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/raid1/www/Hosts/bankrupt/TCREUR_Public/021209.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 Monday, December 9, 2002, Vol. 3, No. 243 Headlines F I N L A N D SONERA CORP: To Voluntarily End Quotation of ADS on NASDAQ F R A N C E FRANCE TELECOM: EUR9 Billion Rescue Package Faces Scrutiny FRANCE TELECOM: Launches FT 2005 to Regain Control of Future G E R M A N Y BAYER AG: Disclose New Rules for Corporate Governance BAYER AG: Strategic Options for Rhein Chemie Under Review KIRCHMEDIA GMBH: May Complete Sale of Company This Month I T A L Y ALITALIA SPA: Court Orders Royal KLM to Pay Alitalia EUR250 MM CAPITALIA SPA: To Sell 135 Branches for EUR800 Million CAPITALIA: To Raise EUR22 MM From Sale of Additional Ten Branches FIAT SPA: Cuts Workforce Despite Failure of Negotiation S W I T Z E R L A N D CREDIT SUISSE: Expands Executive Board With Key Senior Managers SWISS LIFE: Issues Shares, Raises CHF 1,106 Billion U N I T E D K I N G D O M CORUS GROUP: Board Postpones Sale of Aluminum Processing Plants EQUITABLE LIFE: SP Lowers Rating to 'CCC-', Outlook Negative MARCONI PLC: Delays Results Pending Notice of Restructuring ROYAL & SUN: Moody's Changes Insurance Financial Strength Outlook TXU EUROPE: Considers Selling Significant Assets - Source ============= F I N L A N D ============= SONERA CORP: To Voluntarily End Quotation of ADS on NASDAQ ---------------------------------------------------------- In connection with the completion of Telia's exchange offer for all of the outstanding shares of Sonera, Sonera (HEX: SRA, NASDAQ: SNRA), as previously disclosed, will voluntarily end the quotation of its American depositary shares on Nasdaq. It is expected that Sonera's ADSs will cease to be quoted on Nasdaq as of the close of trading on Nasdaq on Friday, December 6, 2002. Sonera shares will continue to be listed on the main list of the Helsinki Exchanges. Sonera Corporation (HEX: SRA, NASDAQ: SNRA) is a leading provider of mobile and advanced telecommunications services. Sonera is growing as an operator, as well as a provider of transaction and content services in Finland and in selected international markets. The company also offers advanced data solutions to businesses, and fixed network voice services in Finland and neighbouring markets. In 2001, Sonera's revenues totaled EUR 2.2 billion, and profit before extraordinary items and taxes was EUR 0.45 billion. Sonera employs about 7,400 people. www.sonera.com CONTACT: Sonera Corporation Jyrki Karasvirta, Vice President, Corporate Communications Phone: +358 2040 60537 E-mail: jyrki.karasvirta@sonera.com or In the United States: Mr. Steve Fleischer, Vice President, Investor Relations, Phone: +973-448-4616 E-mail: steve.fleischer@sonera.com =========== F R A N C E =========== FRANCE TELECOM: EUR9 Billion Rescue Package Faces Scrutiny ---------------------------------------------------------- Rivals and some European authorities are challenging the legality of the EUR9 billion rescue package provided by the French government to state-controlled phone company France Telecom. Italian Communications Minister Maurizio Gasparri said,``We strongly reject any kind of direct aid... I hope the [European Union] commission will look at this very carefully.'' The loan, which France Telecom intends to use while it prepares to raise EUR15 billion in a share sale, still requires the commission's approval. Competition Commissioner Mario Monti must decide the legitimacy of the loan, which on one hand could secure 211,000 jobs, and on the other, endanger the business of other competitors, particularly Cegetel, Royal KPN, and Belgacom. Once France Telecom files for approval, the Commissioner has two months to authorize the loan, or he could launch an investigation that could take as long as 18 months to finish. The French government granted France Telecom EUR9 billion shareholder loan that would allow the company to trim borrowings by EUR30 billion (US$30.02 billion). The company's board approved a plan to trim down debt in the next three years through a EUR15 billion cash injection and a EUR15 billion increase in cash flow. The latter will be achieved through cost cutting, spending cuts and other operational measures, people familiar with the matter told the Wall Street Journal. The thrust towards trimming down costs includes cutting the company's EUR70 billion net debt to EUR40 billion by the end of 2005. FRANCE TELECOM: Launches FT 2005 to Regain Control of Future ------------------------------------------------------------ Following an in-depth study of the Group's activities and finances, the results of which were presented to the Board of Directors on December 4, France Telecom is launching an initiative, FT 2005, which will include four components: (i) Top: a program to improve operational performance, which will generate more than 15 billion euros in free cash flow to reduce debt; (ii) "15+15+15": a plan to strengthen the Group's financial structure: (iii) 15 billion euros via the TOP program, (iv) 15 billion euros in fresh equity, with the participation of the French State in its capacity as shareholder pro rata to its shareholding interest, i.e. for approximately 9 billion euros; (v) 15 billion euros from refinancing the Group's debt; (vi) A strategy focused on customer satisfaction and integrated operational management of a portfolio of assets comprising businesses that are leaders in their principal markets, with strong brands such as France Telecom, Orange, Wanadoo and Equant. Assets with weak strategic and financial positions or those for which majority control is not possible will be considered being divested; (vi) A completely new management team with a simplified organization and greater responsibility assigned to managers. France Telecom will seek to achieve greater strategic and financial flexibility with the aim of a net debt/EBITDA ratio of between 1.5 and 2 