/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030213.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, February 13, 2003, Vol. 4, No. 31 Headlines * F R A N C E * AIR LIB: Employees Protest Job Losses in Imminent Bankruptcy ALCATEL: Chairman Sees No Imminent Market Recovery for Company *G E R M A N Y * AXEL SPRINGER: Agrees to Sell Book Publisher to Random House COMMERZBANK AG: Director Proposes Salary Cuts Instead of Jobs DEUTSCHE TELEKOM: To Cut Additional Jobs Within Administration GERLING-KONZERN: May Sell Loss-making Reinsurance Arm Soon SALAMANDER: Closes Sale of Footwear Division to Garant Schuh * I R E L A N D * ELAN CORP.: CEO to Receive EUR5 MM for Finding Buyer This Year * I T A L Y * FIAT SPA: Creditor Banks to Finalize Sale of Stake in Fidis * N E T H E R L A N D S * BALLAST NEDAM: Reviewing Bid Received for Dutch Operations KONINKLIJKE PHILIPS: Reports Net Loss of EUR 1.530 Billion in Q4 KONINKLIJKE PHILIPS: S&P Affirms Corporate Credit Ratings ROYAL PHILIPS: Van der Poel Moves From Board to Group Management * P O L A N D * DAEWOO GROUP: Electronics Division Closes Three Factories MILLENNIUM BANK: Financial Strength Rating Under Review * R U S S I A * ROSNEFT: S&P Revises Outlook to Negative From Positive * S W I T Z E R L A N D * CREDIT SUISSE: Fitch Ratings Upgrades CSFB Series 1995-WF1 PUBLIGROUPE AG: Predicts Full-Year Net Loss of SFR 30 Million * U N I T E D K I N G D O M * BOOSEY & HAWKES: Sells Instrument Workshops for GBP33.2 Million BRITANNIC GROUP: Takeover Discussions With Old Mutual Untrue CABLE & WIRELESS: Narrows Search for New CEO to Three Candidates CABLE & WIRELESS: Regulators in the Caribbean Ruled Against C&W INVERESK PLC: Reports Progress in Recapitalization, Refinancing PIZZAEXPRESS PLC: Presents Interim Report for 2002 ROYAL MAIL: Disagrees With Regulator Over Access Price to Letter TELEWEST COMMUNICATIONS: Director Expects Recovery by 4Q =========== F R A N C E =========== AIR LIB: Employees Protest Job Losses in Imminent Bankruptcy ------------------------------------------------------------ Between 1,300 and 1,500 employees of embattled French carrier Air Lib expressed their protest over the possibility of losing their jobs by blocking traffic into Paris' Orly airport on Monday. The strikers, who face losing their jobs if Air Lib files for bankruptcy, blocked a major highway into Orly West between 1 pm and 3 pm after police evicted them from the airport where they had mounted a protest earlier. French Transport Minister Gilles de Robien admitted last week that the airline is headed for bankruptcy and the chances of saving Air Lib and the 3,200 jobs impacted were minimal. Mr. Robien said he does not want to raise any more false hopes, although he, together with his deputy, Dominique Bussereau, began talks with various French transport groups, including Air France, the Paris airport authority and the French railways, in an effort to find alternative employment for Air Lib's staff. Mr. Robien previously ruled out the possibility of state financial support for an Air Lib redundancy plan. Air Lib was grounded last week after the government refused to renew the carrier's license without the payment of a EUR100 million to EUR130 million loan, and an assurance of financial support from an investor. This development follows the failure of talks with potential investor, Dutch group IMCA, which had insisted on asking for a discount from European consortium Airbus for the 29 Airbus A319 planes it would need in order to renew Air Lib's fleet if it took over the airline. ALCATEL: Chairman Sees No Imminent Market Recovery for Company -------------------------------------------------------------- Alcatel chairman Serge Tchruk anticipates that the depressed situation of the company's market in the second half of 2002 will carry on into the first half of this year, according to AFX. Mr. Tchruk said, "We are quite possibly at the bottom of the swimming pool...and we will stay there for the moment." But he also believes Alcatel's rating will be picked up at the end of 2003, and there will be no further drastic declines in the market. Ultimately, he expects the company's positive net cash position at the end of 2002 to remain intact by the end of 2003. "I am not saying that financial issues are totally behind us, but this is no longer Alcatel's main problem," he said. As for his plans regarding the space and the optics market, Mr. Tchuruk said he has no intention of exiting either business. It was earlier reported that the French telecoms equipment maker is considering the possibility of selling its troubled opto- electronics division, including the unit's sizeable operation at Livingston, in West Lothian. Alcatel recently posted a net loss of EUR1.119 billion for the fourth quarter. Alcatel Optronics also reported a net loss of EUR115.5 million. Last month, Fitch said it considers Alcatel's fourth-quarter trading statement positive, although its 'BB-' rating with a negative outlook reflects risks and uncertainty. The rating agency said the clear divergence between guidance provided at the 3Q stage and the expected result confirms the extreme uncertainty surrounding the business. The discrepancies particularly relate to: the 4Q02 sequential growth in the high 20% range, which Fitch noted had been around 20% on the last update in December; operating breakeven for the quarter which was reduced to around EUR4.1 billion versus below EUR4.5 billion during the October 2002 guidance; and net cash position predicted at YE 2002 compared with October 2002 guidance of net debt below EUR2.0 billion. ============= G E R M A N Y ============= AXEL SPRINGER: Agrees to Sell Book Publisher to Random House ------------------------------------------------------------ Random House, owned by Bertelsmann AG, has agreed to buy Axel Springer Verlag's book publishing group, Ullstein-Heyne-List, for an undisclosed amount. The deal excludes art book publisher, WeltKunst-Verlag. Axel Springer said it sold the unit, which publishes Tom Clancy, Stephen King and John Grisham in German translation, due to "difficult market and business conditions, and unsatisfactory return potential". Earlier reports estimated the value of the book publisher to be EUR100 million at most. The takeover is still subject to antitrust approval. The division's earnings have been burdened by slow book sales in Germany as a whole and by write-offs on book rights bought in earlier years. In 2001, the last year for which figures are available, the division lost about GBP49.5 million before interest, taxes and amortization, most of which came from Ullstein Heyne, Springer said. CONTACT: AXEL SPRINTER VERLAG Axel-Springer-Platz 1 D-20350 Hamburg, Germany Phone: +49-40-3-47-2-23-70 Fax: +49-40-3-47-2-90-37 Home Page: http://www.asv.de COMMERZBANK AG: Director Proposes Salary Cuts Instead of Jobs ------------------------------------------------------------- Roman Schmidt, managing director of Commerzbank's securities division, is proposing to investment bankers and employee representatives a scheme of cutting salary and working hours in exchange for fewer layoffs. Management board member Mehmet Dalman in November warned that Germany's fourth-largest bank may have to cut as many as 2,000 more jobs as part of its restructuring. Commerzbank plans another round of cuts this year and already has announced 345 investment-banking jobs will be cut. Mr. Schmidt's proposal came as bank managers are discussing further cost-cutting measures for the German bank which recently reported pre-tax loss of EUR372 million in its results for financial year 2002. But convincing competitive investment bankers to give up part of their salary may not be easy, according to Dow Jones, considering that the bank has already trimmed down bonuses. Besides, the downturn in the country's economy meant less work for investment bankers throughout Germany. But if employees indicate they won't accept the scheme, it is back to the drawing board, said Mr. Schmidt. 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 Muller, Chairman Axel Frhr. v. Ruedorffer, Managing Director DEUTSCHE TELEKOM: To Cut Additional Jobs Within Administration -------------------------------------------------------------- Germany's largest telecommunications group, Deutsche Telekom AG, plans to cut around 3,000 jobs within administration by the summer, according to reports. The company's management met Tuesday to decide the number of job cuts and what changes to make to the company's structure. The current cuts build on the 2,400 layoffs announced by interim chairman Helmut Sihler in November. Deutsche Telekom previously confirmed it has plans of unloading other assets in order to meet a target of cutting debt to between EUR49.5 billion and EUR52.3 billion by the end of this year. Last month, Moody's stated its belief that the financial risk for the company will remain high because of uncertainties surrounding their plans to reduce debt and the ongoing cash funding requirements of its 100%-owned subsidiary, VoiceStream. Deutsche Telekom is the no.1 telecom company in Europe and one of the largest in the world, behind NTT and AT&T. Deutsche Telekom is still Germany's no.1 fixed-line phone operator, with about 57 million access lines. CONTACT: DEUTSCHE TELEKOM Friedrich-Ebert-Allee 140 53113 Bonn, Germany Phone: +49-228-181-0 Fax: +49-228-181-8872 Home Page: http://www.telekom.de Contact: Hans-Dietrich Winkhaus, Chairman, Supervisory Board Kai-Uwe Ricke, Chairman, Management Board, and CEO GERLING-KONZERN: May Sell Loss-making Reinsurance Arm Soon ---------------------------------------------------------- Gerling-Konzern Allgemeine Versicherungs AG (Gerling), the struggling German financial services group, is hoping to present a solution for its loss-making reinsurance arm Gerling Globale Rueck soon. Gerling Globale Rueck revealed EUR583 million in losses in 2001, a result of the September 11 terrorist attacks in the U.S. Gerling is currently in close contact with Germany's financial services watchdog, BAFin, which is examining the agreed sale of the reinsurance subsidiary to a capital company led by former Frankona head Achim Kann. BAFin has until March to complete its investigations, which started in December. Meanwhile, Financial Times Deutschland sources said Deutsche Bank AG and Rolf Gerling have reached a preliminary agreement on the main points of an acquisition deal concerning Gerling. If an understanding takes place within the next two weeks, HDI could acquire the main operating business of the struggling insurer. The deal would make DI the third biggest insurer in Germany with about EUR21 billion in annual premium income. Deutsche Bank holds a 34.5% stake in Gerling, while Rolf Gerling holds 65.5%. CONTACT: GERLING VERSICHERUNGS-BETEILIGUNGS-AG Gereonshof 50670 Cologne, Germany Phone: +49-221-144-1 Fax: +49-221-144-3319 Homepage: http://www.gerling.com Contacts: Heinrich Focke, Chief Executive Officer Immo Querner, Chief Financial Officer SALAMANDER: Closes Sale of Footwear Division to Garant Schuh ------------------------------------------------------------ Garant Schuh + Mode, the German association of independent footwear retailers, signed a letter of intent to buy a majority stake in the loss-making shoe retail division of German conglomerate Salamander. Garant intends to acquire Salamander's 230 shoe retail outlets in eight European countries, the rights to Lurchi and Salamander brand names and a production plant in Hungary. The deal is expected to be sealed next month, reports say. Energie Baden-Wurttemberg, which owns Salamander, originally hoped to unload the whole subsidiary, rather than divest the loss-making footwear business and its service activities separately. The management now hopes that it will manage to divest 100% of the group's footwear activities by the end of 2003. Salamander also plans to close its footwear production sites at Vinningen and at Schrozberg, 20 shop outlets and cut 1,330 jobs as part of its restructuring project. The footwear activities of Salmander have continued to see worsening losses in the first half of 2002, when group profit reached only EUR8 million, compared with EUR25 million for the entire year 2001. Rumors circulating the media, meanwhile, said high-class German footwear group Gabor is interested in Sioux, Salamander's high- quality footwear division which sells its products under the brand names of Sioux, Apollo and Yellomiles. ============= I R E L A N D ============= ELAN CORP.: CEO to Receive EUR5 MM for Finding Buyer This Year -------------------------------------------------------------- Elan Chief Executive Kelly Martin is bound to get EUR5 million (GBP3.3 million) from the troubled Irish pharmaceutical group once it strikes a deal to sell the company this year. The firm, however, denied the business is up for sale, and said that the scheme is only a protection and not an incentive for the chief executive, says The Telegraph. "Elan is not being set up to be sold. We have no desire to sell it," a spokesman said. The company's chairman, Garo Armen, has said publicly that he would not even sell the company at three times its current share price of 230.5p, down 6 on Tuesday. The amount "covers him financially if the company is purchased," he said. Mr. Martin is also due to receive EUR3 million if he successfully found a buyer for the group next year, but nothing anymore beyond that. According to the report, Mr. Martin's background in banking fueled rumors he was hired to sell the group, which is currently selling assets to pay down debt. Mr. Martin previously served at Merrill Lynch. Elan, whose shares suffered as a result of a U.S. acounting probe and a number of setbacks in its product pipeline, has already sold royalties to major products such as pain relief drug Skelaxin and sleep drug Sonata. CONTACT: ELAN CORPORATION PLC Emer Reynolds, Vice President, Investor Relations Lincoln House, Lincoln Place Dublin 2, Ireland Phone: +353-1-709-4000 +353-1-709-4108 ========= I T A L Y ========= FIAT SPA: Creditor Banks to Finalize Sale of Stake in Fidis ----------------------------------------------------------- Officials Fiat's creditor banks, Italian banks Sanpaolo-IMI, Banca Intesa, Capitalia and UniCredit, are scheduled to meet their counterparts in the Italian conglomerate on Friday to finalize the sale of Fiat's 51% stake in financial services company Fidis. Fiat agreed last year to sell the stake in the unprofitable consumer lending arm for about EUR400 million to the creditor banks. Fidis - Finanziaria di Sviluppo SPA is primarily a rental and leasing company which also provides factoring services, loans for rental & leasing services of vehicles, lending services, asset management services and insurance products. The company operates throughout Italy and Europe and has a subsidiary company in the USA. Rental income accounted for 42% of 1995 revenues; interest income, 33% and other services 25%. Fiat is further in talks to sell its aeronautics division, Fiat Avio, valued between EUR1.5 billion to EUR1.8 billion by analysts. It is expected that the proceeds will be used to help the industrial group raise the EUR5 billion it needs to re- capitalize loss-making unit, Fiat Auto. Fiat Auto 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. It has so far cut 8,100 jobs and reduced production to turn around the car business. 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 FIDIS FINANZIARIA DI SVILUPPO SPA Via Mazzini, 53 Turin Italy Phone: +39 11 686 41 11 +39 11 686 47 09 ===================== N E T H E R L A N D S ===================== BALLAST NEDAM: Reviewing Bid Received for Dutch Operations ---------------------------------------------------------- Troubled Dutch construction company Ballast Nedam NV said it is studying a bid lodged by a financial party for its Dutch operations. Analysts estimate the deal could fetch up to GBP100 million (USD107 million). The Dutch arm of German construction manager Hochtief AG would not reveal details about the offer, although it confirmed that an unnamed Dutch financial group offered the bid over the weekend and that it is due to present the details to shareholders after reaching a conclusion. The decision to separate Dutch activities from the loss-making Ballast Nedam International was made following a strategic evaluation of the company in recent months. The group said in a statement that international operations will be phased out in the period to 2005, after completing ongoing projects. Financing has been secured in an agreement with banks. The company, which ABN Amro NV is advising, also said it was still seeking a strategic partner for its U.K. operations, Ballast Nedam plc, which it expects to return to profitability later this year after restructuring. Financing has been secured for the unit to operate independently, however the company expects to exit the British market within a few years. Ballast Nedam added: "The decisions that have been made to fund the Dutch activities on an independent basis provide the security and financial latitude to further develop the company as a large player on the Dutch market." SNS Secutiries NV analyst Reinier Westeneng predicts the company could sell the Dutch unit for an enterprise value of between GBP75 million and GBP100 million, though he said much will depend on the company's full-year results. He said, however, that the news offered some assurance to investors that the firm was not headed for bankruptcy. "Even if the results were worse than expected, for the time being the default risk has diminished enormously." The news initially sent Ballast Nedam shares up 13% to GBP3.15, but down from a mid-2001 high of nearly GBP30. The company also reported a provisional net loss of GBP135 million to GBP150 million, with final figures due out next month. KONINKLIJKE PHILIPS: Reports Net Loss of EUR 1.530 Billion in Q4 ---------------------------------------------------------------- Fourth-quarter income from operations of EUR 47 million, a net loss of EUR 1,530 million, including special items of EUR 1,588 million. - 12% higher unit sales, 4% lower nominal sales than in Q4 2001 - Lighting and DAP record income from operations in Q4 - Solid performance of Consumer Electronics and Medical Systems in Q4 - Cash flow from operations of EUR 1,442 million in Q4 - All-time low inventories: 11.1 % of sales - Net debt reduced by EUR 1.7 billion - net debt : group equity ratio 27:73 - Cost reduction programs on-track The fourth quarter 2002 Philips recorded a net loss of EUR 1,530 million (a loss of EUR 1.20 per share), versus a loss of EUR 1,062 million (a loss of EUR 0.84 per share) in the same period last year. Income of Q4 2002 included impairment charges of EUR 1,340 million (EUR 921 million for Atos Origin and EUR 275 million for LG.Philips Displays) and other special charges of EUR 248 million, whilst last year's quarter included impairment charges of EUR 526 million (mainly for Vivendi Universal), and other net special charges of EUR 433 million. Excluding special items, net income came to a profit of EUR 58 million versus a loss of EUR 103 million last year. Sales decreased by 4% over the same period of last year, mainly due to the weakening of the U.S. dollar and related currencies which had a 7% negative impact. Unit sales were 12% higher, continuing the improving trend quarter over quarter. Income from operations improved from a loss of EUR 458 million in Q4 2001 to a profit of EUR 47 million this year. The improvement, which compensated for EUR 150 million of higher pension costs, comes mainly from higher margins and lower costs, including lower amortization of goodwill of EUR 51 million. The cost reduction programs are on-track, with full year reduction in overhead costs amounting to EUR 257 million (EUR 324 million on a run rate basis in Q4), and integration savings realized at Philips Medical Systems of EUR 173 million in 2002. Results from unconsolidated companies came to a loss of EUR 1,391 million, largely caused by EUR 1,260 million of impairment charges and EUR 142 million of other special charges. Cash flow from operating activities was EUR 1,442 million, mainly from tight capital management. Inventories as a percentage of sales came to a record low of 11.1%, compared to 13.3% last year. During the quarter the net debt was reduced by EUR 1.7 billion to EUR 5.25 billion, resulting from the strong cash flow from operations. KONINKLIJKE PHILIPS: S&P Affirms Corporate Credit Ratings --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'A-' long-term and 'A-2' short-term corporate credit ratings on Dutch diversified technology group Koninklijke Philips Electronics N.V (Philips). The outlook remains negative. The outlook follows the group's publication of fourth-quarter and full-year 2002 results, which reflected group debt reduction by approximately EUR1.7 billion. Standard & Poor's credit analyst Guy Deslondes said, "The affirmation primarily reflects continued debt reduction-through operating cash flow generation, working-capital management, and minor asset sales over the past year--most notably in fourth- quarter." The results reported a 30% reduction in net debt since year-end 2001. As for the company's reshuffling of its business scope over the past few years, S&P says, the reshuffling in favor of the medical-equipment market "should provide long-term credit benefits in terms of profitability margins and revenue visibility once the newly acquired businesses have been fully integrated and cost synergies implemented." The rating agency says Philips' credit measures remain weak for the ratings, lease-adjusted net debt to EBITDA remained above 2x in 2002, and overall pension deficits increased substantially in 2002. But S&P expects that credit measures will continue to improve materially in 2003 through enhanced operating cash flow coupled with continued, material gross-debt reduction. S&P warns that sluggish market conditions and the group's ongoing restructuring charges are likely to continue to weigh on the company's cash flow generation and debt-protection measures in the near term. The analyst, meanwhile, warns that the ratings could still be lowered on the company's failure to increase profitability measures and cash flow generation in 2003 while continuing to materially reduce debt. Mr. Deslondes added that the rating agency will closely monitor the evolutio of Philips' pension liabilities, and that, any further stock-market weakness would also weigh on the ratings. ROYAL PHILIPS: Van der Poel Moves From Board to Group Management ---------------------------------------------------------------- Royal Philips Electronics announced that Mr. Arthur van der Poel, Executive Vice President has decided to relinquish his Board of Management position and become a member of the Company's Group Management Committee on a part-time basis as of May 1, 2003. Following a career of almost twenty years with Philips, and as a member of the Board of Management since 1998, Mr. van der Poel has expressed the desire to find a different balance between his working and private life. Mr. van der Poel has committed to remaining a member of the Group Management Committee until the spring of 2004 to focus, on a part-time basis, on the global sustainability policy and Philips' quality management program BEST, both of which are part of his current responsibilities. Gerard Kleisterlee, President and CEO of Royal Philips Electronics, said: "Arthur van der Poel has made a significant contribution to Philips over the past two decades, in particular in leading the Semiconductor division through one of the most dramatic cycles in the industry's history, and the transition from analog to digital electronics. We will miss his contribution in the Board, but respect his wish to create a different work/life balance, after many years of service to the company." Mr. van der Poel's Board responsibilities for supervising Philips' Semiconductors division will pass to Gerard Kleisterlee. About Royal Philips Electronics Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 31.8 billion in 2002. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 170,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at http://www.philips.com/newscenter =========== P O L A N D =========== DAEWOO GROUP: Electronics Division Closes Three Factories --------------------------------------------------------- The overseas production line of Daewoo Electronics in Pruszkow will be the only one in Poland that will continue operations under the ownership of Daewoo. The Lodz-based Fonica plant is currently in the process of liquidation at a cost of almost 100 jobs, according to the Warsaw Business Journal. Fonica representatives recently held negotiations with Daewoo Manufacturing Electronics Poland concerning the possibility of continuing production. Zbgniew Blonski, deputy head of the plant's "Solidarnosc" trade union, said the management hopes to partly continue production at Fonica. Head of Pruszkow-based Daewoo Electronics, however, said the question is not whether but when group lay-offs will take place at television parts manufacturer Fonica. "This will probably occur during the next two months," he said. Revenues of the Pruszk�w plant amounted to over ZL800 million in 2001 and also managed to cut its net losses to ZL5.5 million, from ZL43 million in 2000. Daewoo Electronics produces 1.8 million television sets annually and employs 1,200 people. Creditors have been trying to sell the division since the Daewoo Group collapsed in 1999 with more than USD80 billion worth of debt. MILLENNIUM BANK: Financial Strength Rating Under Review ------------------------------------------------------- Moody's placed the D financial strength rating of Poland's Millennium Bank under review for possible downgrade pending an assessment that will focus on the progress made by the group in strengthening its financial fundamentals. The bank's A3/P-1 deposit ratings and their negative outlook were maintained. The rating agency will take into account restructuring achievements in its review. Included in the scrutiny will be the group's recurring earnings generation trends, the contribution of one-off gains to profit, cost efficiency improvements, and trends in the bank's asset quality. The review will focus particularly on the accounting changes since 2000 that have made year-on-year as well as peer comparisons more difficult. Millennium Bank's audited accounts (PAS) were qualified and restated for the year ending December 31, 2001, with total assets of PLN 20 billion (EUR5.7 billion) and net profit of PLN 19.9 million (EUR5.7 million). The bank reported preliminary consolidated net profits for 2002 of PLN 183.9 million (EUR45.7 million). The Warsaw-based group is formerly known as Big Bank Gdanski. =========== R U S S I A =========== ROSNEFT: S&P Revises Outlook to Negative From Positive ------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Russia- based OJSC Oil Company Rosneft to negative from positive. Rosneft's long-term corporate credit and senior unsecured ratings were at the same time affirmed. Rosneft's local currency is rated BB+/stable/B, its foreign currency, BB/Stable/B. Standard & Poor's credit analyst Elena Anankina said, "The rating action reflects the company's more-aggressive than-expected financial policy and growing debt burden." The action follows public discussions of a possible acquisition of OAO Severnaya Neft and the resulting technical violation of its eurobond financial covenants. The company is in the process of acquiring OAO Severnaya Neft, a small oil production company based in the north of Russia that produces 30,000 barrels per day, and has 232 million barrels of proven reserves, as audited by De Golyer and MacNaughton. The rating agency says the acquisition itself is risky, because the key oil production license of Severnaya Neft is subject to litigation. But Ms. Anankina says, "Although Rosneft is in position where it might realize a technical violation of its eurobond financial covenants, Standard & Poor's does not expect these violations to affect the company's liquidity." But if Rosneft fails to avoid technical default on the eurobond, or if litigations should arise, the ratings on Rosneft may be lowered, if necessary by more than one notch, says Ms. Anankina. The rating agency considers the investment and financial policy of the eighth-largest vertically integrated oil company in the Russian Federation as aggressive. It also sees the company as significantly leveraged, has large capital requirements to invest in continuing production growth and modernizing refineries, and has an ambitious policy to grow through external acquisitions. ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: Fitch Ratings Upgrades CSFB Series 1995-WF1 ---------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp., Series 1995-WF1 is upgraded as follows: $14.6 million class D to 'AAA' from 'AA+', $19.5 million class E to 'A-' from 'BBB' and $9.8 million class F to 'BB+' from 'BB-'. In addition, the following classes were affirmed, $669,156 class C and interest-only class A-X at 'AAA'. The $7.3 million class G is not rated by Fitch. The upgrades and affirmations follow Fitch's annual review of the transaction which closed in December 1995. The upgrades are primarily due to an increase in subordination caused by the prepayments and refinancing of an additional 6 loans in the pool since Fitch's last review. Wells Fargo, the master servicer, collected year-end (YE) 2001 financials for all of the 19 loans remaining in the pool. Based on this information, performance on the underlying loans continues to be strong as evidenced by the weighted-average debt service coverage ratio (DSCR). The DSCR for the loans has increased from 1.42 times (x) at issuance to 1.71x as of YE 2001. YE 2002 financial information on the loans remaining in the pool is expected mid-2003. As of the January 2003 distribution date, the collateral balance had been reduced 79% from $243.9 million at issuance to $51.9 million. The loans remaining in the transaction are secured by commercial and multifamily properties. Fitch reviewed the mortgage document exception report, which did not reveal anything of concern. The pool continues to outperform expectations with no delinquencies or specially serviced loans. There have also been no realized losses. Fitch continues to have strong concerns over the concentration of retail properties (75%) and the properties located in California (73%). Fitch considered the concentrations and the lack of recent YE 2002 financial information when upgrading the certificates. Fitch will continue to monitor this transaction, as surveillance is on-going. CONTACT: Fitch Ratings Erin Stafford Phone: 312/606-2308 (Chicago) Veronica Volk Phone: 212/908-0765 (New York) PUBLIGROUPE AG: Predicts Full-Year Net Loss of SFR 30 Million ------------------------------------------------------------- Swiss publishing group Publigroupe AG expects to post a full-year net loss of SFR30 million due to value adjustments, goodwill amortization, risk provisions and restructuring charges. "Apart from the directories activity which continued to resist the deterioration of the economic environment, all other sectors of group businesses are declining," the company said in an issued statement. The loss, which is far narrower than the earlier loss of SFR185 million, but somewhat worse than the market had been expecting, is opposite to the anticipated continuation of profit gained in September. The group said EBIT will exceed SFR40 million against an earlier 30 million loss. However, the drop in sales (by 18% to SFR2.151 billion in 2002) is in line with the forecast range of SFR2.11-2.25 billion, due to disposal of loss-making or non-strategic operations. The fall in sales from continuing operations was less severe at 13%, with sales at its largest division PubliPresse dropping by 13% to SFR 1.646 billion mostly because of the 38% decline in job vacancy advertising. No recovery for PubliPresse is expected in 2003; rather it is likely to see a further reduction in the order of 5%. Staff for the division has been cut by 8% in 2002, and another 8% will be laid off in 2003. Meanwhile, Publicitas Promotion Network (PPN) saw its sales fall 17% to SFR341 million with the downturn particularly marked in the US. PPN sees a stable 2003, with lower sales but improved EBIT and consolidated net profits, against 2002 after implementing drastic cost cuts. The group further stated: "The development and improvement of the profitability of the group's basic activities in the sectors of press advertising and directories are therefore PubliGroupe's number one strategic priority." Andreas Schmidt replaced Heinz Waegli as the group's Chief Financial Officer as of August 1, following his retirement. Posting of detailed full year results is on April 10. =========================== U N I T E D K I N G D O M =========================== BOOSEY & HAWKES: Sells Instrument Workshops for GBP33.2 Million --------------------------------------------------------------- Struggling classical music icon Boosey & Hawkes sold its instrument workshops and the bass guitar used by Beatle Sir Paul McCartney to private equity firm Rutland Fund Management for GBP33.2 million. The division earned a pre-tax profit of GBP1.6 million, on turnover of GBP71 million in 2001. The assets include a portfolio of brands such as clarinet maker Buffet Crampon and Besson, manufacturer of tubas, trumpets and trombones for Britain's most famous brass bands. The sale concludes a 17th-month takeover transaction that also marks the end of Boosey's 240-year existence as an independent firm, which started in 1760. But even after the sale, the company's debts still stand at GBP19.7 million, and its remaining operations bound to run short of cash not to last another year. That is why the company's management wants to come up with an agreeable offer for its GBP50 million-worth publishing division, whose catalogue includes works by Elgar, Stravinsky, Britten, Bernstein, Rachmaninov and Prokofiev, are believed to include EMI, venture capitalist Hg Capital, and US-based music sales. Boosey, which employs 1,400 people in the UK, Germany, France, the U.S. and India, experienced downturn in 2000 when hundreds of instruments produced by its plant in Edgware, north London were discovered to have defects caused by a new soldering technique. It discovered in the same year a financial gap at a Chicago-based subsidiary. BRITANNIC GROUP: Takeover Discussions With Old Mutual Untrue ------------------------------------------------------------ Reports that Britannic Group is in takeover discussions with Old Mutual Plc are just manipulations, according to a source familiar with the situation. The source denied such talks had taken place, adding the rumor was being circulated by people who want to make quick gains from heavily battered Britannic shares. The statement is in response to a report from the Guardian saying Old Mutual held "detailed" takeover discussion with Britannic, and is reportedly ready to make an offer of 180 p per share, which translates to a GBP350 million value for Britannic. The article alleged that it was Old Mutual who started the discussions following a slump in Britannic's shares last month due to solvency fears in the insurance sector. The company saw several large sells in its shares in January after Goldman Sachs issued negative tunes for the group. Britannic responded to the issue saying it is confident its solvency can be "maintained" even at the back of the stock market slump. Old Mutual also dismissed the report as another piece of speculation. CABLE & WIRELESS: Narrows Search for New CEO to Three Candidates ---------------------------------------------------------------- Cable & Wireless trimmed down its search for a new chief executive to three candidates, all of whom come from senior positions at telecommunications and IT companies across Europe. It is understood that C&W wants someone with knowledge of the telecom or IT industries to complement the restructuring skills of Richard Lapthorne, its executive chairman. The new chief executive, who will replace Graham Wallace, is expected to lead further restructuring of the group's loss-making internet traffic and data. Investors blamed Mr. Wallace for the firm's woes, a result of its strategic shift from its old-reliable telecom business to Internet-related ventures. Last year, the firm cut 3,500 jobs at its money-losing corporate telecoms arm, C&W Global, and soon after announced that its chairman-designate, David Nash, had quit after institutional pressure. CABLE & WIRELESS: Regulators in the Caribbean Ruled Against C&W --------------------------------------------------------------- Local regulators, who settled Cable & Wireless' row over interconnection fees with mobile operators in the Caribbean, recently ruled in favor of the latter. The regulators ordered the British firm to carry its rivals' mobile calls over fixed-line network, allowing Digicel and AT&T Wireless customers to call fixed lines in the easter Caribbean islands for the first time. The region includes the islands of St. Lucia, St. Vincent and Grenada. The decision is expected to diminish C&W's dominance of the mobile market in the area, analysts say. It was known that Irish investor Digicel had all edged that the British company of delaying interconnection agreement. Mr. Lynch said C&W is reluctant to share the market as "70 per cent of the company's profits come from the Caribbean". In a report of the Financial Times in November, the news agency learned that Digicel has accused C&W of not ordering equipment to allow interconnection. C&W Regional, which is composed of traditional phone companies in the Caribbean and Asia, provides the group with steady cash flows to sustain its loss-making C&W Global operation. CONTACT: CABLE & WIRELESS PLC 124 Theobalds Rd. London WC1X 8RX, United Kingdom Phone: +44-20-7315-4000 Fax: +44-20-7315-5000 Homepage: http://www.cwplc.com Contact: Investor Relations Samantha Ashworth Phone: +44 (0)7957 804618 Caroline Stewart Phone: +44(0) 207 315 6225 Virginia Porter (US) Phone: +1 646 735 4211 INVERESK PLC: Reports Progress in Recapitalization, Refinancing --------------------------------------------------------------- External Bank Debt On October 31, 2002 the company sold the business assets of its loss making graphic paper mill at Caldwells, Inverkeithing to Klippan of Sweden. Debts due to the Royal Bank of Scotland plc at that date amounted to a little over GBP21 million. During the three-month period to January 31, 2003 bank debt has reduced to GBP8.9 million. The reasons for the reduction can be summarized as follows:- (i) Klippan paid GBP2 million for inventories, work in progress and raw materials at Caldwells. (ii) The land and buildings at the Westfield site were sold for GBP825,000 less associated costs. (iii) The accounts receivable relating to the Caldwells business but retained in the books of the Company at the transfer date have been collected and the resultant release to cash has reduced bank borrowings by GBP4.7 million. (iv) Strict working capital controls imposed on the Company's businesses, allied to a standstill agreement with the Company's major suppliers during the period of restructuring has assisted the Company to trade forward and to reduce bank debt. (v) The proceeds of the first phase of the recapitalisation exercise amounted to GBP4.2 million before professional costs. Current Trading (i) The Company's activities now comprise the two profitable mills at Carrongrove in Denny, Stirlingshire and St Cuthberts in Wells, Somerset. Both mills are trading according to plan with order books significantly ahead of this time last year. The head office has been closed with costs either decentralised to each of the mills or eliminated. Thanks to the loyalty of the Company's valued customers and the invaluable support of its major suppliers, the integrity of both production and distribution has been maintained throughout this challenging period of restructuring. The short to medium term prospects for both mills remain positive. (ii) Following breaches of the banking covenants with the Royal Bank of Scotland in the summer of 2002, the company has been obliged to embark on a recovery plan as a result of which significant provisions and asset write downs have had to be made in relation to the closure of the Westfield and Kilbagie mills and the sale of the business assets at Caldwells. All provisions will be included in the audited financial report and accounts for the 13 month-period to December 31, 2002. (iii) The actions taken are designed to revitalise the company's balance sheet, improve liquidity, consign the past losses to history and create a platform in 2003 for future growth, tightly controlled by the new management team which has recently been put in place. New Bank Facilities (i) The Company is pleased to announce that it has received confirmation that Credit Committee approval has been received from a major international banking institution to provide both working capital and term loan facilities (8 years) which the Board of Directors considers to be sufficient to allow the company to trade forward and fulfill its obligations to all parties and provide funds for future capital expenditure. These new facilities are subject only to the final stages of due diligence and the successful completion of the second phase of the recapitalization exercise which is scheduled to take place during March 2003 via a placing and open offer of new ordinary shares. As previously stated this issue will be on similar terms to the placing of shares announced in December 2002. (iii) The recapitalisation and refinancing of the Company is expected to be completed during the early part of April 2003, following the issue of a shareholder circular followed by an Extraordinary General Meeting to approve the measures taken. Conversion of Unsecured Loan (i) On January 20, Inveresk announced that it had raised o2.2 million by way of an unsecured loan. The loan was provided by the following individuals: Holder Amount of unsecured loan Klippan AB GBP652,227 Stefan Lersten 641,600 Jan Bernander 706,173 Alan Walker 200,000 2,200,000 (ii) In order to reduce the Group's level of indebtedness, Inveresk announces that it intends to amend the terms of this unsecured loan, in order to allow Klippan AB and Stefan Lersten to convert the loan into new ordinary shares in Inveresk at a price of 10p per share. (iii) It is intended that after the announcement of the company's preliminary results for the year ended 31 December 2002, the loans made by Jan Bernander and Alan Walker will become convertible into new ordinary shares in Inveresk Plc on the same basis. (iv) On the basis that Klippan AB, Stefan Lersten and connected persons are interested in approximately 18% of Inveresk's ordinary share capital, the attachment of conversion rights to the loan is deemed to be a related party transaction under the AIM rules. (v) The Board of Inveresk (excluding Jan Bernander, who is a director of Klippan, and Alan Walker) considers that, having consulted with KBC Peel Hunt Ltd, the terms of the conversion of the unsecured loan into ordinary shares at a price of 10 pence per share is fair and reasonable insofar as its shareholders are concerned. CONTACT: INVERESK PLC Alan Walker, CEO Phone: 020 7240 1234 Mobile: 07710 620260 Jan Bernander, Chairman Mobile: 00 46 708 556 400 PIZZAEXPRESS PLC: Presents Interim Report for 2002 -------------------------------------------------- Key Points Group turnover up 8% to EUR112.0m Profit before tax excluding exceptional costs down 18% to EUR17.8m Basic earnings per share 16.6p Dividend increased by 20% to 3.0p per share U.K. & Ireland pizza restaurant like for like sales -4.8% (2001: 3.0%) Larger pizza introduced with increased menu choice in December Management changes leading to increasing focus on quality and service Refurbishment programme underway An analyst presentation will be held February 11 at 9.30am at Citigate Dewe Rogerson, 26 Finsbury Square, London EC2. A copy of this presentation will be available today on the Company's website www.pizzaexpress.com. INTERIM STATEMENT For the six months ended 31st December 2002 Results The six months to 31st December 2002 saw continued disappointing trading in our core PizzaExpress restaurants especially in central London and within the M25, and this is reflected in these results. Group turnover rose 7.9% to EUR112.0m (2001: EUR103.8m). Group operating margin fell to 15.6% (2001:20.8%), mainly due to like-for-like sales declines in our core U.K. and Ireland pizza restaurants. Profit before taxation excluding exceptional items fell 18.3% to o17.8m (2001: EUR21.8m). Basic earnings per share decreased by 19.4% to 16.6p (2001: 20.6p). Our interim dividend is increased by 20% to 3p per share (2001: 2.5p). U.K. and Ireland Pizza restaurants Trading conditions remained difficult during the period and competition remains fierce, particularly from the pub sector. Total sales were up 4% at EUR100.2m, with an average spend per head of o12.30. PizzaExpress restaurants like-for-like sales declined from -4.4% in the first quarter to -5.1% in the second quarter, making a cumulative half year total of -4.8%. Within the M25 like-for-like sales fell by 10%, whilst outside the region sales were flat. As a consequence, operating profits fell to EUR17.1m (2001:EUR21.5m). As at 31st December there were 311 PizzaExpress restaurants operating in the U.K. and Ireland. We opened 11 new restaurants during the period, the majority being outside the M25. As trading conditions continue to be tough, our site selection criteria remain stringent. The projected new opening number for the full year is 19 restaurants. After 37 years, in December 2002, we took the historic step of increasing our pizza size. This was in response to extensive customer research and trialling in both the U.K. and Eire. A new menu was also launched in December. Initial reaction to these moves has been encouraging, and further development of our menu will follow in the spring. The refurbishment programme announced at the end of last year has now commenced. 13 restaurants have now benefited from re- investment, at a cost of o1m. A further 12 are under way, with a large portion of the estate benefiting from investment before the year-end. Total anticipated spend in this financial year is o11m. The initial phase of refurbishment of our prestige Kettners restaurant in Soho has now been concluded and its sales performance up to Christmas was very encouraging. A second stand-alone To Go unit was opened at London's Victoria station, and we continue to monitor this concept carefully. U.K. and Ireland Pasta restaurants Total sales from the pasta division were up 81% at EUR6.7m, with operating profits of EUR0.2m (2001:EUR0.1m). CafAc Pasta continues to show an encouraging performance with like for like sales increases of +8.5% in the first quarter and +2.4% in the second quarter, making a cumulative half year total of +5.2%. The average spend per head in these restaurants was EUR14.30. Although we have been happy for some time with the broader menu, restaurant design and general operation of CafAc Pasta, we felt the name did not truly reflect our offer and style. Our two new openings during this period (in Clapham and York) therefore opened under a new name - Marzano. Both have proved successful. Consequently we have now extended this branding to include the newly refurbished CafAc Pasta restaurant in Wimbledon Village and three other CafAc Pasta sites. The Gourmet brand has been enhanced with both menu and restaurant design development and we continue to be pleased with levels of sales and profits. Our first new opening was at the beginning of February in Winchester. Retail Our retail pizza products are now being distributed through 320 Sainsbury's and 134 Waitrose stores, as well as 7 in Hong Kong; sales continue to perform satisfactorily, up 37% to EUR2.6m in the half year, with over 140,000 units being sold each week. Operating profits were EUR1.4m (2001: EUR1.0m). International Our international ventures continue to develop at a steady pace, with turnover up 11% to EUR2.1m. Net operating losses were EUR0.4m (2001:EUR0.5m loss). We are rationalising our international expansion and consolidating in significant European markets in which we feel confident. In the half year a Company- owned restaurant opened in Toulouse. All our owned and franchised operations are trading to expectations. Financing Group cash outflow before financing for the six months to 31st December 2002 was EUR2.8m (2001: inflow EUR5.4m). Loan notes repayable fell from EUR2.8m to EUR2.6m. Consequently cash at bank and in hand declined from EUR20.8m to EUR17.8m. Net interest receivable for the period was EUR0.3m (2001: EUR0.4m). Board Change In October 2002 David Sykes was appointed Managing Director of U.K. restaurants. He has 12 years' experience within the Company, in that time successfully filling several roles, including restaurant operations for CafAc Pasta and Ireland, and property. David's focus reflects our priority to improve performance throughout PizzaExpress, concentrating on our core values of service and quality. In October 2002 James Parsons left his position of U.K. PizzaExpress Managing Director and he subsequently resigned from the Board in December 2002. Bid Approaches As announced in December 2002, the Board has received approaches which may or may not lead to an offer being made for the Company. The three independent non-executive directors have formed a committee which, together with the Company's professional advisors, is managing the bid process with all interested parties. This process is well advanced and we hope to be in a position to communicate with shareholders in the near future. Exceptional Costs Costs of o0.6m payable in relation to professional fees incurred in responding to potential bids have been charged to the profit and loss account as at 31st December 2002. Further significant costs may be incurred in the period to 30th June 2003. The exact amount of such costs will depend on whether a transaction is completed. Current trading and prospects Since the half year, trading conditions and like-for-like sales have not improved in the core U.K. pizza operation. Immediate prospects remain uncertain. Intense price competition, coupled with well-documented economic and political factors, continue to delay improvements in performance, but we believe the many initiatives we have taken will aid recovery as market conditions improve. A copy of the financial statements included in this report can be viewed at this URL: http://bankrupt.com/misc/PizzaExpress.htm CONTACT: PIZZAEXPRESS PLC 1 Union Business Park Florence Way Uxbridge UB8 2LS Contacts: Nigel Colne, Chairman David Page, Chief Executive Paul Campbell, Group Finance Director Phone: 01895 618618 Sue Pemberton, Citigate Dewe Rogerson Phone: 020 7638 9571 ROYAL MAIL: Disagrees With Regulator Over Access Price to Letter ---------------------------------------------------------------- Royal Mail chairman Allan Leighton considers the plan of Postcomm to grant rival mail firms access to Royal Mail services at 14p a letter dangerous to the mail service. Mr. Leighton, who is asking for an access price on the final delivery stage of its network of 21p per item, considers the 14p price "ruinous," according to the Telegraph. He discovered the figure in a draft copy of Postcomm's recent price-control report. "With stamp prices at 27p at the moment we still lose a boatload. The access price has the biggest implication on the finances of our mail business." Mr Leighton said. He was also saying that the price "should not be part of the price-control report." But a Postcomm spokesman denied any existing decision about the final price, saying the figure was the middle range of prices, whose effect they view as "cost-neutral." According to the report, Royal Mail has 28 days to agree to the price-control document, which came out last Wednesday, otherwise it would have to lodge and appeal to the Competition Commission. Royal Mail is losing more than GBP1 million a day. It warned Postcomm in December that it faces huge extra costs including a pension fund payment, a GBP120 million bill to cover increases in National Insurance contributions and GBP280 million in potential increases in interest payments on Government loans. In a previous TCR-EU report, it is said that the chairman believes the heavy hand of the regulator is threatening his three-year revival plan for the struggling company. CONTACT: ROYAL MAIL GROUP PLC 148 Old St. London EC1V 9HQ, United Kingdom Phone: +44-20-7250-2888 Fax: +44-20-7250-2244 Homepage: http://www.royalmailgroup.com Contacts: Neville Bain, Chairman John Roberts, Chief Executive and Director TELEWEST COMMUNICATIONS: Director Expects Recovery by 4Q -------------------------------------------------------- The managing director of Telewest Communications Plc, Charles Burdick, is expecting the company to be cash-flow-positive by the ourth quarter after the firm's control is turned over to creditors. Mr. Burdick also hopes the cable operator will finally merge with U.K.'s largest cable operator NTL Inc., which recently emerged from bankruptcy protection. Both parties previously considered the possibility of a merger. But huge debt burdens of both deterred any merger initiative. So now that NTL had already reduced its debt significantly, and Telewest is also in line to do so, a merger at some point seems likely according to Dow Jones. It is understood that the transaction would have no great regulatory impediments since there is no known overlap in their operations. Mr. Burdick, who was appointed managing director last year, hopes that the company's debt restructuring will be completed in the second quarter, so that by then it will be free to focus on performance and on merging with NTL. NTL declined to comment, however. Both Telewest and NTL fell victim to an overstretched balance sheet after consolidating the fragmented U.K. cable industry. The constraint forced Telewest to swap more than half of its GBP5.3 billion debt for equity. CONTACT: TELEWEST COMMUNICATIONS PLC Genesis Business Park, Albert Drive Woking, Surrey GU21 5RW, United Kingdom Phone: +44-1483-750-900 Fax: +44-1483-750-901 Homepage: http://www.telewest.co.uk Contacts: Anthony W. P. (Cob) Stenham, Chairman Charles J. Burdick, Managing Director Phone: 020 7299 5000 Mark Luiz, Chief Operating Officer Richard Williams, Head Of Investor Relations Phone: 020 7299 5479 NTL INCORPORATED In the US: Analysts, Debt and Equity Holders: Bret Richter or Tamar Gerber Phone: 212/906-8440 E-mail: investor--relations@ntli.com Or NTL Incorporated In the UK: Analysts, Debt and Equity Holders: Virginia Ramsden Phone: +44 (0)20 7746 6826 E-mail: investorrelations@ntl.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. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *