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/raid1/www/Hosts/bankrupt/TCREUR_Public/021212.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 12, 2002, Vol. 3, No. 246 Headlines * B E L G I U M * GIB SA: Regulators Approve Sale to Ackermans and Compagnie * F R A N C E * FRANCE TELECOM: S&P Affirms Two France Telecom-Related Deals NATEXIS BANQUES: Moody's Places Financial Strength Under Review * G E R M A N Y * ALLIANZ GROUP: S&P Assigns 'A+' Rating to Allianz Bonds DEUTSCHE TELEKOM: Hires Deutsche Bank to Sell Telephone Directory HVB GROUP: Plans to Sell Consumer Credit Unit , Says Source INFINEON TECHNOLOGIES: To Sell Stake in Chipmaking Venture * I T A L Y * FIAT SPA: Galateri Resigns as Co-chief Executive of Fiat TELECOM ITALIA: Government Divests Stake, Ends Years of Ties * N E T H E R L A N D S * KPN MOBILE: NTT Refuses Offer to Subscribe to Share Offering * S W I T Z E R L A N D * SWISS LIFE: SP Affirms Swiss Life 'A' Ratings, Outlook Negative SYSTOR GROUP: Under Creditor Protection on Failure to Raise Cash ZURICH FINANCIAL: Zurich Group Germany Appoints Deputy CEO * U N I T E D K I N G D O M * AMP: Announces Outcomes of Review of Activities and Costs AMP LTD: Nominates Peter Willcox as New Chairman CABLE & WIRELESS: Fitch Downgrades Long- and Short-term Ratings CABLE & WIRELESS: Announces Changes in Management of C&W Global CABLE & WIRELESS: Listing in FTSE-100 Index Hangs in the Balance NAVAN MINING: Shares Suspended in Irish and London Bourses ============= B E L G I U M ============= GIB SA: Regulators Approve Sale to Ackermans and Compagnie ---------------------------------------------------------- The European Union approved the EUR1.2 billion sale of Belgian retailer GIB Group to holding companies Ackermans & Van Haaren and Compagnie Nationale a Portefeuille, Dow Jones reported. According to the news report, the transaction posed few antitrust problems, because company neither owned other retail operations, and GIB was in the process of selling off its assets. GIB's management announced plans to liquidate last April. The company's assets had been sold off for the past few years, leaving a holding company flush with cash and some EUR1.3 billion that interested the owners of the two Belgian bidders. Ackermans, with the support of Fortis NV, made the first bid for GIB. The offer valued GIB at EUR1.3 billion and accrued to EUR41 a share for the retail giant's outstanding shares. Compagnie Nationale's Mr. Frere followed suit. He is backed of Franco-Belgian bank Dexia Securities and French bank BNP Paribas SA. GIB was Belgium's leading retailer until it sold off its supermarket unit GB to France's Carrefour SA in July 2000. It owns health food chain Exki and information technology network provider Gecoteca, as well as a 57.9% stake in fast-food chain Quick Restaurants and a 50% stake in sports store Disport. =========== F R A N C E =========== FRANCE TELECOM: S&P Affirms Two France Telecom-Related Deals ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BBB-' ratings on two France Telecom-related transactions. The affirmed ratings follow the affirmation of France Telecom's long-term corporate credit and senior unsecured ratings on Dec. 5, 2002. A copy of the related press release can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. Both synthetic issues are swap-dependent synthetic transactions that are weak-linked to the underlying collateral, France Telecom's senior unsecured debt. The ratings reflect the credit quality of the underlying securities issued by France Telecom. RATINGS AFFIRMED Marble Finance Ltd. Zero coupon notes series 2002-1 Class Rating Notes BBB- FRTEL Steers Trust Series 2001-A Floating-rate debt units Class Rating Debt Unit BBB- CONTACT: STANDARD & POOR'S Kelly Luo, New York Phone: 212/438-2535 Mary Ryan, New York Phone: 212/438-2090 NATEXIS BANQUES: Moody's Places Financial Strength Under Review --------------------------------------------------------------- Moody's placed Natexis Banques Populaires' B- financial strength rating under review for possible downgrade following the company's announcement that it registered significant losses in its structured equity products trading activities. All other bank and Group ratings were maintained. The wholesale bank of the Banques Populaires Group blamed the continued difficulties in its markets for the poor results. It added that the inability of certain valuation models to successfully manage the current extreme volatility had also affected its position. Natexis said its net income for the second half of the year will be significantly below the EUR90 million reported in the first half, which is 49% down from half-year 2001. The rating agency indicated to review the vulnerability of the Paris-based company's capital markets and investment business lines, on its management of market risk, and on the bank's generally more fragile financial fundamentals. CONTACT: NATEXIS BANQUES Financial Communications Pierre Jacob Phone: 33-1-40-39-65-27 E-mail: pierre.jacob@nxbp.fr Alain Hermann