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/raid1/www/Hosts/bankrupt/TCREUR_Public/021226.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 26, 2002, Vol. 3, No. 254 Headlines * F R A N C E * ALCATEL SA: Closes Notes Offering Redeemable for Alcatel A Shares BUFFALO GRILL: To Sue Employees for Mad Cow Scandal RHODIA SA: EU Commission Approves Bain Capital's Bid for 3 Units VIVENDI UNIVERSAL: Concludes Sale of Publishing Unit VIVENDI UNIVERSAL: Files Complaint Against APPAC * G E R M A N Y * BAYER AG: Reaches Agreement With U.S. Authorities DEUTSCHE TELEKOM: To Auction French Subsidiary to Save Cash DEUTSCHE TELEKOM: Faces Shortfall as Regulator OKs Lower Hike KIRCHMEDIA GMBH: Finds Buyer for ProSiebenSAT.1 Stake * I T A L Y * FIAT SPA: Divests GM Stake to Meet Financial Targets * N E T H E R L A N D S * VERSATEL TELECOM: Posts Amendment to American Depositary Pact * S W E D E N * LM ERICSSON: Plans to Relocate Headquarters to Kista SKANDIA: Sells American Arm * U N I T E D K I N G D O M * AES DRAX: Concerns Over Emissions May Affect Financing BRITISH ENERGY: In Final Stage of Talks to Sell Canadian Unit CABLE & WIRELESS: Long-distance Monopoly in Jamaica Broken COLT TELECOM: Highberry Insolvency Petition Dismissed CORDIANT COMMUNICATIONS: Announces Board Changes EASYINTERNETCAFE: Loss-making Firm Still Viable, Says Owner EUROTUNNEL PLC: Gains GBP28 Million in Latest Buy HP BULMER: Sells Australian Operations for GBP22 Million IZODIA: Suit to Further Cut Shareholders' Compensation RAILTRACK PLC: Successor to Have Greater Say on Maintenance =========== F R A N C E =========== ALCATEL SA: Closes Notes Offering Redeemable for Alcatel A Shares ----------------------------------------------------------------- Alcatel announced the completion on December 19, 2002 of the offering to institutional investors and to individuals in France of notes mandatorily redeemable for Alcatel A shares for an amount of Euro 645 million, after the exercise of the extension clause. Furthermore, the bonds can take the bearer form from December 23, 2002 and not from December 26, 2002 as indicated in the Offering Circular. 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. CONTACT: ALCATEL 54, rue La Bo,tie 75008 Paris, France Phone: +33-1-40-76-10-10 Fax: +33-1-40-76-14-00 Toll Free: 800-777-6804 Home Page: http://www.alcatel.com BUFFALO GRILL: To Sue Employees for Mad Cow Scandal --------------------------------------------------- Buffalo Grill, the French steakhouse chain subject of an inquiry for allegedly importing British beef at the height of the mad cow scare, plans to sue its employees for masterminding the misinformation. Citing a company statement, Reuters said the company believes employees are behind the false information that have led to a formal investigation of CEO Christian Picart and another top manager for possible manslaughter charges. "Buffalo Grill took the decision to bring an action for libel against the authors of untruthful statements which undermine our reputation," the company statement read. "Some employees have developed personal strategies, talking irresponsibly about an alleged meat trafficking with Great Britain." It did not say how many employees it planned to file suits against, Reuters says. Buffalo Grill reaffirmed it had not imported meat from Britain before or after a European Union ban on British beef in 1996, imposed after mad cow disease, or bovine spongiform encephalopathy (BSE), spread through Britain's beef herd in the 1980s and 1990s. The ban was lifted in France in October. The group -- which owns over 200 restaurants in Europe, 150 of which are in France -- insisted that all beef served at its restaurants came from Brazil, Argentina and Germany. Under French law, a formal investigation is one step short of charges and does not imply any charges will be brought, the news agency said. The move is part of a wider French inquiry focused on the possible causes of four deaths from the brain-wasting disease. On Friday, Mr. Picart called the accusation ridiculous: "I have never imported English meat. Do you think I would take the risk of putting a company with turnover of more than EUR400 million at risk, just to save a few pennies... I'm not stupid." "I have not built up this business for 20 years to see everything wrecked by such a ridiculous thing," he added. Buffalo Grill shares have been suspended since Wednesday after tumbling to a 10th of their value on news of the affair. RHODIA SA: EU Commission Approves Bain Capital's Bid for 3 Units ---------------------------------------------------------------- The plan of French chemical group Rhodia S.A. to sell three European base businesses to U.S. buyout firm Bain Capital received the go-ahead last week from the European Commission, says Reuters. "The Commission's investigation showed that Bain Capital does not hold any interest in any companies active in the same product markets and therefore the transaction does not give rise to any horizontal overlaps or vertical integration concerns," the Commission said in a statement. The three subsidiaries involved in the transaction sell phenol, soda ash and hydrochloric acid, chemicals widely used in manufacturing. Bain has said it is looking to pick up similar "non-core" assets from large European industrials. Reuters says Rhodia would retain less than 20 percent in the businesses, which have combined annual sales of about EUR280 million (US$287.1 million). The disposal is part of Rhodia's pledge earlier this year to raise EUR500 million out of non-core assets. The divestment fits the company's strategy to re-align its portfolio to a growth model based on the cross-fertilization of technologies and the development of high value-added solutions for the customers. Rhodia is one of the world's leading manufacturers of specialty chemicals. Providing a wide range of innovative products and services to the automotive, health care, food, cosmetics, apparel, new technology and environmental markets. Rhodia generated net sales of EUR7.2 billion in 2001 and employs 27,000 people worldwide. Rhodia is listed on the Paris and New York stock exchanges. Bain Capital is a global private equity firm that manages