/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030129.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 Wednesday, January 29, 2003, Vol. 4, No. 20 Headlines * F R A N C E * AIR LIB: Investment Group Offers EUR100 Million Funding DAEWOO ORION: Declared Bankrupt After Fire Raged Factory DAEWOO-ORION: Arson Not Ruled out as Reason for Blaze METALEUROP NORD: Applies for Debt Payment Suspension METALEUROP NORD: Files for Bankruptcy at Bethune County Court VIVENDI UNIVERSAL: Top Honchos Tried to Coerce Regulators * G E R M A N Y * COMMERZBANK AG: Denies Merger Rumors with HVB Group DEUTSCHE NICKEL: Fitch Lowers Senior Unsecured Rating EM.TV & MERCHANDISING: Says Henson Sale Talks Still On EM.TV & MERCHANDISING: At Risk of Defaulting on Huge Bank Debt MOBILCOM AG: Considers Selling Fixed-Line Network to Freenet SPUTZ AG: Sells 11% Tullet Stake to Collins Stewart * H U N G A R Y * DAM STEEL: Files for Bankruptcy after Parent Halts Operation * I R E L A N D * SIBERIAN INVESTMENT: Board to Push for "Open-ended Status" * I T A L Y * FIAT SPA: Chairman Sees Favorable Conditions for Group FIAT AUTO: New Chairman Favors Sale of Ailing Unit FIAT AUTO: Capital Hike, Without Viable Plan, Won't Get Support * L U X E M B O U R G * VANTICO GROUP: Default Vindicates Fitch's Warning * N E T H E R L A N D S * GETRONICS NV: Announces Provisional Unaudited Information GETRONICS N.V.: S&P Downgrades Long-term Corporate Credit Rating * S W I T Z E R L A N D * CREDIT SUISSE: CalPERS Awards CSFB US$37 Billion in Equity Assets CREDIT SUISSE: CSAM Europe Creates New Management Structure CREDIT SUISSE: CSFB 1997-C2 Class G on Rating Watch Negative CREDIT SUISSE: Fitch Downgrades CSFB 1998-C1 Class I FLIGHTLEASE AG: Debt Restructuring Moratorium Extended SWISSAIR: Probe Blames Former Management for Collapse * U N I T E D K I N G D O M * ABBEY NATIONAL: Exposure in Debt Securities Worries Investors AMEY PLC: Plans to Layoff 250 Employees to Keep Operations Afloat BAE SYSTEMS: Decision on Aircraft Contract Bid Remains Uncertain BAE SYSTEMS: Workers to Ask Defense Minister to Avert Job Cuts DYNAMOTIVE ENERGY: Begins Restructuring of European Operations FORD GROUP: Plans to Sack Two-thirds of Workforce NTL INC.: Merger with Telewest Unlikely this Year, Say Analysts MALAKOFF & WM: Marine Engineering Pioneer Enters Receivership * Alixpartners Enters European Market with Zeller and Lovett =========== F R A N C E =========== AIR LIB: Investment Group Offers EUR100 Million Funding ------------------------------------------------------- Investment firm, IMCA, has offered the French government up to EUR100 million of funding for troubled airline Air Lib, and is now expecting a response from the state regarding the proposal. The news from La Tribune emerged after the Dutch group was reported to have withdrawn from the talks Friday. The group said it pulled out after the French government proved unable to meet its demands for a restructuring plan. IMCA has been involved in negotiations regarding the rescue of Air Lib since October. During previous talks IMCA promised to invest EUR50 million, but now the offer is more than double, say unnamed sources of the report. Chairman Erik de Vlieger, who resumed talks with the government Monday, reportedly made a number of other concessions to win the approval of the government. France's junior transport minister, Dominique Bussereau, also confirmed on Monday that the government was "expecting new proposals from IMCA." The investment group is also helping Air Lib settle its outstanding EUR120 million debt to the French government and European development fund. The French government previously rejected Air Lib's restructuring plan, as it would effectively require the government to raise its outstanding credits to the airline. It previously stressed that it would only accept the restructuring with a "firm and irreversible" support of an investor. Air Lib has 3,400 employees and consumes an estimated EUR10 million a month. CONTACT: AIR LIB 42 Rue F. Forest Imm. Le Sommet 97122 Jarry-Baie Mahault Phone: +590-(0)5.90.32.56.00 Fax: +590-(0)5.90.26.64.02 DAEWOO ORION: Declared Bankrupt After Fire Raged Factory -------------------------------------------------------- The Daewoo-Orion television tube factory, which is owned by South Korean auto manufacturer Daewoo, was declared bankrupt after a large fire consumed 30-40% of the plant. The Briey commercial court issued the decision regarding the company's status ahead of the scheduled February 6 deliberation. Meanwhile, forensics experts from the Lille police are currently establishing the cause of the fire. According to Les Echos, unions say the fire is a convenient opportunity for Daewoo to withdraw from its subsidiary. Daewoo Orion, located in Mont-Saint-Martin, Meurthe-et-Moselle, Lorraine has debts of EUR3.4 million. Regional authorities provided Daewoo Orion some EUR46 million in public aid for the site. They also plan to work with the national government on a severance scheme for the employees, and will make every effort to re-industrialize the area. CONTACT: DAEWOO ORION S.A. (DOSA) Ave. De L' Europe 54350, Mont Saint Martin, France Phone: 33-3-8225-2525 Fax: 33-3-8225-2500 DAEWOO-ORION: Arson Not Ruled out as Reason for Blaze ----------------------------------------------------- Arson may have caused the fire that raged Daewoo-Orion television tube factory in Mont Saint Martin near the French border with Luxembourg and Belgium, says Agence France Presse. According to the report of a local official in charge of communications for the local Meurthe-et-Mosselle regional authorities, a "malicious act" could not be ruled out. A union official also said, "This cannot be accidental... In the factory there's acid, nitrogen, coal, lead, lots of chemical substances." But a report on the catastrophe said the cause of the fire was not immediately known. The company's human resources head, Arnaud Blondel, said the fire caused an estimated EUR1.2 million of damage in ruined stock alone, and may have destroyed 30-40% of the site. More losses are also expected through smoke damage. But despite these, no casualties were recorded, as there were no employees in the factory at the time. The company, which had been in receivership for a month on January 9 after it filed for bankruptcy, employs 550 people. It owes more than EUR3 million to a French employment fund, of which only around EUR800,000 had been covered. The French bank Societe Generale has requested seizure of more than EUR19 million to cover debts owed to it. CONTACT: DAEWOO ORION S.A. (DOSA) Ave. De L' Europe 54350, Mont Saint Martin, France Phone: 33-3-8225-2525 Fax: 33-3-8225-2500 SOCIETE GENERALE 29, Boulevard Haussmann 75009 Paris, France Phone: +33-1-42-14-20-00 Fax: +33-1-42-14-54-51 Home Page: http://www.socgen.com Contact: Stephen Peak, Investor Relations Officer Gilles Bazy-Sire, Investor Relations Manager E-mail: investor.relations@socgen.com METALEUROP NORD: Applies for Debt Payment Suspension ---------------------------------------------------- Metaleurop Nord, subsidiary of Metaleurop S.A, on Monday requested the Tribunal de Grande Instance of Bethune (commercial section) to declare it in payment suspension. Metaleurop Nord accounts for about 50% of the 2001 consolidated pro forma sales of the Metaleurop Group, following the sale of the zinc electrolysis plant in Nordenham, Germany. Trading in the shares of Metaleurop S.A. was suspended Monday and yesterday. Over the last ten years, Metaleurop S.A. has provided unwavering support to its subsidiary despite the latter's recurrent losses. The Board of Directors of Metaleurop S.A., at a meeting on January 16, 2003, was obliged to decide to discontinue financial support to its subsidiary in order to ensure its own future in a very difficult business climate due particularly to the historic collapse of the price of zinc. METALEUROP NORD: Files for Bankruptcy at Bethune County Court ------------------------------------------------------------- Metaleurop Nord, the troubled lead and zinc subsidiary of French non-ferrous metals specialist Metaleurop, will file for bankruptcy at the Bethune county court, amid public protests in Noyelles-Godault. This filing has been expected since its parent company announced 10 days ago that it would not re-inject fresh capital into the company. Rumors are rife a pool of banks is interested in acquiring the company. Employees and local politicians are skeptical, however, due to the extremely high levels of pollution at its site in Noyelles-Godault and the reportedly suspect practices of its reference shareholder, Swiss group Glencore, which owns 33% of Metaleurop SA. Reports indicate that Glencore has responsibilities in relation to the closure of the Metaleurop Nord. To this effect, French ecology minister Roselyne Bachelot hired a firm of lawyers to prove Glencore's role and let them foot a of between EUR100 million and EUR300 million. Meanwhile, Metaleurop has applied for declaration of payment suspension at the Tribunal de Grande Instance of Bethune, subsequently suspending Metaleurop SA's share trading on January 27 and 28. Metaleurop Nord has been producing lead and zinc for over a century now and the site at Noyelles-Godault is by far the most polluted in the country, including an area of 45 square- kilometers heavily contaminated by heavy metals. Cleanup of the site is estimated to cost around EUR150 million. Parent company Metaleurop SA decided to shutdown the facility after abandoning restructuring plans for the plant. CONTACT: METALEUROP Maxime ARNAUD Phone: +33 1 42 99 47 73 Mobile: + 33 6 74 93 21 83 Fax: + 33 1 40 75 09 63 E-mail: maxime.arnaud@metaleurop.fr VIVENDI UNIVERSAL: Top Honchos Tried to Coerce Regulators --------------------------------------------------------- A confidential memo suggesting coercion made on the French securities regulator by Vivendi Universal started the current investigation into the conglomerate, a document obtained by Agence France-Presse says. AFX says a memo from Vivendi Universal director Alain Marsaud to chairman Jean-Rene Fourtou mentioned "pressure exercised on a certain number of investigators." The memo further says Mr. Marsaud raised concerns on the consequences the alleged pressure might bring when the information is made public. But Mr. Marsaud told AFX the references were made to journalistic rumors circulating during that time. Vivendi issued a statement saying, "allegations published that Vivendi Universal resorted to 'influence peddling' or 'threats and acts of intimidation against people working in public-sector positions are without foundation." The company also said "it has fully cooperated with the various authorities (COB, SEC, the Paris public prosecutor's office, and the U.S. Department of Justice) that have opened inquiries into actions taken prior to that date." CONTACT: VIVENDI UNIVERSAL Headquarters 42 Avenue de Friedland 75380 Paris Cedex 08 France Phone: +33 1 71 71 10 00 Fax: +33 1 71 71 11 79 Contact: Investor Relations E-mail: investor-relations@groupvu.com Daniel Scolan, Executive VP Investor Relations Phone: +33.1.71.71.12.33 E-mail: daniel.scolan@groupvu.com Laurence DANIEL IR Director, Europe Phone: +33.1.71.71.12.33 E-mail: laurence.daniel@groupvu.com Edouard LASSALLE Associate Director, Europe E-mail: edouard.lassalle@groupvu.com ============= G E R M A N Y ============= COMMERZBANK AG: Denies Merger Rumors with HVB Group --------------------------------------------------- Banking sources denied Spiegel's report that a merger has been agreed between Commerzbank AG and HVB Group AG, describing it as "groundless." One unnamed source said: "The Spiegel story is a load of rubbish. There will be no banking merger in the current environment." Spiegel had claimed that a meeting took place last week between Commerzbank's Klaus-Peter Mueller, Axel Freiherr and Eric Strutz with HVB's Albrecht Schmidt and Dieter Rampl in Munich. "(A merger with Commerzbank) is not on the agenda," the source said, corroborating recent comments from the chairmen of both banks who said they were too busy attempting to solve internal problems and stem losses to think about a huge merger. However, a merger might be more a possibility next year if the markets pick up, one source said. Speculations of a merger have been circulating for some time in the German press given that the two banks posted heavy losses in recent quarters. Muenchener Rueckversicherung AG has also been rumored to be behind the merger talks, as it is believed to be aiming to extract more value out of its stakes in both banks. CONTACT: COMMERZBANK AG Kaiserplatz 60261 Frankfurt, Germany Phone: +49-69-136-20 Fax: +49-69-28-53-89 Homepage: http://www.commerzbank.com Contacts: Klaus-Peter M�ller, Chairman Axel Frhr. v. Ruedorffer, Managing Director DEUTSCHE NICKEL: Fitch Lowers Senior Unsecured Rating ----------------------------------------------------- Fitch Ratings lowered the Senior Unsecured rating of Deutsche Nickel Technology Group (DNT) to 'BB-' on slower than expected recovery of profitability levels following a downturn that started in fiscal year 2001. The rating agency believes that non-ferrous metals businesses will remain exposed to competition in mature market segments. While noting the bad performance in Payment Systems, Fitch deems there is a potential for gradual EBIT improvements in the medium term. The progress will be supported by the focus on higher value-added products, if overall sales levels improve. Amid the weaker profitability, fiscal year 2001 EBITDA-based credit protection measures have deteriorated - Net Debt/EBITDA was 3.6x (FY00: 3.4x) and EBITDA/Net Interest cover fell back to 3.8x, close to FY98 levels. Fiscal year 2001 cash flow generation was mainly supported by the reduction in working capital from a decrease in finished goods in stock, the rating agency said. But Fitch expects that FY02 EBITDA generation will not exceed fiscal year 2001 levels and that measures undertaken to improve profitability are expected to show material impact only from fiscal year 2003 onwards. The rating agency also noted that DNAG entered into a profit and loss absorption agreement with VDN Vereinigte Deutsche Nickel-Werke AG (VDN), which requires VDN to cover any losses at the DNAG level. VDN has not guaranteed any of DNAG's Senior Unsecured creditors with the exception of the outstanding EUR120 million 7.125% Euro debenture maturing 2006. This, in Fitch's view, is an improvement in the bondholders' position. DNT bond is traded in narrow markets characterized by small trading volumes and that current market conditions leave limited room to access the capital markets. The ratings remain on Rating Watch Negative, pending the outstanding test of financial covenants for fiscal year 2002. Fitch explains that covenant levels included in the bond documentation do not reflect a company in financial distress, although non-compliance may cause a refinancing risk. CONTACT: Deutsche Nickel Technology Group Rosenweg 15 Schwerte NRW Germany D-58239 Germany Home Page: http://www.deutsche-nickel.de EM.TV & MERCHANDISING: Says Henson Sale Talks Still On ------------------------------------------------------ EM.TV & Merchandising AG, the cash-strapped German media rights group, has denied rumors that a deal to sell a stake in Jim Henson Co. is about to collapse due to financing difficulties encountered by its preferred bidder. "We have no reason to doubt that Dean Valentine will be able to finance his offer," EM.TV Chief Financial Officer Andreas Pres told Reuters in an interview recently. Mr. Valentine, the former CEO of Viacom Inc.'s United Paramount Network, is reportedly at odds with financial backer, Thomas Unterman, over the terms of the bid. The latter has denied the rumor, however, saying his buyout firm, Rustic Canyon Group, was still interested in the deal. "I'm still very supportive of Dean's efforts to pursue this transaction," Mr. Unterman told Reuters in a separate interview. Along with Mr. Unterman, Mr. Valentine and Europlay Capital Advisors are reportedly offering US$30 million for a 49.9% stake in Jim Henson. The delay in closing the deal, however, has prompted speculations that it would not eventually materialize. Reuters says rumors are rife that Mr. Valentine and Europlay are trolling Hollywood for more money, leading many to suggest that the deal with Mr. Unterman was on the rocks. Mr. Valentine has declined to comment and Mr. Unterman has declined to discuss any specifics of the financing, the news agency said. People familiar with Henson blame inconsistencies with the company's character copyrights and problems with the quality of its distribution deals for the auction woes. EM.TV has been seeking a buyer for more than a year now, Reuters says. If Mr. Valentine were to drop out because of financing problems, he would not be the first to do so. Before his bid, many others have walked away or backpedaled after getting a closer look at the state of the Muppets business, which has deteriorated over the past decade, since the company's patriarch, Jim Henson, died suddenly, Reuters says, citing unnamed sources. Walt Disney Co., for instance, had once contemplated on a US$135 million bid for the entire business, but has since withheld its offer. Entertainment Rights Plc., a British-based company that licenses the rights to children's characters, has also dropped out of the hunt, sources told Reuters. EM.TV & MERCHANDISING: At Risk of Defaulting on Huge Bank Debt -------------------------------------------------------------- Ailing German media rights group, EM.TV & Merchandising AG, is in danger of defaulting on a EUR49 million-loan due before the end of this month if banks won't extend maturity to April. The only thing that could save the company, according to Reuters, is for banks to consider the firm out of immediate liquidity threat after raising EUR24 million recently. If approved, the extension will be the second since last month, when the company successfully pushed back the deadline for another month, after paying EUR15 million to reduce the outstanding amount to EUR49 million, Reuters said. The company is currently negotiating the sale of a 49.9% stake in Jim Henson to a group led by Dean Valentine, former head of Viacom Inc.'s United Paramount Network, who is backed by private equity house Europlay Capital Advisory Partners. Proceeds of this sale would be used to pay the EUR49 million loan, Reuters said. According to EM.TV Chief financial Officer Andreas Pres, the EUR24 million the company recently raised came from the one-off payment of US$37 million from the Sesame Street Foundation. Sesame Street Workshop, which bought the rights to the children's TV classic "Sesame Street" for US$180 million in 2000, agreed this month to pay down the remaining US$56 million payable until 2010 in a lump sum at a discount, the report said. If the banks relent, the company expects to repay the outstanding loan by April, leaving EM.TV free of bank debts and liable for only a EUR400 million convertible bond, which falls due in February 2005. Once a high-flying stock on the Neuer Markt, the company blames its founder, Thomas Haffa, for its financial woes after bleeding dry the company's coffers to finance his expensive acquisition spree. The outstanding debt due this month results from a loan taken out to finance a joint venture between its Junior TV unit and the now-bankrupt KirchMedia group, Reuters said. MOBILCOM AG: Considers Selling Fixed-Line Network to Freenet ------------------------------------------------------------ Germany's mobile telecoms group, MobilCom AG, is on the final stage of selling its fixed-line network to Internet subsidiary Freenet. The transaction, which is valued at more than EUR30 million, is expected to be sealed in two weeks. Citing company sources, the Financial Times Deutschland reported that the design for a letter of intent has already been agreed and the companies are now negotiating over details. A MobilCom board member said the sale price is close to the EUR35 million MobilCom had initially wanted for the fixed line network sector, which covers voice telephony plus Internet access provided through freenet.de. MobilCom provides cellular phone services to more than 5 million subscribers and fixed-line services to more than 925,000 customers following its purchase of rivals TelePassport and D Plus. MobilCom operates its own fiber-optic network and owns 78% of ISP freenet.de. In the fixed line network segment, MobilCom looks after a customer base of 7.9 million people, including 3.6 million call-by-call customers and 900,000 contract customers (pre-selection). CONTACT: MOBILCOM AG HollerstarBe 126 P.O. Box 520 24753 Rendsburg-Buedelsdorf Fax: +49-43-31-69-28-26 Phone: +49-43-31-69-11-73 Contact: Dr. Thorsten Grenz, Chairman of the Board SPUTZ AG: Sells 11% Tullet Stake to Collins Stewart --------------------------------------------------- Troubled German securities trading specialist, Sputz, plans to sell its 11% stake in UK-based company, Tullet & Tokyo Liberty plc, to Collins Stewart Holdings for GBP11.1 million in cash. The transaction also includes the payment of 3.5 million shares in Collins Stewart in exchange for the Tullet holding. Collins Stewart has offered 2.52 new shares per share in Tullet or up to GBP4 in cash per share plus 1.26 new shares. Recently, Sputz, the German subsidiary of NewMedia Spark plc, also unloaded its entire shareholding in Deutsche Borse AG for total proceeds of EUR37.2 million. According to a statement of the parent company, Sputz continues to review the prospects for further disposals from its portfolio of non-core assets. After the disposal of the Tullet shareholding, Sputz is left with shareholdings in Lang & Schwarz AG (17%) and several other smaller businesses. Sputz also has other core broking activities. SPARK acquired a 54% controlling stake in Sputz in September 2001. CONTACT: NEWMEDIA SPARK PLC Michael Whitaker Joel Plasco Fenella Copas Phone: +44 (0) 207 851 7777 ============= H U N G A R Y ============= DAM STEEL: Files for Bankruptcy after Parent Halts Operation ------------------------------------------------------------ Steel manufacturer DAM Steel Rt confirms that it filed for bankruptcy last week, putting 1,500 people on the street in Diosgyor and an estimated 3,000 more at DAM's suppliers. A subsidiary of Italian cogne Acciai Speciali Srl, Dam did not resume production after Cogne decided the operation was too expensive and suspended it early this month. In its two years under Italian ownership, DAM posted losses of HUF6 billion and amassed some HUF1 billion in debts. Last week, Cogne considered selling the loss-making Hungarian steel production subsidiary, citing that it is the only option the owners have unless they reach agreement with the regional electricity distributor, Emasz Rt. Cogne, which built DAM Steel in April 2001 out of the assets of defunct DAM, has a standing row with Emasz Rt over the acquisition of a transformation substation currently held by the latter. Management will reportedly start negotiations with creditors on February 18. ============= I R E L A N D ============= SIBERIAN INVESTMENT: Board to Push for "Open-ended Status" ---------------------------------------------------------- The Directors of Siberian Investment Company plc wish to announce that, at an Extraordinary General Meeting of the Company held on August 9, 2001, it was resolved that the Company will remain closed-ended for a further period of two years, as set out in the Addendum dated December 18, 2001 to the Prospectus. The Directors will put a resolution to the shareholders that would make the Company open-ended effective January 2, 2004. If the resolution is not passed, the Company will remain closed-ended for a further period of three years, after which the Directors will put another resolution to Shareholders that the Company become open-ended. If such resolution is not passed, the Directors will put another resolution to Shareholders proposing to proceed with the orderly liquidation and the proper distribution of the funds of the Company. This resolution was not previously notified to the Irish Stock Exchange due to an administrative oversight. CONTACT: Dillon Eustace Mark Thorne Phone: +353 1 667 0022 Davy Stockbrokers Louise Murray Phone: +353 1 614 8933 ========= I T A L Y ========= FIAT SPA: Chairman Sees Favorable Conditions for Group ------------------------------------------------------ Fiat chairman Paolo Fresco sees the ongoing cooperation with General Motors Corp. and the ascension of Umberto Agnelli to top management as auspicious signs for the group. Mr. Fresco believes Umberto's participation in management will mean additional funding from the group's founding family, the Agnellis. The chairman told La Stampa, "I would say things are very good (with GM). The cooperation between the two companies and the personal links are excellent," adding that the cooperation is essential for the future of Fiat Auto, the group's ailing car unit. Fiat Auto, which has cut 8,100 jobs and reduced production to turn around its car business, had an operating loss of less than EUR200 million (US$213 million) in the fourth quarter. Operating loss for last year amounted to EUR1.3 billion, higher than its forecast of EUR1.16 billion. Analysts have said Fiat had its first full-year loss in a decade in 2001 and is set to report a loss of as much as EUR1 billion for last year. Mr. Fresco considers the availability of Umberto Agnelli to manage the group, and the possible additional funding as "clear commitment to the future." Fiat's bankers reportedly favor the Agnellis' plans for Fiat after the death on Friday of Fiat honorary chairman Giovanni Agnelli. TCR-Europe had earlier reported that the controlling family of troubled Italian industrial group Fiat SpA doesn't have any qualms about participating in a capital increase proposed by creditor banks. Umberto Agnelli, who is leading the talks with banks, was quoted recently by the Financial Times as saying that the family's holding companies - Ifil and Ifi -- are willing to take up most of the rumored EUR5-7 billion refinancing package, which allegedly includes a capital hike. 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 Contact: Giovanni Maggiora, Vice President - Investor Relations Phone: +39-011-686-3290 Fax: +39-011-686-3796 E-mail: Investor.relations@geva.flatgroup.com FIAT AUTO: New Chairman Favors Sale of Ailing Unit -------------------------------------------------- The death of Giovanni Agnelli, the genius behind the Italian industrial behemoth that is now Fiat SpA, has made the fate of Fiat Auto uncertain, USA Today said recently. According to the paper, Umberto Agnelli, the 68-year-old younger brother of the fallen family patriarch, is inclined to sell the troubled car-making unit, a move staunchly opposed by the elder Agnelli. If eventually sold, Fiat Auto could end up with General Motors, which had agreed to buy the unit when it took out a 20% stake in the company three years ago. The U.S. car giant entered into the unusual arrangement in the hopes of getting access to Fiat Auto's transmission and small diesel technology. This option remains valid until 2004. The younger Agnelli, according to the paper, has been known to favor selling the auto unit, believing that the troubled unit is preventing the group from investing in other, more profitable sectors. The decision, however, may rest ultimately with creditor banks, which put up US$3.1 billion in loans in May last year to help the company deal with debts amounting to US$6.1 billion. Under a restructuring plan backed by the banks, they could end up with as much stake in the group should it fail to repay the loan. Goldman Sachs analyst Rod Lache, in an interview with Bloomberg recently, said Umberto hasn't "been present at any of the crisis meetings the past couple of months," giving the banks "the biggest say" on Fiat's immediate fate. For more than 30 years, Giovanni masterminded the success of Fiat SpA, the largest employer in Italy. He is the author of the group's successful expansion into newspapers, soccer teams, aircraft and spacecraft manufacturing. He died Friday at age 81. FIAT AUTO: Capital Hike, Without Viable Plan, Won't Get Support --------------------------------------------------------------- Umberto Agnelli, the heir-apparent to the chairman's gavel at Fiat SpA, will have to do better than pump more money into troubled Fiat Auto, analysts told Reuters recently. Observers say investors won't likely put more money into the losing car-making unit if the new chairman does not come up with a viable "industrial plan" along with any call for another capital increase. "If new funds come with an industrial plan, it will be a positive thing, but if it's just another bit of new financing without a plan, it will just be a drop in the ocean," Marco Vailati, a fund manager with HSBC in Milan, told Reuters recently. Mr. Vailati said he had sold out of Fiat completely. "I'm afraid of the impact of a capital increase," he said. "Fiat management has disappointed for many years. Investors need evidence of what they plan to do different before they give the company more money, and we're talking billions not millions here," WestLB Panmure car analyst Arndt Ellinghorst told Reuters in a separate interview. Nominated unanimously to succeed his older brother, Giovanni, who died Friday, Umberto is known to be open to the idea of selling Fiat Auto. He had once been quoted as saying that the troubled unit is preventing the group from investing in other, more profitable ventures. Giovanni had staunchly opposed any move to sell the loss-making unit, which include Italian icon, Ferrari. Meanwhile, Reuters says a rescue plan earlier pushed by ex-Telecom Italia chairman Roberto Colaninno appears to be doomed, as the Agnelli family has indicated they will lead the restructuring of the group themselves. They have proposed a capital injection of EUR250 million for the holding company, money likely to be pumped into Fiat and which could be followed by similar moves by the listed family holdings Ifi and Ifil, the news agency said. Ratings agency Standard & Poor's on Friday said it had cut its outlook on Ifil's credit rating to "negative" from "stable" on concerns it would cough up cash to help Fiat Auto. Plans for the group are expected to take shape after a board meeting expected to be called soon. Reuters says the most likely scenario sees fresh funds coming from the sale of assets like aircaft engine-maker Fiat Avio and possibly from new financial partners like financier Emilio Gnutti. General Motors Corp. could also be asked for cash in return for Fiat dropping an option to sell the rest of Fiat Auto to GM, which already owns 20 percent, from next year, the news agency said. =================== L U X E M B O U R G =================== VANTICO GROUP: Default Vindicates Fitch's Warning ------------------------------------------------- The default by Vantico Group S.A. has added weight to Fitch's warning to investors that European chemicals leveraged buy-out transactions will continue to be highly volatile, the rating agency says. Vantico Group is a leading global manufacturer of epoxy products and other high-performance thermosetting materials. According to Fitch, rating migration in the sector continues to be negative, and that "chemicals" remains a sector to which many collateralized debt obligations have significant exposure. The average collateralized debt currently is some 9.0% of total portfolio exposure. Rachel Hardee, director in Fitch's leveraged finance group, says "current operating environment for chemicals companies is challenging" and that Fitch believes 2003 will not show any significant improvement on 2002. Fitch's statement on Monday says its report of August 2002 entitled "European Chemicals and Financial Leverage: Handle With Care," highlights that some pre-2001 transactions had already required restructuring action and cited Vantico as one example. Other pre-2001 transactions remain under considerable pressure to generate sufficient net free cash flow to pay down senior debt. The pressure is exacerbated by the demands of capital expenditure and substantial cash interest payments. Also, as these transactions continue to mature, financial flexibility is reduced as issuers face stiffer financial covenant tests, despite earlier relaxations in many cases. Vantico's obligations include a mandatory bank debt repayment of CHF30 million on June 30, 2003 in addition to the high yield interest payment of EUR15 million (CHF 22 million) in February 2003 and annualized CAPEX of around CHF30 million. ===================== N E T H E R L A N D S ===================== GETRONICS NV: Announces Provisional Unaudited Information --------------------------------------------------------- Getronics issues this statement in connection with Monday's bondholders' meeting and extraordinary general meeting of shareholders, held in relation to Getronics' offer to buy back its outstanding 2004 and 2005 convertible bonds: Getronics announced Monday that on the basis of provisional, unaudited information, it expects its EBITA for the financial year ended December 31, 2002 to amount to approximately EUR126 million. This amount: (i) includes a book profit of EUR10 million related to the sale of real estate; (ii) excludes a one-off charge to implement further cost base reductions as part of a cost alignment plan of approximately EUR56 million, which is an increase of EUR11 million compared to estimates published on November 8, 2002. This increase follows an acceleration of the cost alignment plan; and (iii) excludes a positive non-cash result from the curtailment of defined benefit pensions plans in the amount of approximately EUR8 million. As disclosed in its press release and preliminary prospectus of January 10, 2003 (issued in connection with the Invitation to Tender), Getronics announced on November 8, 2002 that it expected an EBITA result of approximately EUR110 million including profit from the sale of real estate referred to in point (i) above and before the one-off restructuring charge referred to in point (ii) that was earlier estimated to be EUR45 million. In connection with the Invitation to Tender, Getronics also announced that its cash position at January 17, 2003 amounted to EUR181 million, before drawing under its new syndicated credit facility (Tranche A of which is in an amount for EUR125 million) and after repayment of all amounts outstanding under its old credit facility. Getronics' cash position is significantly influenced by working capital requirements that fluctuate strongly throughout the year. Getronics is also required to maintain certain cash balances for a variety of purposes (including obligations to banks and clients). This requirement strongly affects the availability of cash. All amounts are unaudited and provisional and subject to adjustment. About Getronics With more than 25,000 employees in over 30 countries, Getronics is one of the world's leading providers of vendor independent solutions and services to professional users of Information and Communication Technology (ICT). Through consulting, integrating, implementing and managing Infrastructure Solutions and Business Solutions, Getronics helps many of the world's largest global and local organizations to maximize the value of their technology investment and improve interaction with their customers. Getronics' headquarters is in Amsterdam, with regional head offices in Boston and Singapore. CONTACT: GETRONICS N.V. Investor enquiries Getronics Investor Relations Phone: +31 20 586 1964 Fax: +31 20 586 1568 E-mail: investor.relations@getronics.com GETRONICS N.V.: S&P Downgrades Long-term Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services downgraded to 'B' from 'BB+' its long-term corporate credit rating on Getronics N.V. The action reflects potentially adverse impact of share price erosion on the company's planned refinancing of its subordinated convertible bonds. The company's subordinated bonds were lowered to 'CCC+' from 'BB-'. All of the ratings were placed on CreditWatch with negative implications. The rating agency noted that since the group's refinancing offer to the holders of its 2004 and 2005 subordinated convertible bonds on January 10, the Dutch information and communications technology group's share price has fallen by more than one-half. Consequently, the current refinancing offer has significantly shrunk in value and seems unlikely to be accepted. Getronics' convertible bonds are currently trading significantly below pre-refinancing offer prices. The bonds are also trading slightly below the minimum value implied by the refinancing offer. The group set a minimum acceptance threshold for the offer of 57.5%. Standard & Poor's credit analyst Patrice Cochelin warned that the rating on the company could be lowered further if no refinancing is implemented in the next several months. S&P added that when bondholders are left with few alternatives but to accept the refinancing offer at a very significant loss, the event constitutes a default under its criteria. The offer, which includes a predetermined number of equity shares, is expected close on January 29. S&P also acknowledges that the short-term liquidity position of the group is adequate following the placement of a new EUR125 million revolving credit facility. Getronics also revealed it had about EUR181 million in cash and equivalents as of January 17. However, Getronics' liquidity could be pressured by the end of 2003 as restructuring and ongoing negative operating cash flow consumes these liquidity resources. The rating agency says, "Unless its share price rebounds significantly in the short term to levels that would make the refinancing offer attractive, the group will face material refinancing needs in April 2004 (about EUR182 million) and March 2005 (about EUR334 million) when its convertible bonds mature" At the end of June 2002, Getronics had total debt of EUR901 million and cash and equivalents of EUR269 million. ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: CalPERS Awards CSFB US$37 Billion in Equity Assets ----------------------------------------------------------------- Credit Suisse First Boston has been awarded the exclusive right to borrow US$37 billion in equity assets by the California Public Employees' Retirement System (CalPERS), the largest public pension fund in the nation. The award marks the third consecutive year CSFB has garnered the business and represents the majority of the US$48 billion in assets auctioned by the pension fund in December. "CalPERS is pleased to enter into the third year of its value-added relationship with CSFB," said Curtis Ishii, Senior Investment Officer for CalPERS Global Fixed Income program. The eSecLending auction process has allowed CalPERS to efficiently match its assets with borrowers, such as CSFB, while capturing premium returns for the Fund. "Securing stable supply is paramount in building a strategic partnership with prime brokerage clients," said Art Mbanefo, Managing Director of CSFB and the Global Head of CSFB's Prime Banking Department. "CSFB has created a platform called "Prime Banking," which combines every service our Firm offers to the hedge fund community. The portfolios awarded by CalPERS to CSFB is an essential component in delivering this platform. We are extremely pleased to offer CalPERS' pension fund members our services and capabilities." CSFB and its clients benefit by gaining exclusive access to assets with the size and depth of CalPERS. This enables the Firm's hedge fund clients to act with clarity in many of the more illiquid situations in the current marketplace. While the ability to direct US$37 billion of equity assets does not ensure that CSFB will have the ability to borrow for every trade, it firmly places the Firm in an enviable position within the supply and demand equation. The assets awarded to CSFB were the result of a previously announced auction conducted by eSecLending, a securities lending manager. Credit Suisse First Boston (CSFB) is a leading global investment bank serving institutional, corporate, government and individual clients. CSFB's businesses include securities underwriting, sales and trading, investment banking, private equity, financial advisory services, investment research, venture capital, correspondent brokerage services and retail online brokerage services. CSFB operates in over 89 locations across more than 37 countries on 6 continents. The Firm is a business unit of the Zurich-based Credit Suisse Group, a leading global financial services company. CREDIT SUISSE: CSAM Europe Creates New Management Structure ----------------------------------------------------------- To enable more targeted use of the opportunities and synergies that present themselves in the pan-European market for institutional asset management and fund management, all the country-specific organizational units within CSAM Europe will now report to the same management with effect from January 1, 2003. The new Chief Executive Officer of CSAM Europe is Heinrich Wegmann, previously CEO CSAM Switzerland. The individual business areas within CSAM Europe will be headed up by the following persons, who will form the new European Executive Board under the CEO CSAM Europe: - Investment Management Equities: Stephen Goldman (incl. Equity Research) Fixed income: Dilip Rasgotra Mixed Portfolios: Guido B�chli - Sales and Distribution Institutional: Michele Porro (incl. Global Investment Reporting and Institutional Advisory, Switzerland) Retail: Stefan M�chler (incl. Investment Management Real Estate) - Products and Platforms Joerg Schultz - Countries United Kingdom: Glenn Wellman ad int. Switzerland: Mario Seris - Finance Karl Huwyler In addition, Bob Parker will sit on the European Executive Board as an ex officio Member in his capacity as Global Head Marketing. With this pan-European management structure, CREDIT SUISSE ASSET MANAGEMENT Europe is ideally positioned to strengthen and further consolidate its leading role in the European asset management market. Credit Suisse Asset Management is the institutional and mutual fund asset management arm of Credit Suisse First Boston, part of the Credit Suisse Group, one of the world's largest financial organizations with approximately USD 819.6 billion in assets under management. Credit Suisse First Boston (CSFB) is a leading global investment bank serving institutional, corporate, government and individual clients. CSFB's businesses include securities underwriting, sales and trading, investment banking, private equity, financial advisory services, investment research, venture capital, correspondent brokerage services and asset management. CSFB operates in 77 locations in 36 countries across six continents. The Firm is a business unit of the Zurich-based Credit Suisse Group, a leading global financial services company. For more information on Credit Suisse First Boston, please visit our Web site at www.csfb.com. As of September 30, 2002, Credit Suisse Asset Management employed 2,270 people worldwide and had global assets under management of approximately USD 284.3 billion. Please note that this is not an offer for advisory services by Credit Suisse Asset Management. For more information on Credit Suisse Asset Management, please visit our Web site at http://ww.csam.com CONTACT: CREDIT SUISSE ASSET MANAGEMENT Sandrine Mehr Corporate Communications Phone: +41 1 333 4248 CREDIT SUISSE: CSFB 1997-C2 Class G on Rating Watch Negative ------------------------------------------------------------ Credit Suisse First Boston's commercial mortgage pass-through certificates, series 1997-C2, $14.7 million class G, rated 'BB-', is placed on Rating Watch Negative by Fitch Ratings. In addition, Fitch affirms the following classes: $45.5 million class A-1, $322.3 million class A-2, $523.3 million class A-3, and interest-only class A-X at 'AAA', $95.3 million class B at 'AA', $80.6 million class C at 'A', $95.3 million class D at 'BBB-', $73.3 million class F at 'BB', $29.3 million class H at 'CCC' and $14.7 million class I at 'CCC'. Fitch does not rate the $25.7 million class E nor the $19.9 million class J certificates. The placement of class G on Rating Watch Negative is due to the uncertainty over the extent of potential losses on Kmart loans, both newly closed and existing REO. The action reflects the weakening of the transaction following Kmart's Jan. 14, 2003 announcement to close an additional 326 stores of which three are in this deal. In addition, there are other loans of concern which when combined with the new store closings necessitate the placement on Rating Watch Negative. The transaction contains six loans in which there is or had been Kmart exposure, representing 5.8% of the transaction by loan balance. The resolution of two other Kmarts in the pool resulted in losses of 34.4% and 71.3% to the trust. Fitch is in the process of gathering more information on the loans with the newly announced store closings, which represent 3.3% of the transaction. Fitch has identified five other loans of concern (6.6%) in the pool. Four of these five loans are secured by hotel properties, while the last is secured by a retail property. In total, there are 10 loans in special servicing, two of which are real estate owned (REO) loans (1.1%), including one Kmart loan (1%). One loan (0.3%) is in foreclosure, two loans (0.8%) are 60 days delinquent, while the remaining five (4%) are current. Fitch will continue to monitor the status of the loans with newly announced Kmart closings and the impact on the ratings in this transaction. For more detailed explanation of Fitch's analysis to deals affected by Kmart exposure, please refer to the press release from earlier Monday ('Fitch: Kmart Store Closings Trigger Few CMBS Downgrades') available on the Fitch Ratings web site at ' http://www.fitchratings.com' CONTACT: Fitch Ratings Lauren Cerda Phone: 312/606-2317, Chicago Mary MacNeill Phone: 212/908-0785, New York CREDIT SUISSE: Fitch Downgrades CSFB 1998-C1 Class I ---------------------------------------------------- Credit Suisse First Boston's (CSFB) commercial mortgage pass-through certificates, series 1998-C1 $24.8 million class I is downgraded to 'CCC' from 'B-' by Fitch Ratings. In addition, Fitch affirms the following classes: $252 million class A-1A, $1.1 billion class A-1B, $262 million class A-2MF and interest only class A-X at 'AAA', $136.6 million class B at 'AA', $136.6 million class C at 'A', $136.5 million class D at 'BBB' and $37.3 million class E at 'BBB-'. Fitch does not rate the $142.7 million class F, $18.7 million class G, $49.6 million class H or the $45 class J. The action reflects the weakening of the transaction following Kmart's Jan. 14, 2003 announcement to close an additional 326 stores of which four are in this deal. In addition, there are other loans of concern which, when combined with the new store closings, necessitate the downgrade. The transaction contains 15 loans in which there is or had been Kmart exposure, representing 8.2% of the transaction by loan balance. The loans with the newly announced store closings represents 2.4% of the transaction. Fitch has identified other loans of concern (11.7%) in the pool. There are 27 loans in special servicing, 12 of which are real estate owned (REO) loans (2%). Four loans represent the aforementioned Kmarts now scheduled for closing, which had been current and with the special servicer for monitoring purposes only. An additional six loans, representing approximately 2% of the pool remain current. During the transaction's annual review in 2002, Fitch expressed concerns with the number of specially serviced loans and indicated in its press release dated Nov. 11, 2002, that the ratings for the class I would need to be revisited in the event that loss estimates appeared to be greater than anticipated. Fitch will continue to monitor the status of the loans with newly announced Kmart closings and the impact on the ratings in this transaction. For more detailed explanation of Fitch's analysis to deals affected by Kmart exposure, please refer to the press release from earlier Monday ('Fitch: Kmart Store Closings Trigger Few CMBS Downgrades') available on the Fitch Ratings web site at ' http://www.fitchratings.com' FLIGHTLEASE AG: Debt Restructuring Moratorium Extended ------------------------------------------------------ The debt restructuring judge of the Bulach district court ruled on December 10, 2002 that the definitive debt restructuring moratorium, granted December 4, 2001 until June 5, 2002 and extended on June 3, 2002 until December 5, 2002 in favor of Flightlease AG, Balz Zimmermann-Strasse, 8302 Kloten, shall be extended for another two months, i.e. until February 5, 2003. Karl Wuthrich, Attorney-at-Law at Wenger Plattner, Goldbach-Center, Seestrasse 39, 8700 Kusnacht-Zurich, remains Flightlease AG's administrator. SWISSAIR: Probe Blames Former Management for Collapse ----------------------------------------------------- Management consultancy firm Ernst & Young said the management of Switzerland's flagship carrier, Swissair, must have been aware in summer 2000 that the company faced a deficit of CHF2.5 billion. Ancillo Canepa, a partner with Ernst & Young said, "If there had been immediate professional crisis management and personnel changes back then, chances to turn the company around would have been much higher." Liquidators would study Ernst & Young's 3,300-page report on its probe on the collapse of the airline, says the company's estate administrator Karl Wuethrich. A decision on whether or not to file charges against former managers and directors is expected in the second half of the year, the Associated Press says. Four main political parties in the country, whose members include former chief executive Philippe Bruggisser, wanted to hold the executives responsible. While the central government has been reluctant to file criminal charges, individual states like Zurich could pursue the proceedings based on Switzerland's decentralized legal system, the report says. The Swiss government and big banks were forced to inject billions of dollars into a new airline, Swiss, that emerged from the carrier, which collapsed amidst leadership errors, dubious accounting methods, and lack of controls. CONTACT: KPMG INTERNATIONAL Burgemeester Rijnderslaan 10 1185 MC Amstelveen, The Netherlands Phone: +31-20-656-7890 Fax: +31-20-656-7700 Home Page: http://www.kpmg.com =========================== U N I T E D K I N G D O M =========================== ABBEY NATIONAL: Exposure in Debt Securities Worries Investors ------------------------------------------------------------- Abbey National's loan book with GBP90 billion worth of exposure in debt securities is making it hard for the bank to convince investors it has a clear turnaround strategy, Down Jones says. UK's seventh-largest bank by market value revealed in August it has a large exposure in its wholesale banking book, most of it in debt securities with a credit rating of triple B or higher. But it did not reveal what the loan book contains nor indicate how this exposure breaks down by geography or sector, giving investors no idea on the precise bad debts and write-down risk that Abbey faces. Adding to investors concerns is the fact that highly rated debt securities can turn quickly, the report says. Shares in the company are expected to remain depressed until February 26, when the bank reports full-year earnings. Abbey shares on Friday fell a further 2.2% to an eight-year low of 430 pence. Abbey warned of huge profit warning last June due to losses in wholesale banking. In its trading update in November, it also warned that provisions, goodwill write-downs and changes in accounting for embedded value in its life fund would lead to a full-year loss. The warnings fueled speculation that a bad result is in for its 2002 figures. AMEY PLC: Plans to Layoff 250 Employees to Keep Operations Afloat ----------------------------------------------------------------- Dismissals await employees of troubled engineering group, Amey, as the company makes an effort to cut overhead expenses in its bid for survival. Amey said the 250 cuts will fall across all areas of its business, following a string of profit warnings, accountancy scandals, high-profile resignations and contract delays. One City analyst was quoted in The Scotsman, saying: "We know they are under tremendous financial pressure, we know they're reducing their working capital requirements and cutting overheads. Cutting jobs comes as no surprise." Shares in Amey went down more than 90% in 2002 as investors gradually lose confidence in the company. The drop in share value resulted to the resignation of Chief Executive Brian Staples in December. Two finance directors of the company also departed from the company's board, further aggravating the situation. The company issued several profit warnings and changed its accounting for contract bidding costs. The latter turned an underlying profit of GBP55 million in 2001 into a GBP18.3 million loss. CONTACT: AMEY PLC Sutton Courtenay Abingdon, Oxfordshire OX14 4PP, United Kingdom Phone: +44-1235-848-811 Fax: +44-1235-848-822 Homepage: http://www.amey.co.uk BAE SYSTEMS: Decision on Aircraft Contract Bid Remains Uncertain ---------------------------------------------------------------- BAE Systems PLC is still waiting on the decision of the government regarding the GBP3 billion aircraft carrier contract, a spokesman for the defense group said. The source said there is still no information whether BAE has won the contract or it should build the ships in cooperation with rival French bidder Thales. His statement is in response to reports that the two groups will be asked to form an alliance and build the ships together. He called the reports "pure speculation." The reports, which are ahead of the official announcement expected after a cabinet meeting next Thursday, say the contract will be awarded to the alliance of Thales and BAE. According to The Business, unnamed sources close to the group say BAE is likely to accept such a deal. The Sunday Times, on the other hand, says Thales could be given the overall control of the alliance, and BAE would only be awarded at least GBP1 billion of the GBP2.5 billion construction work. But the Sunday Telegraph also says BAE Systems will be granted the whole order and will then be required to share a substantial portion of the project with Thales. Last month, Standard & Poor's Ratings Services downgraded its short-term corporate credit and commercial paper ratings on BAE Systems PLC to 'A-2' from 'A-1', following the company's announcement of cost overruns and delays on the GBP2.8 billion Nimrod and GBP2 billion Astute contracts with the British Ministry of Defense. CONTACT: BAE SYSTEMS Airbus UK New Filton House Filton, Bristol BS99 7AR United Kingdom Phone: +44 (0) 117 969 3831 BAE SYSTEMS Advanced Technology Centre PO Box 5, Filton, Bristol BS34 7QW, United Kingdom Phone: +44 (0) 117 936 6024 Fax: +44 (0) 117 936 3733 Contact: Investor Relations E-mail: investorrelations@baesystems.com BAE SYSTEMS: Workers to Ask Defense Minister to Avert Job Cuts -------------------------------------------------------------- BAE members of Amicus, Britain's largest private sector union, together with the GMB, Barrow Council and Furness Enterprise partnership, are meeting with Lord Back, the Ministry of Defence Procurement Minister, to discuss the proposed redundancy program at the shipyard. The issues that the delegation will discuss with the minister include, the intention of BAE systems to make 700 Barrow Shipbuilding workers redundant and moving work on the Type 45 Destroyer to its Clyde yards in Scotland. The Type 45 contract secured the future of the yard together with an additional contract to build Astute Class submarines. Now the company is saying that moving the work to the Clyde will speed up the Astute program. BAE have produced no evidence to substantiate this claim. If the work is removed from Barrow to the Clyde the union estimates that a further 900 jobs will be put at risk needlessly. The delegation will be asking the Minister to intervene and speed up other MOD contract placements to secure British jobs. After the meeting the delegation will lobby North West MP's at Westminster. Kevin Coyne, Amicus North West Regional Secretary said, "This announcement by BAE has put 700 jobs at risk immediately with 900 more seriously under threat if they remove the Type 45 work to the Clyde." "We want action from the MOD to place other orders that are in the pipeline and to put pressure on BAE to reconsider the job cutting announcement." CONTACT: Brian Harris Phone: 07798 531 014 DYNAMOTIVE ENERGY: Begins Restructuring of European Operations -------------------------------------------------------------- DynaMotive Energy Systems Corporation (OTCBB:DYMTF) released an update of the restructuring of operations in Europe and its intention to divest from Border Biofuels Limited. The decision to divest has been ratified by DynaMotive's Board in December 2002 and is part of a consolidation program that the Company announced in May 2002. DynaMotive Europe Ltd. has relocated its European Headquarters in London to Rotch Limited as part of its strategic alliance agreement. The Company is currently finalizing settlement on the release of its European Headquarters. The Company has also reduced staff, with Mr. Antony Robson and consultant, Mr. Gaby Dadoun now responsible for European operations. Mr. Robson continues in his role as Managing Director Europe. Through these changes, the Company has achieved cost reductions in excess of US$350,000 for the year 2003. In regard to BBL, the decision to divest follows changes in market conditions in the UK and the restructuring of operations in Europe. DynaMotive and Rotch Ltd., continue to cooperate in the restructuring of DynaMotive's operations in the UK. As part of this program, Rotch has been granted an exclusive first negotiation right to acquire DynaMotive's controlling interests in BBL. DynaMotive will in such event still provide technology and BioOil for the development of BBL projects on commercial terms, without any adverse impact on the licensing and royalty potential for DynaMotive. With regard to the previously announced commercial demonstration of the technology, the Company has evaluated the cost of demonstrating in the UK compared with achieving the same objectives in Canada. By shifting the program to Canada, financing requirements could be reduced by as much as US$4,000,000 over a foreseeable future. In addition to the reduction in costs and investment requirements, the divestiture and restructuring of operations will allow for a further simplification of reporting and of the groups' compliance costs. Commenting on the restructuring developments in regard to the European Operations, Mr. Kingston President & CEO of DynaMotive said, "Our objective for 2003 is to enhance shareholder value and to meet our goal of reaching a cash flow positive position by year end, thus limiting dilution to our shareholder base. DynaMotive's management is fully focused in the achievement of this goal. The restructuring of our operations in Europe is just one of the various initiatives that the Company has taken to enhance DynaMotive's position." DynaMotive is an energy systems company that is focused on the development of innovative energy solutions based on its patented pyrolysis system. Through the application of pyrolysis, the Company has shown how to unlock the natural energy found in the world's abundant organic resources that have been traditionally discarded by the agricultural and forest industries in a wasteful and costly manner, and to economically convert them into a renewable and environmentally friendly fuel. Proven applications include forestry residues such as wood and bark, and agricultural residues such as sugar cane bagasse and corn stover. The Company has successfully demonstrated conversion of each of these residues into fuel known as BioOil, as well as valuable char, making these residues a renewable and environmentally friendly energy reserve. * * * In its most recent SEC Form 10-K filing, the Company reported: "In May 2001, the Company announced its intention to divest its metal cleaning subsidiary, DynaPower, Inc., to focus all of its resources on its BioOil production technology. This divestiture was completed April 11, 2002. "These financial statements have been prepared on the going concern basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. "As at December 31, 2001, the Company has a working capital deficiency of $2,069,212, has incurred a net loss of $6,838,264 for the year-ended December 31, 2001, and has an accumulated deficit of $25,773,048. The ability of the Company to continue as a going concern is uncertain and is dependent on achieving profitable operations, commercializing its BioTherm(TM) technology and continuing development of new technologies, the outcome of which cannot be predicted at this time. Accordingly, the Company will require, for the foreseeable future, ongoing capital infusions in order to continue its operations, fund its research and development activities, and ensure orderly realization of its assets at their carrying value. The consolidated financial statements do not reflect adjustments in carrying values and classifications of assets and liabilities that would be necessary should the Company not be able to continue in the normal course of operations. "The Company is not expected to be profitable during the ensuing twelve months and therefore must rely on securing additional funds from government sources and by the issuance of shares of the Company for cash consideration. The Company has received commitments from the Canadian and UK governments and subsequent to the year-end, the Company has received a subscription agreement for up to $1.6 million in equity financing." FORD GROUP: Plans to Sack Two-thirds of Workforce ------------------------------------------------- Doncaster-based electrical goods company Ford Group, which is under administration, is to sack 160 staff, or two-thirds of its workforce. The cuts include more than 80 jobs from Hart Group's Doncaster call center. The company, which supplies household goods for insurance replacement claims, suffered "operational difficulties" which led to a cashflow crisis last year. The group used to have an average turnover of about GBP2.5 million per month. The company's administrators at PricewaterhouseCoopers are selling the group as a going concern with a skeleton staff. They are confident a bidder could be found soon. Joint administrator Steve Ellis said it was hoped the new owner would re-employ Ford's skilled workforce. He said, "With these problems now hopefully behind the group, we feel confident that potential purchasers will recognize the underlying value of this business." The group's subsidiaries include Doncaster-based Hart Group, Ford & Sons in Sidmouth, Devon, and Home Electric Direct in Ipswich. The group also operates three call centers for major catalogue retailers. CONTACT: PRICEWATERHOUSECOOPERS 1301 Avenue of the Americas New York, NY 10019 Phone: 646-471-4000 Fax: 646-394-1301 Home Page: http://www.pwcglobal.com In the United Kingdom Edinburgh PRICEWATERHOUSECOOPERS LLP Erskine House 68-73 Queen Street Edinburgh EH2 4NH Mail Address : PO Box 90 Edinburgh EH2 4NH United Kingdom Phone: [44] (131) 226 4488 Telecopier: [44] (131) 260 4008 Glasgow PRICEWATERHOUSECOOPERS LLP Kintyre House 209 West George Street Glasgow G2 2LW Phone: [44] (141) 248 2644 Telecopier: [44] (141) 242 7481 NTL INC.: Merger with Telewest Unlikely this Year, Say Analysts --------------------------------------------------------------- A merger between Telewest Plc and NTL Inc. is doubtful this year, say market observers, who believe talks leading towards that end would not begin earlier than next spring. The Guardian says the analysts it had interviewed are unanimous in saying that bondholders, who now control about 70% of the companies, would likely require them to meet tough operational targets first before allowing merger talks to begin. "The reality of the capital markets will prevent a merger from happening this year," a senior cable industry source told the paper. "However, I would be surprised if we didn't see something by spring next year." The delay will most likely disappoint many who believe that a combined NTL-Telewest is the only way cable could compete with BSkyB in the pay-TV market and BT in the potentially more lucrative high-speed Internet sector, the paper said. Both companies have been forced to restructure finances after they almost collapsed under the weight of the debts from digging up roads, laying cables and buying rivals. NTL recently exited from U.S. Chapter 11 bankruptcy protection, after completing a GBP7 billion debt-for-equity restructuring, while Telewest is understood to be 60-90 days away from completing its own transaction. The latter deal will see GBP3.5 billon out of a total of GBP5.3 billion Telewest debts forgiven in return for handing control of 97% of the company to lenders, the paper said. MALAKOFF & WM: Marine Engineering Pioneer Enters Receivership ------------------------------------------------------------- Malakoff & WM Moore, a 140-year-old marine engineering concern in Shetland, fell into receivership Monday, after facing months of financial difficulties, The Scotsman said yesterday. The company says the delay in establishing a new floating dock facility and mounting manufacturing costs conspired to bring the company down. A team from KPMG's corporate recovery practice, composed of Blair Nimmo and Neil Armour, has been named receiver. They intend to find a buyer rather than liquidate the firm. Mr. Nimmo, in an interview with The Scotsman, said: "We have a team of people up in Lerwick assessing the situation, talking to staff and suppliers and attempting to determine whether the company can continue trading. At this stage, we cannot assess whether there will be job losses, but it is our intention to carry on trading and we are seeking a buyer for the company." The paper says much of the recent crisis came despite the completion of a 137-metre floating dock, which gave the company the ability to complete ship repair service to commercial shipping and large purse-seine vessels. However, the project came in late and ran over budget. Mr. Nimmo added: "In terms of turnover, Malakoff operates in a difficult sector and margins are hard to come buy." In a separate interview, marine surveyor Jim Smith, who works for JLB surveyors on the island of Shetland, told The Scotsman: "It's a great pity. I just hope the receiver can pull them through and keep them operating in some sort of capacity. The facilities they have are essential for Shetland and the local industry." The company, according to the paper, had actually sought areas of work for diversification before its collapse. This, after it became evident that the downturn in the local fishing industry -- which has already resulted in a significant reduction in the fleet and lower levels of repair and maintenance work -- was not about to let up. But despite winning three major maintenance contracts last year, financially the company could not compete in the industry it was operating, the paper said. The company was formed as a result of the merging of Malakoff, Lerwick, and William Moore & Sons, of Scalloway. It operates as a subsidiary of the Lithgows Group. It is 55 percent owned by Lithgows and 45 percent owned by JW Holdings. Mr. Nimmo told The Scotsman neither of the owning parties had expressed any interest in buying the company. * Alixpartners Enters European Market with Zeller and Lovett ------------------------------------------------------------ AlixPartners, LLC, the leading-performance improvement, financial-advisory and restructuring consultancy in the United States, announced the establishment of a significant presence in Europe. Roman Zeller and David Lovett have joined the firm as principals, and AlixPartners has opened offices in Munchen and London. In addition, AlixPartners principal Peter Fitzsimmons has relocated from the firm's New York office to London to head European operations. "As demand for our particular brand of performance-improvement services has increased steadily in Europe, we have decided to commit resources to establishing a strong presence in key European markets with offices led and staffed by local professionals of the highest caliber," said Michael Grindfors, president of AlixPartners. "We are pleased that Roman Zeller and David Lovett have joined AlixPartners to lead our Munchen and London practices, respectively. Their understanding of local cultural and business environments, combined with AlixPartners hands-on, consensual approach to business-performance improvement, will ensure success for AlixPartners and its clients in Europe." Zeller joins AlixPartners' Munchen office from Bain & Company, where he was a partner and a founding member of the private-equity consulting practice at Bain Germany. While working with the portfolio companies of private equity funds, he focused on value enhancing programs comprising strategic, operational, organizational and financial improvement initiatives. Zeller led Bain's European supply-chain management and German e-business practices since 2000. He has developed and implemented programs to increase value for numerous international clients in process industries and in industrial goods, including a global metal-packaging producer that doubled return on sales through sales enhancements, cost reduction and strategic redirection. Lovett joins AlixPartners from Andersen UK, where he most recently served as Chief Financial Officer and Joint Liquidating Partner. He formed Andersen's London turnaround practice in the early 1990s and managed the Global Turnaround practice for Andersen. He will be based in AlixPartners' London office. Fitzsimmons, a seven-year AlixPartners veteran, currently heads the firm's WorldCom international restructuring team, which includes WorldCom's Asian and Latin American operations. He has also worked with the European operations of other global businesses, including companies in the food distribution and automotive manufacturing industries. Before joining AlixPartners in 1995, Fitzsimmons worked both as an operating manager and restructuring advisor. In the U.S., AlixPartners has pioneered the performance-improvement industry. The firm is known for its tactical, hands-on and collaborative approach to improving corporate financial and operational performance. AlixPartners commits senior professionals to each engagement on a full-time, exclusive basis and works collaboratively with existing management, as well as bankers, vendors and employees, to achieve restructuring objectives. "I am pleased to become associated with the world's leading performance improvement organization, and I am looking forward to helping AlixPartners adapt the best of American performance-improvement practices to German business conditions and situations to help healthy companies optimize their performance and struggling companies to be successful in turnaround situations," said Zeller. Currently, AlixPartners is serving as CEO at ISH GmbH & Co., a spin-off from Deutsche Telekom. The firm is developing a program aimed at bringing the company to its full strategic, operational and financial potential. AlixPartners led the efforts to restructure the balance sheet, reduce costs, and improve business processes and operating agreements. The firm led the efforts to obtain additional financing from secured lenders and vendors. Other European engagements include WorldCom and Exide Technologies, where AlixPartners principals are acting as chief financial officer and chief restructuring officer during Chapter 11 proceedings in U.S. Bankruptcy Court. AlixPartners also recently assisted Sunterra, the world's largest vacation ownership company, and Umbro International, a $600-million (EUR569 million) international manufacturer/marketer. AlixPartners first worked in Europe in 1990 with Wang Laboratories and Unisys Europe. AlixPartners' Munchen office is located at Maximilianstrasse 35, D-80539 Munchen. The telephone number is +49 89 242 181 35. AlixPartners' London office is located at 84 Brook Street, London, W1K 5EH. The phone number is +44 20 7866 6073. AlixPartners, LLC, is recognized internationally as the industry standard in solving complex corporate challenges, creating value and restoring corporate performance. It has offices in New York, Chicago, Dallas, Detroit, London and Munchen. For further information, go to http://www.alixpartners.com S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, 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. 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