/raid1/www/Hosts/bankrupt/TCREUR_Public/030331.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Monday, March 31, 2003, Vol. 4, No. 63
Headlines
* C Z E C H R E P U B L I C *
UNION BANKA: Ostrava to Relegate Claim to Union Leasing
* F I N L A N D *
BENEFON OYJ: Plans to Close Bridge Financing Share Issue
* F R A N C E *
ALSTOM SA: Investors Seen Minimizing Ties With Company
ALSTOM SA: Awarded Contracts for Barcelona Tramway Maintenance
SUEZ: Bidding for U.K. Water Company Scheduled by Mid-April
* G E R M A N Y *
BANKGESELLSCHAFT BERLIN: Rating Remains on Negative Watch
BANKGESELLSCHAFT BERLIN: Turns Down BCP's Offer for Stake
BERTELSMANN AG: Clears Speculations About Change in Chairmanship
HVB GROUP: Reinforces Capital Base by Placing Minority Stake
HVB GROUP: Introduces Measures to Implement Transformation Plan
HVB GROUP: Fitch Downgrades HVB Real Estate Bank AG to 'BBB'
INFINEON TECHNOLOGIES: Strengthens Foothold in China
KIRCHMEDIA GMBH: Hands Film Library-and-rights Business to Saban
* I T A L Y *
FIAT SPA: Finmeccanica Mum on Plans Regarding Fiat Avio
* N E T H E R L A N D S *
GETRONICS N.V.: Terminates Revised Invitation to Tender
KONINKLIJKE AHOLD: Inquiry Might Drag Two Big Names in U.S.
RELIANT RESOURCES: Placed on Watch Negative Due to FERC Findings
VERSATEL TELECOM: Closes Tesion and Completel Germany Deal
* P O L A N D *
SZCZECIN SHIPYARD: Receiver Will Accept Bids for Shipyard
* S W I T Z E R L A N D *
ASCOM: Narrows Down Loss by 30% to CHF281 Million in 2002
SWISS INTERNATIONAL: Suspends Weekly Flights to Abu Dhabi
SWISS INTERNATIONAL: WorldCargo Schedules Has Minimal Changes
* U N I T E D K I N G D O M *
ABBEY NATIONAL: EU Approves GE's Acquisition of First National
AFFINITY WIRELESS: Creditors Called for Administration
BAE SYSTEMS: Appointment in Boeing Renews Takeover Gossip
BAE SYSTEMS: Pampered Top Executives With Bonus and Pension
CABLE & WIRELESS: Fitch Affirms 'BB+' Rating, Negative Outlook
EDINBURGH FUND: Managed Funds Down Due to Loss of Mandate
GLAXOSMITHLINE PLC: Akzo Withdraws, Hundreds of Jobs in Danger
ROYAL & SUNALLIANCE: FSA Fines Life Operation for Deficiencies
TELEWEST COMMUNICATIONS: Posts Financial Results and Updates
===========================
C Z E C H R E P U B L I C
============================
UNION BANKA: Ostrava to Relegate Claim to Union Leasing
-------------------------------------------------------
Ostrava will cede control of its CZK4.7 million uninsured deposit
in Union Banka to Ostrava-based Union Leasing. The deposit is
part of the town's CZK6 billion budget.
The transaction, unanimously approved by the counsellors,
involves the sell-off of its claim to Union Leasing, which has
offered the town 99% or CZK4.653 million for the claim -- a far
cry from the usual payment for transferring a claim at just 50-
60% of the deposit's value.
Radim Berka of the municipality said the town "will thus not
suffer any loss from the situation in Union Banka."
The amount will be paid to the town in three packages, the last
of which will be in December.
Meanwhile, Union Leasing board chairman Ivo Ostrozny revealed
that the offer made to Ostrava was an exclusive deal. It was
made on the first day after Union Banka's outlets were closed,
and based on a long-term good cooperation between the town and
the SME group.
It is known that Union Leasing is a 100% subsidiary of
Severomoravska energetika (SME), but was set up as a joint
venture of SME and Union Banka.
Mr. Ostrozny declined to say how many claims on UB the company
has bought, although he indicated there are companies who have
bought more.
In the middle of last year, however, Ostrava had hundreds of
millions of crowns in UB but has been reducing the amount
gradually.
If creditors do not sell their claims, the Deposit Insurance Fund
will pay 90% of their deposit but CZK790,000 at the most.
Payment of compensations will start by mid-May this year.
Earlier, the Czech National Bank decided to revoke UB's licence
last Tuesday. The decision has not come into force yet and Union
banka can appeal against it in 15 days.
=============
F I N L A N D
=============
BENEFON OYJ: Plans to Close Bridge Financing Share Issue
--------------------------------------------------------
There has been public information about the company based on the
interviews of Mr. Peter Chlubek, the President of NRJ
International LLC. Because the information is not by the company,
the company considers it appropriate to comment some parts of the
information:
The Board of Benefon decided to close the bridge financing share
issue short of the committed amount after the full amount was not
subscribed by the subscriber by the end of the subscription
period, extended once on the request by the subscriber. In the
financial position of the company there is no essential change
from what has been earlier made public by the company.
The company has not made public sales expectations but the
uncertainty about the situation of the company has somewhat
effected the sales.
The company has received from Internav a frame order which is not
yet binding and the details and terms of which are being
clarified and negotiated.
===========
F R A N C E
===========
ALSTOM SA: Investors Seen Minimizing Ties With Company
------------------------------------------------------
Investors are retreating from investments in engineering company
Alstom, which is currently bracing itself for a significant loss.
JP Morgan Chase Investor Services and State Street Bank & Trust
Co. have reduced their numbers of shares in Alstom, according to
Conseil des Marches Financiers.
The market filings agency confirmed JP Morgan Chase informed it
of the move that was prompted by clients demand.
JP Morgan Chase cut its holding to 7.82% from above a threshold
of 10%, while State Street Bank & Trust trimmed down its holding
to 4.9% from above a threshold of 5%.
Earlier this month Alstom pre-announced a EUR1.3 billion net loss
for 2002, along with an admission that Alstom would not achieve
financial targets set out in its March 2002 "Restore Value"
restructuring plans.
2002 losses are blamed on the provisions taken to cover technical
faults with some gas turbines sold by ABB Ltd. that were later
acquired by Alstom.
The company's troubles started when Renaissance Cruises Inc., its
biggest customer, filed for Chapter 11 protection. The latter
suffered a sharp fall in demand for cruises after the September
11 terrorist attack in the U.S.
Alstom is currently disposing assets to offset an expected EUR1.3
billion loss in the year to March 2003. Included in its EUR3
billion asset disposal program are its power, transmission and
distribution division as well as its industrial turbines
business.
ALSTOM SA: Awarded Contracts for Barcelona Tramway Maintenance
--------------------------------------------------------------
ALSTOM has been awarded two 25-year contracts for the maintenance
of the new Trambaix and Trambesos tramways in Barcelona.
Under these contracts ALSTOM will maintain the rolling stock and
infrastructure of both tramway networks, for a total of about
EUR179 million. Comsa, a Spanish construction company, will
maintain the platforms.
Operating both tramway networks is a private group headed by
Detren, a Spanish company jointly owned by FCC (Fomento de
Construcciones y Contratas) and Connex. The Sarbus Group and
Soler & Sauret are also part of the operating joint venture.
Patrick Kron, Chairman and Chief Executive Officer of ALSTOM,
said at the signing of the contracts: 'We are very pleased by
this demonstration of confidence in ALSTOM. These long-term
contracts are very important for us, consolidating our reputation
in maintaining light-rail systems. Furthermore, ALSTOM is proud
to be contributing to the continuing development of urban
transport in Barcelona, not only with the city's new tramways,
but also with the new automatic metro line.'
ALSTOM, as the technical leader of the construction consortium
building the Trambaix and the Trambesos networks, is supplying
the rolling stock - a total of 37 trams from its CITADIS family -
as well as much of the infrastructure equipment for both
tramways.
ALSTOM is also supplying 250 metro cars from its METROPOLIS range
for Barcelona's new automatic metro line (Line 9), currently
under construction.
The Trambaix and Trambesos contracts complement ALSTOM's previous
successes in Dublin and Melbourne, where ALSTOM has been awarded
maintenance contracts for the rolling stock of the tramway
networks.
ALSTOM is the global specialist in energy and transport
infrastructure. The Company serves the energy market through its
activities in the fields of power generation and power
transmission and distribution, and the transport market through
its activities in rail and marine. In fiscal year 2001/02, ALSTOM
had annual sales in excess of EUR23 billion and employed 112,000
people in over 70 countries. ALSTOM is listed on the Paris,
London and New York stock exchanges.
ALSTOM's Transport Sector, with annual sales of EUR4.4 billion,
is an internationally leading supplier of rolling stock,
information systems, services and complete turnkey systems to the
rail industry.
CONTACTS: ALSTOM SA
Investor relations
E. Rocolle-Teyssier
Phone: +33 1 47 55 25 78
E-mail: investor.relations@chq.alstom.com
SUEZ: Bidding for U.K. Water Company Scheduled by Mid-April
-----------------------------------------------------------
The second round of bidding for Suez's U.K. water company,
Northumbrian Water, is set by mid-April, according to French
business newspaper Les Echos.
A buyer is expected to be announced mid-May, so that by June,
Suez will be able the cash it plans to use to trim down debt by a
third to EUR26 billion.
Bidders vying for the asset, which Suez purchased for GBP823
million in 1996, are private equity group Terra Firma, venture
capital group Apax Partners, private investment group CVC
Partners, and the private equity units of Goldman Sachs and
Morgan Stanley.
Northumbrian Water is valued at GBP3.2 billion (US$5 billion)
including GBP1.2 billion of debt.
The sale is expected to save the waste, water and energy
conglomerate EUR280,000 a year.
In addition to the water company, Suez also announced its
intention to unload non-core shareholdings in order to proceed
with its debt reduction program.
Assets put on the block included EUR425.6 million-worth of
shareholdings in TotalFinalElf, Axa and Vinci.
Suez reported a net loss of EUR863 million (EUR2.09 billion
profit) for 2002, after exceptional losses of EUR1.73 billion.
=============
G E R M A N Y
=============
BANKGESELLSCHAFT BERLIN: Rating Remains on Negative Watch
---------------------------------------------------------
Fitch Ratings, the international rating agency, is maintaining
the Rating Watch Negative on Bankgesellschaft Berlin's (BGB's)
Long-term rating of 'A' in spite of the announcement by the state
of Berlin that the privatization of the bank is not going ahead.
The other ratings are affirmed at 'F1' Short-term, 'D/E'
Individual and '2' Support.
The Rating Watch Negative reflects Fitch's uncertainty as to what
requirements the European Commission may have in order to approve
the state aid received by the bank in 2001/2002, and the impact
these may have on the position of non-guaranteed creditors of the
Bankgesellschaft group.
The Individual rating reflects the severe deterioration in the
bank's financial strength as a result of the crisis that
threatened its viability in early 2002, which has resulted in
continuing asset quality and profitability problems and low
capital in relation to its risk profile. The Long-term, Short-
term and Support ratings are based on Fitch's view that support
by the state of Berlin - which holds 81% of BGB's capital and
guarantees around 60% of the group's liabilities through its
guarantees for Landesbank Berlin (LBB), a subsidiary of BGB -
would be forthcoming if necessary. Financial support was provided
by a EUR1.75 billion contribution to the capital increase in 2001
and substantial long-term guarantees against potential risks from
real estate fund management business in 2002. In Fitch's view the
bank will continue to benefit from strong potential state support
as long as Berlin remains majority owner or guarantees a
substantial part of its liabilities.
Yesterday the state of Berlin announced that talks with the US
investor group, BGB Capital Partner, the only remaining bidder,
had ended because it regarded the price as unacceptably low in
view of potential risks that would still have to be covered by
the state on top of the support already provided. Fitch comments
that despite Berlin's announcement having clarified the bank's
ownership situation in the near term, the agency expects further
attempts at selling some or all of the bank in the medium term,
which may be directly or indirectly accelerated by the EC's
requirements in order to approve state support, likely to come
through in the next few months. Although the EC's approval is
likely to be forthcoming, it is expected to be linked to several
conditions, such as a plausible restructuring concept enabling
the bank to return to satisfactory profitability in the medium
term and the disposal of assets. As a qualified approval may
alter the bank's balance sheet profile, BGB's Long-term rating
remains on Rating Watch Negative. The Rating Watch does not apply
to the Short-term rating as, in Fitch's view, changes in the
bank's profile over a time horizon of one year will be limited
and Berlin will remain committed to its "flagship bank" until the
ownership changes.
As a result of restructuring BGB will be a leaner and regionally
focused bank, concentrating on retail banking in its core region
and a few other profitable businesses. Scaling back several
activities and staff by 4,000 should help in achieving cost
savings, although stabilising the bank's revenue generation will
remain challenging in the current operating environment.
The Long- and Short-term ratings of 'AAA' and 'F1+' for BGB's
subsidiary, LBB, and the USD15bn EMTN Programme of BGB Finance
(Ireland) plc, guaranteed by LBB, remain unchanged as outstanding
obligations will be grandfathered. Fitch will assign new,
unguaranteed ratings to LBB in due course.
CONTACT: FITCH RATINGS
Andrea Schulz
Frankfurt
Phone: +49 (0)69 768 07618
Bridget Gandy
London
Phone: +44 (0) 207 417 4222
BANKGESELLSCHAFT BERLIN: Turns Down BCP's Offer for Stake
---------------------------------------------------------
The city state of Berlin refused a EUR10 million (US$10 million)
offer for its stake in Germany's ninth largest bank,
Bankgesellschaft Berlin, from BCP Capital Partners, an alliance
of two U.S.-based venture capital funds.
Thilo Sarrazin, Berlin's finance senator, labeled the offer a
"negative purchase price."
Under the terms of the deal for the purchase of its 81% stake,
Berlin has to continue covering a large portion of the bank's
five-year losses.
It has to meet 80% of future risks realized by the bank up to
EUR3.5 billion, and the full amount beyond that, according to the
Financial Times.
The terms mean Berlin has to cover provisions already been made
in the bank's business plan in addition to unforeseen losses.
The city has been trying to sell its stake in order to reduce
huge debt, estimated close to EUR50 billion.
Dr. Sarrazin reiterated the city's commitment to sell the stake,
but admitted "it is clear in the present circumstances that it is
not possible."
According to the report, city officials planned to pursue a long-
term recovery plan for the bank after it became clear that a sale
in the medium term is unlikely.
Negotiations for the sale of the stake has been running for 18
months without conclusion amidst worries about political
resistance to a sale on the Berlin side, and the soundness of an
investment in a weak banking sector.
The city of Berlin had earlier asked the European Union
Commission to initially approve a EUR1.7 billion emergency
financial aid for the bank, which suffered a string of losses as
a result of ill-judged property investments.
BERTELSMANN AG: Clears Speculations About Change in Chairmanship
----------------------------------------------------------------
As of November 1, 2000, Gerd Schulte-Hillen was appointed to the
Gruner + Jahr supervisory board for a period of five years, and
appointed its chairman.
In March 2002, as part of the discussion at the time concerning
possible IPO by Bertelsmann AG, Gerd Schulte-Hillen offered to
cede his Gruner + Jahr supervisory board mandate in the interest
of exemplary corporate governance (to avoid a dual mandate in the
parent/ subsidiary). At the appropriate time, Gerd Schulte-Hillen
and Gunter Thielen will decide on this matter in discourse with
the Gruner + Jahr shareholders. Gerd Schulte-Hillen is also
Chairman of the Bertelsmann AG Supervisory
Board.
HVB GROUP: Reinforces Capital Base by Placing Minority Stake
------------------------------------------------------------
As part of its 2003 transformation program, which aims among
other things to increase its core capital ratio up to 7% by the
end of this year, HVB Group will float up to 25% of Bank Austria
Creditanstalt (BA-CA), a wholly-owned subsidiary of
HypoVereinsbank based in Vienna, in the form of an IPO.
The Supervisory Board approved this plan Wednesday evening. The
stock will be listed as soon as possible before the already
announced real estate spin-off scheduled for the 4th quarter of
2003.
BA-CA will increase its capital stock accordingly. These new
stocks will then be placed internationally and listed on the
Vienna stock exchange. Board spokesman Dieter Rampl: "The
proceeds will help us increase HVB Group's capital resources very
efficiently because this measure will enable us to avoid a
substantial dilution of HVB's earnings per share. We are thus
acting in the interest of our shareholders." BA-CA will remain a
core activity of HVB Group.
BA-CA was fully integrated into HypoVereinsbank in 2001. With a
market share of 28%, it is the undisputed market leader in
Austria and has a dominant market position in the countries of
Central and Eastern Europe. In 2002 the BA-CA subgroup posted a
pre-tax profit of 504 million euros before consolidating entries.
Already today over 50% of the earnings of the BA-CA subgroup
comes from the markets of Central and Eastern Europe. HVB expects
precisely these countries to continue en-joying double-digit
growth in the coming years, among other things through
convergence with Western Europe.
More information will be provided prior to the IPO.
HVB GROUP: Introduces Measures to Implement Transformation Plan
---------------------------------------------------------------
-- Next steps to achieve target for 2003 (sustained improvement
in operating profitability in core business and increase of core
capital ratio toward 7%) introduced:
-- IPO of approx. ¬ of Bank Austria-Creditanstalt to
strengthen Group's capital base
-- Significant reduction of risk-weighted assets: Spin-
Off of Hypo Real Estate Group in fourth quarter of
2003 backdated to January 1, 2003 and further
portfolio optimization
--Cost-cutting initiatives and accelerated personnel
reduction
-- Beginning of 2003 operatively on schedule: operative
turnaround planned in course of the year
-- Presentation of financial statements for 2002 today in
Munich HVB Group has now introduced the next steps to implement
its 2003 transformation program with which it aims to achieve a
sustained increase in operating profitability in its core
business and an increase of its core capital ratio toward 7%.
Most importantly this will include the bank's placing a minority
holding of up to ¬ in Bank Austria-Creditanstalt in the course of
a free-float capital increase before the end of the year.
Depending on the market situation, the new shares will be placed
as soon as possible. Dieter Rampl, spokesman of the Board of
Managing Directors: "This initiative will strengthen the Group's
capital base and demonstrate that HVB Group is implementing the
transformation program on the basis of a sound capitalization. In
addition, we are keeping all options open for further selective
in particular organic growth in the important markets of Central
and Eastern Europe."
BA-CA is an integral core component of HVB Group and is already
today the dominant market leader in Austria and CEE.
"This initiative will strengthen the Group's financial resources
very efficiently because it will enable us to avoid a massive
dilution of equity for our shareholders. Additionally, we clearly
point out the value of our participation of BA-CA," says Dieter
Rampl.
As part of its strategic orientation toward business with retail
and corporate customers in Europe, HVB Group will transfer its
main activities in commercial real estate financing to the Hypo
Real Estate Group and spin this group off in the fall of 2003.
The entire European Real Estate Finance business, the
participation in WrttHyp along with HVB Real Estate Bank and
WestHyp belong to this. HVB Group shareholders will receive one
additional share of Hypo Real Estate Holding for four HVB-shares.
With a tier 1 ratio of around 7%, HVB Group will furnish Hypo
Real Estate Group with a solid core capital. Additionally,
HVB AG will also assume a limited obligation for Hypo Real Estate
Bank in Germany amounting to up to EUR590m.
This limited risk coverage also includes a debtor warrant for HVB
in the event that any provisions formed are reversed at a later
date. The Hypo Real Estate Group will position itself in the
market with a distinct profile emphasizing international real
estate financing. HVB Group expects that the spin-off will bring
higher value-added for its shareholders over the medium term. The
shareholders of HVB Group will vote on the spin-off at the Annual
General Meeting on May 14 this year.