by the end of 2005. Presenting FT 2005, Thierry Breton, France Telecom Chairman and CEO declared: "With FT 2005, France Telecom gives itself the means to bring about its own recovery and regain control over its future. This marks a change from September, when the sole possibility appeared to be refinancing under the worst possible conditions. The in- depth study that has been carried out and the measures we are about to take demonstrate that France Telecom is once again capable of taking the initiative. Our first priority is to loosen the financial grip in which we are now caught, to put France Telecom back into a positive momentum. To achieve this I intend to leverage off the strengths, which has evolved considerably since 1995. We have outstanding human and technical capabilities. Whether in fixed-line, mobile, Internet or corporate networks, we enjoy leadership positions through our France Telecom, Orange, Wanadoo and Equant brands. The superior quality of our services and our capacity for technological innovation are well recognized. These advantages create tremendous potential for operational improvements that will permit us through the TOP program to generate cash in order to accelerate our debt reduction. The initiative we will pursue over the next three years with FT 2005 focuses on continually providing better service for our customers while maintaining as far as possible the current France Telecom Group structure, and thus the jobs of the people who constitute our primary resource. Thanks to the motivation of the Group's employees and the commitment of our management team, I am confident that we will meet the ambitious objectives set out by the TOP program and FT 2005. This will enable us to achieve our ambition of making France Telecom one of the top-performing operators in Europe". In-depth study of the France Telecom Group Upon his arrival at the head of the Group, France Telecom Chairman and CEO Thierry Breton commissioned a team of independent experts to review the company's situation. The conclusions of this study were presented to the France Telecom Board of Directors on December 4, 2002: The Group's operational potential remains intact From an operational perspective, France Telecom remains an extremely competitive company with a portfolio of assets that are leaders in their principal market segments, with strong brands: France Telecom, Orange, Wanadoo and Equant. The Group pursues a coherent range of activities that allows coordinated management of technological, consumer and regulatory evolutions in a competitive environment. However, given the Group's strong external growth and the organization put in place over the last few years, France Telecom has not fully exploited its clear potential to improve its operational margins. Very high debt levels During the 1999-2002 period France Telecom pursued very substantial external growth. Legal constraints requiring that the French State hold at least 50 percent of the company's shares meant that most of these acquisitions could not be paid with shares. These transactions were not accompanied by capital increases or sufficient asset disposals. Successive plans for refinancing and reducing the company's debt were not implemented due to the market turnaround. The Group spent a total of more than 100 billion euros on its expansion policy, 80% of which was paid in cash. The financial commitments linked to these transactions will represent a further total of approximately 5 billion euros between 2003 and 2005. France Telecom must make debt principal repayments totalling 15.2 billion euros in 2003, 15 billion euros in 2004 and approximately 20 billion euros in 2005, making a total of approximately 50 billion euros by the end of 2005. Decentralized and often fragmented organization Although it was very responsive at the operational level, France Telecom Group was organized in an excessively decentralized manner. The central functions did not have enough leverage to develop significant synergies nor to put in place recovery plans in the event of a crisis. The absence of any process for allocation of resources and the multiplication of customer/supplier relationships within the Group made the organization poorly adapted to the constraint of cost reductions. This does not call into question recognizable performance gains such as the successful redeployment of 65,000 people who have changed jobs within the Group since 1996, or the early retirement program. Accounting and financial outlook for end of 2002 France Telecom is today providing the reconciliation of its French GAAP accounts at June 30, 2002, to U.S. GAAP (this reconciliation will appear on the www.francetelecom.com website as soon as it has been furnished to the SEC). The half-year loss under US GAAP is 30.9 billion euros, compared with 12.2 billion euros under French GAAP. Furthermore, negative shareholders' equity at June 30, 2002 was 440 million euros under French GAAP and 24 billion euros under US GAAP. This difference is due to depreciation of goodwill for Equant and Orange, which are subject to the SFAS 142 depreciation test linked to the market price for their shares. Debt under US GAAP was 72 billion euros at June 30, 2002, reflecting financing guarantees for certain asset disposals and the fact that TPSA's debt is not consolidated. It should be noted that TPSA is consolidated according to the equity method under U.S. accounting methods. In view of developments in the Group's businesses and its operating environment since June 30, 2002, several accounting decisions will be proposed to the meeting of the Board of Directors called to approve the financial statements for 2002. Asset write-downs could total between 5.5 billion euros and 7 billion euros. The main component of these write-downs is the impairment of Equant's goodwill in the range of 3.5 to 4.5 billion euros, given the economic environment, third quarter results and unfavorable