/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030113.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, January 13, 2003, Vol. 4, No. 8 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Settles CFSB Dispute Over Mendez Sale Fees * F R A N C E * PPR SA: Close to Striking Deal for Telecom Operation SUEZ SA: To Sell Billions of Assets Over the Next Two Years SUEZ SA: Standard & Poor's Places Credit Rating on CreditWatch * G E R M A N Y * MOBILCOM AG: Issues Statement on Current Media Reports SL INDUSTRIES: Sells German Unit Electro-Metall for $11.6 MM * I T A L Y * CIRIO: May Divest Del Monte Pacific, Says Source FIAT SPA: Says It Successfully Met Debt Reduction Targets * N E T H E R L A N D S * KLM ROYAL: Appoints New SVP & Area Manager for Western Europe * S P A I N * AVANZIT SA: Creditor Banks to Decide Fate This Week * S W E D E N * SONG NETWORKS: Standard & Poor's Withdraws 'D' Ratings * U N I T E D K I N G D O M * ABERDEEN ASSET: Clarifies Speculations on New Star Transaction AVON ENERGY: Standard & Poor's Maintains Ratings on CreditWatch BIG FOOD: City Lunges Questions Over Performance BLYTH & BLYTH: Collapses Into Receivership Under Huge Deficit BRITANNIC PLC: S&P to Review Britannic Assurance Ratings BRITISH ENERGY: Announces December Output Statement BRITISH ENERGY: Amendments in Energy Legislation to Allow Rescue CABLE & WIRELESS: Sets Aside GBP1.5 Billion for Tax Liability EQUITABLE LIFE: Warns of Missing Payment From Halifax EQUITABLE LIFE: Missed GBP250 MM Bad News to Policyholders KINGFISHER PLC: Plans to Close Castorama Deutschland L GARDNER: Requests Receivership for Non-Aerospace Subsidiaries P&O PRINCESS: Moody's Might Change Direction of Rating ============= B E L G I U M ============= LERNOUT & HAUSPIE: Settles CFSB Dispute Over Mendez Sale Fees ------------------------------------------------------------- On Lernout & Hauspie Speech Products N.V. and Dictaphone Corp. and its debtor-affiliates' behalf, Luc A. Despins, Esq., and Matthew S. Barr, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, and Gregory W. Werkheiser, Esq., at Morris Nichols Arsht & Tunnell, in Wilmington, Delaware, signed a stipulation settling a dispute over the allocation of the fees charged by Credit Suisse First Boston as the Debtors' exclusive financial advisor in connection with the sale of Mendez SA. Notwithstanding the provisions of its Court-approved engagement letter or any other agreement or arrangement, CSFB agreed to accept a one-time payment of $2,875,000 in full and final satisfaction of any obligation of any member of the Debtors to CSFB other than: (a) the indemnity under the engagement letter between the parties, and (b) any payment owed to CSFB from the sale of the assets, securities or businesses of Mendez S.A.; CSFB filed a Second Amended and Final Fee Application seeking approval and allowance of the $2,875,000 payment. The Debtors agree that, subject to the Bankruptcy Court's allowance of the CSFB Final Fee Application for $2,875,000, they would allocate the CSFB payment among them as: Debtor Amount ------ ------ L&H NV $1,387,187.28 L&H Holdings 712,812.28 Dictaphone 775,000.00 If the Bankruptcy Court allows the CSFB Final Fee Application in an amount other than $2,875,000, the Debtors will file a subsequent notice allocating any allowed amount. In addition to the compensation of $2,875,000, Dictaphone planned to pay CSFB $750,000 in Dictaphone stock as set forth in the Dictaphone plan of reorganization. Dictaphone will distribute the $750,000 in Dictaphone stock to L&H NV as part of the Allocation. (L&H/Dictaphone Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) =========== F R A N C E =========== PPR SA: Close to Striking Deal for Telecom Operation ----------------------------------------------------- Pinault-Printemps-Redoute said last week that negotiations with potential buyers over the acquisition of its loss-making Kertel telecommunications operations could be coming to a close. Without identifying the party involved in the negotiation, a PPR spokeswoman said, "We are in advanced talks with potential buyers." Dow Jones, meanwhile, learned that privately-owned company Iliad, which controls Internet services provider Free, is engaged in talks for the acquisition of Kertel and could close the deal before the end of the week. Kertel, the no.2 prepaid telephone cards company in France, has a book value of EUR5.8 million. But a person close to the talks cautioned, "You can't assume that the book value will be close to the final price." PPR revealed Kertel is still recording "minimal losses." In 2002, PPR began a series of major asset disposals as part of a strategic shift toward higher-margin businesses. This has resulted in the sell-off of the company's financial services business, Finaref, for close to EUR3.6 billion. Kertel is the remaining asset included in PPR's unsuccessful venture into telecommunications, which started in 1998, the report noted. CONTACT: PINAULT-PRINTEMPS-REDOUTE 18, place Henri-Bergson 75381 Paris Cedex 08, France Phone: +33-1-44-90-61-00 Fax: +33-1-44-90-62-80 Homepage: http://www.pprgroup.com Contacts: Serge Weinberg, Chairman of the Management Board Thierry Falque-Pierrotin, Chairman and Chief Executive Officer, Redcats SUEZ SA: To Sell Billions of Assets Over the Next Two Years ----------------------------------------------------------- The management of French utility conglomerate Suez SA plans to sell EUR9 billion (US$9.44 billion) of assets over the next two years with the hope of restoring investor confidence in the debt- laden company, according to the Wall