HVB Group has planned further measures to reduce administrative
expenses in 2003. The old personnel reduction program which
foresaw 9,100 job cuts has been increased by 22% to 11,100 and
will already be completed by the end of this year, i.e. one year
earlier than originally planned. This increase will affect mainly
the Germany segment. Altogether the bank expects to reduce
administrative expenses of HVB Group (prior to the spin-off)
comfortably to well under EUR7bn (2002:EUR7.076bn) by the end of
the year. On the basis of these measures, coupled with the
substantial reduction of risk provisions and slightly improved
operating revenues, HVB Group expects a sustained improvement in
results in its core business this year. A clear positive range of
EUR300 - 600m is planned for the pre-tax result for this year -
after minus EUR821m in 2002 (HVB new after the separation from
commercial real estate).
The figures for the first two months of this year show that HVB
is operatively on schedule. In this period the Group has
succeeded in reducing risk-weighted assets through concentrated
management by some EUR7bn. This is already 18% of the good
EUR40bn which must be reduced beyond the separation from Real
Estate.
To See Financial Highlights:
http://bankrupt.com/misc/Financial_Higlights.pdf
CONTACT: BAYERISCHE HYPO- UND VEREINSBANK AG
Presseabteilung
Am Tucherpark 16
80538 Munchen
Phone: (089) 378-2 58 01/-2 55 12
Fax: (089) 378-2 56 99
Home Page: http://hvbgroup.com
HVB GROUP: Fitch Downgrades HVB Real Estate Bank AG to 'BBB'
-----------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded
HVB Real Estate Bank AG (HVB RE)'s 'A' Long-term rating to 'BBB'
Stable Outlook and its 'F1' Short-term rating to 'F3'. The
Individual Rating was affirmed at 'C/D'.
Each of these ratings is removed from Rating Watch Negative with
immediate effect. The Support rating of '4' was affirmed, as were
the Public Sector Pfandbriefe at 'AAA' and Mortgage Pfandbriefe
at 'AA+'.
The rating action follows Bayerische Hypo- und Vereinsbank
(HVB)'s announcement of further details regarding the spin-off of
its commercial real estate activities into a separate group. The
Rating Watch Negative was put in place in October 2002 following
HVB's announcement of this transaction, planned for 2003, and
reflected the uncertainty over HVB RE's future ownership,
capitalisation and performance.
To date HVB RE's Long-term rating has been at the same level as
that of its parent, HVB ('A', Outlook Stable), because commercial
real estate lending had been considered a core part of HVB
group's franchise and was subject to the same management controls
as the parent. However, that link will be severed after the
pending share split and potential support from HVB will be
limited (HVB will provide a deficiency guarantee of EUR590
million against HVB RE's loan book). HVB RE's new ratings reflect
Fitch's view of the financial strength on a stand-alone basis of
its successor, taking into account forthcoming changes in its
structure and profile, its weak asset quality, lack of operating
profit, adequate but not strong capitalisation and a sweeping
restructuring that will strain management resources.
The share split will see HVB's commercial real estate business
being transferred to a newly created banking group, the main
banks of which will be Hypo Real Estate Bank AG (Hypo RE), Hypo
Real Estate Bank International and Wurttembergische
Hypothekenbank (WurttHyp). Each will have different business
models, and foreign and domestic real estate activities will be
operationally and legally separated under a common holding
company. HVB RE will merge with Westfaelische Hypothekenbank
(WestHyp) to form Hypo RE, which will largely comprise German
real estate and public sector assets.
Domestic real estate business has been burdened by massive asset
quality problems owing to depressed real estate markets and
exposure to eastern Germany. In 2002 HVB RE's risk provisions
wiped out its operating profit. New management will submit the
German book to comprehensive restructuring during the next three
years, involving a substantial reduction of the portfolio and
very limited new business based on a strict risk/return approach.
In Fitch's view, asset quality will remain an issue for the bank
in the current difficult operating environment, despite increased
reserve coverage, the guarantee from HVB and intentions to run
down impaired loans included in a EUR3 billion workout portfolio,
with a further EUR1.1bn on the "watch list". Due to its low
margin assets, decreasing revenue and continuing provisioning
requirements HVB RE's successor, Hypo RE, will not be in a
position to generate a respectable return in the next few years.
The strategy of the new "Hypo Real Estate group" will be to focus
more on international commercial real estate business to be
transferred to Hypo RE International, which has proved very
profitable during its development during the past 10 years, with
minimal risk costs. A shrinking asset volume in the German
business will mean that the holding company should be able to
reallocate capital to support growth in Hypo RE International.
The group aims to maintain a Tier 1 capital ratio of 7%, regarded
by Fitch as adequate, but not strong in relation to the bank's
risk profile, size, monoline business franchise and exposure of
funding costs to capital markets sentiment.
HVB RE was formed on September 1, 2001 by the merger of three of
HVB's then five mortgage bank subsidiaries, Nuernberger
Hypothekenbank, Sueddeutsche Bodencreditbank and Bayerische
Handelsbank. As a "mixed" mortgage bank, it can act as a
commercial bank beyond the strict limitations of the German
Mortgage Bank Law. HVB RE focuses on property-related business,
including lending, asset management and investment banking for
professional customers as well as public sector lending
INFINEON TECHNOLOGIES: Strengthens Foothold in China
----------------------------------------------------
Infineon Technologies AG is further executing on its sustained
commitment to the Chinese market. Infineon and Semiconductor
Manufacturing International Corporation (SMIC), Shanghai, China,
today announced that they have signed an agreement to expand
their cooperation on the production of standard memory chips
(DRAMs). Under the terms of the additional agreement, Infineon
will transfer its 0.11-æm DRAM trench technology and 300mm
production know-how to SMIC. In return, SMIC will manufacture
products in this technology exclusively for Infineon.
This new move will enable Infineon to increase its overall
capacity by approximately 15,000 wafer starts per month through
SMIC's 300mm production plant, which is currently being built in
Beijing. In December 2002, the two companies signed an agreement
whereby SMIC would manufacture memory chips in its 200mm plant in
Shanghai using Infineon's 0.14-æm DRAM trench technology
exclusively for Infineon. Following the ramp-up of SMIC's Beijing
facility, the addition of the 15,000 wafer starts per month in
300mm technology to the 20,000 wafer starts per month in 200mm
will result in a total capacity of 58,000 wafer starts in 200mm
wafer equivalents. First products from the new 300mm plant are
expected for summer 2004.
"Through the extension of our cooperation with SMIC we can grow
our DRAM business without having to invest in production
facilities," said Dr. Harald Eggers, Memory Products Group CEO at
Infineon Technologies AG. "At the same time we are further
strengthening our regional presence in the promising market of
China and aiming overall at a leading market position in
Asia/Pacific."
"We are pleased to expand our partnership with Infineon," said
Dr. Richard Chang, President and CEO of SMIC. "SMIC's dedicated
quality foundry service will provide a win-win business and
financial solution as the semiconductor industry moves towards
greater outsourcing of production."
This collaboration will further consolidate Infineon's position
as the third largest semiconductor manufacturer in the DRAM
market and further establish the company as a leading provider in
the growing Chinese market. According to forecasts by market
research firm Gartner Dataquest, the semiconductor market in
China alone is set to grow from approximately US $16 billion in
2002 to around US $31 billion in 2006.
About Infineon
Infineon Technologies AG, Munich, Germany, offers semiconductor
and system solutions for the automotive and industrial sectors,
for applications in the wired communications markets, secure
mobile solutions as well as memory products. With a global
presence, Infineon operates in the US from San Jose, CA, in the
Asia-Pacific region from Singapore and in Japan from Tokyo. In
fiscal year 2002 (ending September), the company achieved sales
of Euro 5.21 billion with about 30,400 employees worldwide.
Infineon is listed on the DAX index of the Frankfurt Stock
Exchange and on the New York Stock Exchange (ticker symbol: IFX).
Further information is available at http://www.infineon.com
About SMIC
SMIC is the first pure-play advanced IC foundry in China to
achieve volume production for 8-inch wafers at 0.25æm, 0.18æm and
finer line technologies. Established in April 2000, SMIC is a
Cayman Islands company based in Shanghai. The foundry provides
customers with a full range of services that include: design
services, mask manufacturing, wafer fabrication as well as
testing capabilities. For more information, please visit
http://www.smics.com
*****
Infineon's first quarter EBIT was a loss of EUR31 million, a
strong improvement from a loss of EUR292 million sequentially and
from a loss of EUR 564 million year-on-year.
CONTACT: INFINEON TECHNOLOGIES AG
P.O. Box 80 09 49
D-81609 Muenchen
Germany
Contact:
Investor Relations
Phone: +49 89 234 26655
Fax: +49 89 234 26155
E-mail: investor.relations@infineon.com
KIRCHMEDIA GMBH: Hands Film Library-and-rights Business to Saban
----------------------------------------------------------------
The agreed sale of Kirchmedia's assets to Hollywood entrepreneur
Haim Saban is going on as planned with the transfer of Kirch's
film library-and-rights business to Mr. Saban.
After the investor agreed to buy Kirch's controlling stake in
television broadcaster ProSiebenSat.1 last week, both parties
said an agreement for the films was only days away.
Saban Group official Adam Chesnoff and KirchMedia Managing
Director Hans-Joachim Ziems finally signed the contract true to
their words on Thursday.
The agreement still has to pass regulatory and antitrust review.
Both the film and the stake in ProSiebenSat are the remains of
the collapsed empire of Bavarian entrepreneur Leo Kirch.
Mr. Kirch's company, Kirch Group, collapsed last year under
mounting debts and losses from the unsuccessful Premiere pay-TV
service, bringing with it KirchMedia with EUR1.9 billion (US$2.03
billion) in debt.
=========
I T A L Y
=========
FIAT SPA: Finmeccanica Mum on Plans Regarding Fiat Avio
-------------------------------------------------------
Italian aeronautics and defense company Finmeccanica SpA has kept
its silence over reports that it will make a joint bid with US-
based private equity fund Carlyle Group LP for Fiat SpA's
aeronautics division, Fiat Avio.
Il Sole-24 Ore recently reported that Finmeccanica wants to
contain expenses by bidding just one-third of the EUR1.6 billion
transaction with Fiat, and that Carlyle is considering whether it
can take up the remaining two-thirds.
Finmeccanica declined to comment on this. A spokesman from the
company said: "There have been lots of reports on the Fiat Avio
sale which were subsequently denied."
The spokesman suggested waiting for the board meeting to finish
on Thursday.