several pools of capital including private equity, high-yield assets, mezzanine capital and public equity with over $14 billion in assets under management. Since its inception in 1984, the firm has made private equity investments and add-on acquisitions in over 225 companies around the world, in a variety of sectors, including industrial and manufacturing. CONTACTS: Investor Relations for Rhodia Marie-Christine Aulagnon: Phone: +33 1 55 38 43 01 Fabrizio Olivares: Phone: +33 1 55 38 41 26 Press Relations for Bain Capital Joe LoBello: +1 212 780 1900 (Email: jlobello@stantoncrenshaw.com) VIVENDI UNIVERSAL: Concludes Sale of Publishing Unit ---------------------------------------------------- Vivendi Universal announced Friday the sale of the publishing assets of Vivendi Universal Publishing (excluding Houghton Mifflin and Atica & Scipione) to Investima 10, which is wholly owned by Natexis Banques Populaires. The transaction's value amounts to EUR1.2 billion. Under the terms of the transaction, Vivendi Universal retains its 50% interest in the joint venture that owns Brazilian publishers Atica and Scipione. 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 Paris Antoine Lefort Phone: +33 (1).71.71.1180 Alain Delrieu Phone: +33 (1).71.71.1086 New York Anita Larsen Phone: (1)212.572.7082 VIVENDI UNIVERSAL: Files Complaint Against APPAC ------------------------------------------------ Vivendi Universal has decided to institute legal proceedings against APPAC (minority shareholders association) and its president before the Paris Civil High Court. The aim of the action is to halt the spread of false information through the destabilization campaign being conducted by APPAC. In public statements made on December 12 and 13, 2002, APPAC and its President announced that Vivendi Universal was going to be declared insolvent and placed into receivership, that Vivendi Universal had failed to provide APPAC with a copy of the audit report effected upon its request, and that Vivendi Universal had filed at least seven different balance sheets. As a result of such declarations, Vivendi Universal has filed a complaint with the Paris Civil High Court (Tribunal de Grande Instance de Paris) citing, in particular, APPAC's negligent conduct. Vivendi Universal considers it has a duty to take legal action on behalf of its shareholders and employees, in order that they not fall victim to such misinformation. Vivendi Universal states that it has filed this civil claim in order to cooperate fully in revealing the truth. 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 Paris Antoine Lefort Phone: +33 (1).71.71.1180 Alain Delrieu Phone: +33 (1).71.71.1086 New York Anita Larsen Phone: (1)212.572.7082 ============= G E R M A N Y ============= BAYER AG: Reaches Agreement With U.S. Authorities ------------------------------------------------- Bayer has reached an agreement in principle for a settlement with the U.S. Attorney's Office for the District of Massachusetts regarding an investigation into rebates for pharmaceutical products. Provisions of $257.2 million have been established to secure the agreement. The U.S. subsidiary Bayer Corporation has been the subject of a joint civil and criminal investigation with respect to allegations that Bayer Corporation improperly underpaid rebates, particularly those accruing under the U.S. Medicaid Rebate Program from 1995 to 2000. Medicaid is a joint state-federal health insurance program that provides drugs and treatment for people on low incomes or with disabilities. The final terms of the agreement remain subject to negotiations. Bayer Corporation has cooperated very closely with the authorities throughout this process. CONTACT: BAYER AG Werk Leverkusen 51368 Leverkusen, Germany Phone: +49-214-30-58992 Fax: +49-214-307-1985 Homepage: http://www.bayer-ag.de DEUTSCHE TELEKOM: To Auction French Subsidiary to Save Cash ----------------------------------------------------------- Debt-laden Deutsche Telekom is selling its loss-making French unit, Siris, hoping to arrest its cash-drain and jumpstart its pledge to bring down debts to EUR50 billion in 12 months. Citing Les Echos, the Financial Time said Cegetel, a unit of Vivendi Universal and a concurrent shareholder, would likely end up with the unit. Accordingly, Cegetel has already sent a letter of interest regarding Siris and is mulling an all-paper offer. This would be its first acquisition. DT bought Siris at the end of 1999 for EUR732 million (US$752 million) from the now-defunct Unisource consortium, the paper said. Last year, DT included it in its IT services arm T- Systems. In the third quarter of 2002, DT incurred a EUR473 million write-down of Siris's book value. With a turnover of EUR241 million, Siris ranks number three in the French fixed-line telecom market. In 2001, Siris posted a loss of EUR155 million after taxes, making it the main cash drain on T-Systems, accounting for 58% of worldwide losses, the Financial Times says. DT would retain a presence in France through Club Internet, a subsidiary of T- Online, and through Soleri of T-Systems. The paper says a transaction between Siris and Cegetel has been cleared by LDCom, Louis Dreyfus's group telecom arm, which is abandoning its plans bid for Siris. A board meeting at LDCom last Thursday decided not to pursue the matter further. It is understood that DT had opened exclusive negotiations with LDCom because it had promised a cash offer. The paper says the deal is expected to be closed before January. DEUTSCHE TELEKOM: Faces Shortfall as Regulator OKs Lower Hike ------------------------------------------------------------- Germany telecom regulator RegTP continues to play tough with Deutsche Telekom, refusing last week the 8.6% rental fee hike sought by the debt-laden phone company. The Financial Times says the move "came as a warning to [the company] not to use its quasi-monopoly in the highly cash- generative fixed-line business to help it reach ambitious debt reduction targets." The company is currently struggling to meet its commitment to shareholders to cut debts from EUR64 billion to EUR50 billion by the end of next year. The rental fee increase would have added 99 cents to its customer's monthly bills. Goldman Sachs James Golob told the Financial Times in an interview that had the hike received approval, it would have boosted DT's revenues by EUR390 million next year and earnings before interest, tax, depreciation and amortization by about EUR136.5 million based on a 35% margin for the fixed-line business. The paper says the regulator did not entirely junk the application. It granted a hike, but capped it at 33 cents. This increase will up DT's sales by EUR90 million and add EUR32 million to its earnings compared with their expected levels this year. The paper believes the failure to get the nod on its proposed rate hike adds pressure on the group to deliver on a debt- reduction plan that has been criticized by analysts as leaving no margin for under-performance. The group, which has pledged to keep net debt below 3-times ebitda by the end of 2003, is also facing tough negotiations in its attempts to sell its cable television businesses and bids are now understood to have fallen below its most recent proceeds forecast of EUR2 billion, the paper says. KIRCHMEDIA GMBH: Finds Buyer for ProSiebenSAT.1 Stake ----------------------------------------------------- The nine-month auction of Germany's erstwhile media empire, KirchGruppe, is now nearing its conclusion, as the group's largest chunk has already found a buyer. KirchMedia GmbH announced Friday that it had reached a broad agreement with Baer publishing house and HVB over its 52.5% share in ProSiebenSAT.1, Germany's largest broadcaster. The Financial Times viewed the deal a "milestone," considering that in the last nine months many "consortia came together and disintegrated amid complaints about the lack of information surrounding [Kirch] assets." The announcement came a day after Premiere, Kirch's pay-TV unit, announced that it had also inked a deal with Permira, a private equity house that will become its majority shareholder. This deal will give the new shareholder control of at least 70% of the unit. KirchMedia said the contract for the sale of its ProSiebenSAT.1 stake would be signed next month. While no financial details were provided, Bauer is understood to be paying about EUR700 million (US$719 million) in cash, the Financial Times said. The publisher said it would also start talks shortly about acquiring rival Axel Springer's 11.5% stake in the broadcaster. Springer said last week it would withdraw from the television business after failing to reach an agreement with KirchMedia on raising its holding to a blocking minority. "In this situation, Bauer would seem to be the natural buyer," a Springer spokeswoman told the Financial Times. Bauer will also make an offer to holders of ProSiebenSAT.1's publicly listed shares next year, the report said. Leaving room for a last-minute surprise, Bauer cautioned that the ProSiebenSAT.1 acquisition would be conditional on its acquisition of a majority stake in KirchMedia's film rights unit. People close to KirchMedia told the paper several of its creditor banks had not yet committed themselves to participating in the transaction, which would be partly financed by rolling over some of KirchMedia's EUR750 million bank debt into a new vehicle for the library. The banks, led by Commerzbank, are being asked to renounce some of their old KirchMedia liabilities and have insisted on a EUR200 million equity injection by Bauer and a contract with ProSiebenSAT.1 binding it to the rights unit. Bauer said on Friday it was aiming at securing 52% of the library, with the creditor banks holding the rest, the report said. The collapse of KirchGruppe this year is the largest corporate failure in German history. ========= I T A L Y ========= FIAT SPA: Divests GM Stake to Meet Financial Targets ---------------------------------------------------- Fiat SpA divulged on Monday that it has sold its entire 5.1% stake in General Motors Corp. to Merrill Lynch & Co. for $1.16 billion (EUR1.13 billion) in an effort to meet strict financial targets agreed with its creditor banks last May. According to the Wall Street Journal, the sale of the GM stake comes days after Fiat agreed to the terms of a deal to sell 51% of its consumer-financing arm Fidis to its creditor banks for some ?400 million ($410.8 million). These two deals, as well as the sale of 34% of luxury sportscar unit Ferrari last June and the sale of its castings unit Teksid, could mean Fiat is likely to meet the commitment it made to its creditor banks. It is noted that the banks have lent Fiat EUR3 billion in exchange for a pledge that Fiat will reduce its net debt to EUR3 billion and gross debt to EUR23.6 billion (both targets have a 20% margin) from EUR5.8 billion and EUR32.8 billion respectively. The Fidis sale will lop off some ?6 billion of gross debt, while the GM stake sale should bring net debt just below ?3 billion, a Fiat spokesman said Saturday. It also gives Fiat more breathing space to sell its Toro insurance business and Fiat Avio aerospace unit, a source added. Fiat also hopes such efforts will ward off a threatened downgrade of its debt rating to junk status, the report says. It added that both Moody's Investor's Service Inc. and Standard & Poor's Corp. have repeatedly expressed concern about Fiat's debt and its cash- burn rate. However, the company still faces a blurry future in 2003 as it attempts to halt the continuing decline of its cash-burning Fiat Auto subsidiary and makes a decision to sell the car unit to GM-- all while it gears up for another possible management upheaval in the spring. "Fiat bought its stake in GM in 2000 as part of a wide-ranging deal in which GM took a 20% stake in Fiat Auto for $2.4 billion and agreed to a put option in which GM may be forced to buy the rest of the car company starting in 2004," the Wall Street reports. It adds that "the deal, which also launched a series of joint ventures, was hailed as a formidable union by then-GM Chairman and Chief Executive John F. Smith." Of late, though, sources say the put option has become a liability for both companies because of different financial and political reasons. In October, GM wrote down its 20% stake in Fiat Auto, valuing it at $220 million. Just around the same time, Merrill Lynch--one of Fiat's financial advisers -- proposed to the Italian company that Merrill buy Fiat's GM stake to help the company reduce its billowing debt. These people said the GM stake had always been considered more of a financial than strategic investment for Fiat, with GM keeping in the loop about the transaction. A statement released on Saturday stated Merrill Lynch bought 32.05 million shares (equivalent to the total holding of Fiat in GM) as part of a "capital market activity and not as a strategic investment." Moreover, since Fiat had pledged its stake in GM as collateral for a $2.2 billion convertible bond last December, Fiat and Merrill Lynch have effectively entered into an equity swap, with a notional value equal to the total proceeds from the sale, as a way to hedge Fiat's exposure. The bond, issued by Fiat but convertible into GM shares, pays a coupon of 3.25% and matures in 2007. Merrill Lynch is likely to resell the GM stake eventually, but has agreed to consult the U.S car maker on the buyer, a source said. 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 ===================== N E T H E R L A N D S ===================== VERSATEL TELECOM: Posts Amendment to American Depositary Pact ------------------------------------------------------------- Versatel Telecom International N.V. announced Friday, in cooperation with The Bank of New York, an amendment to section 6.2 of the Deposit Agreement relating to Versatel's American Depositary Shares ("ADSs"). Under the amendment, which will become effective after 30 days, the notice period for termination of the ADS Deposit Agreement will be shortened from 90 days to 20 days and the post termination period of the ADS Deposit Agreement will be shortened from one year to 45 days. After the implementation of these amendments, Versatel intends to seek termination of its ADS program in early 2003. Once this program has been terminated and the post termination period has expired, The Bank of New York will be entitled to sell the ordinary shares underlying any ADSs that have not been surrendered. The net cash proceeds of any such sales would, to the extent possible, be distributed to such non-exchanging holders upon surrender of their ADSs. Holders of Versatel's ADSs will receive a letter from The Bank of New York notifying them of the amendments. Holders of Versatel ADSs may seek to sell their ADSs at any time prior to termination of the ADS program. Subject to the terms of the ADS Deposit Agreement, holders of Versatel ADSs may also surrender their ADSs and receive delivery to their order (which could be to a broker for purpose of settling a sale) of the underlying ordinary shares at any time up to the time that The Bank of New York sells the ordinary shares underlying the remaining ADSs. Versatel also intends to terminate its American Depositary Share Warrant ("ADS Warrant") program in early 2003. The ADS Warrants will terminate 20 days after The Bank of New York gives notice of the termination. After receiving the notice, holders of ADS Warrants will be entitled, upon surrendering their ADS Warrants, to give The Bank of New York instructions for delivery of the underlying warrants to purchase ordinary shares. After the date of termination, The Bank of New York will attempt to sell any remaining warrants to purchase ordinary shares it holds that have not been delivered pursuant to instructions received from holders of ADS Warrants. The Bank of New York will distribute any net proceeds from that sale to the holders of remaining ADS Warrants, upon surrender of those ADS Warrants. CONTACTS: VERSATEL TELECOM INTERNATIONAL N.V. AJ Sauer Manager, Investor Relations and Corporate Development Tel: +31-20-750-1231 E-mail: aj.sauer@versatel.nl Anoeska van Leeuwen Director Corporate Communications Tel: +31-20-750-1322 E-mail: anoeska.vanleeuwen@versatel.nl =========== S W E D E N =========== LM ERICSSON: Plans to Relocate Headquarters to Kista ---------------------------------------------------- Ericsson is planning to move its headquarters from Telefonplan in southern Stockholm, to Kista, north of Stockholm. The move will take place in stages during 2003 and involves approximately 500 employees working within different corporate functions. Ericsson is presently renting the premises at Telefonplan from AP Fastigheter, who bought it from Ericsson in 2000. Ericsson operations remaining at Telefonplan after the move will be among others the sales company for the Scandinavian countries and the Baltic States, Ericsson Sverige AB, Ericsson Enterprise and Ericsson Business Innovation. In 1940, Ericsson moved its headquarters from Tulegatan in central Stockholm to Telefonplan. During the late 1990's, Ericsson operations in Stockholm have increasingly been concentrated in Kista including e.g. major activities of the business unit Systems as well as research and development. Kista has established itself as the "Mobile Valley" of Northern Europe. In accordance with the plan, the new address for Ericsson headquarters will be Torshamnsgatan 23, owned by real estate company Drott. The reason for the move is lowering costs and improved efficiency. The plan for the move is pending negotiations with the trade unions according to Swedish regulations. Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. CONTACT: Pia Gideon, Vice President, External Relations Phone: +46 8 719 2864; Mobile: +46 70 519 2864 E-mail: pia.gideon@lme.ericsson.se Ase Lindskog, Director, Media Relations Phone: +46 73 024 4872 E-mail: ase.lindskog@lme.ericsson.se SKANDIA: Sells American Arm --------------------------- Skandia announced Friday that an agreement has been reached with Prudential Financial, Inc. (U.S.) under which Prudential Financial will acquire American Skandia. Following the transaction, Skandia will be able to: - Improve profit margins and shareholder returns - Increase strategic flexibility by substantially reducing debt and cash consumption - Focus on further developing its strong European core franchises - Deploy resources and continue to support successful expansion in new growth markets with attractive return characteristics Skandia expects lower future growth and profitability in the U.S. market, given the change in market conditions and its impact on American Skandia's rating environment. This has decreased the probability that American Skandia will reach Skandia's return targets. This transaction will therefore enable American Skandia to improve its future development within a U.S. financial institution that has diversified U.S. product lines and complementary distribution channels. The transaction The transaction values American Skandia at USD 1,150 million (SEK 10.7 billion) as of 30 September 2002, including intra-group debt and USD 277 million of external securitizations. The proceeds of the transaction will be used to repay external debt. The agreement between Skandia and Prudential Financial contains standard representation and warranty provisions. In addition, both parties have agreed to a market standard non- compete agreement. The transaction is subject to regulatory approval and is expected to close during the second quarter of 2003. Impact of the transaction on Skandia financials Skandia will incur a total negative result impact related to the transaction of SEK 4.4 billion net after tax. On a pro forma basis as of 30 September 2002, net asset value will be SEK 28.0 billion, of which shareholders' equity will be SEK 15.7 billion. On the same pro forma basis, the sale will bring Skandia's AuM to SEK 536.0 billion, sales to SEK 57.0 billion and operating result (excluding the exceptional impact of the transaction) to SEK 1,821 million. Comments Lars Ramqvist, Chairman of Skandia, says: "This is a solid solution from the shareholders' perspective. The Board fully supports Skandia management's plans for further profitable growth that this transaction has enabled." Lars-Eric Petersson, CEO of Skandia, says: "We have rebalanced Skandia's risk-return profile and significantly enhanced our financial and operating flexibility." Impact on other Skandia operations This transaction has no effect on Skandia Global Funds and other Skandia operations located in the U.S. Nor does it have any effect on Skandia's operations in other countries than the US or any relation between customers or other parties and any company in the Skandia group besides American Skandia. Skandia Press Meeting and Analyst Presentations On Friday, 20 December 2002, Skandia will hold a press and analyst meeting at 13.00, local time, at Skandia's headquarters, Sveav"gen 44, Stockholm. A call-in telephone conference for analysts and the media will be held at 9.30 CET (8.30 GMT). To participate in the teleconference, call +44 (0) 20 7162 0125 or +1 334 323 6203 and request the Skandia teleconference. A recorded version of the teleconference will also be available through 25 December 2002 on tel. +44 (0) 20 8288 4459, code 252 790, or +1 334 323 6222, code 252 790. An audiocast of the teleconference along with an accompanying slide presentation will be available on the Internet at www.skandia.com An investor day will be held in London on Friday, 14 February 2003. About Skandia Skandia Insurance Company Ltd. (publ.) is an international long- term savings and pension provider. Founded in 1855, Swedish-based Skandia currently operates in 24 countries, with the U.K. and Sweden as its largest markets. Skandia is one of the largest providers of investment products to the independent broker-dealer channel worldwide. Additional information on Skandia can be found at www.skandia.com About American Skandia American Skandia, a leading distributor of variable annuities in the US, pioneered the "multimanager" concept in America. Investment managers included in the American Skandia lineup meet rigorous investment policy standards. Variable annuities, variable life insurance and qualified plans are issued by American Skandia Life Assurance Corporation and distributed by American Skandia Marketing, Inc. For more information about American Skandia, visit www.americanskandia.com About Prudential Financial, Inc. (U.S.) Prudential Financial companies, with approximately USD 533 billion in total assets under management and administration as of 30 September 2002, serve individual and institutional customers worldwide and include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. For more information, visit www.prudential.com Financial implications of the transaction in summary Result of the transaction SEK billion Transaction value of American Skandia 10.7 Capital employed in American Skandia -16.8 Result of the transaction before tax -6.1 Result of the transaction after tax -4.4 Key data Interim report Sept. 2002 Pro forma Sept. 2002 SEK million SEK million Sales 92,306 56,975 Result of operations 1,389 1,616 Operating result1) -2,309 1,821 One-time effect on operating result of a 1% increase/decrease in stock market +/- 166 +/- 52 SEK billion SEK billion Total assets 498.8 283.7 Assets under management 779.7 536.0 Funds under management 487.7 250.5 Shareholders' equity 20.1 15.7 Deferred tax liability, net 4.2 2.1 Value of business in force 10.1 10.1 Other surplus values 0.1 0.1 Net asset value 34.5 28.0 Key ratios % % Operational return on NAV 7.7 9.4 Profit margin unit linked, new sales 10.1 13.5 DAC/Funds under management, unit linked 4.7 3.4 Per-share data (before dilution) SEK SEK Operating result -2.25 1.78 Earnings 0.20 2.59 Net asset value 33.74 27.36 Shareholders' equity 19.61 15.34 1) Of which, items affecting comparability, SEK 2,016 million. For result items, pro forma financial data pertains to the result stated in the interim report dated 30 September 2002, excluding the result attributable to American Skandia. For balance sheet items and net asset value, pro forma data pertains to the interim figures after the deconsolidation of American Skandia and taking into account the effects of the transaction. The result effect of the transaction has been converted at the closing rate as per 30 September (1 USD = 9.27 SEK). To maintain comparability, all figures have been converted in accordance with the exchange rates that were used in connection with the interim report as per 30 September 2002. Closing rate 1 USD = 9.27 SEK Average rate 1 USD = 9.94 SEK CONTACT: SKANDIA Odd Eiken, EVP, Strategy & Communication Phone: +46-8-788 