Phone: 33-1-40-39-69-29 E-mail: alain.hermann@nxbp.fr Cecilia Matissart Phone: 33-1-40-39-66-28 E-mail: cecilia.matissart@nxbp.fr ============= G E R M A N Y ============= ALLIANZ GROUP: S&P Assigns 'A+' Rating to Allianz Bonds ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'A+' credit rating to the guaranteed perpetual junior subordinated bond (perpetual bond) issued by The Netherlands-based Allianz Finance II B.V. The bond has a size of US$500 million. At the same time, an 'A+' rating was assigned to the EUR1 billion guaranteed junior subordinated bond (22NC12 bond) issued by Allianz Finance II B.V. The proceeds from both issuances will be used to strengthen Allianz group's capital basis and to fund further growth opportunities. The ratings on both issues are based on guarantees by Munich- based Allianz AG (AA/Negative/A-1+) to the bondholders. The bonds are junior subordinated debt and the issuer has the right to defer interest on a cumulative basis if no dividend or other distribution has been declared or paid by the guarantor on its ordinary share capital. "The bonds will constitute unsecured subordinated obligations of the issuer and the guarantor. The obligations of the issuer under the bonds will be subordinated to the claims of all unsubordinated creditors," said Standard & Poor's credit analyst Wolfgang Rief. "Despite disappointing reported results in the first nine months of 2002, following a poor 2001, Allianz has made significant progress, particularly with respect to cost cutting and in its underlying combined ratio for its property/casualty business," he continued. Mr. Rief added that Standard & Poor's will continue to monitor the situation closely, but considers that earnings for the group will rebound significantly in 2003, after a disappointing 2002. The negative outlook on Allianz reflects that ratings may be lowered if this is not achieved. CONTACT: Standard & Poor's Wolfgang Rief, Frankfurt Phone: (49) 69-3 39 99-190 DEUTSCHE TELEKOM: Hires Deutsche Bank to Sell Telephone Directory ----------------------------------------------------------------- Deutsche Telekom has hired Deutsche Bank to find a buyer for its telephone directory unit DeTeMedien, sources close to the company told Financial Times. Europe's largest company has set up an internal working group to prepare the EUR1 billion transaction, and to work on other sales of smaller units. The news may gain favor from investors who want the company to sell non-listed assets, the report says. Deutsche Telekom is raising EUR6.2 to 8.5 billion from non-core asset sales by the end of 2003. Proceeds of the asset sales are intended to achieve debt-to-EBITDA ratio of around 3 by end-2003. The fixed line operator is also preparing to offer up to 120 million shares in its T-Online internet subsidiary in order 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. HVB GROUP: Plans to Sell Consumer Credit Unit, Says Source ---------------------------------------------------------- Germany's HVB Group is planning to sell its Norisbank AB consumer credit unit, says a source close to the bank. Though it is still unclear whether the transaction will occur next year or the following year, the source established the information by saying that employees of the unit have been advised of HVB's intention. Nuremberg-based Norisbank has 101 branches throughout Germany, about 500,000 clients and EUR2.9 billion in assets. Bank spokesman Thomas Pfaff, however, said that the bank doesn't entertain "market speculation." Although a Munich-based banking analyst also said the report does not come as a total surprise "since HVB has in the past said it would sell it or absorb it into another division." The report noted that the company in October said it is consolidating all real estate financing activities, except private mortgages, into HVB Real Estate Bank AG in preparation for a possible sale. The group values the division at EUR164 billion during that time. According to The Deal, analysts speculate that the most likely buyer for the asset is Citigroup Inc.'s German division. HVB has suffered the effects of bad corporate loans, so that in October the group had to increase its provision for defaults from EUR2.5 billion to EUR3.3 billion. It is also announced plans to cut 13% of its workforce after reporting a third-quarter loss of EUR360 million (US$364 million). The report says HVB may also divest its DAB Bank AG online broker, whose French unit is already being sold and whose Swiss division was previously closed. INFINEON TECHNOLOGIES: To Sell Stake in Chipmaking Venture ---------------------------------------------------------- Infineon Technologies is selling its 30% stake in Taiwan computer memory chipmaking venture ProMos Technologies Inc., after partner Mosel Vitelic Inc. used its own ProMos stake as guarantee to secure loans. According to an Infineon source, Mosel Vitelic violated the shareholder agreement by securing part of its NT$25 billion liability with a stake in ProMos. Infineon's stake is valued at US$350 million