Dow Jones Newswires also reported that Fiat will meet later
Thursday, and will sell insurance unit Toro for EUR2.4 billion
during the weekend.
French aerospace company Snecma SA, once regarded as the
forerunner to buy a controlling stake in Fiat Avio together with
Finmeccanica, is understood to have aborted the plan due to
pressures from the French state, Dow Jones said.
Fiat SpA, which recently posted a EUR4 billion loss, is divesting
several of its assets to raise cash for its troubled unit Fiat
Auto. It needs to have as much as EUR5 billion if it wants to
save the group's struggling auto business.
Fiat Auto, meanwhile, had an operating loss of EUR1.3 billion
last year and is expected to lose around EUR700 million this
year. It is not expected to break even until 2004 when new models
begin to improve margins.
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
=====================
N E T H E R L A N D S
=====================
GETRONICS N.V.: Terminates Revised Invitation to Tender
-----------------------------------------------------------
In the light of the low level of Exchange offers tendered, the
views expressed by the shareholders at the shareholders meeting
of March 27, 2003, and in order to remove uncertainty and
distraction for clients and employees, Getronics Management, with
the support of the Supervisory Board, terminates the Revised
Invitation To Tender.
Getronics Management and Supervisory Board believe that the
decision to terminate the Revised Invitation To Tender is in the
best interests of the company and all its stakeholders.
About Getronics
With approximately 25,000 employees in over 30 countries,
Getronics is one of the world's leading providers of vendor
independent solutions and services to professional users of
Information and Communication Technology (ICT). Through
consulting, integrating, implementing and managing Infrastructure
Solutions and Business Solutions, Getronics helps many of the
world's largest global and local organisations to maximise the
value of their technology investment and improve interaction with
their customers. Getronics' headquarters is in Amsterdam, with
regional head offices in Boston and Singapore. Getronics' shares
are traded on Euronext Amsterdam ('GTN'). For further information
about Getronics, visit www.getronics.com
CONTACT: GETRNONICS N.V.
Investor Relations
Phone: +31 20 586 1964
Fax: +31 20 586 1455
E-mail: investor.relations@getronics.com
KONINKLIJKE AHOLD: Inquiry Might Drag Two Big Names in U.S.
------------------------------------------------------------
U.S. federal investigators conducting inquiry into Ahold's U.S.
Foodservice unit might also look into the subsidiary's suppliers,
Sara Lee Corp. and ConAgra Foods Inc., according to The Wall
Street Journal.
U.S. regulators, including the U.S. attorney's office in
Manhattan and the Securities and Exchange Commission, have been
examining whether some of the supplier rebates booked by U.S.
Foodservice were deliberately inflated.
The names of two big companies in U.S.'s food industry were
dragged in the issue on allegations that representatives from
these companies were involved in "false confirmations" of
supplier rebates that helped puffed up U.S. Foodservice's profits
to at least US$500 million.
A person familiar with the situtation said they knowingly
substantiated the inflated amounts of promotional allowances that
U.S. Foodservice had listed on its books.
A spokeswoman for Nebraska-based ConAgra confirmed knowledge of
the investigation concerning Ahold but declined to comment
further.
A spokeswoman for Chicago-based Sara Lee, on the other hand,
denied having been contacted by any investigative body, and
denied the allegations as "untrue" and "unsubstantiated."
Sara Lee is famous for Jimmy Dean and Hillshire Farm sausages.
ConAgra is best known for its Butterball poultry brand and sells
seafood, dairy products and other brands such as Chef Boyardee
canned spaghetti and Healthy Choice meals.
RELIANT RESOURCES: Placed on Watch Negative Due to FERC Findings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on electricity provider Reliant Resources Inc. (RRI) and
three of RRI's subsidiaries, Reliant Energy Mid-Atlantic Power
Holdings LLC (REMA), Orion Power Holdings Inc., and Reliant
Energy Capital (Europe) Inc., to 'CCC' from 'B-'.
The ratings on each of these companies were placed on CreditWatch
with negative implications. In addition, Orion Power's senior
unsecured rating was lowered to 'CC' from 'CCC'.
The CreditWatch listing for Reliant Energy Power Generation
Benelux B.V. (REPGB) was revised from positive to developing.
The rating action follows the Federal Energy Regulatory
Commission's (FERC) show cause order relating to power trading
during the California energy crisis. The penalty for this may be
a revocation of RRI's authority to sell power at market-based
rates. RRI has 21 days to show cause of why their authority
should not be revoked.
The alternative for selling power at market-based rates is to
sell at cost of service based rates. This adds another element of
uncertainty to RRI's business risk.
The order by the FERC comes at a time that RRI is in the midst of
completing a $5.9 billion global refinancing. The FERC order
could significantly hinder reaching an agreement with bank
lenders on the global refinancing. RRI has a $2.9 billion
maturity on March 28.
Should less than 100% of the bank lenders agree to commit to the
terms of a renegotiated deal representing a long-term solution, a
default could occur. RRI currently has little access to the debt
and equity capital markets and lacks adequate liquid funds to
fully repay the $2.9 billion maturity on March 28. If RRI is
unable to obtain commitments from all of its bank lenders, it may
resolve its credit situation in a bankruptcy filing.
Complete ratings information is available to subscribers of
VERSATEL TELECOM: Closes Tesion and Completel Germany Deal
----------------------------------------------------------
Versatel Telecom International N.V. announced that it has
completed the closing of its recently announced acquisition of
100 percent of the outstanding stock in Tesion and Completel
Germany.
Versatel Telecom International N.V. Versatel, based in Amsterdam,
is a competitive communications network operator and a leading
alternative to the former monopoly telecommunications carriers in
its target market of the Benelux and regional Germany.
Founded in October 1995, the company holds full telecommunication
licenses in The Netherlands, Belgium and Germany and has over
79,000 business customers and approximately 1,600 employees.
Versatel operates a facilities-based local access broadband
network that uses the latest network technologies to provide
business customers with high bandwidth voice, data and Internet
services. Versatel is a publicly traded company on Euronext
Amsterdam under the symbol "VRSA".
*****
On Monday Versatel said it had reached agreement with ARQUES-
Group, a Munich based investment holding that owns Tesion
Telekommunikation GmbH and its wholly owned subsidiary, Completel
GmbH, to merge their German entities.
Upon the closing of the transaction, Versatel Deutschland Holding
GmbH (VDH) will acquire 100 percent of the outstanding stock in
Tesion and Completel Germany.
CONTACTS: VERSATEL TELECOMS
AJ Sauer
Investor Relations & Corporate Finance Manager
Phone: +31-20-750-1231
E-mail: aj.sauer@Versatel.nl
Anoeska van Leeuwen
Director Corporate Communications
Phone: +31-20-750-1322
E-mail: anoeska.vanleeuwen@Versatel.nl
===========
P O L A N D
===========
SZCZECIN SHIPYARD: Receiver Will Accept Bids for Shipyard
---------------------------------------------------------
The official receiver of the bankrupt Szczecin Shipyard (SS)
announced it would be accepting bids for the company's property
until mid-April, with a condition that bidders give an auction
deposit guarantee of PLN1 million.
The company announced the information at its website and is due
to publish the invitation in the press Friday.
The shipyard's machinery and equipment is being offered for
PLN111.775 million, excluding real estate since the whole area
belongs to SS' parent company Porta Holding, which also went
bankrupt in July 2002.
The New Szczecin Shipyard, which is currently leasing some of the
machinery and equipment from the receiver, believes that the
price is too high. The share capital of the yard amounted to
PLN240 million at the end of 2001.
=====================
S W I T Z E R L A N D
=====================
ASCOM: Narrows Down Loss by 30% to CHF281 Million in 2002
---------------------------------------------------------
Ascom with 2.07 billion revenues and 281 million loss -- net
debts more than halved.
In 2002 in a difficult telecommunications market Ascom achieved
revenues of CHF 2,066 million. At the same time the Group reduced
the loss compared with the previous year by almost 30% to CHF 281
million.
The net debts fell to CHF 264 million, a drop of 58%. The three
Business Units Wireless Solutions, Security Solutions and Network
Integration, which together achieved revenues of CHF 797 million,
were able to improve the operating result by CHF 62 million to
CHF 47 million.
In the two Business Units Transport Revenue and PBX, the
operating loss increased compared to the previous year by CHF 16
million to CHF (55) million. The combined revenues of these
Business Units were CHF 445 million. With Energy Systems, revenue
decreased by CHF 206 million to CHF 371 million. The operating
loss increased to CHF (25) million.
It was possible to reduce the operating loss of New Technologies
compared with the previous year by CHF 9 million. In the year
under review it was CHF (28) million with revenue of CHF 11
million. During 2003 Ascom will continue to implement the
measures to improve the results in all Business Units belonging
to the Group and will press ahead with the planned disposals. At
the same time the company will strive for profitable growth in
niche markets with a good market position and low capital
commitment.
At the beginning of 2003 the Executive Board decided on important
measures for the further elimination of sources of loss, the
maintenance of value as well as the adaptation of the cost
structure to the market environment.
In 2002 Ascom achieved revenues of CHF 2,066 million(previous
year CHF 3,143 million). Adjusted for divestments and the
influence of exchange rates, this gives a decrease in revenue of
13.5%. The initiated cost reduction measures were not able to
keep pace in all areas with the economy-dependent erosion of the
markets. This led to an operating result of CHF (107) million
(previous year CHF (124) million). Furthermore, as a result of
the weak market it was necessary to make unplanned write-offs on
goodwill and real estate (CHF 86 million). The Group loss amounts
to CHF (281) million (previous year CHF (396) million).
Net debts: Marked reduction
Marked progress was achieved by the company in the year under
review with the reduction of the net debts. In particular through
the accrual of funds from the disposal of parts of the company to
the amount of CHF 248 million as well as through a reduction in
net current assets and other positions by CHF 213 million, net
debts were reduced by 58% within the year to CHF 264 million
(previous year: CHF 631 million).
Wireless Solutions: Profitability and growth
Development in the Wireless Solutions Business Unit was
gratifying. It increased the operating result by CHF 16 million
to CHF 25 million with an increase in revenue of some 17% to CHF
235 million.
Security Solutions: Profitability increased
In the financial year 2002, Security Solutions exceeded the
result of the previous year by CHF 4 million with an operating
result of CHF 15 million and a reduction in revenues of some 11%.
Revenues amounted to CHF 212 million.
For both Security Solutions and Wireless Solutions, for 2003 the
focus is on programs to promote profitable growth.
Network Integration: Improved result
Network Integration developed positively. Following high losses
in the past, profitability and market position were improved in
the year under revue. In spite of reticence on the part of
customers to invest and a slump in sales of more than 20%,
through consistent cost management, an increase in the efficiency
and expansion of the maintenance offering, the Business Unit
achieved a positive operating result of CHF 7 million (previous
year CHF (35) million). Revenues of CHF 350 million were achieved
(previous year CHF 456 million). Other measures to improve the
cost structure are being implemented.
Transport Revenue: Turnaround in Switzerland not achieved
In spite of the initiated restructuring measures, Transport
Revenue in Switzerland failed to achieve a turnaround. Above all,
old projects burden the operating result through losses. This
resulted in an operating result for the Business Unit of CHF (28)
million (previous year CHF (22) million) with a reduction in
revenues of some 13% to CHF 283 million. Transport Revenue's
foreign Business Units developed positively and even under these
hard conditions operated profitably. Critical projects that
burdened the 2002 result are in the concluding phases, the
focussing of the business on service offerings was again pushed
forward and the unit was subjected to comprehensive process
reengineering. Based on this, losses in 2003 are to be clearly
reduced with additional targeted measures.
PBX: On the path to a turnaround
The PBX (Ascotel) Business Unit suffered losses particularly due
to weakness of the economy in the telecommunications market, a
low propensity to invest anda change to a new system generation.
Revenues dropped to CHF 162 million (previous year CHF 195
million), the operating result to CHF (27) million (previous year
(17) million). With comprehensive cost reduction measures and a
new product line, Ascom has achieved good foundations for a
turnaround in 2003. On this basis, the company decided in
February 2003, in the sense of a maintenance of value, to further
develop PBX (Ascotel) within the Group. Additional measures to
reduce costs that were taken at the beginning of 2003 will be
consistently implemented.
New Technologies: Losses reduced slightly
The operating losses of the New Technologies Business Unit with
Powerline Communications and the activities of iT_SEC, the main
part of which was sold in July, were reduced by CHF 9 million. In
the year under review it was CHF (28) million with revenues of
CHF 11 million (previous year CHF 36 million). In addition,
further high restructuring costs were incurred which led to an
EBIT of CHF (58) million. With the decision taken in January to
transform the start-up company Powerline Communications into a
technology company, and in future to award licenses for the sale,
industrialization and production, it can be prevented that new
high operational losses will be incurred in the future.
Energy Systems: Difficult situation
The crisis in the technology market hit Energy Systems
particularly hard, the market slumped by 35%. Energy Systems'
revenues reduced to CHF 371 million (previous year CHF 577
million). The operating loss increased to CHF (25) million
(previous year CHF (17) million). Measures to improve the result
in the new financial year are being implemented.
Co-operation: Reduction in revenue through sales
The Co-operation unit incorporates parts of the company for which
solutions are being sought outside of Ascom in the form of
partnerships, joint ventures or sales or which were disposed of
in the year under review. In 2002 several sales took place,
amongst them Mailing Systems. The revenue of the unit reduced to
CHF 468 million (previous year CHF 1,240 million); this resulted
in an operating loss of CHF (11) million. (previous year CHF 13
million).
Financing: Bank agreement completed
The financing agreement that expired at the end of October 2002
was converted into a new agreement with the banks on 29 October
2002, whereby the lead manager of the bond was suitably informed.
The new agreement, which reaches maturity on 31 May 2004, covers
a total amount of CHF 228 million and foresees a staggered
reduction of the debt to a level of CHF 100 million at maturity.
2003: Marked reduction of losses planned
At the beginning of the year under new management, Ascom took
decisions about the transformation of Powerline Communications
into a technology company, the further development of PBX within
the Group and a reduction of 500 jobs, 250 of these in
Switzerland and 250 abroad.
Over the coming months the Executive Board will tackle the
following tasks with priority and at great speed:
Strengthen the balance sheet through further reduction of the
operationally tied up capital through planned divestment of real
estate and the Energy Systems Business Unit.
Decrease the cost basis, in particular through the reduction in
personnel by 500 jobs as decided in January as well as with cost
savings in purchasing and through process optimization throughout
the whole of the Group.
Implementation of defined programs to improve the results in the
Transport Revenue and Energy Systems Business Units.
Achieving the turnaround of PBX (Ascotel).
Taking advantage of growth possibilities in niche markets.
Here there are opportunities for the Wireless Solutions and
Security Solutions Business Units.
In the difficult conditions within the technology market, the
initiated measures are aimed at significantly reducing the losses
of the Ascom Group. Based on today's situation, the Board of
Directors and the Executive Board are confident that this
objective set for 2003 can be achieved.
About Ascom
Ascom is an international supplier of telecommunications systems,
integrated voice and data communications, wireless and corded
security solutions and networked revenue collection systems for
public and private transport operators. Ascom's Business Units
plan, build, maintain and operate tailor-made comprehensive
solutions along the whole of the added-value chain witha service-
oriented portfolio and proven technology know-how as well as its
own products. Ascom is active worldwide in markets with a high
growth potential. The Ascom registered shares (ASCN) are quoted
on the SWX Swiss Exchange in Zurich.
SWISS INTERNATIONAL: Suspends Weekly Flights to Abu Dhabi
---------------------------------------------------------
Because of a drop in reservations due to the crisis in Iraq, and
in keeping with the program to streamline the route network,
SWISS is suspending its thrice weekly continuation flights from
Riyadh to Abu Dhabi, effective April 3. The last flight from
Zurich to Abu Dhabi will be on April 1, 2003.
The drop in reservations for flights to and from Abu Dhabi, with
a stop in Riyadh, is the main reason for this decision. The
thrice weekly non-stop flights from Switzerland to Riyadh will
continue.
Additionally, the daily non-stop A330 services to the United Arab
Emirates (Dubai) are to continue. The sales organisation in Abu
Dhabi remains in place and will be adapted to requirements. Abu
Dhabi is located only 150 kilometres from Dubai and thus easily
attainable for passengers.
CONTACT: SWISS
Corporate Communications
P.O. Box, CH-4002 Basel
Phone: +41 (0) 848 773 773
Fax: +41 61 582 35 54
E-mail: communications@swiss.com
Home Page: http://www.swiss.com
SWISS INTERNATIONAL: WorldCargo Schedules Has Minimal Changes
-------------------------------------------------------------
Despite the downsizing of the SWISS aircraft fleet, Swiss
WorldCargo's 2003 summer schedules are largely unchanged apart
from the withdrawal of services from a few peripheral European
destinations. Road truck services play a key role in the new
cargo network.
SWISS's decision to downsize its aircraft fleet and streamline
its route network will have only a minimal impact on the Swiss
WorldCargo summer schedules for 2003. "Our long-haul network in
particular, on which we generate a large proportion of our
revenues, is hardly affected," says Markus Vetsch, Vice President
Operations. The summer timetable period will, however, see new
developments on the equipment front: SWISS's new Airbus A340 will
be deployed on Zurich-Dubai-Karachi and Zurich-Lagos-Accra
services from July onwards. The new long-haul transport has a
maximum cargo capacity of 22 tons.
Production largely unchanged
Even on short and medium-haul routes, which are affected more
tangibly by SWISS's own capacity reductions, the changes will be
limited. "We can largely keep our production at its previous
levels," Vetsch explains, "because we are already providing truck
services to many of the destinations from which SWISS is
withdrawing air services, especially from Basel and Geneva."
These road services are all the more significant in that the
trucks used on them have a maximum capacity of some 17 tons, far
more than a short- or medium-haul aircraft - a Saab 2000 or
Embraer RJ 145 with a full passenger payload can carry some 500
kilos of cargo, while even the bigger Airbus A321 has a maximum
cargo capacity of around three tons.
Road to success
Swiss WorldCargo's road cargo network is one of the most
comprehensive in Europe, and plays a vital role in feeding
airfreight consignments onto its long-haul services and
distributing them from its hubs to their final destinations. All
these truck services are operated under the same conditions as
air cargo flights, and the trucks cannot be loaded or unloaded en
route between airports. Swiss WorldCargo's European truck fleet
currently consists of 29 state-of-the-art vehicles, all in Swiss
WorldCargo livery. The fleet is supplemented by some 250 further
trucks operating in the colors of various transport companies.
From Zurich instead of Basel or Geneva
Swiss WorldCargo will be withdrawing or reducing services to some
European destinations from the start of the summer schedules as a
result of SWISS's downsizing of its fleet and route network.
SWISS will, for example, only be serving Copenhagen, Helsinki and
Stockholm from Zurich in future, instead of from Zurich and
Basel. Some destinations which are of only peripheral importance
in air cargo terms - such as Bilbao, Seville, Guernsey/Jersey,
Porto, Alicante, Sarajevo, Toulouse and Tirana - will see their
services entirely withdrawn, by air or by road. At the same time,
however, Swiss WorldCargo is increasing its frequencies to
Toronto, which will now have daily service, and to Beijing, which
will also receive two additional weekly flights.
For further information, visit http://swissworldcargo.com
Swiss WorldCargo is the air cargo division of Swiss International
Air Lines Ltd. With its global network of more than 150
destinations in over 80 countries and its broad range of
airfreight products and services, Swiss WorldCargo generates
genuine added value for its customers and makes a substantial
contribution to SWISS's earnings results.
===========================
U N I T E D K I N G D O M
===========================
ABBEY NATIONAL: EU Approves GE's Acquisition of First National
--------------------------------------------------------------
The European Commission has given General Electric Consumer
Finance, the consumer credit services business of the General
Electric Company, the go signal to buy Abbey National's consumer
lending arm, First National.
A report from Reuters said GE Consumer Finance is buying most of
Abbey's consumer lending unit, while the bank retains First
National's motor finance unit and its litigation finance unit as
indicated in the agreement entered by the two companies in
February.
Under the agreement, GE Consumer Finance will acquire First
National for an estimated total cash consideration of GBP848
million.
First National is a leading U.K. provider of secured and
unsecured lending to consumers through intermediaries.
Approximately 1,400 people and GBP 4.8 billion of assets are
employed in the operations being sold.
The transaction was approved under the Commission's simplified
procedure, used when neither customers nor rivals have complaints
about a deal.
Abbey National is currently disposing non-core parts to
concentrate on core U.K. personal financial services.
CONTACT: ABBEY NATIONAL
Investor Relations
Jon Burgess
Phone: 020 7756 4182
Rob Askham
Phone: 020 7756 4181
Home Page: http://www.abbeynational.com
AFFINITY WIRELESS: Creditors Called for Administration
------------------------------------------------------
Creditors of mobile and fixed line telephone operator Affinity
Wireless brought the company into administration to recover their
investment before its too late.
A spokesman for parent Affinity Internet Holdings said: "Affinity
Internet creditors said 'Enough's enough, we want our money."
Joint administrator Andrew Pepper "The general plan is to sell as
quickly as possible for a reasonable price, to maximize the debt
collection and minimize customer disruption."
This, the administrator wanted to pursue despite threat of having
thousands of the company's business and private customers facing
disruption to services.
Mr. Pepper said he already has "around 10" indications of
interest from venture capitalists and trade buyers.
The sell-off is also expected to affect 90 jobs in Gloucester and
London.
Affinity Wireless resells branded telecoms services on behalf of
Sainsbury, WH Smith and Vodafone. It produced turnover of
GBP26.6 million for the nine months to September 30 and an
operating profit of GBP951,000.
BAE SYSTEMS: Appointment in Boeing Renews Takeover Gossip
---------------------------------------------------------
Boeing's recent appointment of Sir Michael Jenkins as U.K.
president has fuelled speculation that the world's largest
commercial jet maker is planning to take over the embattled BAE
Systems.
Sir Michael, whose new company had been linked for years with the
defense group, said he would be alert to "direct investment
possibilities."
The former diplomat who was previously vice-chairman of Dresdner
Kleinwort Wasserstein also said: "I would like to look at the
field of current suppliers and see what they produce and the
degree to which they are already dependent on Boeing and look at
where the synergies are."
Boeing's largest suppliers in the U.K. include BAE, Rolls-Royce
and engineering groups Smiths and GKN.
A defense analyst said it would be a surprise if Boeing weren't
looking since buying anything smaller "would really be at the
margins" for the U.S. company. "There is only one [U.K. company
Boeing would buy] and it is BAE," he said.
Although the companies' merger had always been speculated, one
problem that had always hovered over the possible transaction is
the U.K. company's 20% stake in Boeing's rival, Toulouse-based
Airbus.
CONTACT: BAE SYSTEMS
Farnborough, Hampshire GU14 6YU, UK
Phone: +44 (0) 1252 384605
Fax: +44 (0) 1252 383947
Homapge: http://www.baesystems.com
Contact:
Phil Soucy, Corporate Communications
Phone: +44 (0) 1252 384797
E-mail: phil.soucy@baesystems.com
Richard Coltart, Corporate Communications
Phone: +44 (0) 1252 384875
E-mail: Richard.coltart@baesystems.com
BAE SYSTEMS: Pampered Top Executives With Bonus and Pension
-----------------------------------------------------------
BAE's two succeeding chief executives received bonuses and
pension top-ups last year, the company's annual report and
accounts show, according to Independent News.
Mike Turner, who succeeded John Weston in March received a
GBP115,000 bonus, while Mr. Weston himself is now receiving a
GBP166,243 worth of early retirement pension a year.
The disclosure is likely to anger shareholders and employees, who
were asked to increase their own pension contributions when the
company was hitting rock bottom.
Mr. Turner received a total of GBP709,000, or a 24% increase on
the GBP570,000 he received in 2001. His bonus represented a 20%
increase of his base salary.
A BAE spokesman defended the payment of the bonus saying Mr.
Turner met his own "personal targets" despite missing the
company's financial targets.
Mr. Weston, on the other hand, got a total of GBP1.6 million last
year, inclusive of GBP130,000 in salary, GBP520,000 in
compensation for loss of office and a one-off payment into his
pension fund of GBP939,000.
The remunerations were made at a time when BAE Systems had a loss
of GBP616 million, and its share price is down by two-thirds to a
10-year low of 112 p.
BAE was forced to take a GBP750m write-off because of cost and
time overruns on two big equipment programs - the Nimrod
surveillance aircraft and the Astute nuclear-powered attack
submarine.
It also lost out on two other big Ministry of Defense program and
has to share a GBP10 billion aircraft carrier program for the
Royal Navy with Thales of France.
CABLE & WIRELESS: Fitch Affirms 'BB+' Rating, Negative Outlook
--------------------------------------------------------------
Fitch Ratings, the international rating agency, has affirmed its
'BB+' Long-term rating and 'B' Short-term rating for Cable &
Wireless plc (C&W). The Outlook is Negative.
Fitch recognises that C&W's financial flexibility will be
enhanced following the release of GBP1.5bn from an escrow account
held to the order of Deutsche Telekom AG (DT), after the payment
of GBP380m to the Inland Revenue to settle its tax position up to
31 March 2001. Nevertheless, substantial uncertainties remain
with regard to the leadership and strategic direction of the
group. The C&W Global business model is still unproven and the
C&W Regional incumbent telecommunications service provider
businesses continue to face increasing liberalisation and
competition.
As a consequence of the tax settlement, Fitch expects DT to agree
to the release of the funds currently held in escrow. As a result
of this release, C&W will have increased financial flexibility at
a time when the newly-appointed chairman has yet to affirm the
group's strategy. Fitch expects C&W to give more information on
its strategy going forward following the appointment of a new
chief executive officer, and possibly around the time of the
announcement of its results for the financial year to March 31,
2003 on June 4.
In 2002, the group's previous leadership announced a significant
rationalization of C&W Global, whilst retaining the fundamental
characteristics of the business model. This rationalization was
undertaken in order to help achieve the goal of turning this
business free cash flow (EBITDA minus capital expenditure)
positive in the fourth quarter of the 2003/04 financial year. The
C&W Regional portfolio of incumbent telecommunications service
providers located in the Caribbean and other regions of the world
continue to generate significant free cash flow, although these
operations are operating in liberalized and increasingly
competitive markets, particularly in the mobile business.
EDINBURGH FUND: Managed Funds Down Due to Loss of Mandate
---------------------------------------------------------
Edinburgh Fund Managers Group plc is one of the UK's leading
managers of investment trusts and funds for the retail and
institutional markets.
Its investment products are distributed primarily through IFAs
and other professional advisers and through partnerships with
major life and banking institutions.
Preliminary results for the year ended January 31, 2003
Key Features
-- New chairman: appointed February 2003, joint managing
directors appointed November 2002, new Chief Investment Officer
appointed September 2002
-- Funds under management: at GBP4.1 billion, down from GBP7.1
billion largely as a result of market movements and the loss of
The Edinburgh Investment Trust mandate
-- Turnover: down 12% to GBP30.7 million from GBP34.9 million
--Pre-tax profit: before goodwill and exceptional items GBP2.78
million (GBP6.51 million in 2001/02)
-- Earnings per share (before goodwill and exceptional items)
7.0p (16.2p)
-- Dividend per share: in light of the results for the year, no
final dividend will be paid
-- Average fee rate improved over the year from 0.46% of average
funds under management last year to 0.55% this year
-- New business: record gross sales achieved by Edinburgh
Portfolio, which has become the leading retail fund of funds
manager in the UK
-- Investment awards: 6 awards for investment excellence across
key areas of the business.
To See Financial Statements:
http://bankrupt.com/misc/Edinburg_Fund.htm
CONTACT: EDINBURG FUND MANAGERS
Charles Nunneley, Chairman
Phone: 0131 313 1000
Rod MacRae, Joint Managing Director
Phone: 0131 313 1000
POLHILL COMMUNICATIONS
Julian Polhill
Phone: 0207 655 0540
Colin Browne
Phone: 0207 379 5151
MAITLAND CONSULTANCY
Phone: 07733 103800
GLAXOSMITHLINE PLC: Akzo Withdraws, Hundreds of Jobs in Danger
--------------------------------------------------------------
Dutch chemical group Akzo Nobel withdrew at the last hour its
agreement in principle to buy GlaxoSmithKline's pharmaceutical
plant in Montrose, Angus in northeast Scotland.
According to Fritz Frohlich, Akzo Nobel's chief financial
officer, "due to changed economic circumstances in the
pharmaceutical sector, Akzo Nobel is not in a position to pursue
the negotiations further." The company has been hit by the
sluggish global economy, high energy costs and dollar weakness.
The withdrawal is set to threaten the jobs of 500 employees in
the site, prompting employees to expect that GlaxoSmithKline
would take legal advice regarding the pull-out.
Fiona Farmer, north-east regional officer for trade union Amicus
said: "Questions have to be asked about how this could have
happened, as it affects so many people."
John Elliot, GlaxoSmithKline's senior vice-president for primary
supply, promised to make every effort to find another buyer
Mr. Elliot, though, admitted there would be a significant delay
in securing the future of the factory that has been in search for
a buyer since June 2001.
The deal with Azko was expected close early in 2003.
The plant produces ingredients for a variety of GlaxoSmithKline
products, including treatments for respiratory problems, skin
conditions, infectious diseases, cardiovascular complaints and
cancer.
GlaxoSmithKline place the "for sale" sign on the factory as part
of a restructuring of manufacturing operations necessary after
its creation from the merger of GlaxoWellcome and Smithkline
Beechan.
ROYAL & SUNALLIANCE: FSA Fines Life Operation for Deficiencies
--------------------------------------------------------------
Royal & SunAlliance has received notice from the Financial
Services Authority that it is fining its U.K. Life operation
GBP950,000 in relation to deficiencies in its mortgage endowment
sales process between January 1997 and July 1999.
35,000 current polices were sold during the above period and
Royal & SunAlliance is in the process of contacting these
policyholders to inform them of their right to complain if they
feel they have grounds to do so. Royal & SunAlliance has set
aside reserves of GBP11m in its 2002 accounts for redress
payments covering this period. In addition, Royal & SunAlliance
has already reviewed a further 2,000 short term mortgage
endowment policies and offered redress totalling GBP5.6m to
appropriate policyholders.
The FSA has acknowledged that Royal & SunAlliance has devoted
substantial resources to its mortgage endowment review and that
the company has acted proactively in the case of short term
contracts. Also, in between 1994 and 1997 and in advance of the
industry wide reprojection exercise instigated by the FSA, Royal
& SunAlliance warned a significant number of its policyholders of
the risk of policies not providing sufficient funds at maturity
to pay off their mortgage.
Peter Hanby, Royal & SunAlliance's U.K. Director, Life, said:
"The fine and the actions announced today relate to past
shortcomings which we very much regret. Royal & SunAlliance has
been working hard and cooperated fully with the FSA over the
corrective action we are taking. Anyone with a legitimate
complaint will receive the appropriate redress."
CONTACT: ROYAL & SUNALLIANCE
Jay Aitken
U.K. Life PR Manager
Phone: 0151 239 3151
Mobile: 0771 368 4436
Paul Atkinson
U.K. Communications Director
Phone: 020 7337 5712
Mobile: 0771 466 0182
TELEWEST COMMUNICATIONS: Posts Financial Results and Updates
------------------------------------------------------------
HIGHLIGHTS
-- Broadband leadership
-- 297,000 broadband subscribers today
-- 10% of customers subscribe to triple-play (up from 3%)
-- EBITDA before exceptionals up 19% year-on-year to GBP379m
-- Headcount reductions of 1,450 delivered
-- Capex down by 27% year-on-year
-- Exceptional non-cash charge of GBP1,643m for asset impairment
-- Financial restructuring discussions continue
Commenting on the results, Charles Burdick, managing director of
Telewest Communications, said: "We continue our focused strategy
designed to accelerate cash generation, future profitability and
provide a platform for growth. These results demonstrate the
progress we have made. Costs (before redundancy payments) and
capex are significantly down and revenues, EBITDA and EBITDA
margin are up. We now have 297,000 broadband customers and
approximately 80% market share in our cabled areas.
"Our efforts are now focused on sustaining our leadership in
broadband, building a profitable customer-base, great customer
service and controlling costs. We are building on our strengths
in local access to the residential and business customer; the
power of bundling multiple services; and our unique position in
content through our ownership of Flextech.
Management and staff have responded well in very difficult
circumstances and I am confident that the right strategies and
steps have now been taken to deliver the vision for this
company."
FINANCIAL REVIEW
Except where stated otherwise, all profit and loss items are
stated before exceptional items.
Total turnover (including our share of UKTV, our joint venture
with the BBC) for the year ended 31 December 2002 increased 2% to
GBP1,347 million compared to 2001, driven mainly by 6% growth in
the Consumer Division to GBP910 million. Content Division
revenues, including UKTV, fell by GBP22 million primarily due to
the disposal of non-core businesses and the closure of ITV
Digital. Business Division revenues fell by GBP7 million
reflecting a continuing weakness in the Carrier market.
Gross margin improved from 63% to 68% for the year with strong
improvements in CATV margins, rising telephony margins and a
growing number of high margin broadband subscribers. CATV margins
improved from 57% to 62% as a result of selected price rises, a
reduction in the proportion of subscribers taking lower margin
BSkyB premium channels and cost reductions in programming.
Telephony margins have improved from 69% to 71% as a result of
selected price increases, an improvement in the mix of telephony
revenue, improved routing of telephony traffic and a reduction in
termination rates for certain calls. Gross margin is stated after
having taken into account cost of sales, before depreciation.
Selling, general and administrative expenses ("SG&A") for the
year were GBP499 million, up GBP8 million on 2001. SG&A includes
GBP25 million of redundancy costs of which GBP5 million was
incurred in the fourth quarter.
As a result of the continuing improvements in revenue, gross
margin and cost control, the Group's EBITDA for the year grew 19%
to GBP379 million. This includes our GBP11 million share of
UKTV's EBITDA. EBITDA margin grew from 24% to 28% for the year.
EBITDA for the fourth quarter, including GBP1 million from UKTV,
was GBP99 million. Excluding UKTV, EBITDA for the year was GBP368
million, up 20% on 2001.
Net loss for the year improved from GBP801 million to GBP506
million. The improvement was as a result of the 19% improvement
in EBITDA, net foreign exchange gains relating to our US dollar
denominated debt, and lower goodwill amortisation costs,
partially offset by higher depreciation and interest charges.
Capital expenditure has fallen 27% in 2002 to GBP477 million as
the Group continues its focus on cash and cost control.
In the fourth quarter, Telewest sold for cash its shareholding in
SMG for GBP45 million and Maidstone Studios for GBP4 million. As
at 31 December 2002, net debt stood at GBP5,269 million. This
comprises GBP3,419 million of notes and debentures, GBP231
million of lease and vendor financing, GBP9 million of other
loans and GBP2,000 million drawn down on our bank facility,
offset by cash balances and short term deposits of GBP390
million.
Exceptional Items
The Group has provided GBP16 million against turnover as a result
of a VAT & Duties Tribunal judgement in a dispute over the VAT
status of our cable TV listings magazines. Previously this was
disclosed as a contingent liability. The amount arises from VAT
payable in the period from January 2000 to July 2002. The company
has appealed against this ruling. An exceptional amount of GBP2
million has also been provided for interest on the amount in
dispute.
The Group has provided GBP22 million for exceptional legal and
professional costs of its balance sheet restructuring.
Additionally, GBP29 million is included in interest payable
relating to an exceptional write-off of bank facility fees which
were previously being carried forward over the lifetime of our
Senior Secured facility that is being renegotiated as part of our
balance sheet restructuring.
Reflecting current market conditions, the Group has performed
impairment tests on the carrying value of its assets. The
impairment review was carried out in accordance with U.K.
Accounting Standards to ensure that the carrying value of our
separately identifiable assets in both Cable and Content
Divisions are stated at no more than their recoverable amount,
being the higher of net realisable value and value in use. This
has resulted in GBP1,643 million of exceptional non-cash charges.
The non-cash charges comprise of impairment to goodwill (GBP1,486
million relating to both Cable and Content Divisions' goodwill
and GBP70 million relating to joint ventures' goodwill) and fixed
assets (GBP87 million relating to certain Cable Division fixed
assets.)
Net loss after exceptional items for the year was GBP2,218
million compared to GBP1,935 million last year.
Going Concern
These financial statements have been prepared on a going concern
basis and do not include any adjustments that would arise as a
result of the going concern basis of preparation being
inappropriate. The Board of Directors have confidence in the
successful conclusion of a restructuring of the company's balance
sheet (and any required amendments to the Senior Secured
Facility) and, together with and on the basis of cash flow
information that they have prepared, the directors consider that
the Group will continue to operate as a going concern for a
period of at least 12 months from the date of issue of these
financial statements. For additional information concerning the
proposed restructuring of the company's balance sheet see Recent
Developments.
Any restructuring will require the approval of our bankers and
various stakeholders. Inherently, there can be no certainty in
relation to any of these matters.
Audit Report
Our auditors have considered the adequacy of the disclosures made
in the consolidated financial statements concerning the
uncertainty as to the ability of the company and the Group to
continue to meet their debts as they fall due. This depends upon
the successful conclusion of the proposed restructuring referred
to throughout this results announcement.
In view of the significance of this uncertainty the auditors
consider that it should be brought to shareholders' attention but
their opinion is not qualified in this respect.
Recent Developments
On 30 September 2002, we announced that we had reached a
preliminary agreement relating to a financial restructuring ("the
Financial Restructuring") with an ad hoc committee of our
bondholders ("the Bondholder Committee"). That agreement provides
for the cancellation of all outstanding notes and debentures
("the Notes"), representing approximately GBP3.5 billion of
indebtedness, issued by the company and Telewest Finance (Jersey)
Limited and certain other unsecured foreign exchange hedge
contracts ("the Hedge Contracts") of the company in exchange for
New Ordinary Shares ("New Shares") representing 97 per cent of
the issued share capital of the company immediately after the
Financial Restructuring. The company's current ordinary
shareholders will receive the remaining 3 per cent of the
company's issued ordinary share capital.
We also announced on 30 September 2002 that we were deferring
payment of interest under certain of our Notes and the settlement
of the Hedge Contracts. Such non-payment continues and has
resulted in defaults under the Group's bank facilities and a
number of other financing arrangements. Based on one such
default, in respect of non-payment of approximately GBP10.5
million to a Hedge Contract counter-party, that counter-party has
filed a petition for the winding up of the company with a U.K.
Court. The company intends to deal with this claim as part of the
overall restructuring of its unsecured debt obligations and does
not believe that the legal action will significantly impede the
Financial Restructuring process. The company will of course
continue to meet its obligations to its suppliers and trade
creditors and this legal action is expected to have no impact on
customer service.
On January 15, 2003, we announced that we had reached a non-
binding agreement with respect to the terms of amended and
restated credit facilities with both the steering committee of
our senior lenders and the Bondholder Committee. In addition, the
terms of these facilities have received credit committee
approval, subject to documentation and certain other issues, from
all of our senior lenders, save for those banks which are also
creditors by virtue of the unsecured Hedge Contracts with which
we will deal in the overall Financial Restructuring. These
amended facilities will replace the Group's existing bank
facilities and are, as noted above, conditional on various
matters, including the satisfactory finalization of arrangements
for dealing with foreign exchange creditors and the completion of
our balance sheet restructuring. These amended credit facilities
will provide the company with substantial liquidity, which is
expected to be sufficient to see the company through to cash flow
positive after completion of the Financial Restructuring.
Negotiations are continuing with the Bondholder Committee, the
company's senior lenders and certain other major stakeholders
with a view to the completion of the Restructuring.
BUSINESS REVIEW
Consumer Division
Consumer Division revenues grew 6% to GBP910 million resulting
mainly from the growth of our broadband products, increased
multi-service penetration and selected price rises. This all
contributed to household ARPU growing by 4% to GBP41.80 for the
year. Compared to the third quarter, ARPU in the fourth quarter
grew by 1% to GBP41.96.
We have seen a three-fold increase to 183,000 triple play
customers subscribing to broadband Internet, telephone and TV.
These triple play customers accounted for 10% of our customer
base at the year-end.
Triple play customers are our most profitable customer segment
and grew by 28,000 in the fourth quarter. During the fourth
quarter, household customers grew by 400 compared to customer
losses in the previous two quarters. Revenue growth has been
impacted by net household customer losses of 7,000 in 2002,
resulting from price rises and more rigorous enforcement of
installation fees and disconnection policies in line with our
objective of focusing on more cash generative customers. This
strategy rather than one of absolute customer growth means that
we do not expect to see strong customer growth in the near
future. As part of this, we have introduced a GBP50 upfront
payment (offset against any installation fee or subscription
payment) for all new customers and we have continued to tighten
our credit control policy. We are also not actively selling our
entry TV package to new subscribers. We believe initiatives such
as these should contribute to profitability, cash generation and
churn reductions although may not generate overall customer
growth.
Telewest reports churn on a product basis, with 12 month rolling
churn figures for broadband Internet, residential telephony and
CATV. To this we are now adding household churn, which measures
those customers who disconnect entirely from Telewest. (A full
definition can be found in the operating statistics section of
this release.) Household churn in the fourth quarter was 15.7%.
Included within this calculation are "uncontrollable"
disconnections as customers disconnect when they move out of our
addressable areas, which account for approximately 20% of the
U.K.'s households.
Internet
Internet and other revenues increased by 98% to GBP79 million in
2002 due to the growth in broadband subscribers.
Net broadband additions in the fourth quarter were 46,000. At the
year-end, we had 262,000 broadband subscribers, representing
subscriber growth of 21% since the end of the third quarter. This
reflects our continued success in broadband - we remain the
market leader within our addressable areas. 70% of broadband
customers subscribe to the full triple play and 93% take at least
one other product. Broadband is also successful in attracting new
customers to Telewest. In the fourth quarter, 40% of broadband
installations were for subscribers new to Telewest.
As well as our minimum standard 512Kb blueyonder broadband
service, we also offer a 1Mb service at twice the connection
speed of ADSL. At the year-end, 27,000 or 10% of our broadband
subscribers took this 1Mb service. We are currently trialling a
faster 2Mb service to 1,500 customers and plan to launch later in
the year, demonstrating again our focus on providing broadband
leadership.
Broadband growth has continued and as at March 26, we had 297,000
broadband subscribers, of which 31,000 took the 1Mb service.
In January, we launched a self-installation option for broadband,
costing only GBP12.50 for installation - the lowest permanent
entry price to broadband in the U.K. This option makes use of
cable modems embedded in set-top boxes and is available to our
857,000 digital TV subscribers. We believe this will improve
customer satisfaction and reduce our installation costs. We are
also trialling a wireless self-installation pack, which we intend
to launch later this year.
Together with our dial-up internet services, we have 540,000
internet subscribers. Dial-up is led by SurfUnlimited, which
introduces our subscribers to a reliable fixed-fee unmetered
service. In the fourth quarter, 19% of our broadband
installations were for subscribers who had migrated from
SurfUnlimited.
On 1 March 2003, we raised the price of SurfUnlimited by GBP1 to
GBP13, which remains one of the lowest cost unmetered services in
the U.K. today. The price of our Pay-As-You-Go dial-up internet
service has also risen from 1.5p per minute to 2p as we continue
to migrate these subscribers to a flat rate service.
We are also continuing to enhance our broadband content by
developing our network gaming skills. In alliance with Microsoft,
we are conducting consumer trials of the Xbox Live service and
aim to develop a fully supportive service, providing a user-
friendly connection between the console, PC and cable modem. Xbox
Live will enable our broadband internet users to play games
online with friends, talk to other players and download current
statistics, new levels and characters. We are also working
closely with Sony to help, develop and implement technologies to
enhance the consumer experience for PlayStation 2 network gaming.
Our current PC based broadband gaming service bygames.com, with
58,000 registered users at the year-end, was recently declared
"Best Gaming Service" at the Future UK Internet Awards.
Residential Telephony
The number of telephony subscribers at 1.6m has remained
relatively flat for both the year and the fourth quarter. Average
monthly revenue per line for the year was GBP23.16 compared to
GBP22.79 in 2001 reflecting the continued takeup of Talk
Unlimited. Average monthly revenue per subscriber was marginally
down at GBP24.92 due to the migration of dial-up Internet
subscribers to broadband, which reduces second line penetration.
Residential telephony revenues were also impacted by the transfer
of dial-up minutes of a large ISP's subscribers to a flat rate
access regime provided by our Carrier Services unit.
Subscribers to Talk Unlimited, continued to increase with 15,000
net additions in the quarter. This is our 24-hour 7 day-a-week
flat rate unmetered residential voice service available for local
and national calls in the UK.
At the year-end, we had 361,000 Talk Unlimited subscribers
representing 22% of our residential telephony base. At the
beginning of 2003, we expanded our flat rate telephony services
by launching Talk Evenings and Weekends. For GBP17.50 per month,
it gives our customers totally unlimited local and national
weekend and evening calls to anywhere in the UK, including line
rental. On March 1, we expanded this range further by launching
Talk International for GBP3 per month, which offers reduced rates
to all international destinations. We are also improving value
for our telephony consumers by offering them free voicemail.
On January 22, 2003, the Competition Commission announced that
the mobile operators must make significant cuts to their
termination rates charged to fixed line operators such as
Telewest for fixed to mobile calls. Mobile interconnect costs are
a significant cost to our business. These cuts are due to be
implemented by July 25, 2003 and we continue to explore options
to provide even more innovative new telephone packages, so that
we can pass on value to our customers.
CATV
At the year-end, we had 1.3 million TV subscribers, of which 66%
are digital subscribers. Of our consumer products, CATV carries
the highest upfront investment and lowest margins. Therefore, our
focus on cash and on profitable customers has impacted the CATV
customer base more than our other products, and net
disconnections in the quarter were 11,000. This does however
represent a slowing of subscriber losses compared to the previous
two quarters. During the year, we have lost 48,000 CATV
subscribers as we have shifted our focus towards acquiring
profitable customers rather than on pursuing overall subscriber
growth.
Initiatives taken during the year to improve mix and target more
profitable customers included an August price increase for new
customers subscribing to the entry pack. We have now completely
withdrawn our entry TV package from sale to new subscribers and
any customer who wishes to subscribe to TV as a stand-alone
product must take our top-tier basic package, Supreme. We have
now also withdrawn the Essential Plus package for new subscribers
as we encourage customers to take the full Supreme package.
CATV monthly ARPU remained flat for the year at GBP20.82. The
pay-to-basic ratio has fallen to 72% from 80%. In the fourth
quarter, the percentage of subscribers taking our entry package
fell to 18% as we began to successfully improve our product mix.
In 2003, improvements to our digital TV packages continue with
the addition of Sky Multiplex (offering nine extra movie
channels) and ten new basic entertainment channels, providing
even more choice and value.
Business Division
Excluding Carrier Services, the Business Division's revenues for
2002 grew 5% to GBP224 million. The Division benefited from the
strategic focus on high margin data and internet products as we
continue to leverage our local network and product set and focus
on upselling services to existing customers, which has grown
revenues and improved margins.
The focus on upsell has resulted in existing customers renewing
contracts and extending services with us such as The Scotsman
newspaper. It has extended its existing contract with us for
another three years and is also taking additional innovative
technology services including IPVPN (Internet Protocol Virtual
Private Network) with MPLS (Multi Protocol Label Switching)
across various sites. It is also implementing a new Automatic
Call Distribution (ACD) system to enhance call handling services
in its call centre and adopting a new Internet structure.
Other new data contracts include one providing Littlewoods
Leisure with the capacity to run a VOIP (Voice Over Internet
Protocol) service. This service ensures the delivery of high
quality voice communications across the IP Network, which is
constantly monitored to ensure that there is sufficient bandwidth
to prioritise the customer's delivery requirements.
We also continue to strengthen our public sector activity with a
major contract signed with Newcastle City Council to link and
manage the joining of 15 local libraries to the Telewest Schools
Wide Area Network, into which 113 schools are connected. The
contract is worth GBP2.1 million over five years.
Carrier Services revenues were GBP43 million, down from GBP61
million in 2001 reflecting a weakness in general market
conditions. Carrier Services offers our national network to other
carriers and operators (such as TMobile) for voice and data
communications.
Content Division
Content Division revenues totalled GBP170 million in 2002,
including GBP64 million being our 50% share of UKTV revenue.
Content Division revenues are down GBP22 million in 2002 mainly
due to the disposal of non-core businesses. The closure of ITV
Digital also had an impact through lost subscription revenue for
UKTV.
Advertising revenues of GBP73 million (including our 50% share of
UKTV) for the year were up 12% in a market that saw only a 5%
overall rise. This strong performance derives from the viewing
strength of its channels, with its viewing share in pay-TV homes
growing from 6.1% to 6.6% and its share of basic viewing
remaining stable at 20.4%. In 2002, UK Gold was the second most
watched basic-pay channel in pay-TV homes, with LivingTV the
sixth. The Content Division grew its market share with a 3.4%
share of the TV advertising market in the UK, up from 3.0% in
2001.
Subscription revenues of GBP65 million (including our 50% share
of UKTV) in 2002 were down 4% on 2001 and were affected overall
by the closure of ITV Digital. This was partially offset by
strong subscriber growth at BSkyB and improved tiering at NTL.
On 15 January 2003, Flextech launched its latest TV channel, Ftn
and UKTV launched UK Bright Ideas on the new Freeview digital
terrestrial platform. These channels joined UK History which
launched in October, and the Content Division now has three
channels on this new distribution platform.
To see financials: http://bankrupt.com/misc/Telewest.pdf
CONTACT: TELEWEST COMMUNICATIONS PLC
Charles Burdick, Managing Director
Phone: 020 7299 5000
Jane Hardman, Director of Corporate Communications
Phone: 020 7299 5888
Richard Williams, Head of Investor Relations
Phone: 020 7299 5479
Brunswick
John Sunnucks
Phone: 020 7404 5959
Sarah Tovey
Phone: 020 7404 5959
*************
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.
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Information contained herein is obtained from sources believed to
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