2880 Jan Erik Back, Chief Financial Officer Phone: +46-8-788 3720 Michael Wolf, Chief Investment Officer Phone: +46-8-788 4559 Harry Vos, Head of Investor Relations Phone: +46-8-788 3643 =========================== U N I T E D K I N G D O M =========================== AES DRAX: Concerns Over Emissions May Affect Financing ------------------------------------------------------ Power industry financiers of the troubled U.K. power plant AES Drax may think twice about any deals they may do with the company, following a report by Environment Agency inspector John Peak stating that the generator has had problems trying to meet environmental laws, the Wall Street said on Friday. According to Peak, AEs Drax introduced new emissions technology that proved unreliable and created a risk of explosions. "They had all sorts of problems with flame outs and instability, air registers deforming and this sort of thing," Peak said. "I have some horrendous photographs of what happened." One consultant close to the financing said anybody looking to finance a business beyond 2008 is going to be interested in issues that affect the tenure of that financing and the length of assets. "You wouldn't lend money that you knew was going to collapse in two years," he added. "If there are going to be issues that are going to have a financial implication, unless they are covered in the costs, and projected for...then, yes, it is an issue," he said. Drax, however, said it didn't think its emissions program would affect financing, reports say. A Drax spokeswoman told the Wall Street the plant will meet the best available techniques rules and 2008 directives with its planned modifications. "We agree with the regulations, and feel we are already a long way in working towards them. The sulfur dioxide limits can be met already and we are most of the way in meeting the 2008 limits for NOx," she said. The changes won't affect the reliability of supply or cause any safety issues, she added. Earlier, another of AES' power plants, Fifoots in South Wales, went into receivership earlier this year. An industry source said this was directly linked to difficulties with technological improvements. It is noted that an air register is a key measurement and control instrument in the NOx emission burner. A flame out causes a shut down of the burners. Thus, the Environment Agency has ordered Drax to upgrade its emission burners. The inspector said that although the plant is starting to buy the latest emission technology, it will likely still need further upgrades to meet revised emission regulations due in place in 2008. He further explained that the latest modifications will likely only bring the NOx burners in line with current rules. "They would be very lucky if they meet the 2008 standards without doing something else," he said. That could affect whether or not AES Drax gets further financing, one power industry banker said. Drax, the largest coal-fired power plant in Western Europe, has been struggling since it had to cancel a contract last month with its biggest customer, TXU Europe, when it failed to pay for power. Lending banks recently signed on to provide fresh credit of about GBP30 million, reports say. BRITISH ENERGY: In Final Stage of Talks to Sell Canadian Unit ------------------------------------------------------------- The sale of Bruce Power, the Canadian subsidiary of troubled British Energy, is believed to be nearing conclusion as potential buyer Camco is already close to agreeing to a deal. According to Ananova, the sale will raise for the ailing British power firm between GBP300 million and GBP350 million, which will go straight to the Treasury to repay part of the Government's GBP650 million loan. The disposal of the North American interests was one of the conditions set by the government in agreeing to bailout the company. Creditors will probably receive around 25p for every pound they are owed under the company's restructuring plan. British energy owes a total of GBP1.2 billion to banks, bondholders, and power producers, and the Government says it will withdraw its loan unless the creditors can agree on a restructuring plan by February 14. Ananova says under the current proposals it is thought creditors will trade their debt for shares in the group and new bonds worth 25% of the total amount they are owed, although there are reports that creditors are split over whether or not to accept the deal. If the deal does go ahead it is estimated that existing shareholders will be left with only around 10% of the group's total equity. British Energy's problems emerged in September when the loss- making group warned the Government that it could face insolvency if it did not receive immediate financial assistance. CABLE & WIRELESS: Long-distance Monopoly in Jamaica Broken ---------------------------------------------------------- Cable & Wireless faces a possible hefty reimbursement bill if an appeal by the Jamaican solicitor general fails to convince the court the government's 2000 Telecommunications Act was not unconstitutional. According to the Wall Street Journal, the Jamaican Supreme Court had recently ruled that the law unfairly granted the London-based firm exclusive access to Jamaica's long-distance telephone market. InfoChannel Ltd. raised the constitutional question in November last year, accusing Cable & Wireless of barring its customers from placing international calls over the Internet. The ruling, according to the paper, could have huge implications for Jamaica's telecom sector and could ultimately open the island's long-distance market to domestic and international competitors. It also could result in the paying out of millions of dollars to InfoChannel, which says it loses US$100,000 for every month it's barred from providing its long-distance service. Solicitor General Anthony Hylton said the government will appeal the court's decision when the court reconvenes in two weeks. Cable & Wireless spokesman Errol Miller declined to comment, saying the company was still studying the ruling. InfoChannel attorney Harold Brady applauded the decision. "It sends a clear signal that the right to communicate is a constitutional right," Mr. Brady told the paper. InfoChannel launched in 1995 and quickly became Jamaica's second largest Internet provider, behind Cable & Wireless. For years, Cable & Wireless had resisted Caribbean governments efforts to break its monopoly in the former British islands. In 1999, it won an exclusive, three-year license to provide long-distance service in Jamaica. The license is set to expire in March 2003, the deadline for full deregulation of Jamaica's telecom industry, the report says. COLT TELECOM: Highberry Insolvency Petition Dismissed ----------------------------------------------------- COLT Telecom Group plc announced Friday that Mr. Justice Jacob has ruled in favor of COLT and dismissed the claims of Highberry Ltd as: "a shaky, tentative and speculative peering into the middle distance." He concluded that there was no basis for forcing COLT into administration following Highberry's petition for an administration order on October 22, 2002. In summing up, Mr. Justice Jacob said: "There is not and never has been, any substance whatever in their petition. It should never have been launched." COLT's President and CEO Steve Akin added, "The case was won on the strength of COLT's business and financial resources, and I am pleased that the judge has rejected Highberry's claims out of hand, and dismissed all the arguments they made. He also found the no-action clause contained in the terms of our bonds, which was expressly designed to prevent nuisance actions of this nature, is valid. "We said all along that Highberry's claims were completely without foundation and the judgment confirms this. This victory is not just important for COLT but for other companies financed with public debt. It should serve as a warning to other vulture funds that they will not be allowed to disrupt capital markets in this country. "We are obviously delighted with the decision of the Court, and we now intend to continue with the important business of running the company and serving the interests of all our stakeholders." About COLT COLT Telecom Group plc is a leading European provider of business communication services. COLT has over 15,000 network services and eBusiness customers with high bandwidth local networks in 32 European cities in thirteen countries supported by a series of Internet Solution Centres and inter-linked by a 15,000 route kilometre high capacity fibre-optic long distance network. COLT Telecom Group plc is listed on the London Stock Exchange (CTM.L) and Nasdaq (COLT). Information about COLT and its products and services can be found on the web at http://www.colt.net CONTACT: Analysts and Inventors John Doherty, Director Investor Relations Phone: +44 20 7390 3681 Tom Buchanan/Jonathan Glass Brunswick Phone: +44 20 7404 5959 CORDIANT COMMUNICATIONS: Announces Board Changes ------------------------------------------------ The Board of Cordiant announces that the reorganization of the Bates Group, commenced in September 2002, is nearing completion. As a result, Michael Bungey intends to step down from the role of Cordiant CEO at the end of this year and will hand over the role to David Hearn with effect from January 1st 2003. Michael Bungey will continue as an executive director of Cordiant until March 31st 2003. Enquiries: CORDIANT COMMUNICATIONS GROUP PLC College Hill Phone: +44 20 7457 2020 Contacts: Alex Sandberg Nick Elwes EASYINTERNETCAFE: Loss-making Firm Still Viable, Says Owner ----------------------------------------------------------- Businessman Stelios Haji-Ioannou is still not giving up on EasyInternetCafe, despite the heavy losses the business venture has incurred and the personal losses he has absorbed. According to the Financial Times, the company will undergo yet another "radical restructuring" of existing stores, together with the opening of much smaller units in other retailers' stores. The businessman believes this would result in "a few million positive or negative," at the profit line, on turnover of about GBP10 million in 2003. The paper says Mr. Haji-Ioannou plans to call an extraordinary meeting to reverse a controversial share devaluation carried out last year, which saw him injecting GBP15 million to save the Internet cafe chain from insolvency through the issue of 1.5 billion shares at 1p, compared with the previous nominal price of GBP1 a share. The paper says Mr. Haji-Ioannou will propose issuing 94 million shares with a nominal value of GBP1 each. This move will replace the existing share capital and will also provide additional shares to Mr. Haji-Ioannou in return for having assumed GBP16 million of debt. This represents the discounted proportion of convertible debt of GBP24 million owed to Apax Partners and Hewlett Packard, that Mr. Haji-Ioannou has assumed, the paper says. Following the share issue, Mr. Haji- Ioannou will own 98.5% of the company. The Internet cafe chain opened for business in 1999. In September 2001, the company posted pre-tax losses of GBP67.9 million, compared with a deficit of GBP13.5 million in 2000. In the year to September 30, 2002, the loss narrowed to GBP12.6 million, the Financial Times says. Mr. Haji-Ioannou says on a pro-forma basis, assuming the capital restructuring, EasyInternetCafe had net assets of GBP6 million, of which GBP5 million was cash. This means, however, that personally the businessman has effectively lost GBP87 million from his GBP93 million total investment in the company since 1999. Still he is convinced the company is viable: "It has GBP5 million of cash. It has a prospect, it has a business model. It is difficult to argue it is a worthless company." EUROTUNNEL PLC: Gains GBP28 Million in Latest Buy ------------------------------------------------- Restructuring Eurotunnel Plc, which operates the underground rail link between France and Britain, bought last week a unit of Abbey National Plc, says Reuters. Although the company paid GBP345 million for Abbey National March Leasing 1 Ltd, the deal will give Eurotunnel GBP28 million, which it can use to pay down debts. Reuters says the purchase price consisted of GBP61 million in cash and GBP284 million in debt owed by the unit to Abbey National. The unit, which leases aircraft and water assets, will pay Eurotunnel GBP28 million in cash up front related to a tax benefit, a spokesman told Reuters. Eurotunnel has just completed a refinancing deal that cut its borrowing costs by 10%. Its debts total GBP5.9 billion -- a legacy of spiraling construction costs and delays to opening the eight year-old sub-sea railway. The latest deal is being financed by GBP386 million of bank borrowings, but the spokesman said the new debt would be matched by the amounts due to the unit under the leases, so Eurotunnel's net debt would not increase. "It's part of our ongoing strategy of financial operations which generate cash to enable us to repay Eurotunnel debt and to repurchase existing Eurotunnel debt at a discount to market value," the spokesman told Reuters. He said the money due to the unit under its leases was guaranteed by a group of banks, so the subsidiary debt was ring-fenced. Some of the leasing firm's future revenues will also be paid to Abbey National, but an amount was not disclosed, Reuters says. HP BULMER: Sells Australian Operations for GBP22 Million -------------------------------------------------------- HP Bulmer announced last week that it will withdraw its cider- making operations from overseas markets, and the first sale will occur in Australia. According to the company, loss-making Bulmer Australia will be sold to Foster's for GBP22.5 million. The sale is expected to reduce the company's debts, which currently total GBP107 million. The Guardian says the company also announced last week that it will cut about 200 jobs at its headquarters in Hereford and reduce packaging variations from 350 to 120. Many believe these moves are designed to give its new chief executive a clean sheet when he takes over in January. Incoming CEO Miles Templeman is a former Whitbread executive famed for turning Stella Artois into Britain's most popular premium lager, The Guardian said Friday. He joins the company after a flood of profit warnings, a GBP3.3 million accounting scandal and failed overseas expansion -- all of which helped to leave Bulmer in breach of its banking covenants. The company reported GBP1.8 million losses for the six months to November, compared with a profit of GBP6.4 million the previous year. Exceptional charges of GBP31 million included a GBP22 million goodwill write-down on US and South African operations, which have lost out to alcopops. Bulmers brags as the clear market leader in both the take home and on trade cider markets, with Strongbow firmly established within the top 10 highest selling long alcoholic drinks. Its portfolio includes Woodpecker, Scrumpy Jack, White Lightning, a thriving premium packaged beer distribution business and some exciting and innovative new products including Sidekick, a flavored 'shots' style drink. IZODIA: Suit to Further Cut Shareholders' Compensation ------------------------------------------------------ A pending case filed against failed e-commerce software company, Izodia, will further slash the payout for shareholders should the company succumb to liquidation, says the Financial Times. The case filed by HISL, a software company based in Redditch, Worcestershire is seeking GBP5.2 million for an alleged breach of a development agreement. This represents a sixth of Izodia's only asset -- GBP33 million cash. Izodia had mentioned the HISL deal as a material contract in the circular issued when it moved to AIM in September. However, it did not make any public announcement after HISL issued proceedings on November 6. HISL's action was filed after the parties failed to reach a settlement. Izodia so far has not filed a defense, and a hearing is scheduled for January 23 in Birmingham District Registry, the paper says. Aside from this case, the company is also facing a breach of contract suit filed by 35 former employees. An employment tribunal hearing on a test case has been scheduled for February 18. The total claims are believed not to exceed 70,000 pounds the paper says. The company is currently under investigation by the Serious Fraud Office of the United Kingdom. Last week elements of the fraud office raided the offices of Orb, Izodia's largest shareholder. According to the Financial Times, the probe revolves around an allegation of unlawful appropriation of funds belonging to Izodia and possible related offences. RAILTRACK PLC: Successor to Have Greater Say on Maintenance ----------------------------------------------------------- In an effort to cut costs, Network Rail, which will takeover Railtrack, will reduce the role of contractors in the operations of the U.K.'s sprawling railway system. The arrangement, however, will expose the new entity to legal actions in the event of accidents on the railway, according to the Telegraph. Beginning next year, contractors will no longer determine how maintenance and renewals should be done. Under the plan, Network Rail will dictate exactly what tasks it believes needs to be done, will verify that they are done to specifications and will then take on responsibility for routine. At present, contractors are responsible for routine maintenance checks with Network Rail simply paying the bill. Although there are risks in this arrangement, Network Rail's management believes it has little to lose. At present it is held responsible by the public for accidents on the railways, irrespective of where the legal liability lies, the Telegraph says. The company believes the changes will both reduce costs and increase safety. Although the move does not require Government approval, ministers are thought to have been consulted and are supportive of the plan, the report says. Network Rail will have spent more than GBP6 billion this year in maintaining and upgrading the network, including almost GBP1 billion on the West Coast Main Line. The change will be rolled out initially in East Anglia, which will become a newly designated Network Rail "region" created from the splitting of the existing Eastern Region. The first contractors to be affected are Balfour Beatty and Amec, the report adds. ************* 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. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. 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