after Promos shares fell 7% in Taiwan Tuesday. The company has also canceled all purchase and licensing agreements with the plant, effective Jan. 1, said an Infineon spokesman who declined to provide further details of the sell- off. According to the Daily Deal, an analyst in Taiwan with a European equities house said that the Munich-based company has to either gradually dispose the shares on the market or sell it outright. The analyst however posed the question of who is willing to buy the stake when neither Mosel Vitelic nor ProMos have the resources to. ProMos produces computer memory chips under license from Infineon, which uses 45% of the chipmaker's output. Infineon indicated to employ its joint venture with Taiwan-based Nanya Technology Corp. in place of ProMos. The company, however, cleared that the project wasn't completed to replace ProMos. CONTACT: INFINEON TECHNOLOGIES Investor Relations Phone/Fax: +49 89 234 26655 / 26155 E-mail: investor.relations@infineon.com ========= I T A L Y ========= FIAT SPA: Galateri Resigns as Co-chief Executive of Fiat -------------------------------------------------------- The co-chief executive of Fiat, Gabriele Galateri, resigned from his post less than six months after taking office. Commenting on his decision, Mr. Galateri said his resignation will pave the way for an executive with greater industrial experience. The founding family, Agnelli, is expected to push for the ascension of Enrico Bondi to the Chief Executive position at a board meeting on Friday, people close to the group told the Financial Times. The move, however, is likely to meet opposition from several board members as Mr. Galateri's resignation came amidst a battle for control over the Italian industrial group. The government wants to oust Paolo Fresco, Fiat's chairman and co-chief executive, who together with creditor banks wanted to sell Fiat Auto to General Motors in 2004. Prime Minister Silvio Berlusconi is believed to oppose the proposal, says the Financial Times. Mr. Bondi, on the other hand, is linked with Mediobanca, which is in turn is close to Mr. Berlusconi. Mediobanca's plan is to make Volkswagen a minority shareholder of Fiat Auto or its Alfa Romeo division, transactions which are all dependent upon General Motor's approval. 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 TELECOM ITALIA: Government Divests Stake, Ends Years of Ties ------------------------------------------------------------ The Italian government sold its stake in Telecom Italia, raising EUR1.4 billion (US$1.4 billion) and ending the state's more than 70 years ties with the country's largest phone monopoly. The government sold 182.1 million common shares at EUR7.50 a share and 13.5 million savings shares for EUR5.08 each. The stock sale is the country's biggest offering this year, says Bloomberg. The transaction is part of the government's effort to raise EUR20 billion by the end of next year to cut debt. Member nations of the European Union are moving to trim down borrowings to no more than 60% of GDP to qualify for Europe's single currency. Telecom Italia shares have fallen 21% this year, reducing the value of the company to EUR50.2 billion. The company is also divesting assets to reduce debt. It was able to raise EUR484 million (USD483 million) from selling a stake in Telekom Austria AG. Chairman Marco Tronchetti Provera predicted the company's debt to fall to EUR 18.3 billion euros by year-end from the EUR22 billion at the end of 2001. In its nine-months results consolidated net debt fell by EUR 4,278 million meeting plan targets, and corresponding to EUR17,664 million after dividend payout (EUR3,247 million). ===================== N E T H E R L A N D S ===================== KPN MOBILE: NTT Refuses Offer to Subscribe to Share Offering ------------------------------------------------------------ NTT Docomo Inc. refused to exercise its right to maintain an equity stake KPN Mobile by declining to subscribe to the new share offering of the Dutch mobile phone operator. Japan's biggest cell phone operator was offered US$2.4 billion new shares as Royal KPN converts EUR14 billion (US$13.4 billion) in loans to KPN Mobile into stock to support the subsidiary, says Xinhua News Agency. Netherlands-based Royal KPN owns 85% of KPN Mobile. After the offering, NTT DoCoMo's 15% holding in KPN Mobile will fall to some 2.2%. NTT DoCoMo wrote off its US$3.3 billion investment in KPN Mobile by booking an extraordinary loss of US$2.4 billion in the first half of fiscal 2001 and an additional US$800 million in the same period this year. KPN Mobile N.V. is a leading European mobile telecommunications network operator and provider of mobile voice and data services. It is currently active with its own network operators in Germany (E-Plus), Belgium (BASE) and the Netherlands (KPN Mobile), where more than 7400 employees serve some 13.6 million customers (May 2002). CONTACT: KPN MOBILE Maanplein 5 2516 The Hague, The Netherlands Phone: +31-70-332-3426 Fax: +31-70-332-4485 Toll Free: 800-877-6842 Home Page: http://www.kpn-mobile.com Contacts: Paul Smits, President and Chief Executive Officer Ed Kraaijenzank, Chief Financial Officer ===================== S W I T Z E R L A N D ===================== SWISS LIFE: SP Affirms Swiss Life 'A' Ratings, Outlook Negative --------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'A' counterparty credit and insurer financial strength ratings on Switzerland-based life insurer Swiss Life/Schweizerische Lebensversicherungs- und Rentenanstalt AG (Swiss Life) and related entities, and removed them from CreditWatch, where they were placed on Oct. 31, 2002. The outlook is negative. In related actions, Standard & Poor's assigned its 'BBB' counterparty credit rating to Swiss Life Holding (SLH), the holding company of the Swiss Life group. The outlook is negative. Standard & Poor's also assigned a 'BBB' senior unsecured debt rating to the Swiss franc (SFr) 250 million mandatory convertible securities (MCS) issued by Swiss Life Cayman Finance Ltd. and unconditionally and irrevocably guaranteed by SLH. "The CreditWatch resolution reflects Swiss Life's successful completion of the group's capital increase through a combination of a rights issue of SFr856 million and the issue of SFr250 million of MCS," said Standard & Poor's credit analyst Karin Clemens. The securities will be mandatorily converted into registered common shares of SLH three years after the issue date without any cash settlement option. The issuer will pay a fixed coupon of 5.25% per year plus a floating coupon equal to the dividend paid by Swiss Life Holding. The fixed coupon payments may under certain conditions -- such as nonpayment of dividends -- be payable in registered shares, should the issuer choose this option. The current rating is based on Standard & Poor's expectation that the fixed coupon will be paid in cash. Standard & Poor's regards the MCS as a qualifying mandatorily convertible hybrid, and will give full equity credit to the issue, subject to mandatory convertible hybrids and conventional hybrids not exceeding 25% of the group's total adjusted capital. Management is expected to continue to restructure its domestic book of business and to achieve a return on IAS equity of at least 10% by 2005 at the latest. In addition, capitalization is expected to be maintained in line with the current rating. "Failure by management to achieve these targets, or Standard & Poor's expectation at an earlier date that these will not be achieved, could result in the ratings being lowered," said Ms. Clemens. "Standard & Poor's will closely monitor the outcome of the regulator's investigations, and their potential impact on the group's credit profile. Standard & Poor's expects that, after any ratings change, the counterparty credit and financial strength ratings on Swiss Life would remain in the investment-grade range," she added. CONTACT: Standard & Poor's Karin Clemens, Frankfurt Phone: (49) 69-3 39 99-193 Paul Waterhouse, London Phone: (44) 20-7847-7084 SYSTOR GROUP: Under Creditor Protection on Failure to Raise Cash ---------------------------------------------------------------- Systor Group sought provisional creditor protection after failing to receive a cash injection from its creditor banks and its majority owner, UBS. The move follows application for creditor protection of two of the group's German units in November. The Swiss banking software group last month advised that it would dismiss 200 of its 1,800 staff and cut salaries to save cost. A UBS spokeswoman said Systor suffered from a deep slump in the IT market and the company's inability to cut costs as revenue falls. A source close to Systor's creditor banks, on the other hand, blamed UBS for refusing to cooperate with talks initiated by the banking consortium. The creditor banks, led by HypoVereinsbank and also included BNP Paribas, Bayerische Landesbank, Saechsische Landesbank and IBM Bank, arranged a EUR75 million credit line for Systor two years ago to finance the company's expansion in Germany. The source said, the credit line, which the creditor banks have to write off now, was granted with UBS's promise of continued support for Systor. Switzerland's biggest bank, UBS, accounts for the company's CHF425 million (US$290.7 million) sales last year. The figure is about a third of the company's sales, making the bank Systor's main customer. A systor spokeswoman disclosed that the company is seeking for a partner that would rescue it from bankruptcy. The company has two months to work with its administrator on a new business plan to escape the unfortunate ending. CONTACT: SYSTOR AG Baslerstrasse 60 CH-8048 Zurich E-mail: info@systor.com Phone: +41 1 405 3111 Fax: +41 1 405 3113 Home Page: http://www.systor.com Contact: Ulrich F. Kunz, Chief Executive Officer Felix Aeschlimann, Financial Solutions ZURICH FINANCIAL: Zurich Group Germany Appoints Deputy CEO ---------------------------------------------------------- The Boards of Directors of ZUrich Beteiligungs AG (Germany) and Deutscher Herold have appointed Eduard Thometzek, 52, Deputy Chief Executive Officer (CEO) of Zurich Group Germany and member of the Executive Committee of Zurich Continental Europe effective January 1, 2003. Eduard Thometzek has a broad experience in the financial services industry. After various managerial positions in the Kaisers/Tengelmann group, the Bausparkasse Wustenrot and Citibank, he joined the Wurttembergische Insurance Group in 1991. In 1995, he was appointed member of the Executive Board of the Wurttembergische Insurance Group where he was responsible for the consumer business, tariff rating, as well as claims and legal protection. Since the merger of the Wurttembergische Insurance Group with the Wustenrot Group in 1999, he has been responsible for marketing and distribution. He participated in the repositioning of the Group in the German market. In his position as Deputy CEO, Mr. Thometzek will have operational responsibility for the German business. His key tasks will include the implementation of numerous initiatives in the context of the group-wide Profit Improvement Program. Axel P. Lehmann, CEO of the Business Division Continental Europe, said: "I look forward to working closely with Eduard Thometzek. After the fast and successful completion of the first important phase of integration of Zurich and Deutscher Herold, Eduard's skill and breadth of experience will provide the leadership needed to further solidify Zurich's strong position in a key market such as Germany. He will help drive the initiative to improve our profitability with the necessary discipline, and further develop our relationship with Deutsche Bank for the mutual distribution of products and services." 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 =========================== U N I T E D K I N G D O M =========================== AMP: Announces Outcomes of Review of Activities and Costs --------------------------------------------------------- AMP has announced outcomes of its review of activities and costs, in line with the company's five point reform agenda. AMP Chief Executive Officer Andrew Mohl said major strategic decisions about the U.K. Financial Services business, anddecisions about a number of assets that werepart pof AMP International, have now been made. Henderson Global Investors will also undergo changes. Decisions about AMP Bank, Australian Financial Services (AFS) and the Corporate office have already been announced. "In the last two months AMP has conducted an extensive review across the business. Every part of AMP has been under scrutiny - from distribution channels and products, to the role of corporate, to our culture and values," Mr. Mohl said. "We found that the strategy of simultaneously trying to build our U.K. businesses and pursue international growth was inappropriate, particularly in difficult market conditions. "The review also revealed that AMP has a significant potential to perform at a much higher level. This reflects the strength of the Australian and New Zealand businesses and Henderson Global Investors, and the positive long-term outlook for the wealth management industry. "While we have reached the end of the first phase of the review process, we expect changes to continue as we move our focus to implementation." 1. U.K. Financial Services Mr. Mohl said AMP was making good progress in separating the businesses into two streams U.K. Life Services and U.K. Contemporary Financial Services. This separation is aimed at allowing better management of the different risks in each business. A comprehensive review of distribution channels across the businesses has been completed and will result in significant changes. These include: - Closure of the Direct Sales Force (DSF) of around 700 planners. AMP has commenced a minimum 90 day consultation period with the recognized union about how to mitigate the impact of the decision on employees and minimize the number of potential redundancies; - Establishment of a new highly qualified, advice-based, self- employed financial planning group of 50-500 financial planners which will transition from U.K. Life Services to U.K. Contemporary Financial Services when operational; - Closure of the household adviser channel of about 300, which sells primarily non-regulated products, subject to union consultation; - Creation of a self-employed mortgage advisory service group of 50-150 financial planners in U.K. Life Services, providing financial advice on mortgages and protection products; and - Extending the London Life direct model to Pearl customers to provide telephone-based advice and support. These changes are expected to result in a reduction in jobs of up to 1,900 which includes the DSF, support functions and changes relating to splitting of the businesses. These are in addition to the 1,500 job reductions announced in June 2002. Overall cost savings in the U.K. have been revised. Expected cost saves from 2001 levels have increased from Eur100 million by the end of 2003 (announced in June 2002) to Eur160 million in full year 2003. "These have been difficult decision to make because of the impact on our people. However, given tough equity markets and the well- publicized issues of the U.K. life market, we have no choice," Mr. Mohl said. "We will do everything possible to minimize the number and consequences of redundancies. "AMP is making these changes because we are committed to the UK market and we want to have a competitive and sustainable business. In particular, we continue to believe there is a strong need for face-to-face advice in the U.K., particularly serving the needs of customers pre- and post-retirement. "This is why we plan to build two focused distribution channels around good quality advice, targeting appropriate segments of the market. "Ultimately, these changes will position us to provide better service to customers and improve the profitability and returns of these businesses." UK Life Service In the UK Life Services (mature) business, the strategic focus will be on managing the mature and closed books of business, driving down unit costs and improved customer management. There will also be a strong emphasis on financial management, with substantial capital expected to be released over the medium term. The cost to income ratio is expected to be 34 per cent in 2003 while the capital base will be around Eur2 billion. The new mortgage advisory service group will focus on non- regulated products from a variety of providers, including AMP. This will allow AMP to maximize the value of the customer base in the UK Life Services business through limited, highly targeted marketing. UK Contemporary Financial Services In UK Contemporary Financial Services, a comprehensive review of the market and AMP's capabilities has confirmed that the optimal strategy is to compete in areas of competitive advantage - pensions and retirement solutions - in selected areas. The capital base of the business in 2003 will be around Eur400 million, which represents less than 10 per cent of AMP's total invested capital. Distribution through IFAs and Employee Benefit Consultants (EBCs) will be given stronger support and emphasis. The EBC channel, in particular, is experiencing strong growth and AMP is increasingly being accepted on panels. Towry Law, while performing below plan, remains an important distribution channel due to its strong and well-respected brand. The business is also expected to benefit from the pending introduction of depolarization. The new advice-based financial planning channel will leverage Towry Law's infrastructure and processes and will not carry the overheads of the DSF. It will be managed as a business in its own right and focus on profitability and shareholder value. 1. Update on UK Minimum Regulatory Capital (MRC) requirements Mr. Mohl said that all AMP's UK entities meet MRC requirements at current FTSE levels. "By 31 December, 2002, we expect Pearl to meet MRC requirements down to a FTSE level of 3000," Mr. Mohl said. Since June 2002, AMP's initiatives have delivered regulatory capital benefit of more than Eur1.5 billion for Pearl. This has included capital support of Eur500 million from Group. Pearl's Equity Backing Ration (EBR), which includes UK and international equities, property and private capital, has been reduced to an effective figure of around 50 per cent from 71 per cent at the end of 2001. 2. Other assets A number of assets that were formerly part of AMP International have also been reduced. Assets where AMP intends to realize value include AMP Japan, Virgin Money, and Cobalt and associated run-off businesses. Options include sale, closure, break-up or restructuring and decisions are expected in 2003. 3. Henderson Global Investors (HGI) Henderson Global Investors has also undertaken a full review of operations and is refocusing its properties in light of current market conditions. This will target limited cost savings, part of which will be reinvested in growth areas. The key outcomes include: - Scaling back operations in Japan - Scaling back distribution activities in Hong Kong and running Asian operations in Singapore; and - Accelerating product rationalization. Subject to appropriate consultation, there will be a reduction of approximately 100 roles in HGI globally. 4. Financial details Further details have today been provided of the possible A$1.2 billion in anticipated writedowns announced on 18 November 2002. The anticipated U.K. writedowns are expected to total A$850 million which includes A$612 million in MPI, A$110 million in Towry Law, A$64 million in Ample, and A$64 million in Pearl. Other assets, including Virgin, AMP Japan, AMP Finance and Gordian, comprise a possible A$350 million of the writedowns. Total Group restructuring costs, including redundancies, are expected to be around A$320 million after tax. This will be recognized in the accounts for the year to 31 December 2002. 5. Move to implementation phase Mr. Mohl said that in just two months, AMP had undergone a thorough review of all its operations and made a number of key decisions based on the five point reform agenda. This agenda involves: - Addressing low return channels and product lines - Focusing short term growth ambitions on core businesses - Increasing quality and transparency of disclosure - Tackling sacred cows and embedded behaviors; and - Role modeling strong leadership. "We've taken tough decisions across the board, reshaping our businesses to do the basics very well," Mr. Mohl said. "We will be focusing on our core businesses, pursuing operational excellence, reducing portfolio risk and investing only in businesses that leverage our core capabilities and deliver required financial returns. "The reform agenda has strongly driven the first phase of changes in the organization. We will now move to an implementation phase and continue to evolve our strategic thinking." Mr. Mohl said that while short term, conditions in the wealth management business globally were likely to remain difficult, the longer term dynamics of the industry remain attractive. The current restructuring is positioning AMP to bounce back strongly as markets improve. "AMP is clear on its longer term strategic goals," Mr. Mohl said. "We want to know AMP's leading position in the Australian wealth management market. "In the U.K., we want to reduce our capital commitment by releasing capital from the mature business, and develop a wealth management business that is capital efficient and plays to our strengths. "And we want Henderson to build a global asset management business in partnership with other AMP businesses, with a focus on the U.K. and selective expansion in Europe, North America and Asia." CONTACT: AMP LTD. Investor inquiries Mark O'Brien Phone: 61 2 9257 7053 AMP LTD: Nominates Peter Willcox as New Chairman ------------------------------------------------ The AMP Board today announced that Peter Willcox has been appointed Deputy Chairman and will succeed Stan Wallis as Chairman in July 2003, when Mr Wallis will retire from the Board. Mr Willcox joined the AMP Board in September 2002, bringing substantial international business experience to the executive and board levels. Mr Wallis indicated in late September that he would step down as Chairman, after overseeing the appointment of a permanent Chief Executive Officer. Andrew Mohl was appointed CEO in early October. "AMP is a complex company, undergoing substantial change in difficult markets. Peter and I will work together over the next six months to achieve a smooth and orderly transition during what will be an important time for the company," Mr Wallis said. Mr Willcox is currently Deputy Chairman and Chairman-elect of the Mayne Group Limited. He takes up the chair of Mayne in January 2003. Mr Willcox's previous experience in the financial services industry includes being a director of Lend Lease Corporation from 1994 to 2000 and Deputy Chairman from 1999 to 2000, Director of MLC Ltd from 1998 to 1999 and Director of Schroders Australia Holdings Ltd from 1994 to 1999. He is also a former Director of BHP, James Hardie Industries Ltd, FH Faulding Ltd and North Ltd. He lives in Melbourne and holds both Australian and British citizenship. Note: AMP's former Chief Executive, Paul Batchelor, resigned in September as British regulators demand capital increase for its British life insurance business, the operation which hold 70% of its assets. The company recently reviewed its activities and costs, and resolved among others to close its Direct Sales Force in its UK Financial Services. CONTACT: Investor inquiries Mark O'Brien Phone: 61 2 9257 7053 CABLE & WIRELESS: Fitch Downgrades Long- and Short-term Ratings --------------------------------------------------------------- Fitch Ratings downgraded Cable & Wireless plc's Long-term rating from 'A-' to 'BB+' and its Short-term rating from 'F-1' to 'B' following the announcement that the company may procure a guarantee in the sum of GBP1.5 billion from a bank or place the sum of GBP1.5 billion into escrow. It also changed the ratings' outlook from Rating Watch Negative to Negative. The GBP1.5 billion provision is for a tax indemnity that formed part of the agreement put in place at the time of the disposal to Deutsche Telekom of C&W's 50% interest in One2One. Cable & Wireless earlier indicated to rationalize its Global business following a strategic review, a move that requires substantial potential cash exit costs. Fitch believes that the company will be able to maintain adequate financial flexibility if it is able to achieve management's target for turning C&W Global's business cash flow positive in the fourth quarter of its 2003/04 financial year. The rating agency, however, warns that any incremental cash cost arising from C&W's rapid cash consumption, and rationalization, as well as weakness in operating cash flow generation could pressure Cable & Wireless to seek funding from outside. Fitch signs to monitor Cable & Wireless' execution of business plan, as well as its lease leverage position. As Cable and Wireless also announced significant additional operating lease commitments, the rating agency will adjust the group's reported net cash position to reflect the potential impact of limited access to GBP1.5bn of its cash balance to reflect the company's operating lease commitments in its rating. CABLE & WIRELESS: Announces Changes in Management of C&W Global --------------------------------------------------------------- Cable and Wireless plc announces changes in the management of Cable & Wireless Global, which take effect immediately. Don Reed, currently CEO, Cable & Wireless Global, will be based full time in the USA where he will support Graham Wallace, Chief Executive, Cable & Wireless, in dealing with government, regulatory and other corporate matters. He remains on the Board of Cable and Wireless plc, but his current operational responsibilities for Cable & Wireless Global are being reassigned as described below. Adrian Chamberlain, currently Director, Group Strategy and Corporate Development and a member of the Board, will take on responsibility for Cable & Wireless Global excluding the U.S. business and the finance function, becoming CEO Global Services and Europe/Asia. He will also retain responsibility for the Group Strategy and Business Development functions. Simon Cunningham, CEO, Cable & Wireless America, will report to Graham Wallace who will become more directly involved in the restructuring of the business in the USA. Donald Muir, CFO Global, will report to David Prince, Group Finance Director. David Prince will assume direct responsibility for the Global Finance function in addition to his Group Finance responsibilities. This allocation of responsibilities will ensure detailed focus on the successful implementation of the recently announced strategic restructuring that is currently under way in Cable & Wireless Global. CONTACT: Investor Relations Louise Breen Phone: +44 20 7315 4460 Caroline Stewart Phone: +44 20 7315 6225 Virginia Porter Phone: +1 646 735 4211 CABLE & WIRELESS: Listing in FTSE-100 Index Hangs in the Balance ---------------------------------------------------------------- Cable & Wireless faces ejection from the U.K.'s FTSE-100 index of leading shares following disclosure of a GBP1.5-billion tax indemnity relating to a transaction with Deutsche Telekom. When it sold its 50% interest in One2One to Deutsche Telekom in 1999, Cable & Wireless provided the German firm with indemnification to cover tax liabilities arising from the sale. The 'rating trigger' clause contained in the agreement was triggered when Moody's downgraded the company's long-term debt rating from Baa2 to Ba1. When the debt were downgraded to 'junk', Cable & Wireless was required to either put GBP1.5 billion into an escrow account or provide bank guarantees. The discovery of the tax liabilities reduced Cable & Wireless' shares by almost half. To avoid being delisted from the FTSE-100 index, the telecommunications provider need to trade around 53p, says Rod Hall of Dresdner Kleinwort Wasserstein. NAVAN MINING: Shares Suspended in Irish and London Bourses ---------------------------------------------------------- Shares in Navan Mining were temporarily suspended on both the Irish and London Stock Exchanges pending clarification of the company's working capital position. The shares, which traded at 52p two years ago, were held at 1.275 p after the company stopped the trading. The company asked for the suspension--the second time within the year--after talks regarding cash injection with a North American banking group failed. The news prompted suggestions that the company find a new source of fund to avoid liquidation. But the company's main banker, Deutsche Bank, is understood to be unprepared for the injection, says Irish Times. Sources familiar with the matter said that Navan Mining is still working a solution, which includes obtaining agreement for the valuation of the company's remaining assets in Bulgaria. Market sources, however, say the company still needs to find cash to continue its operation until its Chelopech gold mine in Bulgaria starts to generate cash next year. Navan Mining's troubles started last year when its Spanish operations were hit by the collapse in the world zinc price and a fall in the local market for sulfuric acid. Its difficulties were further aggravated with the collapse of Enron, with which it has a financing agreement related to the sale concentrates to smelters. The company was able to raise US$23 million refinancing, but unexpected costs incurred in Spain, completion of an expansion programme at Chelopech and exploration costs associated with its other main asset, the Krumovgrad goldmine in Bulgaria, consumed the reserve. CONTACT: NAVAN MINING PLC Norden House, Basing View Basingstoke, Hampshire RG21 4HG United Kingdom Phone: +44-1256 353312 Fax: +44-1256 335500 Home Page: http://www.navanminingplc.com Contacts: Richard A. Lockwood, Non-Executive Chairman Laurence D. Marsland, CEO and Director ************ S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, 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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