trends in Equant's competitive environment that have dictated a reassessment of its short- and medium-term outlook. France Telecom confirms its growth outlook for 2002. Revenues are expected to increase 8 to 9 percent compared to 2001, as announced when third quarter 2002 revenues were reported. EBITDA, a key figure in terms of France Telecom's commitments to meeting certain financial ratios, is expected to amount to approximately 14.5 billion euros, reflecting efforts initiated as of the fourth quarter of 2002. Investments will amount to less than 8 billion euros in 2002. Given these changes, France Telecom expects to have a liquidity position of about 6 billion euros available at the end of 2002. France Telecom expects to have a net debt/EBITDA pro forma ratio of under 4.70 at the end of 2002 (a ratio of 5 being required on this date to meet its principal credit line commitments) with net debt of approximately 70 billion euros under French GAAP. The Board of Directors will meet on December 19, 2002 to review the company's 2003 budget. Revenue projections for 2003 are voluntarily conservative - under 5 percent - while maintaining the objective of EBITDA growth in excess of 10 percent. Investments will be substantially lower than 2002 levels, generating free cash flow from operations in excess of 3 billion euros (before disposals). Under current circumstances France Telecom does not expect to pay dividends in 2003. FT 2005 With a new executive team in place, the Group assigns itself new ambition targets. The objective of FT 2005 program is to substantially strengthen the company's financial structure thanks to: - improved operational performance thanks to the TOP program, enabling significant debt reduction; - an increase in equity and rescheduling of debt repayments; - strategic refocus of the Group on core assets; Strengthening of the Group's financial structure Strengthening the financial position of the Group and its ability to meet its obligations is anchored in three separate components of a plan called "15+15+15": - 15 billion euros of available free cash flow allocated to reducing debt thanks to substantial efforts throughout the Group to improve operational performance thanks to the TOP program described above; - 15 billion euros in fresh equity for France Telecom; - 15 billion euros from the rescheduling of debt repayments. These three components will be pursued concurrently in order to achieve a net debt/EBITDA ratio in the range of 1.5 to 2 by the end of 2005, affording the Group greater financial flexibility. - TOP operational performance program: 15 billion euros in net cash flow allocated to debt reduction between 2003 and 2005 France Telecom's return to a more solid financial condition depends above all on the improvements in the company's operational performance for the period 2003-2005. These improvements are expected to generate more than 15 billion euros in net free cash flow. 15 billion euros will be allocated to reducing the company's long-term debt. Approximately 20 to 25 percent of the free cash flow is expected to be generated in 2003, 35 to 40 percent in 2004, and 35 to 40 percent in 2005. Over the 2003 to 2005 period, performance improvements should stem primarily from the reduction and optimization of investments (representing 40 to 45 percent of the savings in the TOP program), from the reduction in operating costs (35 to 40 percent of savings) and from optimization of working capital requirements and various other sources (20 to 25 percent of savings). In 2003 the impact will come mainly from the reduction and optimization of investments, given the lead times needed to implement measures designed to cut operating costs. Additional free cash flow for the 2003-2005 period will be generated primarily from fixed-line activities in France (40 to 45 percent) and by Orange (35 to 45 percent). The contribution from fixed-line voice and data activities outside France will represent approximately 12 to 17 percent and Wanadoo's contribution will account for less than 3 percent of the total savings. Restructuring costs are expected to range between 800 million and 1 billion euros (of which 50 percent in cash) for the 2002-2005 period, with a significant portion attributable to Orange. The TOP program is based on conservative revenue scenarios and draws on a hundred perfectly identified projects. The TOP program will be managed jointly by the operational entities and the central Group functions. - Purchasing (excluding purchasing of capacity and information systems) and reduction in general and administrative costs: redefined specifications, revamping of the purchasing process and rationalization of services; - Research & Development: efficient allocation of investments and leveraging the value of patents; - Support functions: reorganization of central functions; - Communication and branding: coordination and optimization of communication plans - Property and tax: rationalization of occupancy of offices/facilities and reduction in operating costs; - Investments: tighter controls over investment budgets, improvement of investment policies managed by key areas across the Group - Working Capital Requirements: improvement in receivables collection and invoicing lead times. The 2003 component of the TOP program has been launched and included in the 2003 budget, which will be presented at the next meeting of the Board of Directors on December, 19, 2002. - Strengthening of equity The Group believes that France Telecom requires approximately 15 billion euros in additional equity. Taking into account the action plan prepared by the management and the outlook for a return on investment, the French State has indicated that it will make a pro rata contribution of 9 billion euros. To give France Telecom the possibility to turn to the markets at the most appropriate moment, the State also indicated that it was ready to anticipate on its participation in the capital increase by providing the company with a subordinated bridge shareholder advance remunerated at market conditions. The measures planned by the French State, as majority shareholder, were communicated to the European Commission on December 3, 2002, in compliance with EU rules. - Refinancing of bonds The Group will also work throughout the three-year period on reshaping the maturity's profile of its outstanding bond financings. Focus on core assets In order to preserve the integrity of the France Telecom Group and give it the resources required to pursue an independent strategy, an overriding priority will be given to generating free cash flow. France Telecom's strategy will focus on customer satisfaction and integrated operational management of a portfolio of assets comprising businesses that are leaders in their principal markets, with strong brands such as France Telecom, Orange, Wanadoo and Equant. Assets characterized by weak strategic or financial positions or those for which majority control is not possible will be considered for divestiture. The Group will work to develop strategic partnerships in areas outside its core businesses and where it cannot achieve critical mass. Additional support measures and projects Successful implementation of the TOP operational performance program requires that the Group adopt a new organization and approach to human resources management. In addition to programs that are already underway such as early retirement program and natural attrition, which together represent the anticipated departure of more than 20,000 people over the next three years, the French State is putting in place a special "mobility" task force. The mission of the task force will be to satisfy to the best of its ability the wishes expressed by volunteer staff. At the same time the Group's Human Resources department will intensify the redeployment of skills within the Group. As a preliminary measure there will be a freeze on hiring until June 2003. Implementation of management and organization To implement FT 2005 and especially the TOP program, Thierry Breton decided to simplify the current organization and appoint a new management team. The number of reporting levels will be reduced and the responsibility of managers for operating income, cash flow and certain balance sheet items will be increased. There will be better coordination in areas such as technology, customer relations and the regulatory environment. The executive committee of the Group will be structured in such a way as to ensure the success of the TOP program, each member of the executive committee being responsible for a certain number of projects. In addition to the annual budget, a six-monthly follow up will be implemented and the salary incentive system will be strengthened. Corporate governance will be improved and organizational structures will be simplified in order to strengthen monitoring procedures and internal controls. This will also enable better centralization of information and decision procedures and more direct involvement of the Board of Directors. The Board of Directors will be heavily involved in defining the strategic direction of the Group and performance monitoring, especially via the newly created Strategic Committee, Compensation and Benefits Committee, and the Audit Committee. Under Thierry Breton, the Executive Committee of France Telecom consists of : - Frank E. Dangeard : FT 2005, Financial Rebalancing(program "15+15+15") Operations: - Barbara Dalibard : Corporate Solutions - Jean-Yves GouiffSs : Fixed -Lines Services and Distribution France - Jean-Philippe Vanot : Networks and Operators - Jean-Paul Cottet : International and IT - Jean-Fran?ois Pontal : Orange - Olivier Sichel : Wanadoo Support functions: - Michel Combes : Finance - Bernard Bresson : Human Resources and FT 2005, Development and Optimization of Human Competencies - Michel Davancens : Management Networks - Jacques Champeaux : General Secretary - Jean-Jacques Damlamian : Research & Development - Marc Meyer : Communication - Louis-Pierre Wenes : Sourcing and Performance Improvement CONTACT: FRANCE TELECOM 6, Place d'Alleray 75505 Paris Cedex 15, France Phone: +33-1-44-44-22-22 Fax: +33-1-44-44-95-95 Home Page: http://www.francetelecom.fr ============= G E R M A N Y ============= BAYER AG: Disclose New Rules for Corporate Governance --------------------------------------------------- Bayer AG will follow the recommendations of the "Government Commission on the German Corporate Governance Code" to a great extent. At its meeting on December 5, 2002, the company's Supervisory Board approved the "declaration of conformity," which the Board of Management and the Supervisory Board will issue to stockholders under new legislation. In addition, the Supervisory Board decided on far-reaching changes regarding the transparency of Management Board and Supervisory Board compensation. Details of the remuneration of Management Board members will in future be provided in the notes to Bayer AG's financial statements, disclosing for each individual the fixed salary, performance-related components and long-term incentives. The same applies to the earnings of the Supervisory Board members, which will be shown according to fixed and performance-related portions. At today's meeting the Supervisory Board also issued new Rules of Procedure for its own activity. Committee work is to be thoroughly reorganized. There will in future be three committees of the Supervisory Board: the Presidium (also nomination committee, established pursuant to 27 of the Co-Determination Act), the Human Resources Committee and the Audit Committee. Some of today's decisions entail amendments to Bayer's Articles of Incorporation. The amendments will therefore be put to the Annual Stockholders' Meeting in April 2003. BAYER AG: Strategic Options for Rhein Chemie Under Review --------------------------------------------------------- An agreement concluded in October 2002 between a U.S. financial investor and Bayer concerning the sale of Rhein Chemie has been dissolved by common consent of the parties, who were unable to agree on a number of outstanding points. Various strategic options are currently being considered. Rhein Chemie is an internationally successful supplier of specialties to the rubber, lubricant and plastics industries. It also has a wholly owned subsidiary, iSL-Chemie GmbH & Co. KG in Kurten, Germany, affiliates in the United States and Japan, and owns a 90 percent interest in a joint venture in China. Note: During Bayer's announcement of the sale of Rhein Chemie to a group of investors in October, the company had announced that it expects to complete the sale at the start of November. The transaction involves a EUR215 million sale price, including debt, to the group of investors advised by US's Advent International, according to AFX. Rhein Chemie employs 1,1oo workers in Germany and around the world, and had generated sales of around EUR320 million in 2001. KIRCHMEDIA GMBH: May Complete Sale of Company This Month -------------------------------------------------------- KirchMedia may reach a deal for the EUR2 billion sale of the company this month to a consortium led by German publisher, Bauer Verlag, according to bankers familiar with the negotiations. Under the terms of the proposal, Bauer and German bank, HVB, would launch two interlocking vehicles to take over KirchMedia's library of film rights and its 52.5% stake in ProSieben. The ProSieben stake is being sold for EUR700 million, with consent to make a public offer for the remaining shares at a price to be determined by Germany's takeover code. Bauer expects the price offering to be EUR6.40 per share, says the Financial Times. The film library, the world's biggest collection library of German-language material, is priced at EUR1.3 billion. The pending acquisition is financed by new loans and rollover of some of KirchMedia's existing EUR2.2 billion bank debts. Although the negotiations are expected wrapped up in about two weeks, uncertainties regarding the success of the deal still linger. Bankers said that some lenders still doubt that Bauer will be able to raise enough cash to fund the buy-out. Axel Springer, another publisher, which holds 11.8% of ProSieben, could still exercise its right to refuse the sale of the company. Axel Springer may attempt to raise its stake in the broadcaster in exchange for a previous cash claim amounting to EUR767 million against KirchMedia. In case Springer decides to do so, its stake in ProSieben would become a 28% blocking minority, the report says. Springer and KirchMedia have until December 17 to reach an agreement. KirchMedia filed for insolveny in April following the collapse of parent company KirchGruppe. ========= I T A L Y ========= ALITALIA SPA: Court Orders Royal KLM to Pay Alitalia EUR250 MM -------------------------------------------------------------- An arbitration court in Hague ordered Dutch airline Royal KLM, to pay EUR250 million (US$249.1 million) in damages to Italy's Alitalia SpA for backing out of an alliance agreed to in 2000. The Italian airline had filed suit against Royal KLM claiming that the termination of the deal was invalid. Although the arbitration court awarded Alitalia damages for the breach, the airliner was also ordered to repay the EUR100 million KLM invested in Milan's Malpensa's airport under the terms of the agreement. The repayment will reduce Alitalia's total award to EUR150 million, plus interest and court costs. The plan of the two airlines to operate as one carrier with hubs in Amsterdam, Milan and Rome was suspended after the Italian government failed to give assurances that KLM and Alitalia would be able to develop Milan's Malpensa airport as a major hub, according to Dow Jones. As of September 30, 2002, Alitalia's net financial indebtedness amounted to EUR610 million, down from EUR340 million in June 2002. For the third quarter, the carrier recorded a loss before extraordinary items and taxation of EUR26 million compared with a loss of EUR31 million last year. CAPITALIA SPA: To Sell 135 Branches for EUR800 Million ------------------------------------------------------ -- Network Rationalization: To Be Sold 135 Branches Forecast Price: Around EUR800 Million Net Gain: EUR356.4 Million -- Sale Of Shareholdings In Finnat And Finaref Price: EUR220 Million, Net Gain: EUR32.5 Million -- Francesco Torri Appointed New Vice-President Of Capitalia -- Francesco Arietti New Director And Member Of Executive Committee The Board of Directors of the Capitalia Group met Thursday under the Chairmanship of Cesare Geronzi and, ahead of the timetable set out in the Business Plan presented to the Financial Community, examined and selected the firm offers relating to the sale of 135 branch offices located in the North East, North West and Southern areas of the country. This sale, which will take place in the framework of the rationalization of the branch network, should bring in an amount of around EUR800 million (on the basis of balance sheet data at 30 June 2002) and an overall net gain of EUR 356.4 million (equal to 9.7% of deposits), to be accounted during the present financial period. In particular, the following will be sold: -- to Unipol Banca, 59 branches, located mainly in the North West of Italy, for an amount of EUR 163.4 million; -- to the Carige Consortium (Banca Carige, CR Rimini and Veneto Banca), 76 branches, located in the North East and South of Italy, for an amount of EUR 193 million. The total amount received for the branches involved in this sale is around EUR 3,700 million. These branches have a total staff of 1.053 persons. For this sale, for which Capitalia used the services of MCC and KPMG Corporate Finance as advisors, will bring about a reduction of around ? 1,600 million in Risk Weighted Assets, in line with the forecasts of the Industrial Plan. In the framework of the disposal of non-core activities, the Board also approved the sale, approved today by the Board of Directors of the Bank of Sicily, of the shareholding the latter has in Banca Finnat Euramerica S.p.A., a bank operating in broking and investment services. The Board further approved the sale of the shareholding directly held in Finaref S.A., the French finance company active in the consumer credit sector. The stake of 49% in Finnat will be sold to Societ. Terme Demaniali di Acqui S.p.A., part of the Nattino Group which already controls 51%. The price of the sale, to be paid in several instalments, is EUR 50 million overall, which will give rise to a net gain of EUR 32.5 million. The 5.4% shareholding in Finaref will be sold to the Pinault Printemps-Redoute Group, parent company of Finaref, at a price of EUR 170 million. This sale is neutral from an income statement viewpoint. The Board of Directors has also taken note of the resignation from the Board of Vice-President Prof. Antonio Longo, whom the Company thanks for the important contributions he has made. The Board has nominated as Vice-President the Director Francesco Torri, Managing Director of the Toro Assicurazioni Group, while Francesco Arietti has been co-opted onto the Board of Directors and nominated a member of the Executive Committee. Finally, the Board used the occasion to emphasise the central and strategic importance of the alliance with the Toro Group. CAPITALIA: To Raise EUR22 MM From Sale of Additional Ten Branches ----------------------------------------------------------------- - Capitalia has received a binding offer from Banca Popolare di Puglia e Basilicata relating to the sale of another 10 branches, located in the South of Italy. The expected net gain related to the sale will be around EUR22 million, equal to 8% of the aggregate of deposits and assets administered and managed by these branches (aggregate deposits and client assets). Upon completion of this operation a total of 145 branches will be involved in the rationalization of the branch networks. The total net gain to be realized by Capitalia is expected to be EUR378 million, equal to 9,5% of aggregate deposits and client assets, which equaled almost EUR4,000 million. Of the latter, EUR1,350 million relate to direct deposits and EUR2,620 million of client assets. These branches have employees totaling 1,139. The total assets relating to the 145 branches equal approximately EUR 1,800 million; Risk Weighted Assets are estimated to be reduced by this operation by a total of approximately EUR1,700 million. Note: Early in November, Moody's Investors Service downgraded to C from C+ Capitalia Spa's financial strength rating. While noting that the then-called Banca di Roma group benefited from its integration with Bipop-Carire group, the rating agency said it expects the bank's credit profile to continue to suffer from legacy issues. Moody's refers the legacy issues particularly to: "asset quality, requiring high provisioning and temporarily hindering management from renewing efforts to increase profitability and efficiency." The rating agency noted in addition, difficulties in economic condition, increased competition, difficulties in integration, and the bank's ability to generate improvements. FIAT SPA: Cuts Workforce Despite Failure of Negotiation ------------------------------------------------------- Struggling industrial group Fiat succeeded in dismissing workers after renewed talks between the company, trade unions and the government failed to resolve conflicting demands. The company laid off 5,600 car workers for up to a year while it continues to negotiate with the government and trade union leaders. Employees affected are workers in Fiat Auto and Fiat- owned components companies. Earlier, Fiat SpA was forced to halt plans of cutting 8,100 jobs on December 2 after talks with the government regarding state- managed unemployment fund were suspended and rescheduled to December 5. According to Francesca Novelli, a spokeswoman for the UGL union, Italy's deputy prime minister, Gianfranco Fini, decided to halt the talks on the manufacturer's reluctance to agree on making concessions. Italy's biggest manufacturer is applying for a state-managed unemployment fund, that would pay workers as much as 80% of their salaries for 12 months when they are laid off. The government and union leaders, however, placed as a condition the rehiring of most of the laid off workers after a year. Gianfranco Fini, Fiat's vice-premier, blamed the demands of the leftist CGIL trade union for the failure of the parties to reach a consensus. The negotiations between the parties are aimed at shortening the lay-off period, retraining workers for other industries and boosting investment for research, says the Financial Times. Also included in the talks is the demand for a more flexible work hours for Fiat Auto's Termini Imerese plant in Sicily in exchange for 12-month lay-off period being reduced by several months. CONTACT: FIAT SPA 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Toll Free: 800-804027 Home Page: http://www.fiatgroup.com/e-index.htm ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: Expands Executive Board With Key Senior Managers --------------------------------------------------------------- Credit Suisse Group announced that it is expanding its Executive Board with key senior managers, as previously communicated at the presentation of its third quarter results. The Board of Directors has appointed the following people to the Group Executive Board, effective January 1, 2003: Brady W. Dougan, Brian Finn, David P. Frick, Ulrich K"rner, Stephen R. Volk and Alex W. Widmer. With these additions, the Group Executive Board will comprise the following Members: Oswald J. Gr�bel Group Co-CEO; CEO CSFS John J. Mack Group Co-CEO; CEO CSFB Hans-Ulrich Doerig Vice-Chairman; Head of Corporate Center, Credit Suisse Group Brady W. Dougan Co-President, Institutional Securities, CSFB Brian Finn Co-President, Institutional Securities, CSFB David P. Frick General Counsel, Credit Suisse Group Ulrich K"rner Chief Financial Officer, CSFS Jeffrey M. Peek Head of Financial Services Division, CSFB Philip K. Ryan Chief Financial Officer, Credit Suisse Group Richard E. Thornburgh Chief Risk Officer, Credit Suisse Group Stephen R. Volk Chairman, CSFB Alex W. Widmer Head of Private Banking, CSFS Oswald Gr�bel and John Mack explained: "We think that it is important to strengthen the Group Executive Board by adding key senior managers, in particular from our business units. These individuals bring to the Board strong leadership, proven business skills and extensive knowledge about our markets, clients and operations. Their contribution to Group-level decisions will be invaluable to us when mastering future challenges." See also: Executive Board of Credit Suisse Group as of Jan.1, 2003 (incl. CVs) Credit Suisse Group Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium- sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group's registered shares (CSGN) are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 80,000 staff worldwide. As of September 30, 2002, it reported assets under management of CHF 1,221.8 billion. CONTACT: Credit Suisse Group Investor Relations Telephone Phone: +41 1 333 4570 SWISS LIFE: Issues Shares, Raises CHF 1,106 Billion ---------------------------------------------------- With the successful conclusion of its capital increase, Swiss Life Holding raised CHF 1,106 billion gross in additional financial resources. Through the issuance of 10 839 704 shares at a subscription price of CHF 79 per share, the company generated gross proceeds amounting to CHF 856 million. The Mandatory Convertible Securities issued at the same time raised additional funds of CHF 250 million for Swiss Life Holding. The definitive terms and conditions for the convertible issue were laid down yesterday and published by Credit Suisse First Boston. Following the 19 December 2002 payment date for the allocated Mandatory Convertible Securities, Swiss Life Holding will hold more than 5% of its own shares. Among other things, this assures that the conversion rights by means of which Mandatory Convertible Securities can be exchanged for Swiss Life Holding shares are covered. With the capital increase, the conditions are now in place for Swiss Life Holding to pursue its new strategic direction and put the company back squarely on the road to success. In the words of Group CEO Rolf D"rig: "We see the capital increase as an impressive vote of confidence. The strengthening of our financial resources enables us to go forward with the focused implementation of our new strategy and achieve a sustained improvement in the Swiss Life Group's performance. It means we have passed an initial milestone along the way to reclaiming our position among Europe's top life insurers." To see Definitive terms and conditions for the convertible issue: http://bankrupt.com/misc/Conditions.pdf =========================== U N I T E D K I N G D O M =========================== CORUS GROUP: Board Postpones Sale of Aluminum Processing Plants --------------------------------------------------------------- The board of Anglo-Dutch steel maker, Corus Group, postponed the planned sale of its aluminum processing plants to Pechiney pending further analysis of the matter. Corus said, "Because of the complexity of the matter the management board felt they needed more time before reaching a decision." The group agreed in principle to the sale of its Aluminium Rolled Products and Extrusions businesses to Pechiney for GBP543 million (EUR861 million) in October. Corus Aluminium Rolled Products consist of rolling mills at Koblenz, Germany and at Duffel in Belgium, together with a 60% interest in Corus LP (Canada) at Cap-de-la-Madeleine. The sale would have substantially concluded Corus' divestment of its aluminum interests announced in March this year. The net proceeds had been intended to reduce debt and further strengthen the Group balance sheet. According to a company statement during that time, Corus and Pechiney were legally prevented from entering into a binding sale and purchase agreement until the employee advice and consultation process is complete. In the company's announcement of the postponement of the process recently, Corus said the management board will be considering the advice of the Central Works Council and the supervisory board before it makes a choice. Dow Jones cited Prakash Shah, an analyst with Barclays Private Clients, saying "You have a choice of a big pile of cash or strategically poor aluminium assets...I don't understand where the problem is with the decision." The analyst reportedly added that the delay could suggest disagreement between the Dutch and British sides of the business. CONTACT: Corus Corporate Relations Phone: +44 (0) 20 7717 4502/4505 Corus Investor Relations Phone: +44 (0) 20 7717 4503/4504 Credit Suisse First Boston Stuart Upcraft/Hugh Richards Phone: +44 (0) 20 7888 8888 EQUITABLE LIFE: SP Lowers Rating to 'CCC-', Outlook Negative ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its junior subordinated debt rating on GBP350 million of perpetual subordinated notes issued by Equitable Life Finance PLC, and guaranteed by The Equitable Life Assurance Society (Equitable Life), to 'CCC-' from 'CCC'. At the same time, Standard & Poor's revised the outlook to negative from developing and affirmed its 'B' counterparty credit rating on Equitable Life, reflecting the lack of upside in the rating over a six-month to two-year period. "The rating action on the subordinated debt reflects the increased risk to debt holders that coupon payments will be deferred," said Standard & Poor's credit analyst Mark Button. Management continues to work to restore stability to the fund. Nevertheless, uncertainties