/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030225.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P E Tuesday, February 25, 2003, Vol. 4, No. 39 Headlines * A U S T R I A * PLAUT AG: Long-Term Corporate Credit Rating Withdrawn * C Z E C H R E P U B L I C * UNION BANKA: Might Lose Operating License, Face Bankruptcy UNION BANKA: Attracts Interest From Several Possible Buyers * F R A N C E * COMPAGNIE GENERALE: Loss of Ship Has No Affect on Credit Quality FRANCE TELECOM: Denies Rumors About Share Capital Increase Date VIVENDI UNIVERSAL: Meheut Replaces Farrugia in Television Unit * G E R M A N Y * ALLIANZ AG: Still Undecided Whether to Pay Dividend, Says CFO BERTELSMANN AG: Reiterates Commitment to Record Unit DEUTSCHE TELEKOM: Long-term Debt Rating Assigned to Bond Issue THYSSENKRUPP AG: Credit Rating Downgrade to Cost EUR20 MM a Year THYSSENKRUPP AG: S&P Lowers Credit and Unsecured Debt Ratings * N E T H E R L A N D S * GETRONICS N.V.: Board Steps Down on Management Disagreement GETRONICS N.V.: To Report Lower Than Expected EBITA on Update KPN: Sells Belgian Internet Provide to Scarlet Telecom UNITED PAN-EUROPE: Announces Confirmation of Reorganization * N O R W A Y * PETROLEUM GEO: Will Announce Fourth Quarter Results on Wednesday * P O L A N D * BRE BANK: Intends to Make Contribution in Kind for CERI * S P A I N * AVANZIT SA: Corpfin Capital Withdraws Offer, Future Uncertain * S W E D E N * ABB LTD.: Decides to Sell Stake in Moroccan Company * U N I T E D K I N G D O M * AQUILA INC.: Moody's Investors Service Downgrades Ratings BAE SYSTEMS: Moody's Downgrades Long- and Short-Term Debt Ratings BAE SYSTEMS: Fitch Lowers Senior Unsecured and Short-term Ratings BAE SYSTEMS: Faces Employee Protest Over Retirement Benefits BAE SYSTEMS: S&P Retains Ratings on CreditWatch Negative BUZZ: GMB Union Says Ryanair Will Cut 400 Jobs on Take Over CARRICK JEWELLERY: To Halve Workforce as Countermeasure DE LA RUE: Issues Third Profits Warning in Seven Months HP BULMER: CVC Approaches Company Regarding Possible Takeover INVENSYS PLC: Outlook on Unsecured Debt Rating Changed to Stable TWR GROUP: Axes Hundreds of Jobs, Hunt for Buyer Continues ============= A U S T R I A ============= PLAUT AG: Long-Term Corporate Credit Rating Withdrawn ----------------------------------------------------- Austrian IT service and consulting group Plaut AG requested Standard & Poor's Ratings Services to withdrew its 'B' long-term corporate credit rating on the company. Plaut requested the withdrawal of the rating as it does not intend to access the capital markets in the near term, and thus would not need to maintain public ratings. The rating had been placed on CreditWatch with negative implications on Dec. 11, 2002, due to "continuing negative free cash flow generation deriving from depressed market conditions and high working capital requirements." The rating agency noted that the group's cash reserve dwindled from EUR19 million at the end of 2001 to EUR13 million at September 30, 2002. It also observed that the company had already used EUR16 million of its EUR25 million 365-day bank lines. =========================== C Z E C H R E P U B L I C ============================ UNION BANKA: Might Lose Operating License, Face Bankruptcy ---------------------------------------------------------- Ostrava-based Union Banka faces bankruptcy at the possible loss its operating license due to the lack of enough money to pay employees' salaries. Last Friday, the Central bank said it launched administrative proceedings against UB for withdrawing its banking license. Union Banka has until March 3 to comment on the situation. Invesmart CEO Paolo Catafamo confirmed it is short of money to pay wages, says Prague Business Journal. This might result in revoking UB's banking license, according to government officials. The danger of bankruptcy came after the Finance Ministry denied the request of the bank's new owner, Italian company Invesmart, for CZK1.5 billion (US$50.7 million) of new capital to the bank. According to a report of TCR-EU in October last year, Invesmart has requested state assistance in resolving the bank's portfolio of bad loans, many of which were taken over from failed banks Ekoagrobanka, Banka Skala, Evrobanka, and Foresbanka. The Central Bank has no plans of imposing administration on Union Banka, which they consider too small to threaten the banking sector, according to the recent report. "Union banka's position on the market is not important enough to make its problems shake the Czech financial system," said Komercni banka analyst Jan Vejmelek. UNION BANKA: Attracts Interest From Several Possible Buyers ----------------------------------------------------------- There are parties interested in acquiring the troubled Ostrava- based bank owned by Italian group Invesmart, according to reports. Mlada fronta Dnes MfD says some banks wants the branch network of Union Banka, while daily Pravo says Austria's Raiffeisenbank and Italy's Unicredito eye at least part of UB's assets and liabilities. According to Pravo, Kamil Ziegler, head of the Prague office of Raiffeisenbank, "We've been monitoring the whole situation and made concrete steps. A few scenarios have been worked out taking into consideration what is going to happen." Union banka closed its branches throughout the Czech Republic, suspended payments and restricted the use of its credit cards on Friday after the bank admitted it had financial difficulties. Union banka has about 100 branches, around 250,000 clients and deposits of more than CZK 20 billion, approximately CZK1 billion less than the amount held at the start of the previous year. =========== F R A N C E =========== COMPAGNIE GENERALE: Loss of Ship Has No Affect on Credit Quality ---------------------------------------------------------------- Standard & Poor's says the loss of Mistral, an off-shore seismic ship, will not affect France-based Compagnie Generale de Geophysique's credit quality. Consequently, the rating agency affirmed its 'BB' long-term corporate credit rating on the largest seismic equipment producer and the third-largest player in seismic services worldwide. The loss of one of its off-shore seismic ships in December 2002 "will have a limited impact on the company's credit quality, as its insurance coverage is adequate and insurance proceeds from the lost ship will be used to pay down debt," said Standard & Poor's credit analyst Eric Tanguy. The rating, however, was removed from CreditWatch, where it had been placed on Dec. 23, 2002. The outlook is negative to reflect that difficult industry conditions will continue in 2003. It also reflects expectation that the significant contribution of Sercel, its profitable equipment manufacturing subsidiary, to positive earnings will slightly diminish this year," according to Mr. Tanguy. CGG's net debt is expected to further decrease in 2003, as free cash flow generation and insurance proceeds from the loss of the Mistral are used to reduce debt. S&P warns that any significant cash or debt-financed acquisition of assets or companies could put pressure on the current rating. FRANCE TELECOM: Denies Rumors About Share Capital Increase Date --------------------------------------------------------------- France Telecom denied reports circulating that its share capital increase, which is expected at EUR15 billion, will be launched on February 25. The rumors sent shares in the company diving sharply in the afternoon of Friday. Mr. Breton announced last week that the capital increase is expected to take place "as soon as possible", but not before the publication of the operator's 2002 earnings on March 5. "These rumors are completely unfounded. No decision has yet been taken - no bank has been chosen as an advisor, for example - and we are still considering the three windows of opportunity (for a rights issue) announced by chairman Thierry Breton, which are spring 2003, autumn 2003 and spring 2004," said spokesman Bruno Janet. One Paris dealer also expressed his doubts on the issue saying, "There are rumors of a capital increase which could take place on February 25 at EUR18 (per share) but we think it's dubious because it's so precise." According to him, some investors also believe these reports are being circulated only to "provide short covering at a bargain price." In December, following an in-depth study of the group's activities and finances, France Telecom announced EUR15 billion capital increase to de-leverage the company's balance sheet. CONTACT: FRANCE TELECOM 6, Place d'Alleray 75505 Paris Cedex 15, France Phone: +33-1-44-44-22-22 Fax: +33-1-44-44-95-95 Homepage: http://www.francetelecom.fr Contacts: Thierry Breton, Chairman Michel Combes, Executive Committee, Finance VIVENDI UNIVERSAL: Meheut Replaces Farrugia in Television Unit -------------------------------------------------------------- Canal Plus chairman Bertrand Meheut will replace the newly resigned chairman of Canal Plus' television unit Dominique Farrugia. Mr. Meheut, former financial director, succeeded Xavier Couture as chairman of Canal Plus, a unit of Vivendi Universal. The news triggered reports of a sell-off of the pay-TV station in the light of its parent company's asset disposal program. Vivendi Universal did sell an 89% stake in Canal+ to Thomson Multimedia, but reiterated that Canal+ is not up for sale, and it retains its place in Vivendi Universal. In a statement to employees clearing the issue, Vivendi Universal chairman Jean Rene Fourtou said he asked Mr. Meheut to takeover the chairmanship of the group in its belief that Canal+ restructure, improve its productivity, and rethink its editorial line. CONTACT: VIVENDI UNIVERSAL Headquarters 42 Avenue de Friedland 75380 Paris Cedex 08 France Phone: +33 1 71 71 10 00 Fax: +33 1 71 71 11 79 Contact: Investor Relations E-mail: investor-relations@groupvu.com Daniel Scolan, Executive VP Investor Relations Phone: +33.1.71.71.12.33 E-mail: daniel.scolan@groupvu.com Laurence DANIEL IR Director, Europe Phone: +33.1.71.71.12.33 E-mail: laurence.daniel@groupvu.com Edouard LASSALLE Associate Director, Europe E-mail: edouard.lassalle@groupvu.com ============= G E R M A N Y ============= ALLIANZ AG: Still Undecided Whether to Pay Dividend - CFO --------------------------------------------------------- Allianz AG chief financial officer Paul Achleitner reiterated the importance of paying dividends, but said the matter has not been decided yet. It is noted that in November Allianz said it should be able to keep its dividend unchanged in 2002 from the year earlier unless unforeseen events take place. Allianz AG is currently under pressure to boost its capital due to the continuing slump in the world equity market. There had been rumors that the financial services company has plans of drawing up emergency plans to tap the equity market for more than EUR5 billion in the event that share prices drop significantly further. Analysts expect the rights issue to come with non-core assets disposals. The management, though, could opt to curtail the rate at which the firm writes new business to counter the slump in the equity market. BERTELSMANN AG: Reiterates Commitment to Record Unit ---------------------------------------------------- Bertelsmann AG remaines committed to its record unit Bertelsmann Music Group, the company said in response to reports that is likely sell the unit after absorbing the impact of its USD2.74 billion purchase of independent music company Zomba Records. Supervisory board and company sources reportedly told the newspaper that a sale of BMG is under consideration and that there is also a chance to resurrect the failed merger with the U.K.'s EMI Group PLC. EMI, Bertelsmann and BMG declined to comment according to the report. However, it is known that the possible merger is a potentiality that has been discussed off and on for several years. The European Union blocked the last attempt on grounds that the combined entity would amount to monopoly of the European recorded music market. Bertelsmann is currently selling its science and business publishing unit in order to lower debt, speculated at around EUR4 billion at the end of 2002. The company's debt ballooned after Zomba exercized a 'put' option worth US$3 billion for Bertelsmann to acquire the remaining shares in Zomba last year. In June it dropped a planned EUR1-billion bond sale due to market conditions. CONTACT: BERTELSMANN AG Carl-Bertelsmann-Strasse 270 D-33311 GA�tersloh, Germany Phone: +49-5241-80-0 Fax: +49-5241-80-9662 Homepage: http://www.bertelsmann.de Contacts: Gunter Thielen, Chief Executive Officer Siegfried Luther, Chief Financial Officer DEUTSCHE TELEKOM: Long-term Debt Rating Assigned to Bond Issue -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB+' long-term debt rating to Deutsche Telekom International Finance B.V.'s guaranteed EUR2.3 billion ($2.5 billion) issue of mandatory convertible 6.5% bonds that matures in June 2006. Peter Kernan, credit analyst and head of the European telecoms group at Standard & Poor's Corporate Ratings Europe explains that the rating concerns only the payment of interest and the bonds' conversion into shares, and excludes the principal, which will be directly linked to the market value of Deutsche Telekom's equity. Standard & Poors will analytically exclude the convertible bonds from Deutsche Telekom's net debt calculation, but will include the interest coupon (about EUR150 million per year) in Deutsche Telekom's fixed-charge coverage measures. The reason for the exclusion is the expectation that the bonds will be converted into shares, and thus, will not be repaid in cash. The corporate credit ratings on Deutsche Telekom continue to be underpinned by the expectation that the group can deliver on its demanding free operating cash flow. The rating agency noted that Deutsche Telekom now generates generating sustainable FOCF and targeting FOCF of EUR5 billion to EUR6 billion per year from 2003. S&P cautions that the key operational challenges, which could threaten Deutsche Telekom's ability to meet its cash flow targets, include: the introduction of local call carrier preselection in 2003, a challenging macroeconomic environment in all of the group's key markets, and uncertainties about the medium-term performance of its subsidiary, Voicestream Wireless Corp. THYSSENKRUPP AG: Credit Rating Downgrade to Cost EUR20 MM a Year ---------------------------------------------------------------- Standard & Poor's downgrade of ThyssenKrupp's credit rating to non-investment grade status will cost the German industrial conglomerate EUR20 million a year, Chairman Ekkehard Schulz disclosed at Thyssen's AGM. The rating agency last week downgraded ThyssenKrupp's previous rating two notches to BB+. S&P has also lowered the issue rating for the outstanding ThyssenKrupp bonds to "BB". According to Standard & Poor's credit analyst Olivier Beroud, the action reflects the rating agency's treatment of unfunded pensions as "debt-like in character". "Including unfunded pensions in the calculation of the group's indebtedness, credit protection measures are weak..." Mr. Beroud said. In a statement, Thyssenkrupp said it "does not share S&P's assessment that its financial situation has deteriorated since its first rating was issued in summer 2001." According to the company, "net financial payables have been substantially reduced by 4 billion euros - from 8.7 billion euros at March 31, 2001 to 4.7 billion euros at September 30, 2002." It also said that ThyssenKrupp's pension obligations in Germany have been based exclusively on defined-contribution schemes. The US$30 billion company has two major debt obligations coming due this year: a DEM400 million issue of 6-1/2% Notes issued by ThyssenKrupp Finance BV and guaranteed by ThyssenKrupp AG, due June 13, 2003; and a US$500 million revolving credit facility provided by a consortium of lenders led by Credit Lyonnais, Deutsche Postbank AG, Hypovereinsbank, and The Royal Bank of Scotland, maturing on August 2, 2003. CONTACT: THYSSENKRUPP AG August-Thyssen-Strasse 1 40221 Dusseldorf, Germany Phone: +49-211-824-0 Fax: +49-211-824-38512 Home Page: http://www.thyssenkrupp.com Contact: Dr. Jurgen Claassen, Communications and Central Bureau Phone: +49 211 824-36001 Gundolf Moritz, Investor Relations Phone: +49 211 824-36464 THYSSENKRUPP AG: S&P Lowers Credit and Unsecured Debt Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on German industrial conglomerate ThyssenKrupp AG to 'BB+' from 'BBB', its short-term rating to 'B' from 'A-2', and its senior unsecured debt ratings to 'BB' from 'BBB'. All ratings were removed from CreditWatch, and assigned a stable outlook. The downgrade of the senior unsecured debt ratings includes its guaranteed entities. The actions, which conclude S&P's credit review in the past few weeks, reflect the rating agency's treatment of unfunded pensions as "debt-like in character," explains Standard & Poor's credit analyst Olivier Beroud. The inclusion of the pension in its debt makes credit protection measures weak. According to him, funds from operations (FFO) to net debt (including pensions) of about 15%, and pension-adjusted debt to capital of more than 60% for the fiscal year ended Sept. 30, 2002. Unadjusted for pensions, FFO to net debt for the same period was slightly less than 30%, and debt-to-capital was about 45%. The senior unsecured debt is placed one notch lower than the corporate credit rating of 'BB+' because the issue of structural subordination is given more weight in the noninvestment grade category. The rating agency noted that the group has substantial EUR7.1 billion of provisions for pensions and similar obligations at the end of September 2002. This is net of pension plan assets of almost EUR1.6 billion at Sept. 30, 2002. The ongoing servicing costs for ThyssenKrupp's pension schemes in Europe are estimated at about EUR450 million per year. S&P expects no additional liquidity or financing pressure in the short to medium term on obligations originating from Germany. According to S&P: "Nevertheless, this is balanced against ThyssenKrupp's good track record in reducing lease and securitization-adjusted financial indebtedness to about EUR7.3 billion from almost EUR9 billion at the end of 2000, and management's strong commitment to continue its debt-reduction strategy." Standard & Poor's considers ThyssenKrupp's liquidity to be adequate: it has EUR0.9 billion in cash at December 31, 2002, EUR3.7 billion under its committed credit facilities of EUR3.0 billion, and bilateral credit lines of EUR1.7 billion. These credit facilities do not include any credit triggers. Its liquidity is further strengthened by a number of potentially disposable assets. "Free cash flow, after capital expenditure and dividend payments, is unlikely to enable the group to reduce debt significantly," Mr. Beroud said. ===================== N E T H E R L A N D S ===================== GETRONICS N.V.: Board Steps Down on Management Disagreement ----------------------------------------------------------- The Supervisory Board of Getronics announced Friday that its Board of Management is stepping down with immediate effect. The decision was taken by the Supervisory Board after consultation with the Board of Management and is based on a difference of opinion on how to manage the Company. Peter van Voorst has been working for Getronics and its predecessors since 1969. He joined the Board of Management in 1985 and became Chairman of the Board of Management and CEO in 2001. Jan Docter joined Getronics in 1988 and has been Chief Financial Officer since then. With immediate effect, Axel R�ckert (56) and Klaas Wagenaar (44) will act as the Board of Management, and will be Chairman and Vice-Chairman respectively. The Supervisory Board will propose the election of Mr R�ckert and Mr Wagenaar to the Board of Management at the Annual General Meeting of Shareholders on 9 April 2003. The proposed board members support the Company's recent invitation to tender to the bondholders, made last week, and regard this offer as a cornerstone of the financial restructuring. Both Axel Ruckert and Klaas Wagenaar are top executives with impressive track records in the multinational ICT sector and experienced managers of large-scale financial restructuring and recovery operations. They will team up to take the Company forward. As Chairman of the Board of Management, Axel Ruckert will be responsible for customers, strategy and operations. As Vice-Chairman, Klaas Wagenaar will focus on the financial revitalization of the Company and related activities. Mr Ruckert - born in Germany, but a resident of France for the past 25 years - brings a wide-ranging international perspective to the Company. In the past, he headed major strategic programs at Danone, Bull and Philips Consumer Communication. Mr Wagenaar was involved in the financial restructuring and recovery programs of Cap Gemini, Baan Company and Cebeco Group. GETRONICS N.V.: To Report Lower Than Expected EBITA on Update ------------------------------------------------------------- Getronics announced Friday the following key figures for 2002. The definitive results will be published on March 4, 2003. The company expects a confirmation of the results published today. The company expects its EBITA for the financial year ended December 31, 2002 to amount to approximately EUR 106 million, which is a decrease of EUR 20 million compared to the provisional EBITA, that was announced on 27 January 2003. This amount: (i) includes a book profit of EUR 10 million related to the sale & lease-back of real estate; (ii) excludes a one-off charge to implement further cost base reductions as part of a cost alignment plan of approximately EUR 43 million, which is a decrease of EUR 13 million compared to estimates published on 27 January 2003. (iii) excludes a non-cash benefit from the curtailment of defined benefit pensions plans of approximately EUR 8 million. Getronics also announces that the impairment of goodwill has been determined at an amount of EUR 375 million. It was previously announced that this impairment was expected be in the range of EUR 275-400 million. The company is also able to announce that the cash flow from operations for 2002 amounts to EUR 181 million (2001: EUR 202 million). KPN: Sells Belgian Internet Provide to Scarlet Telecom ------------------------------------------------------ KPN sold its Belgian Internet provider ' Planet Internet Belgium' to Scarlet Telecom. The parties signed a purchase agreement last Friday. The agreement is subject to clearance from the Belgian competition Authority. Closing of the deal is expected by mid-April. Under the deal, all 135 employees will be transferred from KPN to Scarlet at closing. Planet Internet Belgium had by the end of 2002 a subscriber base of 140000. ***** KPN and Scarlet also completed the sale of KPN Belgium to Scarlet in January. During the closure of the deal, KPN also announced reaching a basic agreement regarding the sale of Planet Internet Belgium to Scarlet. Royal KPN N.V. first disclosed the deal with Scarlet in December. KPN Belgium is a 100% subsidiary of KPN. The company offers telecom services to business users in the Belgian market. UNITED PAN-EUROPE: Announces Confirmation of Reorganization ----------------------------------------------------------- In connection with its ongoing recapitalisation, United Pan- Europe Communications N.V., announces that the US court yesterday confirmed the company's Chapter 11 Plan of Reorganization. All classes allowed to vote, voted in favor including: Class 5 (Bondholders) USD 4,340,584,740.43, representing 99.91% of the amount voted; Class 6 (UPC Preference Shareholders) USD 7,114, representing 100% of the amount voted; Class 8 (UPC Ordinary Shares A) USD 234,841,533, representing 99.97% of the amount voted. Under the Plan, subject to ratification of the Akkoord in the Netherlands, approximately USD 937.51 million of Belmarken Notes, USD 4,688.21 million of UPC Notes, USD 1.71 billion of convertible preference shares, all of the priority shares and all of the ordinary shares A, including those represented by American Depositary Shares, will be converted into new equity of New UPC, Inc. New UPC will become the holding company for UPC after the recapitalization. As previously indicated, UPC intends to seek approval from its creditors for its restructuring through the district court in Amsterdam on February 28, 2003 and subsequent ratification of the Akkoord on March 12, 2003 and remains on track to complete its restructuring by the end of the first quarter 2003. =========== N O R W A Y =========== PETROLEUM GEO: Will Announce Fourth Quarter Results on Wednesday ---------------------------------------------------------------- Petroleum Geo-Services ASA (NYSE:PGO) (Oslo:PGS) expects to announce its fourth quarter and year-end 2002 financial results at 2 p.m. Central European Time on Wednesday, February 26, 2003. A press conference will be arranged in the PGS offices at Lysaker, Oslo on Wednesday, February 26, at 2 p.m. CET. A presentation will be given to analysts at 3 p.m. CET in the same location. Live audio together with the presentation will be broadcasted over the PGS Website, http://www.pgs.com, starting promptly at 3 p.m. CET. Interested parties should go to the Website at http://www.pgs.com, at least 15 minutes early to register and to download and install any necessary audio software. In conjunction with this announcement, Chief Executive Officer, Svein Rennemo, and Chief Financial Officer, Knut Oversjoen, will present the Company's financial results at a breakfast meeting in New York City on Tuesday, March 4, 2003, at the Inter- Continental Hotel The Barclay New York, 111 East 48th Street, in the Whitney Room, Lobby Level, from 8:00 a.m. to 9:00 a.m. Eastern Time. To make your reservation (RSVP) for this breakfast presentation meeting, register by fax to Suzanne McLeod at +1 281-589-1482 or send an e-mail to suzanne.mcleod@pgs.com by Friday, February 28, 2003. * * * 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 =========== BRE BANK: Intends to Make Contribution in Kind for CERI ------------------------------------------------------- The Board of Management of BRE Bank SA informs that on February 20, 2003, BRE Bank SA decided to make a contribution in kind to "Centrum Rozliczen i Informacji Sp. z o.o. w organizacji" (CERI) in form of receivables. The scope of business activities of the CERI consists of offering auxiliary services for the banking operations, in particular settlements executing and data bases operating, for BRE Bank and clients. The company is waiting for registration by the court. The President of the company CERI is Mr Zbigniew Stabiszewski, who was Head of Administration Department in BRE Bank till 31.12.2002 The assets contributed to CERI are mainly property of two bank's unit: Settlement Center SYBIR and Retail Banking IT Maintenance and Support Department. The assets include: telecommunication equipment and computer hardware, office furniture, means of transport etc. The value of the contributed assets in BRE Bank SA's books is PLN 5,556. The value of the assets to be recorded in the books of CERI will be PLN 5,556 based on market valuation. ========= S P A I N ========= AVANZIT SA: Corpfin Capital Withdraws Offer, Future Uncertain ------------------------------------------------------------- Venture capital group Corpfin Capital Asesores has withdrawn its offer for Avanzit SA's media division Telson Servicios Audiovisuales SLU. In a statement addressed to Spain's market regulator, Avanzit said Corpfin pulled out its offer to pay EUR22 million (USD22.6 million) for the company's audiovisual arm after 21 creditor banks failed to unanimously accept the deal, blocking a bailout that could have saved the troubled telecom provider from liquidation. Only 19 of the 21 banks gave an OK to the deal, which was Avanzit's "last and only possibility" for viability, according to a Corpfin spokeswoman. She declined to reveal the two in opposition, but affirmed the bank group must unanimously approve any solution. The bank group earlier rejected a similar deal from New York- based Alpha Private Equity in January after the Avanzit board had accepted an offer to pay EUR22 million for the entire company. Although proceeds from the sale could have been sufficient to allow the resumption of debt payments and fund Avanzit's remaining businesses, it represents just a fraction of the EUR150 million debt the banks hope to recover. It is known that the company owes more than EUR237 million to 42 creditors and has been engaged in a dispute with them since May when the company went into receivership and stopped paying its bills. The Spanish technologies group, together with its units, Avanzit Telecom and Avanzit Tecnologia SL, was put in receivership following an unsuccessful attempt to transform itself into a telecommunications, media and technology company. As a result of the venture, the company's total debt ballooned to EUR235 million, prompting it to lay off of workers and close divisions to survive. The company's largest creditors are Santander Central Hispano SA, Caja San Fernando and Caja Castilla La Mancha. CONTACT: AVANZIT S.A. Alcala 581 28027 Madrid, Spain Phone: +34-91-754-67-00 Fax: +34-91-754-67-16 Home Page: http://www.avanzit.com Contact: Rafael Martin Sanz, Chairman =========== S W E D E N =========== ABB LTD.: Decides to Sell Stake in Moroccan Company --------------------------------------------------- ABB Ltd. has agreed to sell its 50% stake in Jorf Lasfar Energy Company in Morocco for US$1.6 billion to ease out its debt position, weekly magazine La Vie Economique said. ABB and the country's energy and mine ministry had discussed the sell-off of the stake in the project it shares with CMS Energy Co., according to the report. Chief Executive Juergen Dormann is selling non-core assets as part of the company's effort to reduce its debt, currently at US$9 billion. During S&P's downgrade of the company's corporate and debt ratings, S&P says ABB will better address the current financial challenges it face through corporate restructuring and asset disposals, so long as the group's underlying credit strength improves. These cost savings and restructuring program, however, are coupled with implementation risks. The company's current balance-sheet problems are partially blamed on a US$1 billion share buyback in the second half of last year. ABB Ltd.'s U.S. subsidiary, Combustion Engineering, Inc., recently filed for Chapter 11 in the Delaware bankruptcy court, based upon CE's previously announced pre -packaged plan of reorganization. CONTACT: ABB LTD. Investor Relations Switzerland Phone: +41 43 317 3804 Sweden Phone: +46 21 325 719 USA Phone: + 1 203 750 7743 =========================== U N I T E D K I N G D O M =========================== AQUILA INC.: Moody's Investors Service Downgrades Ratings --------------------------------------------------------- Moody's Investors Service lowered Aquila Inc.'s Senior Implied rating to B1 from Ba2, Senior Unsecured rating to B1 from Ba2, Subordinate rating to B2 from Ba3, and Preferred Stock to B3 from B1. All of the ratings remain on review for possible further downgrade. In addition, Moody's downgraded the Issuer Rating of Aquila Merchant Services to B1 and kept it on review for possible downgrade. According to the rating agency, the downgrade reflects: (i) weak cash flow generation relative to total debt; (ii) asset sales proceeds which have not sufficiently reduced the debt that was incurred to purchase the same assets; (iii) liquidity pressures related to the trading business that Aquila is winding down; and (iv) the need to extend or replace maturing bank facilities. Aquila has over US$300 million in cash on hand, but one of its principal bank credit facilities matures in April, and a waiver of default under the other facility also expires in April. The downgrade will cost the company additional collateral calls to an existing US$70 million (SEC filing). Moody's says that without an extension of its bank credit facilities the company would not have sufficient cash to repay its maturing debt obligations, and not enough cash cushion to operate. The renegotiation of the banking facilities, which Moody's believes will require regulatory approvals for the provision of security, is important in stabilizing the rating. Aquila, Inc. headquartered in Kansas City, MO., is a regulated electric and gas networks business in the US, Canada, Australia, and the U.K. BAE SYSTEMS: Moody's Downgrades Long- and Short-Term Debt Ratings ----------------------------------------------------------------- Weak operating and cash flow outlook, challenges in improving core profitability, and significant cash outlays related to troubled programs led Moody's to downgrade BAE System's long- and short-term debt ratings to Baa1 and Prime-2 from A2 and Prime-1, respectively. According to Moody's BAE's profits and cash flows have deteriorated over the past several years due to sizeable charges related to shipbuilding programs in the U.K., the closure of its regional jet business, and losses at Astrium. The rating agency also noted substantial schedule and cost implications resulting from its troubled Astute attack submarine and the Nimrod MRA4 aircraft programs. Despite promise from the government that it would cap cost overruns on the programs, BAE is still expected to record exceptional after-tax charges of about GBP572 million (GBP750 million pre-tax) in its 2002 financials. The announced charges will be all cash, and will be spread out as follows: GBP225 million in 2003, GBP100 million in 2004, and the balance of GBP250 million to be expended in 2005 and beyond. The action also considered BAE's large underfunded pension plan positions, the expected demands on the company's cash flow related to aircraft financing by Airbus (where BAE is a 20% participant), the uncertainty surrounding the terms under which other new major development programs may be awarded, and the potential implications for the company's future earnings and cash flow generation. The rating outlook is Negative to reflect Moody's view that BAE's financial performance remains weak. The rating agency, thus, cautions that any additional operating problems from existing or new development programs could exacerbate the company's already negative free cash flow. Any further erosion in pension plans or aggressive use of funds for acquisitions or aircraft financing activities could delay any rebuilding of the company's credit quality. Ratings downgraded are: BAE SYSTEMS plc -- the senior debt rating to Baa1 from A2; the long-term issuer rating to Baa1 from A2; and the short-term debt rating to Prime-2 from Prime-1. BAE SYSTEMS Finance, Inc. -- the rating on its guaranteed senior debt to Baa1 from A2; and the rating on its guaranteed MTN program to Baa1 from A2. BAE SYSTEMS Holdings, Inc. -- the rating on its guaranteed senior debt to Baa1 from A2; and the short-term debt rating, guaranteed by BAE Systems plc to Prime-2 from Prime-1. BAE SYSTEMS: Fitch Lowers Senior Unsecured and Short-term Ratings ----------------------------------------------------------------- Deterioration of BAE's financial profile prompted Fitch Ratings to lower the Senior Unsecured rating of BAE Systems Plc (BAE) to 'BBB+' from 'A-' and the Short-term rating to "F2" from "F1". The ratings are on Rating Watch Negative. The defense group issued a preliminary result last week with an increase in net debt position to GBP1.3 billion at FYE02 from GBP831 million at FYE01 due to a difficult trading environment during 2002 as well as substantial cost overruns and delays, mainly on the Nimrod maritime patrol plane and Astute nuclear powered submarine contracts. Further, Fitch predicts: "with a flat 2003 market outlook it is unlikely that cash generation will be sufficiently strong to allow the company to significantly reduce debt levels." The rating agency also warns that the delays in the Nimrod and astute contracts might lead to higher financing needs in the short term. Fitch says the ratings will remain on Rating Watch pending a meeting with BAE's management, although it is quite possible that the ratings will be affirmed. BAE is Europe's largest defence equipment company and shareholder in aeroplane manufacturer Airbus SAS. CONTACT: Dennis Burton, C4ISR Phone: +44 (0) 1202 408512 Mobile: +44 (0) 7801 712587 BAE SYSTEMS Farnborough, Hampshire GU14 6YU, UK Phone: +44 (0) 1252 384605 Fax: +44 (0) 1252 383947 Home Page: http://www.baesystems.com BAE SYSTEMS: Faces Employee Protest Over Retirement Benefits ------------------------------------------------------------ Employees of defense group BAE Systems are planning to hold a protest over the company's plans to scale back retirement benefits to fill a pension gap. BAE has an estimated GBP2.16 billion gap in its pension scheme that has troubled analysts and debt-rating agencies. Jack Dromey, T&G union national organizer, said the T&G's 12,000 BAE members and thousands of their colleagues were prepared to strike if a meeting with the company failed to resolve the conflict. He said that the workers were angered even more upon learning that BAE took holidays from making pension contributions throughout the 1990s. BAE told the staff to increase contribution by almost 2% a year, or else leave the scheme and join a less generous plan. The main pension scheme excludes new workers. The company says it plans to increase its contributions by the same amount from April this year, and possibly the next year. BAE indicated it would make an extra contribution of GBP30 million to its pension scheme this year, and GBP60 million next year. BAE SYSTEMS: S&P Retains Ratings on CreditWatch Negative -------------------------------------------------------- BAE Systems PLC reported its 2002 results and the agreement with the U.K. Ministry of Defence (MoD) to revise terms for the Nimrod marine patrol aircraft and the Astute attack submarine contracts. Standard & Poor's Ratings Services said that its ratings, including the 'A-' long-term corporate credit rating, on BAE Systems remain on CreditWatch with negative implications, where they were placed on Dec. 12, 2002. The revisions, which resulted in combined pretax charges of GBP750 million (GBP572 million after tax) to recognize the additional cost to complete these programs under the new contract terms, led to a net loss of GBP686 million in 2002. U.K.-based BAE Systems' other operations performed close to expectations in 2002 and should be relatively stable in 2003. "The agreement with the MoD will cap any future potential losses faced by BAE Systems by separating the design and development phase of each program from the production phase," said Standard & Poor's credit analyst Roman Szuper. The contract revisions will establish new target cost and fee levels, and any cost savings and cost overruns will be shared by BAE Systems and the MoD, based on a formula. BAE Systems' historically strong balance sheet and liquidity position will likely provide less support for the rating in the intermediate term, since net debt increased to about GBP1.3 billion in 2002 and is expected to rise further in 2003. Furthermore, the pension plans had a deficit of almost GBP2.2 billion at Dec. 31, 2002, although cash funding requirements are modest for 2003 and 2004. BAE Systems is a major global supplier of military aircraft, defense electronics, military and commercial avionics and aerostructures, submarines and surface combatants for the Royal Navy, and support services and information technology. Standard & Poor's will evaluate the above developments and other factors to determine their effect on credit quality and expects to conclude its review in the near future. BUZZ: GMB Union Says Ryanair Will Cut 400 Jobs on Take Over ----------------------------------------------------------- The GMB union has warned that up to 400 jobs will be under threat at British budget airline Buzz as a result of its takeover by rival Ryanair. About 100 redundancies were reportedly agreed upon after the takeover deal went through in January, and Ryanair warned it could close down Buzz if staff did not agree to new working terms. However, GMB said it had been told that 25% of the Stansted-based carrier's pilots, 80 percent of the cabin crews and half the ground services staff were among those set to lose their jobs when Ryanair takes over on April 1. Declining to confirm the job cuts, a Ryanair spokeswoman said: "The integration process is ongoing and there's scheduled to be an announcement at the end of the month." Meanwhile, the GMB's Paul Kenny revealed that the remaining jobs at Buzz were not likely to survive for long since "Ryanair's predatory takeover is simply to remove the opposition from the low cost part of the industry." "The flying public will lose out on choice and 400 Buzz employees will lose their livelihood immediately and I expect the rest will follow soon after," he added. Owned by Dutch airline KLM Royal, Buzz operated 21 routes from London Stansted to points in Germany, Holland, France and Spain, as well as two French domestic routes. CONTACT: KLM ROYAL Contact: Investor Relations Home Page: http://investorrelations.klm.com Phone: 31 20 649 3099 CONTACT: RYANAIR HOLDINGS PLC Dublin Airport Dublin, Ireland Phone: +353-1-812-1212 Fax: +353-1-812-1213 Homepage: http://www.ryanair.ie CARRICK JEWELLERY: To Halve Workforce as Countermeasure ------------------------------------------------------- Carrick Jewellery will shed half of its workforce as a countermeasure to rising manufacturing costs and a downturn in the industry, according to the Scotsman. The job cuts will involve half of the staff at its factory in Livingstone, where it employs 47 workers, and a number at its head office in Glasgow. Workers and staff at the head office were offered guidance in finding new jobs. Carrick, which manufactures 25% of its products in the Far East, plans to move some manufacturing operations overseas, according to a company spokeswoman. "The current climate has made it difficult to retain manufacturing jobs in this country, and it is an issue that has affected a number of companies in the jewelry business." The company founded by Edward Robertson in 1971 has a turnover of GBP8 million a year. It is behind the famous Charles Rennie Mackintosh-inspired jewelry ranges, which was popular both in Scotland and abroad when they were launched in the mid-1980s. Eva Smith, Mr. Robertson's daughter, is presently managing the company. DE LA RUE: Issues Third Profits Warning in Seven Months ------------------------------------------------------- Basingstoke-based bank note printer De La Rue issued its third profits warning in seven months after suffering a 94% fall in its shares to 190.5% due to tough trading conditions in Germany and Spain. The warning, which came less than three months after the group predicted a "significantly" better second half, indicated that a "sharp deterioration" in its German and Spanish markets meant its profit before tax, exceptional items and goodwill amortization would be 25% below market expectations. De La Rue said the main problems lay in its cash and currency systems divisions. Its cash systems unit, which sells counting and sorting machines to banks and financial institutions, has been hit by a collapse in demand from customers in Germany and Spain since the start of the year, the company said. There have also been delays in orders being placed by banks in Germany and Spain, according to the group. In Spain, customers had "postponed the delivery period of significant orders into the next financial year" while in Germany sales were likely to be down 50% on last year. Reports say public appetite for cash remains undimmed, but the business of providing machinery for handling and sorting cash ran into trouble. The company also mentioned problems in the global services business, which makes holograms for items such as passports, and predicted a loss for the year. Paul Steegers, analyst at Merrill Lynch, downgraded his recommendation on the stock from buy to neutral after the surprise announcement. Mr Steegers said: "While we always believed the risk to forecasts were still on the downside in cash systems, we were surprised at the scale of the downgrade [which is] 25% to consensus earnings expectations." In the wake of losing a third of its stock market value, one of the biggest on the market, it tried to reassure investors by saying it expected the final payment of its dividend to be "maintained" at last year's level. Analysts, however, expects this to mean further increases after the rise at the interim stage might not be possible in the near future. Last year, De La Rue axed 350 jobs and announced plans to close a factory in High Wycombe, Bucks. Although it declined to comment on the extent of any future cull, the group is reportedly preparing the ground for job cuts in continental Europe after entering discussions with relevant trades unions. CONTACT: DE LA RUE PLC Jays Close, Viables Basingstoke, Hampshire RG22 4BS United Kingdom Phone: +44-1256-329-122 Fax: +44-1256-605-336 Homepage: http://www.delarue.com Contact: Brandon Gough, Chairman Ian Much, Chief Executive Paul Hollingworth, Group Finance Director HP BULMER: CVC Approaches Company Regarding Possible Takeover ------------------------------------------------------------- CVC Capital Partners, the U.K. private equity company, made a takeover approach to troubled cider maker HP Bulmer. The news raised Bulmer's shares 8% Friday. It is believed that CVC is one of the several venture capitalists to have held preliminary takeover discussions with the company which has lost three quarters of its value in a year after a flood of profit warnings, a GBP3.3 million accounting scandal and failed overseas expansion. Both companies declined to comment on the matter. TCR-EU reported last year that the company posted GBP1.8 million losses for the six months to November, compared with a profit of GBP6.4 million the previous year. Exceptional charges of GBP31 million included a GBP22 million goodwill write-down on US and South African operations, which have lost out to alcopops. Reports say newly appointed CEO Miles Templeman, former Whitbread executive famed for turning Stella Artois into Britain's most popular premium lager, needs to devise a plan to reduce group debt that could include the sale of drinks distribution The Beer Seller and an equity issue. Another option is to sell the whole business. "The board has to evaluate both options and decide which is best value for shareholders," a spokesman for Bulmers said, declining to comment on whether it was holding discussions with CVC. Bulmers is known as the clear market leader in both the take home and on trade cider markets, with Strongbow firmly established within the top 10 highest selling long alcoholic drinks. Its portfolio includes Woodpecker, Scrumpy Jack, White Lightning, a thriving premium packaged beer distribution business and some exciting and innovative new products including Sidekick, a flavored 'shots' style drink. CONTACT: HP BULMER Miles Templeman, Chief Executive Phone: 01432 352000 Smithfield Financial John Kiely Phone: 020 7360 4900 INVENSYS PLC: Outlook on Unsecured Debt Rating Changed to Stable ---------------------------------------------------------------- Weaknesses in certain of Invensys' businesses prompted Moody's to change the outlook on the company's Ba1 senior unsecured debt rating to negative from stable. Moody's expects the weaknesses to prevent the company from meeting its earnings and cash flow targets for the current fiscal year and possibly beyond. The rating agency therefore cautions that "Any strategic response developed by management that fails to demonstrate a clear path towards improving cash flows in the core business and/or include measures to reduce net debt further would be likely to add to the pressure on the company's rating." After a business review, Invensys warned that its second-half core operating profit might decrease as much as 25% lower than the first-half figure. The under-performance relates to certain of the company's businesses, including software company Baan and climate controls, which together account for about 20% of revenues, Moody's says. The Ba1 senior unsecured debt rating was affirmed considering the localized nature of Invensys' problems. The following ratings were affirmed at Ba1: Invensys plc -- for senior bonds, medium-term notes and bank credit facilities. On the positive side, Moody's recognizes the company's substantial financial flexibility from its portfolio of assets, good track record of asset disposals, and substantial cash and headroom under committed facilities. The asset disposals helped the company reduced net debt to around GBP1.5 billion. Invensys plc generated sales from core operations of GBP2.1 billion in the first half of its fiscal year ending 31 March 2003. TWR GROUP: Axes Hundreds of Jobs, Hunt for Buyer Continues ---------------------------------------------------------- Tom Walkinshaw Racing Group announced that 298 employees would lose jobs while discussions are continuing with customers about a number of measures to ameliorate the situation The group is based in Witney, Oxfordshire and Worthing, Sussex, and has approximately 500 employees. Job cuts will affect about 108 in Worthing, 150 in Witney, and the remainders in places based between the two sites. Following the job cuts, TWR will reportedly be left with a workforce of 165 people. According to the appointed receivers, PricewaterhouseCoopers LLP, a series of unsuccessful meetings with TWR's customers and suppliers have been held in an effort to secure their support while a buyer is sought for the business. Partner Rob Hunt said in a statement: "Unfortunately, we have been unable to agree revised trading terms with regard to one of the group's major projects to allow the project to continue. "Without continuing this project the group would have incurred significant trading losses and we have been left with no alternative but to effect significant redundancies." The Group recently filed for administrative receivership after it suffered a loss of more than EUR20 million on its investment in the failed Arrows Formula One team, and a general downturn in the industry. TWR has businesses in the automotive and motorsport industry, ranging from the engineering, design and manufacture of vehicles, through to the building of specialist racing engines. Year-end turnover for 30 June 2002 was in excess of EUR140 million. CONTACT: TWR GROUP Leafield Technical Centre Leafield, Witney, Oxon OX29 9PF Phone: (01993) 871000 Fax: (01993) 871100 PRICEWATERHOUSECOOPERS LLP Plumtree Court, London EC4A 4HT Contacts: Alison Campbell-Smith Steven Wilson Phone: 202 7804 4087 Fax: 020 7804 5566 E-mail: michelle.rice@uk.pwcglobal.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 * * *