/raid1/www/Hosts/bankrupt/TCREUR_Public/030402.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, April 2, 2003, Vol. 4, No. 65
Headlines
* F R A N C E *
AIR LIB: Takeoff and Landing Slots Distributed to Other Carriers
* G E R M A N Y *
BANKGESELLSCAFT BERLIN: Posts Seven-Fold Rise in 2002 Losses
BERTELSMANN AG: Controlling Family and Management Compromise
COMMERZBANK AG: Chairman Presents Cost-cutting Plan at Meeting
DEUTSCHE POSTBANK: Moody's Raises Outlook on Financial Strength
EM.TV & MERCHANDISING: Books Marked by Exceptional Write-Downs
HVB GROUP: S&P Affirms 'A-' Long- and Short-term Ratings
HVB GROUP: Standard & Poor's Cuts Ratings of Two Subsidiaries
KIRCHMEDIA GMBH: Creditors Committee Approves Sale of Assets
KIRCHMEDIA GMBH: Sports Channel May Be Sold Off to Consortium
MUNICH RE: Capital Weak Despite Progress in Reinsurance Business
* I T A L Y *
ALITALIA SPA: Marks Turnaround With Net Profit of EUR93 MM
* N E T H E R L A N D S *
IFCO SYSTEMS: Reports Completion of Restructuring in Results
LAURUS N.V.: Regulator Approves Planned Acquisition by Colruyt
UNITED PAN-EUROPE: Reports Results for Q4 and Year 2002
* P O L A N D *
GDYNIA SHIPYARD: Dismisses Manager as Part of New Rescue Plan
* S W E D E N *
SCANDINAVIAN AIRLINE: Head Admits Necessity of Renegotiation
* S W I T Z E R L A N D *
ZURICH FINANCIAL: Closes Sale of Rud Blass to Deutsche Bank
* U N I T E D K I N G D O M *
ADAPTIVE VENTURE Presents Financial Results, Business Proposals
BUZZ: Ryanair Updates Market of Progress of Acquisition
CORUS GROUP: Employees Urge Shareholders to Axe Chairman
EQUITABLE LIFE: Society "Cautiously Optimistic" About Future
ITV DIGITAL: Former Staff Seeks Compensation From Parents
LICENTIA UK: Placed Into Administrative Receivership
MARCONI PLC: Unveils Proposed Schemes of Arrangement
MARCONI PLC: Court Calls for Separate Meetings of Creditors
PIZZAEXPRESS: Luke Johnson's Recommended Offer Is Extended
ROYAL & SUNALLIANCE: Launches Initial Public Offering of Promina
SPIRENT PLC: Shareholders Passed Resolution to Divest WAGO
SSL INTERNATIONAL: Issues Resolutions of Strategic Review
THISTLE HOTELS: HSBC Posts Cash Offer for Asset on Behalf of BIL
THISTLE HOTELS: Issues Response to Posting of BIL's Offer
THISTLE HOTELS: Issues Response to Rumors Regarding Disposals
ZYZYGY PLC: Posts Loss Before and After Taxation for Second Half
===========
F R A N C E
===========
AIR LIB: Takeoff and Landing Slots Distributed to Other Carriers
----------------------------------------------------------------
The take-off and landing slots formerly held by collapsed airline
Air Lib were distributed to 15 different carriers, including
Aeris, Easyjet, Virgin Express, Air France, and Volare.
Aeris got the largest part of the capacity with 7,612 slots out
of a total of 44,528. It applied for nearly three times it got.
Easyjet grabbed the next, with 7,300, although it applied for
20,000. Virgin Express got 5,840, while Volare received 3,650.
The government took its part of 20% vacated slots, or 8,906,
which will be distributed to ensure sufficient links were
maintained with France's outre-mer overseas territories and
Corsica.
According to the Financial Times, the slots will be used to
achieve plans for a new airline Air Dom to serve France's
overseas territories.
Air France is likely to be among the recipients of the
government-controlled slots aside from the 3,440 it received from
the recent distribution. It got a third of its slots through its
BritAir unit.
CONTACT: AIR LIB
42 Rue F. Forest
Imm. Le Sommet
97122 Jarry-Baie Mahault
Phone: +590-(0)5.90.32.56.00
Fax: +590-(0)5.90.26.64.02
Home Page: http://www.air-liberte.fr/
=============
G E R M A N Y
=============
BANKGESELLSCAFT BERLIN: Posts Seven-Fold Rise in 2002 Losses
------------------------------------------------------------
Bankgesellschaft Berlin: Restructuring on track
Significantly improved operating result - targets exceeded
Earnings after tax negatively impacted further by write-downs
In the 2002 financial year, Bankgesellschaft Berlin significantly
improved its operating result despite considerable negative
impacts from the economic crisis and the reappraisal of its past.
Positive progress was made in the operating result after risk
provisions. "The restructuring is taking effect", said Hans-Jorg
Vetter, Chairman of the Management Board of Bankgesellschaft
Berlin.
The key figures for the 2002 consolidated financial statements
show an operating loss of EUR 48 million. The Group has therefore
significantly exceeded its target of at least halving the
operating loss of the 2001 financial year of EUR 632 million
(with no change of the reserve as per Section 340f of the German
Commercial Code). The operating result before risk provisions
totalled EUR 483 million (previous year: EUR 131 million). This
is mainly down to significant cost reductions and an improved net
result from financial transactions.
Management Board Chairman Hans-Jorg Vetter said: "We have made
good progress in implementing our restructuring programme. The
bank has created a stable basis thanks to the commitment and
performance of our employees and despite the difficult market
environment. It is now time for the next stage to take effect:
the return to sustained, positive results."
The components of the business result in detail:
Overall, net interest income fell 9.1 percent to EUR 1,706
million (previous year: EUR 1,876 million). Taking into account
the EUR 244 million fall in income from strategic interest rate
management, net interest income increased by EUR 74 million (5.1
percent).
At EUR 342 million, net commission income was 11.4 percent down
from EUR 386 million in the previous year. Whilst commission from
payment transactions and account management increased, the
ongoing restraint of clients in the securities and issue business
again led to declining income. In addition, the scheduled
concentration of retail and regional corporate banking in the
Berlin area and the selected conclusion of new business
negatively impacted earnings. However, the performance of the
individual ratios indicates initial success in the expansion of
collaboration with existing clients.
At EUR - 24 million, the net result from financial transactions
(previous year: EUR - 106 million) is up on the 2001 financial
year. In the 2002 financial year, the result was again negatively
impacted by the valuation of own shares. This item particularly
reflects the poor state of the capital markets.
As a result of rigorous cost management, administrative
expenditure fell 15.4 percent to EUR 1,546 million (previous
year: EUR 1,828 million), taking it not only below the level of
the previous year, but also below the level of 1997.
The risk positions balance for the Group is EUR 531 million
(previous year: EUR 763 million). A total of EUR 617 million
(previous year: EUR 738 million) was transferred to the credit
risk provisions, offset by income from securities of the
liquidity reserve at EUR 86 million. Almost half the risk
provisions balance stemmed from the real estate financing
business, and thus from a further working-off of the existing
debts of the Group.
As disclosed on the reporting date of September 30, 2002,
earnings after tax were negatively impacted by a write-down
requirement regarding the portfolio of Euro-Stoxx-50 shares held
in fixed assets. Write-downs as at September 30, 2002 amounted to
EUR 216 million. Write-downs for the whole of 2002 totalled EUR
399 million. As in autumn 2002, the bank responded to the stock
market falls with the write-down carried out at the end of the
year, reporting in the balance sheet the long-term estimate of
the Euro-Stoxx shares.
There was also a write-down requirement in the participations
area (EUR 125 million) as well as allocations to restructuring
provisions (EUR 70 million).
The key figures for the 2002 financial year show an annual
deficit of EUR -699 million (previous year: EUR -112 million).
Bank achieves restructuring targets
The Group is on course with the implementation of reorganisation
and restructuring plans - in some areas, it is even ahead of its
targets. In 2002, operating expenditure (including ordinary
depreciation) fell by 17.9 personnel, and staff costs were down
by 13.3 percent. The vast majority of the necessary job cuts were
settled on a voluntary basis. Redundancies accounted for only a
small proportion of the cuts. Overall, 2026 employees left the
Group (as at January 1, 2003). To date, the bank has already
contractually settled 65 percent of the necessary job cuts up to
2005.
The balance sheet total declined by EUR 14.4 billion (7.6
percent) to EUR 174.8 billion (previous year: EUR 189.2 billion).
A crucial factor here was the scheduled reduction of amounts due
from clients and banks, which results from the consistent cutback
of business activities in the course of the restructuring and
redimensioning of the Group.
In the course of the restructuring process, activities in the
real estate services, capital markets, corporate and
international business as well as in parts of the real estate
financing business were significantly cut back or ended. In the
reporting year, the closure of the Private Banking Centres in
Germany, the outsourcing of services and the sale of
participations ensured further streamlining of the Group. The
sale of Zivnostenska banka (Prague), signed last year and
completed in February 2003, represents a further key milestone in
the restructuring concept. A total of EUR 75 million was realized
from the sale of participations in the reporting year (excluding
Zivnostenska banka).
"In the past year, the bank has created a sound foundation for
achieving at least a break-even result in the operating business
this year", said Management Board Chairman Vetter. "However, we
will not fall into the trap of premature optimism. We still have
a strenuous path ahead of us. On the one hand, the further
restructuring means that charges from the past must be processed.
On the other hand, there has never been such enormous uncertainty
in one year regarding economic activity, geopolitics and the
economy as a whole. Over the past few months, Bankgesellschaft
has significantly extended its room for maneuver. In the next few
months, the task is to consolidate our successes and stabilize
income from our client business."
BERTELSMANN AG: Controlling Family and Management Compromise
------------------------------------------------------------
A compromise on new bylaws for the collegiate body that holds the
stake of the family that controls debt-laden media company
Bertelsmann has been put up after weeks of heated negotiations.
"I can confirm that routine discussions on the
Verwaltungsgesellschaft's [management holding's] bylaws have now
ended and that the shareholders seem to have reached an
agreement," a spokesman for the group said.
The deal is expected to ease out tensions created by the
announcement of Reinhard Mohn, the head of the controlling
family, that he intends to double the family's representation in
the holding, according to The Financial Times.
Managers and employees were at that time concerned that Mr. Mohn
was reversing a long-time policy of disallowing direct influence
of the family in the company affairs.
Mr. Mohn on his part was believed to have been alarmed last year
by the plan of former chief executive Thomas Middelhoff to float
the group and dilute the family's stake below 75%. Mr. Middelhoff
resigned last July.
It was known that Mr. Mohn had secured the ascendancy of his
younger wife to his role in the company by creating the
management holding, endowed with his own voting rights, in 1999.
In the latest move, the patriarch decided to raise the family's
representation in the holding.
The family now occupies half of the management holding's eight
seats.
Gerd Schulte-Hillen, supervisory board chairman, warned Mr. Mohn
through a magazine interview to keep away not to encroach on the
management's prerogatives.
Mr. Schulte-Hillen also threatened to resign should the family be
allowed to veto supervisory board appointments, particularly
since the company is reportedly looking for the replacement for
the former chief executive.
Bertelsmann's financial debt is now EUR2.7 billion.
CONTACT: BERTELSMANN AG
Carl-Bertelsmann-Strasse 270
D-33311 GA,AAtersloh, Germany
Phone: +49-5241-80-0
Fax: +49-5241-80-9662
Homepage: http://www.bertelsmann.de
COMMERZBANK AG: Chairman Presents Cost-cutting Plan at Meeting
--------------------------------------------------------------
-- Costs down to 4.5bn euros by 2004
-- One billion euros extra credit for Mittelstand
-- Retail Banking again in the black
-- Dividend of 0.10 euro for 2002
-- Two new Management Board members
The Chairman of Commerzbank`s Board of Managing Directors, Klaus-
Peter Muller, presented the results of the "Cost-Offensive-Plus"
at Monday`s Supervisory Board meeting. Through this new savings
program, with 650 separate items, the costs of the Bank will
decrease to less than 5bn euros this year (2002: 5.15bn euros).
Next year costs should reach only 4.5bn euros, the same level as
in 1999. Compared to the high point reached in 2001, this is the
equivalent of lowering costs by almost one-fourth. The Board
reacted to the continuing difficulties of banking in Germany with
far-reaching cost cuts totaling 688m euros. The savings are split
between 381m euros for personnel and 307m euros for other costs.
Of that total, around 460m euros in savings will effectively be
achieved in 2003.
Cost-Offensive-Plus plan to eliminate 3,100 jobs
-- Domestically, especially in the Group Controlling and Group
Services departments, another 1,500 reductions are planned. All
central staff units are affected, including the Information
Technology, other back-office areas and headquarters departments.
All cutbacks still have to be reviewed by the Works Council. The
Bank plans to open talks immediately with these representatives.
-- Overseas branches and subsidiaries will cut another 1,100
jobs.
-- 500 additional job cuts are now being negotiated or are
already completed, especially in Investment Banking.
-- Cutbacks in other expenses will be mainly due to reducing
expenditures for Information Technology (by 118m euros), as well
as through lower rental, advertising and consulting costs.
Mr. Muller commented on the staff cuts by saying: "It personally
hits us very hard that we have to enforce another staff
reduction, as behind these numbers are individual hardships. But
in light of banking`s rapid structural changes and the continuing
drop in demand for financial services, we had no other choice,
since this is necessary to secure the remaining positions.
However, this time it will hardly be possible - through natural
fluctuation, part-time jobs and pre-retirement plans - to
continue cutting costs without staff cuts due to the drop in
business."
Up to now, cost cuts have resulted in 4,300 job losses. After the
cutbacks through 2004, the Commerzbank Group will employ around
32,000 personnel; at year-end 2001 it was almost 39,500. "With
our Cost-Offensive-Plus we must make ourselves more fit and trim
so that we can achieve our goal of getting back into the black
this year," said Mr. Muller in underlining his prediction for
2003. As reported to the Supervisory Board, business in the first
two months was generally positive. Particularly the results from
Group Treasury and Investment Banking were clearly better.
New loan initiatives for the Mittelstand and construction
In outlining the Bank`s future strategy for the Supervisory
Board, Mr. Muller said that, after a strong push to reduce its
risk positions last year and the consequently much improved core
capital ratio of more than 7.3 percent, Commerzbank now has more
flexibility in its lending business. This they plan to use now,
which is why the Management Board decided to send a signal with a
new lending offensive, providing an additional one billion euros
in credits to help support the successful German Mittelstand.
This expansion in Mittelstand credits will also be supported by a
lower interest rate loan of 500m euros from the government-owned
Kreditanstalt fur Wiederaufbau (KfW), and a similar loan of 250m
euros from Baden-Wurttemberg`s L-Bank. Altogether this will mean
an additional 1.8bn euros available for loans to the Mittelstand.
"This demonstrates that Commerzbank is committed to serving the
Mittelstand in Germany," said Mr. Muller of the lending plans.
A further initiative was started by Commerzbank at the beginning
of March to help support private residential construction.
Another loan from KfW valued at 1.5bn euros, fully utilizing the
advantages of lower cost refinancing, will be passed on to the
Bank`s customers in the form of individual construction loans.
"We think this will help us gain additional market share in
construction financing, as we can fulfil the wish of everyone to
have their own home on especially good terms," said Mr. Muller.
Dividend as sign of confidence
At its meeting the Supervisory Board approved the Annual Report
for 2002. The 361,000 shareholders of Commerzbank will be
recommended a dividend of 0.10 euros per share at the Annual
General Meeting scheduled for May 30. The necessary payout of
54.2m euros will come from the net earnings of the Parent Bank.
Holders of profit-sharing certificates will be paid in full. The
dividend recommendation reflects the Bank`s confidence that 2003
will see a turn for the better.
Details of segment reporting
The final results for 2002 are generally in accordance with the
preliminary figures presented at the February 5th press
conference. They show the Commerzbank Group reported a net loss
of 298m euros last year. The operating result was 192m euros in
the black. Total assets at year`s end were 422bn euros. Based on
these figures, the Bank had a 1.6 percent return-on-equity with a
slightly improved cost/income ratio of 77.3 percent.
The segment reporting (see Annual Report pages 120-127) for the
first time no longer lists the "Profit contribution from business
passed on" for each segment, rather such earnings are split
directly. Especially noteworthy is the Retail Banking segment,
which, after reporting a loss the previous year, was back in the
black with an operating profit of 53m euros. Asset Management
reported a slightly positive operating result, however
restructuring expenses and the write-off of goodwill resulted in
a pre-tax loss of 330m euros. Higher loan-loss provisions
negatively affected the results of Corporate Customers and
institutions. Yet it still reported the highest profit of all the
business lines; its return-on-equity and cost/income ratios were
8.5 percent and 45.9 percent, respectively. The Securities
department, including foreign exchange trading, suffered from the
downward trend on the stock markets, shown by its operating
result being minus 296m euros.
Mr. Teller and Dr. Strutz appointed to Board
The Supervisory Board also appointed two new members to the Board
of Managing Directors:
-- Nicholas R. Teller (43), previously Regional Board Member
responsible for corporate customers in Northern Germany and
Scandinavia, joins the board as of April 1. A British citizen, he
takes over responsibility for Corporate Customers from Andreas de
MaiziSre, who in the future will be responsible for IT,
Operations, Transaction Banking, Branch organization and
Personnel.
-- Dr. Eric Strutz (38), head of the Corporate Strategy and
Corporate Controlling department, will take over as Chief
Financial Officer, subject to the approval of the Federal
Supervisory Office for Financial Services (BAFin). He succeeds
Dr. Axel Frhr. v. Ruedorffer (61), who is retiring following this
year`s AGM. Klaus Patig will assume responsibility for
implementing the Cost Offensive.
With these appointments the average age of Commerzbank board
members decreases appreciably, even while it gains two
experienced specialists. "The appointments of Mr. Teller and Dr.
Strutz is a clear signal that we are planning long-term, and
remain focussed on our goal of returning to solid earnings," said
Mr. Muller of the new board members.
NOTE: The complete Annual Report 2002 may be found on the
Internet in both German and English under
http://www.commerzbank.de/aktionaere/konzern(in both PDF and an
interactive version).
The Interim Report with First Quarter 2003 results will be
presented on May 7.
DEUTSCHE POSTBANK: Moody's Raises Outlook on Financial Strength
---------------------------------------------------------------
Moody's raised the outlook on Deutsche Postabank's C+ financial
strength rating to reflect the bank's strengthening retail
franchise, improved profitability and greater diversification.
From stable the outlook is raised to positive.
The Bonn-based bank's P-1 short-term debt and deposit ratings
remain stable. The Aa3 long-term debt and deposit ratings remain
under review for possible downgrade.
As of December 31, 2001, Deutsche Postbank AG had total assets of
EUR140 billion.
EM.TV & MERCHANDISING: Books Marked by Exceptional Write-Downs
--------------------------------------------------------------
In 2002 the media company EM.TV & Merchandising AG achieved group
sales totaling EUR 249.9 million (previous year: EUR 721.6
million), EUR 92.3 million alone of which resulted from a strong
fourth quarter.
In the previous year, the comparable sales basis amounted to EUR
264.3 million, leading to a decrease of 5.4 per cent. In an
industry and capital market environment which has again
deteriorated, EM.TV has succeeded in pressing ahead with its new
strategic positioning process and generated a positive EBITDA.
In accordance with IAS/IFRS accounting, the earnings before
interest, taxes, depreciation and amortization (EBITDA) amounted
to EUR 8.4 million (previous year adjusted for deconsolidation
effects and special items: EUR 7.2 million).
As in the two previous years, the group's earnings were marked by
high extraordinary write-downs on assets totalling EUR 240.0
million in 2002. Of this amount, EUR 195.8 million alone were
attributed to the extensive write-down on the shares in the
Formula 1 company Speed Investments Ltd. to a residual book value
of EUR 8.5 million. The earnings before interest and taxes (EBIT)
amounted to minus EUR 88.5 million as against minus EUR 133.3
million in the previous year. The EM.TV group shows a net loss
after minority interests and taxes of EUR 310.2 million (previous
year: minus EUR 374.2 million).
The liquid funds in the group as per December 31, 2002 amounted
to EUR 90.6 million (minus 29.2 per cent as against December 31,
2001). Due to the annual loss, the shareholders' equity decreased
to EUR 129.9 million (previous year EUR 465.7 million). The
equity ratio was 14.6 per cent (previous year 35.9 per cent). The
parent company's individual financial statement in accordance
with the German Commercial Code (HGB) shows a net loss of EUR
324.3 million (previous year minus EUR 247.3 million). The parent
company's equity decreased from EUR 561.6 million to EUR 237.5
million, thus still considerably exceeding the subscribed capital
of EUR 145.9 million.
In view of the repayment of the so-called junior loan and the
goal of sustainably securing its liquidity, EM.TV will execute a
partial or total sale of the Jim Henson Company.
CONTACT: EM.TV & MERCHANDISING
Frank Elsner
Phone: +49 5404 91 92 0
Fax: +49 5404 91 92 29
HVB GROUP: S&P Affirms 'A-' Long- and Short-term Ratings
--------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'A-'
long-term and 'A-2' short-term counterparty credit and
certificate of deposit ratings on Bayerische Hypo-und Vereinsbank
AG (HVB) and Bank Austria Creditanstalt AG (BA). The outlook is
negative.
In addition, the 'AAA' ratings on Offentliche Pfandbriefe issued
by HVB and the 'AA+' ratings on BA's guaranteed obligations were
affirmed. (For rating actions on related mortgage bank entities,
please see separate media release entitled "Two HVB Group Subs
Ratings Cut to 'BBB'; Four Subs Put on Watch With Varying
Implications", published on March 31, 2003, on RatingsDirect,
Standard & Poor's Web-based credit analysis system.)
The rating actions follow HVB's announcement of its plans to
facilitate the envisaged spin-off of its mortgage bank
subsidiaries on March 27, 2003, including its plan to place up to
25% of BA with investors by means of a free-float capital
increase. The planned capital increase of BA is one of various
measures to compensate for the planned transfer of capital to the
yet-to-be separated entities and to improve the remaining HVB
group's modest capital strengths in 2003. HVB aims to improve its
Bank for International Settlements (BIS) Tier 1 capital ratio to
6.5%-7% by year-end 2003, from 5.6% at year-end 2002.
"Standard & Poor's considers improved capital strengths as a
crucial element to maintain its current ratings on HVB," said
Standard & Poor's credit analyst Stefan Best.
The ratings on BA are equalized with those on its parent, based
on Standard & Poor's view of BA as a core subsidiary for HVB.
"Standard & Poor's expects to affirm the ratings and maintain its
negative outlook on HVB if the capital increase is completed
successfully. Failing this, the ratings are likely to be
lowered," said Mr. Best. HVB remains challenged to address other
areas, which Standard & Poor's also considers key negative rating
factors, particularly HVB's weak core profitability, the quality
of its loan portfolio, and the sizable unrealized losses of its
holdings in Allianz AG (AA-/Negative/A-1+) and Munich Reinsurance
Co. (AA-/Negative/--). HVB's management appears strongly
committed to implement its "transformation program" in a
difficult operating environment. Failure to improve operating
profits and/or a deterioration of its business and risk profiles
would most likely have negative rating implications, however.
HVB GROUP: Standard & Poor's Cuts Ratings of Two Subsidiaries
-------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
counterparty credit and senior unsecured debt ratings on Germany-
based HVB Real Estate Bank AG (HVB REB) and Westfaelische
Hypothekenbank AG (WestHyp) to 'BBB' from
'BBB+' and placed them on CreditWatch with negative implications.
In addition, the short-term counterparty credit ratings were
lowered to 'A-3' from 'A-2'.
At the same time, Standard & Poor's placed its 'BBB+' long-term
counterparty credit and senior unsecured debt ratings on
Wuerttembergische Hypothekenbank AG (WurrttHyp) on CreditWatch
with positive implications.
The 'A-2' short-term counterparty credit ratings were affirmed.
In addition, the 'BBB+' long-term and 'A-2' short-term ratings on
Pfandbrief Bank International S.A. (PBI) were placed on
CreditWatch with negative implications.
Furthermore, the 'A-2' short-term counterparty credit rating on
HVB Bank Ireland was affirmed.
The 'A-' long-term and 'A-2' short-term ratings on the parent,
Bayerische Hypo- und Vereinsbank AG (HVB) were affirmed. The
outlook is negative.
(Please see separate media release entitled "HVB Group 'A-' Rtgs
Affirmed; Rtgs On Two Subs Cut; Four Subs On Watch With Varying
Implications," published on March 31, 2003, on RatingsDirect,
Standard & Poor's Web-based credit analysis system.)
Moreover, the 'AAA' ratings on Tffentliche Pfandbriefe issued by
HVB REB, WestHyp, and WurrttHyp; on Hypothekenpfandbriefe issued
by WurrttHyp; and on Lettres de Gage Publiques issued by PBI were
affirmed.
The downgrades and CreditWatch placements follow HVB's March 27,
2003, announcement on details concerning its spin-off of its
mortgage bank subsidiaries. The spin-off, which is expected to be
completed in the fall, is subject to regulatory and shareholder
approval scheduled for May 2003.
HVB's plan to place up to 25% of Bank Austria Creditanstalt AG
(BA;A-/Negative/A-2) with investors by means of a free-float
capital increase in 2003 is also a crucial element of its
transformation program. "Standard & Poor's expects to resolve the
CreditWatch placements once it is sufficiently confident that the
process of implementing the new structure as announced will
proceed as planned," said Standard & Poor's credit analyst Stefan
Best.
HVB envisages the creation of a pure holding company, to be named
Hypo Real Estate Holding AG (HREH), which will be owned by the
current shareholders of HVB. HVB will not retain any share in
HREH after the spin-off has taken place. HREH will become the
sole owner of Ireland-based Hypo Real Estate Bank International
(Hypo International; currently known as HVB Bank Ireland), as
well as the majority owner of HVB REB, WestHyp, and WurrttHyp. In
turn, Hypo International will house HVB's international real
estate business and will be the sole owner of PBI. The members of
the new Hypo Group will not be legally required to support each
other in times of stress, and management is committed not to
counterbalance losses among operating entities. "Therefore,
Standard & Poor's expects to assign higher ratings to stronger
members, namely Hypo International and WurrttHyp, and lower
ratings to weaker members of the HREH Group, namely HVB REB and
WestHyp," said Mr. Best.
The downgrades and CreditWatch actions on HVB REB and WestHyp,
which HVB plans to merge into HVB REB, reflect their weakened
business profiles, uncertainties about the success and duration
of their restructuring processes currently underway, and their
roles within the HREH Group. From today's perspective, Standard &
Poor's expects that the ratings on HVB REB and WestHyp will not
be lowered by more than one notch due to the much-improved levels
of capitalization, risk coverage, and support from HVB under a
limited guarantee for existing loans.
The CreditWatch placement on WurttHyp reflects HVB's announcement
to improve the bank's capital strength, which Standard & Poor's
currently considers a primary negative rating factor besides its
modest, albeit stable, profitability levels, and lack of business
diversification, due to the limitations of the Mortgage Bank Act.
"From today's perspective, Standard & Poor's expects that
WurrttHyp's improved capital strengths would allow it to raise
WurrttHyp's long-term rating to 'A-' and affirm its 'A-2' short-
term rating. Ratings might otherwise be affirmed," said Mr. Best.
The affirmation of the ratings on HVB Bank Ireland (the future
Hypo International) reflects HVB's announcement to concentrate
its international property business in this entity and provide
sufficient capital to ensure the bank has a Bank for Internation
Settlements (BIS) Tier 1 ratio of 8.5%. (For further analysis see
longer related article entitled "Summary: HVB Real Estate Bank
AG", on RatingsDirect.)
Once the planned measures to increase capital strength have been
successfully carried out, Standard & Poor's expects--from today's
perspective--to affirm its 'A-2' short-term ratings on HVB Bank
Ireland (the future Hypo International) and to assign its 'A-'
long-term counterparty credit rating to the future entity.
The CreditWatch placement on Luxembourg-based PBI reflects HVB's
announcement that PBI will become wholly owned by HVB Bank
Ireland (the future Hypo International).
From today's perspective, the ratings on PBI might be affirmed or
lowered modestly if Hypo International fails to allay concerns
about PBI's future role and strategic importance within the real-
estate-oriented group, due to PBI's exclusive focus on
international public finance.
KIRCHMEDIA GMBH: Creditors Committee Approves Sale of Assets
------------------------------------------------------------
The creditor committee of KirchMedia GmbH unanimously approved,
as expected, the transaction giving control of broadcaster
ProSiebensat.1 Media and the company's film library to Hollywood
entrepreneur Haim Saban.
The deal involves ceding control of a 72% voting rights in
ProSiebenSat.1, one of Germany's largest broadcasters, and the
sell-off of KirchMedia's film library, which includes around
18,000 films and series.
The transaction is subject to the approval of Germany's
competition authority, the Federal Cartel Office, as well as the
country's media oversight commission, known as the KEK.
The deal will close after the approvals.
Insolvency administrator Dr. Jaffe said on the conclusion of the
negotiations for the sale he is confident that the closing and
the execution of the contract "will be quickly completed."
CONTACT: KIRCHMEDIA GMBH & CO KGAA
Rudolf Wallraf
RW-Konzept GmbH
Phone: +49 (0)9 99562324
Mobile: +49 (0)3 2678888
Hartmut Schultz
Hartmut Schultz Kommunikation GmbH
Phone: +49 (0)89 99806220
Mobile: +49 (0)170 4332832
SABAN GROUP
in Germany:
Bernhard Meising
Phone: +49 (0)211 5775902
Elisabeth Ramelsberger
Phone: +49 (0)211 5775913
Citigate Dewe Rogerson GmbH
in USA:
Stephanie Pillersdorf
Phone: +1 212 687 8080
Citigate Sard Verbinnen
KIRCHMEDIA GMBH: Sports Channel May Be Sold Off to Consortium
-------------------------------------------------------------
KirchMedia GmbH & Co KGaA are about to sell German sports TV
channel Deutsches Sportfernsehen (DSF) to a consortium made up of
EM.TV & Merchandising AG, KarstadtQuelle AG and Swiss businessman
Hans-Dieter Cleven.
A pre-published story by Focus magazine reported the imminent
acquisition, and named the firms consisting the rival consortium
bidding for DSF as France's TF1 and Sweden's Modern Times Group
MTG AB.
Kirchmedia has also recently agreed to the sale of its film
library-and-rights business to Hollywood entrepreneur Haim Saban.
The company was put in administration after the collapse of its
parent Kirch Group under a mountain of debt load accumulated
during a failed venture into pay television.
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.
CONTACT: KIRCHMEDIA GMBH & CO KGAA
Rudolf Wallraf
RW-Konzept GmbH
Phone: +49 (0)9 99562324
Mobile: +49 (0)3 2678888
Hartmut Schultz
Hartmut Schultz Kommunikation GmbH
Phone: +49 (0)89 99806220
Mobile: +49 (0)170 4332832
SABAN GROUP
in Germany:
Bernhard Meising
Phone: +49 (0)211 5775902
Elisabeth Ramelsberger
Phone: +49 (0)211 5775913
Citigate Dewe Rogerson GmbH
in USA:
Stephanie Pillersdorf
Phone: +1 212 687 8080
Citigate Sard Verbinnen
MUNICH RE: Capital Weak Despite Progress in Reinsurance Business
----------------------------------------------------------------
Munich Re key figures for 2002: Despite stock market slump,
profit for the year nearly EUR1.1bn / Premium growth of almost
11% / Board of Management expects continuation of positive
development in 2003
Group premium growth of 10.8% to EUR40bn driven by an upswing in
reinsurance business; a quadrupled profit for the year of nearly
EUR1.1bn; and earnings per share of EUR6.08 (previous year:
EUR1.41) - these are the positive key figures for Munich Re's
business year 2002, despite the stock market slump worldwide.
Munich Re began the current year with appreciable successes in
the renewal of its reinsurance treaties, and the Board of
Management expects business to continue developing positively
overall. Therefore payment of an unchanged dividend of EUR1.25
per share will be proposed at the Annual General Meeting (11 June
2003).
The persistently strong demand for high-quality reinsurance cover
contrasts with a substantial reduction on the supply side in the
last three years. Losses from investments in equities, burdens
from the WTC loss, the reserve strengthening that has been
necessary mostly in the US, and the withdrawal of a number of
market players, have led to a decrease in capacity which has been
far from offset by the influx of new capital. Munich Re intends
to take advantage of this favorable situation to further
strengthen its position as a much sought-after risk carrier
worldwide. The issue of subordinated bonds, announced by Munich
Re a week ago, serves this end and will achieve a significant
increase in the Group's shareholders' equity, currently standing
at EUR14.5bn. With the planned hybrid capital, whose specific
features mean it is recognized as equity capital by markets,
supervisory authorities and rating agencies, Munich Re is
targeting international investors in the market for corporate
bonds.
"2002 even more difficult than 2001, but adverse factors fully
compensated for"
In a telephone conference with the press, Dr. Jorg Schneider,
member of the Munich Re's Board of Management, said: "2002 was
even more difficult than 2001. The insurance industry was mainly
hit in the area of investments and equity capital. Munich Re had
to cope with substantial writedowns on securities totaling
EUR5.7bn in its investment result. But in our income statement we
were able to more than compensate for these writedowns and the
appreciable burden from strengthening reserves for U.S. losses.
This was because before the stock market crash we had reduced
individual shareholdings and thereby realized high capital
gains." The details: In the first half of 2002, Munich Re added a
total of EUR1.8bn (after tax) to its loss provisions for the
terrorist attack of 11 September 2001 and for long-tail claims
affecting its U.S. subsidiary American Re. On the other hand, it
realised a total profit of EUR4.7bn on the sale of long-term
shareholdings in companies of the Allianz Group. (For further
figures, please see table.)
Reinsurance: High organic growth, significantly reduced combined
ratio
Apart from the acquisition of KarstadtQuelle Versicherungen, the
increase in the Group's gross premium income was largely due to
organic growth. Munich Re continues to favor such a form of
expansion. This includes the Group's reinsurance segment, where
its premium income rose by 14.6% to EUR25.4bn in 2002. In its
result before amortization of goodwill, the reinsurance group
achieved a profit of EUR2.6bn, compared with a loss of EUR0.7bn
in the previous year.
Despite the better situation as regards both premiums levels and
terms of trade, the need for further improvements is underlined
by the adjusted combined ratio of 106.5% (112.7%), which though
considerably reduced is still not satisfactory. Dr. Nikolaus von
Bomhard, member of Munich Re's Board of Management did not commit
himself to a forecast for the current year, but drew attention to
the very pleasing improvements in prices and conditions at the
beginning of 2003 from the reinsurer's point of view: "As things
stand at present, it looks as if income from investments will not
reach the level of the last few years. We have therefore geared
our treaty renewals in non-life reinsurance to a combined ratio
of under 100%. The prices and conditions we have achieved will
significantly improve our profitability in operative business."
Natural catastrophes contributed a comparatively high 3.3 (1.5)
percentage points to the adjusted loss ratio of 79.9% (82.1%).
The main loss event for the Munich Re Group was the August
flooding in Central and Eastern Europe, which cost it around
EUR500m. This event provided renewed confirmation of the major
impact of windstorm and flood losses on income statements in the
insurance industry. In 2002 they were responsible for 99% (92%)
of the insured natural catastrophe losses.
Primary insurers' growth exceeds market average; combined ratio
falls to under 100%
Munich Re's primary insurance group, for many years one of the
mainstays of growth and earnings, suffered like many other
investors in 2002 from plummeting share prices. It achieved an
above-average rise of 5.6% to EUR16.6bn in premium income, but
this segment suffered a dramatic fall in its investment results,
ultimately closing the business year with a loss of EUR0.7bn
before amortization of goodwill, compared with a profit of
EUR0.6bn in the previous year. A gratifying feature was the
combined ratio in property-casualty insurance, which improved to
99.1% (101.4%) despite the burdens from natural catastrophes.
This improvement was due mainly to a lower loss ratio of 62.7%
(64.9%) but also to a slightly more favorable expense ratio of
36.4% (36.5%). The ERGO companies are currently carrying out a
program of systematic efficiency enhancement, from which they
expect annual savings in the order of EUR300m as from 2005.
The multi-channel strategy of the ERGO companies - with a
powerful sales organization of its own, insurance brokers and now
direct selling via KarstadtQuelle Versicherungen - is proving a
reliable growth-driver in primary insurance. The exclusive
partnership with HypoVereinsbank resulted in a total of 150,000
insurance policies being arranged through the bank in the year
under review, with an annual policy premium of nearly EUR300m
that significantly exceeded planning figures.
Big increase in the number of shareholders
Despite the weakness of the economy and the negative stock market
trend, the number of Munich Re shareholders increased in the past
year by around 38% to 122,000, even with the share price falling.
In March 2003, more than 130,000 shareholders were entered in
Munich Re's shareholders' register. The proposed reduction of
Munich Re's and Allianz's reciprocal shareholdings to around 15%,
announced on 20 March 2003, will increase Munich Re's free float
(currently around 63.5%) by about seven percentage points to a
good 70%.
To See Provisional figures for 2002
http://bankrupt.com/misc/Provisional_figures.pdf
=========
I T A L Y
=========
ALITALIA SPA: Marks Turnaround With Net Profit of EUR93 MM
----------------------------------------------------------
The Board of Directors of ALITALIA - Linee Aeree Italiane S.p.A.
- met today at the company headquarters to examine the draft
balance for the financial year.
In 2002, Alitalia showed a net profit of EUR 93 million, compared
with consistent losses reported in the two previous years. The
Group also reversed the trend relating to the deterioration of
the operating result which began in 1998.
The operating margins achieved in 2002 are in line with the
targets set in the Two-Year Business Plan for the period.
The Two-Year Plan for the restructuring of the Group pinpointed
several strategic actions for 2002 which led to important results
following their implementation during the course of the year.
Strategic challenges for Alitalia identified in 2002
-- Business model leading to low profitability
-- Problems with the network design
-- Strategic isolation
-- Composition of the fleet
-- Inefficiency in terms of costs
-- Critical nature of financial structure
Strategic actions set out in the Two-year Plan Main results
deriving from implementation in 2002
-- Focus on core business and disposal of non-strategic
activities -- Reshaping the offer system
-- Maximising the leverage provided by strategic alliances
-- Updating and renewing the fleet
-- Program for reducing costs
-- Increase company capital
Main results deriving from implementation in 2002
-- Disposal of Sigma and Italiatour (completed in January 2003),
and sale of real estate assets
-- Offer more closely focused on profitable routes
-- Start of joint venture with Air France on Italy-France bundle,
and share exchange of 2% of capital
-- Replacing B-747s with new B-777s, and expanding the regional
fleet
-- Reducing labour costs, and start-up of efficiency projects
-- Completion of capital increase / convertible bond loan, for a
total of 1.8 billion euros
ALITALIA GROUP
Financial Result
The year 2002 was marked, on the one hand, by a highly critical
situation in the macroeconomic scenario and in the air transport
sector and, on the other hand, by the first significant steps
towards implementing the Business Plan for restructuring the
Group. Compared to 2001, the Group's performance showed an
encouraging recovery in operating results as well as consistent
improvement in the net result. Compared to a consolidated loss of
EUR 907 million in the previous year (therefore in part
reflecting the significant amounts set aside last year for
restructuring), the net result in 2002 showed a profit of EUR 93
million (this figure reflects in large measure several
extraordinary items mostly referring to the favourable outcome of
the arbitration proceedings against KLM, and to operations
regarding disposal of activities that are not strictly part of
the core business).
Financial Performance
The macroeconomic scenario and the situation in the air transport
sector were subject to exceptionally critical factors, existing
in a market context that was already showing clear signs of rapid
and major structural changes to enable "traditional" carriers to
counteract the tendency towards marked deterioration in their
main areas of activity. At the same time, 2002 was an important
year for the Alitalia Group because activities were focused on
the tangible implementation of the restructuring and
repositioning programs set out in the 2002-2003 Business Plan.
Production Value
In the situation outlined above, the Group's production value
amounted to EUR 4,843 million with a decrease of 9% compared to
2001. This variation chiefly concerned traffic revenues which,
due to cuts in the offer combined with a fall in demand and the
new network strategy, reported a decrease of EUR 453 million (-
10%), caused mainly by the passenger sector (-EUR 401 million ),
cargo sector (-EUR 33 million ) and charter sector (-EUR 15
million).
Gross Operating Margin
The gross operating margin, amounting to EUR 184 million, showed
an improvement of no less than EUR 186 million compared to the
previous year, thanks to a reduction in costs relating to
consumption of materials and services of EUR 553 million (-14%
compared to the previous year) and labour costs for EUR 120
million (a decrease of 10 % compared to 2001). We should point
out that both of these variations were larger in percentage terms
than the drop in production value shown above, in relation to the
cut in offer, the implementation of restructuring and cost
containment, as well as more favourable fuel prices and
euro/dollar exchange rates. However, there was also an abnormal
increase in insurance costs following September 11.
Operating Result
The operating result was negative for the amount of EUR 118
million with an improvement (compared to the previous year) that
was close to that already reported for the gross operating margin
(an increase of EUR 173 million).
Result before extraordinary items and before tax
The result before extraordinary items and taxes showed a loss of
EUR 260 million with an improvement of EUR 66 million compared to
2001. The positive difference compared to the previous year is
less with respect to the variations of results shown above,
because of a negative difference of net financial items (compared
to 2001) of about EUR 107 million which were largely subject to
the combined effect of lower revenues and higher expenses
resulting from coverage of interest charges and exchange rates,
conversion of active/passive assets, and the devaluation of bad
credit situations.
Extraordinary items
Extraordinary items, whose effect on the net result has already
been mentioned, reported a positive balance of EUR 388 million,
almost wholly due to revenues from the positive outcome of the
arbitration proceedings against KLM (EUR 266 million), the
capital gains arising from the disposal of the subsidiary firm
Sigma (EUR 80 million) and the overall gains arising from the
sale of the real estate used as the Alitalia headquarters (EUR 43
million), and the use of funds set aside for tax appeals by the
Group as part of fiscal settlement procedures (EUR 7 million).
Asset structure
As far as the asset structure is concerned, the company capital
increased from EUR 846 million to EUR 1,769 million; on the
whole, this variation reflects the effects of operations on
capital, decided on and carried out during the year, for a total
amount of EUR 829 million, as well as the year's profit of EUR 93
million.
Indebtedness
Net indebtedness at year's end was EUR 908 million against a
figure of EUR 998 million in 2001. Regarding medium-long term
indebtedness, there was a net increase of about EUR 750 million
(from EUR 931 million to EUR 1,681 million) mainly generated by
the issue of convertible bond loan for the amount of EUR 715
million. The net short-term debt position improved by EUR 840
million (EUR 276 million or lower short-term debts, and EUR 564
million for the increase in cash equivalents).
Third party means/company means (D/E)
In line with the trends described above relating to asset
structure and indebtedness, the ratio between third party means
and company means changed from 1.18 in 2001 to 0.51 in 2002.
Investments
During 2002, the Group made net investments of EUR 829 million
mainly referring to the fleet (against about EUR 586 million in
the previous year). As of December 31, the Group's operating
fleet was made up of 173 aircraft of which about 69% were wholly
owned.
Main factors affecting company management during year
The main features affecting company management during 2002 were
as follows:
a) First of all, the company's role as a "global" carrier was
reconfirmed by the restructuring of the offer system and of the
network, in such a way as to ensure its suitability, with maximum
flexibility, to the reduced volumes and the new characteristics
of the demand. The selective rationalisation of the destinations
offered led to the development of quality products (point-to-
point flights and high frequency services) on the main domestic
and European routes with high yield, as well as to the start up
of a process to maximise complementary features, in order to
cover traffic flows on international and intercontinental routes,
between the Group's two hubs, Malpensa and Fiumicino, focusing on
their inherent market potential.
b) The program for updating and renewing the Group's fleet also
began, with the aim of standardising and reducing the number of
aircraft families and the unit capacity - basic elements to
support the new offer system and to improve the efficiency of the
production process. For the long-haul fleet, after the complete
withdrawal of the B-747s, four new B-777s joined the fleet, to be
followed by a further six mostly during 2003, together with the
planned phase out of the MD11 fleet. For the short/medium range
fleet, the arrival of the Airbus family, which grew by six
aircraft during the year (five A319s, and one A320), to be
followed by another four A320s during 2003, with a further seven
A319s joining the fleet by March 2004. Furthermore, the Group is
gradually renewing the fleet with short/medium range aircraft
with lower unit capacity (in 2002, three Embraer 145s and two
ATR72s joined the fleet, to be followed in 2003 by another three
Embraer 145s, six Embraer 170s and one ATR72).
c) Within the framework of the extraordinary measures directly
affecting the Group's cost structure, a particularly significant
step was the memorandum of understanding signed with the union
organisations and the professional associations relating to ways
of containing labour costs. These measures made it unnecessary to
resort to collective mobility during the two-year period 2002-
2003, and took the form of suspension of some types of contacts
and the use of solidarity contracts (only for ground staff), in
addition to the effective implementation of the incentive program
for early retirement.
d) In order to speed up the move towards recovering
profitability, and in line with the aim of the two-year plan to
make operation and production processes more efficient, the Group
took steps to implement an across-the-board project aimed at
reducing the running costs for all the main sectors
(distribution, flight and ground operations, maintenance, and
staff) in an overall framework of raising levels of efficiency.
e) Maximising the leverage deriving from strategic alliances by
means of joining the SkyTeam global alliance and setting up
bilateral collaboration with Air France, Delta Air Lines and
other partners. This step was further consolidated by means of an
exchange of shares with Air France of 2% of company capital,
voted by the respective Boards on November 18, 2002, to be
finalised by January 2003 for both companies.
f) In terms of concentrating on the core business by adopting an
industrial model focusing on passenger and cargo air transport
and rationalising other activities, it has been decided to
withdraw from several non-strategic activities outside the core
business in order to simplify the Group structure and to release
funds to support the above-mentioned program of investments
(during 2002, the sale of the subsidiary company Sigma was
finalised, for an amount of around 114 million euros).
For other activities which are complementary to the core business
(handling, maintenance, etc.), research is continuing into the
possibility of setting up partnerships and joint ventures.
In 2002, a major real estate project was completed with the
acceptance of an offer for the sale of the property in Rome's
Magliana district, used as the company's headquarters, which led
to a transaction worth approximately 152 million euros.
g) The development of Group activities along the lines described
above was the necessary premise for the launch of a complex
operation to increase the company capital and the issue of a
convertible bond loan, which raised cash equivalents for a total
amount of over 1.4 billion euros, to be added to the capital
increase of around 0.4 billion euros reserved for the Ministry of
Economy and Finance.
h) Finally, mention should be made of the conclusion, with a
decision wholly favourable to the Group, of the arbitration
proceedings which began in August 2000 against KLM after the
break-up of the alliance between Alitalia and the Dutch airline.
The Arbitration Committee's sentence was that KLM should pay
damages and the penalty figure set out in the contract, for the
amount of 250 million euros, with interest and reimbursement of
legal expenses. The Committee's sentence also acknowledged KLM's
right to reimbursement with interest of the payment of 100
million euros made by KLM in December 1999 as a contribution
towards Alitalia's investments in the development of the Malpensa
hub. The adjusted total of over 172 million euros was paid by KLM
at the end of January this year. Considering that Alitalia had
wisely set aside a cautionary sum in previous years, against the
100 million euros paid by KLM, the economic benefit for the year
2002 was equal to the whole penalty plus interest and legal
expenses.
Forecast development of company business
The forecast development of company business very much depends on
the macroeconomic scenario filled with unknown and critical
factors, in which the re-absorption of the structural questions
afflicting the main western economies is not likely to take place
in a short space of time. Furthermore, the forecast performance
for 2003 will be heavily conditioned by the outcome and the
duration of the hostilities in Iraq. Throughout the air transport
sector, there is the build-up of a competitive scenario which is
particularly fierce, with the accentuation and the extension of
the prolonged weakness in demand, further aggravated by the start
of hostilities in Iraq (first estimates on this question issued
by IATA show a drop in passenger traffic, in the case of a brief
conflict, of between 5% and 20%). All this tends to erode
profitability margins in the domestic sector, the Group's main
market reference, and to a lesser extent also puts pressure on
the yield and the load factor in the international and
intercontinental sectors. As far as the price of fuel and
petroleum products is concerned, increasing tension in the Middle
East towards the end of 2002 and the outbreak of a serious
political-economic crisis in an important OPEC country such as
Venezuela, had already led to a sharp upswing in the price of
crude oil, which continued and worsened in the early days of
2003, with prices that have already exceeded 30 dollars a barrel.
This situation made it necessary for the Group, like most other
airlines, to introduce a "fuel surcharge" in the second half of
March 2003. The effect of this will be to absorb almost
completely (the opposite of what happened in 2002) any expected
exchange benefits related to the ongoing weakness of the U.S.
dollar.
It is also important to bear in mind that there have been price
hikes for other important cost components, beyond the control of
single airlines (generally speaking and/or in the Italian
context), in particular relating to tariffs for aircraft handling
and airport assistance. The forecast (in some cases already
applied) is for an increase well above that of inflation, to
which should be added the effects of ever-tighter security and
safety measures.
Against this background, it is becoming clear that the combined
effect of the actions programd or already underway via the two-
year plan (reshaping the network, actions regarding labour costs,
projects for more efficiency in terms of costs, policy of
withdrawal or partnership in non-core business activities etc.),
while proving to be effective, do not seem to be sufficient at
present, even in 2003, to bring about full recovery of the
negative elements outlined above.
In this context, the Alitalia Group has suffered for many years
from a poorer revenue/cost ratio than its main competitors,
mainly due to competitive disadvantages of a structural nature,
such as geographic position, a social and economic context that
is less able to produce high yield traffic, greater dispersion of
the demand over the whole country, the delayed and confused
development of the Malpensa hub. Hence, the Alitalia Group must
necessarily think in terms of speeding up its restructuring
program, giving priority wherever required to actions which will
have a marked impact on its overall business organisation. This
will make it possible to benefit from the associated effects of
correcting the above trends, both in the long-term prospect and
in the short-term for 2003. For all these reasons, against the
background of deep uncertainty and serious problems described
above, and in the absence of significant and unrepeatable gains
from extraordinary items (at least to the same extent), today it
is not possible to predict a positive net result even on the
limited scale forecast by the two-year plan which assumed, it
should be remembered, that there would be government support for
the sector in 2003, similar to what happened in the USA
immediately after September 11. On this subject, the U.S.
government will probably repeat these support measures in the
very near future.
On the other hand, the new phase of grave and widespread
uncertainty which is affecting the geo-political scenario at
present, makes it impossible to give more precise forecasts.
ALITALIA Linee Aeree Italiane S.p.A.
Financial result
Regarding the head of the Group, the 2002 balance shows a net
profit of EUR 95 million (against a net loss of EUR 905 million
for the same period in 2001), reflecting in broad outline the
events already described for the Group as a whole.
The proposal will be made at the shareholders' meeting to
transfer the year's profit to reserves.
Significant facts during the year
The downsizing of the offer (expressed in tonne kilometres) was
an overall 17.8%, accompanied by a level of demand which followed
the trend reported throughout the industry (AEA); after the first
part of 2002 when there was a more marked recovery than forecast
in the Two-Year Plan, demand stayed well below the levels
reported for the previous year, finishing overall (though with
different levels in the three sectors: domestic, international,
intercontinental) at a reduction of 17.8% (tonne kilometres) and
with a total number of passengers carried of 22.2 million (-
10.9%). Against this background, it should be pointed out that
the trend is more or less in line with the performance reported
by the European air transport industry overall (AEA), even though
there were differences relating to the larger cuts in the offer
made by the Alitalia Group (the drop in passengers was slightly
higher than the average figure for competitors). This was a
component of the package of measures required for rapid recovery
of profitability, even against the difficult scenario that had
come about, considering the precarious state of the Group's
economic results at the outset, and a cash-in-hand situation that
was rapidly deteriorating.
In more detail, the performance of the intercontinental sector
was most affected by restructuring, showing a marked decrease in
the number of passengers carried in the North Atlantic area, due
to the total withdrawal during the year of B-747 passenger
aircraft with high unit capacity, and to the cancellation of
flights to Los Angeles and San Francisco. In overall terms,
against an offer reduced by 28.1%, the number of passengers
carried decreased by 26.9%, leading to a rise in the load factor
of 1.2 points.
For the international sector, a reduction in the offer of 10.9%
led to a decrease in the number of passengers carried limited to
7.8%, with a resulting improvement in the load factor of 2.3
points determined by widespread recovery in the following areas:
European Union (+1.9 p.p.), Eastern Europe (+1.7 p.p.), North
Africa (+6.2 p.p.) and the Middle East (+2.0 p.p.).
For the domestic sector, against a reduction in capacity offered
of 4.9%, there was a decrease in the number of passengers carried
of 7.9%, leading to a change in the load factor of 2.0 points.
This reflected a framework in which the major Italian carriers
have upped their competitive pressure on the main routes by
adopting not only a strategy of increased capacity offered (aimed
at recovering market shares), but also by introducing fare
policies focused on promotional initiatives (reflecting a
situation of excess capacity and a significant drop in average
revenues per passenger).
In overall terms, the yield in 2002 showed a noticeable
improvement (+7.8%) compared to the previous year, benefiting not
only from the planned moves to rationalise the network, but also
from a series of further corrective actions relating to a
reduction in the unit capacity of aircraft, and the introduction
of the crisis surcharge.
Considered overall, the measures adopted have made it possible to
limit the decrease in passenger revenues over the whole network
to a figure of the order of 11.4%, reaching more or less the
planned levels set out in the two-year Business Plan and re-
establishing a generally favourable relationship with the
fluctuations in the capacity offered expressed in tonne
kilometres (-17.8%).
Other facts
With payment of the agreed sum of 18 million euros, final
settlement was reached in the controversy between Alitalia and
the bankrupt Fokker company, regarding the claim for damages
following matters relating to the development program for the F70
fleet which started in 1995, and which was interrupted when the
first five aircraft already delivered were handed back to the
Dutch company following its declaration of bankruptcy.
Significant facts after the closure of balance
Significant facts after the closure of the balance for the year
include:
-- On January 17, 2003, the contract was signed for the sale of
80% of the company capital of Italiatour S.p.A. to the firm CIT
(Compagnia Italiana Turismo S.p.A.) for the amount of about EUR 9
million. The transaction - whose completion is subject to
approval by the appropriate authorities, and which will lead to a
capital gain during the current year - forms part of a wider
program of disposal of non-strategic activities started by
Alitalia within the framework of the two-year plan for 2002/2003.
-- On January 29, 2003, the Alitalia Board of Directors decided
to sell the entire shareholding in France Telecom with the aim of
taking advantage of the favourable market opportunities which
emerged in the early part of the year. On February 3, 2003, the
shareholding was sold at an average price of 24.3 euros per
share, and this will lead to a capital gain during the current
year.
-- As part of a feasibility study regarding a partnership on the
domestic market, the Alitalia Board decided on February 24, 2003,
to examine more closely the possibility of setting up a strategic
alliance with Meridiana, the third largest Italian carrier, in
the form of a period of exclusive negotiations aimed at defining
a joint business plan by April 15, 2003.
-- The Alitalia Board, again on February 24, 2003, finally
decided not to proceed with the appeal to the European Union High
Court regarding the annulment of the sentence handed down by the
European Commission on July 15, 1997, and confirmed by the Court
on December 12, 2000.
-- On February 28, 2003, the fixed-time mandate expired that the
company had arranged with its banking agents in July 1997,
relating to a deposit account set up as a guarantee against
commitments to the Italian government regarding early retirement
payments, on the basis of decree no. 546 of October 23, 1996,
(converted into law no. 640 on December 20, 1996), for employees
who had left the company in the period 1995-1997.
When the account was opened, the company paid in 56.6 billion
lire, and further instalments should have been paid as required
by the State according to Law no. 640/1996, regarding early
retirement according. On the basis of said law 640/1996, the
banking agents should have credited the accumulated funds to the
State.
As of December 31, 2002, the balance of the account was 33.9
million euros.
Against this background, a consulting committee has been set up
to deal with the unclear question of how to deal with these
funds. The committee is made of representatives from the Ministry
of Infrastructures and Transport, together with Alitalia, and has
the task of managing and closing down this deposit account,
settling any disputed claims. On this subject, it should be
remembered that the Ministry of Transport at the time
communicated with the European Commission on June 26, 1997,
contesting what appeared to the Commission to be State aid via
law no. 640/1996, whereas the Ministry and Alitalia considered it
to be of a social welfare nature, therefore legal, and had made a
request in this sense to the Commission: "considering the
opportunity and the convenience of finding a pragmatic solution
without prejudice to the respective juridical positions."
- On the subject of the price of crude petroleum, it should be
noted that the sharp rise in the early part of the year due to
growing fears of hostilities in Iraq, forced the Group to
introduce a "fuel surcharge" on tickets, in a similar manner to
that already carried out by Lufthansa, KLM and other carriers.
The fuel surcharge varies according to the length of the flight
(six euros for domestic flights, eight euros for international
flights and twelve euros for intercontinental flights).
***
The Board then examined some projects for industrial
collaboration in activities of aircraft maintenance, with Air
France and with Lufthansa Technik. The program with Air France
envisages mutual evaluation of skills and production capacity in
the sectors of cell maintenance, line maintenance and component
maintenance.
The program with Lufthansa Technik envisages joint development of
servicing and maintenance operations for aircraft engines in the
Fiumicino workshop.
In particular, Alitalia will hand over the branch of the company
dealing with engine operations to its subsidiary Alitalia
Maintenance Systems S.p.A., and Lufthansa Technik will acquire a
40% holding.
Alitalia and Lufthansa Technik will pass on to the company a
sufficient number of engine servicing jobs to raise the level of
utilisation of the Fiumicino workshop (150 shop-visits a year)
within five years, with a forecast increase of more than 80%
compared to the current level of activity. When the new
organisation is up and running, engine maintenance activities
will represent a significant competitive edge for Alitalia not
only in terms of production costs but also in terms of quality
and timing.
***
Finally, the Board decided to convene an extraordinary and
ordinary shareholders' meeting on May 16, 2003 (first call), and
on May 29, 2003 (second call). The agenda will include not only
the balance for 2002 and the appointment of the Board members and
their overall retribution, but also the modification of the
Company Statute to reduce the number of Board members to 9-11,
and correspondingly, to reduce the number of Executive Committee
members to five.
=====================
N E T H E R L A N D S
=====================
IFCO SYSTEMS: Reports Completion of Restructuring in Results
------------------------------------------------------------
Significant Improvement in Profitability - Financial
Restructuring Completed
-- Consolidated revenues grew by 2.8% to $378.0 million in 2002
from $367.7 million in 2001.
-- EBITDA for 2002 increased by 41.2% to $46.7 million from $33.1
million in 2001.
-- EBITDA margin increased 3.4 percentage points to 12.4% in
2002.
-- EBIT for 2002 improved in 2002 by $17.9 million to $16.4
million from $(1.6) million in 2001.
-- 2002 operating cash flows increased from $(4.1) million to
$11.8 million, an increase of $15.9 million
-- Financial restructuring completed, resulting in the conversion
of $238.9 million of debt into equity.
Revenues: 2002 revenues grew 2.8% to $378.0 million in 2002 from
$367.7 million in 2001.
These revenues related to the company's continuing businesses
only, from which IFCO Argentina (deconsolidated at end 2001) and
ISL (terminated at end 2001) have been excluded.
Furthermore, following a new crate supply agreement with SWS
(effective April 2002), granulate sales have also now been
excluded from the company's revenues.
RPC revenues, excluding the nonrecurring revenues addressed above
from both periods, increased 2.7% to $148.8 million in 2002 from
$144.8 million in 2001. The RPC business segment made
approximately 230.9 million and 254.5 million trips during 2002
and 2001, respectively, a decrease of 9.3%. The shortfall in
trips was more than offset by price increases. The U.S. business
performed strongly and Europe, excluding Germany, also developed
in line with management expectations.
The shortfall in German revenues was primarily the result of
lower retailer driven volume, which resulted from the continued
slowdown of the overall economy and by the uncertainty created by
the company's capital restructuring process in 2002.
As a result of the ongoing RPC replacement and upgrade program,
and in line with management expectations, our global RPC pool
level at December 31, 2002 had decreased by 4.5% to 67.3 million
RPCs from 70.5 million RPCs at December 31, 2001.
Pallet Services revenues were $212.2 million in 2002 compared to
$205.0 million in 2001, an increase of $7.2 million, or 3.5%. The
revenue increases are primarily the result of successes in the
company's national sales program. Revenues from the custom
crating division were also higher.