regarding mis-selling, expense, and general provisions remain. Consequently, adverse developments in asset values, a material strengthening of provisions, or an inability to manage liabilities in line with changing asset values could result in the ratings being lowered. "The close matching of assets and liabilities and the limited equity exposure mean that the upside for solvency is likely to be limited," added Mr. Button. CONTACT: Standard & Poor's, London Mark Button Phone: (44) 20-7847-7045 Paul Waterhouse Phone: (44) 20-7847-7084 MARCONI PLC: Delays Results Pending Notice of Restructuring ----------------------------------------------------------- Following Marconi's announcement on 21 November 2002 on progress towards its financial restructuring, Marconi's Board has now finalised a set of revised proposals with a coordinating committee of syndicate banks and an informal ad-hoc committee of bondholders which will allow the Restructuring to be formally documented and launched. These revised proposals were submitted to the full bank syndicate earlier today. As a result of these developments, Marconi will delay the publication of its interim results until it makes a full announcement regarding the Restructuring. The Company expects to make such an announcement shortly and confirms that its interim trading results remain consistent with the updates published at the end of the first and second quarters. Marconi still expects to complete the Restructuring in line with the terms announced in August, including the initial cash distribution of GBP260 million to creditors, of which GBP95 million has already been paid in the form of interest payments. Marconi's Board continues to believe that the proposed restructuring is in the best interests of Marconi, and its stakeholders as a whole. The Board expects that it will continue to receive the support of both the syndicate banks and the informal ad-hoc committee of bondholders. 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 aim is to help fixed and mobile telecommunications operators worldwide reduce costs and increase revenues. 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. ROYAL & SUN: Moody's Changes Insurance Financial Strength Outlook ----------------------------------------------------------------- Moody's Investors Service changed its outlook on the A2 insurance financial strength rating of Royal & Sun Alliance Lenders Mortgage Insurance Limited from review for possible downgrade to uncertain. The action is due to the impeding Initial Public Offering of the Royal & Sun Alliance group's Asia-Pacific operation, which will include RSA LMI. Moody's said the review will be mainly influenced by the new entity's future business strategy and financial profile. The success of the offering is understood to greatly help boost the finances of the London-based parent, Royal & Sun Alliance Group, which is currently experiencing significant financial and operational difficulties in several of its businesses. The IPO is expected complete by the second quarter of 2003. The insurance financial strength of RSA LMI is rated A2 due to the company's standing as a valued component of the RSA group's Australian operation. RSA LMI is an independent monoline. It is the only material mortgage insurance firm that is not part of a broader mortgage insurance group. Moody's predicts that the most likely near-term scenario is for the RSA Asia-Pacific group to be successfully spun off via the planned IPO. The rating agency, however, does not rule out an outright sale of the firm to another insurance group. The success of the IPO as planned is predicted to potentially improve RSA Insurance Australia Limited's access to capital and strengthen its ability to support RSA LMI. It will also positively influence rating. Royal & Sun Alliance Insurance Group Plc owns RSA LMI through its subsidiary, Royal & Sun Alliance Australia Holdings Limited. TXU EUROPE: Considers Selling Significant Assets - Source --------------------------------------------------------- TXU Europe plans to divest big assets, including TXU Nordic Energy and majority stakes in two German utility companies, an administrator at one of TXU Europe group's units told Dow Jones. According to the report, Jop Rosenberg-Polak, an administrator for a Geneva-based trading arm of TXU Europe, said, "These are big assets that we have to do something with." But JC Rosenberg-Polak from Dutch law firm Salomons warns that a sale may create problems due to the big number of companies under the group and their financial interrelations. TXU Europe's fall into administration dragged six other companies within the TXU Europe group, and there are over 50 different units in Europe linked to the group in administration, says a TXU Europe spokesman. In a previous TCR-EU report, Mr. Rosenberg-Polak said, "As far as we know now, there are very many inter-company relations at all levels and through all countries, all jurisdictions, between the U.K. group and the Continental group." Yet, Mr. Rosenberg-Polak says it is yet early to talk about investigations into intercompany links. Among TXU Europe's main businesses are TXU Nordic Energy and TXU Stadverke Holding GmbH, which the group purchased for US$400 million in May. The latter owns a 74.9% stake in German utility Braunschweiger Versorgungs. According to the report, the energy company may also sell TXU Germany, which owns a 51% stake in Stadtverke Kiel which TXU bought for US$220 million two years ago, as well as retail energy arm ARES. TXU Europe recently succumbs into administration after its U.S. parent, TXU Corp, abandoned the energy company. CONTACT: TXU Europe Limited The Adelphi, 1-11 John Adams St. London WC2N 6HT, United Kingdom Phone: +44-20-7879-8081 Fax: +44-20-7879-8082 Home Page: http://www.txu-europe.com ************ 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. 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