/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030219.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, February 19, 2003, Vol. 4, No. 35 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Court Allows Committee to Propose a Plan * F I N L A N D * BENEFON OYJ: Says Financing Negotiations Taking Shape * F R A N C E * AIR LIB: French Court Orders Airline's Liquidation METALEUROP SA: Faces Judicial Inquiry Over Alleged Fraud VIVENDI UNIVERSAL: Might Replace Diller to Pave Way for VUE Sale VIVENDI UNIVERSAL: Polsat to Pick up Talks on Buying Polish Asset * G E R M A N Y * COMMERZBANK AG: Asset Management Operation Not for Sale MOBILCOM AG: Agrees to Sell Fixed Line Business to Freenet MOBILCOM AG: Founder's Insolvency Has No Impact on Company * G R E E C E * OLYMPIC AIRWAYS: Greece Denies Illegal State Aid for Airline * I T A L Y * FIAT SPA: Puts Profitable Division in Auction Block FIAT SPA: Aerospace Groups Confirms Interest in Aviation Unit FIAT SPA: To Push With Planned Capitalization for Unit * N E T H E R L A N D S * UNITED PAN-EUROPE: Declines to Reveal Result of Creditor's Vote * N O R W A Y * PETROLEUM GEO-SERVICES: Pays Bond Interest Within Grace Period * P O L A N D * DAEWOO-FSO: MG Rover's Unexpected Move Breaks Negotiations * R O M A N I A * TRANSELECTRICA SA: Long-term Senior Implied Rating Assigned * R U S S I A * SBS AGRO: Declared Bankrupt * S W E D E N * ABB LTD.: U.S. Subsidiary Files for Pre-Packaged Chapter 11 LM ERICSSON: Moody's Downgrades Long-term Debt Ratings * U N I T E D K I N G D O M * BRITISH ENERGY: Chairman Under Pressure to Clean up Board BRITISH ENERGY: Agrees With Creditors on Formal Standstill CABLE & WIRELESS: Files Interconnection Complaint Against PLDT MYTRAVEL GROUP: Notice of Annual General Meeting to Be Posted NEW MEDIA: Doubles Half-Year Losses, Enters Talks Over Tullet SILENTNIGHT HOLDINGS: Has Support of New Majority Shareholder TXU EUROPE: Small Investors to Lose Millions of Pounds ============= B E L G I U M ============= LERNOUT & HAUSPIE: Court Allows Committee to Propose a Plan ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approves the Official Committee of Unsecured Creditor's Motion and modifies the exclusivity periods, on a limited basis, solely to allow the Committee to propose its own plan of liquidation for Lernout & Hauspie Speech Products N.V. Judge Wizmur does not impose any deadlines for the Committee to file its competing plan. As previously reported, the Official Committee of Unsecured Creditors asked Judge Wizmur to modify Lernout & Hauspie Speech Products N.V.'s exclusive periods to allow the Committee to propose a plan of liquidation because: (1) the case is over two years old; (2) the Committee believes that the plan of liquidation currently on file is not confirmable; and (3) the Committee believes that it could be in a position to file its own plan shortly. (L&H/Dictaphone Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) ============= F I N L A N D ============= BENEFON OYJ: Says Financing Negotiations Taking Shape ----------------------------------------------------- With reference to the bulletin released on February 14, 2003, regarding the financing negotiations, the Board of Directors, based on the conducted negotiations, is now about to end up to a directed book-building equity issue with a share price of 0.34 euros per share. The minimum target of the issue is to raise 10 Meuros with the nominal target of 20 Meuros, in addition to the needed bridge financing. The company has offered its creditors an opportunity to participate the issue so that the subscription commitments may also be paid in set-off. The company has already received substantial amount of subscription commitments by international investors byt also by creditors. Because all of the indicated subscription commitments have not yet arrived and in some of the received commitments there are details needing clarifications and not all details of the bridge financing are yet final, the company Board has in its meeting of today resolved to continue the handling of the matter in a meeting to be held, as latest, on February 25, 2003, by which time all the details of the directed equity issue together with the bridge financing should be clarified so that the Board can resolve about acceptance of the received subscription commitments and about calling up an extraordinary shareholderrs' meeting to resolve about approval of the issue. The company will report about the proceedings without delay. =========== F R A N C E =========== AIR LIB: French Court Orders Airline's Liquidation -------------------------------------------------- Air Lib's battle to stay afloat finally ended when a French commercial court ordered the liquidation of the number two French airline. The carrier filed for bankruptcy after being grounded for failure to renew its operating license. Air Lib's struggle to stay afloat since it was created in 2001 from the French operations of collapsed Swissair was dealt a serious blow when the French government decided to stop providing subsidy to the airline, and demanded the payment of EUR100 in loans. The government also demanded the commitment of an investor as a condition in renewing the airline's license. Air Lib held negotiations with Dutch group IMCA in a bid to come up with the government's terms, but talks fell after the latter failed to gain a discount for the 29 Airbus A319 planes it is negotiating to acquire from the European consortium Airbus. IMCA needed the planes to push with its plans of renewing Air Lib's fleet if it took over the airline. The carrier's collapse is expected to affect some 3,200 jobs. Air Lib has flight to Algeria, Cuba, French Antilles, among a number of European and French destinations. It has 44,000 annual landing slots at Paris's Orly airport. 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 Home Page: http://www.air-liberte.fr/ METALEUROP SA: Faces Judicial Inquiry Over Alleged Fraud -------------------------------------------------------- The French ministry has launched a judicial inquiry against French non-ferrous metal processing group Metaleurop SA for suspected fraudulent dealing with company assets. French justice minister Dominique Perben said the investigation would probe whether there was possible abuse of company property within the European metals group. Last month, the Paris public prosecutor introduced preliminary investigations on Metaleurop SA's responsibility for the problems encountered by its French subsidiary, Metaleurop Nord. The probe was launched after accounting authorities indicated that assets sold off by the company might have been underpriced. The first investigation was handed over to the French fraud squad, Brigade Financiere, on the recommendation of Metaleurop's auditors. Metaleurop Nord's factory in Noyelles-Godault, a subsidiary of the company, in northern France was placed in receivership at the end of January. Thousands of people in Noyelles-Godault launched demonstration of protest over the closure of the Metaleurop Nord lead and zinc factory. A number of politicians reportedly took part in the demonstration, which was organized by local authorities. 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: Might Replace Diller to Pave Way for VUE Sale ---------------------------------------------------------------- There are efforts to replace Vivendi Universal Entertainment chairman and CEO, Barry Diller, by selling the business, and Mr. Diller himself is also said to be aware of the fact, the Daily Deal says. His role in VUE and USA Interactive Inc., a possible buyer of the asset he runs, is a source of concern for Vivendi's French bankers, according to a source. The report says Mr. Diller is also aware of Vivendi's determination to sell the asset. He declined to comment, though, on the potential conflict of interests. One source called the move "a very tall order" considering Mr. Diller's significant role in Vivendi's entertainment asset that he heads together with Vivendi Universal's chief Jean-Rene Fourtou. His influence in the affairs of the entertainment assets is reportedly so much greater than that of Fourtou that it scarcely matters he is part time chairman and CEO of USA Interactive Inc. Mr. Diller is also responsible of non-VUE units Vivendi Games and Universal Music Group, which combine with VUE as Universal Entertainment for corporate purposes. According to the report, Mel Karmazin, president and COO of Viacom Inc., and Chase Carey, who resigned last year as News Corp.'s co-COO has been considered, both without promise of success. Former superagent Michael Ovitz has also been interviewed with less enthusiasm. VIVENDI UNIVERSAL: Polsat to Pick up Talks on Buying Polish Asset ----------------------------------------------------------------- Private TV company Polsat will go ahead with its plan to buy the holdings of French conglomerate Vivendi on the Polish telecom Elektrim Telekomunikacja. The parties held talks last week but failed to reach an agreement. The Polish broadcaster last month signed a letter of intent with Vivendi to buy 49% of Elektrim Telekomunikacja. But analysts are in doubt whether Polsat has the resources needed to acquire the asset estimated to be worth EUR2 billion, says Warsaw Business Journal. ETG groups together fixed, mobile, and cable television operators. It holds mobile market leader Polska Telefonia Cyfrowa, the largest mobile operator in Eastern Europe, and CATV provider Aster City Cable. The group is currently struggling for survival amid financial and ownership upheaval at its parent companies, Elektrim and Vivendi Universal. The French parent is divesting assets to pay down EUR19 billion of debts acquired during ex-CEO Jean-Marie Messier's US$77 billion acquisition spree. CONTACT: VIVENDI UNIVERSAL Inverstor Relations Paris Daniel Scolan Phone: +33 (1).71.71.3291 Laurence Daniel Phone: +33 (1).71.71.1233 ============= G E R M A N Y ============= COMMERZBANK AG: Asset Management Operation Not for Sale ------------------------------------------------------- Commerbank asset management director, Friedrich Schmitz said that while its Cominvest asset management unit is no longer a core business, the business is not up for sale. Mr. Schmitz told Boersen-Zeitung the bank would only consider selling the asset if it will not achieve a 10-15% return on equity before goodwill amortization. A spokesman from the bank declined to comment on what Cominvest's current return on equity is, or when it would be expected to reach the 10-15%. According to Handelsblatt, executives at HVB Group AG and Commerzbank are in favor of merging the unit with the former's asset management unit, Activest, although plans for such move are not yet in place. Experts are reportedly affirming the idea. Commerbank, which recently recorded a pre-tax loss of EUR372 million in its results for financial year 2002, is undertaking a restructuring aimed at achieving break-even for 2003. It is planning to divest non-core industrial and financial holdings to finance possible acquisitions, to save equity and to concentrate on core activities. 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 MOBILCOM AG: Agrees to Sell Fixed Line Business to Freenet ---------------------------------------------------------- MobilCom AG on Monday signed a preliminary contract to sell its fixed line business, including customers and infrastructure, for EUR 35 million to freenet.de AG. MobilCom has a 76% holding in freenet.de. The main reason for the sale is the exploitation of synergies between fixed line and Internet business. Improved integration of these two fields will increase efficiency and thus reduce costs. In addition, infrastructure investments planned by freneet.de mean guaranteed competitiveness in the long term. With this sale, MobilCom increases the value of its freenet.de holding at the same time as putting itself in a position to reduce its current debts sooner than planned if necessary. The sale price will be paid in four instalments, two of EUR7.5 million and two of EUR 10 million, during this and next year. The contract has yet to be approved by the supervisory board, the warrantors and the lending banks. MOBILCOM AG: Founder's Insolvency Has No Impact on Company ---------------------------------------------------------- The insolvency of Gerhard Schmid, which was announced Monday, has no impact on the activities and legal agreements of MobilCom AG. The validity of both the agreement with France Telecom (MC Settlement Agreement) and the trust agreement remain unchanged. Professor Dr. Helmut Thoma remains the legal owner of the MobilCom shares previously owned by Gerhard Schmid and Millenium GmbH. MobilCom AG views the current developments as an opportunity to continue to drive forward the company's positive development and re-establish it as a healthy, competitive enterprise. In light of the insolvency MobilCom will be examining any claims the com pany may have against Gerhard Schmid and will be registering these with the receiver as appropriate. =========== G R E E C E =========== OLYMPIC AIRWAYS: Greece Denies Illegal State Aid for Airline ------------------------------------------------------------ The Greek government denied that the country's national carrier Olympic Airways benefited from illegal state aid, the Transport Ministry said. Greece insisted on the claim in its response to the commission's order that the carrier repay EUR194 million. "It does not seem as though there has been any illegal state aid," the statement said. As such the government does not see how "any measure can be taken by the state to claim back any sum from OA." Olympic Airways plans to appeal the ruling at both Greek and European tribunals, AFX said citing the ministry. The Hellenic Air Carrier Association submitted in October 2000 and July 2001 complaints to the European Commission against the Hellenic Republic and Olympic Airways. The complaint stated that the Hellenic Republic continued to grant Olympic Airways unlawful state aid. The Minister of Transport and Communications, Mr. Christos Verelis, said in a statement in December "there were attempts to ensure that Olympic Airways repay the entire amount of aid granted to it since 1994." "In the end, the decision seeks to recover EUR41,000,000, representing the last installment of aid granted to Olympic Airways in 1998." ========= I T A L Y ========= FIAT SPA: Puts Profitable Division in Auction Block --------------------------------------------------- The profitable unit of industrial group Fiat SpA, Toro, is being sold for up to EUR2.5 billion (GBP1.67 billion), according to Times Online. Proceeds of the sale are understood to help the troubled industrial group shore up Fiat's diminishing finances. Toro Chairman Gabriele Galateri, earlier, confirmed the possibility of the sell-off after Fiat made no mention of it when after a meeting with banks it disclosed that asset sales were going ahead as planned. Fiat is currently working on its planned EUR2.5 billion capital increase aimed at reviving its loss-making unit, Fiat Auto. But with markets still depressed, investors deemed it necessary for the group to show it is doing its part, including sellng some of its treasured operations. 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. 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 SPA: Aerospace Groups Confirms Interest in Aviation Unit ------------------------------------------------------------- Two aerospace groups confirmed they are interested in acquiring Fiat Avio, Fiat SpA's aviation unit, which is not officially on the industrial group's auction block. According to the Daily Deal, co-chief executive Pierfrancesco Guarguaglini of Italian state-controlled defense and aerospace group Finmeccanica SpA said his company is considering the possibility of investing in the unit, but it has not yet held talks with the Italian group. Jean-Paul Bechat, chairman and CEO of French aerospace group Snecma, also expressed his interest in Fiat Avio, but mentioned the Italian's government's preference for a local partner as a concern. A sale of the unit, which analysts valued at between EUR1.5 billion and EUR2 billion, is expected to help Fiat raise the EUR5 billion it needs to re-capitalize its loss-making unit, Fiat Auto. Fiat Avio's other potential buyers include the US carlyle Group, Rolls-Royce PLC, Pratt & Whitney, and General Electric Co, who is closely monitoring the situation since it already has industrial links with the aerospace company. A Fiat spokesman declined to comment on the report, according to the Daily Deal. 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 CONTACT: FINMECCANICA SPA 4, Piazzi Monte Grappa 00195 Rome, Italy Phone: +39-06-324731 Fax: +39-06-3208621 Homepage: http://www.finmeccanica.it Contacts: Pier F. Guarguaglini, Chairman Roberto Testore, Managing Director SNECMA 2, bd du General Martial-Valin 75015 Paris, France Phone: +(33) 1 40 60 80 80 Fax: =(33) 1 40 60 81 02 Home Page: http://www.snecma.com FIAT SPA: To Push With Planned Capitalization for Unit ------------------------------------------------------ Fiat reaffirmed its commitment to inject about EUR5 billion (US$5.4 billion) into Fiat Auto to appease worries about the group's current plans for the troubled unit. Umberto Agnelli, younger brother of Fiat's late honorary chairman Giovanni Agnelli, and the company's executives said they will pursue the plan outlined in January. According to people familiar with the talks, Fiat plans raise EUR2 billion through a rights issue and an additional EUR3 billion from the sale of Fiat Avio, an aeronautics company, and Toro, an insurer. The offering could tender new shares at a 30-35% discount to current prices, sources told the Financial Times. According to the report, the success of the rights issue and of negotiations with GM will hinge partly on whether Fiat Auto's year-old industrial plan begins to bear fruit in coming months. The source, however, cautioned that the details of the plan are still to be worked out. Under this, Fiat Auto could still be sold later in the year. The Agnellis and Fiat executives indicated to pursue the plan wiith or without the support of Fiat Auto's 20% stakeholder, General Motors. General Motors has the right to acquire 80% of the loss-making unit between January 2004 and 2009 under a put option. Fiat and GM had discussed for the past six months the possibility of making changes to the agreement. The Italian government is moving to retain Fiat Auto under Italian management, while GM is believed to be exhausting means to spend as little amount in the Italian group. Negotiators also believed Fiat could exchange the put option for cash, or delay the first exercise date of the put for several years in exchange for a smaller amount of cash. 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 ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: Declines to Reveal Result of Creditor's Vote --------------------------------------------------------------- Cable television operator UPC refused to reveal the result of a creditors' vote on the group's plan to emerge from Chapter 11 bankruptcy protection ahead of a Thursday court hearing in the United States. "The company is following a set of court guidelines," a UPC spokesman told Reuters. UPC declared Chapter 11 bankruptcy in the United States and received creditor protection in Netherlands as part of a restructuring process that should erase two-thirds of the group's EUR10.4 billion debt burden. After the restructuring, Liberty Media is expected to increase its control over UPC, by virtue of its significant holding in the Dutch group via its unit UnitedGlobalCom. The restructuring plan is expected to gain overwhelming majority support with Liberty Media's backing and preliminary approval from other key creditors. UPC plans to de-list its shares from the Euronext Amsterdam Exchange after the restructuring expected at the end of March. By then, its assets and management would already be under a new company named New UPC. UPC shareholders are scheduled to vote on the plan, which would convert their severely diluted stakes into New UPC shares, on Thursday. The scheduled voting on the plan, which would convert shareholders' severely diluted stakes into New UPC shares on Thursday, is a key event in the company's emergence from bankruptcy and creditor protection on March 3 and March 24, respectively. UPC will be granted to come out of the filings clean if the plan is passed and no objections are raised in the U.S. and Dutch courts. =========== N O R W A Y =========== PETROLEUM GEO-SERVICES: Pays Bond Interest Within Grace Period -------------------------------------------------------------- Petroleum Geo-Services ASA (NYSE:PGO) (Oslo:PGS) has paid interest on its 8.15% Senior Notes due 2029. The Company previously announced on January 14, 2003, that it would use the 30 day grace period for payment of interest due January 15, 2003, on these notes. Under the terms of the notes, no default has occurred as the interest payment was made within 30 days of the due date. As reported in Troubled Company Reporter's February 5, 2003 edition, Fitch Ratings affirmed Petroleum Geo-Services ASA senior unsecured debt rating at 'C'. The ratings remain on Rating Watch Negative. This affirmation follows the payment by PGO of interest related to PGO's 6-5/8% senior notes due 2008 and its 7-1/8% senior notes due 2028. PGO finds itself in the same situation it was in last month as it has utilized a 30-day grace period to make an $8.2 million interest payment on its 8.15% senior notes due 2029. This grace period expires Feb. 15, 2003. =========== P O L A N D =========== DAEWOO-FSO: MG Rover's Unexpected Move Breaks Negotiations ---------------------------------------------------------- British carmaker MG Rover changed the terms under which it would start its investment in bankrupt plant Daewoo-FSO, breaking down talks between creditors of the Polish carmaker and MG. In an unexpected move, MG demanded that the Polish side shoulder the whole financial burden with a special guarantee given to the British, letting them escape the risks associated in the deal. This took the Polish side by surprise as earlier talks were going very well. Although renewed negotiations saw the two sides declare their readiness to reach a binding decision before the end of February, Daewoo creditors said the talks will only be resumed once MG return to its previous, more favorable offer. In October, shareholders of Daewoo-FSO Motor Polska filed a motion to create a new company out of the troubled carmaker. The deal could result to MG Rover taking 25% in the new company, as well as Poland's Treasury and Daewoo-FSO's creditors taking shares in exchange for debt. The Treasury holds 9.2% stake in the factory, according to a previous article of the TCR-EU. CONTACT: DAEWOO-FSO MOTOR CORPORATION Ul. Jagielloivska 88 03-215 Warszawa Phone: +48-22-676-3955 Fax: +4822-676-1501 Homepage: http://www.daewoo.com.pl ============= R O M A N I A ============= TRANSELECTRICA SA: Long-term Senior Implied Rating Assigned ----------------------------------------------------------- Moody's Investors Service assigned a B2 long-term senior implied rating with stable outlook to Transelectrica SA to reflect both the company's strategic role in the country, and its limited financial and operating track record. Transelectrica SA is the transmission, system and market operator within the Romanian electricity system. The rating agency warns that given its integral role in the sector in Romania, it will also be affected by general developments in the country's economy. It explains that although the state promised a strong support for the company, this does not mean a full payment guarantee, and so Moody's did not assign a rating at the same level as that of the state. Transelectrica plans to issue a Eurobond in 2003 in order to implement the upgrading the transmission network. Its motion to enter the Union for the Coordination of Transmission of Electricity in 2003 should in time allow it to play a broader role in the Balkans area, Moody's says. The rating agency also noted that the company's audited accounts, which consist only of reports since its formation from August 2000 until 2001, showed that it was not in full compliance with a number of financial covenants in loan agreements as of end of December 2001. Moody's says, though, that it understands these terms are currently being met. Moody's also noted that Transelectrica is dependent on related parties meeting their obligations to the company. Its assets are in public domain. Due to the short track record of the company and the ownership structure of its assets, Moody's says it is difficult to conclude a full analysis of the company's stand-alone strength. The B1 ratings also considered execution risks in relation to Transelectrica's investment and modernization program that is foreseen to increase significantly the company's debt levels. Moody's also noted that while the regulatory environment is benign, it is comparatively new and untested. Transelectrica was formed in August 2000 from Conel, the former state-owned vertically integrated utility. =========== R U S S I A =========== SBS AGRO: Declared Bankrupt --------------------------- SBS-Agro Bank, one of Russia's largest banks, which collapsed during the 1998 economic crisis, was officially declared bankrupt on Monday, leaving individual depositors in the dark as to whether they would be able to recover their savings. SBS-Agro, owned by former oligarch Alexander Smolensky before the crisis of 1998, was one of the largest multi-divisional and socially significant banks in Russia. In terms of the value of assets SBS-AGRO Bank was ranked second in Russia, besides, its position as one of the top 1000 banks of the world. It reportedly atrophied along with many others when the government defaulted on loans and sharply devalued the national currency in August 1998. Efforts from the Central Bank to sanction emergency stabilization loans to SBS-Agro and several other commercial banks unfortunately failed. The petition to declare the bank insolvent was filed on January 17, 2003 by the Agency for Restructuring Credit Organizations to the Moscow Arbitration Court. It is known that SBS-Agro owes some USD14.68 million to private accountholders, assets of ESD9.31 million and creditors' claims of USD1.47 billion. CONTACT: SBS-AGRO BANK 59A, Stroyeniye 1 Aviamotornaya Str. 111024 Moscow Phone: (095) 745-52-44 =========== S W E D E N =========== ABB LTD.: U.S. Subsidiary Files for Pre-Packaged Chapter 11 ----------------------------------------------------------- ABB Ltd. said Monday that its U.S. subsidiary Combustion Engineering, Inc. (CE) has filed for Chapter 11 in the Delaware bankruptcy court, based upon CE's previously announced pre - packaged plan of reorganization. The pre-packaged plan was earlier negotiated with certain asbestos claimants' lawyers and approved by David Austern, the proposed representative for future claimants. The voting period for the plan commenced in January and is currently scheduled to end on February 19, 2003. As of Saturday, February 15, approximately 103,000 favorable votes had been received, together with less than 1,000 votes cast against the plan. CE decided to file the Chapter 11 case prior to February 19 in order to foreclose any possible last minute effort by objecting claimants to file an involuntary bankruptcy and thereby interrupt the voting process. CE intends to seek immediate confirmation from the bankruptcy court that voting will continue to completion on February 19, as originally scheduled. CE is encouraged by the magnitude and favorable outcome of the vote to date. CE will seek prompt confirmation of the proposed pre-packaged plan. The terms of the proposed pre-packaged plan remain unchanged. ABB (http://www.abb.com)is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in more than 100 countries and employs about 146,000 people. ***** In January, ABB said the company had set aside US$1.2 billion to settle the claims, with most ofthe funds to be raised through the liquidation of the remaining assets of CE, which were valued at US4812 million at the end of September. The remainder of the sum will come via cash payments from the parent of up to US$350 million and ABB stock worth US$50 million. CONTACT: ABB LTD. Investor Relations Switzerland Phone: +41 43 317 3804 Sweden Phone: +46 21 325 719 USA Phone: + 1 203 750 7743 LM ERICSSON: Moody's Downgrades Long-term Debt Ratings ------------------------------------------------------ Moody's Investors Service downgraded to B1 from Ba2 the long-term debt ratings of Telefonaktiebolaget LM Ericsson. The rating agency, at the same time, downgraded to B1 from Ba2 the ratings on: - Telefonaktiebolaget LM Ericsson: Euro Medium-Term Notes, the US$600 million revolving credit, the issuer rating, and the senior implied rating. It confirmed, meanwhile, the following Not-Prime ratings: - Ericsson Treasury Services AB: guaranteed US and Euro commercial paper. - Ericsson Treasury Services U.S. Inc.: guaranteed US commercial paper. According to Moody's, the action reflects "the severe contraction in Ericsson's revenue flow during the fourth quarter with no material indications of a near-term stabilization." It also shows the resulting large cash burn during 2000 that is expected to increase once cash releases from working capital are exhausted. Basing on the company's cash consumption rate from operations and financial obligations, the rating agency says Ericsson's free liquidity to last well beyond calendar year 2002. At fiscal year end 2002, Ericsson had cash and marketable securities of SEK 66 billion (EUR 7.15 billion) and net cash of SEK 5.6 billion (EUR600 million) after deduction of financial debt and pension obligations. Lastly, it reflects the need for additional downsizing should the current rate of business decline of above 30% extend well into 2003. Moody's says stabilization may not yet come before the next year, and this could cause high net cash burn from operations, restructuring and repayment of maturing debts. The ratings are assigned a negative outlook to show little indications of the telecom operator spending and the possibility for a persistent high rate of decline for the company's revenues. As for its mobile phone joint venture, SonyEricsson, Moody's says the business is well capitalized today, though it faces challenges in achieving cash flow break-even. The venture has required fresh cash injection of EUR150 million. The rating downgrades are based primarily on the agency's review of Ericsson's public fourth quarter earnings release, concludes the review started in February 2003. =========================== U N I T E D K I N G D O M =========================== BRITISH ENERGY: Chairman Under Pressure to Clean up Board --------------------------------------------------------- Investors and unions are pressuring British Energy chairman Adrian Montague to clean up the company's board to free it from directors belonging to the previous administration. According to the Observer, the call is reflected in Whitehall, where officials indicate they consider changes likely, though they still leave the matter to the newly appointed chairman to decide. The campaign is directed to executives who served under the term of former chairmen Robin Jeffrey and Peter Hollins: finance director Keith Lough; David Gilchrist, managing director of BE generation; and Robert Armour, director of corporate affairs and company secretary. Mr. Jeffrey was attacked for his role in the events that rendered British Energy needing government help. The British government provided the group with GBP650 million emergency loan to sustain operations while it negotiates with lenders and shareholders about a restructuring. On Monday, the nuclear generator said the government is willing to extend the company's credit facility at a reduced level for a period after March 9. CONTACT: BRITISH ENERGY PLC 3 Redwood Crescent, Peel Park East Kilbride, Strathclyde G74 5PR, United Kingdom Phone: +44-135-526-2000 Fax: +44-135-556-5656 Home Page: http://www.british-energy.com Contact: Paul Heward, Investor Relations Phone: 01355 262201 BRITISH ENERGY: Agrees With Creditors on Formal Standstill ---------------------------------------------------------- Announcement of agreement on formal standstill and heads of terms with certain creditors The Board of British Energy announces that it has agreed with certain of its creditors formal standstill agreements and that it has also reached non-binding agreement in principle regarding the recognition, compromise and allocation of certain claims under the terms of the restructuring proposals announced on November 28, 2002. Progress on restructuring: - Formal standstill agreements reached, subject to various conditions, with Significant Creditors and BNFL - Significant Creditors have agreed in principle the amount of each of their claims solely for the purpose of the restructuring. New bonds and new equity will be allocated on the basis of these amounts - Secured loan from HMG to be repaid from the proceeds of the disposal of Bruce Power and stoodstill amounts. HMG likely to extend facility, subject to certain conditions, after 9 March 2003 for limited working capital and collateral purposes - Eggborough Banks to enter into new Capacity and Tolling Agreement. Payments will be made as if they had been issued with EUR150 million of new bonds - Issue of new bonds to be reduced from, previously announced EUR700 million, by EUR150 million to EUR550 million as a result of the CTA - Proposals to issue warrants to existing shareholders are under consideration. However, the return, if any, to existing shareholders will represent a very significant dilution. Adrian Montague, Chairman of British Energy, said: "Today is a significant milestone in the restructuring of British Energy but is just one step along a road which may take another eighteen months. The Government, creditors and shareholders have shown a tremendous determination to secure British Energy's future and long-term viability. For our part, we will continue to focus on delivering a successful restructuring whilst re-building a company which can compete in the UK energy market." Restructuring update Announcement of agreement on formal standstill and heads of terms with certain creditors Introduction The Board of British Energy announces that it has agreed with certain of its creditors formal standstill agreements and reached non-binding agreement in principle regarding the recognition, compromise and allocation of certain claims under the terms of the restructuring proposals announced on November 28, 2002. The creditors, with whom non-binding agreement in principle regarding the recognition, compromise and allocation of certain claims has been reached, are certain of the 2003, 2006 and 2016 sterling bondholders, the steering committee for the Eggborough bank syndicate, The Royal Bank of Scotland Plc as provider of a letter of credit to the Eggborough Banks in respect of Eggborough Power Limited, Teesside Power Limited, TotalFinaElf Gas and Power Limited and Enron Capital & Trade Europe Finance LLC (an affiliate of Enron Corp.) The standstill agreements with Significant Creditors and British Nuclear Fuels plc and the heads of terms with Significant Creditors that have been reached are subject to certain conditions (detailed below). In addition, implementation of the proposed restructuring remains subject to material conditions, including approval by the European Commission under State Aid rules and the disposal of British Energy's North American operations Bruce Power and AmerGen. The Board continues to believe that the proposed restructuring is in the best interests of the Company and is working closely in conjunction with its advisers and creditors to implement a successful restructuring of British Energy in accordance with the Restructuring Proposals accepted on 28 November 2002 by the UK Government. However, if the requirements set out in the Restructuring Proposals are not met and The restructuring is therefore not implemented, the Company may have to seek insolvency proceedings, in which case the distributions to unsecured creditors may represent only a small fraction of their unsecured liabilities and it is highly unlikely that there would be any return to shareholders. Standstill agreements The formal standstill agreements which British Energy has agreed with its Significant Creditors and BNFL are subject to approval by the banking syndicates of Eggborough and TPL, the credit committee of RBS and Enron board approvals and court approvals. These approvals are required prior to March 24, 2003 (except for Enron court approvals which are expected to follow in due course). The definitive restructuring documentation itself is not expected to be formally agreed by Significant Creditors until September 30, 2003. In addition, the members of an ad hoc committee of Bondholders and certain other Bondholders have also entered into a separate bondholder standstill agreement which binds approximately 58% of the 2003 bondholders, 55% of the 2006 bondholders and 75% of the 2016 bondholders. A notice has been published convening Extraordinary General Meetings on March 10, 2003 for the holders of each series of bonds to formally approve the standstill arrangements and a Circular explaining these proposals will be issued to Bondholders early next week. The Bondholders who have entered into the bondholder standstill agreement have undertaken to vote in favour of the proposed resolution and not to dispose of any interest in their bonds (otherwise than among themselves or in connection with settlement of any credit derivative transaction entered into before Friday) unless the transferee agrees to be bound by the bondholder standstill agreement including the undertaking to vote in favor of the proposed resolution. During the period of the standstill, commencing on February 14, 2003 and ending on the earliest of 30 September 2004 or a termination event or the completion of the restructuring Significant Creditors and BNFL have agreed with British Energy that they will not take any steps to initiate administration proceedings or demand or accelerate any amounts due and payable by British Energy. Under the standstill agreements, certain Significant Creditors will be paid interest but not principal in respect of any claims against the British Energy group. Interest will continue to be paid to Bondholders and the Eggborough Banks in accordance with existing arrangements, except that following the payment of the normal annual coupon to Bondholders on March 25, 2003, subsequent interest payments will, subject to appropriate resolutions being passed by the Bondholders, be made on a six-monthly rather than an annual basis. In respect of TPL, TFE, ECTEF and RBS, interest will be paid first on March 25, 2003 and then on the last business day of every six-month period thereafter based on the agreed Claim Amounts (except in the case of RBS where interest payments will be based on the present value of the Claim Amount). As part of the standstill agreement British Energy will amend the existing power purchase agreement with TPL so that during the Standstill Period, British Energy will continue to purchase power from TPL at fixed prices set at levels based on the current forward curve for electricity. On completion of the restructuring, this power purchase arrangement with TPL will terminate. The standstill agreements contain certain covenants for the benefit of the Significant Creditors and BNFL (including the Bondholders who have signed the bondholders standstill agreement). For example, during the Standstill Period, British Energy has undertaken that it will not, without the unanimous consent of the Significant Creditors and BNFL, inter alia, make any acquisition or disposal greater than EUR5 million (except for the sale of Bruce Power and AmerGen) and it will not issue equity or pay any dividends. BNFL or any of the Significant Creditors may terminate the standstill agreement following the occurrence of a termination event. The termination events include certain insolvency events affecting the Company, British Energy Generation Limited (BEG), British Energy Generation (UK) Limited (BEGUK), British Energy Power & Energy Trading Limited (BEPET) or EPL, acceleration of the Facility, the required approvals under the standstill agreement not being obtained within the timescales envisaged, any of the Company, BEGUK, BEG, BEPET or EPL failing to discharge certain continuing obligations and definitive documentation having not been executed by September 30, 2003. Heads of Terms The Significant Creditors have, subject to the approvals referred to in connection with the standstill agreements, signed non- binding heads of terms in respect of the recognition and settlement of their claims in the restructuring of the British Energy group. These Heads of Terms are in accordance with the Restructuring Proposals. Treatment of HMG Facility The secured loan from HMG provided in September 2002 to help the Company through the restructuring period is expected to be repaid in full from the proceeds of asset disposals and amounts stoodstill during the Standstill Period. The Company believes that after March 9, 2003 it will continue to require some limited ongoing working capital and collateral facilities. HMG has indicated a willingness to extend the Facility at a reduced level for a period after March 9, 2003. Treatment of Eggborough Banks The Eggborough Banks have security over the Eggborough generation plant and the assets of EPL. Under the Heads of Terms the Company will enter into a revised capacity and tolling agreement (the "CTA") with the Eggborough Banks lasting until 2015 and the Eggborough Banks will receive EUR20 million of new bonds and 14.0% of the new equity to be issued to Significant Creditors. The Company will make payments to EPL under the revised CTA equivalent to the payments which EPL would have received if they had been issued with EUR150 million of new bonds. In 2015, economic ownership of the plant will revert to the Eggborough Banks. The Eggborough Banks will have an option to break the CTA in March 2008 in return for payment of a fee of EUR104 million. On exercise of the option, the Company would cease to have any obligation to make further payments under the CTA including payments in respect of the bond-equivalent amounts. Treatment of other Significant Creditors Each Significant Creditor, save for the Eggborough Banks, has agreed, subject to successful completion of the Restructuring Proposals and receipt of any requisite approvals, on the amount of their unsecured claim in the restructuring, as follows: Claim Amount Bondholders EUR408 million ECTEF EUR72 million RBS EUR37.5 million TFE EUR85 million TPL EUR159 million The amounts do not include accrued interest (if any) paid to each creditor during the Standstill Period. Allocation of new bonds and new equity It was announced on November 28, 2002, that British Energy would issue EUR700 million of new bonds of which EUR275 million would be allocated to the newly established nuclear liability fund and EUR425 million to the Significant Creditors. However, as a result of the CTA proposal being offered to the Eggborough Banks, the amount of new bonds being issued will be reduced by EUR150 million so that EUR275 million of new bonds will be issued to the Significant Creditors. In addition, when the restructuring completes, the Company expects to issue new ordinary shares to Significant Creditors. The Heads of Terms set out how the new bonds and new equity will be allocated to each of the Significant Creditors based on the agreed Claim Amounts. The table below summarizes the allocation of new bonds and new equity to the Significant Creditors. New bonds1 Proportion of the new equity issued to Significant Creditors2 Bondholders EUR154.1 million 52.3% Eggborough Banks EUR20.0 million 14.0% ECTEF EUR20.0 million 6.8% RBS EUR14.2 million 4.8% TFE EUR23.3 million 7.7% TPL EUR43.5 million 14.4% Total EUR275 million 100% 1 See attached appendix for summary of the terms of new bonds 2 Excludes retained equity interest, if any, of existing shareholders BNFL Progress is being made with BNFL in agreeing contracts in relation to BNFL's supply of fuel and related fuel services for future burn (front and back-end) based on the non-binding heads of terms with BNFL announced on 28 November 2002. HMG will meet the costs of British Energy's historic back-end fuel liabilities with BNFL. The new contracts with BNFL will be conditional upon the restructuring being implemented. In addition, the Company is discussing with BNFL the sale of its enriched and natural uranium stocks and its ongoing supply arrangements in connection with their procurement. Existing shareholders The Board is considering proposals under which holders of both the ordinary and A shares would have both shares and warrants in the restructured group. Any allocation of shares or warrants to existing shareholders in the restructured group will need to be agreed with the Significant Creditors. If the restructuring is implemented, the return, if any, to existing shareholders will represent a very significant dilution of their existing interests. Bruce On 10 February 2003 British Energy announced that it had received shareholder approval for the disposal of Bruce Power. In addition, certain important conditions to the disposal have been satisfied (including receipt of certain of the required favourable tax rulings), however the disposal remains subject to a number of outstanding conditions. Conditions for the restructuring Entering into these agreements with Significant Creditors does not ensure the success of the restructuring and the Restructuring Proposals remain conditional, inter alia, on: - Completion of a sale of British Energy's interest in Bruce Power - A sale of British Energy's interest in AmerGen having been agreed by June 30, 2003 and completed by the completion of the restructuring - Formal approvals by significant Creditors (as set out above) to the standstill agreements and the non-binding Heads of Terms prior to March 25, 2003, and in the case of Enron court approval by a later date - Formal agreement to the Restructuring Proposals having been entered into by BNFL, the Eggborough Banks, RBS, TPL, TFE and ECTEF by no later than September 30, 2003 - The Restructuring Proposals having been approved by meetings of the bondholders by September 30, 2003 - Receipt of State Aid approvals to the Restructuring Proposals by September 30, 2004 (or such later date as the Secretary of State or Significant Creditors may agree) - Admission of the new ordinary shares and new bonds to listing by the UKLA - Shareholder approval, where required - Receipt of all necessary regulatory approvals and tax clearances Documentation to approve the restructuring is expected to be issued in the summer of 2003. HMG expects to receive European Commission approval of the State Aid application by mid-2004. Other Considerations The legal structure and the steps necessary to implement the proposed restructuring, together with their accounting and tax consequences, have not been finalized. Implementation of the proposed restructuring will require the identification of a structure which permits the commercial and economic effects outlined above to be achieved without material adverse taxation or accounting consequences. The detailed terms of the restructuring will also need to be discussed and agreed with the Inland Revenue. No agreement has been reached in relation to the price or terms of any sale of AmerGen. Furthermore, the European Commission may not approve the restructuring or may impose conditions to such approval that would affect the financial terms or even the viability of the restructuring. In addition, the Secretary of State may not extend the Facility sufficiently and in any event will be entitled to require immediate repayment of the Facility if in the opinion of the Secretary of State the restructuring cannot be implemented in the manner or timescale envisaged. If such agreements cannot be reached or the required approvals are not forthcoming or the assumptions underlying the proposal are not fulfilled or the conditions to the Restructuring Proposal are not satisfied or waived within the timescales envisaged or the standstill agreements terminate, then the Company may be unable to meet its financial obligations as they fall due and therefore the Company may have to take appropriate insolvency proceedings. The Board considers that, in the event of insolvency, distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities and it is highly unlikely that there would be any return to shareholders. The Heads of Terms are not legally binding and do not create any legal obligation on any person. Any reference to the amount due to any person or a method of calculating such an amount does not preclude the Company or any Significant Creditor subsequently taking the position, in circumstances where the proposals set out in the Heads of Terms are not implemented, that a different amount or that no amount is due or a different method of calculation should be used. CABLE & WIRELESS: Files Interconnection Complaint Against PLDT -------------------------------------------------------------- Cable & Wireless public group director Tom Phillips claimed in a complaint letter addressed to the National Telecommunications Commission in the Philippines, that Philippine Long Distance Telephone Co is moving to cut the firm's connection to the Philippines. The British company is providing service in the Philippines through its partner Eastern Telecommunications Philippines Inc. (ETPI). He said that circuits from the UK remain cut and PLDT has degraded the quality on the circuits to such extent that the latter is unable to send any traffic to PLDT. "This is effectively a refusal by PLDT to accept traffic from UK or Japan," he added. According to newspaper reports, the dispute was due to disagreement on settlement rates after PLDT raised its charges to USD0.12 from USD0.09 per minute for calls to Britain. Cable and Wireless thus urged the NTC to act on its complaint at the soonest time possible and ensure that PLDT resumes normal usage of circuits. To this effect, NTC commissioner Armi Jane Borje was quoted in a report saying that the agency has already called the attention of PLDT and other telecom firms to the complaints. A PLDT source said the phone company is "at a quandary as to why C&W will accept the rates of ETPI yet at the same time, file a complaint against us for charging exactly the same rates," although adding that when the two companies were first discussing the process of adjusting rates, everyone did not agree to them. CONTACT: CABLE & WIRELESS PLC Louise Breen, Director, Investor Relations Phone: +44 (0)20 7315 4460 Fax: +44 (0)20 7315 5198 Caroline Stewart, Manager, Investor Relations Phone: +44 (0)20 7315 6225 Fax: +44 (0)20 7315 5198 PHILIPPINE LONG DISTANCE CO Mr. Enrique G. Yu, Senior Manager, International Facilities Arrangements Division Phone: +63-2-816-8971 Fax: +63-2-810-0844 E-mail: egyu@pldt.com.ph MYTRAVEL GROUP: Notice of Annual General Meeting to Be Posted ------------------------------------------------------------- The Notice of Annual General Meeting for MyTravel Group plc to be held on March 20, 2003 at the Manchester International Convention Centre, the G-Mex Centre, Manchester, M2 3GX at 11.00hrs will be posted to shareholders Monday. ***** MyTravel Group, formerly Airtours, is the no. 2 tour operator in the UK behind Thomson Travel. MyTravel offers travel and tour services from about 1,000 travel outlets in Europe, North America, and the UK under more than 80 brands such as FTi, Spies, Sunquest, Suntrips, and Tradewinds. MyTravel also owns four airlines, four cruise ships, and some 130 hotels. European car rentals and reservation services are two of its other interests. The UK accounts for more than 50% of sales. CONTACT: G.J. McMahon, Group Company Secretary Phone: 0161 232 6515) MYTRAVEL GROUP Parkway One, Parkway Business Centre, 300 Princess Rd. Manchester M14 7QU, United Kingdom Phone: +44-161-23-20-066 Fax: +44-161-23-26-524 Home Page: http://www.airtours.com NEW MEDIA: Doubles Half-Year Losses, Enters Talks Over Tullet ------------------------------------------------------------- European venture capital organization New Media Spark said it had more than doubled its pre-tax losses for the six months to the end of September as a result of weak market conditions. The investor, which focuses on early stage investments in the technology, media, telecom and financial services sectors, posted pre-tax loss of GBP17.9 million for the period, up from GBP7.3 million last year. It also wrote off a total of GBP9.9 million for the period versus GBP2.6 million in the same period last year. According to the firm's chairman, Michael Whitaker, "The expected high early failure rate has been exacerbated by extremely weak markets and we have had to take very substantial write-downs." NMS invested GBP700,000 in Glasgow-based Digital Animations Group in 1999, saving it from financial meltdown after its shares were suspended to a financial crisis. It is known that the cash injection enabled DAG to roll out the virtual newsreader Ananova, which was eventually sold to mobile phone operator Orange. NMS is DAG's largest shareholder with an 11.7% stake. It is currently discussing with Collins Stewart, a London-based equity brokerage, the sell-off of its 11% stake in the UK bonds and derivatives house Tullett. Collins Stewart reportedly agreed at the end of last month to buy Tullett in a EUR212.7m all-shares deal, pending shareholder approval. CONTACT: NEW MEDIA SPARKS 33 Glasshouse Street (Head Office) London W1B 5DG Phone: (020) 7851 7777 Fax: (020) 7851 7770 or Lacon House (Registered Office) Theobald's Road London WC1X 8RW E-mail: enquiries@newmediaspark.com SILENTNIGHT HOLDINGS: Has Support of New Majority Shareholder ------------------------------------------------------------- Shareholder Interest and Undertaking On January 8, 2003, the company announced that Soundersleep Limited was now the registered holder of 23,667,470 ordinary shares representing 50.8 per cent. of the issued share capital of the Company. These shares had been transferred from Famco Holdings Limited in accordance with the announcement dated September 16, 2002. Soundersleep is a subsidiary of, and controlled by, Famco, which owns seventy-five percent of the ordinary share capital, and all of the preference share capital of Soundersleep. N Allenza and M Scott, directors of the company, each subscribed for twelve and a half per cent. in the ordinary share capital of Soundersleep prior to their appointment to the Board, and consequently have an indirect interest in the shares of the Company. Receipt of an Undertaking The Board is pleased to announce the receipt of an undertaking from Soundersleep and Famco, addressing the relationship between themselves, as the majority shareholder, and the Company and its subsidiaries with regard to Listing Rule 3.12. The undertaking includes the following terms: - All transactions between the Silentnight and Famco / Soundersleep will be effected on normal arm's length commercial terms for bona fide purposes of the Group. - Neither Famco nor Soundersleep will cause the Company to take any action that is against the interests of the Company and all of its shareholders as a whole. - Famco and Soundersleep will endeavour to ensure that the Company retains at all times two independent directors, of which one should be non-executive Chairman. Famco and Soundersleep have committed to adhere to such undertaking. The Undertaking shall continue in full force and effect until withdrawn, by giving not less than 28 days notice in writing to the Company, or unless and until terminated by either Soundersleep ceasing to be the controlling shareholder of the Company; or by the Company no longer retaining a quotation on a recognized investment exchange. ***** Silentnight's troubles started two years ago when it invested its cash pile on the Parker Knoll chairs business owned by Cornwell Parker and solid wood and pine specialist Ducal. House broker Beeson Gregory is expecting between GBP25 million and GBP30 million of exceptional costs within over two years. Some GBP9 million was accounted for in the first half. The broker is forecasting underlying taxable profits of GBP3.5 million in the latest year, against GBP12.1 million the other year. CONTACT: SILENTNIGHT HOLDINGS PLC Silentnight House Salterforth Barnoldswick Lancashire BB18 5UE Phone: (08707) 429 910 Fax: (01282) 816 926 Homepage: www.silentnight.co.uk Contact: Nino Allenza, Chief Executive Phone: Telephone: 01282 811137 Fax: 01282 816449 Ed Jones, Williams de Broe Plc 4 Park Place Leeds, LS1 2RU Phone: 0113 243 1619 Fax: 0113 243 9320 TXU EUROPE: Small Investors to Lose Millions of Pounds ------------------------------------------------------ Hundreds of small investors face losses that could amount to millions of pounds as a result of their choice to accept loan notes instead of cash from TXU Europe during the acquisition of Energy Group. Majority of investors are shareholders in the former conglomerate Hanson, which de-merged Energy Group, parent of Eastern Electricity, according to Independent News, in 1996. Note holders are likely to get substantial value to their notes, with some 800 investors who own GBP19 million of outstanding notes possibly losing all or most of their money. They could not claim against TXU Europe's parent, TXU, either, as the loan notes, which were issued by TXU Europe's subsidiary, TXU Acquisition, were unsecured. TXU Europe was forced to file for administration after its US parent cut its ties with the European division. Shareholders accepted loan notes rather than cash when TXU Europe bought Energy Group for GBP4.5 billion in 1998 to avoid paying capital gains tax. TXU Europe's administrators are Ernst & Young, and KMPMG. ************ 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 * * *