/raid1/www/Hosts/bankrupt/TCREUR_Public/021024.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
Thursday, October 24, 2002, Vol. 3, No. 211
Headlines
* F R A N C E *
ALCATEL: Signs EURO 20 Million Deal With Telekomunikacja Polska
ALCATEL: China Unicom Awards USD11 Million CDMA Contract
VIVENDI UNIVERSAL: To Sell Publishing Businesses to Lagardere
VIVENDI UNIVERSAL: Banks Reluctant to Finance Cegetel Acquisition
* G E R M A N Y *
FAIRCHILD DORNIER: Seeks Okay to Retain Deloitte as Tax Advisors
HVB GROUP: Woes to Trim Down HVG's Workforce Deeper
HVG GROUP: Board Seen to Prefer Rampl as Chief Executive
* I R E L A N D *
ELAN CORP: Publishes Circular on Proposed Disposal of Abelcet
* P O L A N D *
NETIA HOLDINGS: Confirms Financial Results Release Date
NETIA HOLDINGS: Resolves Claims Disputes with Dissenting Parties
* S W I T Z E R L A N D *
ABB: Woes Affect European Shares - Thomson Financial
ABB: Moody's Downgrades Senior Debt Ratings to Baa3
ABB: Likely to Default on Failure to Refinance Maturing Debt
ABB LTD.: S&P Lowers Credit Ratings to 'BBB+' from 'A-'
* U N I T E D K I N G D O M *
ABBEY NATIONAL: Appoints New Group Chief Executive
BALTIMORE TECHNOLOGIES: Launches Trusted Business Suite
BALTIMORE TECHNOGIES: Delivers Security for Orange's Smartphone
BRITANNIC GROUP: Announces Appointment Of Group Finance Director
COLT TELECOM: Highberry Petitions Appointment of Administrator
CORDIANT COMMUNICATIONS: Announces Notifiable Holdings
CORUS GROUP: Announces Directors Shareholding
EIDOS PLC: Provides Update on Trading and Release Schedule
MARCONI PLC: Issues Trading Update for Three Months
NTL INC.: Justifies Pay Increase of Chief Executive
TXU EUROPE: Fitch Transfers Rating Watch to "Evolving"
===========
F R A N C E
===========
ALCATEL: Signs EURO 20 Million Deal With Telekomunikacja Polska
---------------------------------------------------------------
Alcatel (Paris: CGEP.PA and NYSE: ALA) announces that it has
signed a frame agreement with Telekomunikacja Polska (TP), the
largest telecom operator in Poland. Under the agreement, TP will
purchase from Alcatel the full range of telecommunications
equipment, including access, switching and transmission solutions
to extend its network and to meet the growing demand for
increased bandwidth and for new value-added services. The value
of the contract amounts to Euro 20 million. The frame agreement
builds upon the previous cooperation between both companies and
confirms Alcatel's position as key partner of Telekomunikacja
Polska.
About Telekomunikacja Polska
Telekomunikacja Polska, the leading carrier in Poland, provides
services to more than 10 million customers. The company is also
the leader in data transmission, satellite communications, and
Internet access. TP belongs to a Group of companies, which
includes also the Idea mobile network operator (PTK Centertel), a
provider of modern Internet solutions (TP Internet), and an e-
commerce platform (Marketplanet). The company is a part of France
Telecom, a worldwide telecommunication group. More information on
Telekomunikacja Polska is available from the company website at
www.telekomunikacja.pl.
About Alcatel
Alcatel designs, develops and builds innovative and competitive
communications networks, enabling carriers, service providers and
enterprises to deliver any type of content, such as voice, data
and multimedia, to any type of consumer, anywhere in the world.
Relying on its leading and comprehensive products and solutions
portfolio, stretching from end-to-end optical infrastructures,
fixed and mobile networks to broadband access, Alcatel's
customers can focus on optimizing their service offerings and
revenue streams. With sales of EURO 25 billion in 2001, Alcatel
operates in more than 130 countries.
ALCATEL: China Unicom Awards USD11 Million CDMA Contract
--------------------------------------------------------
Alcatel (Paris: CGEP.PA and NYSE: ALA), the world's fastest-
growing GSM/GPRS supplier, announced Tuesday that it has been
awarded an US11 million dollars CDMA-network contract by Gansu
Unicom, a subsidiary of China Unicom. The contract was won
through Alcatel Shanghai Bell, Alcatel's Chinese flagship
company.
Under the terms of this contract, Alcatel will provide coverage
for eight regions of the Gansu province via its CDMA 2000 1X
product and technology. The new key features of Alcatel's CDMA
2000 1X include a double capacity and enhanced radio feature such
as power control, soft handover, voice activation and high rate
mobile data capacity. The solution also supports value-added
services, such as Short Message Service (SMS), Pre-paid and
Virtual Private Network (VPN).
Liu Shouguo, general manager of Gansu Unicom, declared: "We truly
appreciate our partnership with Alcatel. This CDMA network will
offer our customers higher capacity and more value-added services
to meet their ever growing demands."
Marc Rouanne, President of Alcatel's Mobile Networks activities,
added: "This win is the first success for Alcatel in the China
Unicom group's CDMA project. With our advanced products and
quality of services, we believe that Alcatel will continue its
stride and gain further CDMA contracts in other provinces."
About Gansu Unicom
Gansu Unicom, a subsidiary of China United Telecommunication
Corporation Ltd. (China Unicom) , is presently the only
integrated telecommunications service provider licensed in the
province. Its business includes local calls, mobile services
(including GSM & CDMA), paging, long-distance calls as well as
data/internet services and IP phones. In addition, China Unicom
has the exclusive right to offer the CDMA services in China.
About Alcatel Shanghai Bell
Alcatel Shanghai Bell is the first foreign-invested company
limited by shares in the telecommunications sector in China, with
Alcatel holding 50%+1 shares and Chinese shareholders holding the
remainder. The multibillion dollar telecom technology leader
delivers end-to-end telecommunications solutions and high-quality
services, covering the fixed, mobile networking, broadband
access, intelligent optical networking, multimedia solutions and
network applications. It also has a key international R&D center
with full access to Alcatel's global technology pool, developing
original technology for use in China and export to Alcatel's
customers worldwide. With 6,500 employees, an advanced
manufacturing center, and the most extensive sales and support
network in China, it is the only company capable of meeting the
global needs of Chinese customers. For more information, visit
Alcatel Shanghai Bell on the Internet at http://www.alcatel-
sbell.com.cn
About Alcatel
Alcatel designs, develops and builds innovative and competitive
communications networks, enabling carriers, service providers and
enterprises to deliver any type of content, such as voice, data
and multimedia, to any type of consumer, anywhere in the world.
Relying on its leading and comprehensive products and solutions
portfolio, stretching from end-to-end optical infrastructures,
fixed and mobile networks to broadband access, Alcatel's
customers can focus on optimizing their service offerings and
revenue streams. With sales of EURO 25 billion in 2001, Alcatel
operates in more than 130 countries.
About CDMA 2000 1X
CDMA2000 1X technology support both voice and data services by
standard 1x CDMA channel, which capacity is twice of previous IS-
95 CDMA system to better adapt to growing demands from voice and
wireless Internet services. Its upload rate can reach to 153 Kbps
and up to 2.4 Mbps in future, without losing voice services due
to data requirements. CDMA2000 1x is compatible with previous
CDMA technology and can be easily upgraded in a secure and
economical manner for operators.
About Alcatel's Evolium solutions
Alcatel is now the world's fastest growing GSM/GPRS supplier.
Currently, over 110 mobile operators worldwide rely on Alcatel's
EvoliumT GSM/GPRS core and radio solutions. By creating Evolium
SAS, an Alcatel-Fujitsu company, Alcatel clearly reinforces its
position in both mobile infrastructure and mobile Internet.
Evolium SAS combines Alcatel's expertise in GSM, GPRS, and EDGE
as well as in ATM and IP technologies, with the advanced
experience of Fujitsu as supplier of NTT DoCoMo. NTT DoCoMo is
the world's leading mobile communications company with more than
40 million customers. The company provides a wide variety of
leading-edge mobile multimedia services. These include i-
mode(TM), the world's most popular mobile Internet service, which
provides e-mail and Internet access to over 32 million
subscribers, and FOMA, launched in 2001 as the world's first 3G
mobile service based on W-CDMA.
Alcatel's UMTS solutions are a reality today, with 20 UMTS field
trials networks in operation or planned to be delivered by
Alcatel in Europe and in Asia by end of 2002. Alcatel's strategy
covers all aspects of UMTS deployment, from radio access and core
network to terminals. Evolium SAS delivers a radio infrastructure
that is 3GPP-compliant, field-proven and capitalises on Japanese
3G technical and field experience. Alcatel, which played a vital
part in developing the mobile Internet market, in particular
through the successful roll out of GPRS commercial networks
world-wide, has today a timely UMTS offering.
VIVENDI UNIVERSAL: To Sell Publishing Businesses to Lagardere
-------------------------------------------------------------
Vivendi Universal has selected the most favorable offer and
decided to enter into negotiations with the LagardSre group to
sell it the publishing businesses in Europe and Latin America of
Vivendi Universal Publishing (VUP). The plan is for the Natexis-
Banque Populaire to make the acquisition on behalf of LagardSre.
It would then sell LagardSre the VUP assets once agreement is
obtained from the antitrust authorities. The sale would be
carried out on the basis of an enterprise value of ?1.25 billion
and include VUP's general literature, reference and educational
publishing activities, excluding Houghton Mifflin.
This project will be submitted for information and consultation
with the personnel representative bodies.
To assess the amount of this disposal, it is necessary to take
into account those assets that were previously included in the
VUP consolidation scope, especially the professional press,
Groupe L'Express-L'Expansion and Comareg, which were sold this
year. Also to be taken into account are the educational software
and the video game businesses, which are part of Vivendi
Universal Games.
As to Houghton Mifflin, Vivendi Universal is examining the
possibility of starting the disposal process again in order to be
able to open it up to a higher number of potential acquirers.
This may take place soon unless a significantly higher bid is
received by end of business Friday October 25.
Commenting on this agreement, Jean-Ren, Fourtou, Chairman and
Chief Executive Officer of Vivendi Universal, said:
"This agreement fully meets the three inter-linked objectives
that we set when we made this difficult decision to sell our
publishing businesses. Firstly, it contributes to lowering
Vivendi Universal's debt, which is an absolute prerequisite to a
turnaround. Next, it meets the cultural and heritage concerns
that relate to publishing, and which we have never lost sight of.
This is why, from the outset, we asked all potential acquirers to
make important commitments in this area. Thirdly, this agreement
offers growth prospects for VUP's French and European publishing
businesses."
VIVENDI UNIVERSAL: Banks Reluctant to Finance Cegetel Acquisition
-----------------------------------------------------------------
Banks are hesitant to support Vivendi Universal's move to keep
control of telecommunications subsidiary Cegetel.
As gathered by Dow Jones Newswires, Vivendi's banks wanted more
than future cash flows as assurance for loan; they reportedly
intend to lend against further asset sales, leading observers to
believe Vivendi may be pushed beyond its EUR12 billion asset
disposal by March 2004.
Vivendi needs at least EUR4 billion by October if it intends to
contest a EUR13.07 billion bid for control of Cegetel from
Vodafone Group PLC.
Lenders apparently wanted more than the assets being currently
sold, including the publishing unit whose spin off is already
closed to completion with bids of between $2.6 billion and $3.0
billion.
Cegetel, France's second largest telecom player, is valued for
its 80% stake in SFR, the country's second biggest wireless
operator. Although cash from a sale of Cegetel would bring down
Vivendi's EUR19 billion-debt, the telecom unit remains one of the
troubled media group's few cash-generating assets, making Vivendi
desperate to keep it, says the report.
Vodafone has offered BT and SBC, two shareholders in Cegetel, a
total of EUR6.3 billion. Vodafone has even offered Vivendi
EUR6.77 billion for its own Cegetel shares.
Chairman Jean-Rene Fourtou has been in talks with the banks since
Vodafone launched its bid for Cegetel last week. Mr. Fourtou is
also seen to seek an extension beyond the mid-November deadline
for Vivendi to exercise its right to buy one or both of the other
stakes in Cegetel in order to buy more time before having to
respond to the U.K. mobile phone operator's offer.
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G E R M A N Y
=============
FAIRCHILD DORNIER: Seeks Okay to Retain Deloitte as Tax Advisors
----------------------------------------------------------------
Fairchild Dornier Corporation seeks authority from the U.S.
Bankruptcy Court for the Eastern District of Virginia to retain
and employ Deloitte & Touche LLP as tax advisors in matters
related to the Debtor's 1993 through 1997 Federal tax liability
subject to ongoing dispute with the Internal Revenue Service
Exams, Appeals and Chief Counsel Offices.
The Debtor asks the Court that Deloitte be allowed to immediately
commence work on this case to continue its analyses, discussions
and negotiations with the Government.
The Debtor believes that the size of their operations and the
complexity of their attendant financial difficulties requires
them to employ a tax advisor to assist in gathering and analyzing
relevant information and to perform other necessary services.
The Debtor expects Deloitte to:
a) Represent the Debtor in matters pertaining to 1993 through
1997 Federal tax liability before the Internal Revenue
Service Exams, Appeals and Chief Counsel Offices;
b) Assist the Debtor in connection with its identification,
development, and implementation of Exams and Appeals
strategies related to the Debtor's Federal Income Tax
liabilities for the respective tax years, 1993 through
1997, and other matters, relating to the IRS Exams and
Appeals process of the Debtor's tax liability;
c) Provide advice pertaining to the presentation of the
Debtor's case to IRS Exams, Appeals, and Chief Counsel;
d) Appear at hearings before Exams, Appeals and Chief Counsel
in efforts to resolve the controversies regarding 1993
through 1997 liabilities;
e) Prepare of support documentation to be presented to Exams,
Appeals and Chief Counsel of the IRS, setting forth the
taxpayers position;
f) Assist the Debtor in its tax appeals process, including the
Debtor's development of plans for protest and related
document preparations, setting forth the taxpayers
position;
g) Consult and provide analysis of settlement possibilities,
including their impact and advisability of accepting such
opportunities, with the Debtor;
h) Analyze of books and records pertaining to the issues in
dispute by the IRS;
i) Prepare and discuss regarding analysis of the financial
impact of potential resolutions of the matters pending with
the IRS;
j) Provide advice and recommendations with respect to other
related matters as the Debtor or its professionals may
request from time to time.
Deloitte will bill the Debtor at its current hourly rates
ranging from:
partners, principals and directors $462 to $660
senior managers $385 to $550
managers $329 to $470
senior consultants $259 to $370
consultants, analysts and staff $203 to $290
paraprofessionals $ 65 to $125
The hourly rates for professionals expected to provide services
during this engagement are:
Peter K. Talkington $450
Dan Hamm $450
Bill Hammack $500
Fairchild Dornier Corporation's involuntary chapter 7 case was
converted to voluntary chapter 11 proceeding under the U.S.
Bankruptcy Code on May 20, 2002. Dylan G. Trache, Esq., at Wiley
Rein & Fielding LLP, and Thomas P. Gorman, Esq., at Tyler, Bartl,
Gorman & Ramsdell, PLC, represent the Debtor in its restructuring
efforts.
HVB GROUP: Woes to Trim Down HVG's Workforce Deeper
---------------------------------------------------
Troubles in the market and gloomy economy outlook may prompt
Germany's second biggest bank, HVB Group, to cut more jobs.
According to a survey conducted by Bloomberg on 15 analysts, the
Munich-based bank could have a third-quarter loss of EUR193
million (USD188 million). The figure contrasts with EUR68
million profit in the same period a year ago.
HVB Chief Executive Officer Albrecht Schmidt has already cut
9,100 jobs or about 12% of the bank's workforce. Konrad Becker,
an analyst at Merck Finck & Co. in Munich, noted that as
``Revenues are declining faster and risk provisions are going up
more than expenses are going down,' the financial institution
would be forced to dismiss more people.
The bank, which is formerly called HypoVereinsbank, is expected
to increase full-year provisions for potential loan defaults to
as much as 3.2 billion euros from 2.5 billion euros, according to
analysts.
Analysts also predict HVB to cut dividend following the third-
quarter loss, and to suffer a downgrade in credit ratings if it
cannot revive earnings. High loan-loss provisions is expected to
compound the problem.
HVG GROUP: Board Seen to Prefer Rampl as Chief Executive
--------------------------------------------------------
The supervisory board of HVB Group AG is likely to choose Dieter
Rampl, head of German business corporates and markets, from among
the shortlist of three candidates to replace Chief Executive
Albrecht Schmidt.
Mr. Rampl stands out as the front-runner among contenders:
Stephan Bub, head of global credit, and Stefan Jentzsch, head of
wealth management and risk. His edge for the post comes from a
long-time career with HVB Group, sources say.
Analysts see Mr. Rampl to focus on private banking customers
rather than shift strategy toward investment banking of risk
businesses, according to Dow Jones.
Yet, Mr. Rampl's history with the bank is not seen unanimously
seen as a boon to the business. According to Guido Hoymann,
analyst with Metzler Bank in Frankfurt, Mr. Ramphl's strategy is
not necessarily a good thing for investors.
In 2001, the private and business clients unit saw an operating
loss of EUR104 million, compared with 2000's operating profit of
EUR650 million.
According to Dow Jones, Mr. Hoymann prefers an outsider who isn't
"emotionally involved in the bank."
Konrad Becker, analyst with Merck Fink in Munich said, the bank
needs someone who will bring profits in the soonest possible
time.
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I R E L A N D
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ELAN CORP: Publishes Circular on Proposed Disposal of Abelcet
-------------------------------------------------------------
Elan Corporation, plc (NYSE: ELN) on Tuesday announced the
publication of a circular to shareholders in connection with the
proposed disposal of its United States, Canadian and any Japanese
rights to Abelcet(TM), Elan's injectible amphotericin B lipid
formulation, and certain related assets to Enzon, Inc., (NASDAQ:
ENZN), details of which were announced on October 2, 2002.
Due to the classification of the transaction under the Listing
Rules of the Irish Stock Exchange and the Listing Rules of the UK
Listing Authority, the completion of this transaction is
conditional on the receipt of approval of a majority of
shareholders voting at a special meeting of the company. The
Circular, which is being posted today to holders of Ordinary
Shares and to holders of American Depositary Shares, provides
further details on the disposal, explains why the Elan Board of
Directors believes that the disposal is in the best interest of
Elan and its shareholders as a whole and seeks the approval of
its shareholders to an ordinary resolution to be proposed for
consideration at this special shareholders meeting.
The Extraordinary General Meeting will be held at 10.30 a.m. on
November 12, 2002 at The Davenport Hotel, Merrion Square, Dublin
2, Ireland.
In compliance with their respective Listing Rules, a copy of the
Circular has been submitted to the Irish Stock Exchange and the
UK Listing Authority, and will be available for inspection at the
following locations:
Company Announcements Office,
Irish Stock Exchange,
28 Anglesea Street,
Dublin 2,
Ireland.
Tel: + 353 1 6174200
Financial Services Authority,
25 The North Colonnade,
Canary Wharf,
London E14 5HS,
United Kingdom.
Tel: + 44 20 7676 1000.
The Circular and Notice of the Extraordinary General Meeting will
also be available on the Company's website at www.elan.com.
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
Phone: 212-407-5740
800-252-3526
or
Investors: (Europe)
Emer Reynolds
Phone: 353-1-709-4000
00800 28352600
or
Media:
Sunny Uberoi
Phone: 212-332-4766
800-252-3526
===========
P O L A N D
===========
NETIA HOLDINGS: Confirms Financial Results Release Date
-------------------------------------------------------
Netia Holdings S.A. (WSE:NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), confirmed today that its 2002 third
quarter results will be released after the close of the Warsaw
Stock Exchange on Tuesday, November 5, 2002.
On the following day, Wednesday, November 6, 2002, President of
the Management Board, Wojciech Madalski, and Chief Financial
Officer, Avi Hochman, will host a conference call at 6:00 p.m.
(CET) / 5:00 p.m. (GMT) / 12:00 p.m. (EST). The conference call
will be available for replay purposes as well. Netia followers
will receive invitations to participate in this conference call.
CONTACT: NETIA HOLDINGS
IR
Anna Kuchnio
Phone: +48-22-330-2061
or
Media
Jolanta Ciesielska
Phone: +48-22-330-2407
or
Taylor Rafferty, London
Alexandra Jones
Phone: +44-(0)20-7936-0400
or
Taylor Rafferty, New York
Jeff Zelkowitz
Phone: 212/889-4350
NETIA HOLDINGS: Resolves Claims Disputes with Dissenting Parties
----------------------------------------------------------------
Netia Holdings S.A., (WSE: NET) Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), announced that on October 21, 2002,
Netia and certain of its Polish subsidiaries entered into an
agreement with parties who had formally objected to the
restructuring of the Polish Netia Companies previously agreed to
by more than 95% of the Company's creditors in the arrangement
proceedings for the Company approved by the District Court for
the City of Warsaw.
According to the Agreement, the parties will mutually release
each other from any claims they may have relating to the
restructuring of the Polish Netia Companies and their Dutch
affiliates and to the Company's investment account in the United
States. In consideration of such releases and the Dissenting
Parties' agreement to withdraw with prejudice their appeals
and/or litigation in Poland and the United States, and to forego
any prospective litigation, claims or objections against the
Netia Group in any jurisdiction, the Dissenting Parties will be
paid upon the conclusion of the restructuring of the Netia Group
a sum of $4.1 million inclusive of the Dissenting Parties' joint
legal and other expenses and have agreed to be treated as all
other similar creditors in the restructuring. The Company has
obtained the requisite regulatory approvals for the Agreement
under Polish law. The Company believes that the Agreement will
facilitate the consummation of the restructuring to the benefit
of all the Netia Group's customers and stakeholders.
Netia Holdings SA's 13.50% bonds due 2009 (NETH09NLN2) are
trading at 17 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09NLN2
for real-time bond pricing.
=====================
S W I T Z E R L A N D
=====================
ABB: Woes Affect European Shares - Thomson Financial
----------------------------------------------------
European bourses have sunk under the weight of weaker U.S.
futures although many sectors remain in the black. Poor corporate
news has kept several heavyweight industries lower, with the
construction and engineering sectors undermined by a profit
warning from ABB and oil stocks lagging as tensions in the Middle
East have eased. Chip stocks have dragged down the technology
sector after U.S. peer Texas Instruments and Asian supplier TSMC
posted disappointing results. The chemicals sector has struggled
against a poor outlook from Clariant and news that Lonza will
have to battle to keep a 20% stake out of unfriendly hands. Many
other areas have clung above parity, however, with the prospect
of a radical overhaul of the tough European competition rules
causing some happiness.
The FTSE Eurotop 300 Index is down by 5.97 points or 0.66%.
London's FTSE-100 Index has dropped 6.1 points or 0.15%, while
Paris's CAC-40 Index has dropped by 22.05 points or 0.70%.
Milan's MIB-30 Index is down 306 points or 1.30%. Frankfurt's DAX
Index was lately trading down by 64.19 points or 1.96%.
* Shares in Swiss engineering company ABB have plummeted this
morning after it cut its earnings targets for the full-year,
blaming market weakness and slower cost-cutting benefits than
expected. ABB also said its U.S. business, Combustion
Engineering, might have to file for bankruptcy protection as the
predicted costs of asbestos-related liabilities exceed the value
of the firm's assets. Shares in peers such as Alstom and Invensys
have dropped, as have stocks in the construction sector that have
exposure to asbestos claims in the U.S., such as France's Saint-
Gobain.
* A European Union court has overruled a European Commission
ruling that French electrical components maker Schneider could
not acquire rival Legrand, which has sparked calls for radical
reforms of the European competition rules. Schneider had been
asked to exit the deal by selling Legrand to investment houses at
a 2.7 billion euro loss but the decision will allow the original
merger to proceed. The next case to be put before the court comes
on Friday, when it will decide whether the EC was right to ban
the merger between packaging firms Tetra Laval and Sidal.
* Meanwhile, Schneider reported that comparable sales dropped
2.4% to 2.27 billion euros in the third-quarter. The firm added
that there was no sign of an upturn during the quarter but it
maintained the forecast for a limited decline in full-year sales.
* Nordic bank Nordea has reported that its third-quarter pre-tax
results soared to 399 million euros, above expectations, from 228
million last year. Nordea said that this was despite a charge of
120 million euros in the quarter owing to a pension fund deficit.
* British life assurer Friends Provident has posted a 7% jump in
third- quarter sales to 91.9 million pounds, well above
forecasts, as the firm has exploited the Internet to make sales
at a lower cost. Friends Provident said that it was confident
about where it stood despite continuing tough market conditions.
* Swedish household goods maker Electrolux has reported that
third- quarter pre-tax profits more than doubled to 1.7 billion
Swedish crowns, which still came in below average forecasts. The
company said that operating profit should rise for the full-year
thanks to restructuring and cost-cutting despite its prediction
that demand for the rest of the year would be either flat or
slightly down in Europe and North America.
* Troubled British telecoms equipment maker Marconi has posted a
6% drop in second-quarter core sales to 482 million pounds
compared to the previous quarter, as market conditions continue
to worsen. The firm reassured that its core loss had narrowed by
20%, however, owing to cost-cutting and the axing of 2,000 jobs
in the quarter.
* British supermarket chain Safeway has posted a 1.9% increase in
sales in the first-half of its financial year, well under the
growth posted by its rivals Tesco and J Sainsbury. The firm said
that it expected the level of sales growth to continue into the
third-quarter.
* French retailer Pinault-Printemps-Redoute confirmed speculation
that it was in talks to sell its consumer credit arm Finaref. The
French group also reported a 1.6% drop in third-quarter sales to
6.42 billion euros, taking nine-month sales to 19.735 billion
euros, from 20.033 billion last year.
* Swiss specialty chemicals maker Clariant has opened lower this
morning after reporting that third-quarter sales dropped 4% to
7.12 Swiss francs, mainly attributable to unfavourable currency
movements. The chemicals firm warned that weak economic
conditions would continue into a flat fourth-quarter, but stuck
to its promise that full-year net income would improve from 2001.
* Swiss specialty chemicals company Lonza Group is set to begin
an international investor roadshow next week to protect a 19.8%
stake in the company from being acquired by an unsuitable party,
according to press reports. The stake, which is worth around 900
million Swiss francs, has been put up for sale by Swiss financier
Martin Ebner.
ABB: Moody's Downgrades Senior Debt Ratings to Baa3
---------------------------------------------------
Moody's Investors Service downgraded the senior debt ratings of
ABB Ltd. and its guaranteed financial subsidiaries to Baa3 from
Baa2 and placed all long- and short-term ratings on review for
possible further downgrade.
Ratings placed on review are:
ABB Ltd. - Baa3 Issuer Rating,
ABB Holdings, Inc. - Baa3 Backed Issuer Rating,
ABB International Finance Limited - Baa3 Backed Senior Unsecured
Rating,
ABB Asea Brown Boveri Ltd. - Baa3 Issuer Rating and Senior
Unsecured Rating,
ABB Finance Inc. - Baa3Backed Senior Unsecured Rating,
ABB Capital B.V. - Baa3 Backed Senior Unsecured Rating,
ABB Financial Services Australia Ltd. - Baa3 Backed Senior
Unsecured Rating
Short-term ratings placed on review are:
ABB Ltd. - Prime-3 Short-term Issuer Rating,
ABB Treasury Center (USA) Inc. - Prime-3 Backed Commercial Paper
Rating,
ABB Capital B.V. - Prime-3 Backed Commercial Paper Rating
ABB Financial Services Australia Ltd. - Prime-3 Backed Short-term
Debt Rating
According to the rating agency, the action follows "ABB's recent
business update emphasizing the protracted market weakness in
ABB's core industries compounded by lower than expected cost
reduction benefits, as well as continued refinancing risk and
execution risk relating to the possible reorganisation of
asbestos litigation target Combustion Engineering."
The rating downgrade predicts a continued difficult market
environment for ABB, which Moody's warns could not be fully
compensated by the management's accelerated downsizing program.
Moody's review will focus on the group's ability to stabilize
operating cash flows, raise additional capital, and resolve the
asbestos liabilities of its American subsidiary, Combustion
Engineering.
The rating agency warns that ABB's financial flexibility remains
constrained by refinancing needs over the next 12 months within
which USD3.7 billion of debt matures.
ABB Ltd., headquartered in Zurich, Switzerland, is a global
engineering group with leading positions in power and automation
technology products serving the manufacturing, process and
consumer industries, utilities, and the oil and gas market. In
the first half of fiscal year 2002, the group generated total
revenues of US$10.9 billion.
ABB: Likely to Default on Failure to Refinance Maturing Debt
------------------------------------------------------------
Engineering group, ABB, is believed by many analysts to be in
danger of default if it fails to refinance USD3.7 billion of debt
due in the next 12 months.
After profit warnings cut the company's share price by nearly
two-thirds, it is believed that Europe's second largest
engineering group is in the verge of collapse, says the Financial
Times. ABB's assertion that its $5.2bn debt mountain was under
control did nothing to reassure investors on Tuesday.
The group is suffering mounting asbestos losses in the US and a
failure to avoid additional compensation claims through an appeal
to the US Supreme Court. ABB has plans of limiting future
asbestos liabilities by seeking bankruptcy protection for its
Connecticut-based Combustion Engineering subsidiary, but lawyers
are not confident the move would be successful.
As for the effect of the subsidiary's bankruptcy filing to ABB,
Pierre Tissot, a veteran ABB watcher at Geneva's Lombard Odier
Darier Hentsch, believes it could make operations in the US
difficult for the firm, although it would not really pull the
whole group down. ABB employs 14,000 in the US out of a total
workforce of 150,000.
The company's chief executive and chairman, Jurgen Dormann,
meanwhile, assured that the group would survive despite the
breakdown in internal reporting procedures that encouraged
managers to underestimate problems.
ABB LTD.: S&P Lowers Credit Ratings to 'BBB+' from 'A-'
-------------------------------------------------------
Standard & Poor's Ratings Services lowered the long-term
corporated credit ratings on engineering services group ABB Ltd
to triple-'B'-plus from single-'A'-minus.
The action follows the company's profit warning as a result of
lingering market weakness and slower than expected benefits from
its cost reduction program.
According to Standard & Poor's credit analyst Maria Bissinger,
"the downgrade primarily reflects the group's deteriorating
operating performance and continued challenge to improve cash
flows and
operating margins under still-weak conditions in its core
automation and power technology markets".
The analyst warns that the company may not be able to reduce net
debt at year-end according to Standard & Poor's expectations.
She does acknowledge, though, that the group will still be able
to reduce net debt to below its own USD2.6 billion target.
All ratings on the group were placed on CreditWatch with negative
implications, including the long-term corporate credit ratings,
the 'A-2' short-term corporate credit ratings, and the single-'A'
long-term insurer financial strength and counterparty credit
ratings on Sirius International Insurance Corp., the group's
insurance entity.
The CreditWatch status was based on the group's announcement that
it would consider various alternatives to solve its asbestos
liability and on the lack of significant visibility in the
group's future operating performance, says Mrs. Bissinger.
The rating agency particularly singled out the implications to
ABB group of the possible Chapter 11 filing of ABB's US
operation, CE, on its continuing review.
===========================
U N I T E D K I N G D O M
===========================
ABBEY NATIONAL: Appoints New Group Chief Executive
--------------------------------------------------
Abbey National plc announces the appointment of Luqman Arnold as
Group Chief Executive. He will take up his new role and a
position on the Board on 21 October 2002.
Luqman Arnold, 52, has thirty years' banking experience, most
recently at UBS AG, where he was employed from 1996 - 2001,
latterly as President. In this role, he was responsible for
running the bank, as Chairman of the Group Executive Board. Prior
to that, he was Group Chief Financial Officer of UBS.
Lord Burns, Chairman of Abbey National, said "Luqman is a highly
talented and experienced banker, with a proven track record in
managing complex businesses facing challenging times. He clearly
has outstanding leadership and strategic skills, and is the ideal
person to steer Abbey National back to a strong growth path. I am
absolutely delighted he is joining us."
Luqman Arnold said "Abbey National has a brand and franchise that
provide an outstanding platform on which to develop a more
competitive and profitable business, with the customer at the
heart of our organisation. I am greatly looking forward to
leading the Group's strategy and ensuring we place an even
sharper focus on driving shareholder value."
There are no details to be disclosed under paragraph 16.4 of the
Listing Rules in relation to the appointment of Luqman Arnold.
Biography of Luqman Arnold
Luqman Arnold joins Abbey National in October 2002 as Chief
Executive.
Prior to joining Abbey National, Luqman Arnold was employed by
UBS AG, where he was President (2001, Zurich), Chief Financial
Officer and Head of Corporate Centre (1999-2001, Zurich), Chief
Operating Officer (1998-1999, London) and CEO Asia Pacific (1996-
1998, Singapore and Tokyo).
In 1993 he joined Banque Paribas in London as Global Head of
Investment Banking, Paribas Capital Markets, before moving to
Paris as Group Head of Business Development, a position on the
Group Executive Committee, from 1995-1996,
For a year in 1992-1993 Luqman Arnold took a sabbatical and
established a team to research the drivers and outlook for cross
border institutional investment flows and implications for the
financial services industry.
He worked for Credit Suisse First Boston (CSFB) from 1982 - 1992,
in London and Tokyo, starting as Head of Investment Banking
origination for Asia Pacific and Head of Private Placements,
moving on to be Head of Investment Banking, Asia Pacific, Head of
Central and Eastern Europe, and ultimately Head of Investment
Banking, new business, for CSFB.
In his early career, Luqman Arnold worked in London, Hong Kong
and Singapore for Manufacturers Hanover Corporation (1976-1982)
and in Singapore and London for First National Bank in Dallas
(1972-1976).
Born in April 1950 in Calcutta, Mr Arnold was educated at Oundle
School and he gained an honours degree in Economics from the
University of London. He speaks French and German, is married
with a young son, and lives in London.
CONTACT: Thomas Coops
Director of Corporate Affairs
Phone: 020 7756 5536
Christina Mills
Head of Media Relations
Phone: 020 7756 4212
Jon Burgess
Head of Investor Relations
Phone: 020 7756 4182
Matt Young
Media Relations Manager
Phone: 020 7756 4232
BALTIMORE TECHNOLOGIES: Launches Trusted Business Suite
-------------------------------------------------------
Baltimore Technologies (London: BLM), a leading e-security
company, today launched a new suite of high-trust solutions for
the corporate market.
Trusted Business Suite is a set of business modules offering
enhanced security in the domain of networking, messaging and
documents. Each module is built on top of a core platform the
Baltimore Applied Solutions Engine (BASE) that packages
Baltimore's core authentication and authorisation technologies
and leverages Baltimore's strengths in security, scalability and
open standards.
Trusted Business Suite leverages the power and flexibility of
digital
signatures and digital certificates to provide security for
Virtual Private Networks (VPN), Web-based information exchange,
secure messaging and the most commonly used applications within
the workplace.
'Today's launch of Trusted Business Suite is not only an
important milestone for Baltimore, but will change the way
corporates exploit the strengths of high-end PKI security
technology,' commented Bijan Kherzi, Chief Executive of Baltimore
Technologies plc. 'Through pre-configuring, packaging and
seamlessly embedding our core security infrastructure into a
suite of networking, data and messaging applications, we have not
only made security transparent but we have put business
competitiveness first. In addition to our traditional customer
base in Finance and Government for high-end security
infrastructure projects, Trusted Business Suite will allow us to
address an important and growing corporate market segment.'
'Baltimore is taking the fear out of PKI security with Trusted
Business Suite,' added Thomas Raschke, Program Manager European
Security Products & Strategies, IDC. 'This is the right step
forward as Baltimore tightly integrates security into existing
applications enabling immediate use and ensuring a fast return on
investment (ROI) for organisations. Most importantly, Trusted
Business Suite puts the emphasis on the business benefits of
public key based security rather
than the technology that enables it.'
'With Trusted Business Suite, Baltimore is taking a new direction
in their way to approach the market,' added Jose Lopez, Industry
Analyst and Programme Leader European IT Security, Frost &
Sullivan. 'This approach will allow Baltimore to address the
security needs of a larger number of businesses by offering
tailored solutions for their security-critical applications as
well as reducing the complexities generally associated with the
use and deployment of digital certificates. The solutions suite
addresses the security concerns of businesses today who need to
have assurances of the source, privacy and accuracy of their
data.'
Trusted Business Suite is designed for the high-end corporate
market. In particular, where organisations need to manage risk
and ensure the source, integrity and privacy of transactions and
information over public networks.
Each of the modules leverages the same security platform and
thereby reduces the total cost of ownership. Trusted Business
Suite is preconfigured to be deployed 'out of the box' enabling
organisations to realise an immediate return on investment.
About Trusted Business Suite:
Trusted Business Suite is a suite of high trust business
solutions offering enhanced security in the domain of networking,
messaging and documents.
Trusted Networks:
Trusted VPN creates a more scalable, manageable and more secure
Virtual Private Network (VPN) using digital certificates. It
delivers a secure VPN solution built on industry leading
technology combined with a complete user enrolment and management
facility.
Trusted Web provides access and authorisation management coupled
with strong authentication in a web environment. The solution
gives businesses the power to guarantee complete confidentiality
and integrity of online data, positively identify users and
control authorisation over user and resource entitlements.
Trusted Messaging:
Trusted E-mail enables organisations to quickly and easily assign
digital certificates to every e-mail user, giving them the power
to digitally sign and encrypt e-mails. It enhances the native
security in existing Microsoft Outlook and Outlook Express e-mail
applications.
Trusted Web-mail seamlessly extends messaging to extranets, web
services and communication portals, giving users simple and
secure access to corporate e-mail anytime, anywhere. It allows
companies to extend security outside their domain without
impacting the people they transact with, removing any security
concerns around critical corporate communications.
Trusted Workplace:
Trusted Documents provides secure digital signing and encryption
for electronic documents. It enables users to sign and encrypt
any file created in any desktop application.
Trusted Forms enables web based communications and transactions
to be signed by applying digital signatures to form-based
processes and authenticated using digital certificates.
About Baltimore Technologies
Baltimore Technologies' products, services and solutions solve
the fundamental security and trust needs of e-business in
distributed environments. Baltimore's e-security technology gives
companies the necessary tools to verify the identity of whom they
are doing business with and securely manages which resources and
information users can access on open networks. Many of the
world's leading Finance and Government organizations use
Baltimore's e-security technology to conduct business over the
Internet and wireless networks.
Baltimore also offers worldwide support for its authorization
management and public key-based authentication systems.
Baltimore's products and services are sold directly and through
its worldwide partner network, Baltimore TrustedWorld. Baltimore
Technologies is a public company, trading on London (BLM). For
more information on Baltimore Technologies please visit
http://www.baltimore.com
Note: In September, Baltimore Technologies announced its interim
results for the six months ended June 30, 2002 with LBITDAE (loss
before interest tax depreciation amortization and exceptional
items) of GBP9.8 million down from the GBP39.7 million in the
first half of 2001. Its cash balance on June 30, 2002 was
GBP23.1 million, down from GBP53.9 million in the first half of
last year.
CONTACT: Edward Bridges
Financial Dynamics
Phone: +44 207 831 3113
BALTIMORE TECHNOGIES: Delivers Security for Orange's Smartphone
---------------------------------------------------------------
Baltimore Technologies (London: BLM.L), a leading e-security
company, today announced that it is the provider to Orange SA of
security services for the Microsoft Windows(R) Powered Orange
Smartphone SPV(TM) - the world's first "Smartphone" which was
launched today in London.
Baltimore was chosen by Orange SA to be the exclusive provider of
code signing certificate services to its Independent Software
Vendors (ISVs) for the Microsoft Windows Powered Smartphone.
Baltimore provides Orange with the Certificate Authority that
enables a highly cost efficient and secure means to issue code-
signing certificates to Orange's ISVs developing for the
Smartphone. This ensures that all application code embedded in
the Smartphone is securely protected and authenticated on each
session initiation. The integration confirms Baltimore's position
as a leading security provider in the wireless sector and
positions the company to offer one of the strongest security
services available to other mobile network operators worldwide.
Microsoft Windows Powered Smartphone provides a rich data
platform for mobile developers and operators to build compelling
mobile data applications and services. Mobile phones built on the
Smartphone platform combine fully integrated voice and data
capabilities with a rich set of applications including personal
information management (PIM), gaming and multimedia features in a
small, lightweight mobile phone form factor. Orange is the first
operator worldwide to announce retail availability of a Windows
Powered Smartphone, the Orange Smartphone SPV(TM).
"Baltimore's expertise in security services combined with our
knowledge of the Smartphone led Orange to select us for this
important project", commented Dean Coclin, Strategic Alliances
Director, Baltimore Technologies. "Baltimore, as a Microsoft Gold
Certified Partner, has been working closely with Microsoft on
Smartphone security for almost a year and fully supports
Microsoft's Mobile2Market developer programme, enabling secure
ISV applications for the Microsoft Pocket PC and Windows Powered
Smartphone software platforms".
"Application security is fundamental to the success of the
Windows Powered Smartphone and in fact any rich programmable
mobile device, and will become increasingly relevant as mobile
data takes hold," said Howard Gefen, Director of Mobile Operator
Solutions and Business Development, Microsoft Corp. "We are
pleased to be working closely with leading Certificate
Authorities such as Baltimore through our Mobile2Market programme
to enable this key capability. Having integrated it into our
Smartphone, we're setting the stage for a more secure mechanism
to distribute network-ready applications."
About Microsoft Mobile2Market
Microsoft Mobile2Market--the Marketplace for Mobile Applications-
-enables a process for the certification and market delivery of
network-ready wireless applications for the Windows(R) Powered
Pocket PC and Smartphone software platforms. Mobile2Market
certified applications assure mobile operators that the
applications are network-ready, and of high quality and
reliability.
For more information on Mobile2Market, visit:
www.microsoft.com/mobile/developer/developerprograms/mobile2marke
t/
About Baltimore Technologies
Baltimore Technologies' products, services and solutions solve
the fundamental security and trust needs of e-business in
distributed environments. Baltimore's e-security technology gives
companies the necessary tools to verify the identity of whom they
are doing business with and securely manages which resources and
information users can access on open networks. Many of the
world's leading Finance and Government organizations use
Baltimore's e-security technology to conduct business over the
Internet and wireless networks. Baltimore also offers worldwide
support for its authorization management and public key-based
authentication systems.
Baltimore's products and services are sold directly and through
its worldwide partner network, Baltimore TrustedWorld. Baltimore
Technologies is a public company, trading on London (BLM).
For more information on Baltimore Technologies please visit
http://www.baltimore.com
Microsoft and Windows are either registered trademarks or
trademarks of Microsoft Corporation in the United States and/or
other countries. The names of actual companies and products
mentioned herein may be the trademarks of their respective
owners.
CONTACT: Baltimore Technologies
Media Contact:
Irene Dehaene
Phone: +353 1 881 6407
Mobile: +353 87 292 3333
E-mail: irene.dehaene@baltimore.com
BRITANNIC GROUP: Announces Appointment Of Group Finance Director
----------------------------------------------------------------
The Board of Britannic Group plc is pleased to announce the
appointment of Paul Thompson as Group Finance Director, with
effect from 1 December 2002.
Age 40, Paul qualified as a chartered accountant with Coopers &
ybrand, after which he pursued his career in investment banking,
initially with Kleinwort Benson and BZW and most recently at
Merrill Lynch. Paul has been with Merrill Lynch since 1997 as a
Managing Director in its Financial Institutions Group.
Commenting, Harold Cottam, Chairman of Britannic Group, said;
"We are delighted that Paul is joining us. His extensive
experience and knowledge of our sector, combined with his
financial skills, fit him ideally for the role of Group Finance
Director. Together with the recent appointment of Bryan Portman
as our Group Managing Director, Paul will bring our central
management team to full strength."
CONTACT: Bryan Portman, Group Managing Director, Britannic Group
plc
Phone: 01564 20 4433
Anthony Carlisle, Citigate Dewe Rogerson
Phone: (07973 611 888)
020 7638 9571
COLT TELECOM: Highberry Petitions Appointment of Administrator
--------------------------------------------------------------
Further to its announcement of 9 October, the Board of COLT
Telecom Group plc said that, as expected, Highberry Limited (a
Hedge Fund) has today presented a petition to the High Court for
the appointment of an administrator to COLT. As stated on 9
October, the Board's view is that there is no basis whatever for
Highberry taking this action. COLT is a going concern with a
robust business and a sound business plan:
- COLT has approximately o1 billion of cash, with no bank debt
- COLT's EBITDA is growing and its capital expenditure
requirement is reducing, as the core network construction is now
complete
- COLT's operational cash consumption is reducing significantly
- COLT expects to be free cashflow positive during 2005
- The Board is confident that COLT will be able to repay or
refinance its bonds when they fall due
- COLT's most recent published balance sheet as at 30 June 2002
adjusted to reflect the impairment charge announced on 27
September shows total assets of o2,760 million and total
liabilities of o1,697 million
- The Board of COLT welcomes the opportunity to demonstrate in
court why Highberry's action is self-serving and without merit.
Highberry, which is part of The Elliott Group, a New York based
Hedge Fund, has informed COLT that it holds senior notes and
senior convertible notes issued by COLT. Free cashflow is
cashflow after capital expenditure and financing costs.
CONTACT: John Doherty
Director Investor Relations
Tel: +44 20 7390 3681
Tom Buchanan / Jonathan Glass
Brunswick
Tel: +44 20 7404 5959
CORDIANT COMMUNICATIONS: Announces Notifiable Holdings
------------------------------------------------------
Cordiant Communications Group Plc (NYSE:CDA), was notified on 18
October 2002 that The Capital Group Companies, Inc. has a holding
of 12,363,000 Ordinary shares, representing 3.01% of the issued
share capital of the company.
CONTACT: CORDIANT
Nathan Runnicles
Phone: 44 207 262 4343
College Hill
Alex Sandberg
Dick Millard
Phone: 44 207 457 2020
CORUS GROUP: Announces Directors Shareholding
---------------------------------------------
The following Directors of the Company purchased Corus Group plc
shares at 0.45 pence per share on 21 October 2002 under the Corus
Group Employee Share Ownership Plan.
No of Shares Purchased
A P Pedder 277
D M Lloyd 277
Following this notification, the directors shareholdings are:
No of Shares Held
A P Pedder 100,704
D M Lloyd 3,262
EIDOS PLC: Provides Update on Trading and Release Schedule
----------------------------------------------------------
Eidos plc (Nasdaq: EIDSY), one of Europe's leading publishers and
developers of entertainment software, provides an update on its
current trading and release schedule for the financial year to 30
June 2003.
The critically acclaimed Hitman 2 was released on 5 October on
PS2, Xbox and PC and is enjoying worldwide success having shipped
in excess of 1 million units to date, which is ahead of
management expectations. TimeSplitters 2 was released on 18
October on PS2, Xbox and GameCube, on the back of very positive
reviews including a rarely awarded 10/10 rating by the Official
Playstation 2 Magazine. Eidos currently holds the No.1 and No.2
positions in the UK charts with TimeSplitters 2 and Hitman 2
respectively. Both titles entered the charts at the No.1 position
in their first week of launch. The success of both these pillar
titles demonstrates the continued strengthening of the Eidos
portfolio.
Management has decided to reschedule the release of two key
franchise titles - Lara Croft Tomb Raider: The Angel of Darkness
and Championship Manager 4. Both of these games are in the final
stages of development and testing and are now scheduled for
release in February 2003. The Company believes that both games
will benefit from further refinement in order to maximise the
game play experience and their potential in a very competitive
market place. Eidos remains confident that a later launch date
will not adversely affect budgeted sales. The balance of the
Company's release schedule remains unchanged.
The Board believes that rescheduling the launch of Tomb Raider:
The Angel of Darkness and Championship Manager 4 will not impact
the Group's full-year financial performance and thus continues to
be confident that current market expectations will be fulfilled.
The Group's cash position remains strong.
CONTACT: Eidos
Mike McGarvey
Stuart Cruickshank
Phone: +44 20 8636 3000
or
Brunswick UK
Jonathan Glass
Patrick Handley
Phone: +44 20 7404 5959
or
Brunswick NY
Nina Pawlak
Phone: 212/333-3810
MARCONI PLC: Issues Trading Update for Three Months
---------------------------------------------------
- During a period of further market deterioration, Marconi
continued to trade in line with its sensitized financial
projections
- Core sales o482 million; 6% sequential decline
- Book to bill in Network Equipment steady at 0.9; Overall Core
book to bill reduced to 0.8 mainly due to phasing of long-term
service projects
- Recent major new contract wins include BXR 48000 (US), Access
Hub (South Africa), Fixed Wireless Access and SDH equipment
(Germany)
- Around 20 per cent reduction in Core operating loss before
goodwill amortisation and exceptional items compared to first
quarter
- Cost reduction actions take underlying Core gross margin back
above 20% of sales before impact of additional stock provisions
- Significant progress towards operating cost saving targets; Q2
exit
run-rate of o635 million vs o760 million end Q1
- Headcount reduction of over 2,000 achieved during the second
quarter; major driver of c. o100 million exceptional
restructuring costs during the quarter
- Net Debt reduced by approximately o170 million to o2.8 billion
at 30 September 2002
- Group cash flow since 1 July in line with projected cash
profile to expected completion of Restructuring; on track to
deliver o260 million cash distribution to creditors, subject to
the matters discussed in Note 1, and of which o92 million of
interest and accrued interest already paid to 15 October 2002
- Sequential reduction in Core operating cash outflow largely due
to cash generated from inventory utilisation
- Restructuring on track for expected completion end January 2003
Marconi (MONI) on Tuesday provided a trading update relating to
the three months ended 30 September 2002. The figures in this
trading update are preliminary and subject to audit.
Mike Parton, Chief Executive, said: "We held our quarterly sales
decline in the Core to 6% in what continues to be an extremely
challenging trading environment and aggressively managed our cost
base to reflect these tough conditions. We made significant
progress in the quarter in reducing our pre-exceptional operating
losses and cash outflows and remain on track to deliver our
commitments to creditors in the context of our proposed financial
restructuring."
Trading Update
The Core business comprises the Group's Network Equipment and
Network Services activities. Network Equipment comprises Optical
Networks, Broadband Routing and Switching (BBRS), European
Access, Outside Plant and Power (OPP), North American Access and
Other Network Equipment businesses. As previously disclosed, upon
completion of the Group's financial restructuring, it is intended
that OPP and North American Access will be transferred to and
reported as part of Marconi Capital. Marconi's Mobile assets were
transferred to Capital on 1 April 2002.
Group Sales
om
Q2 03 %var to Q1 03 %var to Q2 02
Core 482 (6) (40)
Capital - Mobile 34 (44) (67)
Capital - Other 1 (96) n/m
Capital - Medical - n/a n/m
Other* (3) n/m n/m
Group 514 (13) (64)
*Other relates to intra-Group sales
Core Sales
by Geography
om Q2 03 %var to Q1 03 %var to Q2 02
EMEA 285 - (36)
US 142 (7) (41)
CALA 10 (60) (83)
APAC 45 (4) (18)
Core 482 (6) (40)
by Product Area
om Q2 03 %var to Q1 03 %var to Q2 02
Optical Networks 108 (19) (48)
Broadband Switching* 35 (8) (43)
European Access 69 17 (38)
Outside Plant & Power*(a)34 (26) (48)
North American Access* 23 (8) (26)
Other Network Equipment 15 7 (61)
Network Equipment 284 (10) (45)
IC&M 89 (8) (39)
VAS 109 12 (20)
Network Services 198 2 (30)
Core 482 (6) (40)
* The primary businesses comprising the Group's US Assets as
defined in the Restructuring Heads of Terms announced on 29
August 2002
(a) OP&P equipment sales only; o24 million of power installation
service sales reported in IC&M in Q2 and o27 million in Q1.
Core Overview
During a period marked by a further deterioration in market
conditions in the telecommunications industry, the Group traded
in line with its sensitised financial projections.
The Group's sensitised financial projections are based on the
Group's Business Plan forecasts prepared in April 2002, to which
a set of sensitivities were applied to reflect the scenario of
more difficult market conditions, and in particular, a delay in
market recovery beyond the end of 2003 as assumed in the Business
Plan. Details of the Business Plan were set out in Marconi's
announcement on 29 August 2002.
Core Orders and Sales
Order intake in the Core was o379 million. Sales remained
relatively resilient at o482 million, a decrease of 6% compared
to the previous quarter (Q1: o510 million).
Book to bill in Network Equipment remained stable at 0.9 whilst
in Network Services, it fell to 0.6, giving an overall Core book
to bill of 0.8 during the period.
The low order intake and book to bill ratio were mainly the
result of the phasing of long-term service contracts. This trend
was particularly marked in EMEA where the Group's ongoing
contracts include long-term maintenance contracts with a number
of U.K. service providers and long-term service projects in
industry sectors such as transportation, government and
utilities. These contracts vary in length but revenues can be
recognised over a period of up to 5 years. No such major new
contracts were booked in the second quarter while approximately
o125 million of service-related sales were traded in EMEA, of
which approximately 50 per cent would typically come from the
existing order back log. This absence of major new orders to
replenish this consumption of the order backlog is a timing
issue. A number of the Group's existing service contracts are due
for renewal later in the financial year.
Core Sales by Geography and Product Area
In Europe, market dynamics in the U.K. continue to show signs of
stabilisation. BT continues its broadband access campaign which
over time should lead to increased traffic flows onto the core
transmission network and, in turn, to renewed spending in optical
equipment. In addition, a number of restructured second operators
are beginning to re-emerge. The Italian market has remained
relatively stable, mainly as a result of the absence of 3G debt
issues amongst Italian telecom operators. Elsewhere in Europe
however, major operators are continuing to cut capital
expenditure budgets as they focus on debt reduction. Overall,
EMEA sales remained flat during the second quarter at o285
million. Lower sales of Optical Networks equipment were offset by
an increase in sales of Access and Interactive Systems equipment
during the period. In European Access, growth was driven by
increased sales of high density DSLAM sales in Italy and voice
systems in the U.K. Market conditions remain tough in the German
fixed wireless access sector.
The market in the Americas has been worst affected by the further
decline, as was the case in the previous quarter. In the US,
incumbent RBOC and ILEC operators continue to maintain tight
controls over capital expenditure whilst political and macro-
economic issues in CALA have had a significant negative impact on
the telecoms market, particularly in Brazil and Mexico.
Core sales in CALA dropped 60 per cent to o10 million (Q1: o25
million) mainly as a result of lower sales in both Optical
Networks and Outside Plant and Power. In the U.S., Core sales
amounted to o142 million, a reduction of 7 per cent compared to
the previous quarter (Q1: o153 million). A higher percentage
decline in sales of Outside Plant & Power and Access equipment
was partially offset by growth in BBRS sales to U.S. customers,
mainly as a result of a strong quarter in deliveries to the U.S.
Federal Government at the end of its financial year. Overall on a
global basis, BBRS sales declined by 8 per cent as the strong U.S.
sales were more than offset by declines in EMEA and APAC.
Sales in APAC fell 4 per cent to o45 million during the period
(Q1: o47 million) Growth in Optical Networks was more than offset
by declines in BBRS and Access product sales.
Network Services as a percentage of total Core sales increased to
41 per cent during the second quarter. Historically this segment
has represented between 30 and 35 per cent of the Core business.
Overall, Network Services recorded modest growth to o198 million
(Q1: o194 million). Installation, commissioning and maintenance
(IC&M) activities, which represented around 45 per cent of
Network Services sales in the period, fell by approximately 8 per
cent. Whilst long-term maintenance contracts continue to trade
through to sales, this was not sufficient to offset continuing
declines in the level of demand for installation and
commissioning activities associated with Network Equipment sales.
The lower sales in IC&M were more than offset by a 12 per cent
increase in Value Added Services, particularly in the
transportation and government sectors.
During the period, Marconi was awarded a number of major contract
wins including the first sale of the Group's new multi-service
switch-router platform, the BXR 48000 to the U.S. Federal
Government; a new two-year frame contract with Telkom South
Africa for the supply and installation of the Group's Access Hub
high density DSLAM and Access network management platform; a
contract extension from Alstom to deliver a voice radio system as
part of the UK West Coast Main Line signalling and communications
upgrade; and a contract with Telefonica Moviles Mexico to supply
SDH and power systems for their network expansion. In addition,
in October 2002, Marconi was awarded a major new frame contract
from O2 Germany for the supply of fixed wireless access and SDH
equipment.
BT remained Marconi's largest customer, accounting for almost 19
per cent of Core sales during the period. The top ten Core
customers - BT, Bell South, China Railcom, Metro City Carriers
(Germany), Qwest, Telecom Italia, U.K. Government, U.S. Government,
Verizon and Vodafone Group - represented 48 per cent of Core
sales.
Operating Performance
Cost reduction actions in the supply chain and a more favourable
business mix led to an improved gross margin in the Core during
the second quarter of over 20 per cent of sales before the impact
of additional stock provisions. Improved utilisation of resources
in installation and commissioning was also a contributing factor
in the quarter.
In line with the Group's accounting policy and in the light of
the continued decline in market conditions, additional provisions
for excess inventory were raised during the second quarter mainly
in relation to optical networking and access equipment. These
provisions amounted to approximately o25 million and were charged
to cost of sales, thereby reducing the gross margin achieved in
the quarter.
Further supply chain rationalisation and outsourcing initiatives,
along with further planned product cost reductions are expected
to be the main drivers of future gross margin improvement in line
with the Group's business plan.
At the end of the second quarter, the annualised operating cost
run-rate in the Core had reduced to around o635 million from o760
million at the end of the first quarter and o890 million at the
end of the last financial year. This is in line with the Group's
target to achieve an annualised operating cost run-rate of no
more than o520 million early in the next financial year.
Headcount reductions are the major driver of these savings. Since
1 July 2002, over 2,000 employees from the Core business have
left the Group, reducing the Core headcount to just over 19,000
by 30 September 2002. Plans have already been announced and
actions are now in place to further reduce the Core headcount to
around 15,000 early in the next financial year. Additional
savings were achieved in the quarter through the scaling back of
marketing initiatives and reductions in engineering materials
spend and capital expenditure in the area of research and
development.
As a result of these actions on direct and indirect costs,
significant progress was made in reducing the Core operating loss
before goodwill amortisation and exceptional items by around 20
per cent over the previous quarter, despite the impact of the
additional stock provisions. Group operating loss before goodwill
amortisation and exceptional items reduced by around 18 per cent
during the second quarter.
Core R&D spend in the quarter amounted to just over o70 million.
Over 80 per cent of this spend was focused on Optical Networks,
BBRS and European Access. In Optical Networks, on-going R&D
projects include developments in DWDM (Marconi's PMM metro WDM
range), SDH (next generation SMA 16/64 and MSH256 and next
generation digital cross connect) as well as the continued
development of Marconi's network management software. In
September, the Group announced the availability of its next
generation Series 4 SMA 1 - 4 products which have been designed
to be more cost effective and offer service providers greater
functionality than previous generations of the product. In BBRS,
the BXR 48000 remains the key area of development spend whilst in
Access, investment is focused on Fixed Wireless, Softswitch and
Access Hub platforms.
Exceptional Items
The Group's audit of the financial statements for the six months
to 30 September 2002 is progressing and management is still
considering the need for further write-downs primarily related to
both tangible and intangible fixed assets (including goodwill).
Exceptional restructuring costs of approximately o100 million
were incurred during the period predominantly in relation to the
Group's restructuring and reorganisation and the balance mainly
to costs associated with the ongoing financial restructuring
process.
Cash Flow
Cash Movement Projected to Actual to
Sept.30, 2002 since June 30, 2002 in om expected
completion of
Restructuring
Strategic Communications disposal,
net of bilateral indebtedness 290 295
Repayment of other
bilateral indebtedness (54) (2)
Interest payments
1 August to 15 October 2002 (95) (78)
Projected operating expenditures,
exceptional restructuring costs,
working capital movements
and other disposals (408) (197)
Other net interest paid (12)
Total cash movement (267) 6
During the second quarter, the Group generated a total cash
inflow of o6 million as set forth in the table above.
In August 2002, Marconi completed the sale of its Strategic
Communications business for cash proceeds of over o290 million,
net of Italian bilateral indebtedness. An additional o2 million
of other bilateral indebtedness was also repaid during the
period.
A net cash outflow of o197 million was incurred during the second
quarter in relation to operating expenditures, exceptional
restructuring costs, working capital movements and disposals
other than the sale of Strategic Communications, in line with the
Group's projected cash outflow of o408 million in this respect
from 1 July 2002 to the expected completion of Restructuring.
The operating cash outflow was lower than the previous quarter,
largely as a result of cash generated from the reduction of
inventory. Net inventory turns in the Core increased from 4.3 in
June to 5.1 in September mainly as a result of continued
improvements to the Group's sales and operations planning process
designed to better align inventory in-feed with forecast sales
demand. Core debtor days increased from 97 in June to 104 in
September. This was due to geographic mix with a higher
proportion of Southern European sales where payment terms are
typically longer than average combined with a decline in U.S. sales
where payment terms are shorter. Core creditor days increased
from 48 in June to 53 in September as the reduced inventory in-
feed resulted in a higher proportion of suppliers with longer
settlement profiles.
Depreciation in the Core is currently running at o30 to 40
million per quarter and capital expenditure at less than half
that rate.
Exceptional restructuring cash costs amounted to approximately
o100 million during the period. This comprised mainly the cash
costs relating to the Group's operational restructuring and
reorganisation including cash costs associated with the Group's
manufacturing outsourcing programme, payments made under onerous
contracts and as a result of supplier liability claims, and most
of the balance to payments to advisors in relation to the Group's
financial restructuring.
Cash inflows from other disposals including proceeds from the
sale of Applied Technologies were partially offset by the payment
of transaction-related costs and fees, a payment to Court
relating to litigation regarding the Group's joint-venture,
Ultramast as well as prior year U.S. Federal tax charges paid in
the quarter.
Net interest paid in the period amounted to approximately o90
million. Of the interest paid, approximately o78 million of this
was paid by Marconi Corporation plc in August and September
including the payment of Marconi Corporation's U.S. dollar bond
coupon and, as planned as part of the Restructuring process, the
payment of accrued interest on Marconi Corporation's Eurobonds as
at 15 September 2002, together with interest due to the Group's
syndicate banks.
After the end of the quarter, on 15 October 2002, as planned as
part of the Restructuring process, Marconi paid all interest on
Marconi Corporation's financial indebtedness (including bond and
syndicate bank debt) accrued as at that date. This amounted to
o14 million. The o78 million paid in August and September and the
o14 million paid in October constitute o92 million of the
projected o95 million interest payments which form part of the
planned o260 million cash distribution to creditors within the
framework of the Restructuring.
The Group confirms that its cash flows during the period 1 July
to 30 September 2002 were in line with the previously disclosed
projected cash movement for the period 1 July 2002 to expected
completion of Restructuring. The Group also confirms that it
remains on track to deliver the planned cash distribution of o260
million to creditors upon completion of Restructuring, subject to
the matters discussed in Note
1.
Net Debt
Net debt stood at o2,846 million at 30 September 2002 compared to
o3,017 million at 30 June 2002. The decrease of o171 million in
net debt relates primarily to debt reduction arising from the
disposal of Strategic Communications and foreign exchange
translation movements.
Net debt comprised o1,071 million of cash and gross financial
debt of o3,917 million made up of o1,695 million of Euro and U.S.
dollar bond debt, o2,117 million of syndicate bank debt and o105
million of bilateral and other bank debt. The reduction in the
sterling equivalent amounts of syndicate bank debt and bonds
outstanding compared to the value at 31 March 2002 relates to
foreign exchange translation. In addition, interest rate swap
arrangements totalling o53 million were converted to new loan
agreements in the period.
As previously announced, in September 2002, Marconi granted
interim security to the Group's syndicate banks, bondholders
(including the bond trustees) and certain ESOP derivative
providers over the balance of the cash held in the lockbox
accounts established in April 2002. At 30 September 2002, the
balance of the secured cash amounted to o738 million.
Financial Restructuring
Marconi continues to work with the Co-ordination Committee of
Syndicate Banks and an informal ad hoc committee of bondholders
to finalise the specific details with respect to the
Restructuring consideration (as outlined in Marconi's
announcement on 29 August 2002) as part of the process of
implementing the Restructuring. The agreed terms and conditions
of the Restructuring will be set out in the formal Scheme
documentation. Marconi believes the restructuring process is on
track for expected completion at the end of January 2003.
Interim Results
Marconi expects to publish its audited interim results for the
first six months ended 30 September 2002 on 26 November 2002.
Q2 Trading Update - Conference Call for Analysts and Investors
A conference call and audio webcast will be held for analysts and
investors today (22 October) at 4 pm, UK time.
Dial-in details (from Europe) +44 (0) 20 8896 3900 or (from US)
+1 617 801 9702 and quote "Marconi Trading Update".
An instant replay will be available for seven days by dialling
+44 (0)1296 618 700, access code 470 427 or +1 617 801 6888,
access code 63745
Materials to accompany the presentation will be available on
Marconi's website www.marconi.com.
Notes
The estimated distribution of o260 million set out in the Group's
announcement on 29 August 2002 assumed that Marconi will have
cash resources available for distribution on completion of the
Restructuring of approximately o165 million; o92 million of the
balance of approximately o95 million comprising due and payable
and accrued interest has been paid to 15 October 2002. The actual
amount of cash ultimately available for distribution as part of
the Restructuring will be dependent, amongst other things, on the
Group's on-going trading performance, proceeds from further non-
core asset disposals, the post-Restructuring working capital
requirements of the business (including obtaining a new working
capital facility), performance bonding facilities, foreign
exchange rate movements and upon the terms of the final agreement
with creditors.
About Marconi plc
Marconi plc is a global telecommunications equipment and
solutions company headquartered in London. The company's core
business is the provision of innovative and reliable optical
networks, broadband routing and switching and broadband access
technologies and services. The company's customer base includes
many of the world's largest telecommunications operators.
The company is listed on the London Stock Exchange under the
symbol MONI. Additional information about Marconi can be found at
www.marconi.com.
CONTACT: David Beck / Joe Kelly, Public Relations
Phone: +44 (0) 207 306 1771
E-mail: joe.kelly@marconi.com
Heather Green, Investor Relations
Phone: +44 (0) 207 306 1735
E-mail: heather.green@marconi.com
NTL INC.: Justifies Pay Increase of Chief Executive
---------------------------------------------------
NTL Inc. backed the threefold pay rise to chief executive Barclay
Knapp--the executive who headed Britain's largest television
company during the firm's bankruptcy filing in May.
According to The Scotsman, a company spokeswoman said, NTL's new
renumeration committee increases Mr. Knapp's pay deal to bring
his compensation parallel with comparable companies.
Mr. Knapp's pay deal includes a significant increase in his basic
pay, a discretionary bonus, share options and a severance package
worth up to GBP1.4 million. The deal is filed with a bankruptcy
court in New York.
NTL went to the court for bankruptcy protection with more than
USD20 billion (GBP13 billion) of debts as a result of a huge
acquisition spree in the 90s.
In September, NTL announced that the United States Bankruptcy
Court for the Southern District of New York confirmed its Second
Amended Joint Reorganization Plan on September 5, 2002. While
the action clears the way for NTL's emergence from Chapter 11
protection, renegotiations for the company's USD500-million debt
facility is seen to delay its drive to exit from creditor
protection.
CONTACT: NTL INC.
8 rue Christophe Colomb
75008 Paris
France
Phone: +33 (0) 1 44 43 3434
E-mail: contact@ntleurope.com
TXU EUROPE: Fitch Transfers Rating Watch to "Evolving"
-----------------------------------------------------
International rating agency Fitch on Tuesday revised the Rating
Watch on the 'C' Senior Unsecured rating of TXU Europe Ltd. to
Evolving from Negative. The company's short-term rating was not
affected and remained at 'C'.
The action follows the announcement that TXE has agreed to sell a
package of assets, including majority of its cash-generating U.K.
business, to Powergen UK plc for GBP1.37bn in cash, plus the
assumption of a related receivables securitization programme.
Fitch notes that, "While the sale does capture value from part of
the U.K. business that may otherwise have continued to decline at
an accelerated rate, it is far from clear that the remaining
business of TXE will be able to support the level of liabilities
that Fitch estimates will remain."
According to Fitch, TXU Europe's rating could go up if the
company pays overdue interest on the USD200 million Energy Group
Overseas B.V. 7.425% bonds, presents a plausible recovery plan,
resolves a potential put event on the 2030 GBP275m 7.25% sterling
bond, or presents evidence of continued access to lending
markets.
The rating may go down, on the other hand, if the firm fails to
pay overdue interest in the remaining grace period, delays other
payments, and/or a standstill occurs among creditors.
************
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 and Ma. Cristina Canson, 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. For subscription information,
contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *