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/raid1/www/Hosts/bankrupt/TCREUR_Public/020913.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, September 13, 2002, Vol. 3, No. 182 Headlines * F R A N C E * FRANCE TELECOM: Lenders See Multibillion-dollar Deals Ahead FRANCE TELECOM: To Honor Deal With MobilCom Lenders, Say Analysts VIVENDI UNIVERSAL: Prominent Buyout Firms Eye Publishing Unit VIVENDI UNIVERSAL: U.S. Entertainment Assets Likely to Be Peddled VIVENDI UNIVERSAL: E-mails Show Former CEO Pressured Auditors * G E R M A N Y * ARNDT AG: Succumbs to Insolvency After Talks With Banks Failed BABCOCK BORSIG: Sells German Shipyard to U.S. Investment Lender DUISBURG: MIM Holdings May Be Forced to Close German Smelter FAIRCHILD DORNIER: Airbus' Parent Comes to the Rescue HERLITZ: Attracts Up to Five Investors Reports Say INTERSHOP COMMUNICATIONS: Calls Special Stockholders Meeting KIRCHMEDIA: Mediaset Waiting for the Right Price KIRCHMEDIA GMBH: ProSiebenSat1 Interested in Film Rights Library MICROLOGICA AG: Shareholders End Restructuring, Opt for Wind-up MOBILCOM AG: Negative Report Sends Stocks on Sharp Nosedive MOBILCOM AG: To Sue France Telecom If It Abandons Sinking Ship * I R E L A N D * AER LINGUS: Gets EUR11 Million for Majority Stakes in Timas ELAN CORPORATION: Patents for Transgenic Mice Found Valid JEFFERSON SMURFIT: Smurfit-Stone Subsidiary Issues Senior Notes * S W E D E N * ERICSSON: Completes Sale of Microelectronics * S W I T Z E R L A N D * ABB LTD: Chairman May Unload Oil-Drilling and Reinsurance Units * U N I T E D K I N G D O M * BRITISH AIRWAYS: Sees War More Damaging Than Sept. 11 Attacks BRITISH ENERGY: Could Benefit From Joint Stake Sale With Exelon BRITISH ENERGY: Cameco Provides Update on Bruce Power Investment BRITISH ENERGY: Union Prefers Public Ownership Than Insolvency BRITISH TELEKOM: Ofcom Chairman Favors BT Break-up NTL INCORPORATED: To Compete With BT Using Standalone Broadband P&O PRINCESS: U.S. Antitrust Experts Okay Carnival, Royal Bids P&O PRINCESS: Sues Insurers for Denying 9/11 Claims SMG PLC: Interim Results Six Months Ending 30 June 2002 SMG PLC: Announces Decision to Sell Publishing Business =========== F R A N C E =========== FRANCE TELECOM: Lenders See Multibillion-dollar Deals Ahead ----------------------------------------------------------- Leading banks and financial advisers are camping out at the premises of France Telecom, as the debt-laden government- controlled phone operator mulls steps to improve its dire financial condition. According to The Deal, some of the world's leading institutional lenders are intently awaiting the decision of the company's supervisory board, which could result in multibillion-dollar deals. "All the major investment banks are camped at France Telecom and the French treasury," one London-based banker told The Deal. "France Telecom wouldn't officially [hold a] beauty parade for a rights offering - everyone pitches ahead of the deal and then the company will pick its team. That's what's been going on for almost the last year. There [are] non-stop presentations and plenty of pitching." Speculations abound that the company will launch a EUR10 billion government-backed rights issue or a government-guaranteed bond issue that could provide the company with much-needed liquidity without massively diluting existing shareholders and hammering France Telecom's share price. The company, whose shares rose 5.4% Tuesday to EUR10.75, now has a market cap of EUR12.8 billion, down 76% from the start of the year. "The consensus in the market is that France Telecom needs about EUR15 billion to allay the current concerns about its liquidity," Laurent Sierra, telecom analyst at brokerage CIC EFIB in Paris, told The Deal. Considering its need for this much cash, analysts expect France Telecom to consider selling a stake in its mobile unit, Orange SA, once a rights or bond issue has been concluded. France Telecom holds 85% of Orange, the remainder in free float. Analysts estimate the French behemoth could sell up to 30% of Orange, which would now be worth EUR6.9 billion. The Deal says France Telecom is unlikely to sell this stake to a trade buyer, but could either try to sell the stake on the open market or through a private placement to selected institutions. France Telecom bought Orange in 2000 for GBP31 billion. The unit's current market value is EUR23 billion. Among those expected to be looking intently at how France Telecom will try to whittle down its EUR70 billion debt-load are Morgan Stanley, Merrill Lynch & Co., Credit Suisse First Boston, Societe Generale SA, Rothschild & Cie, Dresdner Kleinwort Wasserstein, BNP Paribas SA and UBS Warburg. FRANCE TELECOM: To Honor Deal With MobilCom Lenders, Say Analysts ----------------------------------------------------------------- France Telecom will release MobilCom and allow it to go bankrupt, but it will honor its commitments to the German affiliate's syndicate of 17 creditor banks. Citing analysts, Bloomberg says France Telecom has no choice but to stay on good terms with lenders or risk being abandoned when it needs cash next year. The company has EUR15 billion of loans coming due next year and may face a cash shortage of EUR5 billion in 2003 and EUR20 billion in 2004, Banc of America Securities analyst Peter Plaut told Bloomberg recently. In June, France Telecom agreed to give 17 banks, including Societe Generale SA, securities convertible into its own shares for the money MobilCom owes them. "They will honor most if not all of MobilCom's debt," Duncan Warwick-Champion, a credit analyst at UBS Warburg told Bloomberg. He said most of the banks "would have only gotten into MobilCom because they thought France Telecom was standing behind it." In February, France Telecom negotiated a EUR15 billion credit line with 47 banks, including ABN Amro NV and Deutsche Bank AG, which also extended loans to MobilCom. "Given the financial situation of France Telecom, they can't risk angering the banks," Manuel Lachaux, an analyst at ETC Groupe, told Bloomberg in an interview. VIVENDI UNIVERSAL: Prominent Buyout Firms Eye Publishing Unit ------------------------------------------------------------- Some of the world's biggest buyout firms are taking an interest in the publishing unit of Vivendi Universal, which has recently received bids of as much as EUR3.5 billion, says Bloomberg. The report says a group of buyout firms led by BNP Paribas SA's private-equity arm, PAI Management, plans to buy 35% of the unit. The rest would be split by other buyout firms like Apax Partners, Bain Capital, Blackstone Group LP and Thomas H. Lee Partners LP, people familiar with the negotiations told Bloomberg. Vivendi is under pressure to sell assets worth EUR10 billion within the next two years, a requisite set by lenders being courted by the company for a EUR2 billion loan. Vivendi is struggling with EUR19 billion of debts, caused by the US$77 billion acquisition spree of former Chief Executive Jean-Marie Messier. "Vivendi needs the money to guarantee its survival," Matthieu Giuliani told Bloomberg, referring to the offer of the buyout firms. He helps manage EUR2 billion at San Paolo Asset Management and owns Vivendi shares. Mia Carbonell, a spokeswoman for Paris-based Vivendi, declined to comment on the sale when asked by Bloomberg. The spokesmen for KKR, Thomas H. Lee, Bain, Apax and Blackstone similarly declined to confirm their rumored plan. Michael Sandler, a spokesman for PAI Management with Hudson Sandler, also declined to comment on this Bloomberg report. In 2001, Vivendi Universal Publishing had sales of EUR4.7 billion and operating income of EUR448 million. It accounts for 16 percent of Vivendi's media business revenue. The unit is the largest hardcover and educational publisher in France. Mr. Messier expanded the unit last year with his US$2.2 billion acquisition of Houghton Mifflin, the Boston-based publisher of J.R.R. Tolkien's "The Lord of the Rings" and the "Curious George" children's books. Analysts of Merrill Lynch & Co. estimate Vivendi Universal Publishing, including the games unit, to be worth EUR7.1 billion. This is based on 10 times the unit's expected earnings before interest, taxes, depreciation and amortization next year, Bloomberg says. J.P. Morgan Chase & Co. values the business at as much as EUR8.5 billion. VIVENDI UNIVERSAL: U.S. Entertainment Assets Likely to Be Peddled ----------------------------------------------------------------- The entertainment assets of Vivendi Universal in the United States will likely be sold, and this will be the main topic of CEO Jean-Rene Fourtou's trip to the United States later this week. Analysts interviewed by the New York Times believe there is no more incentive for the French company to keep the U.S. assets, after its businesses in France have outperformed them in recent years. Mr. Fourtou has pledged to reduce debt and refocus the company on a group of core businesses that are predominantly in Europe. He has so far kept to himself his plans for the U.S. entertainment companies, which include Universal Music, movies and theme park divisions inherited through the 2000 purchase of the Seagram Company from the Bronfman family and the USA Network and Sci-Fi Channel purchased from Barry Diller, now the head of Vivendi Universal Entertainment. Citing people close to Vivendi, the paper says options under consideration include selling shares to the public, shedding some of these businesses piecemeal, or retaining them. One of the more plausible courses of events might go like this: Vivendi would sell a minority stake in Vivendi Universal Entertainment to the public and at the same time sell another minority stake to a strategic partner, perhaps someone like John C. Malone of Liberty Media, leaving Vivendi with a 51 percent stake in the business. It is unclear if Universal Music, which is not part of Vivendi Universal Entertainment, would be grouped with these businesses, or kept separate. The paper says Vivendi would then, at a later date, reduce further its stakes by selling out to rivals. Analysts and investment bankers interviewed by the New York Times believe NBC, owned by General Electric, could be a possible suitor, because it is the only broadcast network not affiliated with a major studio. The paper says NBC is always mentioned in speculation about the sale of any production studio because it is the only American network not aligned with one. But Bob Wright, the president of NBC, has previously said that NBC does not need to own a Hollywood studio. Nor is NBC a logical fit to seek to purchase Vivendi's music division. The report says an initial public offering would value Vivendi Universal Entertainment at US$9 billion to US$10 billion, while an outright sale to a rival could include a premium that might lift the value as high as US$15 billion. Mr. Fourtou is expected to outline his plans for these assets at a board meeting scheduled for September 25. Bear Sterns analyst Nick Bell told the New York Times that one big decision facing the CEO is whether to keep these assets or to sell them. Mr. Bell said he saw no place for an American media company within what he considers an increasingly French organization. He noted that Cegetel, a French phone company in which Vivendi has a 44 percent stake, generated three times the cash that the American entertainment assets did, making it difficult to justify keeping them. Mr. Bell said Vivendi would create more value for shareholders if it sold its American entertainment assets and used the proceeds to take control of Cegetel, allowing it to consolidate that company's cash. Mr. Fourtou took over the reins at Vivendi when it was nearly bankrupt and in the process of negotiating a EUR2 billion (US$1.96 billion) rescue package with its banks. He has pledged to reverse the company's fortunes. The chief's visit to the United States, his first since assuming his post on July 3, will bring him to New York and Los Angeles. He is to meet with Mr. Diller who, on his behalf, has already explored selling Universal's theme park business to a consortium of private investors, including the New York-based Blackstone Group, which owns a small stake in Universal's theme park business, the New York Times says. VIVENDI UNIVERSAL: E-mails Show Former CEO Pressured Auditors ------------------------------------------------------------- E-mails sent by former CEO Jean-Marie Messier to Vivendi's auditors indicate that he had pressured them to get favorable treatment of a complex off-balance sheet transaction, the Financial Times says. The e-mails were recently seized by the French stock market regulator, Commission des Operations de Bourse (COB), which is currently investigating the trustworthiness of Vivendi's financial reporting. The company and Mr. Messier currently face numerous class action lawsuits for allegedly misrepresenting the group's financial situation. According to the paper, one of Vivendi Universal's two audit firms, Salustro Reydel, on Tuesday admitted temporarily suspending its head of methodology, Xavier Paper. He had objected to the regulator over the way Vivendi Universal proposed to account for its 23 percent stake in BSkyB. It denied any pressure from Vivendi Universal. Vivendi Universal's second accounting firm, Arthur Andersen, had approved the treatment, which complied with Securities and Exchange Commission norms. However, the COB ruled against Vivendi Universal. Mr. Paper was subsequently reinstated. Citing the e-mail excerpts in Le Monde, the Financial Times said Mr. Messier on February 11 wrote to the head of the COB, Michel Prada, to complain that his officials had been meeting privately with Salustro Reydel and had requested that signatories to Vivendi Universal's accounts be excluded from discussions. On February 21, Mr. Paper objected to the proposed accounting treatment to the COB. E-mails in the COB's possession show the French audit firm then came under sustained pressure from Vivendi Unversal's senior finance officers and finally from Mr. Messier himself, the paper said. At 12:04 on March 1, deputy finance director Dominique Gibert wrote an e-mail to the Salustro partner responsible for Vivendi Universal: "I am furious to learn the COB has received an opinion from Xavier Paper. I would like you to send me a copy of Paper's memo and to tell me what steps will be taken to avoid a repetition of this type of problem, which could be highly damaging to Vivendi Universal." At 14:13 finance director Guillaume Hannezo wrote to the same partner: "There is a real problem at Salustro and I hope it will be remedied as soon as possible." At 21:11 that night, Mr. Messier wrote in an e-mail: "I am shocked to learn all this, which raises real questions about the professional ethics at Salustro." On March 7, Mr. Prada wrote to Mr. Messier expressing his concern at the treatment of Mr. Paper by Salustro Reydel and emphasizing the regulatory requirement that external auditors be independent and competent, the Financial Times said. ============= G E R M A N Y ============= ARNDT AG: Succumbs to Insolvency After Talks With Banks Failed -------------------------------------------------------------- German car rental firm Arndt AG has filed for insolvency, citing lack of money to pay bills after talks with banks and potential investors failed to achieve anything, says Bloomberg. "Talks with creditor banks and potential investors haven't led to satisfactory results yet," the company said in a statement to the Frankfurt stock exchange. It added that the talks continue and that it will revoke the application "as soon as" further financing can be secured. The company's insolvency petition is pending at a Dusseldorf court, the statement said. Based in Neuss, Germany, the company last week cut its full-year profit target and said it won't break even this year after business travelers and tourists rented fewer cars and trucks amid weak economic growth in Germany. Troubled Company Reporter-Europe tried, but failed to locate any financial statements or disclosures of the company. BABCOCK BORSIG: Sells German Shipyard to U.S. Investment Lender --------------------------------------------------------------- Babcock Borsig AG sold its 25% stake in German shipyard Howaldtswerke Deutsche Werft AG to One Equity Partners, a unit of Bank One Corp. The move marks Babcock's exit from shipbuilding, Bloomberg says. Without naming the actual price, the German company admitted, it will raise an amount in the "double-digit million." The sale to One Equity Partners, a unit of Bank One Corp., will give the investment arm of the U.S. lender a 70% right in the shipyard, while giving Babcock an amount to reduce its EUR1.5 billion (US$1.46 billion) debt. Babcock's shares have fallen more than 90% this year. Babcock filed for creditor protection four months after it unloaded a first 25% stake in HDW to Bank One, the report says. The sale also clears the way for the shipyard to focus on its future, said Christopher von Hugo, a spokesman for OEP in Frankfurt. Part of the transaction is the tender of part of HDW to two German companies, ThyssenKrupp AG, Germany's No. 1 steelmaker, and Ferrostaal AG, a unit of MAN AG. Babcock shareholders, however, including U.S. investor Guy Wyser- Pratte were against the sale. Wyser-Pratte, who owns about 8% of Babcock plans to sue the company's chief executive and insolvency lawyer Helmut Schmitz, says a report of Germany's Die Welt. The news citing Wyser-Pratte's lawyer, Thomas Heidel, disclosed that Wyser is claiming as much as EUR250,000 in damage. Submarines HDW is the biggest maker of non-nuclear submarines. It has annual sale so or EUR461 and employs 3,435 people, and has sold almost 100 submarines worldwide. DUISBURG: MIM Holdings May Be Forced to Close German Smelter ------------------------------------------------------------ The troubled European zinc smelters of Australian miner MIM Holdings Ltd. may be forced to close according to some analysts and traders, Reuters reports. Company spokesman Collin Myers confirmed MIM will exit Avonmouth and Duisburg. MIM disclosed its decision to write down the two plants in UK and Germany in August with a plan to exit them. Uncertain zinc prices and strong European currencies had hurt the business. An analyst was quoted saying, "Every two years they are losing what the closure costs would be." With this, analysts are concluding a closure is really possible. According to MIM the shutdown in UK's sole zinc smelter, Avonmouth, would cost around GBP 27 million (US$41.95 million) over three years. For Germany's Duisburg it would cost EUR65 million (US$63.48 million), plus or minus 25%. The closure is expected to take around 190,000 ton of annual production from the market, and to raise zinc prices. The Duisburg plant yields about 1/3 of total German zinc output, which totalled 358 tons in 2001. Avonmouth produces 115,000 tons per year capacity. But there are also analysts who believe a sale is still possible. According to Claire Hassall of CHR Metals, steelmakers might want the operations to deal with hazardous EAF dust. The plants are Imperial Smelting Furnaces (ISF), facilities able to treat bulk concentrates and secondary feed. According to CHR's Hassall, the closures could cause problems for mines as reduction in the smelting capacity could raise prices for the service. FAIRCHILD DORNIER: Airbus' Parent Comes to the Rescue ----------------------------------------------------- Bavarian governor Edmund Stoiber saId, the parent company of European aircraft maker Airbus (F.ABI) intends to hire some of the 3,600 workers of bankrupt German-US regional jet manufacturer, Fairchild Dornier, Dow Jones reports. Mr. Stoiber also assured employees at Fairchild that Airbus would continue ordering parts from the company. EADS spokesman Eckhard Zanger confirmed that Airbus would continue ordering tail assemblies from the company's works in Oberpfaffenhofen, and would absorb as many as 400 specialists directly. Stoiber, who is running as conservative challenger for chancellor in September 22 national elections, said in a statement, "Strengthening the aerospace industry is in the interest of Germany as a high technology place to do business." He was reporting to the employees after meeting with Philippe Camus, chief executive of EADS, the parent of Airbus. Fairchild Dornier is undergoing restructuring after it filed bankruptcy in April when airline sales fell due to the September 11 attacks. The company lay off 1,800 workers and offered three months of training for new jobs at 80% of their previous pay. Some 1,000 workers may be reinstated once a new investor that would continue a project for a new 70-seater regional jet is found. HERLITZ: Attracts Up to Five Investors Reports Say -------------------------------------------------- Christian Supthut, chief executive of Bankrupt German office equipment maker, Herlitz AG, disclosed that four to five potential investors are interested in helping the company towards recovery, Bloomberg reports. ``In order to be completely healthy and powerful, we need a strong partner that can provide us with money,'' Supthut was quoted saying in an Allgemeine Zeitung report. Among the interested companies, is Capital Management Partners CMP, a firm involved in reorganizing indebted companies. The company filed for creditor protection in Berlin, in April, after failing to negotiate loan extension with banks. Herlitz's creditors waived EUR40 million US$39 million) in debt. In a July TCR-Europe, Supthut said the current debt level of the company is at EUR150 million. Herlitz is looking for an adviser to help it find an investor, which is preferably from its own industry rather than a venture capital firm or a bank. INTERSHOP COMMUNICATIONS: Calls Special Stockholders Meeting ------------------------------------------------------------ Intershop Communications AG (Nasdaq: ISHP; Neuer Markt: ISH), a leading provider of e-commerce software for enterprises, on Wednesday announced several initiatives aimed at strengthening its balance sheet and increasing the company's financial flexibility. The financial initiatives include asset write-downs and a capital decrease combined with a 1-for-5 reverse stock split on Intershop common bearer shares. Since the asset write-downs will reduce the equity position of Intershop Communications AG to below half of its share capital, a special stockholders meeting is being called for the purposes of article 92, section I of the German Stock Corporation Law (Aktiengesetz). At the meeting, the company seeks approval of the new financial structure. The asset write-downs, exclusively at Intershop's holding company, will not impact the consolidated group results. Intershop's new financial structure is designed to increase the company's flexibility to raise additional funds supporting the company's future development. Intershop is receiving strategic advice on raising capital from the investment bank ING Barings. Dr. Juergen Schoettler, chief financial officer at Intershop commented, "In the past few quarters, we have streamlined Intershop's operations and re-aligned the company's cost structure to match current levels of business activity. In an extremely tough market environment, we have not only significantly improved our bottom line results, but also broadened our product offering by launching a set of new e- commerce software solutions, re-focused our sales organization, and strengthened senior management. Complementing our operational restructuring program, today we decided on a set of financial initiatives that will create a solid platform allowing future funding opportunities to improve Intershop's competitive position further." About Intershop Intershop Communications (Nasdaq: ISHP; Neuer Markt: ISH) is a leading provider of e-commerce solutions for enterprises who want to automate marketing, procurement, and sales using Internet technology. The Intershop Enfinity commerce platform, combined with proven, flexible industry and cross-industry solutions, enables companies to manage multiple business units from a single commerce platform, optimize their business relationships, improve business efficiencies and cut costs to increase profit margins. By streamlining business processes, companies can achieve a higher return on investment at a lower total cost of ownership, increasing the lifetime value of customers and partners. Intershop has more than 2,000 customers worldwide in retail, high-tech and manufacturing, media, telecommunications and financial services. Customers including Bertelsmann, Motorola, Sonera, Otto and Bosch have selected Intershop's Enfinity as the foundation for their global e-commerce strategies. More information about Intershop can be found on the Web at http://www.intershop.com. CONTACT: INTERSHOP COMMUNICATIONS Klaus F. Gruendel, Investor Relations Phone: +49-40-23709-128, or Fax: +49-40-23709-111 E-mail: k.gruendel@intershop.com, or Heiner Schaumann, Home Page: http://www.intershop.com KIRCHMEDIA: Mediaset Waiting for the Right Price ------------------------------------------------ Italian commercial broadcaster, Mediaset, is still interested in bidding for the assets of German broadcaster KirchMedia eventhough it is not among the listed bidders, Reuters reports. Munich-based Kirch, which owns numerous film library and sports right and controls Germany's largest commercial broadcaster ProSienbenSat.1 Media, is offering its assets for sale after admitting insolvency in April. Mediaset Chairman Fedele Confalonieri said the cost of the assets is yet "too high" for his company to bid. He also disclosed that they have not presented an offer and is just observing what happens to the cost. Mediaset singled out two of the four channels run by ProSienbenSat.1 as target, but it will only bid if it deems the price right. The bidders listed include a combination of media billionaire Haim Saban and French media group TF1, a partnership between Commerzbank and Sony Corp.'s Columbia Tristar film studio, and a group of KirchMedia shareholders. KIRCHMEDIA GMBH: ProSiebenSat1 Interested in Film Rights Library ---------------------------------------------------------------- ProSiebenSat1 Media AG is seriously considering buying the film library of KirchMedia, which has put a EUR1.58 billion price tag on the asset, Bloomberg says. "We have a basic interest in securing the film rights and it would make sense to us," ProSiebenSat1 spokeswoman Irmgard Jarosch told Bloomberg in an interview. ProSiebenSat1 Media AG, Germany's largest television network, receives about two-fifths of its programming from KirchMedia, which filed for protection from creditors in April. The largest in Europe, the film library holds rights to movies including "Pretty Woman" and "Fight Club." Ms. Jarosch said an offer from her company may be made as soon as this week. KirchMedia has claimed it has received as much as EUR2.6 billion for the library. "To acquire the asset would make sense but the financing, especially when they need to pay in cash, is questionable," Roland Pfaender, media analyst at BHF Bank AG in Frankfurt, told Bloomberg. He said the TV network may try to pay for the rights through selling shares. ProSiebenSat1 has been trying to reduce costs for programs and cutting jobs to compensate for declining advertising sales. First-half net income fell 69 percent to EUR16 million, the report says. Net debt rose 12 percent to EUR910 million. KirchMedia, which owns 53% of ProSiebenSat1, has said it's looking for a buyer or group of buyers to acquire all the entire KirchMedia assets up for sale. These include the film library and the stakes in the TV network. Potential buyers like Mediaset SpA, Television Francaise 1 SA and Axel Springer Verlag Aghave, however, are only interested in the ProSiebenSat1 stake. MICROLOGICA AG: Shareholders End Restructuring, Opt for Wind-up --------------------------------------------------------------- Software-maker Micrologica AG says its shareholders have approved the liquidation of the company, more than a year since filing for protection in April 2001. The company's shares have stopped trading after the company informed the Frankfurt exchange this week. The company makes software for phone networks. Just this February, the company's creditors' committee unanimously agreed to its restructuring, approving an insolvency plan that unfortunately failed to take off. Under the plan, creditors were to receive an unusually high payout quota of 60% of the value of their receivables by April. An additional future distribution from shares previously held by the founding shareholders was also planned. The management board said then that the company will in the future, increasingly act as a holding company, since the bulk of its operations were sold during the restructuring process to Tenovis during which 80% of all jobs were secured and maintained in the company's headquarters in Bargteheide. The restructuring plan was jointly drawn up by the Hamburg-based official receiver RA/StB/vBP Berthold Brinkmann and the company's management board member Andreas von Arnim. Further information is available from Micrologica AG i.l. Brinkmann & Partner Frauke von Benzon RA/StB/vBP Berthold Brinkmann Bahnhofstr. 5a Sechslingspforte 2 22941 Bargteheide 22087 Hamburg Tel: +49/04532 403-0 Tel: +49/040-226677 Fax: +49/04532 403-199 Fax: +49/040-22667888 eMail: fvb@micrologica.de eMail: Hamburg@brinkmann-partner.de MOBILCOM AG: Negative Report Sends Stocks on Sharp Nosedive ----------------------------------------------------------- As if the present uncertainty was not bad enough for its stocks, MobilCom suffered its worst nosedive Wednesday when French newspaper Le Figaro said France Telecom would abandon the German mobile phone operator and allow it to go bust. Shares of MobilCom dropped 2.73 euros, or 60 percent, to 1.80 euros at 10:02 a.m. in Frankfurt. MobilCom, worth EUR13 billion (US$12.7 billion) when France Telecom bought its 28.5 percent stake in March 2000, now has a market value of about EUR118 million, Bloomberg said Wednesday. Citing no one, the French paper said supervisory board members appear to be listening to Michel Bon's suggestion not to takeover the German affiliate and allow it to rot. Without further support and absent a buyout by France Telecom of stocks it doesn't own, MobilCom could go bankrupt. The board was expected to form a decision on MobilCom yesterday during its meeting. Earlier, the French group committed to refinance a EUR4.7 billion loan for MobilCom by the end of September, provided that it can renegotiate EUR1.1 billion of vendor financing from Nokia and Ericsson. In addition, the French company also set as a pre- requisite the sale of MobilCom's 50% equity, which is currently under former CEO Gerhard Schmid's name. Cutting its exposure in MobilCom, however, would afford France Telecom enough financial elbowroom, crucial at a time when its debts are threatening to surpass the EUR70 billion-mark by year's end. MOBILCOM AG: To Sue France Telecom If It Abandons Sinking Ship -------------------------------------------------------------- An unnamed MobilCom spokesman confirmed Wednesday that the German mobile phone operator will definitely sue France Telecom if it withdraws its financing commitment to the company and allow it to go bankrupt. "If France Telecom does decide to dump MobilCom, as the market seems to expect will happen, then they should take into account the financial consequences," the spokesman said. "If France Telecom takes that step, then they can expect legal action at a number of levels aimed at recouping damages." The Deal says MobilCom's legal action, if ever, will center on the French company's "unilateral termination" of a common framework agreement reached by the companies earlier this year. Under this agreement, France Telecom had undertaken to continue to finance MobilCom's operations. The MobilCom press official said the German company was dependent on "liquidity injections" from France Telecom every two weeks. The official said the action could be initiated by MobilCom's supervisory board, by administrators if the company is forced into insolvency or by company shareholders. France Telecom purchased its 28.5% stake in MobilCom in 2000 for EUR3.7 billion with hopes of using the service provider to gain a foothold in Europe's largest and most lucrative mobile market. But after paying its share of an EUR8 billion 3G license, France Telecom saw MobilCom's and its own share price tumble while debt at both companies skyrocketed. France Telecom's net debt is now estimated by analysts to be about EUR70 billion, while MobilCom's debt is about EUR6 billion, The Deal says. MobilCom's supervisory board is being advised on the dispute by Deutsche Bank AG's Jens Hardkopf and Merrill Lynch's Bruce McInroy. France T,l,com SA is being advised by Dresdner Kleinwort Wasserstein and Soci,t, G,n,rale. ============= I R E L A N D ============= AER LINGUS: Gets EUR11 Million for Majority Stakes in Timas ----------------------------------------------------------- Aer Lingus, which has been peddling non-core assets, recently earned EUR11.1 million for its share in Timas Ireland, an airline reservation company that has been sold to Galileo International. According to the Irish Times, the state-owned carrier held a 74% stake in the unit, which is understood to have fetched EUR15 million. Irish travel agents, who pocketed some 15,000 euros each for their shares, held the rest of the equity. The paper says Timas Ireland was a distribution partner of Galileo International, which is owned by the US group Cendant Corporation. The unit facilitates the coordination of ticket sales for connecting flights operated by separate airlines throughout the world. Timas Ireland claims to be the market leader in Ireland. Its annual post-tax profits are understood to be in the region of EUR2 million. The report says another sale, this time involving Aer Lingus' Spain-based charter company, Futura, is expected to be concluded within the next six weeks. In June, the airline sold a ticketing reconciliation business, Aviation Services Ireland, to a management group. The September 11 terrorist attacks on the United States last year almost brought the Irish carrier to its knees. But even before the attacks, the airline had already undertaken several asset disposals, involving non-core assets. ELAN CORPORATION: Patents for Transgenic Mice Found Valid --------------------------------------------------------- Elan Corporation, plc (NYSE: ELN) announced that two of its patents covering certain research mice used to study potential drugs for Alzheimer's disease were found valid August 30th in an opinion issued by the United States Court of Appeals for the Federal Circuit. The opinion concerned United States Patent Nos. 5,612,486 and 5,850,003, which claim transgenic mice that express the human gene known as the Swedish mutation of the amyloid precursor protein, and process the resulting protein. Following the CAFC's decision, Elan plans to continue its program of licensing the technology to companies and institutions commercially using the patented mice. The CAFC decision reverses an earlier lower court decision that the Elan patents were anticipated by a prior patent (United States Patent No. 5,455,169). The disclosure in the Mullan patent, the CAFC opinion holds, was no more than an invitation to experiment, providing only a path of "trial and error and hope." It therefore did not invalidate Elan's patents. The full CAFC opinion may be obtained from the court's website at http://www.fedcir.gov/opinions/00-1467.doc The decision comes in Elan's litigation with the Mayo Foundation. In that litigation Elan asserts that the Mayo Foundation owes Elan a portion of license fees received from licensing the patented mice to commercial pharmaceutical companies. The CAFC decision reverses a summary judgment earlier sought by the Mayo Foundation, and eliminates from the parties' litigation the Mayo Foundation's contention that the Mullan patent anticipates Elan's transgenic mouse patents and renders them invalid. The case will be returned to the United States District Court for the Northern District of California in San Francisco for trial of the remaining issues. Elan is focused on the discovery, development, manufacturing, selling and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. CONTACT: Elan Corporation, plc Investors: (U.S.) Jack Howarth, 212-407-5740 800-252-3526 or Investors: (Europe) Emer Reynolds, 353-1-709-4000 00800 28352600 or Media: Sunny Uberoi, 212-332-4766 JEFFERSON SMURFIT: Smurfit-Stone Subsidiary Issues Senior Notes --------------------------------------------------------------- Smurfit-Stone Container Corporation (Nasdaq: SSCC) announced that Jefferson Smurfit Corporation (U.S.), an indirect wholly-owned subsidiary of Smurfit-Stone, had entered into an agreement to sell $700 million of 8.25% Senior Notes due 2012. The Notes will be guaranteed by JSCE, Inc., a wholly-owned subsidiary of Smurfit-Stone and the sole stockholder of Jefferson Smurfit Corporation (U.S.), and will rank equally with all of Jefferson Smurfit Corporation (U.S.)'s other senior unsecured indebtedness. Proceeds from the Note issuance (after deduction of discounts and commissions, fees and other expenses associated with the sale of the Notes) will be used to repurchase up to $500 million aggregate principal amount of Jefferson Smurfit Corporation (U.S.)'s outstanding 9.75% Senior Notes due 2003 and to pay related tender fees and premiums (including consent payments). Jefferson Smurfit Corporation (U.S.) expects to use the remaining proceeds to fund a portion of the purchase price relating to the previously-announced acquisition of the Stevenson, Alabama mill from MeadWestvaco Corporation. The Notes are being sold to qualified institutional buyers in reliance on Rule 144A. The Notes will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Company has agreed that after the issuance of the Notes it will file a registration statement relating to an exchange offer for the Notes under the Securities Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Smurfit-Stone Container Corporation (Nasdaq: SSCC) is the industry's leading integrated manufacturer of paperboard- and paper- based packaging. Smurfit-Stone is a leading producer of containerboard, including white top linerboard and recycled medium; corrugated containers; multiwall bags; clay-coated recycled boxboard; and is the world's largest paper recycler. In addition, Smurfit-Stone is a leading producer of solid bleached sulfate, folding cartons, paper tubes and cores, and labels. The company operates approximately 300 facilities worldwide and employs approximately 38,500 people. CONTACT: Smurfit-Stone Container Corporation Carrie Doyle, 312/580-4685 (investors) or Home Page: http://www.smurfit-stone.com =========== S W E D E N =========== ERICSSON: Completes Sale of Microelectronics ------------------------------------------- Ericsson has closed the earlier announced transaction with Infineon Technologies AG, whereby Infineon takes over Ericsson Microelectronics AB and its related global activities. As announced on August 15, 2002, the sales price is 2 800 MSEK (300 MEUR). Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. CONTACT: Media Mads Madsen, Director Media Relations Phone: +46 8 719 06 26; +46 70 666 2903 E-mail: mads.madsen@lme.ericsson.se Investors Gary Pinkham, Vice President, Investor Relations Phone: +46 8 719 0858; +46 730 371 371 E-mail: gary.pinkham@ericsson.com ===================== S W I T Z E R L A N D ===================== ABB LTD: Chairman May Unload Oil-Drilling and Reinsurance Units --------------------------------------------------------------- Analysts expect ABB Ltd.'s newly installed chairman, Juergen Dormann, to add the company's oil-drilling and reinsurance units on his list of divestments as he tries to bring the company to health, Bloomberg reports. Analysts deem it necessary for the new executive to hasten the divestment to meet his predecessor's goal of boosting operating margin to between 4% and 5% by the end of 2002, and to as much as 10% by 2005. ABB also aims to sell more property and part of the unit GE did not buy to hit the target of reducing borrowings to US$2.6 billion in 2002. The sale of its deep-sea-drilling maker is expected to raise about US$2.5 billion, while the reinsurance firm is seen to gather US$1.7 billion. The new executive is also expected to unload all or part of the oil, gas and petrochemicals unit as well as reinsurer Sirius International Insurance Corp. Sirius had net premiums of $836 million last year, when it posted its first loss ever. Thomal Gangl, who helps manage more than 1 billion Swiss francs ($670 million) at IRB Interregio Bank, foresees that ABB will survive, only that the recovery will take more job cuts and sell- offs of businesses not useful in its strategy of refocusing in engineering. ABB will slash 12,000 jobs to catch up with more profitable competitors, including France's Schneider SA and the U.K.'s Invensys Plc. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Sees War More Damaging Than Sept. 11 Attacks ------------------------------------------------------------- The chief executive of British Airways warns that war in Iraq could have a more deleterious impact on the business than the September 11 terrorist attacks in the US, Evening Standard reports. As the launching of a military campaign against Saddam Hussein is fast approaching, Rod Eddington, BA's chief executive, sees the company preparing for a conflict that would be staged longer than the Gulf War. Mr. Eddington expects the impending conflict not as deep but more prolonged than the September 11 attacks. The attacks resulted to a 25% collapse in airline travel. BA's head then expects the impact to be as much, but lasting for several months. Mr. Eddington, on the other hand, affirmed that the airline is more financially ready to face a war crisis today than it would last year. The crisis in the airline industry had reduced its reserves to less than GBP1 billion. According to the report, Mr. Eddington now admits it was within 12 months of going bankrupt. The airline limited capital spending, cut nearly 8000 jobs, and raised cash through the disposal and husbanding of positive cashflow during the peak summer months to stave off a collapse. BRITISH ENERGY: Could Benefit From Joint Stake Sale With Exelon --------------------------------------------------------------- British Energy could receive more for its stake in AmerGen Energy if it sells its stake together with that of its 50-50 partner, Exelon, Financial Times reports. Exelon, who confirmed it also intends to sell its stake, has a contract to buy 100% of the energy produced by AmerGen. Although negotiations for the sale may have taken place, the deal is expected to take some time and would not solve any of the nuclear generator's immediate financial problems at all, says the report. According to industry bankers, possible bidders for the stake are Dominion Resources, En-tergy, Constellation Energy and Florida Power & Light. These are US companies already involved in nuclear power generation. Acquisitive power companies are also expected to turn out as bidders for British Enegy's Bruce Power, the Canadian nuclear company owned by British Energy, says the report. British Energy is expected to make a profit on any of the sale as it acquired US nuclear assets at a time when they were yet inexpensive. BRITISH ENERGY: Cameco Provides Update on Bruce Power Investment ---------------------------------------------------------------- Cameco Corporation on Monday provides an update regarding Bruce Power Limited Partnership (Bruce Power) and the impact on Cameco of the financial difficulties announced by British Energy plc (BE), the majority owner in Bruce Power with 82.4%. Cameco owns 15% of Bruce Power and the two unions representing employees hold the remainder. The government of the United Kingdom (UK) announced today that it will provide 410 million pounds (almost $1 billion Cdn) in working capital to cover BE's immediate cash requirements, if any, and to allow BE to stabilize its trading position in the UK and North America, including Bruce Power's trading position. This short-term agreement with the UK government will expire September 27, 2002. Cameco understands that BE has undertaken to resolve its longer-term financial situation. As a condition of the agreement to provide financial assistance, the UK government required guarantees from certain BE subsidiaries, including Bruce Power. As part owner, Cameco has consented to Bruce Power providing the necessary guarantees. Although the risk profile of Bruce Power has been temporarily increased by these recent events, Cameco's commitment to invest up to $100 million in Bruce Power and to provide up to $102 million in financial assurances remains unchanged. To date, Cameco has invested about $70 million exclusive of the $42 million that it invested in the initial fuel inventory purchase, which has been fully recovered from Bruce Power. Bruce Power has responded to the recent inquiry by the Canadian Nuclear Safety Commission (CNSC) regarding its required financial guarantee. It is expected that the matter of Bruce Power's financial guarantee will be addressed at an upcoming, already scheduled meeting with the CNSC on September 12, 2002. Cameco believes the Bruce reactors will continue to be safe and well-run and that Bruce Power will remain an important supplier of electricity, accounting for 15% of Ontario's requirements. As additional information comes available, Cameco will provide further updates. Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest uranium supplier. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today. Cameco's shares trade on the Toronto and New York stock exchanges. CONTACT: Bob Lillie Manager, Investor Relations Cameco Corporation Phone: (306) 956-6639 Fax: (306) 956-6318 Jamie McIntyre Director, Investor & Corporate Relations Cameco Corporation Phone: (306) 956-6337 Fax: (306) 956-6318 BRITISH ENERGY: Union Prefers Public Ownership Than Insolvency -------------------------------------------------------------- The Amicus union, which represents workers at British Energy, wants the company to be returned into public ownership rather than be forced into liquidation, AFX reports. The nuclear power generator, which was privatized in 1996, received over GBP410 million government aid on Monday. The company attributed its financial troubles on the collapse of wholesale energy prices. Dougie Rooney, national officer for the 1,700 Amicus members, expressed the union's fears that the company may resort to insolvency before trying to exhaust all means to restructure. Mr. Rooney also expressed the group's demand to know the company's position, adding that it wants to avoid the labor force being demoralized. Union officials are scheduled to meet the management in Scotland on Friday to determine plans. "We are going to have to chase this thing up to bring more pressure," Mr. Rooney said. The union leader also disclosed that the group is seeking to negotiate with Energy Minister Brian Wilson. BRITISH TELEKOM: Ofcom Chairman Favors BT Break-up -------------------------------------------------- A research paper co-written by the new chairman of communications super-regulator, Ofcom, shows the official favors a break-up of British Telecom and an end to mobile price controls, The Times says. The paper, which is written with John Cubbin and completed before his appointment to Ofcom, holds that regulators should favor promoting competition. The suggestion goes against the telecoms regulation adopted by the existing regulator, Oftel. The report, however, cannot ascertain if indeed the research represents Currie's present thinking, as he did not return calls asking for comments. According to The Times, the paper deems that "the fastest and best route to regulatory withdrawal in telecoms is for BT to separate its distribution business from its business of supplying services". Oftel, however, publicly rejected the break-up of BT. The regulator holds it has enough powers to combat any anti- competitive behavior. The paper criticizes Oftel's imposition of price controls on mobile operators, labeling the regulator as pursuing, "the transfer of an interventionist regulatory approach designed for fixed-line telephones into the mobile market." Although Oftel did not make an official comment, a source said that Oftel holds the right to determine regulatory policy for the time that Ofcom is not yet functioning. Ofcom is set to become operational towards the end of next year. NTL INCORPORATED: To Compete With BT Using Standalone Broadband -------------------------------------------------------------- Britain's NTL plans to sell standalone high-speed Internet access to 8 million households which are currently being reached by its cable network, Reuters reports. The service, which is expected to be availabe by the end of September, is expected to challenge the monopoly of former telecoms BT Group Plc. NTL will offer the service at GBP25 (US$39) a month to compete with BT's cheapest offer of GBP27 a month for comparable speeds. The company, which currently sells broadband to customers paying for phone and TV, is seen to soon offer the service for no extra fee to homes that subscribe to rivals such as BSkyB's market- leading TV service Sky Digital. The collapsed company aims to attract new subscribers with its broadband offering and then promote its other services, the report says citing sources close to the company. NTL is Britain's largest cable companies with 2.7 million subscribers, though only 300,000 use broadband. P&O PRINCESS: U.S. Antitrust Experts Okay Carnival, Royal Bids -------------------------------------------------------------- The antitrust bureau of the U.S. Federal Trade Commission is convinced that the merger of P&O Princess with either Royal Caribbean Cruises or Carnival Cruises won't seriously affect competition in the cruise business. The Times of London says the bureau has already recommended to the Commission not to oppose both deals, but the matter will need the vote of the agency's five commissioners. The antitrust division says a combination of two of the world's top three cruises won't lead to price hikes. An FTC spokesman told the paper the Commission was reviewing the matter but declined to discuss the case further. But one of the sources close to the case told the paper the proposed mergers could still run into opposition from some of the commissioners despite the recommendation. "There are some questions among some of the commissioners about this," the source told The Times of London. "The commission is not a rubber stamp." Antitrust enforcers at the European Commission have already approved both merger proposals. The proposal to merge P&O Princess and Royal Caribbean, announced in November, would combine the second and third largest cruise lines. Carnival, which came out with a competing bid for P&O a month later, is the world's biggest cruise line. The cruise line mergers have provoked opposition from some consumer groups. In July the American Antitrust Institute, which is based in Washington, said that either deal would "present a substantial risk of anti-competitive effects." Lawyers for the cruise companies won over the FTC's competition bureau by using detailed data on cruise pricing to argue that they could not use their increased size to raise ticket prices, The Times of London said citing sources. P&O PRINCESS: Sues Insurers for Denying 9/11 Claims --------------------------------------------------- U.K. cruise ship operator P&O Princess sued two U.S.-based insurers a day before the anniversary of the September 11 terrorist attacks on the United States. The Independent says the suit was filed against American International Group, the world's largest insurer, and Lexington Insurance, the closely held Massachusetts-based group. The suit is now pending in the Los Angeles Superior Court. P&O Princess alleges breach of contract and unfair business practices against the two insurers for allegedly failing to pay for a policy intended to cover interruptions to business. The company wants to be reimbursed US$1 million to cover the expense of arranging alternative travel and hotel arrangements for customers that were due to board one of its cruise ships on the day of the attacks. The cruise operator had to divert ships due to dock in New York to Boston. It also incurred costs as a result of the closure of North American airspace. According to the suit, the two insurers denied coverage in January because they "unreasonably took the position" that P&O Princess needed to suffer damage to its property for the policy to be upheld. P&O Princess called AIG's and Lexington's "denial of coverage ... unreasonable and in bad faith". P&O Princess took a US$12 million one-off charge relating to last year's attacks, the report says. The two insurers could not be reached for comments. SMG PLC: Interim Results Six Months Ending 30 June 2002 ------------------------------------------------------- - Interim results in line with expectations - All SMG businesses remain profitable and cash generative - Continued market share gains across the Group - Sale of newspapers and magazines businesses initiated KEY FINANCIALS - Total turnover * - o130.7m (2001: 139.7m) - EBITDA * - o31.3m (2001: o34.4m)** - Total operating profit * - o26.4m (2001: o29.9m)** - Profit before tax * - o11.5m (2001: o20.0m) - Earnings per share * - 2.7 p (2001: 4.7 p) - Dividend per share - Deferred (2001: 1.5 p) * Excluding online activities and goodwill amortisation ** Re-stated to include FRS17 costs These results reflect the strength of SMG's businesses in the continued difficult trading environment. Profit before tax reduced by o8.5m to o11.5m, with o4m of the fall as a result of the decline in ITV advertising and reduced network programme commissions; o2.5m was the impact of the increased cost of the Group's borrowings; and o2m reflected the additional pension charge from the introduction of accounting standard FRS17. In light of the decision to initiate the sale of the Group's Publishing Division, the Board has deferred a decision on an interim dividend for 2002. Andrew Flanagan, Chief Executive of SMG, said: "In difficult trading conditions, the Group is performing robustly and all our businesses are profitable. We are well- prepared for the advertising upturn when it comes. The sale of our Publishing Division will provide us with the flexibility, both financial and regulatory, to pursue our cross media strategy, building national positions in the faster growing media sectors. "As we enter this period of great opportunity for UK media companies, we are determined that SMG will be well-positioned to take full advantage of all the possibilities for further development that the forthcoming months are set to present." CONTACT: SMG Callum Spreng, Corporate Affairs Director Tel: 020 7882 1199 SMG PLC: Announces Decision to Sell Publishing Business ------------------------------------------------------- The board of SMG plc announces on Tuesday its decision to sell the Group's publishing business, including The Herald, Sunday Herald and Evening Times regional newspapers. SMG's Publishing Division consists of its three regional newspapers, a stable of 11 business to business and specialist consumer magazine titles and its online content and advertising business, s1. The sale process has been initiated and it is anticipated that, allowing for regulatory clearance and shareholder approval, any resultant transaction will be completed by the second quarter of 2003. Greenhill & Co. International LLP is acting for SMG in connection with this transaction. Commenting on the announcement, Andrew Flanagan, Chief Executive, said: "Our strategy of focusing SMG's development on a cross media approach with national positions in the faster growing media sectors, means that publishing is no longer core to the Group. In an increasingly consolidated newspaper and magazines sector, it is clear that the ongoing success of these businesses is best assured as part of a larger publishing network. "Initiating the sale of these valuable newspapers now, will ensure that SMG has the flexibility to capitalise on the opportunities presented by the Communications Act next year." CONTACT: SMG Callum Spreng, Corporate Affairs Director Tel: 020 7882 1199 ************ S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson and Jean Claire Dy, Editors. Copyright 2002. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. 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