Pallet Pooling Services revenues decreased $0.8 million, or 4.3%,
to $17.0 million in 2002 from $17.8 million in 2001. This is in
line with management expectations, as unprofitable businesses
were terminated.
EBITDA: Total EBITDA (which also excludes nonrecurring items; see
definition and reconciliation to reported U.S. GAAP results
below), increased by 41.2% to $46.7 million in 2002 from $33.1
million in 2001. The related EBITDA margin as a percentage of
continuing revenues increased by 3.4 percentage points to 12.4%
in 2002 from 9.0% in 2001. The positive development of EBITDA and
the respective margin improvement is primarily the result of the
implementation of cost reduction and efficiency improvement
measures across all business segments.
RPC EBITDA increased by 33.8% to $32.9 million in 2002 from $24.6
million in 2001. The related EBITDA margin as a percentage of
revenues grew by 5.7 percentage points to 22.1% in 2002 from
16.4% in 2001. The operational efficiency measures initiated by
the company have increased the washing depot network efficiency,
leading to reduced depot and transportation costs.
Pallet Services EBITDA increased by 6.5% to $17.4 million in 2002
from $16.4 million in 2001. The related margin as a percentage of
revenues also grew to 8.2% in 2002 from 8.0% in 2001. The
development in EBITDA was primarily a result of the segments'
revenue gains. Pallet Pooling achieved EBITDA of $0.8 million
2002 compared with $(2.4) million in 2001. These improvements
were consistent with management's target as the segment
implemented the restructuring measures which were initiated
during 2001.
Gross Profit as a percentage of related revenues increased to
14.3% in 2002 from 12.1% in 2001.
Selling, general and administrative costs were significantly
reduced by $26.1 million in 2002 to $44.9 million, or 11.8% of
revenues, compared to $71.0 million, or 18.6% of revenues, in
2001.
These decreases reflect the effect of significantly lower
administrative headcount, lower professional fees, facility
consolidations, and continuing aggressive management of all
overhead expenses. Management believes that a significant amount
of the selling, general and administrative costs recognized in
2001 were nonrecurring in nature as a result of the company's
various cost reduction initiatives during 2001.
Headcount: The company employed 3,190 personnel in its continuing
operations at the end of 2002, as compared to 3,312 personnel at
the end of 2001. This decrease is primarily due to the
consolidation of the European washing depot network.
Cash and Cash Flows: The company's cash position increased to
$16.9 million as of December 31, 2002, from $11.9 million as of
December 31, 2001.
Operating activities provided $11.8 million in cash in 2002
compared to $(4.1) million in 2001, an increase of $15.9 million.
In addition to improved operating cash flow results, accounts
receivable levels were reduced by $31.5 million due to increased
focus on collections efforts. These gains were offset by a $30.8
million reduction in accounts payable and other current operating
liabilities, as operating cash flows were used to reduce our
operating liabilities to normalized levels.
Net cash provided by investing activities was $20.5 million in
2002 and $16.4 million in 2001. Capital expenditures decreased
34.6% in 2002 to $22.2 million, compared to $34.0 million in
2001. Proceeds from the sale of discontinued operations were
$41.4 million in 2002 and $47.8 million in 2001.
Net cash used in financing activities was $29.1 million in 2002
compared to $18.0 million in 2001. The company used $26.8 million
of cash in 2002 to reduce interest bearing debt and $15.3 million
in 2001.
Financial restructuring completed: The company completed the
restructuring of its Senior Subordinated Notes, exchanging
approximately 99% of the notes for new ordinary shares. As a
result of this and another subordinate note conversion, total
interest-bearing debt decreased to $124.4 million as of December
31, 2002. Accordingly, the company's future annual interest
expense burden was reduced by approximately $21 million. Total
equity has increased by $108.2 million to $110.1 million as of
December 31, 2002 from $2.1 million as of December 31, 2001.
Total equity was 24.7% of total assets as of December 31, 2002.
Karl Pohler, IFCO Systems' CEO, said: "We are very pleased with
our strongly improved 2002 results. This is even more remarkable
considering we also successfully completed our financial
restructuring in 2002. The operational efficiency measures we
have implemented in the last two years have resulted in
significant and sustainable cost reductions, improved operating
results and cash flows. We expect revenue and profitability to
continue to increase in 2003."
The 2002 Annual Report will be filed with the Deutsche B"rse AG
and the SEC, and will be available on our homepage
http://www.ifco.de or http://www.ifcosystems.com
To see financials: http://bankrupt.com/misc/IfcoSystems.pdf
CONTACT: IFCO SYSTEMS N.V.
Investor Relations
Zugspitzstrasse 7
82049 Pullach - Germany
Phone: +49 89 744 91 223
LAURUS N.V.: Regulator Approves Planned Acquisition by Colruyt
--------------------------------------------------------------
Colruyt Group and Laurus S.A. announce that the Belgium
Competition Authority approved the planned acquisition by Colruyt
of an important part of Laurus Belgium. The acquisition concerns
on the one side 26 stores and on the otherhand all wholesale
activities of Laurus Belgium, including the Spar and Eurospar
banner, 2 distribution centers and 4 cash & carry stores.
The Belgium Competition Authority judges that the planned
acquisition doesn't create or consolidate Colruyts position in
the market in such way that it will obstruct the fair competition
on the Belgium market or a significant part of it.
The approval of the Belgium Competition Authority implicates that
now Colruyt and Laurus can finalise the transaction. At the
moment parties perform a legal and financial due diligence.
Colruyt and Laurus aim for closing of the transaction by the end
of April 2003.
UNITED PAN-EUROPE: Reports Results for Q4 and Year 2002
-------------------------------------------------------
United Pan-Europe Communications N.V. announces its operating and
financial results for the fourth quarter and year ended December
31, 2002.
Full Year 2002 versus Full Year 2001
-- Total consolidated revenues from continued operations grew 15%
for the full year 2002, to EUR 1,366m from EUR 1,191m in 2001,
exceeding financial guidance for the year
-- Triple play 1) revenues from continued operations grew 14% for
the full year 2002, to EUR 1,221m from EUR 1,067m in 2001
-- Average revenue per revenue generating unit (RGUs)2) per month
("ARPU")3) increased by 6% during the twelve months to year end
2002, to EUR 13.48 from EUR 12.70 at year end 2001
-- New Services 4) RGUs increased by 20% for the full year 2002,
to 1,265,000 from 1,056,000 in 2001
-- UPC consolidated Adjusted EBITDA 5) improved EUR 446m to
positive EUR 284m for the full year 2002 from negative EUR (162)m
in 2001. Net loss before income tax and other items improved from
negative EUR (1,108)m in 2002 from negative EUR (4,838)m in 2001
-- UPC consolidated Adjusted EBITDA margin improved to positive
20% for the full year 2002 from negative (12)% in 2001
-- Adjusted EBITDA less capital expenditure improved from
negative EUR (1,059)m in 2001 to positive EUR 13m in 2002
(1) Triple play services include basic cable, digital, Internet
and telephony (excluding DTH and our deconsolidated German
business)
(2) RGUs are the sum of basic cable, digital, Internet, telephony
and DTH subscribers. Q1 2001 restated removing Polish DTH
subscribers
(3) ARPU calculation excludes deconsolidated German revenues and
is based on residential subscribers only
(4) New Services are the sum of digital, Internet and telephony
(5) Adjusted EBITDA represents earnings before interest, tax,
depreciation, amortisation, stock based compensation,
restructuring and impairment charges
Management Comments
Commenting on UPC's results, John F. Riordan, CEO of UPC, said:
"UPC performed strongly during 2002, despite a challenging
business environment. Demand for our services and continued cost
control have enabled us to exceed all the financial targets we
set for the Company.
I am pleased to report that a strong fourth quarter in 2002
contributed to an important year of solid operating performance
for UPC. Significant operational efficiencies were achieved
during the year, building on pan-European economies of scale and
a successful focus on cost control, which maximised our Adjusted
EBITDA generation. The resetting of our cost base was largely
completed in 2002 and we saw a substantial improvement in
Adjusted EBITDA of EUR 446m and Adjusted EBITDA less capital
expenditure of EUR 1,072m, over our performance in 2001.
As we have previously highlighted, UPC's operating strategy was
revised during 2002 to "analogue triple play," focusing on a
return to a growth orientated strategy, bundling triple play
products, internet, analogue TV and NPV positive telephony, with
a measured digital NPV positive rollout.
The revised strategy has been successful, with 248,000
residential customers added during the year, despite subscriber
additions in the second half of 2002 being negatively impacted in
some countries by the publicity surrounding our financial
restructuring. The focus on improving our capital discipline has
been a key factor in our Adjusted EBITDA improvement as well as
reducing our capital expenditure from EUR 897m in 2001 to EUR
271m in 2002, a better result than our forecast guidance.
Our balance sheet restructuring has had overwhelming creditor
support and has been ratified by the Dutch District Court and
confirmed in the U.S. Court. However, as announced last week,
InterComm Holdings L.L.C. ("ICH"), a creditor in the Dutch
moratorium proceeding with a EUR1.00 claim and one vote, appealed
the Dutch Court's ratification of the Akkoord. We believe the
appeal is without merit. The Dutch Court of Appeals has scheduled
an expedited hearing for the appeal on April 1, 2003 and the
Court is expected to rule on the appeal shortly thereafter. The
U.S. Court has overruled an objection brought by ICH in the
parallel U.S. Chapter 11 process.
We do not expect that this appeal will affect the successful
completion of our restructuring, which is in its final stages. We
are currently negotiating with the Coordinating Committee of
senior bank lenders and expect to receive an extension to the
waiver on our senior bank facility shortly. We will provide more
information on the expected timing of completion of the
restructuring as soon as it is available. UPC has started 2003
well. As we go forward into the rest of the year, we will
continue to prioritise the quality of service we offer our
customers, ensuring our subscribers continue to be at the centre
of everything we do. In addition, we are continuing to target and
achieve prudent revenue growth whilst maintaining our strategy of
adding profitable subscribers and driving continued growth in
Adjusted EBITDA."
Group Financial Review
UPC's core operations are split into three principal divisions as
follows:
(1) UPC Distribution - local operating systems providing video,
telephone and internet services for residential customers (Triple
Play).
(2) UPC Media - broadband internet and interactive digital
products and services, transactional television services such as
pay-per-view movies, digital broadcast and post-production
services and thematic channels for distribution on UPC's network,
third party networks and DTH platforms.
(3) Priority Telecom - providing network solutions to the
business customer.
In addition, and as part of the ongoing realignment of the
business, UPC is in the process of forming an Investments
Division, which will manage our non-consolidated investment
assets. These assets were valued at EUR 226m and EUR 127m as of
December 31, 2001 and 2002, respectively. The reduction in the
value of the portfolio arose as a result of write-downs and asset
disposals. During 2003, UPC has agreed to sell its shares in SBS
Broadcasting S.A. to UnitedGlobalCom for EUR 100m, against a
year-end 2002 book value of EUR 65m, prior to the Effective Date
of the Plan of Reorganisation. As a result the pro forma value of
the portfolio is EUR 62m. UPC will continue to focus on
rationalising its investment portfolio to maximise value.
Revenue
UPC's consolidated revenue from continued operations (excluding
Germany which was deconsolidated August 1, 2002) in the twelve
months ending December 31, 2002 was EUR 1,366m, an increase of
15% from EUR 1,190m in 2001. UPC Triple Play Distribution revenue
from continued operations increased 14% to EUR 1,221m in 2002,
compared to EUR 1,067m in 2001.
DTH revenues have been set out in the table below to show the
impact of deconsolidating the Polish DTH business in Q4 2001. DTH
revenues outside of Poland were EUR 30m in 2002, a 34% increase
compared to EUR 23m in 2001.
Continued operations at Priority Telecom before intercompany
eliminations, generated a revenue increase of 9% to EUR 119m in
2002 compared to EUR 109m in 2001. Revenues have been set out in
the table below to show the impact of the closure of
international wholesale operations and a change in the
recognition of interconnect revenues.
Continued operations at UPC Media generated a revenue increase of
50% to EUR 73m in 2002 compared to EUR 49m in 2001. Revenues have
been set out in the table below to show the impact of the closure
of four UPC owned thematic television channels (Sport 1, Film 1,
Innergy and Expo 24x7) and a reduction in intercompany revenue
allocations between UPC Distribution and chello, from January 1,
2002, from 40% to 20% for the franchise fees relating to internet
access revenues.
UPC consolidated Adjusted EBITDA improved significantly during
2002 to a positive EUR 284m, a EUR 446m improvement from the
negative EUR (162)m in 2001, as a result of controlled revenue
growth, continued cost control measures and the growing maturity
of our business.
UPC Triple Play Distribution Adjusted EBITDA (excluding the
deconsolidated German entity, EWT) increased 106% to EUR 346m in
2002 from EUR 168m in 2001.
Our Central European DTH business, Priority Telecom and UPC Media
all demonstrated significant operating improvements in 2002. As
previously highlighted, Priority Telecom and UPC Media reached
Adjusted EBITDA breakeven in Q3 2002. For the full year 2002,
Priority Telecom improved its Adjusted EBITDA loss from EUR (89)m
in 2001 to EUR (4)m in 2002. UPC Media improved its Adjusted
EBITDA loss from EUR (113)m in 2001 to EUR (5)m in 2002.
UPC is focused on improving underlying cashflow generation. The
table above highlights the significant improvement in Adjusted
EBITDA less capital expenditure over the last year. This improved
from negative EUR (1,059)m in 2001 to positive EUR 13m in 2002.
UPC uses Adjusted EBITDA, a non-GAAP financial measure, as a
management tool to monitor financial performance and as part of
the calculation of company performance against senior bank
facility covenants. As previously highlighted, UPC generated
positive EUR 284m of Adjusted EBITDA in 2002 compared to negative
EUR (162)m in 2001. Adjusted EBITDA is defined as earnings before
interest, tax, depreciation, amortisation, stock based
compensation, restructuring and impairment charges.
Update Quarter 4, 2002 compared with Quarter 3, 2002
In the three months ended December 31, 2002, revenues from
continued operations grew 4% compared to the third quarter of
2002. UPC added 101,000 residential RGUs in Q4 2002.
Total consolidated revenues increased 3% to EUR 350m in the
fourth quarter 2002 compared with EUR 341m in the third quarter
2002. Total consolidated Adjusted EBITDA increased 7% to EUR 84m
in Q4 2002 compared with EUR 78m in Q3 2002. Net operating loss
before income taxes and other items improved from negative EUR
(357)m in Q3 2002 to negative EUR (396)m in Q4 2002.
Consolidated Operating Statistics
The table below shows operating statistics for UPC on a
consolidated basis:
UPC continues to drive ARPU growth per basic cable subscriber,
and has now reached EUR 20.43 in Q4 2002, in Western Europe from
18.35 in Q4, 2001, an 11% increase in the period. In Eastern
Europe ARPU per basic cable subscriber has increased to EUR 8.69
by year-end 2002 from EUR 8.16 in Q4, 2001, an increase of 6% in
the period. Across all properties, ARPU per RGU increased during
the twelve months to December 31, 2002 by 6% to EUR 13.48 per RGU
from 12.70 in Q4, 2001.
Over the period 2001/2002 UPC implemented a new subscriber
management system in the Netherlands, involving the consolidation
of a number of customer databases. As part of this
implementation, there has been a systematic reduction in the
period over which an overdue account is disconnected for non-
payment of service fees. This has resulted in a reduction in the
number of Dutch subscribers during quarter four, 2002 and quarter
one, 2003 and this process is expected to be completed by the end
of Q2 2003. Although net subscriber growth is strong in all other
respects the impact of this reduction means that we do not expect
the number of RGUs for the Group as a whole to significantly
increase during Q1.
Net Results
UPC generated a net loss during 2002 of EUR (2,243)m, compared
with a net loss of EUR (4,420)m for 2001. The net loss for 2002
includes non-cash charges of EUR (710)m for depreciation and
amortisation, EUR (421)m in impairment and restructuring charges
(including EUR 346 goodwill impairment charge), EUR 658m in
foreign exchange gain and other income/expense, EUR (324)m in
non-cash interest charges and EUR 1,499m as the cumulative effect
of the change in accounting policy outlined below.
Statement of Financial Accounting Standards no. 142 Goodwill and
Other Intangible Assets ("SFAS 142") became effective January 1,
2002 and was adopted by UPC at that time. As a result of the
adoption of SFAS 142, UPC no longer amortizes goodwill, which is
tested for impairment on an annual basis. The outcome of UPC's
goodwill impairment test as at January 1, 2002 resulted in a non-
cash charge to its statement of operations for the year ended
December 31, 2002 of EUR 1,499m, which is recorded as a
cumulative effect of a change in accounting principle, as
announced on February 28, 2002. An additional goodwill impairment
charge, occurring as a result of UPC's annual impairment analysis
as at December 31, 2002, resulted in a further non-cash charge of
EUR 346m. Total goodwill impairment of EUR 1,845m has therefore
been recorded as a non-cash charge to UPC's statement of
operations for the year ended December 31, 2002.
Capital Expenditures and Working Capital Update
Capital expenditure reduced significantly during 2002 to EUR 271m
from EUR 897m for the full year 2001. This reduction in capital
expenditure reflects both the variable nature of UPC's capital
expenditure requirements and the company's focused investment in
new build and upgrade, ensuring this investment generates an NPV
positive return.
In addition, operating leverage was reset during 2002; current
operating assets reduced by EUR 94m and improved subscriber
prepayments of EUR 22m helped offset a payables reduction of EUR
241m arising largely as a result of our reduced capital spending
during the year.
2003 Outlook
As previously announced, UPC anticipates the Effective Date for
emergence from Chapter 11 and Akkoord process and the completion
of its recapitalisation will be delayed beyond the end of March
2003. UPC is currently negotiating with the Coordinating
Committee of senior bank lenders and expects to receive an
extension to the waiver on its senior bank facility. The company
will provide more information on the expected timing of
completion of the restructuring as soon as it is available.
In addition, on March 24, 2003 UPC Polska deposited funds to be
held in trust with the indenture trustee to pay and discharge PCI
Notes plus accrued interest at maturity (November 2003). UPC and
holders of UPC Polska Notes are engaged in discussions about a
restructuring of UPC Polska indebtedness.
For Q1 2003, UPC expects revenue growth (Q4 2002 to Q1 2003) of
between 2% - 4%, Adjusted EBITDA growth (Q4 2002 to Q1 2003) of
between 20% - 25% and capital expenditures of EUR 75m - EUR 80m.
UPC expects to continue to achieve positive Adjusted EBITDA after
capital expenditure during the first quarter 2003.
Consistent with its recent SEC filing, for the full year 2003,
UPC expects revenue growth of 12%, Adjusted EBITDA of EUR 525m
and capital expenditures of EUR 329m. UPC expects Adjusted EBITDA
less capital expenditure and interest to be breakeven by the end
of the fourth quarter 2003. Financial targets for 2003 may be
impacted by the resolution of a court case relating to certain
minimum programme guarantees, which could negatively impact UPC
Adjusted EBITDA by approximately EUR 25m annually from 2003 to
2005.
This press release should be read in conjunction with the
company's audited financial statements and notes as filed on Form
10K with the SEC on March 31, 2003. This filing can be found on
the UPC website at http://www.upccorp.com
===========
P O L A N D
===========
GDYNIA SHIPYARD: Dismisses Manager as Part of New Rescue Plan
-------------------------------------------------------------
The supervisory board of Poland's Gdynia Shipyard dismissed its
long-standing manager as part of a plan to consolidate the ship-
constructing sector.
Janusz Szlanta was removed Friday in a secret vote that was
requested by shareholders, according to spokesman Miroslaw
Piotrowski. The move came after the company, once viewed as a
post-communist success story, slipped back into the red.
The board reportedly said it expects the effort to encourage the
government to take "positive" decisions concerning the shipyard.
It is understood that the company, which is badly in need of new
loans to continue production, is hoping for government guarantees
that would persuade banks to release the funds.
However, Polish media have reported that Janusz was booted
because he disagreed with the government's plan to rescue the
once-powerful shipbuilding industry by consolidating yards.
Szlanta had been in charge of the Gdynia Shipyard for six years
and was widely praised for turning the near-bankrupt yard into a
prosperous company.
The head of the Pomerania Special Economic Zone Wlodzimierz
Ziolkowski replaced him.
According to an anonymous source quoted by Reuters, the personal
change was made in order to introduce someone who would "co-
operate better with shareholders".
Meanwhile, the consolidation plan is currently being prepared by
the Industrial Development Agency, which wants to see the
creation of an industrial group consisting of SG, HCP Cegielski
engineering company and Szczecin Shipyard.
The new company would then receive TPSA shares worth PLN100
million.
Gdynia Shipyard lost its prestigious role in Poland's transition
to a market economy due to depressed shipping market and
unfavorable currency rates. For the past year, it has been unable
to pay its employees' wages on time.
Reports indicate that managers concede the shipyard made a loss
last year for the first time since its financial difficulties in
1996, but refused to give figures.
Currently SG's commercial liabilities amount to almost PLN 400
million.
CONTACT: GDYNIA SHIPYARD GROUP
C/o. Polservice Sp. z o.o.
Poland-Warsaw
Embassy of the Republic of Poland Camp
50M, Shantipath, Chanakyapuri
New Delhi - 110 021, India
Phone/Fax: 91-11-6889181
===========
S W E D E N
===========
SCANDINAVIAN AIRLINE: Head Admits Necessity of Renegotiation
------------------------------------------------------------
The new head of Scandinavian Airline's flag carrier admitted the
company has to renegotiate with the worker's union before
proceeding with its restructuring program.
The carrier is expected to release details of a new restructuring
plan in mid-April, its third in a year and a half.
The program is thought to mean point-to-point routes from the
three Scandinavian capitals to European destinations, instead of
via the Copenhagen hub, as well as more job cuts and
centralization of aircraft maintenance and ground handling
operations.
"But if we can't get (changes to) the union agreements, the rest
will be quite pointless," Mr. Soeren Belin said.
"The cabin crew represents only 25% of costs, but they control
how we use our most expensive resource, our planes," he
explained.
SAS said a further 25%-40% in cuts are needed in the airline,
which accounts for 50% of total sales.
According to Dow Jones, Mr. Belin acknowledged that talks with
the numerous unions in Sweden, Denmark and Norway are difficult
but said he is "optimistic that negotiations will be far-
reaching."
He also suggested scraping the rules that hamper productivity so
that "crews can fly more during their work shifts."
He disclosed plans to increase the number of pilot fly from 490 a
year to the level of easyJet, the carrier he considered "the most
competitive."
The Swedish-Norwegian-Dannish company's European flights are
operating at a loss. It is also facing tough competition with
no-frills carriers.
"It will take 18 to 24 months to change the way we operate our
routes, but we have to hurry," before other rivals enter the
sector and gain footing Mr. Belin said.
It recently launched its own low-price unit Snowflake to help it
battle the competition.
=====================
S W I T Z E R L A N D
=====================
ZURICH FINANCIAL: Closes Sale of Rud Blass to Deutsche Bank
-----------------------------------------------------------
Having received all necessary approvals, Zurich Financial
Services today announced the completion of the sale of Rud, Blass
& Cie AG Bankgeschaft (Rud Blass) to Deutsche Bank (Switzerland)
Ltd. As agreed on February 5, 2003, Deutsche Bank (Switzerland)
Ltd. has therewith acquired all of the shares of Rd Blass.
Rud Blass, which focuses on providing private banking solutions
to high net worth individuals, is noted for its expertise in
managing Swiss and European equities and Swiss real estate
investment products, and had CHF 7.1 billion invested client
assets at the end of 2002. Rud Blass will keep its brand name and
continue to operate as a separate legal entity in the Swiss
market.
Zurich Financial Services is an insurance-based financial
services provider with an international network that focuses its
activities on its key markets of North America, the United
Kingdom and Continental Europe. Founded in 1872, Zurich is
headquartered in Zurich, Switzerland. It has offices in
approximately 60 countries and employs about 68,000 people.
CONTACT: ZURICH FINANCIAL SERVICES
Media and Public Relations
8022 Zurich, Switzerland
Phone: +41 (0)1 625 21 00
Fax: +41 (0)1 625 26 41
Home Page: http://www.zurich.com
===========================
U N I T E D K I N G D O M
===========================
ADAPTIVE VENTURE Presents Financial Results, Business Proposals
---------------------------------------------------------------
CHAIRMAN'S STATEMENT
This is my first annual statement to shareholders since becoming
Executive Chairman of the Group at the end of July last year. It
affords me the opportunity to present the trading results, to
report on other material matters including actions already taken
by the Board and, to provide a strategic view of the future of
Adaptive. In common with many other small technology-based
operations, Adaptive has gone through a very difficult period,
the results of which are reflected in the trading outcome and the
directors' estimated valuation of the Group's investments.
Trading Results
The Group's trading results for the year ended September 30,
2002, before exceptional items, bad debt provisions and the non-
recurring profit on the sale and leaseback of the Group's
premises, continued the trend shown in the first half of the year
with the operating loss falling to GBP159,000 compared with
GBP215,000 for the nine months' period to 30 September 2001.
However, after bad debt provisions, the operating loss rose to
GBP840,000 and, after taking account of exceptional and non-
recurring items and interest, the loss is GBP1.075M.
The trading results have therefore been completely overwhelmed by
provisions made following the suspension of Hearing Enhancement's
(HE) shares and provisions against the investments in and debts
of other client companies.
Having carefully examined the potential future of the Group's
investments in Pneumetrica and Full Immersion Television (FIT)
and the intellectual property licensed to them, the Board has
decided that provisions should be made against the full cost of
those assets and, by association, the amounts due by those
companies to the Group. Against this, there has been a partial
release of the provision made last year in respect of EctoPharma.
These net provisions amounted to GBP1.19m, which was partially
offset by the profit made on the sale of the Group's premises.
The overall impact on the Group of the above provisioning is
clearly very significant. I have commented further on these
provisions and the consequent need for accounting and operational
changes later in this statement.
Profit and Loss Statement
Year to Nine months to Year to
30 September 30 September 31 Dec
2002 2001 2000
Audited Audited Audited
GBP'000 GBP'000 GBP'000
Revenues 916 630 769
Operating loss (840) (215) (168)
Provision for
diminution in value
of fixed (513) (420) -
asset investments
Profit on sale of
Premises 318
Interest (40) (34) 14
Loss on ordinary
activities
before taxation (1,075) (669) (154)
Board Changes
As you know Malcolm McSwan stepped down as Chairman on 26 July
2002 and remains a non-executive director. Roger Gifford, Dr
Walter Jacobs and Richard Muir-Simpson have resigned as
directors.
Following Richard's resignation I have absorbed his role into my
position as Executive Chairman. I have considerable experience,
having been actively involved in developing engineering companies
for many years, including three successful management buy-ins
over the last twelve.
I am very pleased to welcome Dr Clive Dyson as an executive
director and to the position of Managing Director - Client
Company Development. Clive is a doctor of physics with an MBA
and prior to joining us was chief executive of the National
Microelectronics Institute. He will have full responsibility for
the development of client companies prior to the appointment of
chief executives of each client.
Client Companies
The position and development of each client company is reviewed
in detail in the Operational and Financial Report, contained
below.
Investment Assets
Investment activity during the year was very modest with an
additional commitment of GBP50,000 being made to DC Heat and
GBP10,000 to the patent application filed by the Group's
subsidiary, AE Patents in connection with the license granted to
FIT.
Following the successful financing for HE, which took place last
August, your Board were optimistic that the company would quickly
make progress with the development and commercialization of their
Nano Loop and Pico Loop products.
However, markets turned against them; they were unable to secure
the orders that they anticipated in time and, following cash
shortages, the shares, as stated earlier, were suspended in
November. As a result, Adaptive has made a provision in respect
of our shareholding in HE and we are unlikely to recover most of
our debt.
Following detailed reviews of the speed of development of and the
funding implications for both Pneumetrica and FIT, the directors
concluded that new funds could not be raised and have made
appropriate provisions in the accounts for the value of the
investments and the debts due from those two companies.
In order to recognize the continuing significant problems in the
private equity markets, the Board has decided that, in future, no
allowance should be made for any potential equity for debt swaps
involving balances due from client companies and that services
may be withdrawn from clients who are unable to meet their
obligations.
In aggregate, the total net cost of investments and intellectual
property has been reduced by GBP474,000 to GBP810k. Similarly,
the cumulative valuation of all investment assets, on a
consistent basis, fell from GBP2.4m in 2001 to GBP0.8m as at
30 September 2002.
DC Heat has made good progress over the past six months. They
are currently involved in another financing round to raise
GBP200,000 at GBP2.00 per share. Adaptive are unable to
participate in this financing round because of the company's
current financial position and have made a provision of
GBP138,000 against this investment reflecting the current issue
price. However, DC Heat has a well-considered business plan and
is making good progress against its plan. This provision is
therefore not in any way a reflection of the performance of DC
Heat, it is simply a reflection of the very difficult market for
financing small technology companies.
Finally, I am pleased to report that EctoPharma Ltd has recently
undertaken another financing round at GBP0.50p per share raising
approximately GBP250,000, resulting in a partial release of the
provision made last year.
Recent Activities
The Board of Adaptive has carried out the following actions over
recent months:
-- Restructured the Executive Board.
-- Significantly reduced annual operating costs through staff
reductions, changes in operating structure and more controlled
purchasing.
-- Tightened operating and accounting policies.
-- Reviewed the Group's business model.
-- Undertaken the investigation of a number of new client
companies.
-- Applied to become a co-investor partner with Scottish
Enterprise in their co-investment fund.
The future of the Group
The Board recognize that after a number of years of investment,
there have been no returns to shareholders and in the light of
this have reviewed your Group's position. We have carried out a
thorough review of the Group's business model, cost base, working
methodologies and future strategy, and I would like to share our
findings, thoughts and solutions with you.
As you are aware, Adaptive's prime activity has been to create
businesses by taking a good idea, usually with intellectual
property rights attached, developing a strategy for growth,
investing in and managing this growth, and then exiting. Income
comes from services, in particular specialist development
services, to client companies and from the sale of these client
companies. To date, Adaptive has invested in five client
companies, but has not undertaken any full exits.
The Board has modified the Adaptive business model, picking up
the best points of the seven years the company has existed and
combining these with new approaches and ideas. The model remains
one of developing businesses under close supervision, with daily
management support including, initially, senior management and
strategic direction. This model gives Adaptive a number of
strategic advantages:
--It remains a low risk way of managing young companies.
-- Good ideas/businesses can be moved to Livingston from other
parts of the U.K. and even from overseas.
-- It is an attractive route through which to undertake corporate
venturing and portfolio mining from any source.
-- It provides a supportive environment for developing and
licensing
IP.
The new elements of the model are:
-- To combine compatible ideas and businesses, including
acquisition/receiverships, to form larger organisations, thus
increasing value.
-- To exit from businesses rapidly, or have a clear plan and
funding to grow a sizeable enterprise.
-- In the case of the latter, to introduce a focused CEO at an
early stage.
-- To use AE Patents Ltd to develop a major Intellectual Property
(IP) licensing business independent of Adaptive's client
companies.
-- To significantly increase the investment funds available to
Adaptive, initially through partners like Scottish Enterprise and
private business angel organizations.
Based on the above, your Board has the intention of growing
Adaptive but we have to overcome the immediate financing
problems.
The Board's preference would be to raise money by way of a Rights
Issue to give all shareholders the opportunity to participate.
However, this would mean the production of a detailed Offer
document in compliance with the Public Offer of
Securities Regulations 1995, and this would be an unacceptably
expensive exercise in comparison to the funds required.
Accordingly, it is proposed that as there is no longer effective
trading in the company's shares:
-- The company should withdraw its listing on the Alternative
Investment Market ('AIM'),
-- It should be taken private, which will enable it to
communicate with shareholders and offer all shareholders the
opportunity to participate in future Rights Issues on a more
informal basis; and
-- It should undertake a share placing to raise approximately
GBP200,000.
By de-listing the company and taking it private the regulatory
burden and attendant costs will be reduced and Adaptive will be
able to communicate more informally with shareholders, which I
believe will be helpful.
We are currently living in an extremely difficult economic
climate and your Board's strategy for going forward will be to
identify small companies that we believe are capable of being
turned around with the type of management skills that the new
management team is able to provide. Adaptive have already
established contact with various banks who are supportive of this
strategy and who, the Board believe, may be willing to provide
additional financial support to the company to enable it to
develop and implant this strategy.
I am very aware of the importance of trying to restore some
liquidity in your shareholding. However, the primary task must
be to restore shareholder value.
Once that has been achieved, options will be kept open and
Adaptive may again seek a listing if and when it seems
appropriate to do so.
R B Rae
Chairman
31 March 2003
Overview
The year to September 30, 2002 was the most testing experienced
by the Group. Stock markets in both the U.K. and North America
continued to weaken before fluctuating around a low base without
any clear evidence of sustained direction.
As a result, the quantity of new listings on either the Official
List or AIM fell very significantly as did, as a direct
consequence, the availability of personal private equity
emanating from realised capital gains. Further confirmation of
these conditions came from the near 70% drop in the new funds
received by venture capital trusts in the year to April 2002
compared with 2001.
Hearing Enhancement PLC
HE's interim results for the six months to 30 June 2002 showed a
59% decrease in revenues to GBP326,000 (2001: GBP803,000) and a
pre-tax turnaround from a first half 2001 reported profit of
GBP7,000 to a reported loss of GBP574,000 for the first six
months of 2002.
The drop in sales was due to seasonal phasing of ongoing
contracts. HE completed the development of five new products for
the business-to-business and personal markets. It invested
GBP441,000 (2001:GBP46,000) in these new products and associated
fixed assets. There were significant commitments associated with
the development and launch of the new products. The company was
awarded an Airtime Service Provider's Licence by Vodafone. Just
over GBP600,000 was raised from a placing of new shares.
As HE's year-end is December 31, the full year's results are not
yet available, and as noted in the Chairman's statement, the
shares are currently suspended, pending the financial
restructuring of the company.
Shares held by Adaptive at 30 September 2002 1,955,709
Percentage of issued capital 13.7%
Cost GBP193,946
Less: provision GBP(22,867)
Net book value GBP171,079
Valuation GBP195,571
D C Heat Limited
DC Heat, benefiting from the recruitment of its first directly
employed chief executive, has built on the commercial
opportunities that had been identified previously. Both the
product range and the customer base have been expanded and,
recently, the company's audited results for 2002 showed revenues
of GBP612,000 (2001:GBP79,000) and a loss of (GBP340,000) (2001:
GBP422,000). Further progress is expected in 2003..
Shares held by Adaptive at 30 September 2002 276,131
Percentage of issued capital 33%
Cost GBP634,754
Less: provision GBP(138,035)
Net book value GBP496,719
Valuation GBP517,000
Pneumetrica Limited
Over the year, considerable effort was directed into improving
the reliability of Pneumetrica's products. However, the
development of a robust technical and commercial platform has not
been completed. As a result, and reflecting the difficult
financing conditions, the decision has been taken to write off
both the carrying cost of the investment (GBP299,000) and the
debt due from Pneumetrica to Adaptive (GBP497,000). The future of
this investment is currently under review.
Shares held by Adaptive at 30 September 2002 74,625
Percentage of issued capital 47%
Cost GBP298,500
Less: provision GBP(298,500)
Valuation GBP0
Full Immersion Television Limited
While the process of obtaining international registration of the
intellectual property has continued, the development of
commercial applications has made little progress. As a result,
the decision has been taken to write off both the carrying cost
of the investment (GBP90,000) and the debt due from FIT to
Adaptive (GBP77,000). The future of this investment is currently
under review.
Shares held by Adaptive at 30 September 2002 60,000
Percentage of issued capital 50%
Cost GBP90,000
Less: provision GBP(90,000)
Valuation GBP0
EctoPharma Limited
Following the 2001 write down in the value of the investment in
EctoPharma, there was considerable concern surrounding its
future. Thus, conditioned by qualified optimism, recent
information released by EctoPharma indicated that its
intellectual property assets have made considerable progress and
attracted interest from a small number of major companies. The
company has recently carried out a successful rights issue and
placing, and therefore the directors feel it is appropriate to
increase the valuation.
Shares held by Adaptive at 30 September 2002 286,259
Percentage of issued capital 9.5%
Cost GBP448,429
Less: provision GBP(334,000)
Net book value GBP114,429
Valuation GBP115,000
Intellectual Property
The Group generates royalties from intellectual property acquired
from inventors and then licensed back to client companies.
Royalties, usually based on 7.5% of relevant sales, build up over
three years (minimum GBP50,000 per annum after 3 years). The
Group writes off its patent interests over 5 years while licenses
run for up to 10 years. Currently, patents and other intellectual
property have been licensed to Hearing Enhancement, Pneumetrica
and Full Immersion Television.
The Group has written off the value of its FIT patents
(GBP50,000) leaving a book value of GBP28,000, being the
director's value of the remaining patents and licenses.
A summary valuation table is given below. Valuations have been
estimated by the directors using BVCA guidelines.
Cost less provision Directors' Estimated Valuation
30 Sept 02 31 March 02 30 Sept 02
GBP'000 GBP'000 GBP'000
Hearing Enhancement PLC 171 475 196
D C Heat Ltd 497 792 517
Pneumetrica Ltd 0 299 0
Full Immersion
Television Ltd. 0 100 0
EctoPharma Ltd 114 29 115
Intellectual property
(at net book value) 28 450 28
Total 810 2,145 856
Dr Clive Dyson
Managing Director - Client Company Development
31 March 2003
Basis of opinion
We conducted our audit in accordance with United Kingdom Auditing
Standards issued by the Audit Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the
directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the Group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
Going concern
In forming our opinion, we have considered the adequacy of the
disclosures made in the financial statements concerning the
Group's ability to obtain sufficient additional funding to enable
it to continue as a going concern. We specifically draw your
attention to the matters contained under Basis of Preparation in
the Principal Accounting Policies set out in the financial
statements of the Company. Our opinion is not qualified in this
respect.
Opinion
In our opinion the financial statements give a true and fair view
of the state of affairs of the company and the Group at 30
September 2002and of the loss of the Group for the year then
ended and have been properly prepared in accordance with the
Companies Act 1985.
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
EDINBURGH
March 31, 2003
To See Financial Statements:
http://bankrupt.com/misc/Adaptive_Venture.htm
BUZZ: Ryanair Updates Market of Progress of Acquisition
-------------------------------------------------------
Ryanair, Europe's No.1 low fares airline on Monday updated the
market on the progress of the acquisition of Buzz from KLM. The
due diligence process has now been completed and the final legal
documentation is being finalized, however the transaction will
not proceed on April 1, 2003 as originally scheduled, because the
acquisition has not yet received clearance from the Office of
Fair Trading in the UK.
Both Ryanair and KLM have been in regular correspondence with the
OFT, and both companies are seeking urgent approval so that the
transaction may complete as soon as possible in order to save the
core operation of Buzz and preserve up to 130 jobs at a time of
crisis in the aviation industry. Approval will also allow crew
training to commence in advance of operations on 1 May next.
Ryanair and KLM have received enormous assistance from the OFT to
date, and neither party envisages any difficulties in obtaining
the necessary clearance in due course. However since the
transaction is subject to regulatory approval, it cannot complete
until such clearances have been received. Details on the final
purchase agreement will not be available until post OFT approval.
CONTACT: RYANAIR
Paul Fitzsimmons
Phone: +353-1-8121212
MURRAY CONSULTANTS
Pauline McAlester
Phone: +353-1-4980300
CORUS GROUP: Employees Urge Shareholders to Axe Chairman
--------------------------------------------------------
Employees of Anglo-Dutch metal group Corus are calling for the
immediate resignation of chairman Sir Brian Moffat, whose
strategy they blame for the company's troubles.
Michael Leahy, general secretary of the ISTC steel union, in a
written request urged top five shareholders Standard Life, Legal
& General, Brandes Investment Partners, Capital group and Morgan
Stanley, to oust Mr. Moffat, according to The Observer.
Mr. Leahy attributed the collapse in Corus's share price on
'frequent switches of strategy' and blamed the company's present
troubles on the failed plan to sell the aluminum business to
Pechiney of France. He also mentioned failed attempts to expand
in Poland and Brazil.
Unions fear another round of job cuts, which could number up to
4,000, and closure of a major plant, could ensue from a need for
further restructuring in the company. Corus had already axed
10,000 since the merger.
Mr. Moffat, who is at the same time acting as CEO after Tony
Pedder resigned this month, said he will step down after the
company finds a new chief executive.
Mr. Pedder resigned after Corus unveiled net loss of GBP458
million and was forced to abandon the EUR750 million sale of its
European aluminum plants due to the opposition of the Dutch
supervisory board.
CONTACT: CORUS GROUP PLC
Anthony Hamilton
Phone: +44 (0)20 7717 4444
Home Page: http://www.corusgroup.com
EQUITABLE LIFE: Society "Cautiously Optimistic" About Future
------------------------------------------------------------
Business Highlights
-- Society continues to meet statutory solvency requirements;
real progress in stabilising the fund and no material new issues
have emerged.
-- No further reductions to maturity or surrender payouts needed.
-- No discretionary bonus for 2002. Interim non-guaranteed bonus
of 3.5% p.a. (2.75% p.a. for life assurance policies) commences
from 1 April, 2003.
-- Fixed-interest securities now account for 80% of total asset
portfolio.
-- Board "cautiously optimistic" over future but significant
uncertainties remain.
Vanni Treves, Equitable Life's Chairman, said: "I believe that
these results show that Equitable Life is gradually coming out of
intensive care. Although responding to treatment, we are still
some way off declaring a clean bill of health. There are a number
of difficult issues that still need to be resolved but, looking
forward, I am cautiously optimistic about the Society's outlook."
Charles Thomson, the Society's Chief Executive, said: "This has
again been a difficult period for Equitable Life but the actions
taken over the last year are helping to stabilize the Society.
Over the coming year we aim gradually to remove the substantial
uncertainties that continue to overhang the Society, meet our
obligations to policyholders, reduce expenses and resolve
outstanding claims and litigation against the fund. We are on
track to meet those objectives."
To See Equitable Life's Full Release:
http://bankrupt.com/misc/Equitable.pdf
ITV DIGITAL: Former Staff Seeks Compensation From Parents
---------------------------------------------------------
Parents of collapsed pay-television service ITV Digital, Granada
and Carlton, are facing complaints from 150 former staff of the
collapsed company for allegedly failing to properly compensate
workers.
The staff claims they were not adequately consulted about their
dismissal last April. They also believe having been owed the
equivalent of three months' salary as well as redundancy pay when
ITV Digital collapsed. They claimed to have only received four
weeks' salary as payoff and a week's wages for every year of
service.
A former employee reportedly said: "We hung on at ITV Digital
rather than go for other jobs when we knew the business was in
trouble because Carlton and Granada assured us we would be
properly taken care of."
Granada and Carlton bosses are also currently facing criticism
from shareholders about the levels of executive remuneration.
Granada's chief has a controversial rolling contract that allows
him a two-year payoff, while remuneration for Carlton's chairman
and his board is insufficiently clear.
If the move to seek compensation is successful, the workers could
win up to GBP2,000 each at the employment tribunal and could take
their claim to the high court.
LICENTIA UK: Placed Into Administrative Receivership
----------------------------------------------------
Flat-pack furniture maker Licentia U.K. was placed into
administrative receivership with Mike Saville and Joe McLean
appointed as joint administrative receivers.
Mr. Saville is from the Leeds office of accountants Grant
Thornton, while Mr. McLean is from the firm's Newcastle office.
The company is based in Yorkshire and trades from factory
premises in Sherburn in Elmet. It is a major supplier of volume
flat-pack kitchen and bedroom furniture to leading DIY and
furniture retailers.
The company, which employes 190 staff, is expected to continue
trading while discussions are held with customers and suppliers.
Mr Saville said: "We are attempting to stabilise the business and
secure the ongoing support of key stakeholders in the business,
including customers and employees. The current intention is to
continue trading the business whilst a purchaser is found."
Prospective purchasers have already shown interest.
"Historical" problems, which cancelled improvement in the
company's performance, are to blame for the company's fall into
receivership, according to Mr. Saville.
MARCONI PLC: Unveils Proposed Schemes of Arrangement
----------------------------------------------------
Publication Of Prospectus By Marconi Corporation Plc
On March 18, 2003 Marconi plc announced that it had filed with
the High Court of Justice of England and Wales proposals in
relation to the proposed financial restructuring of Marconi and
its wholly-owned subsidiary Marconi Corporation plc.
Marconi on Monday announces that the Court has ordered the
convening of meetings of all creditors of Marconi Corporation and
Marconi (except, in each case, for certain excluded creditors)
(Marconi Corporation Scheme Creditors' and 'Marconi
Scheme Creditors respectively) for April 25, 2003 to consider
schemes of arrangement under section 425 of the Companies Act
1985 between Marconi Corporation and the Marconi Corporation
Scheme Creditors (the Marconi Corporation Scheme) and between
Marconi and the Marconi Scheme Creditors (the Marconi Scheme and,
together with the Marconi Corporation Scheme, the Schemes).
Marconi Corporation and Marconi are posting a document, together
with claim forms and proxy forms, to Marconi Corporation Scheme
Creditors and Marconi Scheme Creditors convening such meetings
for that date and setting out the final terms of the
Restructuring.
Marconi Corporation will also be publishing today a prospectus in
connection with its application to the U.K. Listing Authority
(the UKLA) for the securities to be issued by it under the
Restructuring to be admitted to the Official List and to trading
on the London Stock Exchange's market for listed securities (the
Prospectus). Marconi is also today writing to its shareholders in
relation to the Restructuring. The Restructuring is expected to
become effective on or around May 19, 2003 (the Effective Date).
The Marconi Corporation Scheme is not conditional on the Marconi
Scheme becoming effective. The Marconi Scheme will not become
effective unless the Marconi Corporation Scheme becomes
effective.
Summary of principal terms of the Restructuring
Marconi Corporation Scheme
The claims of Marconi Corporation Scheme Creditors as at 5.00
p.m. on March 27, 2003 will be compromised in consideration for a
distribution (pro rata to their admitted claims) of a package of
cash, new senior notes, new junior notes and new shares of
Marconi Corporation. The liability of Marconi Corporation in
respect of those claims will be extinguished. Further details of
the terms of the new senior notes and the new junior notes are
contained in the Scheme Document and the Prospectus.
The Marconi Corporation Scheme provides that a first initial
distribution of Marconi Corporation Scheme consideration will
take place on the Marconi Corporation Scheme becoming effective.
In summary, each Marconi Corporation Scheme Creditor that
participates in the first initial distribution will be entitled
to receive (assuming no increase in the cash element but that the
Marconi Scheme becomes effective on the same day as the Marconi
Corporation Scheme), for each GBP1,000,000 of admitted claim, an
initial distribution of approximately: GBP64,196 cash; GBP85,022
equivalent in aggregate principal amount of new senior notes
(which will be denominated in euro and/or U.S. dollars, subject
to elections made in claim forms and account holder letters);
GBP58,177 equivalent in aggregate principal amount of new junior
notes (which will be denominated in U.S. dollars); and 187,993
new Marconi Corporation shares.
The Marconi Corporation Scheme requires the approval of Marconi
Corporation Scheme Creditors at the meeting convened for that
purpose (the Marconi Corporation Scheme Meeting); the sanction of
the Court by an order (the Marconi Corporation Scheme Order); and
the sealing of that order and the delivery of a copy of it for
registration to the Registrar of Companies in England and Wales
(the Registrar of Companies). The Marconi Corporation Scheme
Order will not be delivered for registration unless and until:
a. Marconi Corporation has, following the passing of a unanimous
Board resolution to approve the same, provided confirmation in
writing to the prospective Supervisors (for the sole benefit of
the prospective Supervisors) prior to each of (i) the release of
the interim security granted by Marconi Corporation through its
special purpose subsidiary Highrose Limited, (ii) the Marconi
Corporation Scheme Meeting, (iii) the hearing to sanction the
Marconi Corporation Scheme and (iv) the Effective Date, to the
effect that Marconi Corporation remains satisfied that the
reserves built into the Marconi Corporation Scheme are sufficient
to meet distributions due to be made to all Marconi Corporation
Scheme Creditors and that Marconi Corporation remains of the
opinion that the statement as to the Marconi Corporation group's
working capital contained in the Scheme Document remains valid;
b. the prospective Supervisors have provided confirmation in
writing to Marconi Corporation (for Marconi Corporation's sole
benefit) on the day of, but prior to, each of events (i) to (iv)
in (a) above to the effect that they have no reason to disagree
with Marconi Corporation's view that the reserves built into the
Marconi Corporation Scheme are sufficient to meet distributions
due to be made to all Marconi Corporation Scheme Creditors;
c. a permanent injunction order is made in the U.S. Bankruptcy
Court in respect of the Marconi Corporation Scheme; and
d. all conditions precedent (other than those relating to the
Marconi Corporation Scheme becoming effective) set out in Marconi
Corporation's new working capital and performance bonding
facilities are satisfied or waived by the facility agents.
If the Court makes the Marconi Corporation Scheme Order, Marconi
Corporation anticipates that the order of the U.S. Bankruptcy
Court will be granted. Marconi Corporation will not pursue a
permanent injunction order of the U.S. Bankruptcy Court unless
the English Court makes the Marconi Corporation Scheme Order. If
all of the above conditions are not satisfied by 19 June 2003 the
Marconi Corporation Scheme will be withdrawn. Marconi Corporation
will undertake to the Court to file the Marconi Corporation
Scheme Order with the Registrar of Companies as soon as the
conditions set out above are satisfied provided such conditions
are satisfied on or before 19 June 2003.
Marconi Scheme
The claims of Marconi Scheme Creditors as at 27 March 2003 will
be compromised in consideration for a distribution in specie (pro
rata to their admitted claims) of all of Marconi's assets, net of
a reserve in respect of Marconi's ongoing costs. Marconi's assets
will principally comprise the package of cash, new senior notes,
new junior notes and new shares of Marconi Corporation which
Marconi will receive as a result of the Marconi Corporation
Scheme from the Eurobonds and the Yankee Bonds (the 'Bonds') held
by its subsidiary, Ancrane, and monies owed by Marconi
Corporation to Ancrane. The liability of Marconi in respect of
the claims of Marconi Scheme Creditors will be extinguished.
The Marconi Scheme provides that a first initial distribution of
Marconi Scheme consideration will take place on the Marconi
Scheme becoming effective, at the same time as the first initial
distribution under the Marconi Corporation Scheme. In summary,
each Marconi Scheme Creditor that participates in the first
initial distribution in the Marconi Scheme will be entitled to
receive (assuming no increase in the cash element of the Marconi
Corporation Scheme Consideration but that the Marconi Scheme
becomes effective on the same day as the Marconi Corporation
Scheme), for each GBP1,000,000 of admitted claim, an initial
distribution of approximately: GBP9,446 cash; GBP14,554
equivalent in aggregate principal amount of new senior notes
(which will be denominated in euro and/or U.S. dollars, subject
to elections made in claim forms and account holder letters);
GBP9,959 equivalent in aggregate principal amount of new junior
notes (which will be denominated in U.S. dollars); and 32,182 new
Marconi Corporation shares.
The Marconi Scheme requires the approval of Marconi Scheme
Creditors at the meeting convened for that purpose (the 'Marconi
Scheme Meeting'); the sanction of the Court by an order (the
'Marconi Scheme Order'); and the sealing of that order and the
delivery of a copy of it for registration to the Registrar of
Companies. The Marconi Scheme Order will not be delivered for
registration unless and until:
a. Marconi has, following the passing of a unanimous Board
resolution to approve the same, provided confirmation in writing
to the prospective Supervisors (for the sole benefit of the
prospective Supervisors) prior to each of (i) the release of the
interim security granted by Marconi Corporation through its
special purpose subsidiary Highrose Limited, (ii) the Marconi
Scheme Meeting, (iii) the hearing to sanction the Marconi Scheme
and (iv) the Effective Date, to the effect that Marconi remains
satisfied that the reserves built in to the Marconi Scheme are
sufficient to meet distributions due to be made to all Marconi
Scheme Creditors;
b. the prospective Supervisors of the Marconi Scheme have
provided confirmation in writing to Marconi (for Marconi's sole
benefit) on the day of, but prior to, each of events (i) to (iv)
in (a) above to the effect that they have no reason to disagree
with Marconi's view that the reserves built into the Marconi
Scheme are sufficient to meet distributions due to be made to all
Marconi Scheme Creditors;
c. a permanent injunction order is made in the U.S. Bankruptcy
Court in respect of the Marconi Scheme; and
d. a copy of the Marconi Corporation Scheme Order has been
delivered to the Registrar of Companies for registration.
If the Court makes the Marconi Scheme Order, Marconi anticipates
that the order of the U.S. Bankruptcy Court will be granted.
Marconi will not pursue a permanent injunction order of the U.S.
Bankruptcy Court unless the Court makes both the Marconi
Corporation Scheme Order and the Marconi Scheme Order. If all of
the above conditions are not satisfied by 19 June 2003 the
Marconi Scheme will be withdrawn. Marconi will undertake to the
Court to file the Marconi Scheme Order with the Registrar of
Companies as soon as the conditions set out above are satisfied
provided such conditions are satisfied on or before June 19,
2003.
No member of the Marconi group will vote at either of the Scheme
Meetings.
Recommendation
Marconi Corporation and Marconi believe that, given the Marconi
group's financial position, the proposed Restructuring is in the
best interests of all stakeholders, including Scheme Creditors,
Bondholders and Marconi's shareholders. If the Restructuring is
not approved, the severity of the Marconi group's financial
position is such that Marconi Corporation and Marconi would have
no reasonable prospect of avoiding insolvency proceedings which
would mean that there would be a lower return to Scheme
Creditors, accompanied by uncertainty and delay, and no return
whatsoever to Marconi shareholders.
Accordingly, Marconi Corporation recommends that Marconi
Corporation Scheme Creditors (including definitive holders of
Bonds) vote in favor of the Marconi Corporation Scheme at the
Scheme Meeting of Marconi Corporation Scheme Creditors and
Marconi recommends that Marconi Scheme Creditors (including
definitive holders of Bonds) vote in favour of the Marconi Scheme
at the Scheme Meeting of Marconi Scheme Creditors.
Expected Timetable of principal events
Latest time and date for delivery of claim forms to KPMG in order
for Scheme 5.00 p.m. on April 17, 2003 Creditors to be able to
participate in the first initial distribution of
Scheme Consideration
Latest time and date for delivery of account holder letters to
Bondholder 5.00 p.m. (New York City time) on 17 Communications
Group in order for designated recipients of Bondholders to April
2003 participate in the first initial distribution of Scheme
Consideration and latest recommended time and date for such
delivery in order for definitive holders of Bonds to vote at the
Scheme Meetings
Latest recommended time and date by which KPMG should receive
forms of proxy 5.00 p.m. on April 17, 2003 for voting at the
Scheme meetings
Latest time and date by which KPMG should receive forms of proxy
for voting at 12 noon on April 24, 2003 the Scheme meetings
Scheme meetings April 25, 2003
Court hearing to sanction the Schemes tMay 12 to 13 2003
U.S. Bankruptcy Court hearing for section 304 U.S. Bankruptcy
Code permanent May 14, 2003 injunction orders
Last day of dealings in shares in Marconi May 16, 2003
Effective date of the Schemes May 19, 2003
Listing of the New Marconi Corporation Shares, Warrants and Notes
8.00 a.m. on May 19, 2003
First initial distribution of Scheme Consideration May 19, 2003
The dates in this timetable assume that neither of the Scheme
meetings is adjourned. It is therefore not possible to be
specific about these dates. It is also possible that the drawing
up of the order or orders of the Court sanctioning one or both of
the Schemes may be delayed if any person appeals the relevant
order or orders. The times in this timetable refer to London time
unless otherwise specified.
U.K. Listing Authority waiver
The UKLA has granted a waiver of paragraph 9.22 of the Listing
Rules which would otherwise require the consent of Marconi
shareholders to the issue of the New Shares (the 'Waiver').
Accordingly, the Schemes are not conditional on the approval of
Marconi shareholders.
The board of directors of Marconi (the 'Directors'), Lazard
Brothers & Co., Limited ('Lazard') and Morgan Stanley & Co.
Limited ('Morgan Stanley') as joint sponsors to Marconi
Corporation and, for the purposes of the Waiver only, Marconi
have confirmed to the UKLA that Marconi is in severe financial
difficulty. The Directors have, and have confirmed to the UKLA
that they have, considered the methods to resolve Marconi's
current financial position and have concluded that the
Restructuring represents the only viable alternative to an
insolvency procedure. The Directors are of the opinion, and have
confirmed to the UKLA, that unless the Restructuring is
successfully concluded, Marconi would be forced into an
insolvency proceeding and that the Restructuring preserves
greater economic benefit for shareholders than any such
proceeding. The Directors have been advised that, in these
circumstances, Marconi shareholders could not expect to receive
any return from such a procedure. The Directors have confirmed
that negotiations in relation to the Restructuring have made it
apparent that the Restructuring depends on there being no
shareholder vote and therefore, they believe that it is
inappropriate for Marconi shareholders to have a vote in the
circumstances. The Directors have confirmed to the UKLA that,
given these circumstances and having been so advised by Lazard
and Morgan Stanley, they believe that the terms of the
Restructuring (including the Waiver) constitute the only option
that would be likely to provide economic value for Marconi
shareholders and therefore, in these circumstances, are fair and
reasonable so far as Marconi shareholders are concerned. The
Directors have also confirmed to the UKLA that, having taken
advice from Marconi's legal and financial advisers, they believe
that the Restructuring (including the Waiver) is in the best
interests of the shareholders of Marconi as a whole. Lazard and
Morgan Stanley have advised the Directors, and have confirmed to
the UKLA that they have so advised the Directors, that it is
their belief that the terms of the Restructuring (including the
waiver of the requirement for Marconi shareholder approval)
constitute the only option that would be likely to provide
economic value for Marconi shareholders and therefore, in these
circumstances, are fair and reasonable so far as Marconi
shareholders are concerned. In providing this financial advice
Lazard and Morgan Stanley have taken into account the Directors'
commercial assessment of the Restructuring.
Lazard and Morgan Stanley are advising Marconi Corporation and
Marconi and no one else in connection with aspects of
Restructuring and will not be responsible to anyone other than
Marconi Corporation and Marconi for providing the protections
afforded to their clients or for providing any advice in
connection with any aspect of the Restructuring.
The joint co-ordinators of the syndicate banks (the 'Joint Co-
ordinators') have confirmed to the UKLA that the majority banks
will not make further finance or facilities available to Marconi
and that, in the event that a Marconi shareholder vote in
relation to the Restructuring is required, the Majority Banks
will remove their support thereby forcing Marconi into immediate
insolvency. The Joint Co-ordinators have also confirmed to the
UKLA that the majority banks' willingness to allow the
Restructuring to proceed is dependent on the Restructuring not
requiring a vote of Marconi's shareholders to approve the
Restructuring and that the majority banks are of the view that,
having regard to the financial condition of the Marconi group, a
shareholder vote is disproportionate to Marconi's shareholders'
economic interest in the Marconi group.
In the opinion of Marconi Corporation, subject to the Schemes
becoming effective in accordance with their terms and having
regard to the facilities available to the Marconi Corporation
group, the working capital available to the Marconi Corporation
group is sufficient for the Marconi Corporation group's present
requirements, that is for the next 12 months following the date
of this announcement.
Prospects
Upon completion of the Restructuring, Marconi Corporation and
Marconi expect the Marconi group (comprising Marconi Corporation
and its subsidiaries) to be better positioned to compete
effectively in the areas of the broader telecommunications
equipment market on which it has chosen to focus.
The market for telecommunications equipment and services remains
difficult. During the first three quarters of the financial year
ending March 31, 2003 the annualised rate of Core (as defined in
the Prospectus) sales has declined by around 10 per cent. from
approximately GBP2 billion in the first quarter to approximately
GBP1.8 billion in the third quarter. Marconi Corporation and
Marconi do not expect that the Group will benefit from a seasonal
uplift in Core sales during the fourth quarter of the financial
year compared to the level recorded in the third quarter (GBP456
million), contrary to the seasonal pattern of customer demand in
previous years. Despite this difficult business environment,
Marconi Corporation and Marconi believe that the previously
announced cost reduction initiatives currently being implemented
will enable the Group to make further progress during the final
quarter of the financial year ending March 31, 2003 towards its
near term financial objectives to reduce costs and to achieve
operating cash breakeven before exceptional cash costs.
Furthermore, Marconi Corporation and Marconi believe that market
volumes are likely to contract further during the financial year
ending March 31, 2004 and do not expect to benefit from
significant market share gains. As a result, the Group believes
that Core sales could decline by up to a further 5 per cent.
during the financial year ending 31 March 2004 compared to the
annualized third quarter trading levels (GBP1.8 billion).
In December 2002, the Group outlined its Core operating model and
confirmed its target is to achieve a gross margin run rate in the
range of at least 24 to 27 per cent. of Core sales and an
operating expenditure run rate in the range of 21 to 24 per cent.
of Core sales during the financial year ending March 31, 2004.
The Group now believes that it will be able to reduce the Core
operating cost base to an annual run rate below GBP450 million
during the financial year ending 31 March 2004 and thereby reduce
its breakeven level of sales to below GBP1.7 billion per annum.
Although the Group's principal markets remain difficult, Marconi
Corporation and Marconi expect them to recover, at some stage, as
end customer demand for fixed or mobile broadband services
increases. While Marconi Corporation and Marconi cannot predict
with any level of certainty the occurrence, timing or extent of
any recovery, they believe that the favorable longer-term
dynamics of the telecommunications market should enable the Group
to improve margins and grow profitably.
CONTACT: MARCONI PLC
Joe Kelly/David Beck
Public Relations
Phone: +44 (0) 207 306 1771
E-mail: joe.kelly@marconi.com
Heather Green
Investor Relations
Phone: +44 (0) 207 306 1735
E-mail: heather.green@marconi.com
Private Shareholder Enquiries only
Company Secretary's Office
Phone: +44 (0) 207 306 1410
E-mail: shareholder.enquiries@marconi.com
MARCONI PLC: Court Calls for Separate Meetings of Creditors
-----------------------------------------------------------
In the matter of Marconi Corporation PLC and in the matter of
Marconi PLC and in the matter of the Companies Act 1985
Notice is hereby given that by Orders dated March 24, 2003 the
Court has directed that separate meetings of the Scheme Creditors
of, respectively, Marconi Corporation plc (Corp) and of Marconi
plc (plc) as defined in the schemes of arrangement hereinafter
identified, be convened for the purpose of considering and, if
thought fit, approving (with or without modification) Schemes of
Arrangement proposed to be made between Corp and plc and their
respective Scheme Creditors (as so defined) and that such
meetings be held at the Institute of Civil Engineers, 1 Great
George Street, London, SW1 on April 25, 2003 at the respective
times below mentioned, namely:
(i) the meeting of Scheme Creditors of Corp at 10.00a.m.; and
(ii) the meeting of the Scheme Creditors of plc at 10.15a.m. (or
as soon thereafter as the preceding meeting shall have been
concluded or adjourned)
at which place and respective times all the Scheme Creditors are
requested to attend.
Any person entitled to attend either meeting can obtain copies of
the relevant Scheme of Arrangement, form of proxy and claim form
and copies of the Explanatory Statement required to be furnished
pursuant to Section 426 of the above-mentioned Act from Philip
Wallace at KPMG, 8 Salisbury Square, London EC4Y 8BB, England,
UK.
Scheme Creditors may vote in person at the relevant meeting or
they may appoint another person, whether a Scheme Creditor or
not, as their proxy to attend and vote in their stead. It is
requested that forms appointing proxies be lodged with Philip
Wallace at KPMG, 8 Salisbury Square, London EC4Y 8BB, England,
U.K. by 12 noon on April 24, 2003, but if forms are not so lodged
they may be handed to the Chairman at the relevant meeting.
The Schemes provide that a first initial distribution of scheme
consideration will take place on the effective date of the
Schemes. In order to be entitled to participate in the first
initial distribution of scheme consideration, duly completed
claim forms must be submitted to Philip Wallace at KPMG by April
17, 2003 and subsequently admitted by KPMG.
The Scheme Creditors include the holders of the 7 3/4%, and 8%
bonds denominated in U.S. dollars, issued by Corp and guaranteed
by plc and due in 2010 and 2030 respectively and the 5.625% and
6.375% bonds denominated in euros, issue by Corp and guaranteed
by plc and due in 2005 and 2010 respe4ctively. Persons with
interest in such bonds may obtain copies of the documents
referred to above from Philip Wallace of KPMG and also from Donna
Martini of Bondholder Communications Group at 30 Broad Street,
46th Floor, New York, NY 1004, USA or at 64 Queen Street, 3rd
Floor, London EC4R 1AD and are urged to contact BCG and the banks
and brokers with whom they hold their Bonds with a view to the
necessary documents being completed to enable them to vote, in
person or by proxy, at the relvent meeting and to enable them to
participate in the first initial distribution.
By the Orders of the Court has appointed John Devaney, Chairman
of Corp and plc or, failing him, Michael Parton, Chief Executive
Officer of Corp and plc, to act as Chairman of each meeting and
has directed the Chairman to report the results thereof to the
Court.
The Schemes of Arrangement will be subject to the subsequent
approval of the Court.
Allen & Overy, One New Change,
London EC4M 9QQ
Solicitors for Corp and plc
PIZZAEXPRESS: Luke Johnson's Recommended Offer Is Extended
----------------------------------------------------------
Venice Bidder, the bidding vehicle of entrepreneur Luke Johnson
for PizzaExpress, said its recommended offer for the company has
been extended to April 3.
Mr. Johnson, who is tendering a 367p-a share offer, is vying
closely for the struggling pizza chain with Capricorn Ventures
International, and TDR Capital. The team launched GondolaExpress
as their own bid vehicle.
City sources believe the partners could make an offer soon of
between 380p and 390p a share. Latest rumors suggest a figure of
385p, which could value PizzaExpress at GBP276 million.
PizzaExpress, which admitted having tough trading following a
slump in tourism and downturn in the economy, posted a year of
dwindling sales and falling share value.
It put the business up for sale after receiving an approach from
Mr. Osmond in November.
By the first closing date for acceptances, Mr. Johnson spoke for
14.4% of the struggling chain's shares, although that included
the 8.6% stake he has previously acquired.
Losing out to a higher bid could mean a GBP2.6 million break fee
for the entrepreneur.
CONTACT: PIZZAEXPRESS PLC
1 Union Business Park
Florence Way
Uxbridge
UB8 2LS
Contacts:
Nigel Colne, Chairman
David Page, Chief Executive
Paul Campbell, Group Finance Director
Phone: 01895 618618
Sue Pemberton, Citigate Dewe Rogerson
Phone: 020 7638 9571
ROYAL & SUNALLIANCE: Launches Initial Public Offering of Promina
------------------------------------------------------------
Introduction
Royal & SunAlliance announced Monday the launch of the initial
public offering of Promina Group Limited, formerly Royal & Sun
Alliance Australia Holdings Limited. Promina will be the holding
company for the Group's Australian and New Zealand general
insurance operations.
As we announced on November 7, 2002, Royal & SunAlliance has
initiated a wide-ranging program of actions designed to deliver a
more focused general insurance business, with a view to improving
returns to investors. One element we identified in this program
was the sale or exit of businesses where we considered the
opportunity existed to unlock significant value for shareholders.
We stated in November and December 2002 that part of this program
would include an initial public offering of our Australian and
New Zealand businesses.
Work has been ongoing since November, and we now propose to
proceed with the flotation of our Group holding in Promina Group
by way of an IPO. Promina will be seeking listings on the
Australian Stock Exchange and the New Zealand Stock Exchange.
The offering will comprise up to 100% of the Group's shareholding
in Promina and an offering of new shares by Promina. The
offering is being made to institutional investors in Australia,
New Zealand and internationally, and to retail investors in
Australia and New Zealand.
Due to the size of the IPO relative to the Royal & SunAlliance
Group, we will be seeking the approval of the Royal & SunAlliance
shareholders for this transaction. A circular and formal notice
of an Extraordinary General Meeting ("EGM") will be sent to
shareholders shortly.
Background to and Reasons for the Disposal
During 2002, the Board initiated a major operational and
financial review to determine the appropriate strategy Royal &
SunAlliance should follow in seeking to improve shareholder
value. This review followed a period of disappointing operating
results and a weakened capital position.
On November 7, 2002, we announced a detailed program of actions,
following this review, in order to seek to deliver improved
returns to investors and to be able to meet capital requirements
of the business going forward. There are two key elements to the
program of actions. The first is a detailed operational
improvement program, targeting profit enhancement from
improvement in both claims and underwriting and from cost
reductions. The second element is selected business line
disposals and exits designed to reduce net written premium by
GBP3.5bn and strengthen the company's consolidated capital
position.
The businesses selected for disposal are those where:
-- Target levels of performance and returns over time are not
being sustained;
-- The risk profile of the business is unacceptable from a Group
perspective due to the level of risk aggregation;
-- The Group does not hold a strategic competitive advantage in a
particular sector; and/or
-- There is an opportunity to unlock significant value for
shareholders e.g. the Group's Australian and New Zealand
operations.
The largest individual component of this plan is the IPO of
Promina, the successful completion of which would release
significant capital for Royal & SunAlliance.
Overview of Promina Group Promina is the third largest general
insurer in Australia and is the second largest general insurer in
New Zealand, based on gross written premiums written in the
relevant countries for the year ended 31 December 2002. In
addition, Promina has significant financial services operations
in Australia and New Zealand, which include life risk, asset
administration and funds management businesses.
Promina operates a portfolio of businesses in three market areas
across Australia and New Zealand:
-- Direct general insurance, principally selling personal
insurance products such as motor and home insurance, through well
known brands such as AAMI, Australian Pensioners Insurance
Agency, Shannons and AA Insurance, directly to customers;
-- Intermediated general insurance, selling a range of general
insurance products including property, liability, marine,
commercial motor and personal insurance, through intermediaries;
and
-- Financial services, offering products such as term life and
disability insurance, superannuation products and services, asset
administration and funds management through intermediaries and
affinity groups.
The Promina Group will be formed by the combination of Royal &
Sun Alliance Australia Holdings Limited (RSAAHL) and Royal & Sun
Alliance New Zealand Limited (RSANZ), the holding companies for
the general insurance and financial services businesses of Royal
& SunAlliance in Australia and New Zealand.
A prospectus for the purposes of marketing the IPO of Promina was
lodged with the Australian Securities and Investment Commission
Monday (the "Prospectus"). The Prospectus is not being sent to
Royal & SunAlliance's shareholders, as the IPO is not being
extended to the U.K. retail market. The historical financial
information reported in the Prospectus is the responsibility of
the directors of Promina and has been prepared by them from local
historical audited financial statements of the companies
comprising the Promina Group, namely RSAAHL and RSANZ. The
financial information in the Prospectus is presented on a pro
forma basis to show the consolidation of RSAAHL and RSANZ and
certain other adjustments to reflect the operations of the
Promina Group as an independent group going forward. These
adjustments include removing certain divested businesses,
reclassifying discontinued businesses and removing the impact of
a quota share reinsurance treaty that is being discontinued.
This pro forma financial information is presented in accordance
with local Australian generally accepted accounting principles
(AGAAP) and is included in this announcement for information
purposes only.
The Prospectus states that, as at 31 December 2002, the pro forma
net assets of the Promina Group under AGAAP were A$1,466m
(GBP513m). This pro forma figure is prepared on the bases stated
above and does not show the effect on the net assets of Promina
of the receipt of expected proceeds of the IPO which will be used
to repay intra group subordinated debt which amounts to
approximately A$344m (GBP131m); of the payment of the costs
associated with the IPO apportioned to Promina; of the
recognition of goodwill and retained RSANZ profits upon the
acquisition by Promina of RSANZ; and of the receipt of proceeds
by Promina under the IPO in the event that the over allotment
option granted to the joint global coordinators is exercised over
new shares issued by Promina. The net assets of Promina Group
(including the discontinued businesses and assuming full exercise
of the over-allotment option) after the above adjustments are
stated in the Prospectus, as adjusted, as being A$2,027m
(GBP774m).
The Prospectus also states that in 2002, Promina Group reported a
pro forma after tax loss (after outside equity interests) of
A$291m (GBP102m) under AGAAP, which was affected by a goodwill
writedown of A$425m (GBP149m) on its Australian and New Zealand
financial services operations. For the financial year ending 31
December 2003, the Prospectus states that the directors of
Promina Group are forecasting an increase in profit after tax to
approximately A$188m (GBP72m) under AGAAP. It should be noted
that the forecast, which is not being made by the Directors of
RSAIG, makes a number of assumptions, which may or may not occur,
and is specific to the Promina Group as an independent group
going forward. The forecast has been included here for
information purposes only.
Historical financial information of the Promina businesses RSAAHL
and RSANZ will be contained in a circular being sent to
shareholders shortly. This information has been extracted from
historical audited consolidated financial information of Royal &
SunAlliance and is presented in accordance with U.K. GAAP. On
this basis net assets for these businesses are stated as GBP627m
including goodwill of GBP62m, and loss on ordinary activities
before tax is stated as GBP16m, for the year ended 31 December
2002.
Terms of the Disposal
The disposal will be effected by an IPO of the Australian and New
Zealand businesses, which are currently wholly and indirectly
owned by the company through Group companies.
Prior to the IPO, certain reorganisation events are required to
take place. The Group's New Zealand operations, RSANZ, will be
sold, conditional upon the IPO completing, to the Australian
holding company, RSAAHL, now named Promina Group Limited, for
approximately A$516m (GBP197m). The New Zealand consideration,
as well as the intra group subordinated debt (approximately
A$344m (GBP131m)), owed by Promina to the Royal & SunAlliance
Group, will become immediately payable on completion of the IPO.
A minimum of 900 million shares will be offered for sale to new
investors, comprising the majority of the holding in Promina
owned by Royal & SunAlliance through its wholly owned subsidiary
RSA Overseas Holdings BV ("BV"), and such number of shares as are
required to raise the amounts of new capital needed to repay to
Royal & SunAlliance Group the New Zealand consideration and the
intra group subordinated debt, and to meet the costs associated
with the IPO apportioned to Promina, collectively an amount
totalling approximately A$910m (GBP347m).
The joint global co-ordinators will be granted over allotment
options by both Royal & SunAlliance and Promina for a total of up
to 157 million shares. Royal & SunAlliance has agreed to
allocate 100 million of its shares in Promina to this over
allotment option, which will be initially retained by the Royal &
SunAlliance Group and sold if the joint global co-ordinators
exercise the option to enable them to settle over allocations.
Promina has also agreed to issue up to 57 million additional new
shares pursuant to their over allotment option. Promina will
retain the proceeds for this share issue if the option is
exercised. Shares in Promina held by the Royal & SunAlliance
Group will be given priority in the exercise of the over-
allotment option.
If the over allotment options are not exercised, or not exercised
in full, the Royal & SunAlliance Group will retain up to a 10%
shareholding in Promina. Any shares retained will be held by the
Royal & SunAlliance Group through its selling subsidiary, BV,
which will be subject to a lock-in arrangement restricting its
ability to sell these shares for a period of one year following
completion of the IPO.
The IPO will be marketed to retail and institutional investors in
Australia and New Zealand, and selected institutional investors
in other jurisdictions, including U.S. investors under a separate
144A offering.
As mentioned above, the proceeds from the new share issue by
Promina will be used to pay the New Zealand consideration, to
repay the existing intra group subordinated debt, totalling
approximately A$344m (GBP131m), owed by members of the Promina
Group, and to pay for certain costs associated with the IPO
apportioned to Promina, estimated at approximately A$50m
(GBP19m). Any proceeds raised through the issue of new shares
through the over allotment option will be retained by Promina to
further strengthen its capital base.
The nature of the IPO process is such that the final offering
price is fixed at the end of the offering period, depending on
demand and market conditions at the time of pricing, normally but
not necessarily within the indicative price range contained in
the Prospectus. Final offering pricing will take place after
shareholder approval had been obtained at an EGM of the
shareholders to be called for Friday 2 May 2003. Final pricing is
expected to be announced on Monday 12 May 2003. During the
offering period, the joint global coordinators to the IPO will
jointly manage a "book build" process during which institutional
investors will be invited to bid for shares in Promina at
specific prices. The final price at which the IPO will proceed
will therefore be a book built price.
The Prospectus contains an indicative institutional price range
per Promina share of A$1.50 to A$2.00 which would imply a total
indicative market capitalisation of Promina of A$1,586m to
A$2,114m, (GBP605m to GBP807m) assuming the over allotment option
is fully exercised.
Retail investors will be able to purchase or subscribe for shares
at a price A$0.10 lower than the final book built price subject
to a maximum price of A$1.90 per share, and will receive
guaranteed allocations.
The IPO may proceed notwithstanding that the final price may be
outside the above range if to do so is considered by the Board to
be reasonable and in the best interests of shareholders as a
whole. Accordingly, the Board is seeking shareholder approval to
proceed with the IPO at such a price as would satisfy these
criteria, which may or may not be within the indicative price
range stated above.
Financial Effects of the Disposal
Following completion of the IPO, on the assumption that the total
holding of BV in Promina were sold at the institutional price,
the disposal of Promina would realise for Royal & SunAlliance an
approximate amount of between A$1,450m and A$1,950m (GBP553m to
GBP744m) based on the indicative price range set out in the
Prospectus for the institutional offer.
This amount comprises the consideration for the sale of the
shares owned by the Royal & SunAlliance Group in Promina of
between A$590m and A$1,090m (GBP225m to GBP416m), the New Zealand
consideration amounting to approximately A$516m (GBP197m) and the
repayment of the intra-group subordinated debt of A$344m
(GBP131m). This compares to Royal & SunAlliance's total capital
value for the disposed businesses as at 31 December 2002 of
GBP747m, including intra group subordinated debt of GBP120m and
goodwill of GBP62m.
The net proceeds of the disposal will be used to support the
capital position of the Royal & SunAlliance Group and the writing
of general insurance business.
Extraordinary General Meeting
Shareholder approval for the disposal will be sought at an EGM of
the company to be held on Friday 2 May 2003. A formal notice of
the meeting and the resolution to be proposed will be sent to
shareholders shortly, together with a circular setting out
further details of the disposal of Promina.
Final pricing of the IPO will take place after the EGM and is
expected to be announced on 12 May 2003.
NB: The historical financial information as at 31 December 2002
has been translated at GBP1.00 =A$2.86. All other currency
translations have been calculated at a rate of GBP1.00 = A$2.62,
and GBP1.00 = NZ$2.86, being the rate on 27 March 2003.
Important Disclaimer
This press release contains forward-looking statements as defined
in the U.S. Private Securities Litigation Reform Act of 1995. The
forward-looking statements are based on management's current
expectations or beliefs as well as a number of assumptions about
future events, and are subject to factors and uncertainties that
could cause actual results to differ materially from those
described in the forward-looking statements. The specific
forward-looking statements cover, among other matters, the
proceeds from the disposal, the number of shares issued under the
IPO and post IPO financial projections. The company does not
assume any obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
This press release does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in the United States.
Securities may not be offered or sold in the United States unless
the securities have been registered under the U.S. Securities Act
of 1933, as amended (the "Securities Act") or an exemption from
registration is available. The securities in the offering have
not been and will not be registered under the Securities Act.
CONTACT: ROYAL & SUNALLIANCE
Malcolm Gilbert, Director Communications
Phone: +44 (0) 20 7569 6138
SPIRENT PLC: Shareholders Passed Resolution to Divest WAGO
----------------------------------------------------------
Spirent plc, a leading international network technology company,
announces that at the Extraordinary General Meeting of the
company held Monday, the Ordinary Resolution approving the
proposed divestment of the Group's interests in WAGO, its
interconnection joint venture, as set out in the Notice of the
Meeting sent to shareholders on March 12, 2003, was duly passed.
The divestment is expected to complete in early April 2003.
About Spirent
Spirent plc is an international network technology company
providing state-of-the-art systems and solutions for a broad
range of customers worldwide. Our Communications group is a
worldwide provider of integrated performance analysis and service
assurance systems for next-generation network technologies.
Spirent's solutions accelerate the development and deployment of
network equipment and services by emulating real-world conditions
and assuring end-to-end performance of large-scale networks. Our
Network Products group provides innovative solutions for
fastening, identifying, insulating, organising, routing and
connectivity that add value to electrical and communication
networks in a wide range of applications. Our Systems group
offers integrated product solutions for the aerospace and power
controls markets. Further information about Spirent plc can be
found at http://www.spirent.com
Spirent plc is listed on the London Stock Exchange (ticker: SPT)
and on the New York Stock Exchange (ticker: SPM; CUSIP number:
84856M209) with one American Depositary Receipt representing four
Ordinary shares.
Spirent and the Spirent logo are trademarks of Spirent plc. All
other trademarks or registered trademarks are held by their
respective companies. All rights reserved.
*****
The divestment of Spirent's interests in the WAGO interconnection
joint venture will raise net cash proceeds of approximately
GBP58.2 million. The company will use the proceeds to pay down
debt pegged at GBP162 million as of December 31, 2002.
Spirent plc recorded GBP1 billion pre-tax loss for 2002.
CONTACT: SPIRENT
Investor Relations
Nicholas Brookes, Chief Executive
Eric Hutchinson, Finance Director
Phone: +44 (0)1293 767676
Brunswick
Jon Coles/Rupert Young
Phone: +44 (0)20 7404 5959
SSL INTERNATIONAL: Issues Resolutions of Strategic Review
---------------------------------------------------------
SSL International plc announces the result of a detailed
strategic review, undertaken to establish the best way to create
value for shareholders.
In conducting this review, the Board has been particularly aware
of the importance for the development of both the Consumer and
Medical divisions, of each receiving the required resources to be
able to compete effectively in their global markets.
The Board has concluded that it is in shareholders' interests to
focus on the Consumer division, and to realise the value of the
Medical division by means of disposal. To this end, Rothschild
has commenced a disposal process on behalf of the Group. The
proceeds of disposal will be used to reduce debt and invest in
the development of the consumer business.
In accordance with its normal practice, the Group plans to issue
a full trading update for the year ending March 31, 2003 at the
end of April. Sales performance to the end of February in all
business areas has been slowed by difficult market conditions,
particularly in the U.S. and Italy, such that sales for the year
are now expected to be approximately GBP620 million. The planned
efficiency improvements and cost reduction programs are
proceeding on course, which will materially mitigate the effect
on group profit arising from slower sales.
The preliminary results announcement for the year ending March
31, 2003 will be made in early June 2003, at which time an update
on the disposal process referred to above and the Group's plans
for growing its core consumer business will be given.
Commenting on today's announcements, Ian Martin, Chairman said:
"We scrutinized the Group's capabilities and opportunities in all
its markets and product areas. Our firm conclusion is that
shareholders' interests would best be served by focusing
resources on driving growth in the consumer business where SSL
has two major international brands, Durex and Scholl."
CONTACT: SSL INTERNATIONAL PLC
Phone: (020 7367 5760)
Brian Buchan, Chief Executive
Garry Watts, Group Finanace Director
Home Page: http://www.ssl-international.com
THE MAITLAND CONSULTANCY
Phone: (020 7379 5151)
Brian Hudspith
Simone Cheetham
Toft Hall
Toft
Knutsford
Cheshire
THISTLE HOTELS: HSBC Posts Cash Offer for Asset on Behalf of BIL
----------------------------------------------------------------
Introduction
BIL (U.K.) announces that the Offer Document containing the Cash
Offer for Thistle, being made on its behalf by HSBC, is being
posted to Thistle Shareholders today [Monday]. Acceptances to the
Offer should be received as soon as possible following receipt of
the Offer Document and in any event, by no later than 3.00pm
(London time) on April 22, 2003.
The Offer
The Offer Price of 115 pence per Thistle Share represents:
-- A premium of approximately 29 per cent. to the Closing Middle
Market Price of 89 pence per Thistle Share on 29 January 2003,
being the last business day prior to Investec re-rating Thistle
based on "potential for corporate action";
-- A premium of approximately 15 per cent. to the Closing Middle
Market Price of 100 pence per Thistle Share on 20 February 2003,
being the last business day prior to the announcement by BIL that
it was contemplating making an offer for Thistle;
-- A multiple of approximately 8.5 times Thistle's 2002 pro-forma
EBITDA*; and
-- A multiple of approximately 27.2 times Thistle's 2002 pro-
forma earnings*.
BIL believes that the Offer represents full and fair value to
Thistle Shareholders:
Compared to the valuation of Thistle implied by a peer group of
comparable companies **, considered by BIL to be the most
comparable to Thistle, the Offer Price represents:
-- A premium of approximately 35 per cent. on the basis of
Thistle's 2002 pro-forma
EBITDA*; and
-- A premium of approximately 138 per cent. on the basis of
Thistle's 2002 proforma earnings *.
Compared to the valuation of Thistle implied by recent
acquisitions ** of U.K. hotel companies, considered by BIL to be
the most comparable to Thistle, the Offer Price represents:
-- A premium of approximately 32 per cent. on the basis of
Thistle's 2002 proforma turnover*; and
-- A premium of approximately 147 per cent. on the basis of
Thistle's 2002 proforma earnings *.
In arriving at the Offer Price, BIL was mindful of the fact that,
in the 12 months prior to BIL's announcement that it was
contemplating making an offer for Thistle, Thistle's share price
has been inflated by bid speculation, trading at an average
premium of 21 per cent. to the FTSE All Share Leisure and Hotels
Index, despite Thistle releasing several negative trading
statements.
As detailed above, on an earnings-based valuation approach BIL's
Offer is at a premium to the values implied by both comparable
companies** and recent acquisitions**. BIL considers that an NAV
based valuation approach is inappropriate for a hotel company and
ignores, in the case of Thistle:
-- The contractual early redemption cost of Thistle's debenture
debt of
approximately GBP406 million, a premium of 56 per cent. to its
book value;
-- A potential tax liability on asset sales of up to GBP90
million;
-- The cost of exiting the hotels business on any asset sale; and
-- The GBP90 million letter of credit relating to the 10 year
performance guarantee to Orb, covering the hotel businesses sold
to Orb in April 2002.
Taking into account the full contractual cost of redemption of
Thistle's debenture debt, the current net cash position of
approximately GBP108 million would become a net debt position of
approximately GBP39 million.
Background to the Offer
BIL originally acquired Mount Charlotte Investments PLC, the
forerunner to Thistle, in 1991 and following significant
investment, growth of the portfolio and a rebranding of the
company to Thistle, floated it on the London Stock Exchange in
1996. The purpose of the flotation was to raise Thistle's profile
and status, increase international recognition of the Thistle
brand and further the development of the business.
BIL considers that since that time Thistle has not performed to
its potential and that its share price has suffered as a
consequence.
The U.K. hotel sector is currently facing difficulties that BIL
believes are unlikely to be short term. An uncertain outlook and
negative sentiment associated with the current conflict in the
Gulf combines with generally poor global economic and political
conditions:
-- In BIL's view there will be no quick recovery from the current
downturn.
Following the Gulf War in 1991 and the last major downturn, it
took Thistle six years to exceed pre-Gulf War operating profit
levels; and
-- BIL believes that the geopolitical risks and global economic
uncertainty are greater now than in the early 1990s.
Upon completion of the Offer, BIL intends to undertake a thorough
strategic, financial and operational review of Thistle.
Interest in Thistle Shares The BIL Group currently owns or
controls 221,094,640 Thistle Shares, representing approximately
45.8 per cent. of Thistle's existing issued share capital.
BIL wishes to make it clear that, even if a competing offer were
made, the BIL Group would not dispose of its shareholding in
Thistle. This statement is intended be binding for a period of at
least 12 months.
Extraordinary general meeting
In line with BIL's existing shareholding in Thistle and also as a
consequence of BIL's view that Thistle has not performed to its
potential, it is BIL's intention to write to Thistle to
requisition an extraordinary general meeting of Thistle
Shareholders.
At that extraordinary general meeting resolutions will be
proposed which would effect substantial changes to the size and
composition of the Thistle board. Any such changes will be
consistent with BIL's obligations to Thistle under the
Relationship Agreement entered into by BIL and Thistle at the
time of Thistle's flotation in 1996, in that the majority of
Thistle directors would not be directors or employees of the BIL
Group. Save with the consent of the Panel, any such extraordinary
general meeting would not be requisitioned until after the end of
the Offer Period.
The passing of any resolutions to effect changes to the Thistle
board requires a simple majority of the votes cast by those
shareholders present (in person or by proxy) and voting at the
meeting. The BIL Group intends to vote in favor of the
resolutions in respect of its 221,094,640 Thistle Shares,
representing approximately 45.8 per cent. of Thistle's existing
issued share capital.
* The calculation of pro-forma 2002 results for Thistle is set
out in Appendix 1 to this announcement.
** Further details of the comparable companies and the recent
acquisitions of U.K. hotel companies are set out in Appendix 1 to
this announcement.
Document dated March 31, 2003 have the same meaning when used in
this announcement, unless the context requires otherwise.
This announcement has been issued by HSBC, which is regulated in
the U.K. by The Financial Services Authority, and which is acting
as financial adviser to BIL and BIL (UK) and no one else in
connection with the Offer and the matters described in this
announcement and will not be responsible to anyone other than to
BIL and BIL (UK) for providing the protections afforded to
customers of HSBC, nor for providing advice in relation to the
Offer or any other matters described in this announcement.
Unless BIL (UK) otherwise determines, the Offer is not being
made, directly or indirectly, in or into the United States,
Canada, Australia or Japan or by use of the mails of, or by any
means or instrumentality of interstate or foreign commerce of, or
any facility of a national securities exchange of any of those
jurisdictions and the Offer should not be accepted by any such
use, means, instrumentality or facility or from within the United
States, Canada, Australia or Japan. This includes, but is not
limited to, the post, facsimile transmissions, telex, telephone,
e-mail and the internet.
Accordingly, copies of this announcement and any related
documents are not being sent and must not be mailed or otherwise
distributed or sent in, into or from the United States, Canada,
Australia or Japan. Persons receiving such documents (including,
without limitation, custodians, nominees and trustees) should not
distribute or send them in, into or from the United States,
Canada, Australia or Japan or use the United States, Canadian,
Australian or Japanese mails or any such means, instrumentality
or facility for any purpose, directly or indirectly, in
connection with the Offer. Doing so may invalidate any related
purported acceptance of the Offer.
The directors of BIL and BIL (UK) accept responsibility for the
information contained in this announcement, save that the only
responsibility accepted by them in respect of the information in
this announcement relating to Thistle or the Thistle Group (which
has been compiled from published sources) is to ensure that such
information has been correctly and fairly reproduced and
presented. Subject as aforesaid to the best of the knowledge and
belief of the directors of BIL and BIL (UK) (who have taken all
reasonable care to ensure that such is the case), the information
contained in this announcement for which they are responsible is
in accordance with the facts and does not omit anything likely to
affect the import of such information.
CONTACT: HSBC
Arun Amarsi
Phone: +65 6228 1427
Neil Goldie-Scot
Phone: +44 (0)20 7991 8888
BRUNSWICK
Jan Sanders
Marcus Ayre
Simon Sporborg
Jonathan Glass
Phone: +44 (0)20 7404 5959
THISTLE HOTELS: Issues Response to Posting of BIL's Offer
---------------------------------------------------------
The Board of Thistle* notes BIL's announcement regarding the
posting on Monday of its offer document to Thistle shareholders.
The Board of Thistle* believes that BIL's arguments fail to
justify the wholly inadequate price of its offer and strongly
advises Thistle shareholders not to accept this highly
unsatisfactory and opportunistic offer. BIL's offer has been
timed to capitalise on the sector's current weakness in advance
of any upturn.
Shareholders should note the following matters relating to BIL's
offer:
-- As stated in its offer announcement dated 4 March 2003, BIL
intends to retain the final dividend of 3.4 pence per Thistle
share recommended by Thistle's board for 2002 and is, therefore,
in fact only offering 111.6 pence per share in additional value;
-- The cash on Thistle's balance sheet equates to approximately
76 pence per share and therefore BIL's offer values Thistle's
non-cash assets at only 39 pence per share, or approximately
GBP188 million in aggregate, which is a 71 per cent. discount to
their net asset value;
-- BIL's offer represents a 9 per cent. discount to Thistle's 12
month average share price of approximately 126.4 pence (excluding
the period when Thistle was in an offer period following the
announcement by Orb a.r.l. that it was considering a possible
offer for Thistle);
-- BIL's offer does not reflect a full control premium. BIL does
not have majority control of Thistle and the premium it is
offering is wholly inadequate; and
-- Thistle is well placed to benefit from a sector upturn as it
has high quality assets in key London locations and, given its
substantially fixed cost-base, expects that increases in revenue
will largely flow through to earnings. The Board* believes that
BIL should not be the only shareholder to reap the rewards of any
such upturn.
A shareholder circular setting out the Board of Thistle's*
detailed response to the offer document and its advice to Thistle
shareholders will be sent to shareholders shortly. This circular
will also address BIL's arguments on Thistle's performance and
value, with which the Board* does not agree. The Board of
Thistle* will keep you informed of any material developments.
BIL has stated its intention to requisition an Extraordinary
General Meeting following the offer period seeking to change the
size and composition of Thistle's Board. The Board of Thistle*
regards this tactic in an offer period as being an unacceptable
attempt by BIL to coerce the Board* and shareholders into
accepting its wholly inadequate offer.
David Newbigging, Chairman of Thistle said:
'BIL's offer is wholly inadequate and the Board of Thistle*
continues to have no hesitation in rejecting it. We urge
shareholders to do the same and to ignore BIL's proposals to
change the Board which are an attempt to coerce the Board* and
shareholders during the offer period.'
Ian Burke, Chief Executive Officer of Thistle said:
'The offer has been carefully timed and is highly opportunistic.
The hotels sector as a whole is suffering as a result of the weak
economic environment and current hostilities in the Middle East.
The offer also fails to recognize the very significant value BIL
would be in a position to realise from Thistle if its offer
succeeds. The Board of Thistle* is continuing to explore options
to maximise value for each and every Thistle shareholder.
Shareholders should ignore BIL's claims that it is offering fair
value and reject its offer.'
Sources and bases:
The value of BIL's offer for Thistle's non-cash assets is based
on the value of the whole of the existing issued ordinary share
capital of Thistle of approximately GBP555 million, implied by
BIL's offer of 115 pence per Thistle share multiplied by 482.4
million Thistle shares in issue, less cash of GBP367 million
(equivalent to 76 pence per Thistle share) as at December 29,
2002, sourced from Thistle's Preliminary Results Announcement
dated March 3, 2003.
The net asset value of Thistle's non-cash assets is based on net
assets of GBP1,016 million less cash of GBP367 million as at 29
December 2002, sourced from Thistle's Preliminary Results
Announcement dated 3 March 2003 and 482.4 million shares in
issue.
The recommended final dividend of 3.4 pence per Thistle share is
sourced from Thistle's Preliminary Results Announcement dated 3
March 2003.
Average share price information has been sourced from Datastream
and the discount of BIL's offer to Thistle's 12 month average
share price is based on the period up to February 20, 2003, being
the last business day prior to the announcement by BIL that it
was contemplating making an offer for Thistle, and excludes the
period when Thistle was in an offer period following the
announcement by Orb a.r.l. that it was considering a possible
offer for Thistle.
*The Board of Thistle for these purposes comprises all of the
Directors of Thistle other than Tan Sri Quek Leng Chan and Mr
Arun Amarsi, who in view of their positions as Chairman and CEO,
respectively, of BIL have not participated in the deliberations
of the board in relation to BIL's offer.
Merrill Lynch International and Deutsche Bank AG are acting for
Thistle Hotels Plc and for no-one else in connection with BIL's
offer for Thistle Hotels Plc and will not be responsible to
anyone other than Thistle Hotels Plc for providing the
protections afforded to clients of Merrill Lynch International or
Deutsche Bank AG or for providing advice in relation to such
offer.
CONTACT: THISTLE HOTELS PLC
Phone: 020 7895 2304
Ian Burke, Chief Executive Officer
MERRILL LYNCH INTERNATIONAL
Phone: 020 7995 2000
Simon Mackenzie-Smith, Managing Director
Richard Nourse, Managing Director
DEUTSCHE BANK
Phone: 020 7545 8000
James Agnew, Managing Director
Charles Wilkinson, Managing Director
HOGARTH PARTNERSHIP LIMITED
Phone: 020 7357 9477
Nick Denton
Chelsea Hayes
THISTLE HOTELS: Issues Response to Rumors Regarding Disposals
-------------------------------------------------------------
In the light of recent press speculation, the Board of Thistle*
confirms that following the announcement of BIL International
Limited's ('BIL') offer on March 4, 2003 it has received
approaches from a number of parties. These approaches relate to a
range of potential alternative transactions, including possible
competing offers for Thistle and the disposal of certain of its
hotel assets.
Discussions regarding these alternatives are at various stages
and there can be no certainty that any such transaction will be
concluded.
Ian Burke, Chief Executive Officer of Thistle said:
'We said in response to BIL's offer that we would review options
to maximize value for all of Thistle's shareholders. We have
entered into discussions following approaches from a number of
interested parties to determine whether there is a proposal which
will generate additional value for our shareholders.'
If appropriate, a further announcement will be made in due
course.
* The Board of Thistle for these purposes comprises all of the
directors of Thistle other than Tan Sri Quek Leng Chan and Mr
Arun Amarsi, who in view of their positions as Chairman and CEO,
respectively, of BIL have not participated in the deliberations
of the board in relation to BIL's offer to acquire all of the
shares in Thistle not already owned by BIL.
Merrill Lynch International and Deutsche Bank AG are acting for
Thistle Hotels Plc and for no-one else in connection with BIL's
offer for Thistle Hotels Plc and will not be responsible to
anyone other than Thistle Hotels Plc for providing the
protections afforded to clients of Merrill Lynch International or
Deutsche Bank AG or for providing advice in relation to such
offer.
CONTACT: THISTLE HOTELS PLC
Phone: 020 7895 2304
Ian Burke, Chief Executive Officer
MERRILL LYNCH INTERNATIONAL
Phone: 020 7995 2000
Simon Mackenzie-Smith, Managing Director
Richard Nourse, Managing Director
DEUTSCHE BANK
Phone: 020 7545 8000
James Agnew, Managing Director, Corporate Broking
HOGARTH PARTNERSHIP LIMITED
Phone: 020 7357 9477
Nick Denton
Chelsea Hayes
ZYZYGY PLC: Posts Loss Before and After Taxation for Second Half
----------------------------------------------------------------
Chairman's Statement
I am pleased to present the unaudited second interim results of
the company for the six-month period ended December 31, 2002.
The result was a loss before and after taxation for the period of
GBP59,000, which compares with a loss of GBP817,000 in the
previous six months and a loss of GBP5.21 million for the year
ended December 30, 2001. This much reduced loss was incurred as
a result of professional and other costs associated with
maintaining the company's AIM status.
Your company has granted an option to Alythia Limited which was
capable of being extended by Alythia Limited, subject to the
advance of an unsecured loan of GBP75,000. These monies have not
been received and, accordingly, the option has lapsed.
Your directors have recognized that the circumstances under which
the company was formed and first operated have completely
changed. We have therefore decided to explore other means of
improving shareholder value and have concluded that the most
effective option is to acquire another business. To this end,
your directors have been seeking to identify a suitable
acquisition. The negotiations to which I referred in my last
statement continue and I hope to be able to report progress in
the near future.
Joanne Sawicki
Chairman
March 31, 2003
To See Financial Statements:
http://bankrupt.com/misc/Zyzygy_Interim_Result.htm
(I) Basis of preparation
The Interim Accounts for the six months ended 31st December, 2002
are unaudited and do not constitute statutory accounts in
accordance with section 240 of the Companies Act 1985.
(ii) Dividends
No dividend is proposed for the six months ended 31st December
2002.
(iii) Loss per share
The basic loss per share has been calculated by dividing the
retained loss for the period of GBP59,000 by the weighted average
number of ordinary shares of 37,595,961 in issue during the
period.
(iv) Copies of Interim Results
Copies of the Interim Results will be sent to shareholders
shortly and will be available to members of the public from the
company's registered office, 10 Market Walk, Saffron Walden,
Essex CB10 1JZ. Full accounts for the period ended 31 December
2001, on which the auditors gave an unqualified report and
contained no statement under Section 237 (2) or (3) of the
Companies Act 1985, have been delivered to the Registrar of
Companies.
CONTACT: ZYZYGY PLC
Edward Oliver
Phone: 01799 550265
JOHN EAST & PARTNERS LIMITED
John East
Phone: 020 7628 2200
Simon Clements
*************
S U B S C R I P T I O N I N F O R M A T I O N
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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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