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/raid1/www/Hosts/bankrupt/TCREUR_Public/030417.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, April 17, 2003, Vol. 4, No. 76 Headlines C Z E C H R E P U B L I C UNION BANKA: Head of Football Club Accused of Kidnapping Roselli UNION BANKA: Withdraws Filing for Bankruptcy, Ousts Petitioners F R A N C E VIVENDI UNIVERSAL: Minority Investors Want Inquiry on Messier G E R M A N Y DRESDNER BANK: Loses Two More Bankers According to Sources DEUTSCHE BAHN: Gets Eight Bids For Chemicals Distribution Unit HEIDELBERG CEMENT: Faces Huge Penalty for Anti-Competitive Acts I T A L Y FIAT SPA: Likely to Sell Stocks to Current Investors Say Sources TELECOM ITALIA: Offers for Directories Unit Reach EUR5 Billion N E T H E R L A N D S ROYAL KPN: Signs EUR 1.5 Billion Improved Credit Facility KONINKLIJKE PHILIPS: Reports Net Loss of EUR 69 Million for 2003 UNITED PAN-EUROPE: Court Rejects Appeal Against Akkoord S W E D E N CELLPOINT INC: First Creditors' Meeting to Convene on May 12 LM ERICSSON: Chairman to Take Extra Responsibilities at ABB S W I T Z E R L A N D ASCOM: Expands Board, Changes Muller-Mohl Representation SWISS INTERNATIONAL: Scales Back Amidst Flagging Economy U N I T E D K I N G D O M AQUILA INC.: Impairment and Restructuring Charges Drive Net Loss CORUS GROUP: Ignores Call from Workers to Kick Chairman EASTWOOD CARE: Receiver Grant Thorton Offers Business for Sale EDINBURG FUND: Financial Advisor Took GBP229,000 in Fees EMI GROUP: Modifies Severance Terms for Two Top Executives IMPERIAL CHEMICAL: FSA Questions First Quarter Profit Warning HOLLINGER INC.: S&P Cuts Credit Rating to `CCC+' INVENSYS PLC: New Disposals Fail to Change Rating Outlook INVENSYS PLC: Posts Operating Profit Despite Continued Weakness INVENSYS PLC: Places Ratings on Review for Possible Downgrade LEICESTER CIRCUITS: Joint Administrators Offer Business for Sale LE PETIT: Business Offered for Sale as a Going Concern LICENTIA UK: Receivers Hopeful of Achieving Sale Next Week PERNOD RICARD: Gives Partner Complete Ownership of Distillery P&O PRINCESS: Ratings on Review Pending Resolution of Merger SFI GROUP: Intends to Cancel Listing, Skip Final Dividend THISTLE HOTELS: Shareholders Support Rejection OF BIL's Offer WIMBLEDON & SOUTH WEST: Remaining Assets Offered for Sale - - - - - - - - =========================== C Z E C H R E P U B L I C ============================ UNION BANKA: Head of Football Club Accused of Kidnapping Roselli ---------------------------------------------------------------- The police implicated Pribram-based entrepreneur and head of the Marila Pribram Czech first-league football club Jaroslav Starka in the kidnapping of Union Group head Giuseppe Roselli, according to Czech Happenings. Mr. Starka's bodyguard, Zdenek Karnos, was also accused, and both are waiting a decision regarding whether they will be taken for custody, according to Martin Omelka of Prague's state attorney's office. This brings the number of people involved in the kidnapping to three. Pribram-based entrepreneur Roman Kolar is being interrogated at liberty. Italian banker Giuseppe Roselli, who holds the right to sign more than 75% of documents pertaining to bankrupt Union Banka, was abducted and forced to sign a number of documents last Monday. Michal Donath, spokesperson of Invesmart, UB's owner, said the kidnappers are believed likely to attempt an unlawful takeover of Invesmart-owned Union Group, which is the majority owner of Union Banka. An earlier report of Czech Happenings say the police brought charges of blackmail against "two men" over the kidnapping of Mr. Roselli. CONTACT: UNION BANKA ul. 30 dubna c. 35 70200 Ostrava Phone: 596108111 Fax: 596120134 Home Page: http://www.union.cz E-mail: union@union.cz UNION BANKA: Withdraws Filing for Bankruptcy, Ousts Petitioners --------------------------------------------------------------- Union Banka has withdrawn the petition for bankruptcy filed on Monday by now former board of directors Stefan Veselovsky and Michal Gaube. The board members submitted the application at Regional Courts in Ostrava, Usti nad Labem and Prague, at the same time that the remaining board members Petr Votoupal and Hana Vyslouzilova tendered a settlement proposal to the Regional court in Ostrava via fax. According to Czech Happenings, Mr. Votoupal said the court settlement with creditors is to preserve the bank's assets management activities, and the planned worked out on the basis of an agreement with Goldman Sachs counts on maintaining a part of the outlets. Clients would get 30% of their claims on the bank in a settlement, whereas in bankruptcy they would get only 15%. Neither settlement nor bankruptcy will affect insured deposits of Union Banka clients. Union Banka dismissed Mr. Veselovsky and Mr. Gaube for filing the bankruptcy petition. It afterwards elected investment adviser Jan Valdiger to the board. Mr. Valdiger was reportedly supported by a group of people around Goldman Sachs, the investment bank interested in reviving UB. CONTACT: UNION BANKA ul. 30 dubna c. 35 70200 Ostrava Phone: 596108111 Fax: 596120134 Home Page: http://www.union.cz E-mail: union@union.cz =========== F R A N C E =========== VIVENDI UNIVERSAL: Minority Investors Want Inquiry on Messier ------------------------------------------------------------- A French minority shareholder group has requested an investigation on the stockholdings of former Vivendi Universal chief executive Jean-Marie Messier during his tenure at the company, according to daily Le Monde. Association of Minority Shareholders, known by its French acronym, ADAM, claimed Mr. Messier "failed in his duty of loyalty to shareholders," by signing an annual report that contained incorrect information. Mr. Messier's statement that he held 333,243 shares at the end of 2001 contradicted Vivendi's annual report that showed he held 592,810. He also denied having sold any shares in 2002, and explained that sales late in 2001 were not reflected promptly into the annual report. Le Monde's report also mentioned a discrepancy of seven million votes between the proxy votes held by Messier at the April 24, 2002 annual general meeting and data recorded at the meeting. According to the report, investigators said the initial document in their hands did not include the number on the proxy votes held by Messier. Upon request, Vivendi provided an original document with which showed the number 70,036,415 added in handwriting. Data registered at the annual general meeting showed proxy votes amounted to 64,117,899. ============= G E R M A N Y ============= DRESDNER BANK: Loses Two More Bankers According to Sources ---------------------------------------------------------- Dresdner Bank AG's co-head of corporate finance Manjit Boual and managing director Jeremy Miller have joined the list of executives leaving the bank's securities unit, according to people familiar with the company. The unit, which struggles to restore earnings as demand for mergers and share sales declines, saw the gradual exit of top bankers since German insurer Allianz AG bought Dresdner Bank two years ago. Among senior bankers who left the company were Tim Shacklock, executive chairman of investment banking, and Michael Biondi, co- head of North America. Ms. Boual's resignation came after Steven Berger was appointed to replace Mr. Shacklock ealier this month, people said, according to Bloomberg. Mr. Miller, on the other hand, is retiring. Dresdner lost more than 11,000 jobs since May 2000 as the company's position in the market drops. It went down from being the ninth top company in the field of advising global mergers in 2001, to 18th last year, Bloomberg data showed. It also fell to 32nd in global sales from 17th in 2001. DEUTSCHE BAHN: Gets Eight Bids For Chemicals Distribution Unit -------------------------------------------------------------- Deutsche Bahn's chemical distribution business recently attracted numerous bids, valued at up to EUR1.5 billion (USD1.6 billion), according to the Financial Times. Previously, indebted Deutsche Bahn sent out a preliminary information memorandum to gauge the interest of potential bidders for Brentagg based on the limited details it provided. The German national railway operator will send out more detailed books in the following days and is then expected to take selected bidders through to the first round. The bidders are believed to include US buy-out house Kohlberg, Kravis Roberts, as well as rival Carlyle Partners, BC Partners, and CVC. It has been reported that private equity funds such as the potential bidders have been extremely active in the chemical sector, as they are attracted to solid assets that are cash generative. Brenntag announced a 7% rise in full-year earnings before interest and taxes to EUR164.4 million last month. Operating profits in 2002 also increased 24% to EUR127.6 million. Sales have however decreased by 6.6% to EUR4.34 billion last year. A major reason for this is a fall in the demand for chemical products worldwide. Deutsche Bahn, owned by the German government, is one of Europe's largest transport firms. Its main divisions, DB Regio (local passenger transport) and DB Reise & Touristik (long-distance passenger transport), carry more than 1.7 billion passengers yearly throughout Germany and to neighboring countries. CONTACT: DEUTSCHE BAHN AG Am Potsdamer Platz 2 10785 Berlin, Germany Phone: +49-30-2-97-6-11-33 Fax: +49-30-2-97-6-19-19 Homepage: http://www.bahn.de HEIDELBERG CEMENT: Faces Huge Penalty for Anti-Competitive Acts --------------------------------------------------------------- The German Federal Cartel Office fined Heidelberg Cement EUR252 million for its involvement into alleged anti-competitive practices in the German cement industry. The fine is the largest of a total of EUR661 million imposed against six companies equally involved in the scandal, including Readymix AG, Lafarge, Dyckerhoff, Holcim, and an unlisted company, Schwenk. The companies were fined for cooperating to fix artificially high prices as far back as the 1970s. The president of the German cartel office, Ulf Borge said: "Decades of collusion between Germany's cement producers almost completely prevented competition in the sector." He finds the large penalty, which Heidelberg Cement considered "preposterously high", appropriate. Heidelberg Cement indicated it would appeal the ruling. It did not deny taking measures to defend itself against cheap imports from Asia and Eastern Europe, but insisted it did not harm customers. Readymix went out with a fine of only EUR12 million for whistle blowing. Lafarge, which owns Blue Circle in the UK, was fined EUR86 million while Holcim's German division Alsen was fined EUR74 million. ========= I T A L Y ========= FIAT SPA: Likely to Sell Stocks to Current Investors Say Sources ---------------------------------------------------------------- Industrial group Fiat may raise as much as EUR2 billion (US$2.2 billion) through a stock offering to current investors, according to people familiar with the matter. ``If they're going to get back on track, they need to do what they haven't in the past and that's invest in technology, develop something no one else has and for that they need funds,'' said Massimo Nibbi, who helps oversee $1.6 billion at Meliorbanca SpA and doesn't own Fiat shares. The company reported a record loss of EUR3.9 billion last year. It is also in need of some EUR2 billion a year to launch new models through 2004 after partner General Motors Corp. stopped investing more cash. Fiat decided to sell assets and has so far raised at least EUR5 billion this year. EUR2.4 billion of this was raised from the sale of Toro, EUR1.6 billion from FiatAvio, EUR160 million from real estate, and EUR805 million from truck rental company Fraikin SA. ``Talk of a capital increase has been a weight on the stock because they will only be able to do it at a heavily discounted price,'' said Stefano Fabiani, who helps manage the equivalent of $269 million at Zenit Sgr. Shares in Fiat dived to more a more than 18-year low in speculations of a share sale last February. Fiat spokesman Richard Gadeselli said no decision has been made regarding a capital increase, and sources say Chairman Umberto Agnelli and Chief Executive Giuseppe Morchio wanted to finish its business plan before approaching the market. Under Italian law, companies are not allowed to sell shares below their nominal value of EUR5 billion, which means Fiat would only be able to offer shareholders a maximum discount of 19% at current market prices. The Agnelli family, through its private holding company Giovanni Agnelli & C., has already agreed to raise as much as EUR250 million through the sale of shares and convertible bonds to take up its part of an eventual Fiat rights offer, according to Bloomberg. TELECOM ITALIA: Offers for Directories Unit Reach EUR5 Billion -------------------------------------------------------------- The battle for the Seat Pagine Gialle yellow pages business of Telecom Italia is believed to have reached the EUR5-billion (US$5.4 billion) mark--potentially one of the year's biggest private equity deals. Telecom Italia is selling the directories division to lower net debt that is expected to balloon to EUR42 billion after its merger with Olivetti this summer. Olivetti owns 55% of the phone company. The price range had risen from earlier estimates and was now closer to EUB4.8 billion to EUR5.3 billion a person close to the auction said, according to the Financial Times. Telecom Italia's previous management bought its 56% stake in Seat Pagine Gialle for EUR9.5 billion three years ago. Four private equity consortiums are bidding for the assets. These include a combination of US private equity groups Thomas H Lee, Carlyle, and Providence Equity Partners; Kohlberg Kravis Roberts, Blackstone and Texas Pacific Group; Hicks Muse Tate & Furst and Apax; and and BC Partners, Permira, CVC and Investitori Associati. Hicks Muse Tate & Furst and Apax together own Yell, the UK yellow pages business. BC Partners, Permira, CVC and Investitori Associati, together with some other members in its consortium originally invested in Seat's 1997 privatization. The KKR consortium is understood to be the most advanced with work on its bid, but the BC Partners consortium is thought to be the most aggressive on price, according to the report. ===================== N E T H E R L A N D S ===================== ROYAL KPN: Signs EUR 1.5 Billion Improved Credit Facility --------------------------------------------------------- On April 14, 2003 KPN signed a renegotiated three years EUR 1.5 billion credit facility with an extension option of one year taking the final maturity to April 2007. This facility replaces the existing EUR 1.75 billion credit facility. The credit facility can be used for general corporate purposes, working capital or refinancing of indebtedness of KPN and/or subsidiaries. CFO Maarten Henderson: "We are pleased that we have been able to renegotiate the existing facility with our group of 10 core relationship banks. The new terms and conditions of this credit facility are less restrictive than the previous one, which is another confirmation of the improved financial position of KPN." The most important improvements are: -- Extension of the maturity date to April 2006, with a further extension option of 1 year to April 2007. -- Improved interest margin and commitment fee. -- Significantly decreased utilization fee. -- Removal of the restrictive covenants with regard to cash acquisitions and the prepayment of debt. KPN is currently rated BBB with a positive outlook by Standard & Poors and Baa2 on review for possible upgrade by Moody's. The Mandated Lead Arrangers on the transaction are ABN AMRO Bank N.V., Banc of America, Citigroup, Credit Suisse First Boston, Deutsche Bank AG, HVB Group, ING Bank N.V., J.P. Morgan, Rabobank International and Scotia Capital. For Further Details See Annex: http://bankrupt.com/misc/Annex.htm KONINKLIJKE PHILIPS: Reports Net Loss of EUR 69 Million for 2003 ---------------------------------------------------------------- Philips reports first quarter income from operations of EUR 32 million - a net loss of EUR 69 million -- 14% lower nominal sales, comparable sales growth 1% -- Strong performance from Lighting and record income at DAP -- 10% sequential comparable sales decline at Semiconductors, excluding Mobile Display Systems -- Improved performance of Medical Systems -- Weakening Consumer Electronics markets -- Cost reduction programs on-track -- Record low inventories for the quarter: 12.1% of sales -- Net debt: group equity ratio 30:70 The first quarter 2003 Philips recorded a net loss of EUR 69 million (a loss of EUR 0.05 per share) versus a profit of EUR 9 million (a profit of EUR 0.01 per share) in the same period last year. This year's quarter included special items of negative EUR 34 million, whilst last year's special items amounted to a positive EUR 16 million. Sales decreased by 14% over the same period of last year, negatively impacted by the weakening of the US dollar and related currencies (11%), and lower consumer confidence levels. Volumes were 8% higher, continuing the positive trend quarter over quarter. Income from operations was a profit of EUR 32 million, including EUR 31 million in net special charges, versus a EUR 73 million profit last year, which included EUR 58 million in net special gains. Pension costs were EUR 78 million higher in the quarter. Income from operations was positively impacted by a net EUR 54 million for past use licenses. The cost reduction programs remain on-track, with reduction in overhead costs amounting to EUR 277 million to-date, total integration savings at Medical Systems of EUR 214 million, and other projects which together will ensure the Company achieves the targeted EUR 1 billion in savings by 2004. Cash flow from operating activities saw the usual seasonality with an outflow of EUR 205 million. Inventories as percentage of sales came to another record low for the quarter of 12.1%, compared to 14.0% last year. During the quarter the net debt position increased by EUR 323 million (EUR 202 million of which was used for Philips' participation in InterTrust Technologies Corporation) to EUR 5.6 billion. Gerard Kleisterlee, Philips' President and CEO: "Although net income was a loss, the first quarter of 2003 has demonstrated again that Philips is able to show positive operational performance in spite of adverse economic conditions. Seasonality and the weaker US dollar, coupled with declining consumer confidence, especially affecting CE, resulted in significantly lower sales levels, while higher pension costs also impacted the results. Nevertheless, we achieved another record quarter at our DAP division, healthy results from Lighting, improved earnings from Medical Systems, and progress from CE on its improvement plan for the U.S. For Semiconductors, we announced a clear recovery plan and we are confident that the division will be back to profitability in the fourth quarter of this year. Improving operational performance remains the focus of our attention. We will continue to reduce costs and exercise best-in- class supply chain management. In addition we will better capitalize on product and marketing innovation to drive sales - supported by exploiting best practices and synergies across the Philips Group." Highlights in the quarter Group sales and income Sales in Q1 were EUR 6,499 million, 14% lower than Q1 2002. Nominal sales were negatively impacted by weaker currencies (11%), and the effect of various divestments (4%). The average euro dollar rate showed a sequential decline of 7% in Q1 and a decline of 18% from the same period last year. Comparable sales growth in Q1 came to 1%. Consumer Electronics sales were impacted by declining consumer confidence. On the positive side, sales in Lighting, DAP and Semiconductors expanded on a comparable basis. Price erosion remained at 7%, whilst unit sales grew with 8%. Geographically, sales decreased in all regions, but particularly in North and Latin America, caused by the weaker currencies. On a comparable basis, sales rose 8% in Asia Pacific, 1% in North America and decreased 10% in Latin America and 2% in Europe. Income from operations amounted to a profit of EUR 32 million and included net special charges of EUR 31 million. Last year's income of EUR 73 million included net special gains of EUR 58 million. The positive impact of the overhead cost reduction program in the quarter was EUR 20 million and the integration savings at Medical Systems were EUR 41 million. Past use licenses contributed net EUR 54 million to income compared to EUR 23 million last year. Pension costs were EUR 78 million higher than the same period in 2002. Lighting, CE (due to higher license income), DAP and Medical Systems improved versus last year, the latter largely as a result of the post-merger integration savings (EUR 41 million). The lower income from operations at Semiconductors was caused by restructuring charges at San Antonio (EUR 30 million) and accelerated depreciation of assets at Albuquerque (EUR 22 million), and the write-off of intangible fixed assets (EUR 13 million). Financial income and expenses were EUR 82 million, compared with EUR 20 million last year, which was beneficially impacted by a EUR 67 million gain from the sale of ASML shares. Interest expenses were lower than last year, mainly driven by the lower net debt position in Q1 2003. Income tax has been calculated using an estimated effective rate of 25% on pre-tax income. Last year, the tax calculation excluded the gain from the sale of ASML shares. Result relating to unconsolidated companies was a loss of EUR 24 million, in line with last year's quarter which included EUR 24 million for amortization of goodwill. LG.Philips LCD's results were lower than last year by EUR 54 million, while LG.Philips Displays' net income improved by EUR 73 million, mainly resulting from lower restructuring charges in Q1 2003. Cash flows and financing Cash outflow from operations of EUR 205 million was EUR 151 million more than last year. Capital expenditures of EUR 177 million were EUR 48 million lower than the same period last year. A reset of currency hedges generated a cash inflow of EUR 141 million. Main proceeds from divestments were related to the sale of parts of PCMS (EUR 40 million). Outflows included a payment of EUR 202 million for the 49.5% participation in InterTrust Technologies Corporation. Inventories as a percentage of sales came to 12.1%, 1.9% less than Q1 2002 and another record low for the quarter. The cash conversion cycle came to 23 days, a 5-day sequential increase, reflecting seasonality. Net debt increased by EUR 323 million in the first quarter to EUR 5,574 million. Group equity showed a decrease of EUR 787 million, including the impact of dividends payable (EUR 460 million), EUR 178 million negative translation differences and a decrease in value of the securities for sale of EUR 105 million. The net debt: group equity ratio ended the quarter at 30:70. Employment At the end of March 2003, the total number of employees was 166,394, a decrease of 3,693 compared with the position per the end of 2002. Excluding portfolio changes, staffing levels were reduced by 2,487, mainly attributable to Consumer Electronics and Lighting. Sales and income from operations per sector Sales at Lighting were impacted by 10% due to negative currency movements. On a comparable basis a 4% increase was achieved from last year. All businesses contributed to this increase, with the exception of Luminaires, which showed a 1% comparable decline. Income from operations came to EUR 173 million, a EUR 21 million increase compared to Q1 2002. This was a result of improved margins, reduced costs and a more profitable product mix. Sales of Consumer Electronics amounted to EUR 1.9 billion, a comparable decrease of 5% versus last year. The decline, which became more evident in the course of the quarter, is attributable to a fall in consumer confidence and over-stocked retail channels. Sales decreases were particularly noted in Television (-9%), in GSM (-33%), where price erosion has increased considerably and in Set-top Boxes (-38%). Monitor sales increased by 5% on a comparable basis (mainly growth in LCD in Asia). Income from operations of Consumer Electronics excluding licenses came to a loss of EUR 28 million, EUR 6 million lower than last year. Income from operations of GSM was a loss of EUR 14 million in this quarter. The other parts of CE were generally able to maintain last year's profitability level, in spite of the lower sales levels, by exercising tight cost controls. This year included a EUR 16 million gain on the sale of part of PCMS and restructuring charges for Monitors of EUR 7 million, while a EUR 16 million insurance payment for GSM was included in last year's result. Results in North America continued the improving trend, from a loss of EUR 51 million last year, to a EUR 30 million loss. License sales amounted to EUR 115 million, compared to EUR 84 million for Q1 2002. Income from operations came to EUR 101 million, including EUR 63 million for past use licenses. Last year, income from operations amounted to EUR 73 million, which included EUR 23 million for past use licenses. DAP`s nominal sales increased by 1%. Currencies and deconsolidations had an 11% negative impact, but the selling-in of new products contributed to a strong 12% comparable sales increase. The increase was driven by dry shavers, the Sonicare toothbrush and the Senseo coffee machine, together responsible for a 15% increase. Regionally, North America and Western Europe contributed the most. Income from operations was a record for the 15th consecutive quarter increasing 25% compared with last year as a result of continued higher gross margins, lower costs and an improved product mix. Semiconductors experienced a nominal sales decline of 5% versus Q1 2002, whilst comparable sales increased 7%. Sequential sales fell 16%, but 12% on a comparable basis. Excluding Mobile Display Systems/PSS telecom (MDS) the comparable decline was 10%. The push outs of orders in Mobile telecommunications into Q2 and weak consumer markets were the main reasons for the set back. MDS witnessed a 59% comparable sales increase over last year due to a switch to color screens, but seasonality had its negative effect compared to Q4 2002. The 3 months average book-to-bill ratio of Semiconductors increased to 1.05 at the end of Q1 compared to 0.87 at the end of Q4 2002. Q1 income from operations was a loss of EUR 178 million, though MDS made a small profit. Income was impacted by various special items, including the accelerated depreciation of assets at Albuquerque (EUR 22 million) and restructuring charges at San Antonio (EUR 30 million), and the write-off of intangible fixed assets (EUR 13 million). An insurance payment had a EUR 17 million positive effect in income. Medical Systems' nominal sales were impacted by the lower dollar and the divestment of HCP in the last quarter of 2002. Comparable sales were at the same level as Q1 2002, when voluntarily held-back shipments from the former ADAC company were released. Income from operations came to EUR 70 million, representing an operating margin of 5.3% and included EUR 27 million for the amortization of intangible fixed assets. The improvement of EUR 43 million compared to Q1 of last year was primarily driven by fewer special items and approximately EUR 41 million from the realization of integration savings, in line with the EUR 350 million targeted savings by year-end 2003. Higher IT and other costs of about EUR 20 million reflect the ongoing investment in improved systems and supply chain management. These costs will gradually decline during 2003. Income from operations of Miscellaneous came to a loss of EUR 56 million and included a special gain on the sale of certain speech recognition activities of EUR 19 million. Income of Optical Storage, excluding a past use license payment of EUR 9 million, was just above break-even, which is a strong improvement compared to the loss giving situation of last year. Income was affected by a small increase in the provision for asbestos claims in the U.S. Corporate and regional overhead costs in Unallocated were 13% lower than the same period last year, mainly driven by savings from the overhead cost reduction program. Pension costs in Unallocated were EUR 58 million higher. Results related to unconsolidated companies LG.Philips LCD joint venture (100%) Sales for the quarter were EUR 769 million and maintained the sequential growth trend from previous quarters, with 5.7% growth. Compared to Q1 last year sales grew by 6.9%, and by 18% in local currency. Average sales price per panel was USD 200 in the current quarter, USD 58 below the average prices of Q1 2002. The substantial increase in volume, especially driven by the new 5th generation facility, resulted in the growth in sales. Gross margin for the quarter was 9.2% of sales and income from operations came to 0.8%. The significant weakening of the Korean Won during the quarter resulted in currency transaction and translation losses. Net income for the quarter was a loss of EUR 34 million, Philips' share of which was EUR 17 million. LG.Philips Displays joint venture (100%) Sales declined by 5% in USD terms, compared to the first quarter of 2002. The decline was 22% in EUR terms, resulting from the deterioration of the USD. Gross margin improved by 1% from last year to 9%. Income from operations included a EUR 22 million restructuring charge (Q1 2002: EUR 182 million charge) and was at break-even level. Net income for the quarter was a loss of EUR 34 million, Philips' share of which was EUR 17 million. Other information As stated in the Annual Report, on January 22, 2003, a jury in Raleigh, North Carolina, USA, delivered a verdict of approximately USD 152 million to Volumetrics, Inc. against the Philips Ultrasound business of Philips Medical Systems. The claim relates to the decision of Philips not to collaborate with or acquire Volumetrics at a point in time when Philips was in discussions with Agilent Technologies, Inc. to purchase its Health Care Solutions Group. The verdict is not a judgement, and is subject to review by the trial judge. A decision was originally expected in March 2003, but as yet has not been delivered. A decision is now expected in the course of the second quarter, 2003. Philips believes that the facts of the case do not support the verdict. To see financials: http://bankrupt.com/misc/Koninklijke_Philips.htm UNITED PAN-EUROPE: Court Rejects Appeal Against Akkoord ------------------------------------------------------- United Pan-Europe Communications N.V. gives notice that, as expected, the Dutch Court of Appeals has rejected the appeal by InterComm Holdings L.L.C (IHC), a creditor in the Dutch moratorium proceeding with a Eur 1.00 claim and one vote, who appealed the Dutch court's ratification of the Akkoord. This decision is subject to a further appeal period of eight calendar days starting April 16th to the Supreme Court. In addition, UPC announces a further extension to the Dutch Implementing Offer, until April 24, 2003, for holders of ordinary shares A of UPC, domiciled outside of the United States. The Company will provide more information on the expected timing of completion of the restructuring as soon as it is available. =========== S W E D E N =========== CELLPOINT INC: First Creditors' Meeting to Convene on May 12 ------------------------------------------------------------ The United States Trustee will convene a meeting of Cellpoint, Inc.'s creditors on May 12, 2003, 4:00 p.m., at Young Building, 300 Booth Street, Room 2110, Reno, NV 89509. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Cellpoint, Inc., is in the business of the development, sales and support of mobile locations software technology and platforms. The Company filed for chapter 111 protection on April 4, 2003 (Bankr. Nev. Case No. 03-51091). Thomas H. Fell, Esq., at Gordon & Silver, Ltd., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimates its debts and assets between $10 million and $50 million. LM ERICSSON: Chairman to Take Extra Responsibilities at ABB ----------------------------------------------------------- LM Ericsson chairman Michael Teschow will cease working full-time at the company as he takes on added responsibilities at ABB Ltd, according to a report of Dagens Industri. Mr. Treschow will represent one of Ericsson's leading owner, Investor AB, on ABB's board. Expressing the general feeling of leading institutional investors, Hakan Johansson, investment head at Folksam, said: "I'm deeply disappointed. Treschow is needed in Ericsson." Ericsson earlier sustained seven straight quarters of losses after failing to counter drop in demand. It was forced last year to raise $3.4 billion in a share sale to weather the slump. The nomination committee at Ericsson's AGM expects Mr. Treschow to devote his time for the telecom company to justify his extra compensation of SEK5.5 million on top of his regular chairman's fee of SEK2.5 million. CONTACT: LM ERICSSON Home Page: http://www.ericsson.com/ Lotta Lundin, Investor Relations Ericsson Corporate Communications Phone: +46 8 719 6553 E-mail: lotta.lundin@clo.ericsson.se ===================== S W I T Z E R L A N D ===================== ASCOM: Expands Board, Changes Muller-Mohl Representation -------------------------------------------------------- At the Annual General Meeting on May 6, 2003, the Ascom Board of Directors of Ascom Holding Ltd under the chairmanship of Juhani Anttila will be proposing a fifth member of the board in the person of Peter Schopfer, CEO and Country Manager of T-Systems Switzerland. It will also propose the election of Beat Naf, CEO of the Muller-M"hl Group, to succeed Dr Frank Gulich who will be standing down at the Annual General Meeting on 6 May 2003 due to his departure from the M�ller-Mohl Group. At the Annual General Meeting on May 6, 2003 the Board of Directors of Ascom Holding Ltd will be proposing the election of an additional board member, Peter Schopfer, who brings with him in-depth expertise and many years of experience in the fields of telecommunications and information technology. In addition to his technical studies, Peter Schopfer has a Master of Business Administration (MBA) degree. He has been CEO and Country Manager of T-Systems Switzerland since 2001. Between 1986 and 1993 he was with the former Swiss Telecom PTT and until 2000 with Swisscom, among other things as Senior Manager responsible for the development of international participations. In 1998 he was appointed as Board Chairman of Tesion (a Swisscom subsidiary in Germany), a position he held for one year. At the end of 1999 he returned to Swisscom International as Head of International Operations, in which position he was also responsible for the administration and supervision of Swisscom participations. Between 2000 and2001 he held the office of CEO of telecoms operator Multilink AG, which became T-Systems Switzerland in 2001. Dr Frank Gulich, CEO of the Muller-Mohl Group until December 31, 2002 and Delegate to the Board of Directors of Anova Holding Ltd in Hurden since January 1, 2003, will be standing down from the Ascom Board of Directors at the Annual General Meeting on May 6, 2003. As successor to Dr Gulich and representative of one of Ascom's principal shareholders, the Muller-Mohl Group, the Board of Directors proposes Beat Naf, who took over as CEO of the Muller-Mohl Group on January 1, 2003. Beat Naf has a degree in electrical engineering from the Federal Institute of Technology and MBA. Between 2001 and 2002, before taking up the office of CEO of the Muller-Mohl Group, he was a partner with the Swiss Capital Group in Zurich primarily responsible for the management of Private Equity investments. Prior to this he was Senior Vice President of the Zug-based investment and management enterprise, European Webgroup AG, and between 1996 and 2000 he was with management consultants McKinsey & Co. Inc., primarily responsible for telecoms companies. The Board of Directors is sorry to lose Dr Frank Gulich and would like to take this opportunity to thank him for his solution- oriented collaboration and for the major trust and commitment he showed during a highly intensive, decisive period in the company's development. About Ascom Ascom is an international provider of telecommunications systems, integrated voice and data communications, wireless and wired security solutions, and networked revenue collection systems for public and private transport operators. Ascom business units plan, build, service and operate tailor-made integrated solutions along the entire value chain - with a service-oriented portfolio and proven technology know-how as well as proprietary products. Ascom is active world-wide in markets with major growth potential. Ascom registered shares (ASCN) are listed on the SWX Swiss Exchange in Zurich. SWISS INTERNATIONAL: Scales Back Amidst Flagging Economy -------------------------------------------------------- SARS and the war in the Middle East are having a direct impact on passenger demand. For this reason, SWISS is temporarily reducing its capacity. These measures affect both Europe and the long-haul network. In the long-haul sector some flights to the following destinations will be suspended during the period April 21 and May 31: Peking, Hong Kong, Johannesburg, Boston, Washington, Cairo, Dar- es-Salaam and Nairobi In Europe, temporary capacity reduction will be achieved by the selective use of smaller aircraft. For the month of May, the following routes will be affected by this change: Basel: London Heathrow Z�rich: Athens, Frankfurt, D�sseldorf, Hamburg, Berlin, Paris, Rome, Belgrade, London Heathrow, Vienna, Brussels, London City, Geneva, Pristina, Istanbul und Milan. In the period from May 1 to May 31, 2003 the following midday flights will be cancelled: Basel - D�sseldorf Basel -Munich In addition, during the period May 1 to May 31, 2003, the following midday flights will be partially cancelled: Basel - Manchester Basel - London City Basel - Barcelona CONTACT: SWISS Corporate Communications P.O. Box, CH-4002 Basel Phone: +41 (0) 848 773 773 Fax: +41 61 582 35 54 E-mail: communications@swiss.com Home Page: http://www.swiss.com =========================== U N I T E D K I N G D O M =========================== AQUILA INC.: Impairment and Restructuring Charges Drive Net Loss ---------------------------------------------------------------- Aquila, Inc. on Tuesday reported a fully diluted loss of $5.22 per share for the fourth quarter of 2002, or a net loss of $977.9 million on sales of $411.3 million for the quarter. The loss in the fourth quarter is primarily due to impairment charges, losses within discontinued operations, and margin losses on winding down Aquila's merchant trading portfolio. Significant charges had been expected as the company continued its efforts to exit its wholesale commodity positions, sell additional assets and restructure its balance sheet. The company reported a fully diluted loss of $12.83 per share for full year 2002, or a net loss of $2.1 billion on sales of $2.4 billion for the year. Restructuring charges, impairment charges and net losses on sales of assets, losses within discontinued operations, and margin losses incurred during the wind-down of Aquila's merchant trading portfolio contributed the majority of the 2002 net loss. Most of these charges are related to the execution of Aquila's ongoing plan to refocus on its core utility operations. During the year, Aquila reorganized its U.S. utility operations by state to improve efficiency and better align cost structures and services with specific state requirements. "During the second half of 2002, we began our transition from being a major player in the energy trading sector to concentrating on being a service-oriented operator of electric and natural gas utilities located principally in the United States," said Richard C. Green, Jr., Aquila's chairman and chief executive officer. "We knew that we had a number of serious situations to address, and the necessary action steps we have taken are clearly reflected in the 2002 results. "We will continue following our restructuring plan throughout 2003," Green said. "Our underlying utility operations are valuable assets and we will stay focused on maximizing the potential of that business." Restructuring Charges Aquila recorded restructuring charges of $22.4 million for the fourth quarter and $210.2 million for the year ended December 31, 2002, as described in the table below. The fourth quarter restructuring charges consisted primarily of a loss on the termination of certain aggregator loans to substantially complete Aquila's exit from that business; losses on the exit from certain unfavorable interest rate swaps resulting from the early repayment of debt due to the restructuring of the business; and additional severance and retention payments to employees. 3 Months Ended Year Ended December 31, December 31, In millions 2002 2002 ----------------------------------------------- ------------- Domestic Networks: Severance costs $1.4 $16.2 Disposition of corporate aircraft -- 5.1 ----------------------------------------------- ------------- Total Domestic Networks 1.4 21.3 ----------------------------------------------- ------------- Capacity Services: Interest rate swap reductions 6.2 6.2 ----------------------------------------------- ------------- Total Capacity Services 6.2 6.2 ----------------------------------------------- ------------- Wholesale Services: Severance costs 1.5 30.6 Retention payments 1.6 30.5 Lease agreements 1.9 38.5 Writedown of leasehold improvements and equipment -- 58.8 Loss on termination of aggregator loan program 9.0 9.0 Disposition of corporate aircraft -- 2.0 Other -- 4.4 ----------------------------------------------- ------------- Total Wholesale Services 14.0 173.8 ----------------------------------------------- ------------- Corporate and Other severance costs .8 8.9 ----------------------------------------------- ------------- Total restructuring charges $22.4 $210.2 =============================================== ============= Impairment Charges and Net Loss on Sale of Assets Aquila recorded several significant impairment charges in the fourth quarter of 2002 as a result of the change in strategic focus. A decision was made in the fourth quarter to halt the build-out of Everest Connections' network to allow that business to become self-funding, a goal it has since achieved. As a result of this change, a reassessment of the realizability of the investments in communications network assets and recorded goodwill was completed, resulting in an impairment charge of $204.5 million. In addition, due to the limitations on liquidity, a change in strategic direction regarding international investments, the progress on sale transactions regarding these investments, and impairment charges that were being taken at the underlying business, impairment charges of $247.5 million and $127.2 million were recorded against the United Kingdom and Australian investments, respectively. The impairment charges and net loss on sale of assets are listed below: 3 Months Ended Year Ended December 31, December 31, ---------------- In millions 2002 2002 2001 ----------------------------------------------- --------- ------ Domestic Networks: Investment in Quanta Services $(2.0) $696.1 $-- Everest Connections and other communications investments 204.5 227.6 16.5 Enron exposure -- -- 31.8 Gas distribution system 9.0 9.0 -- ---------------------------------------------- --------- ------ Total Domestic Networks 211.5 932.7 48.3 ---------------------------------------------- --------- ------ International Networks: Midlands Electricity 247.5 247.5 -- Multinet and AlintaGas 127.2 127.2 11.5 Other 6.4 3.4 -- ---------------------------------------------- --------- ------ Total International Networks 381.1 378.1 11.5 ---------------------------------------------- --------- ------ Capacity Services: Turbines 42.1 42.1 -- Exit from Lodi gas storage investment -- 21.9 -- Termination of Cogentrix acquisition -- 12.2 -- Capacity Services goodwill 7.9 7.9 -- Other 4.8 6.2 -- ---------------------------------------------- --------- ------ Total Capacity Services 54.8 90.3 -- ---------------------------------------------- --------- ------ Wholesale Services: Wholesale Services goodwill -- 178.6 -- Enron exposure -- -- 35.0 Other 2.2 3.5 -- ---------------------------------------------- --------- ------ Total Wholesale Services 2.2 182.1 35.0 ---------------------------------------------- --------- ------ Total impairment charges and net loss on sale of assets $649.6 $1,583.2 $94.8 ============================================== ========= ====== During 2002, Aquila completed a number of asset sales as part of its previously announced program to enhance its liquidity and dispose of non-core assets. Asset sales through December 31, 2002 were as follows: Gross In millions Proceeds --------------------------------------------------------------- Natural gas gathering and pipeline assets $262.9 Lockport power project 37.5 New Zealand networks 489.1 United Kingdom gas storage facility 36.9 Investment in Quanta Services 48.5 Texas gas storage facility 160.4 Merchant loan portfolio 258.5 Other assets 55.7 --------------------------------------------------------------- Total $1,349.5 =============================================================== Discontinued Operations In connection with the sales of its natural gas storage facilities, gas gathering and pipeline assets, merchant loan portfolio and coal handling facility, Aquila reported the results of these businesses as discontinued operations in its consolidated income statements for the three years ended December 31, 2002. Included in the 2002 loss from discontinued operations were net pretax losses on sales of assets of $184.0 million related to the merchant loan portfolio that was recorded in the fourth quarter of 2002 and a $240.3 million loss related to the gas gathering and pipeline assets that was recorded in the third quarter. Liquidity Aquila experienced significant net losses and negative cash flows from operations in 2002. It also experienced a number of credit downgrades and currently is rated non-investment grade. This caused the company to post a substantial amount of cash or letters of credit as collateral on a number of contractual agreements. As a result of the 2002 losses, Aquila was in violation of an interest coverage ratio covenant and a covenant that requires maintaining a specified debt to capitalization ratio. On April 11, 2003, Aquila closed on a new financing agreement that replaces its short-term credit facilities. The package consists of two secured loan facilities -- a one-year $200 million loan to UtiliCorp Australia, Inc. and a $430 million three-year term loan to Aquila. The initial amount drawn under the one-year loan will be $100 million, and the company will have an option to draw another $100 million within 30 days. The one- year loan is non-recourse to Aquila, Inc. Proceeds from the financings will be used to retire debt and thereby eliminate the covenant violations stated above. The new financings are expected to provide sufficient liquidity to cover the company's operational needs through June 2004. Aquila's next significant need for outside capital relates to senior debt that matures in 2004. The company anticipates retiring those notes through additional asset sales. Restatement of 2000 and 2001 Cash Flow Statements Aquila's consolidated statements of cash flows included in its Form 10-K filed today have been restated for the years ended December 31, 2001 and 2000. These changes had no impact on earnings or losses. Between 1997 and 2000, Aquila was paid in advance on certain long-term contracts that were treated as operating activities for cash flow purposes. As a result of developments in industry accounting and guidance in 2002, these cash flows are now required to be shown as financing activities. As a result, cash flow from operating activities increased in 2001 by $82.2 million and decreased in 2000 by $396.1 million. Cash flows from financing activities were changed by corresponding amounts. The restatement also includes a reclassification of the $110.8 million of proceeds on the sale of shares of Aquila's merchant subsidiary in 2001 from cash flows from operating activities to cash flows from investing activities as previously reported on its Form 10-K/A filed in August 2002. The net effect of the changes discussed above is shown in the following table: For the Year Ended December 31, ------------------------------------------- 2001 2000 --------------------- --------------------- As As Previously As Previously As In millions Reported Restated Reported Restated ------------------------------- --------- ----------- --------- Cash provided from operating activities $223.7 $195.1 $789.9 $393.8 Cash used for investing activities (886.5) (775.7) (1,729.4) (1,729.4) Cash provided from financing activities 533.1 450.9 1,107.2 1,503.3 ------------------------------- --------- ----------- --------- Net increase (decrease) in cash and cash equivalents $(129.7) $(129.7) $ 167.7 $ 167.7 ------------------------------- --------- ----------- --------- Domestic Networks Domestic Networks reported a loss before interest and taxes of $829.6 million for 2002 compared to earnings before interest and taxes (EBIT) of $117.9 million for 2001. As noted above, this decrease was primarily the result of $932.7 million of impairment charges and net losses on sales of telecommunications assets and investments as well as $21.3 million of restructuring charges resulting from the realignment of Aquila's domestic utility businesses. Results for the business unit were also impacted by a $30.1 million decrease in off-system power sales, the sale of the company's Missouri pipeline business in January 2002, and lower earnings and a reduced ownership stake in Quanta Services. These were partially offset by a reduction of costs associated with Everest Connections in 2002. International Networks International Networks reported a loss before interest and taxes of $70.1 million for 2002 compared to EBIT of $125.4 million in 2001. This loss also was primarily the result of $378.1 million of impairment charges in 2002. These charges were partially offset by a $130.5 million pretax gain on the sale of Aquila's New Zealand investment. Additionally, the above losses were partially offset by stronger equity in earnings of investments as they increased by $50.5 million in 2002. This increase was driven by the acquisition of Midlands Electricity in May 2002 and the change in accounting for goodwill. Capacity Services Capacity Services reported a loss before interest and taxes of $105.0 million for 2002 compared to EBIT of $88.4 million for 2001. This loss resulted primarily from $90.3 million of impairment charges and net losses on sales of assets and $6.2 million of restructuring charges. Gross profit in this unit decreased $104.1 million primarily due to decreases in electricity prices, lack of pricing volatility which reduced opportunities to take significant price positions, and increased fixed capacity payments as new plants became operational or were online for a full year. Additionally, contract terminations due to counter-party creditworthiness generated losses of $10 million in 2002. Wholesale Services Wholesale Services reported a loss before interest and taxes of $566.0 million in 2002 compared to EBIT of $224.9 million in 2001. This loss included impairment charges of $182.1 million, and restructuring charges of $173.8 million. In addition, the lack of price trends and lower volatility, the record earnings in 2001 and the exit from the wholesale trading business led to a decrease in gross profit for Wholesale Services operations of $726.3 million in 2002 compared to 2001. The unit incurred $115.8 million in losses in 2002 as a result of actions to balance counter party positions, reduce open positions and terminate existing contracts. Also impacting results were unfavorable movements in credit, liquidity and interest reserves, unfavorable movements in trading positions that were not fully hedged, and unfavorable adjustments related to final settlements. These 2002 losses are in comparison to record earnings in 2001. Income Tax Expense (Benefit) Income taxes decreased $316.2 million in 2002 compared to 2001, primarily as a result of the loss before income taxes in 2002 compared to record earnings in 2001. However, the 2002 expected income tax benefit was significantly reduced as a result of valuation allowances provided against capital loss carry- forwards, non-deductible goodwill and additional deferred taxes related to our international investments. Conference Call, Webcast and Additional Information Aquila will host a conference call and webcast today at 9:00 a.m. Eastern Time in which senior executives will review 2002 fourth quarter and full-year results. Participants will be Chief Executive Officer Rick Green, Chief Operating Officer Keith Stamm and Interim Chief Financial Officer Rick Dobson. To access the live webcast via the Internet, go to Aquila's website at www.aquila.com and click on the link to the webcast. Listeners should allow at least five minutes to register and access the presentation. For those unable to listen to the live broadcast, replays will be available for two weeks, beginning approximately two hours after the presentation. Web users can use the same access method outlined above. Replay will also be available by telephone through April 22 at 800/405-2236 in the United States, and at 303/590-3000 for international callers. Callers must enter the access code 534824 when prompted. Additional supplemental information, including income statements by business segment, consolidated cash flow statement, consolidated balance sheet and statistical information, is available at www.aquila.com. Click on "Investors" near the top of the screen, then "Financial Performance" at left. Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving customers in seven states and in Canada, the United Kingdom and Australia. The company also owns and operates power generation assets. At December 31, 2002, Aquila had total assets of $9.3 billion. More information is available at www.aquila.com. "EBIT" Aquila uses the term earnings before taxes and interest ("EBIT") as a performance measure for segment financial analysis. The term is not meant to be considered an alternative to net income or cash flows from operating activities, which are determined in accordance with generally accepted accounting principles, as an indicator of operating performance or as a measure of liquidity or other performance measures used under generally accepted accounting principles. In addition, the term may not be comparable to similarly titled measures used by other companies. To see financials: http://bankrupt.com/misc/AquilaInc.htm CORUS GROUP: Ignores Call from Workers to Kick Chairman ------------------------------------------------------- Corus executive chairman and acting chief executive Sir Brian Moffat refused to bend to Europe-wide pressure to resign from his post. He also did not clarify his plans regarding his remuneration. Workers staged a "red card" protest outside Corus plants in the UK, the Netherlands, Germany and Belgium on Monday calling for his resignation. The workers are blaming chairman Brian Moffatt for mismanagement, large losses, and legal action against the works' council and Dutch supervisory board. Independent News said Sir Brian indicated he would neither resign, nor agree to a pay freeze, nor inform shareholders and employees now of what he would be receiving for carrying out the twin jobs of chairman and chief executive. Unions at Anglo-Dutch company Corus demanded to know his plans since, according to Michael Leahy, leader of the main UK steel union, the last time Sir Brian fulfilled both roles he got a 130% pay rise and drew a sizeable pension. "Given that he has overseen an obscene change to the bonus scheme for the company's directors at the same time as UK employees endured a pay freeze, I have written to him and asked him to clarify whether he intends to set an example and fulfil his temporary role on his current salary or continue the tradition of filling his pockets while he can," Mr. Leahy said earlier. But the company maintained Sir Brian would not step down until it had found both a new chief executive and a new chairman. His present role, Corus say, is to "ensure stability and continuity". The steel maker also declined to disclose Sir Brian's salary this year ahead of its annual report which will come out next April. EASTWOOD CARE: Receiver Grant Thorton Offers Business for Sale -------------------------------------------------------------- Robert H Pick and Andrew D Conquest of Grant Thorton appointed Joint Administrative Receivers of Eastwood Care Homes (Northampton) Ltd. (in Administrative Receivership) offers business for sale. Specialist Care Home Provider, based in Nottinghamshire, is an operator of 9 leasehold Care Homes. Features: annual turnover of circa GBP8.5 million; leases available for assignment and goodwill; 9 specialist care homes; located in Northampton, Leicester, Liverpool, Sheffield, Nottingham, Derbyshire and London; total number of registered beds is 229; scope for registering a further 50 beds. CONTACT: GLP CARE LTD. Joint Receivers' Agent 0870 241 9988 E-mail: all@glpcare.com EDINBURG FUND: Financial Advisor Took GBP229,000 in Fees -------------------------------------------------------- Edinburg Fund Manager's latest annual report reveals that the company paid GBP229,000 to former financial advisor Noble Grossart, a merchant bank of former EFM deputy chairman, Sir Angus Grossart. The report showed EFM paying the fees for providing "services to the group in connection with potential acquisitions and for advice in connection with an offer for the group". The offer is understood to refer to the GBP170 million, or 600p- a-share, bid for EFM from 29.3%-shareholder Hermes early last year. The deal did not materialize after EFM refused to relinquish its management contract automatically to Hermes. The merchant bank's lucrative advising role in companies in which Sir Angus is director increasingly gathered criticisms, as shareholders have become more interested in best corporate governance principles, according to The Herald. Noble Grossart also advised Scottish Investment Trust, and Hewden Stuart. EFM recently replaced Noble Grossart with London-based Hawkpoint amidst a boardroom shakeup which saw Sir Angus and three other directors leaving the company. This was after shareholders led by Hermes demanded that he and Johnnie Blair, another non-executive director, step down from the investment house's board. Noble Grossart also took GBP237,000 in fees for advising EFM during the financial year 2001. Some of its services also related to the Hermes bid attempt, which began in late 2001. EMI GROUP: Modifies Severance Terms for Two Top Executives ---------------------------------------------------------- EMI Group Plc, the world's third largest music company, changed the controversial severance terms for its two top executives in the wake of a general outcry against excessive executive remuneration. The music group and its leading shareholders decided to replace two-year pay-offs with one-year schemes for Eric Nicoli, chairman, and Roger Faxon, finance director in case of a shake- up, according to the Financial Times. The one-year terms will come into effect in April 2004. The move underlines mounting pressure from investor to cut generous pay-offs, particularly for companies whose conditions are on the rocks, according to the report. This includes EMI, whose shares were battered by intense competition and piracy in the music industry. The group was forced to restructure its recorded music arm after worldwide music sales slumped as a result in part of Internet piracy. It lowered the fixed salary bill of its label managers by making the remuneration more performance based. It also tightened its control of the money spend marketing new release. IMPERIAL CHEMICAL: FSA Questions First Quarter Profit Warning ------------------------------------------------------------- The U.K. specialty chemicals and paints group Imperial Chemical Industries PLC, which is facing several shareholder lawsuits, revealed it is being questioned by the Financial Services Authority about the fall of its share price following a surprise profit warning. According to the company, it is in discussion with the FSA but not "under investigation". The company added it believes it "will be able to satisfy" all the FSA's questions. It, however, failed to identify the nature of the queries. FSA also declined to comment. ICI recently issued a warning that first quarter profits will fall by 24%, as troubles at Quest and National Starch mounts. The news was immediately followed by a 44% (more than STG800 million) wipeout of the company's value and a fall of 39% in ICI shares. Several shareholders have launched lawsuits against the company, alleging that ICI violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities. HOLLINGER INC.: S&P Cuts Credit Rating to `CCC+' ------------------------------------------------ Standard & Poor's Ratings Services said it lowered the long-term corporate credit rating on newspaper publisher Hollinger Inc. to 'CCC+' from 'BB-', the global scale preferred share rating to 'CC' from 'B-', and the Canadian national scale preferred share rating to 'CC' from 'P-4(Low)'. At the same time, the 'B' senior secured debt rating on Hollinger Inc. was affirmed. In addition, Standard & Poor's affirmed its ratings on Toronto, Ont.-based Hollinger Inc.'s subsidiary (70.7% voting control and 29.6% equity stake), Hollinger International Inc., and Hollinger International's wholly owned subsidiary, Hollinger International Publishing Inc. (HIPI), including the 'BB-' long-term corporate credit ratings. The outlooks are negative. "The ratings actions follow Hollinger Inc.'s recent announcement that there is uncertainty regarding its ability to meet its future financial obligations with respect to its outstanding preferred shares," said Standard & Poor's credit analyst Barbara Komjathy. The downgrade reflects the highly vulnerable position of Hollinger Inc.'s rated C$101.5 million 7% series III preference shares and the implication of this on the long-term corporate credit rating on Hollinger Inc. The series III preference shares are retractable at the option of the holder at any time and have a mandatory redemption date of April 30, 2004. If Hollinger Inc. were to not meet its obligation on the series III preference shares, either when retracted by holders or on the redemption date, then the preferred share rating would be lowered to 'D' and the long-term corporate credit rating to 'SD' (selective default). The rating on Hollinger Inc.'s secured debt was affirmed, as Standard & Poor's continues to base its debt ratings on the consolidated group of Hollinger companies, including Hollinger International and HIPI. The consolidated view reflects Standard & Poor's opinion that economic interests and ownerships are aligned in a way that ensures Hollinger Inc.'s solvency. Similarly, the ratings affirmations on Hollinger International and HIPI reflect Standard & Poor's view that that there is no material change in Hollinger International's and its subsidiaries' ability and willingness to meet their debt obligations. Under Canadian corporate law, Hollinger Inc. is not required to redeem the preference shares if its liquidity would be unduly impaired. Hollinger Inc.'s stand-alone liquidity is limited as substantially all of its assets have been pledged as security for its US$120 million senior secured notes due 2011. Standard & Poor's believes that on a consolidated basis, including Hollinger International and HIPI, Hollinger has sufficient resources to meet its financial obligations. Given its aggressive financial policy and limited legal recourse of preferred shareholders, however, the company could elect not to meet its redemption or retraction obligations as due. Hollinger Inc. also recently proposed to exchange all of its 7% series III preference shares at par plus any unpaid dividends for newly issued series IV 8% preference shares with comparable terms and a mandatory redemption date of April 30, 2008. The ratings on the consolidated group of Hollinger companies reflect the strong market positions of Hollinger's two key newspapers, The Daily Telegraph (U.K.) and the Chicago Sun-Times (U.S.), and the geographic diversity they provide, which helps to mitigate regional downturns. These factors are offset by the inherent cyclical nature of the advertising revenues and newsprint prices, and by Hollinger's aggressive financial profile and policy. INVENSYS PLC: New Disposals Fail to Change Rating Outlook --------------------------------------------------------- The U.K.-based engineering group Invensys PLC, announced that it has expanded its disposal program in order to secure its financial stability in weakening markets. The group intends to focus on its Production Management businesses and the Rail Systems unit, which have combined annual revenues of about GBP1.6 billion. Nevertheless, Standard & Poor's Ratings Services said today that its 'BB+' ratings on Invensys will remain on CreditWatch with negative implications, where they were placed on Feb. 14, 2003. "Invensys has widened its disposal program to generate sufficient proceeds from planned asset sales to meet its cash requirements associated with a need to reduce its high level of indebtedness and fund the group's net pension deficit," said Standard & Poor's credit analyst Leigh Bailey. "Standard & Poor's considers the successful completion of, at least, a significant portion of the group's disposal program to be essential in securing the medium-term financial stability of the group." Standard & Poor's believes that the withdrawal from a number of markets, which had been considered core to operations, through the announced divestment of higher margin Energy Management group businesses is likely to weaken Invensys' business profile, but is necessary to ensure the financial stability of the group. To resolve Invensys' CreditWatch status, Standard & Poor's will focus on the strength of the group's business profile in its retained operations and progress achieved by management in the execution of its disposal program and revised strategy. As part of the CreditWatch review, Standard & Poor's will assess whether the group's rated bonds should remain at the same rating level as the long-term corporate credit rating. INVENSYS PLC: Posts Operating Profit Despite Continued Weakness --------------------------------------------------------------- Invensys confirms that the operating profit before exceptional items and goodwill amortization of the existing core Group for the year to March 31, 2003 is expected to be approximately GBP250m. At the same time, it announces that it will be narrowing its focus from two core divisions to one, Production Management. It will also continue to develop its Rails Systems business. In February 2002, the management outlined plans to simplify the Group's structure, secure its financial position and, in the process, stabilize the Group. Against a difficult market background, the management has remained focused on this objective. Non-core businesses have been sold for a total consideration of GBP1.8bn. Banking covenants have been consistently met and margin improvement has been achieved in a significant number of businesses, most notably in Production Management. While the Group has made progress, trading conditions have continued to weaken. The Board recognizes the need to secure a greater level of financial stability and to enable sufficient investment of resource in the best of its growth opportunities. These are the provision of productivity solutions to customers in the process, hybrid and discrete manufacturing industries - in other words, the businesses in Production Management - and in mass transit infrastructure, the business of Rail Systems. As a result, the Group will divest its holdings either partially or wholly in all other businesses, by seeking either suitable equity partners or new owners, as appropriate to the development needs of each business. A structured and phased process to achieve this is already underway, comprising Baan, as well as the product-based Appliance Controls, Climate Controls, Metering Systems, APV Baker, Powerware, Lambda, Teccor and Hansen Transmissions. These businesses will be managed in an expanded Development Division, which for the year to March 2002 would have had combined revenues of GBP2.9bn. The balance of Energy Management -principally IMServ and certain data management technologies - will be incorporated into Production Management. Rail Systems will be managed on a standalone basis. Proceeds raised from asset sales will be used to satisfy the cash requirements of the Group, including reduction of indebtedness and funding of pension schemes, as well as the investment required to grow market share in Production Management and Rail Systems. In these circumstances, the Board does not feel it appropriate to recommend a final dividend for the year to 31 March 2003 (2002:1p). On completion of these actions, the Board believes that Invensys will offer investors a Group possessing higher-quality growth prospects and leading competitive positions, financed by a stronger balance sheet. In seeking to create maximum value for shareholders, the Board's priority will be to ensure stability and assurance for employees and customers and optimal participation in recovering markets. Invensys will provide further details of these plans at the announcement of its full year results on 29 May. CONTACT: INVENSYS PLC Duncan Bonfield Phone: +44 (0) 20 7821 3529 BRUNSWICK Phone: +44 (0) 20 7404 5959 Ben Brewerton INVENSYS PLC: Places Ratings on Review for Possible Downgrade ------------------------------------------------------------- Moody's Investors Service indicated to review the ratings of global electronics and engineering company Invensys plc after the company announced it intends to undertake further asset disposals. The review looks toward a possible downgrade of Invensy's senior unsecured bank credit facilities, rated Ba1, and senior unsecured debt, rated Ba1. The rating agency says it will focus its review on: "the ongoing underlying performance of the group; the impact of the announced disposals on the company's financial profile; the size and stability of the remaining business to support residual debt levels; an update with respect to other liabilities of the group; including pension obligations; and the likely event risk facing the company during execution of its revised plan. The London-based company operates through principally two core divisions: Production Management and Energy Management. LEICESTER CIRCUITS: Joint Administrators Offer Business for Sale ---------------------------------------------------------------- The joint administrators are offering for sale the business and assets of Leicester Circuits, manufacturer and distributor of circuit boards. Principal features include: leasehold premises in East Goscote, Leicestershire, c25,000 square foot; UK's longest running PCB manufacturer, operating since 1961; established customer base; turnover of cGBP4 m pa; skilled workforce of 65 employees. CONTACT: KPMG CORPORATE RECOVERY Richard Philpott Chris Pole 1 Waterloo Way, Leicester LE1 6LP. Phone: 0116 256 6000 Fax: 0116 256 6033 E-mail: sarah.mckenlay@kpmg.co.uk LE PETIT: Business Offered for Sale as a Going Concern ------------------------------------------------------ The joint administrators LA Manning & A P Beveridge of Kroll offer for sale, as a going concern, the business and assets of Le Petit Blanc Limited. Feature: -- Brasserie-style chain of 4 leasehold restaurants with an annual turnover of approximately GBP6.7 million -- Restaurants situated in prime locations in Birmingham, Cheltenham, Manchester and Oxford -- Available as a group or individually -- Approximately 178 employees. CONTACT: (preferably by e-mail) KROLL 10 Fleet Place, London EC4M 7RB Phone: 020 7029 5000 Fax: 020 7029 5001 E-mail: pmather@krollworldwide.com Or E-mail: cnicholson@krollworldwide.com LICENTIA UK: Receivers Hopeful of Achieving Sale Next Week ---------------------------------------------------------- Receivers of Licentia UK, manufacturer of domestic self-assembly furniture based in Sherburn in Elmet, West Yorkshire, said there has been "considerable" interest in the firm from potential buyers. The future of the Yorkshire-based flat-pack furniture maker, which was put into administrative receivership at the end of March, lies on the sale of the business that could happen within the next week. Mike Saville, of the Leeds office of accountants Grant Thornton, said: "Whilst we remain hopeful that a sale of the business can be achieved and the jobs saved, it is still too early to be certain that this will be the outcome but we do feel we can at least extend our trading by a further week." Mr. Saville stressed that no sale has yet been finalized and the receivers remain open to all offers. Mr. Saville was appointed joint administrative receiver with Joe McLean, from the firm's Newcastle office. He said Licentia, which trades from factory premises in Sherburn in Elmet and is a major supplier of volume flat-pack kitchen and bedroom furniture to major DIY and furniture retailers, was put into administrative receivership due to "historical" trading problems. He added that nine redundancies had been made since the company went into receivership but the workforce "continued to perform to a very high level". Support from the staff, customers and suppliers have made the company capable to continue trading for at least another week, Mr Saville said. CONTACT: Mike Saville and Joe McLean Grant Thornton St Johns Centre 110 Albion Street Leeds LS2 8LA Phone: 0113 245 5514 Fax: 0113 246 0828 E-mail: richard.a.daszkiewicz@gtuk.com PERNOD RICARD: Gives Partner Complete Ownership of Distillery ------------------------------------------------------------- French drinks group Pernod Ricard said it sold its shareholding in Kirin Distillery to Kirin Brewery, giving it the entire ownership of the former joint venture Kirin Seagram Limited. Kirin distributes, amongst others, the following Pernod Ricard brands in Japan: Chivas Regal, Martell, Royal Salute and Glen Grant. The group, which owns Paisley-based whisky maker Chivas Brothers and counts Glenlivet and Jameson among its brands, was among the whisky makers struggling with surplus stocks and capacity. Last month, Pernod put up a sale notice on the four Highland distilleries it closed last October so that it could focus resources on its key malts. Buyers were given the option to choose any one of its Speyside distilleries: Allt A'Bhainne, Braeval - formerly known as Braes of Glenlivet - Benriach and Caperdonich. CONTACT: PERNOD RICARD Home Page: http://www.pernod-ricard.com Patrick de Borredon, Investor Relations Phone: (33 1) 41 00 41 71 or Barbara M. Burns/New York Phone: 212/486-1140 P&O PRINCESS: Ratings on Review Pending Resolution of Merger ------------------------------------------------------------ Moody's leaves the ratings of P&O Princess on review for possible upgrade pending the final resolution of the capital structure of the entity that will be created from its merger with Carnival Corporation. Carnival shareholders approved the merger of Carnival and P&O under a dual listed company structure in April. Carnival's long-term ratings were downgraded to A3 from A2, and its short-term rating to Prime-2 from Prime-1. The review on P&O's rating will focus on: "the degree of effective subordination in P&O's capital structure, P&O's strategic role in the combined group, as well as the implications of the cross-guarantees that are required for new, but not existing, lenders." The rating agency expects the combination to result in increased proforma leverage. On a combined entity basis, 2002 proforma retained cash flow to total adjusted debt was approximately 27%, and total coverage was 7.6x, it says. Moody's expects the combined entity to be a "net borrower" in 2003 and 2004 as it foresees that it will not generate sufficient cash to finance total capital and dividend needs. Carnival is currently saddled with US$121 million of debt on one ship, and debt at subsidiaries of approximately $1.0 billion. P&O has approximately $1.4 billion of secured debt, and has commitments of about $1.0 billion to finance up to three new ship deliveries with secured debt. Moody is confident of the companies' liquidity in the form of committed financing, but it expressed concern on Carnival's convertible debt issues, which are puttable in 2005, and 2006. SFI GROUP: Intends to Cancel Listing, Skip Final Dividend --------------------------------------------------------- Background On October 21, 2002, in its AGM statement, the Company announced that Tim Andrews, the Finance Director, was conducting a full review of the Group's financial position, with the assistance of PricewaterhouseCoopers. The Company had reported in its AGM statement that its cash flows had necessitated a request for, and a grant of, temporary waivers of certain breaches of its banking facilities and had recommended no final dividend be paid. On November 12, 2002, the Company reported that a number of material conclusions had then been reached in relation to the financial review. It was also announced that Andrew Latham, the Chief Executive, was conducting a full strategic review of the Group, again with the assistance of PricewaterhouseCoopers. In the circumstances, dealings in the Company's shares were suspended pending the conclusion of the financial and strategic reviews and clarification of its financial position. On December 20, 2002, the Company announced that the Board had instructed Simmons & Simmons to conduct a full investigation into the matters raised in the announcement of November 12, 2002. It was further announced that the Board had agreed revised banking facilities with its bankers. The Company reported that it would be instructing external advisors to undertake a revaluation of the Group's property portfolio as part of the financial review. On March 7, 2003, the Company announced that because the financial review was still ongoing, it had decided to delay the publication of its interim results for the 28 weeks ended December 14, 2002. The Board is now providing an update to shareholders in relation to these matters. Financial Review Significant work in relation to the financial review has been undertaken. In particular, substantial progress has been made with accounting systems and procedures to ensure they are capable of measuring the current financial performance of the business. This work is still ongoing. Strategic Review The Board have been considering the future of assets and brands which are under performing in the current market. Bar Med and the Latin brands have not so far attracted bids which meet the Company's disposal criteria. If this continues to be the case, they will be withdrawn from sale and alternative strategies pursued. Investigation Progress has been made in relation to the Simmons & Simmons investigation. There remain, however, a number of issues on which further work is required. The conclusions of the full investigation may be relevant to the completion of the financial review. Property Revaluation The Company appointed Christie & Co. to undertake a revaluation of its property assets. Significant work in relation to the revaluation has been undertaken and, to reach a conclusion, will need to take account of the detailed re-statement of unit performance which is still ongoing. A combination of poor market conditions and some under performing assets may mean the revaluation has an adverse effect on the net assets of the Company. Further information in relation to the financial review, strategic review, investigation and property revaluation will be made as appropriate in due course. Current Trading The trading environment has remained challenging since the start of 2003. The core Slug & Lettuce and Litten Tree brands (representing about 60% of the Group's current year to date sales) are, however, producing EBITDA to sales in excess of 20% despite the difficult trading environment. However, overall Group sales have been below expectations, being depressed by weaker performance from the Bar Med and Latin businesses. Banking Facilities The Group continues to operate with banking facilities of GBP133.8 million plus working capital facilities of GBP7.5 million and overdraft facilities of GBP10 million. Cancellation of Listing Under the Listing Rules, a company may normally only remain suspended for six months before its listing is cancelled. The Board considers that it will not be in a position to clarify its financial position before May 12, 2003, being the date six months after dealings in the Company's shares were suspended, and is, therefore voluntarily requesting that the listing of the Company's shares is cancelled with effect from May 12, 2003. Following the delisting, the Board intends to continue to manage the Company's affairs wherever appropriate as if it remained a listed company. It is the Board's aim that once the reviews, investigation and revaluation have been completed and the Company is placed on a firmer financial footing, that the Company will seek a re-listing of its shares. April 15, 2003 CONTACT: KBC PEEL HUNT Phone: 020 7418 8900 Christopher Holdsworth-Hunt COLLEGE HILL Phone: 020 7457 2020 Justine Warren THISTLE HOTELS: Shareholders Support Rejection OF BIL's Offer ------------------------------------------------------------- The Board of Thistle* announces that shareholders representing more than 39 % of Thistle's entire issued share capital, and more than 72 % of the issued share capital not owned by BIL, have confirmed to Thistle that they do not intend to accept BIL's offer of 115 pence per Thistle Share. David Newbigging, Chairman of Thistle commented: 'We are delighted to have received such a significant level of support from shareholders. This strongly reinforces our view that BIL's wholly inadequate offer significantly undervalues the Company.' ***** These indications of shareholder support are not legally binding and apply only as at the date on which they are given. Thistle shareholders who have given such indications are not restricted from dealing and, therefore, the number of shares in respect of which they have given indications may change in the future. The Thistle shareholders who have made these statements of intent may include shareholders who have publicly indicated their likely intentions in respect of BIL's 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 Thistle 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 Charles Wilkinson, Managing Director FINANCIAL DYNAMICS Phone: 020 7831 3113 Andrew Dowler Ben Foster WIMBLEDON & SOUTH WEST: Remaining Assets Offered for Sale --------------------------------------------------------- Malcolm Cohen and Raymond Hocking, were appointed joint administrators of Wimbledon & South West Finance plc in 1994 and now offer for sale the remaining assets of the company having realized the majority of the loan book during the administration. This is a unique opportunity to buy an income generating loan book. -- Presently 45 loans remain outstanding -- Loans secured by first or second charges -- Security mainly on residential properties -- Five staff of the company retained CONTACT: Matthew Chadwick Phone: 020 7893 2241 Fax: 020 7935 3944 E-mail: matthew.Chadwick@bdo.co.uk S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *