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/raid1/www/Hosts/bankrupt/TCREUR_Public/021205.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, December 5, 2002, Vol. 3, No. 241 Headlines * F R A N C E * ALCATEL: Announces Additional Restructuring Measures in France SCOR: S&P Comments on SCOR and Its Subsidiaries VIVENDI UNIVERSAL: Decides to Raise Holdings in Cegetel to 70% VIVENDI UNIVERSAL: To Demerge U.S. Entertainment Assets Next Year VIVENDI UNIVERSAL: In Talks Regarding Sale of Hungarian Operation * G E R M A N Y * BAYER AG: New Products to Add Over EUR 800 MM to Sales by 2006 DEUTSCHE TELEKOM: To Offer up to 120 Million Shares in T-Online HVB GROUP: Real Estate's Foundation Laid for Management Structure HVB GROUP: Arranges EUR600 MM Placements for DaimlerChrysler * I T A L Y * FIAT SPA: Sells Brazilian Automobile Finance Unit * N E T H E R L A N D S * BUHRMANN NV: Announces Restructuring Plan, Amends Credit Deal ROYAL PHILIPS: Announces Plan to Strengthen Optical Activities UPC: Initiates Final Steps to Implement Recapitalization UNITED PAN-EUROPE: Case Summary & 20 Largest Unsec. Creditors * P O L A N D * ELEKTRIM SA: Posts PLN476 MM Net Loss in First Half NETIA HOLDINGS: Polish SEC Admits Shares to Public Trading * S W I T Z E R L A N D * CREDIT SUISSE: S&P Assigns CSFB Mortgage Prelim Ratings CREDIT SUISSE: Weiss Announces Class Action Lawsuit on CSFB CREDIT SUISSE: Fitch Places CSFB 1995-M1 on Rating Watch Negative CREDIT SUISSE: Fitch Ratings Affirms CSFB 2001-CP4 ZURICH FINANCIAL: ZCM to Buy Interests of CPH and QP in Australia * U N I T E D K I N G D O M * ABERDEEN ASSET: Issues Financial Results for Year Ended September SFI GROUP: FTSE Announces Changes in Share Trading TELEWEST COMMUNICATIONS: Sharpens Consumer Marketing Focus =========== F R A N C E =========== ALCATEL: Announces Additional Restructuring Measures in France -------------------------------------------------------------- Alcatel (Paris: CGEP.PA and NYSE: ALA) announced that it is going to increase the restructuring of its optics activity, initiated 18 months ago throughout its worldwide facilities, in order to adapt to the persistent crisis in the submarine network and optical fiber markets. The global submarine network market, which has always been cyclical, is today experiencing an unprecedented crisis. It will have declined by more than 80% between 2000 and 2002. The global optical fibers market will have decreased by 60% over the same period. The over-capacities of both these activities are leading Alcatel to take the following measures in its French sites, whose activity is largely dedicated to worldwide markets: - The optical fiber site in Conflans Sainte-Honorine (Yvelines), which employs 380 people*, should be closed down by end 2003. After restructuring, its R&D activity will be transferred to the Douvrin (Pas-de-Calais) site and its central functions to another Alcatel site in the Paris region. The total transfer concerns 90 positions. - In Calais (Pas-de-Calais), the submarine network headcount will be reduced by 280 positions by end 2003. Alcatel employs 745 people* in Calais for the whole of its submarine networks and optical fiber activities. - In Ormes (Loiret), the submarine network manpower will be reduced by 70 positions by end 2003. Alcatel has 830 employees* in Ormes. This project has been presented today to the employee representatives of the concerned companies. The objective is to open negotiations in order to identify the most appropriate measures and the details of their implementation within the frame of an "employment protection plan" ("plan de sauvegarde de l'emploi"). These measures are part of the restructuring program recently announced by Alcatel. *End-2002 estimate 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. SCOR: S&P Comments on SCOR and Its Subsidiaries ----------------------------------------------- Standard & Poor's Ratings Services said that its long-term ratings on France-based reinsurer SCOR and SCOR's subsidiaries-- including its 'A-' counterparty credit and insurer financial strength ratings on SCOR--remain on CreditWatch with negative implications. Standard & Poor's expects to resolve the CreditWatch status of these ratings by Dec. 12, 2002. "The ratings were originally placed on CreditWatch following the unexpected announcement by SCOR on Oct. 30, 2002, that it was going to post a loss of about EUR250 million for 2002, which was subsequently revised to about EUR400 million," explained Standard & Poor's credit analyst Marcus Rivaldi. This prompted Standard & Poor's to discuss with SCOR's management the various issues that the loss raised--in particular management control, revisions to the group's business mix, and the potential for a successful EUR381 million rights issue. The SCOR group is the eighth-largest global reinsurance group, with reported net premiums written of EUR4.1 billion in 2001. The group's reinsurance operations are conducted through SCOR, the France-based parent, as well as through guaranteed subsidiaries operating on a regional basis in the world's main insurance markets, including the U.S., Europe, and Asia-Pacific. Following the end of the rights issue subscription period on Dec. 12, 2002, if SCOR has successfully raised at least 75% of the target EUR381 million, Standard & Poor's will affirm the counterparty credit and financial strength ratings at 'A-' but revise the outlook to negative. The proposed outlook revision will occur because despite recent changes, group management continues to be skeptically assessed, particularly with regard to its ability to control and monitor its risk portfolio. In addition, SCOR currently remains vulnerable to a further large net retained loss, and from 2003 onwards, there must be a sustained improvement in the group's operating performance. If SCOR is unsuccessful in raising at least 75% of the targeted EUR381 million, Standard & Poor's will lower the counterparty credit and financial strength ratings on SCOR to 'BBB' based on immediate concerns with regard to capital adequacy, financial flexibility, and the likelihood that the group will not be able to fully participate in the current hard market, thus resulting in a significantly weakened business position. CONTACT: Standard & Poor's, New York Marcus Rivaldi, London Phone: (44) 20-7847-7056 Yann Le Pallec, Paris Phone: (33) 1-4420-6725 VIVENDI UNIVERSAL: Decides to Raise Holdings in Cegetel to 70% -------------------------------------------------------------- Vivendi Universal (Paris Bourse: EX FP; NYSE: V) made the following announcement with respect to Cegetel: 1. Vivendi Universal has decided to exercise its pre-emptive rights on British Telecom's (BT's) 26% interest in Cegetel in order to own 70% of the capital of France's leading private telecommunications operator. On the proposal of Jean-Rene Fourtou, Chairman and CEO, Vivendi Universal's Board of Directors has unanimously decided to exercise its pre-emptive rights on BT's 26% interest in Cegetel. Vivendi Universal will thus own 70% of France's leading private telecommunications operator and, as a result, 56% of SFR. Vivendi Universal will purchase BT's 26% in Cegetel for the sum of E4 billion through a Special Purpose Vehicle (SPV) financed by E1.3 billion of non-recourse debt and E2.7 billion cash. Vivendi Universal has raised the resources to finance its policy through the issue of the notes redeemable for shares and the sale of Vivendi Environnement shares, which have been previously disclosed, and the non-recourse loan to the SPV. In addition, as disclosed, Vivendi Universal has a E1 billion back-up facility. The exercise of its pre-emptive rights on BT's shares is not expected to have any impact on the asset disposal program or the financial targets announced by Vivendi Universal on September 25. The transaction will give Vivendi Universal majority control over Cegetel and SFR, two strong-growth companies that generate significant cash flow. Vivendi Universal is maintaining its target to reduce debt to below E8 billion by the end of 2004 and continue its asset disposal program, including Vivendi Environnement, to raise E16 billion over the same period. 2. Structure of the Board of Directors The Board of Directors noted the departure of Jean-Marc Espalioux, Jacques Friedmann and Marc Vienot. The Board of directors is very grateful for their valuable help, and, in particular, for their continuous support through these difficult months. Thanks to the dedication of all concerned, it has been possible to correct the situation and open new prospects. Messrs. Marc Vienot, Jacques Friedmann and Jean-Marc Espalioux have expressed their complete approval of the strategic orientations taken by the Board. These primarily concern removing Vivendi Environnement from VU's consolidation scope and the decision to exercise the pre-emptive rights on BT's interest in Cegetel. They would like to congratulate Jean-Rene Fourtou and his teams for the excellent work they have done since July 3, in particular, their improvement of the cash position and the major disposal program that they have undertaken. The program has resulted in a substantial reduction of the company's debt and the resumption of strategic initiatives. They feel that, under the circumstances, their mission has been accomplished, and they would now like to resign from the Board so that a renewed team can take over. CEO Comments: Jean-Rene Fourtou, Chairman and CEO of Vivendi Universal, said: "In just five months, Vivendi Universal's teams have done an outstanding job, for which I thank them. The cash position is now well under control. The asset disposal program is ahead of schedule. The sale of our interest in Vivendi Environnement has been agreed rapidly and in the best interests of both companies. "By taking over BT's stake in Cegetel, we will have secured majority control over SFR and Cegetel while continuing to meet our priority targets: ensuring a good cash margin, improving our financial ratios and lowering debt. "SFR and Cegetel have been managed by our teams since the companies were created 15 and 6 years ago respectively. They are real industrial successes, with over 16 million customers (including more than 13 million for SFR), 8,600 employees, 2001 revenues of E6.4 billion, debt of below E500 million and very substantial cash flows. It is rare to find such well-managed telecommunications companies. "Given the attractiveness of the French mobile phone market and the growth in fixed-line business, we are convinced that over the next three to five years, Cegetel is expected to post excellent growth in earnings and annual free cash flow that will regularly reach over E1.3 billion. This performance takes into account the necessary investments already started in UMTS. "A majority holding in Cegetel and SFR is the surest way of creating value for our shareholders in the coming years, much more value than that represented by the offers we have received. "To conclude, since July, Vivendi Universal has gone through a major defensive stage, and now it has taken the essential step of securing control over Cegetel. We are at present in a good position to improve our value for the benefit of all our shareholders." CONTACT: VIVENDI UNIVERSAL (Investor Relations) (Paris) Daniel Scolan Phone: +33 (1).71.71.1470 or Laurence Daniel Phone: +33 (1).71.71.1233 or (New York) Eileen McLaughlin Phone: 212/572-8961 VIVENDI UNIVERSAL: To Demerge U.S. Entertainment Assets Next Year ----------------------------------------------------------------- Executives at Vivendi Universal say the French company is planning to demerge its U.S. entertainment assets under the Universal brand next year, either through a stock market listing or a sale, the Financial Times reports. The assets are valued at up to US$25 billion. Bankers speculate that the French company would float a 20-25% stake and demerge the remaining shares to shareholders. "This is an extraordinarily strong brand. At this moment I am of the view that it would make sense for it to be listed on the market, but I do not exclude other value creating options," Vivendi Universal Chief Executive Jean-Rene Fourtou said. Bankers and analysts support the decision, the report says. The appointment of Barry Diller as interim co-chief executive of Vivendi's U.S. media and entertainment assets this month had fueled speculations that the owner of Universal Studios is likely to demerge the U.S. units, says Bloomberg. The issue of a partial demerger of the company's games business was prompted earlier by the separate disposal of the company's U.S. and European publishing operations. In a previous report TCR-EU said, financial analysts have speculated that the assets in line for spin-off may include the movie studio, Universal Music Group, theme parks and cable TV networks like USA. VIVENDI UNIVERSAL: In Talks Regarding Sale of Hungarian Operation ----------------------------------------------------------------- Vivendi Universal is in negotiation with a consortium including financial investors AIG Global Investment Group Inc. and GMT Communications Partners Ltd. for the sale of Vivendi Telecom Hungary Rt, industry sources told Budapest Business Journal. The French company, which is currently disposing assets to trim down EUR19 billion of borrowings, expects to raise EUR450 million from the sale. The asset being sold is Hungary's number two fixed-line telecom, which according to Concorde Securities Rt analyst, Andor Daroczi, "has the potential to be a genuine competitor to Matav Rt." But the operation also has at least EUR450 million in debt says analyst. It also needs investment in infrastructure and service capabilities in order to rival Matav, Mr. Daroczi added. Craig Butcher, managing director of AIG Global Investment (Hungary) Kft, declined to confirm the report of the talks, while Timothy Green, chief executive officer of GMT, failed to return calls. London-based GMT is an independent investment firm focusing exclusively on the communications sector in Europe. AIG is a manager of a diversified product line, including private equity, real estate investment funds and fixed-income strategies. CONTACT: VIVENDI UNIVERSAL 42 avenue de Friedland 75380 Paris Cedex 08, France Phone: +33-1-71-71-10-00 Fax: +33-1-71-71-11-79 Home Page: http://www.vivendiuniversal.com Contacts: Jean-Rene Fourtou, Chairman and Co-CEO Jean-Bernard Levy, Chief Operations Officer Robert de Metz, Executive Vice President AIG INVESTMENT GROUP 175 Waters St. New York, NY 10038 Phone: 212-770-7000 Fax: 212-509-9705 Home Page: http://www.aiggig.com Contacts: Win J. Neuger, Chairman and CEO Paul G. Gately, Senior Managing Director GMT COMMUNICATIONS PARTNERS LIMITED Sackville House, 40 Piccadilly London, W1V 9PA United Kingdom Phone: +44 (20) 7292-9333 Fax: +44 (20) 7292-9390 Home Page: http://www.gmtpartners.com/ ============= G E R M A N Y ============= BAYER AG: New Products to Add Over EUR 800 MM to Sales by 2006 -------------------------------------------------------------- Out of a total of six new active ingredients presented recently at the British Crop Protection Council (BCPC) Conference in Brighton, U.K., four came from Bayer CropScience AG, the Bayer AG subsidiary formed by the merger of Bayer's Crop Protection Business Group and Aventis CropScience. The new company, which launched operations in June 2002 and is already among the industry leaders, expects new product introductions to add more than EUR 450 million to its sales by 2004 and over EUR 800 million by 2006. These new compounds are clear evidence of the R&D capability of Bayer CropScience, which plans to introduce another two to three new active ingredients annually in the coming years. Of the four molecules that will serve as the basis for a number of new products and mixtures, two are fungicides that are particularly suitable for use in cereal crops. The other two are insecticides, one offering superior protection against whitefly and spidermites in vegetable crops and cotton, the other providing high efficacy in the control of biting and sucking insects in crops such as corn, oilseed rape, sugar beet and cereals, even when applied as a seed treatment. Bayer CropScience AG, a subsidiary of Bayer AG with current annual sales of some EUR 6.0 billion, is one of the world's leading innovative crop science companies in the areas of crop protection, seeds and green biotechnology, as well as non- agricultural pest control. The company offers an outstanding range of products and extensive service backup for modern, sustainable agriculture and for non-agricultural applications. Bayer CropScience has a global workforce of 22,000 and is represented in 122 countries, ensuring proximity to dealers and consumers. DEUTSCHE TELEKOM: To Offer up to 120 Million Shares in T-Online --------------------------------------------------------------- Fixed line operator Deutsche Telekom will offer up to 120 million shares in its T-Online internet subsidiary, with 100 million intended for institutional investors and 20 million for a so- called "greenshoe" option. A source familiar with the situation told the Scotsman that the German operator is taking advantage of the unit's better-than expected results to raise cash to cut down debt. Deutsche Telekom's debt was pegged at GBP40.76 billion at the end of September. The company aims to reduce the figure to between GBP31.5 billion and GBP33.4 billion by the end of 2003. The company is under pressure to make progress in its debt reduction program to protect its debt rating, currently under review by Moody's. The company said it would place a fix price for the shares after the order book closed. Analysts expect the shares to be sold at between GBP3.56 and GBP3.88, says the report. At the price, Deutsche Telekom will be able to raise between GBP356.7m and GBP466.2. The share offering will see Deutsche Telekom reducing its holding in T-Online to around 73.5% from 81.7%. Deutsche Telekom plans further share sale, but said it intends to retain majority holding of at least 51%. HVB GROUP: Real Estate's Foundation Laid for Management Structure ----------------------------------------------------------------- Following its decision to establish an independently operating real estate group, HVB's Board of Managing Directors has taken the next step towards setting up the new real estate company. The Board will propose that the Supervisory Board of HVB Real Estate bank appoints Georg Funke to be Chairman of the Managing Board of HVB Real Estate Bank with effect from January 1, 2003. His responsibility will be to integrate the commercial real estate financing activities of the HVB Group into HVB Real Estate Bank and position the new real estate financing group as a legally and economically independent company in the market. An amicable agreement has been reached with Dr. Claus Nolting, Chairman of the HVB Real Estate Bank's Board of Managing Directors and member of HVB's Board of Managing Directors to date, who will resign from office effective December 31, 2002 in order to assume new responsibilities. As part of these changes Dr. Egbert Eisele (60), member of th e Board of Managing Directors of HVB, will retire on December 31, 2002. He will continue to place his expertise in real estate financing and his wealth of experience from many years on the Board of Managing Directors at the bank's disposal by remaining on the Supervisory Board of HVB Real Estate Bank, W�rttembergischen Hypothekenbank, Westf"lische Hypothekenbank and FGH Bank in the Netherlands and thus support the development of the new group. Dr. Albrecht Schmidt, spokesman of HVB's Board of Managing Directors: "I thank Dr. Egbert Eisele most sincerely for his 17 years of successful endeavors, first on the Board of Managing Directors of-Bayerische Vereinsbank and since 1998 of HypoVereinsbank. With great farsightedness, outstanding commitment and strong identification with the bank, he has performed excellent service. I also wish to thank Dr. Claus Nolting, who as a Managing director initially of Bayerische Vereinsbank and subsequently of HVB and as Chairman of the Board of Managing Directors of HVB Real Estate Bank took the first big steps toward integration in a extremely difficult economic environment and has accelerated the reorganization of operations." Dieter Rampl, designated spokesman of the Board of Managing Directors: "We have chosen Georg Funke, a manager from the HVB Group, to be responsible for developing the new real estate bank, because he is well acquainted with all aspects of real estate financing in our bank and in the markets from his own intensive practical experience. He will position the new real estate financing group on the market as an independent bank by the second half of 2003." Dr. Egbert Eisele was appointed to the Board of Managing Directors of Bayerische Vereinsbank in 1985 and in the course of his 17 years on the Board was responsible at different stages for real estate financing, retail customer operations and treasury. Dr. Claus Nolting (51) was a member of the Board of Managing Directors of Bayerische Vereinsbank from 1996 to 1998, and from then on as Chairman of the Board of Managing Directors of Bayerische Handelsbank, now HVB Real Estate Bank, and since 2001 is also on the Board of Managing Directors of HypoVereinsbank. In 2001 he merged the mortgage bank subsidiaries Bayerische Handelsbank, S�dboden and N�rnberger Hypothekenbank into HVB Real Estate Bank which he managed as Chairman of the Board of Managing Directors. Georg Funke (47), executive Divisional Board Member for Real Estate operations at HVB is responsible for international operations and simultaneously Managing director of HVB Real Estate Bank. Born in Gelsenkirchen, he began his career in 1972 with business training at Westdeutsche Wohnh"user AG in Essen. In 1984 he joined the D�sseldorf branch of Bayerische Hypotheken- und Wechselbank AG as head of the construction financing office. A father of three children, he was transferred in 1989 to the London branch. Following the merger to HypoVereinsbank in 1998, Funke assumed responsibility for Real Estate Financing Customers in Great Britain and also became CEO of HVB Real Estate Capital. Since 2000 he has been in charge of HVB's international real estate operations at head office in Munich. CONTACT: Bayerische Hypo- und Vereinsbank AG Presseabteilung Am Tucherpark 16 80538 M�nchen Phone: (089) 378-2 58 01/-2 55 12 Fax: (089) 378-2 56 99 HVB GROUP: Arrange EUR600 MM Placements for DaimlerChrysler ----------------------------------------------------------- Together with HSBC, HypoVereinsbank (HVB) is the joint lead managing a new euro bond for EUR600 million for the Daimler- Chrysler Group. The issuer is DaimlerChrysler North America Corporation, and the guarantor is DaimlerChrysler AG. Due date is December 10, 2002. The bond has a coupon of 4 5/8 % (short first coupon) and will mature on March 10, 2006. Moody's rated the paper A3, Standard & Poor's BBB+. The bond was placed with institutional investors. Security identification No.: 369 293 ========= I T A L Y ========= FIAT SPA: Sells Brazilian Automobile Finance Unit ------------------------------------------------- Fiat Spa sold its Brazilian automobile finance unit, Banco Fiat, to Brazilian banking giant Banco Itau for BRL897 million (US$243.1 million). The country has experienced prolonged economic downturn and Fiat's retreat is just among the number of withdrawals of foreign companies in the region. Banco Fiat is the leading auto finance company in Brazil, accounting for approximately 40% of the total sales volume of new Fiat vehicles. The sell-off comes as the Italian industrial group undertakes restructuring measures to cut cost in order to alleviate the effects of weak Italian markets. Fitch rating agency even expects the European auto market to continue to decline by 3-5%. Fitch says that despite the new models during the coming year and an improvement in the profit mix, Fiat's domestic market share could come under renewed pressure in a weaker Italian market. ===================== N E T H E R L A N D S ===================== BUHRMANN NV: Announces Restructuring Plan, Amends Credit Deal ------------------------------------------------------------- Further reorganization initiatives will result in cost reductions of around EUR 30 million in 2003 and annualized savings of about EUR 60 million. An extraordinary charge of EUR 85 million in total after tax will be taken in the fourth quarter of 2002, which includes reorganization, as well as write-offs on IT investments and distribution facilities. Bank credit terms have been amended, providing for more financial flexibility. Restructuring As announced on 7 October 2002, Buhrmann has identified further streamlining opportunities. We will be implementing reorganization measures that will lead to a cost reduction of around EUR 30 million in 2003 and annual cost savings of about EUR 60 million as of 2004. The restructuring amounts to EUR 115 million before tax, of which EUR 65 million is in the form of a reorganization cash outlay and EUR 50 million is in the form of non-cash write-offs. This results in an extraordinary charge of EUR 85 million in total after tax in the fourth quarter of 2002. Following the successful introduction of a new generation eCommerce system and the introduction of a new integrated single operating system in the USA, some other eBusiness applications that have been developed will not be used. This now leads to the early write-off of redundant IT assets. At the same time the completion of the new centralized IT systems supports our efforts to implement consistent organizational best practices throughout North America including the elimination of certain duplicate activities. This reorganization provides an opportunity to further improve the service to our customers. In Europe we will improve capacity utilization of warehouses by consolidating a number of distribution facilities. Further rationalizations allow for a reduction in back-office and support functions without affecting the organization's distribution capabilities, while the expansion of the sales force will continue. The reorganization will lead to a reduction in headcount of 1,100 in total. As the information and consultation procedures with employees and their representatives in various countries will begin in the coming weeks, no further details can be given at this time. Financing (Credit Agreement) Buhrmann has negotiated a revision of the terms of its Senior Credit Facility to ensure more financial flexibility. Amongst other things, the agreed consolidated leverage ratios and consolidated net cash interest coverage ratios have been adjusted in view of the experienced lower level of operating profit on a twelve months rolling basis (also see the attached briefing note). The interest margin as laid down in the pricing grid has been increased by 0.5%. In combination with fees paid upfront which will be amortized over the remaining duration of the facility, it is expected that this leads to an increase in annual financing costs in the order of EUR 6 million to EUR 7 million (assuming no change in the debt level). As a part of the agreement any optional dividend over 2002 will be paid out entirely in shares. The 2002 dividend proposal will be announced on 13 February 2003 with the publication of the full year results. As stated in the company's third quarter earnings report, implemented restructurings and cost reduction efforts as well as continued stringent working capital management in all divisions will contribute to a positive available cash flow in the fourth quarter of this year. Consequently, total interest-bearing debt at the end of the fourth quarter will further decrease compared to the level at the end of the third quarter of this year. ROYAL PHILIPS: Announces Plan to Strengthen Optical Activities -------------------------------------------------------------- Royal Philips Electronics (AEX: PHI, NYSE:PHG) disclosed its plans for the restructuring of its Optical Storage business, and confirmed its expectation that the business' losses will be eliminated within two quarters. Philips announced in October that following the dissolution of the Components division, a comprehensive restructuring plan would be carried out to bring Philips Optical Storage (POS) back to profitability. Philips Optical Storage was responsible for more than half of the losses, excluding special charges, of the entire Components division, with its data storage line the main source of the problems as a result of intense competition and a weak PC market. The major part of the restructuring will see the PC related (Data) business line concentrated in Taiwan. Approximately 390 employees in Hasselt, Belgium, will be affected by the move, approximately 45 of who will be offered positions at other sites within POS. The present POS group in Eindhoven will be strengthened to concentrate on the pre-development activities of the POS business. Workers councils and union representatives have been informed and Philips will provide all possible support in assisting affected employees to find other employment within or outside the company. The Taiwanese relocation will allow Philips to focus on its DVD+RW development activities and further cooperation with local and regional partners. Philips will use its strengths in research and development to continue its leadership in new product innovation and establishing standards. Manufacturing will increasingly be done through partnerships. The turnaround of POS Data will be achieved by eliminating unprofitable product lines based on more mature technologies, focusing on DVD+RW where margins are profitable and improving as the standard becomes established, and at the same time significantly reducing fixed costs. "We have found a course of action for Philips Optical Storage which will both put a stop to the losses on our stated time frame of two quarters, and allows the business to concentrate on the areas where it can add the most value - innovating and defining and establishing new standards for data storage," commented Arthur van der Poel, Executive Vice President and member of Philips' Board of Management. "This focus will ensure the maximum synergies with related businesses in Philips, leaving manufacturing and certain other activities to our partners, with key competences in these areas. As we have said, a successful turnaround for POS will provide the basis to bring the former Components businesses back into the black for the full year 2003." By strengthening its position in DVD+RW applications and new or emerging standards, Philips will remain a leading player in the OEM and aftermarket optical storage industry with a solid basis for sustained profitability. Geographically, the innovation and long-term development will take place in Europe while the ongoing Data business operations will be centered in Asia. Philips will establish its business headquarters for the PC related Optical Storage business in Taiwan in the course of 2003. Besides the Data business, the consumer and automotive business lines of Philips Optical Storage are profitable and developing according to plan. The consumer line is a leader in the audio/video market and supplies drives for applications including DVD Recorders (based on the DVD+RW standard) and games consoles. About Royal Philips Electronics Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 32.3 billion in 2001. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 184,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at www.philips.com/newscenter CONTACT: ROYAL PHILIPS ELECTRONICS The Rembrandt Tower, Amstelplein 1 1096 HA Amsterdam, The Netherlands Phone: +31-20-59-77-777 Fax: +31-20-59-77-070 Home Page: http://www.philips.com Contact: Gerard J. Kleisterlee, Chairman, Executive Board Lodewijk Christiaan van Wachem, Chairman, Supervisory Board Jan H.M. Hommen, Executive Vice President UPC: Initiates Final Steps to Implement Recapitalization -------------------------------------------------------- UnitedGlobalCom, Inc. (UGC) (Nasdaq: UCOMA) announced Tuesday that, as expected and as indicated in its announcement of September 30, 2002, its subsidiary United Pan-Europe Communications, NV (UPC) has initiated the final steps necessary to implement its recapitalization. With the full support of UGC, UPC's largest creditor and shareholder, and an ad hoc committee representing certain non-UGC holders of its Senior Notes and Senior Discount Notes, UPC NV commenced a Chapter 11 proceeding in the United States and a Dutch moratorium proceeding in the Netherlands, in order to ensure an efficient and effective recapitalization. On September 30, 2002, UPC publicly announced that UPC, UGC, the members of the Bondholder Committee and New UPC, Inc., a newly- formed U.S. company that will become the holding company for UPC, had entered into a restructuring agreement intended to substantially de-lever UPC's consolidated balance sheet through a judicially supervised conversion of UPC's outstanding indebtedness under its Senior Notes and Senior Discount Notes and the Belmarken Notes into new common stock of New UPC. Under the Recapitalization, the existing Dutch holding company, UPC N.V., will become a substantially or wholly owned subsidiary of New UPC. In order to ensure an efficient and effective Recapitalization, UPC has chosen to complete the restructuring by means of a Chapter 11 proceeding in the U.S. and a voluntary moratorium proceeding in the Netherlands. As a first step, UPC has filed a voluntary petition under Chapter 11 in a U.S. court and has commenced a suspension of payments proceeding in the Dutch court. In furtherance of those processes, UPC has filed a draft plan of composition, known as an "Akkoord," with the Dutch Court and a proposed plan of reorganization and draft disclosure statement with the U.S. court. The proposed Plan and the proposed Akkoord, as well as the draft Disclosure Statement, are subject to further revision. Final versions of the proposed Akkoord, the Plan and the Disclosure Statement will be made available to UPC's creditors and shareholders upon approval of the Disclosure Statement by the U.S. court. This final version of the Disclosure Statement will serve as the document referred to in article 3(2)(b) of the Dutch Securities Supervision Act 1995. The final version of the Disclosure Statement will be made publicly available as soon as practicable after its approval. The location where the document can be obtained will be publicly made available in due course. UPC continues to anticipate that the Akkoord process in the Dutch Courts and the Chapter 11 proceedings in the U.S. courts will be completed by the end of the first quarter 2003. Management Comments Gene Schneider, Chairman and CEO of UGC, said, "We are very pleased to have reached another important milestone in the recapitalization of UPC. We expect UPC will emerge from this restructuring by the end of March 2003 with one of the strongest balance sheets in the European media and telecom sector. Of course, we believe that this recapitalization plan is a great result for UGC shareholders, with our ownership in UPC expected to increase to approximately 66% from 53% currently." Mike Fries, President and COO of UGC, added, "The Chapter 11 and voluntary moratorium proceedings only apply to UPC at the parent company level and, as such, will have no material impact on the day-to-day business of UPC's subsidiaries. Customer service remains the key focus and UPC will continue to provide the highest level of service to its customers throughout the court protection process and afterwards. Meanwhile, UPC's operations are achieving record financial results including seven consecutive quarters of improved EBITDA performance. We look forward to building on those results as we move into 2003." Additional Recapitalization Information During and upon completion of the Recapitalization UPC expects to have sufficient resources to fund its operations through to positive free cash flow, a point from which UPC will be able to fund itself. As part of the implementation of the Recapitalization, New UPC intends to make a Dutch public offer in the Netherlands, with the support of UPC, for the Ordinary Shares A in UPC (the "Dutch Implementing Offer") to enable the shareholders of UPC outside the United States to exchange their Ordinary Shares A in UPC for shares of New UPC's common stock in accordance with and as provided under the Plan. In this context, the press release also serves as a public announcement as referred to in article 9(b)(1) of the Decree to the Dutch Securities Supervision Act 1995. To this end, in the Netherlands a public offer document describing at least the key elements of the Dutch Implementing Offer (the "Dutch Implementing Offer Document") is expected to be made publicly available in early to mid January 2003. Any acceptance of a possible Dutch Implementing Offer by New UPC will be subject to the consummation of the Recapitalization. In order to facilitate the implementation of the Recapitalization, UPC intends to call an Extraordinary General Meeting of Shareholders, currently expected to be held in the first quarter of 2003. About UnitedGlobalCom UGC is the largest international broadband communications provider of video, voice, and Internet services with operations in 21 countries. Based on the Company's aggregate operating statistics at September 30, 2002, UGC's networks reached approximately 19.1 million homes and 13.1 million total subscribers. Based on the Company's consolidated operating statistics at September 30, 2002, UGC's networks reached approximately 12.4 million homes and over 8.7 million subscribers, including over 7.3 million video subscribers, 690,300 voice subscribers, and 700,000 high-speed Internet access subscribers. In addition, its programming business had approximately 45.8 million aggregate subscribers worldwide. UGC's major operating subsidiaries include UPC, a leading pan- European broadband communications company; VTR GlobalCom, the largest broadband communications provider in Chile, and Austar United Communications, a leading satellite, cable television and telecommunications provider in Australia and New Zealand CONTACT: UnitedGlobalCom, Inc., Investor & Media Relations Rick Westerman, CFO Phone: +1-303-220-6647 Fax: +1-303-770-3464, E-mail: rwesterman@unitedglobal.com Home Page: http://www.unitedglobal.com UNITED PAN-EUROPE: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: United Pan-Europe Communications N.V. Bowing Avenue 53 P.O. Box 74763 Amsterdam, The Netherlands 1070 BT aka United and Philips Communications BV Bankruptcy Case No.: 02-16020 Type of Business: United Pan-Europe Communications N.V. is a holding company which owns various direct and indirect subsidiaries that operate broadband communications networks providing telephone, cable and internet services to both residential and business customers in Europe. Chapter 11 Petition Date: December 3, 2002 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtors' Counsel: Howard S. Beltzer, Esq. White & Case, LLP 1155 Avenue of the Americas New York, NY 10036 Tel: (212) 819-8306 Fax : (212) 354-8113 Total Assets: E7,021,760,000 Total Debts: E10,130,880 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Citibank NA Indenture Trustee $4,690,526,335 5 Carmelite Street for all Series of London EC 4Y0PA Bonds United Kingdom Attn: Marne Lidster Tel: 44 207-500-5748 MacKay-Shields Bonds $387,370,000 Financial Corp. Mr. D. Morgan 9 West 57th Street 33rd Floor New York, NY 10019 Tel: 212-230-3911 Salomon Brothers Asset Bonds $260,488,000 Management Mr. P. Wilby 745 Route 3 Rutherford, NJ 07070 Tel: 201-231-0728 Capital Research & Mgt. Bonds $229,565,000 Mr. P. Haaga One Market, Stewart Towers Suite 1800 San Francisco, CA 94105 Tel: 415-421-9360 Merill Lynch Investment Bonds $127,000,000 Managers Mr. V. Lathburg 800 Scudders Mill Road Plainsboro, NJ 08536 Tel: 609-282-2084 Putnam Investments Bonds $115,020,000 Mr. E. D'Alelio 1 Post Office Square 7th Floor Boston, MA 02109 Tel: 617-760-1339 Bear Stearns Trading Desk Bonds $92,839,000 Mr. B. Cowley 575 Lexington Avenue 10th Floor New York, NY 10022 Tel: 212-272-2000 Fidelity Investments Bonds $83,020,000 Mr. R. Pozen 82 Devonshire Street Boston, MA 02109 Tel: 617-563-7703 Merill Lynch Debt Bonds $72,325,844 Securities Apollo Advisors Bonds $68,000,000 Mr. T. Doria Two Manhattanville Road Purchase, NY 10577 Tel: 914-694-8000 York Capital Management Bonds $65,978,000 Federated Investors Bonds $61,545,000 1001 Liberty Avenue Pittsburgh, PA 15222 Prudential Investments Bonds $56,885,000 Mr. P. Appleby 100 Mulberry Street 2nd Gateway Center Newark, NJ 07102 Tel: 973-367-3073 Oppenheimer Funds Bonds $50,585,000 Mr. D. Negri 498 Seventh Avenue New York, NY 10018 Tel: 800-525-7048 Everest Capital Ltd. Bonds $50,567,000 Mr. E. Graham 65 Front Street PO Box HM 2458 HM 5X Hamilton, Bermuda Philips Digital Trade Collector $45,000,000 Networks BV Professor Holstlann 4 5656AA Eindhoven The Netherlands JP Morgan Investment Bonds $40,205,000 Management 60 Wall Street, 23rd Fl. New York, NY 10260 Tel: 212-483-2323 Teachers Advisors, Inc. Bonds $40,000,000 Mr. D. Schleffer 730 Third Avenue New York, NY 10260 Tel: 212-483-4021 Morgan Stanley Dean Bonds $34,835,000 Witter & Co. 5, Rue Plaetis L-2338 Luxembourg Tel: 352-346-46-000 Northwestern Mutual Life Bonds $31,500,000 Insurance Co. Ms. J. Clark-Gunia 720 E. Wisconsin Ave, Milwaukee, WI 53202 Tel: 414-271-1444 =========== P O L A N D =========== ELEKTRIM SA: Posts PLN476 MM Net Loss in First Half --------------------------------------------------- Polish conglomerate Elektrim reported a first-half net loss of PLN476 million (EUR119.9 million), compared with a loss of PLN413 million in the same period last year. Net sales are down from PLN2,795 to PLN1,184 million, while operating losses have grown to PLN345 million, up from PLN240 a year ago. In compliance with the terms of the company's Restructuring Agreement with the State Treasury in 1991, Elektrim transferred net income from settlement contracts executed by Elektrim in prior periods to the State Treasury. As a result, for the first half, Elektrim's liabilities resulting from the Restructuring Agreement amounted to PLN 802 million. To see Elektrim's Full Results: http://bankrupt.com/misc/Elektrim.doc NETIA HOLDINGS: Polish SEC Admits Shares to Public Trading ---------------------------------------------------------- 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 November 29, 2002, the Polish Securities and Exchange Commission decided to admit to public trading 317,682,740 ordinary series H shares, 64,848,652 ordinary series J shares and 18,373,785 ordinary series K shares of Netia, to be issued connection with Netia's ongoing restructuring. Furthermore, the Commission gave its consent for the introduction to public trading of 31,419,172 ordinary series I notes and 1,005,154 ordinary series II notes, which authorise their holders to subscribe for the series J shares on a pre-emptive basis, with priority to Netia shareholders (subscription warrants), and 18,373,785 ordinary series III notes, which authorise their holders to subscribe for the series K shares on a pre-emptive basis. This approval represents the achievement of another milestone in the implementation of the Restructuring Agreement signed by Netia with its creditors on 5 March, 2002. CONTACT: Netia Anna Kuchnio (IR), +48-22-330-2061 or Jolanta Ciesielska (Media), +48-22-330-2407 or Taylor Rafferty, London Alexandra Jones, +44-(0)20-7936-0400 or Taylor Rafferty, New York Jeff Zelkowitz, 212-889-4350 ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: S&P Assigns CSFB Mortgage Prelim Ratings ------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Credit Suisse First Boston Mortgage Securities Corp.'s US$1.21 billion commercial mortgage pass-through certificates series 2002-CP5 (see list). The preliminary ratings are based on information as of Dec. 03, 2002. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings assigned to reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property-type diversity of the loans. Classes A-1, A-2, A-3, B, C, D, and E are currently being offered publicly. The remaining classes are being offered privately. Standard & Poor's analysis determined that, on a weighted-average basis, the pool has a debt service coverage ratio of 1.75 times based on a weighted-average coupon of 6.48%, a beginning loan-to-value ratio (LTV) of 81.3%, and an ending LTV of 70.3%. PRELIMINARY RATINGS ASSIGNED Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2002- CP5 Class Rating Amount (US$) A-1 AAA 356,250,000 A-2 AAA 634,599,000 B AA 42,228,000 C A+ 22,622,000 D A 15,082,000 E A- 18,098,000 F BBB+ 9,048,000 G BBB 16,590,000 H BBB- 15,081,000 J BB+ 22,623,000 K BB 6,032,000 L BB- 9,049,000 M B+ 7,541,000 N B 4,524,000 O B- 6,033,000 P CCC 6,032,000 A-X(a) AAA (3)1,206,514,158 A-SP(a) AAA (3)1,054,365,000 * For the IO classes, the amount represents the initial notional balance. (3) Initial notional balance. CREDIT SUISSE: Weiss Announces Class Action Lawsuit on CSFB ----------------------------------------------------------- A class action lawsuit has been filed in the United States District Court for the Southern District of New York, case number 02 Civ. 9564, on behalf of all persons or entities who purchased or otherwise acquired Agilent Technologies, Inc. securities (Agilent or the Company) (NYSE:A) between December 13, 1999 and September 9, 2002, inclusive. Credit Suisse First Boston and Elliot Rogers, the analyst responsible for covering Agilent, are named as defendants. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements, which artificially inflated the price of Agilent stock. The complaint alleges that CSFB issued analyst reports regarding Agilent that recommended the purchase of the Company's common stock. However, such analyst reports were false and misleading because they conflicted with defendants' internally expressed negative opinions regarding Agilent and failed to disclose that CSFB's coverage and ratings of Agilent were not independent and objective, but instead were a biased marketing tool for CSFB to maintain and enhance its investment banking business with Agilent. Throughout the Class Period, CSFB, maintained "Buy" or "Hold" recommendations on Agilent in order to obtain and support lucrative financial deals for CSFB. Indeed, defendants' conduct was so brazen that this system of false ratings was internally dubbed the "Agilent Two-Step" at CSFB. As a result of CSFB's false and misleading conduct, Agilent common stock traded at artificially inflated levels during the class period. The action seeks to recover damages on behalf of defrauded investors who purchased Agilent securities. Plaintiff is represented by Weiss & Yourman, a law firm possessing significant experience and expertise in prosecuting class actions on behalf of defrauded shareholders in federal and state courts throughout the United States. Weiss & Yourman has been appointed by numerous courts to serve as lead counsel in class action lawsuits and in that capacity has recovered hundreds of millions of dollars on behalf of investors. Currently, Weiss & Yourman is litigating several securities class action lawsuits alleging similar conduct against financial institutions. If you purchased Agilent securities between December 13, 1999 and September 9, 2002, you may move the Court no later than December 16, 2002, to serve as a lead plaintiff of the class. In order to serve as a lead plaintiff, you must meet certain legal requirements. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Weiss & Yourman or other counsel of your choice to serve as your counsel in this action. If you wish to receive an investor package or if you wish to discuss this action, have any questions concerning this notice or your rights or interests with respect to this matter, or if you have any information you wish to provide to us, please contact: Mark D. Smilow, David C. Katz, and/or James E. Tullman, (888) 593-4771 or (212) 682-3025, via Internet electronic mail at or by writing Weiss & Yourman, The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176. CONTACT: Weiss & Yourman Mark D. Smilow, David C. Katz, and/or James E. Tullman Phone: 888/593-4771 or 212/682-3025 CREDIT SUISSE: Fitch Places CSFB 1995-M1 on Rating Watch Negative ----------------------------------------------------------------- Fitch Ratings places the following classes of Credit Suisse First Boston (CSFB) Mortgage Securities Corporation's multifamily mortgage pass-through certificates, series 1995-M1, on Rating Watch Negative: US$5.5 million class B at 'AA'; US$7.8 million class C at 'A'; US$2.7 million class D at 'BBB-'; US$5.1 million class E at 'B+'; and US$1.5 million class F-1 and US$1.2 million class F-2 at 'CCC'. Fitch affirms the US$39.3 million class A and interest-only class A-X at 'AAA'. Classes G-1 and G-2 are not rated by Fitch. The rating actions are a result of interest shortfalls as of the Nov. 25, 2002 remittance report. The transaction closed in April 1995. For the Nov. 25, 2002 payment date, classes C through F-2 received no interest payment. Class B received only a partial interest payment. The total interest shortfall for November was US$180,000. The shortfall was attributed to the reimbursement of advances to GMAC Commercial Mortgage Corp. (GMAC), the transaction's master servicer. The reimbursed advances reflected the recent valuation of the Paramount property, which secures a loan with a current unpaid principal balance of approximately US$1.6 million. The Paramount loan has been real estate-owned (REO) since February 2001. In June 2002, GMAC ceased making advances after it was determined that any future advances would not be recoverable. In October 2002, GE Capital Realty Group Inc., the special servicer, received a new appraisal for the property. The new appraised value of the Paramount property is approximately US$500,000 lower than GMAC's outstanding advances and GMAC is now recovering the difference through three reimbursements. The reimbursements will continue for two more months, after which, interest shortfalls will begin to be repaid in sequential order. Classes B through F-2 will remain on Rating Watch Negative until the shortfalls are recovered and could be downgraded if shortfalls are permanent. Fitch will continue to monitor this transaction as surveillance is ongoing. CONTACT: Fitch Ratings Eduardo Hernandez Phone: 1-212-908-0721 Lauren Cerda Phone: 1-312-606-2317 CREDIT SUISSE: Fitch Ratings Affirms CSFB 2001-CP4 -------------------------------------------------- Credit Suisse First Boston (CSFB) Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CP4 US$89.5 million class A-1, US$86.9 million class A-2, US$110 million class A-3, US$611.4 million class A-4 and interest-only classes A-X and A-CP are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms US$61.9 million class B at 'AA', US$45.7 million class C at 'A', US$22.1 million class D at 'A-', US$16.2 million class E at 'BBB+', US$16.2 million class F at 'BBB', US$11.8 million class G at 'BBB-', US$22.1 million class H at 'BB+', US$19.1 million class J at 'BB', US$10.3 million class K at 'BB-', US$8.8 million class L at 'B+', US$7.4 million class M at 'B' and US$5.9 million class N at 'B-'. Fitch does not rate the US$20.6 million class O certificates. The rating affirmations follow Fitch's annual review of the transaction, which closed in August 2001. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. As of the November distribution date, the pool's collateral balance has decreased 1% to US$1.17 billion from US$1.18 billion at issuance. The certificates are collateralized by 130 fixed-rate loans on 139 properties, consisting mainly of the following: office (45% of the pool), multifamily (31%), and retail (19%) with significant concentrations in California (25%), Texas (12%), and Florida (11%). Midland Loan Services, the master servicer, collected year-end (YE) 2001 financials for 88% of the pool balance. The YE 2001 weighted average debt service coverage ratio (DSCR) is 1.53 times (x) compared to 1.58x at issuance for the same loans. Currently, one loan (0.08%) is in special servicing. The loan is secured by a multifamily property in Cincinnati, OH and is currently 30 days delinquent. The borrower is working to bring the loan current. Two loans(2.3%) reported YE 2001 DSCRs below 1.00x. One of the loans(2.2%), Golf Terrace Apartments, is located in Winter Springs, FL and suffered in 2001 from construction at the property which has been completed. Fitch reviewed credit assessment of the Landmark loan (7.8%) and the Parfinco East and West Annex loan (4.7%). The DSCR for each loan is calculated using borrower financials less required reserves and debt service payments based on the current balance and Fitch stressed refinance constant. The Landmark loan is secured by a 423,677 square foot (sf) office building located on Market Street in the Financial District of Downtown San Francisco. The stressed DSCR for the trailing twelve months ending September 2002 was 1.70x compared to 1.73x at issuance. Tenants include Epicentric (26% of the net rentable area), Del Monte(15%), and Salesforce.com(15%). The tenants have security deposits in place in the form of letters of credit aggregating to approximately US$18 million. The Parfinco East and West Annex loan is secured by two eight story office buildings totaling 510,550 sf located in Pasadena, CA. The stressed DSCR for the trailing twelve months ending September 2002 was 1.48x compared to 1.40x at issuance. The largest tenants are Kaiser Health Plan (54%), FEMA (12%), and Arco (12%). Based on their stable to improved performance, both loans maintain investment grade credit assessments. Fitch will continue to monitor this transaction, as surveillance is ongoing. ZURICH FINANCIAL: ZCM to Buy Interests of CPH and QP in Australia ----------------------------------------------------------------- As part of its previously announced restructuring to focus on core strengths, Zurich Capital Markets (ZCM), a group of wholly owned subsidiaries of Zurich Financial Services, has reached an agreement with CPH Investment Corp. (CPH) and Queensland Press Pty. Ltd. (QP) to buy all of the interests QP and CPH held in Zurich Capital Markets Australia (ZCMA). ZCMA was launched in November of 2000 as a strategic expansion of ZCM to offer tailored investment, risk transfer and risk management solutions to customers in Australia and parts of Asia. ZCM will continue its presence in the region offering its core asset management-based products for clients seeking exposure to alternative investments. Given the revised scope and change in ownership of ZCMA, several members of the original ZCMA management team have left the firm to pursue other interests. ZCM, CPH, and QP wish them well in their new endeavors. Mike Watanabe and John Moran will oversee the ZCM operations in Sydney until a new management team is named. Zurich Capital Markets is a member of the Zurich Financial Services Group and serves a global client base including financial institutions, insurance companies, hedge funds, funds- of-funds, and high net worth individuals. ZCM has offices in New York, London, Dublin, Sydney, Tokyo and Hong Kong. Zurich Financial Services is an insurance-based financial services provider with an international network that focuses its activities on its key markets of North America, the United Kingdom and Continental Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. It has offices in approximately 60 countries and employs well over 70,000 people. CONTACT: Zurich Financial Services, Media and Public Relations 8022 Zurich, Switzerland Phone: +41 (0)1 625 21 00, Fax +41 (0)1 625 26 41 Home Page: http://www.zurich.com SWX Swiss Exchange/virt-x: ZURN =========================== U N I T E D K I N G D O M =========================== ABERDEEN ASSET: Issues Financial Results for Year Ended September ----------------------------------------------------------------- FINANCIAL HIGHLIGHTS 2002 2001 Turnover GBP193.3m GBP182.1m Pre-tax profit (before goodwill amortisation and exceptional items) GBP40.7m GBP48.2m Earnings per share (before goodwill amortisation and exceptional items) 15.9p 21.1p Total dividend per share 6.0p 10.5p Assets under management at the year-end GBP23.7bn GBP25.8bn* * pro forma excluding assets previously managed for Scottish Provident OPERATIONAL HIGHLIGHTS Assets under management decrease to GBP23.7 billion from GBP25.8 billion (pro forma). The net reduction arises from net new business (+GBP0.9 billion), market movements (-GBP2.3 billion) and split capital investment trust debt repayments (-GBP0.8 billion). Strong performance from property and fixed interest asset classes New controls and management structure in place Cost reduction programme has reduced overhead by GBP30 million on an annual basis Proposed divestment of Aberdeen Property Investors in 2003 Operating margin at 30.4% Final dividend of 2.15p (2001: 6.65p), making a total of 6.0p (2001: 10.5p) To see Aberdeen Asset Management's Financial Statements: http://bankrupt.com/misc/Aberdeen.htm CHAIRMAN'S STATEMENT The past year has been very difficult for the Group and for the whole investment management industry. However, the broadly diversified range of our activities, the result of successful acquisitions made over several years, has mitigated some of the worst effects of the unrelenting decline across major equity markets. The bear market has seen the FTSE World Index fall by some 25 per cent over the past year and by 35 per cent over the last three years. Bonds and property account for 58 per cent of our assets under management and these proved to be more resilient than equity markets; the IPD UK Monthly Property Index had a positive return over the year of 10 per cent and many areas of the bond markets produced positive returns. It is against this general background that profits before taxation, goodwill amortisation and exceptionals this year amount to GBP40.7 million, compared with GBP48.2 million earned in the previous year and earnings per share amount to 15.9 pence this year compared with 21.1 pence in 2001. The impact of falling revenues and funds under management has brought pressure on our balance sheet. During the previous financial year, to 30 September 2001, we increased bank borrowings by GBP202.6 million in order to help finance acquisitions, which cost a total of GBP357.5 million, of which GBP222.8 million was paid for in cash. This year has seen modest acquisitions, the largest of which was the purchase of Old Mutual's Isle of Man life assurance operation for GBP36.1 million. This purchase was funded by a GBP100 million convertible bond issue in January 2002, GBP43 million of which was used to repay bank borrowings, which have now been reduced to GBP123.7 million. We have recently completed a strategic review of our activities and the implementation of the decision to divest the property division will further reduce our gearing. The Board will keep under review whether other asset disposals should be undertaken. We started the year with GBP34.7 billion under management. During the course of the year, following Abbey National's acquisition of Scottish Provident, GBP8.9 billion of funds managed on behalf of Scottish Provident were transferred out. GBP2.3 billion of the reduction resulted from market movements, debt repayments by split capital closed-end funds reduced assets by GBP0.8 billion and net new business flows added GBP0.9 billion, leaving assets under management totalling GBP23.7 billion at year end. Dividend The Board has decided to recommend a final dividend payment of 2.15p per share, making a total for the year of 6.0p per share, compared with 10.5p in 2001. The decision to reduce the total dividend to a sustainable level has been taken in the light of current conditions in world markets, which we expect to prevail through next year, and the desire to conserve financial resources until there is a marked recovery. In the coming year the interim and final payments will be rebalanced on the basis of the total dividend for 2002 to reflect a more normal payment pattern. Strategic Review In October we completed a strategic review of our operations. A key decision was to focus on our core competencies in the management of equity and fixed interest securities. This was taken particularly in view of the emphasis clients are now laying on investment performance and process disciplines, irrespective of market conditions. As it stands, the bear market has dented investor confidence, but the long-term argument for investment in risk assets remains valid, not least as governments around the world encourage individuals to make provision for their retirement. Aberdeen Asset Management is an independent manager of third party assets. Our business strategy is to offer high-quality investment management services to discrete market segments worldwide, defined by where we can compete effectively and best leverage economies of scale. We systematically evaluate our business mix in order to ensure we can maintain sustainable margins and thus healthy returns to shareholders. Aberdeen Property Investors Our strategic review led us to conclude that the interests of shareholders will be best served by the disposal of a majority interest in Aberdeen Property Investors, our property asset management business, through flotation on the London Stock Exchange. Following our announcement of the intention to pursue a flotation of this division, we have received approaches from a wide range of financial institutions expressing interest in purchasing this division. These are being given due consideration by the Board. Cost reduction programme Against the background of falling equity markets, we have kept our cost base under constant review and have taken significant steps to bring it into line with prevailing market conditions. As a consequence, we have been able to maintain operating margins at 30.4% compared with 32.3% achieved in 2001. This has, however, meant a headcount reduction in our equity and fixed interest fund management divisions of 27 people during the year and another 61 across marketing and administration functions. Together with other cost saving measures, this will result in an overall reduction in costs on an annualised basis of some GBP30 million. Our current staff base comprises 1,280 employees worldwide, of whom 574 work in our property division. Nevertheless, we remain committed to maintaining the highest standards of customer service and risk control in all areas of our business. Split Capital Closed End Funds The split capital closed end fund sector in the U.K. has continued to suffer dramatically in the downturn. We managed or advised 19 such funds during the period, each with distinct investment objectives and structures, out of an industry total of 138 funds. As the largest of the 37 fund managers operating in the sector, we have faced intense scrutiny. The U.K. regulator is reviewing the whole sector. We believe that at all times we have acted with complete integrity and in accordance with all relevant regulations and laws. These issues are, however, extremely complex and come at a time of market uncertainty and widespread negative comment. In conjunction with the boards of the split capital closed end funds that we manage, we continue to explore all positive measures to improve sector confidence, in addition to measures to assist individual client companies and funds. I would like to state that we are distressed at the losses suffered by investors in the split capital sector. While these individuals make up a small proportion of the investing public, we recognise the impact that the steep decline in values, or outright failure, of some trusts may have had on their portfolios. Board Restructuring The Board had grown considerably following acquisitions over the last few years. As part of the Strategic Review, we have restructured it in order to streamline decision-making and separate governance from operational issues more clearly. As a consequence, all of the executive directors, with the exception of Martin Gilbert, Chief Executive, and Bill Rattray, Finance Director, have resigned from the Board, although they continue in their existing management roles. They now constitute a separate Executive Management Committee, reporting to the Board on each of our principal operating areas worldwide. Chris Fishwick, who resigned from the Board in October, is leaving the Group at the end of December. At the forthcoming annual general meeting, two of our longest serving non-executive directors, Ronnie Scott Brown and Clive Gilchrist, will also be retiring. Ronnie Scott Brown joined the Board as a founding director in 1983, becoming non-executive deputy chairman in 1997. In its early days, Aberdeen had less than GBP35 million under management and the Group has developed enormously since then. Both Ronnie and Clive have given magnificent service over the years and their wise counsel will be sorely missed. Phil McLoughlin will also retire at the annual general meeting after five years' service, and Simon Tan, Executive Vice President of The Phoenix Companies Inc, will take his position. I extend a warm welcome to Simon Tan in his new role and an expression of much gratitude to Phil McLouglin for the benefit of his experience over the years. Susan Murray has recently resigned from the Board in order to devote all of her time to her new role as Chief Executive of Littlewoods Retail Limited. I would also like to thank her for her valuable contribution over the past two years. Outlook Many of the challenges we face are common to all in the fund management industry and may be associated with a deeper than expected bear market following a decade-long period of growth. That said, our margins remain steady. Our immediate task is to shed non-core activities, support our existing clients and restore brand confidence. A reinforced commitment to our core asset management skills will enable us to deliver the strong performance our clients require, across our full product range. Finally, I would like to offer my thanks to everyone at Aberdeen Asset Management for all their hard work and support during this challenging year. Charles Irby Chairman CONTACT: Neil Bennett, Gavin Anderson Phone: 020 7554 1400 Lindsey Harrison SFI GROUP: FTSE Announces Changes in Share Trading -------------------------------------------------- Following the continued suspension of SFI Group PLC and in accordance with the ground rules, FTSE announces the following changes: INDEX CHANGE EFFECTIVE FROMSTART OF TRADING FTSE SFI GROUP (UK 0135515) December 5, 2002 All-Share will be removed at 0p FTSE CAP SFI Group December 5, 2002 All-Share will be removed as above FTSE All-Share SFI Group December 5, 2002 Ex-Multinationals will be removed as above FTSE All-Small SFI Group December 5, 2002 will be removed as above FTSE SmallCap SFI Group December 5, 2002 will be removed as above CONTACT: FTSE Client Services in UK: Phone: +44 (0) 20 7448 1810 and Client Services in US: Phone: +1 212 825 1328 +1 415 445 5660 and Client Services in Asia Pacific: Phone: +852 2230 5800 +65 6223 3738 E-mail: info@ftse.com Home Page: http://www.ftse.com TELEWEST COMMUNICATIONS: Sharpens Consumer Marketing Focus ---------------------------------------------------------- Telewest Broadband is introducing a new agency line-up to drive its consumer marketing strategy forwards in 2003 and beyond. The cable communications company has appointed Rapier, as lead strategic and communications agency, to work alongside specialist radio creative agency Radioville. A key focus will be to extend the success of the company's award winning blueyonder broadband internet service, from "early adopters" to the "early majority" market. David Hobday, deputy managing director, Telewest Broadband, said: "We want to build a collaborative agency model that will maximise performance and value and be closely aligned to the company's core strategies of achieving broadband leadership and customer loyalty." John Petter, director of marketing, Telewest Broadband, added: "blueyonder broadband has beaten BT hands-down with an 80% market share within our franchise areas, where consumers have a head to head choice of cable Vs ADSL. BT may well outspend us on advertising - but whilst they're raising general awareness of broadband we're focussing on communicating the superiority of our ISP blueyonder to consumers." Radio advertising and sponsorships will continue to play a major part in the marketing programme, as will delivering response- driving DM to boost sales, upsell and customer loyalty across the company's tripleplay of broadband internet, telephone and TV services. Having recently enhanced its customer data, Telewest Broadband has hired Rapier to help turn this capability into targeted communications. Ben Stephens, managing director, Rapier, said: "Broadband is a fast-moving and dynamic area and we are delighted to be working with one of the most innovative companies in the industry. "We have extensive experience of delivering breakthrough- marketing techniques with several of the U.K.'s leading service brand companies. We will be developing multi-channel solutions from day one and can't wait to get motoring." Adrian Reith, chief executive, Radioville, commented, "We are delighted that Telewest Broadband has as much confidence in effective creative radio as we do and backed that with a serious radio spend. "Radioville is glad to be pioneering effective creative solutions for many big brands who have decided that radio is the right medium for them." Radioville is the specialist creative agency committed radio clients use. The biggest radio specialist in the U.K., they make radio creative for clients such as The Carphone Warehouse, Nestle, Nationwide, Radio Advertising Bureau, Time Out, HMV, Six Continents Retail and Exchange & Mart. Rapier is the agency that brings together business and data strategists and communications planners in order to generate step changes in marketing effectiveness for Service Brand clients. It works for the likes of the AA, HSBC and Marks & Spencer. Telewest Communications, the broadband communications and media group, currently passes 4.9 million homes and provides multi- channel television, telephone and internet services to 1.76 million U.K. households, and voice and data telecommunications services to around 74, 100 business customers. CONTACT: Ben Stephens, managing director, Rapier Phone: 020 7369 8211 Adrian Reith, Chief Executive, Radioville Phone: 020 7534 5959 Rachel Turner, Head of PR Telewest Broadband Phone: 01483 582140 ************* 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. 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