Street Journal. Chief Executive Gerard Mestrallet said Suez will sell its stakes in French insurer AXA SA, Belgian bank insurer Fortis NV and French oil group TotalFinaElf SA by 2004. Suez owns 1%, 10%, and 1% of AXA, Fortis and TotalFinaElf, respectively. Without offering further details, he said that assets to be sold include foreign and communications assets. Suez is expected to unload French television company M6 and Paris cable operator Noos, says the report. The executive of France's second most indebted company next to France Telecom also said Suez plans to cut investments in its core energy, water and waste businesses to EUR4 billion a year from EUR8 billion between 2003 and 2005, and cut back its exposure to emerging markets by one-third. He also disclosed plans of redeploying employees and reducing hirings in order to cut cost by EUR500 million in 2003 and EUR100 million 2004. The conglomerate, which recently reported a EUR900-million loss amassed huge debts through a five-year acquisition spree under Mr. Mestrallet. Under Mr. Mestrallet's management, the company spent EUR19 billion in acquiring assets. Shares in the company lost half of their value last year amidst concerns about its EUR27 billion debt. About EUR11 billion of Suez's debt comes due in 2003 and 2004. But Mr. Mestrallet assured: "We don't have any short-term financial constraints." The company counts on EUR6.5 billion in cash and EUR3.4 billion in liquid stock-market investments, excluding the proceeds from the planned asset sales to meet obligations. The report, however, noted that interest payments took up about EUR1.5 billion of Suez's cashflow in 2002. Suez also took a EUR500 million charge to cover its exposure to crisis-ridden Argentina and EUR1.4 billion in write-downs on its large portfolio of investments in listed and nonlisted companies. Suez, which is the product of a 1997 merger between financial group Cie. Financiere de Suez and water utility Lyonnaise des Eaux, operates power, water and waste businesses. CONTACT: KPMG INTERNATIONAL Burgemeester Rijnderslaan 10 1185 MC Amstelveen, The Netherlands Phone: +31-(0)20-656-7890 Fax: +31-(0)20-656-7700 Homepage: http://www.kpmg.com Contacts: Mike Rake, Chairman Robert W. Alspaugh, Chief Executive Officer SUEZ 16, Rue de la Ville I'Eveque 75008 Paris, France Phone: +33-(0)1-40-06-64-00 Fax: +33-(0)1-40-06-67-33 Homepage: http://www.suez.fr Contacts: Gerard Mestrallet, Chairman and CEO Jean Gandois, Vice Chairman SUEZ SA: Standard & Poor's Places Credit Rating on CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'A-' long-term corporate credit ratings of Suez S.A. and related subsidiaries on CreditWatch with negative implications. The 'A-2' short-term credit rating of Suez was meanwhile affirmed. The move follows the France-based multi-utility company's announcement of weaker-than-expected preliminary results for 2002 and significant decline in the value of its non-core financial assets during 2002. But the rating agency noted that the company also announced goals to rapidly reduce EUR28.2 billion (as of June 30, 2002) of net debt by approximately one-third by the end of 2004 through the sale of core and non-core assets and a sharp reduction of its investment program. Standard & Poor's credit analyst Karl Nietvelt says, "Standard & Poor's expects to resolve the CreditWatch placement once 2002 year-end results are available and have been fully analyzed." The rating agency says the resolution of the 'A-' long-term ratings depends on the analysis of the 2002 results and on Suez's ability to improve future credit protection ratios to levels in line with the rating category. It says that the rating could either be maintained or lowered by one notch. ============= G E R M A N Y ============= MOBILCOM AG: Issues Statement on Current Media Reports ------------------------------------------------------ Mobilcom AG feels obliged to make some explanatory comments on reports currently appearing in the press. The MC Settlement Agreement with France Telecom, to which Gerhard Schmid has also given his consent, includes the following provisions: - Gerhard Schmid and his wife are not allowed to be members of the company's Supervisory Board or to perform any management function within the MobilCom Group. This restriction will remain operative until at least 31 December 2004 and also beyond that date for as long as state guarantees in favour of MobilCom remain in place. - Should either Millennium GmbH or Gerhard Schmid fail to repay an amount of around EUR71 million from a stock option scheme by March 31, 2003, the trustee appointed by Millennium GmbH and Gerhard Schmid will be obliged to sell as many of the MobilCom shares held by him on behalf of Millennium as may be necessary to satisfy MobilCom's claims. This sale will, if necessary, be effected between 1 April and 31 December 2003 and will include all the MobilCom shares held by Millennium which are not encumbered by third-party rights. - MobilCom has agreed to refrain from instituting legal proceedings against Gerhard Schmid and Millennium GmbH until after 31 December 2004. The provisions set out above are part of the Settlement Agreement with France Telecom. MobilCom has fulfilled its obligations by publishing the content of the main points of the agreement in the invitation to the Annual General Meeting and in the management report, copies of which can be obtained by shareholders from the company. The Settlement Agreement will also be available for inspection at the Annual General Meeting. SL INDUSTRIES: Sells German Unit Electro-Metall for $11.6 MM ------------------------------------------------------------ SL Industries, Inc. (NYSE and PHLX:SL), sold its German subsidiary, Electro-Metall Export GmbH for a purchase price of $11.6 million, which consisted of cash, purchaser notes and assumption of bank debt. The purchaser notes are comprised of a $3 million secured note that bears interest at the prime rate plus 2% and matures no later than May 1, 2003, and a $1 million unsecured note that bears interest at an annual rate of 12% and matures April 3, 2004. Cash proceeds were used to pay down debt. After giving effect to such debt repayment, the Company's outstanding bank debt is approximately $10.4 million. EME is a producer of electronic actuation devices and cable harness systems sold primarily to original equipment manufacturers in the aerospace and automotive industries. Its operations are located in Ingolstadt, Germany and Paks, Hungary. EME is expected to report sales of approximately $ 27 million and net income of approximately $1.7 million for the 2002 calendar year. As a result of the transaction, SL's net worth is expected to decrease by approximately $3.5 million. The transaction is not anticipated to be a taxable event. The Company further announced that it entered into a three-year senior secured credit facility with LaSalle Business Credit LLC. The credit facility provides for a maximum indebtedness of $20 million, with a revolving tranche and a term debt tranche. Outstanding indebtedness under this facility bears interest ranging from the prime rate plus fifty basis points to the prime rate plus 2%. The credit facility is secured by all of the Company's U.S. assets and requires that the Company maintain specified financial ratios. Loan proceeds were used to retire the Company's pre-existing debt, which matured on December 31, 2002, and for working capital purposes. Warren Lichtenstein, Chairman and Chief Executive Officer of SL Industries, Inc., said, "We are pleased to report the sale of the Company's EME subsidiary. These transactions represent strategic steps to maximize the value of the Company for its stakeholders." Lichtenstein continued, "I would also like to note the significance of the Company's new credit arrangement with LaSalle Business Credit LLC. We believe that this credit facility will provide ample liquidity to take advantage of market opportunities and sufficient flexibility to maintain a balanced capital structure. More importantly, we expect that the new credit facility will provide much needed financial stability by substituting a new lender interested in developing a cooperative business relationship. We look forward to working with LaSalle Business Credit LLC as we continue to implement the Company's business plan." SL Industries, Inc. designs, manufactures and markets Power and Data Quality (PDQ) equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. For more information about SL Industries, Inc. and its products, please visit the Company's web site at http://www.slpdq.com. ========= I T A L Y ========= CIRIO: May Divest Del Monte Pacific, Says Source ------------------------------------------------ Struggling canned foods group Cirio Finanziaria Spa could soon pursue its initial plan of selling Singapore-listed Del Monte Pacific and its real estate, a financial source told Reuters. The Italian food group's advisers and its new management might also rewrite the restructuring plan arranged by Cirio's recently resigned Chairman and Chief Executive Sergio Cragnotti. Cirio is currently implementing a restructuring plan and is mulling over the divestiture of its soccer team, Lazio. In December, the company was reported to have plans of overhauling its debt and refocusing on its core food business. Cirio had accrued net debt of EUR691.5 million at end of September. The company's nine-month EBITDA is EUR60.8 million. The company's advisors are Livolsi & Partners. CONTACT: CIRIO Phone: ++39 06 4145700 Fax: ++39 06 4145729 Home Page: http://www.cirio.it FIAT SPA: Says It Successfully Met Debt Reduction Targets --------------------------------------------------------- Fiat SpA said it has reached the target to cut its net debt to EUR3 billion (US$3.14 billion), and gross debt by more than EUR10 billion to EUR23 billion, as part of a rescue plan it agreed to with banks in May. Fiat has until March to meet the target. According to Dow Jones, a person close to the matter said Fiat's fourth-quarter operations were stronger than the company and the banks had expected. The report came with indications from its four main creditors that they are willing to explore options to help the industrial group in its restructuring efforts. The conglomerate is currently selling non-core yet profitable assets to revive its ailing unit, Fiat Auto, the business which it denies having plans of selling. But despite denials, the report says, "Fiat is understood to be entertaining, if not planning, a divestiture of its auto unit to raise the much needed funds for Fiat Auto's re-launch and to lighten the burden on the parent company." Earlier, Italian entrepreneur Roberto Colaninno was reported to be preparing a rescue offer that would allow him to take a significant stake in Fiat as well as the chief executive position. Mr. Colaninno indicated he would renegotiate Fiat's put option to sell Fiat Auto to General Motors, which already owns 20% of the unit, but would retain the partnership with the U.S. automaker. CONTACT: FIAT SPA 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Toll Free: 800-804027 Homepage: http://www.fiatgroup.com/e-index.htm Contacts: Paolo Fresco, Chairman and Co-CEO Alessandro Barberis, Co-CEO ===================== N E T H E R L A N D S ===================== KLM ROYAL: Appoints New SVP & Area Manager for Western Europe ------------------------------------------------------------- KLM Royal Dutch Airlines has appointed Erik F. Varwijk (41) Senior Vice President & Area Manager - Western Europe effective January 16, 2003. He will succeed Onno P.M. van den Brink, who has been appointed President & CEO of Transavia airlines. Until January 1, 2003, Mr. Varwijk was stationed in Singapore as Vice President & Area Manager - Asia Pacific. He joined KLM in 1989, after graduating in business economics. Since then he has held various operational and commercial posts at KLM. This new posting will place him at the head of the passenger marketing and sales organization for the Benelux, United Kingdom and Ireland. Mr. Varwijk will report directly to Paul S.M. Gregorowitsch, Executive Vice President - Commercial. Effective January 1, 2003, E.J. (Boet) Kreiken (44) succeeded Mr. Varwijk as Vice President & Area Manager - Asia Pacific. Mr. Kreiken previously headed the Pricing & Revenue Management department of the Commercial division at Passenger Business. Mr. Kreiken, a business administration graduate, joined KLM in 1985. He has held a series of positions at KLM, including several commercial posts outside the Netherlands. Mr. Kreiken will be posted in the Netherlands. The department of Pricing & Revenue Management will be under interim management for the time being. ========= S P A I N ========= AVANZIT SA: Creditor Banks to Decide Fate This Week --------------------------------------------------- The fate of Spanish telecom company Avanzit SA will be decided this week when creditor banks vote whether to accept the deeply discounted offer of New York-based Alpha Private Equity. The transaction only needs 30% approval from banks, as 70% of Avanzit's investors have already approved the scheme, which would involve Alpha taking control of the company by buying its bank debt for EUR22 million ($23.1 million), an 85% discount on the EUR150 million it owes 43 banks. Avanzit has been in receivership since June after a failed attempt to transform itself into a telecommunications, media and technology company. It has accrued a total debt of EUR235 million as a result of the venture, and the Madrid-based company has been laying off workers and closing divisions just to survive. The deal with Alpha is expected to save the firm from being liquidated. According to The Deal, Jose Arozamena, the Alpha partner handling the deal, warned that he will drop the offer if the banks take too long to decide. He earlier denied media reports in Spain that the banks had already refused the bid. Avanzit's largest creditors are Santander Central Hispano SA, Caja San Fernando and Caja Castilla La Mancha. =========== S W E D E N =========== SONG NETWORKS: Standard & Poor's Withdraws 'D' Ratings ------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'D' senior unsecured debt ratings on Sweden-based telecommunications operator Song Networks N.V. The rating agency also withdrew Song's 'D' long-term corporate credit, placed in August 2002 when the company failed to pay the interest coupon due August 1, 2002, on its 12.375% senior notes. Song Networks is undergoing a financial restructuring, which involves a pre-negotiated court filing and composition proceedings to eliminate all of Song's outstanding debt and associated interest expense while introducing fresh capital and additional network assets. The restructuring is expected to cancel the company's bonds in exchange for shares. Formerly Tele1 Europe, (Stockholmsborsen:SONW) Song Networks is a data and telecommunications operator with activities in Sweden, Finland, Norway and Denmark. The Company's business concept is to offer the best broadband solution for data communication, Internet and voice to businesses in the Nordic region. The Company has built local access networks in the largest cities in the Nordic region. The Company was founded in 1995 in Sweden and have approximately 975 employees per September 30. The head office is located in Stockholm and there are an additional 34 offices located in the Nordic region. CONTACT: SONG NETWORKS HOLDING AB Home Page: http://www.songnetworks.net Tomas Franz,n, Chief Executive Officer Phone: +46 8 5631 0111 Mobile: +46 701 810 111 E-mail: tomas.franzen@songnetworks.net =========================== U N I T E D K I N G D O M =========================== ABERDEEN ASSET: Clarifies Speculations on New Star Transaction ----------------------------------------------------------- Aberdeen notes recent press speculation regarding a potential divestiture of the rights to manage certain retail funds to New Star Asset Management. Aberdeen confirms that it has been approached by New Star in respect of such a transaction and has participated in discussions in response to this approach. However, recent press speculation differs materially from the terms proposed by New Star and therefore shareholders should place no reliance on such speculation. A binding agreement has not been entered into and there is no certainty that such an agreement will be entered into. Given the financial terms proposed by New Star, which are significantly in excess of those speculated in the press, Aberdeen believes that it is in the interests of shareholders to explore New Star's proposal. This is consistent with Aberdeen's stated intention to increase its financial flexibility, whilst also preserving its options for future business strategy. The terms of the proposal under discussion are that Aberdeen would dispose of the rights to manage a limited number of funds whose investors are primarily retail in nature. The assets attributable to the Rights are significantly less than that speculated in the press. The remainder of Aberdeen's current range of thirty open-ended funds would remain in place to service the needs of its institutional and other clients. Shareholders will be kept informed as appropriate. CONTACT: ABERDEEN ASSET MANAGEMENT Martin Gilbert Phone: 020 7463 6000 Gavin Anderson Lindsey Harrison Phone: 020 7554 1400 AVON ENERGY: Standard & Poor's Maintains Ratings on CreditWatch --------------------------------------------------------------- Standard & Poor's maintained Avon Energy Partners Holdings' 'BB' long-term ratings on CreditWatch with negative implications, where they were placed on December 24, 2002. The rating agency also maintained the 'BBB-' long-term ratings on the electricity holding company's subsidiaries, Midlands Electricity PLC and Aquila Networks PLC, on CreditWatch with negative implications. Standard & Poor's initiated the action as a result of the imposition of the Office of Gas and Electricity Markets of amendments to Aquila Network's operating license conditions and limitations on cash transfers from network operations to any of its affiliates. Credit analyst Daniela Katsiamakis said, "Although trapping cash flow within the regulated operating business protects Aquila Networks, the new conditions are to the detriment of bondholders at Avon Energy. The servicing of Avon Energy's debt now hinges on potential cash transfers from Aquila Networks, as permitted by OFGEM, and excess cash from Midlands." The rating agency noted that under the conditions set by OFGEM, Avon Energy has been denied direct access to the network cash flow. Thus, the UK-based company remains highly exposed to uncertainty about serviceability and recovery for its debtholders. Avon Energy has total debt of more than GBP870 million (US1.402 billion) including an inter-company loan of more than GBP200 million from Midlands. Avon Energy is presently left at a position of extremely high liquidity risk due to possible difficulties in accessing the capital markets and the lack of access to regulated cash flows. The company's constraints lies on the fact that it does not have access to any bank facilities to support ongoing debt service. Standard & Poor's says it is considering the proposed sale of the U.K. operations by the ultimate shareholders in its review of Avon Energy's ratings. It warns that the credit ratings on Avon Energy may be lowered by one category if Standard & Poor's is not satisfied that debtholders are to be serviced from reliable sources of cash. BIG FOOD: City Lunges Questions Over Performance ------------------------------------------------ The management of retailer Big Food Group, which includes the Iceland frozen food chain, is under fire from the City over its performance. The company is due to present its group Christmas trading statement in the coming days. According to the Independent News, the watchdog is raising questions over the success of Iceland's new formats, the group's pay structure and its continued use of a corporate jet. The document includes 40 questions and runs six pages, arranged into sections including sales, profits, new store format, pensions, director's benefits and "gossip". The detailed format of the document has led some observers to speculate the work could be prepared by Malcom Walker, the group's defunct chairman who controversially sold GBP13m of shares just weeks before the group issued a profits warning two years ago. Mr. Walker was not able to the news agency to issue his comment. A spokesman for the company dismisses the report saying, "These are all peripheral issues and nothing to do with the core issue, which is the recovery of the Big Food Group." Analysts expect the Iceland chain to report negative like-for- like sales for the third quarter but show an improving trend in both sales and margins on its Christmas sale performance. But the group's 30 new store formats which are being trialed, will be due for questioning whether they are showing profit increases as well as increases in sales. The GBP200,000 salary of Big Food Group's non-executive, George Greener, will be up for questioning. On the question of how many days does the chairman works, the company responded: "George works three or four days a week. But all this is in the annual report and has been approved by the remuneration committee." As for the corporate jet, "The jet is cost-effective and everyone is quite happy with it. The company has got two head offices, in Deeside and in Wellingborough, and it is useful for getting people from one to the other." The company said it has no plans of selling it. BLYTH & BLYTH: Collapses Into Receivership Under Huge Deficit ------------------------------------------------------------- Accountancy firm KPMG took control of engineering consultancy Blyth & Blyth after the company went into receivership due to a huge deficit in its pension scheme. Blair Nimmo, KPMG's head of corporate recovery in Scotland, says it is yet to ascertain the figure of the company's total liabilities, but the deficit on the pension fund is "a very substantial sum." At the end of November, when investors were warned that the scheme is being wound up, the deficit was estimated at around GBP6 million. During that time, trustees of Blyth & Blyth's pension scheme, which was managed by Edinburg Fund Managers, told 250 members of the investment they migth not recover some or all of their final salary pension if Blyth & Blyth do not intervene. The fund's trustees, led by Blyth & Blyth's non-executive chairman, John McLennan, indeed made sure that at least some of the deficit could be met, but Nimmo was unable to reveal how much was pitched in. According to The Scotsman, Mr. Nimmo is confident the engineering design consultancy firm will be able to attract buyers to continue the company's operations in Edinburg, Glasgow, Leeds, Bristol and London. He actually has a list of about 20 rival engineering companies, which could be interested in buying the firm, says the report. The 150-year old firm has been involved in construction projects across the U.K. - including PFI work. BRITANNIC PLC: S&P to Review Britannic Assurance Ratings -------------------------------------------------------- Standard & Poor's Ratings Services said Thursday that it will review its 'BBBpi' counterparty credit and insurer financial strength ratings on U.K.-based Britannic Assurance PLC (Britannic) following publication of Britannic's year-end results and returns to the Financial Services Authority later this year. This follows a trading statement issued by Britannic Group PLC, the parent company of Britannic, on Jan. 6, 2003, announcing that annual bonuses for 2002 are likely to be deferred and that no final dividend is likely to be paid in respect of 2002. The ratings on Britannic are public information-based ('pi') ratings, based on the analysis of an insurer's published financial information and additional information in the public domain. Standard & Poor's does not therefore have access to Britannic management for in-depth discussions about the consequences of its recent actions. Nevertheless, Standard & Poor's considers that these actions indicate reduced financial flexibility (the ability to source capital relative to needs), and could lead to a weaker business position. "Britannic's announcement that it is likely to defer annual bonuses for 2002 is indicative of the impact of depressed investment market conditions over the past three years," said Standard & Poor's credit analyst Mark Button. "By not declaring an annual bonus, Britannic has used an important tool to manage its need for capital by slowing the build-up of guaranteed liabilities," added Mr. Button. In addition, shareholders are unlikely to support any calls for capital in the short term, given the dividend cut and subsequent fall in the share price. Britannic's flexibility to reduce capital needs in the future and raise additional capital have therefore reduced. "Standard & Poor's expects with-profits life insurers to manage bonuses over the coming years consistent with recent lower-than- expected investment returns," said Mr. Button. Indeed, the purpose of with-profits products is to smooth actual volatile investment returns to policyholders via more stable payouts over time. Nevertheless, Standard & Poor's expects more highly rated with-profits insurers to be able to achieve this smoothing without deferral of reversionary bonuses and/or skipping a dividend payment. BRITISH ENERGY: Announces December Output Statement --------------------------------------------------- A summary of net output from all of British Energy's power stations in December 2002 is given in the table below, together with comparative data for the previous financial year: 2001/02 December Year to Date Output Load Factor Output Load (TWh) (%) (TWh) Factor (%) UK Nuclear 6.24 88 50.28 80 UK Other 0.72 50 5.07 40 Bruce Power 1.77 76 15.45* 87* Amergen 1.60 90 13.47 86** 2001/02 December Year to Date Output Load Factor Output Load (TWh) (%) (TWh) Factor (%) UK Nuclear 5.91 83 45.93 73 UK Other 0.85 59 3.80 30 Bruce Power 1.77 75 15.86 76 Amergen 1.87 101.1 14.81 91** * The figures for the year to date in 2001 for Bruce Power cover a shorter period from Financial Close on 12th May 2001 * *The capacity for Clinton was up-graded in spring of this year to 1017 MWe and the capacity of TMI unit 1 increased to 840 MWe following a turbine replacement in autumn 2001. OVERVIEW The UK nuclear plant remains on track to achieve the revised target, announced in August 2002, of 63 TWh (plus or minus 1 TWh) by 31st March 2003. The output figures for both AmerGen and Bruce Power remain in line with the plan after allowing for the higher number of planned outages in the current year. PLANNED OUTAGES UK Nuclear (i) Off-load refuelling was carried out on one reactor each at Dungeness B and Heysham 1. (ii) Low load refuelling was carried out on both reactors at Heysham 2 and on one reactor each at Hinkley Point B, Hunterston B and Torness. Bruce Bruce unit 7 completed its planned outage and was synchronized to the grid on 30th December 2002. UNPLANNED OUTAGES (i) Repairs to a boiler feed pump were undertaken on one unit at Dungeness B and a gas circulator was replaced on one unit at Heysham 1. CONTACT: Paul Heward, Investor Relations Phone: 013552 62201 BRITISH ENERGY: Amendments in Energy Legislation to Allow Rescue ---------------------------------------------------------------- Struggling British Energy may see a rescue in the proposed changes that the U.K. government is initiating to the current electricity legislation. The new parliamentary bill being introduced will give the authorities the right to legally bail out the nuclear generator, or allow them to buy the business or assets of the company. It will also allow the government to buy shares in the successor firm to British Energy and remove the ceiling for financial assistance to the group towards the massive costs of de- commissioning nuclear power plants. ENERGY Minister Brian Wilson said, "The bill introduced today will allow us to deal with any eventuality faced by British Energy." "These are sensible provisions, which will continue to protect our priorities of nuclear safety and the security of electricity supplies," he added. The move illustrates the government's worries over the potential for failure in the rescue package, according to The Scotsman. British Energy's trouble last year stems from the collapse of power prices in the region. The UK government provided it with GBP650 million emergency loan, whose earlier expiration has already been extended in November to March this year. It also said it would shoulder most of the GBP2.1 bln bill for shutting down power stations over the coming decades. CABLE & WIRELESS: Sets Aside GBP1.5 Billion for Tax Liability ------------------------------------------------------------- Telecom group Cable & Wireless has reserved GBP1.5 billion to cover tax liability from the sale of mobile phone business One2One to Deutsche Telekom, according to the Scotsman. Moody's downgrade of Cable & Wireless' GBP2.5 billion (US$3.95 billion) bonds from Baa2 to Ba1 activated the complex arrangement of the company with Deutsche Telekom on the sale of the former's stake in One2One. As a result, the telecom company has to put GBP1.5 billion of its GBP2.2 billion in net cash into an escrow account since it earlier agreed to set aside GBP1.5 billion to cover potential tax liabilities arising in future years should its credit rating fall below investment grade. The company has lost more than 95% of its market value after it failed in its venture into data-services due to falling demands. In addition to the possible tax liability, the phone and Internet provider has GBP1.2 billion of bonds due this year and faces GBP1 billion of one-time costs. Bloomberg says Cable & Wireless has to repay a US$1.5 billion bond on June 9, 2003. EQUITABLE LIFE: Warns of Missing Payment From Halifax ----------------------------------------------------- Insurer Equitable Life warns that Halifax, owned by HBOS, might not be able to pay the firm the additional GBP250 million agreed for the buy-out of Equitable's continuing businesses. Equitable's chairman, Vanni Treves said, "I think it unlikely now that we will get that money. I am not at all confident." Halifax bought Equitable's continuing business, including its fund management, sales and back office operations, for EUR750 million in February 2001. Part of the agreement is the payment of the GBP25 million in 2005 on the condition of the salesforce meeting undisclosed performance targets for this year and the next. But Equitable's chairman, Vanni Treves, admitting the dire financial situation of the life insurance sales is likely to prevent the money from materializing said, "It is all but impossible for them to meet the targets they have been set." Halifax though insists they do intend to pay the amount, says Times Online. The company also said the targets were competitive but possible to meet. Defending the management's decision to enter a deal with Halifax, Mr. Treves said they have "little choice" not to accept the only available offer they have. EQUITABLE LIFE: Missed GBP250 MM Bad News to Policyholders ---------------------------------------------------------- Equitable Life's warning that it might miss the additional GBP250 million payment from Halifax came as a blow to policyholders, who had hoped the payment would ease the insurer's financial woes, says Times Online. The payment transaction was part of the agreement the parties entered into in 2001, when Halifax bought Equitable Life's continuing business for EUR750 million. The amount is payable on the condition that the sales force meets certain performance targets for this year and the 2004. But the dire financial situation in life insurance sales seems to have erased any hope of the payment materializing. The assurer warned in November that 50,000 pensioners holding with-profit annuities would have their payments cut by up to 30% as the company experiences sharp deterioration in its financial position. At the same time, the group admitted it is in danger of falling below the 4% minimum margin that life assurers need to hold under the rules of the Financial Services Authority. The insurer also warned it might not be able to pay back the GBP346 million it owes bondholders, but that it remains solvent to be able to pay policyholders. Last month, Equitable Life dismissed analyst's call to unitize its mutual's GBP14.5 billion (US$22.8 billion) with-profits life fund--a move that according to the Financial, Times could let policyholders share directly in the performance of Equitable's investments, without the "smoothing" of returns. Equitable's chairman, Vanni Treves, lately said, "We are in active discussions with the Financial Services Authority and we hope to have something that can be put to our former policyholders soon." He also expressed puzzlement over why he and his board had been criticized by some policyholders when they were doing their best for policyholders. KINGFISHER PLC: Plans to Close Castorama Deutschland ---------------------------------------------------- Kingfisher plc announced that it intends to close its loss-making six store German subsidiary, Castorama Deutschland GmbH, as part of the Group's previously announced review of its international home improvement operations. Discussions have begun with the central works council to agree to the overall process for closure, which is expected to take around eight months to complete, during which time every effort will be made to sell individual stores to minimize layoffs. It is anticipated that Kingfisher will suffer an exceptional charge of around GBP35 million as a result of this move. Castorama Deutschland GmbH was founded in 1990 and operates six stores at Kamen, Koblenz, Wildau, Chemnitz, Castrop-Rauxel and Kassel. The company, which employs 391 people, is expected to make a o5 million loss in the current financial year on a turnover of o40 million. Kingfisher is Europe's leading home improvement retailer and is ranked number three in the world. The Company operates more than 600 home improvement stores in 12 countries and enjoys market- leading positions in the UK, France, Poland and Taiwan. Sales for the Home Improvement sector for the year to 2 February 2002 were more than o5.8 billion, with retail profit in excess of GBP430 million. Kingfisher also has a strategic alliance with Hornbach, Germany's leading big box home improvement retailer, which operates 99 stores across Europe. Kingfisher's Electrical & Furniture business operates more than 830 stores in nine countries. It is Europe's third largest electricals retailing business by sales and number two by retail profit. As well as holding the leading position in France with Darty and BUT and the number two position in the UK with Comet, Kingfisher also enjoys leading positions in Belgium and in the Czech and Slovak Republics. Sales for the year to 2 February 2002 were more than o3.7 billion, with retail profit of o184 million. CONTACT: Broker and Institutional Enquiries Ian Harding, Director of Financial Communications Phone: +44 (0) 20 7725 4886 Frederique Lepelletier, Head of IR, Continental Europe Phone: +33 (0) 1 42 27 7634 Graham Fairbank, Head of Corporate Comms, France Phone: +33 (0) 1 43 18 52 26 The Maitland Consultancy Duncan Campbell-Smith Phone: +44 (0) 20 7379 5151 KINGFISHER PLC Phone: +44 (0) 20 7724 7749 Home Page: http://www.kingfisher.com L GARDNER: Requests Receivership for Non-Aerospace Subsidiaries ----------------------------------------------------------------- The Group today requested that its bankers appoint administrative receivers to the Group's 5 trading non-aerospace subsidiaries, namely Sloman Engineering Limited, ADA Manufacturing Services Limited, Gardner Avon Limited, Gardner Parts Limited and Bentall Rowlands Limited. Substantial losses were being incurred in these non-core subsidiaries and despite extensive efforts it has not been possible to find purchasers for these companies or to effect sufficient rationalisation to stem the losses. The Board announced that these steps were necessary to protect and support the Group's core Aerospace businesses. The aerospace businesses are unaffected by these actions. Whilst trading conditions are also difficult in the Aerospace sector, the Board considers that the prospects for the core businesses are encouraging. However, following recent discussions between the Board and the Group's bankers it is clear that the core businesses cannot sustain the Group's current overall level of debt in the longer term. Although the Board has made every effort to agree with the Group's bankers a financial restructuring which would have maintained an interest for the Group's ordinary shareholders, the magnitude of the debt and continuing difficult market conditions have, unfortunately, meant that this has not been possible. Accordingly, discussions have commenced with a view to the Aerospace subsidiaries being acquired by a new company funded by a number of financial institutions and in which the current directors may have an interest. This process, which is not expected to result in any funds being available to ordinary shareholders, is intended to be completed as soon as possible. It is not anticipated that such acquisitions would involve any further insolvencies of any of the Group's operating subsidiaries. In light of these ongoing discussions, steps are being taken to reconstitute the existing Board. P&O PRINCESS: Moody's Might Change Direction of Rating ------------------------------------------------------ Moody's says it might upgrade the Baa3 long-term debt rating of P&O Princess Cruises PLC following the announcement of the company's board that it has agreed to, and recommended, Carnival Corporation's dual listed company proposal. The outlook for the rating was previously developing. After the abandonment of the merger plan with Royal Caribbean the rating pressure from such scenario has been lifted. Moody's says, "Consequently, the current Baa3 rating for P&O Princess has become the de-facto rating floor for the remaining two scenarios, either a full combination as outlined above (likely) or a failure to complete (less likely)." According to the rating agency the current ratings reflect P&O Princess' strong and healthy business profile, but it also accounts for the significant investment program funded by additional debt. The rating agency also warns of challenging operating environment in the industry due to anticipated over-capacity, a weak economy, and prevailing geo-political risks (such as a war in Iraq). It says also that the possibility of a combination with either Carnival or Royal Carribbean was considered in the rating. P&O Princess Cruises plc, headquartered in London, United Kingdom, is the third largest cruise operator. In the first nine months of 2002, the company generated gross revenues of about US$1.9 billion and an operating profit of around US$366 million. ************* 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 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *