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/raid1/www/Hosts/bankrupt/TCREUR_Public/030930.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, September 30, 2003, Vol. 4, No. 193 Headlines F R A N C E ALSTOM SA: Cancels Secondary Listings on London Stock Exchange ALSTOM SA: Sells Transmission and Distribution Business to Areva ARIANESPACE: Successfully Launches Three Commercial Satellites VIVENDI UNIVERSAL: Mum on Impact of PTC Stake Sale Collapse VIVENDI UNIVERSAL: Chairman Pledges Dividend Payout by 2005 G E R M A N Y JENOPTIK AG: Senior Unsecured Debt Assigned 'BB' Rating WESTLB AG: Close to Selling Pubmaster Stake, Says Report H U N G A R Y K&H EQUITIES: Police Track Down Assets Involved in Scandal I T A L Y AVIO HOLDING: Assigned 'B+' Credit Rating, Stable Outlook N E T H E R L A N D S IFCO SYSTEMS: Rated 'B+' A Year After Dropping to 'D' ROYAL PHILIPS: Opens EUR20 Mln Factory for Next-generation TV P O L A N D DAEWOO-FSO: Korean Creditors OK Debt-for-Equity Swap ELEKTRIM SA: Deutsche Telekom Withdraws Bid for PTC Stake S W I T Z E R L A N D WINTERTHUR GROUP: Sells Italian Operations for EUR1.4 Billion U N I T E D K I N G D O M AVON ENERGY: Fitch Affirms 'C' Ratings; Outlook Negative AVON ENERGY: Ratings Unchanged Despite Breakdown of Buyout Talks BOOSEY & HAWKES: Hg Investment Mulls 195p-a-share Bid ENDEVA: CEO Agrees to Take Part in Management Buyout INTER-ALLIANCE GROUP: Sees Return to Positive Cashflow by 2004 MIDLANDS ELECTRICITY: Ratings Unchanged by Buyout Talks Failure MIDLANDS ELECTRICITY: Fitch Affirms 'BBB-' Ratings MOTHERWELL BRIDGE: Management Eyes Buyout as Receivership Looms NETTEC PLC: Details Benefit of Selling Trading Subsidiary NETTEC PLC: Warns of Potential Problems in Real Property Biz NETTEC PLC: Contests Cases Brought by Former Supplier, Staff NETTEC PLC: Outstanding Contingent Liabilities Total GBP5.6 Mln NETTEC PLC: Board Looking for Reverse Takeover Opportunities NETTEC PLC: Chairman Steps Down; Founder to Assume Post SAFEWAY PLC: Morrisons Gets Green Light to Acquire Safeway SAFEWAY PLC: Ratings, Outlook Unaffected by DTI Ruling on Bids WHYTE & MACKAY: Moves Bottling Operations to Grangemouth Plant * Large Companies with Insolvent Balance Sheets ********* =========== F R A N C E =========== ALSTOM SA: Cancels Secondary Listings on London Stock Exchange -------------------------------------------------------------- Alstom hereby announces the intended cancellation of its secondary listings of both ordinary shares and U.K. Depository Receipts evidencing these shares on the Official List of the U.K. Listing Authority and from trading on the London Stock Exchange's market for listed securities. The last day of trading in both of these types of securities on the London Stock Exchange will take place on November 17, 2003. Following cancellation of Alstom's secondary listings on the London Stock Exchange, holders of ordinary shares in Alstom will still be able to trade these shares on Euronext Paris (Paris Stock Exchange). As separately notified to each holder of Alstom's U.K. Depository Receipts, such holders are entitled to exchange their U.K. Depositary Receipts for Alstom ordinary shares until 3 p.m. on November 24, 2003. Where any U.K. Depositary Receipt has not been exchanged for Alstom ordinary shares by 3 p.m. on November 24, 2003, the U.K. Depository Receipt will be cancelled and the Alstom ordinary shares referable to such U.K. Depositary Receipt will be sold on the holder's behalf and the net proceeds, less commission at 0.75%, delivered to him. ***** Alstom has been hit by cost overruns on key projects, accounting irregularities at its U.S. operation, and the bankruptcy of a major client. The company's share price has plunged 90% and it has shed thousands of jobs over the past two years. ALSTOM SA: Sells Transmission and Distribution Business to Areva ---------------------------------------------------------------- Alstom has reached an agreement to sell its Transmission & Distribution activities to Areva, for an enterprise value of EUR950 million, which is another key step in its continuing disposal program. The Transmission & Distribution Sector sells products, systems and services for the medium and high voltage markets. The Sector's Power Conversion activities are not part of the transaction and will remain within Alstom. In the last financial year, Alstom's Transmission & Distribution Sector (excluding the Power Conversion activities) generated sales of EUR3.2 billion, accounting for 15% of Alstom's revenues. It employs 25,000 people in 70 countries. Commenting on the planned sale, Patrick Kron, Chairman and CEO of Alstom said: "This transaction constitutes another key step in implementing the action plan I launched on March 12, 2003. I also believe that T&D has a bright future in the Areva Group." The transaction is subject to normal closing conditions, including regulatory clearances and the completion of employee consultations. Closing is expected in January 2004. CONTACT: ALSTOM SA Investor relations: E. Chatelain Phone: +33 1 47 55 25 33 E-mail: investor.relations@chq.alstom.com M: Communications: L. Tingstrom Phone: +44 789 906 6995 E-mail: tingstrom@mcomgroup.com ARIANESPACE: Successfully Launches Three Commercial Satellites -------------------------------------------------------------- Arianespace on Saturday orbited two geo-stationary communications satellites: INSAT-3E for the Indian Space Research Organization, and e-BIRDTM for European operator Eutelsat. The mission's third payload, European Space Agency's SMART-1 lunar probe, was successfully injected into an orbit that will take it to the Moon. Thirteenth successful launch With its 13th successful mission, the standard Ariane 5G (Generic) launcher confirmed its technical and operational maturity. This is the third successful Ariane 5 mission in 2003. It confirms the Council, which approved the Ariane 5 support plan and also gave the go-ahead for the construction of a Soyuz launch pad at the Guiana Space Center. This will provide Arianespace with a complete family of launchers, enabling the company to remain a leader in the commercial launch services marketplace. These decisions resulted in the recent agreement signed by Arianespace and EADS Space Transportation at the Paris Air Show for production of a batch of 30 Ariane 5 launchers to ensure the continuity of Arianespace's launch service. The higher productivity that results from this order will improve the Ariane launcher's competitiveness for the benefit of all customers. Loyal customers on Flight 162: Indian Space Research Organization, Eutelsat and European Space Agency For Saturday's mission, Ariane's selection by a leading international operator, as well as the Indian and European space agencies, clearly reflects widespread recognition of Arianespace's top-flight launch service. INSAT-3E is the 11th Indian satellite to be orbited by Europe's launcher. Arianespace and Indian Space Research Organization have worked together for over 22 years, starting with the 1981 launch of India's first satellite, Apple. e-BIRDTM is the 20th satellite that Arianespace has launched for Eutelsat. The first satellite ever deployed by Eutelsat was ECS 1 - a payload launched by Ariane in 1983. SMART-1 is the 25th European Space Agency satellite to use the Ariane launcher. It will be followed next year by the Rosetta spacecraft, along with the first of nine ATV cargo vessels that will support the International Space Station. INSAT-3E was designed, assembled and integrated by the Indian Space Research Organization in Bangalore, southern India. Weighing 2,750 kg. at liftoff, and equipped with 36 C-band and extended C-band transponders, it will be positioned at 55 degrees East. It will provide telecommunications and TV transmission services for the Indian sub-continent. e-BIRDTM was built by Boeing Space Systems in El Segundo, California, using the BSS 376 platform. It is the 23rd spin-stabilized satellite to be launched by Arianespace. e-Bird weighed 1,525 kg. at liftoff, and is fitted with 20 Ku-band transponders. It will provide high-speed IP links for Europe and Turkey. This satellite marks the latest step forward in Eutelsat's strategy to establish itself as a benchmark provider of high-speed transmission services for businesses, communities and consumers. SMART-1 is Europe's first Moon mission. Its primary aim is to test the onboard electric propulsion system for future deep space missions. The Smart 1 probe was built by the Swedish Space Corporation, with European Space Agency as prime contractor. It weighed about 370 kg. at liftoff. Placed into an elliptical orbit around the Moon, SMART-1 will qualify various new technologies, while also establishing an exhaustive inventory of chemical elements on the lunar surface. ***** In July, TCR-Europe said Arianespace is in need of funding to revive the launching of its Ariane 5 rocket and stay afloat amidst fierce competition from U.S. rivals Boeing and Lockheed Martin. The firm's 10-ton version of Ariane 5 exploded shortly after takeoff in December. The failure prompted the company to say it expects losses of about EUR45 million for last year. VIVENDI UNIVERSAL: Mum on Impact of PTC Stake Sale Collapse ----------------------------------------------------------- Vivendi Universal SA declined to comment on the impact of Deutsche Telekom AG's decision to drop its plan to buy the remaining 51% of Polish mobile phone firm, Polska Telefonya Cyfrowa (PTC), from Vivendi, Elektrim and Ymer. Asked whether it will adjust its full-year guidance considering the German company's decision, a Vivendi spokesman told AFX News: "We have no comment to make on the matter." Vivendi has been under pressure to reduce its EUR13.7 billion load at end-June, it would have received EUR691 million (US$700 million) for its 25% percent stakes in PTC. The French media company earlier announced it forecasts net debt to total EUR13 billion at end 2003, and to decline to below EUR5 billion by end-2004. It also confirmed its 2003 target of returning to profitability before non-recurring items and goodwill charges, as well as its goal of "very strong growth in proportionate cash flow from operations," AFX said. Vivendi Chief Executive Jean-Rene Fourtou previously indicated that the company expects to sell assets amounting to EUR3.5-4.0 billion by 2004. PTC is the largest mobile operator in Poland, where only about 40% of people have cell phones. Deutsche Telekom said in a statement the EUR1.1 billion (US$1.2 billion) deal collapsed because Elektrim failed to resolve a dispute with its own bondholders over the sale. VIVENDI UNIVERSAL: Chairman Pledges Dividend Payout by 2005 ----------------------------------------------------------- Vivendi Universal Chairman and CEO Jean-Rene Fourtou released these half-year 2003 figures at a press conference recently: (a) Vivendi Universal (Paris Bourse: EX FP; NYSE: V) is forecasting an increase in 2003 operating income of more than 20% on a pro forma basis(1). (b) Vivendi Universal is expecting to increase its stake in Maroc Telecom from 35% to 51%, probably during the second quarter of 2004. (c) Vivendi Universal believes it will be in a position to pay dividends in 2005. (d) In view of Canal+ Group's improved performance and the commitments of its management, the Vivendi Universal Board of Directors has decided to recapitalize Canal+ Group by an amount of EUR3 billion within the coming nine months. This recapitalization will be achieved by transferring a part of Vivendi Universal's current account with Canal+ into capital. In addition, Vivendi Universal would like to provide the following clarifications on cashflow from operations (defined as net cash provided by operating activities net of capital expenditures and before financing expenses and taxes) and proportional cashflow from operations (defined as cash flow from operations excluding minority stakes, in particular in Cegetel, SFR and Maroc Telecom). (a) The pro forma information illustrates the impact of the acquisition of the entertainment assets of InterActiveCorp. and the disposition of the publishing assets in 2002 and 2003 as if these transactions had occurred at the beginning of 2002. It also illustrates the accounting of Veolia Environnement using the equity method at January 1, 2002 instead of December 31, 2002. Reconciliation of net cash provided by operating activities to cash flow from operations and proportionate cash flow from operations: Vivendi Universal considers the non-GAAP measures called cash flow from operations and proportionate cash flow from operations, which is defined as cash flow from operations excluding the minority stake in less than 100%-owned entities, to be important indicators of the Company's operating performance by business segment, because it is commonly reported and used by the international analyst community, investors and others associated with certain media and communication industries. The company manages its various business segments on the basis of operating measures that exclude financing cost and income taxes. Cash flow from operations excludes the effect of these items, and includes the effect of capital expenditures. The company's management uses cash flow from operations for reporting and planning purposes. ---------------------------- Half-year ended June 30, ---------------------------- 2002 pro 2003 forma (a) ------------- ------------- (in millions of euros) Net cash provided by operating activities, as reported EUR 939 EUR 1 919 Reclassify: Loss on settlement of put options on treasury shares (b) - 300 Deduct: Purchase of property, plant, equipment and intangible assets (543) (1 917) Proceeds from sale of property, plant equipment and intangible assets 277 103 ------------- ------------- Capital expenditures, net of proceeds (266) (1 814) Add back: Income tax: cash 1 122 822 Financing expenses: cash 416 674 Other: cash 3 (393) Add: Pro forma adjustments: 281 ------------- ------------- Cash flow from operations (before income taxes, financing costs and after restructuring costs) EUR 2 214 EUR 1 789 24% ============= ============= === Deduct: Cash attributed to minority interest (864) (1 051) ------------- ------------- Proportionate cash flow from operations (before income taxes, financing costs and after restructuring costs, minority interests) EUR (1 350) EUR (738) 83% ============= ============= === ---------------------------- Half-year ended June 30, ---------------------------- 2002 pro 2003 forma (a) ------------- ------------- Cash flow from operations by business segment (in millions of euros) SFR - Cegetel 1 135 1 178 Maroc Telecom 374 233 Universal Music Group 345 285 Vivendi Universal Entertainment 641 562 Canal Plus Group 245 (330) Vivendi Universal Games (144) 85 Holding & Corporate (297) (26) Others (95) (198) ------------- ------------- Total Vivendi Universal (Excluding businesses sold in 2002 and 2003) 2 204 1 789 ============= ============= Veolia Environnement - - VUP assets sold during 2002 and 2003 10 - ------------- ------------- Total Vivendi Universal 2 214 1 789 ------------- ------------- (a) The pro forma information illustrates the effect of the acquisition of the entertainment assets of InterActiveCorp. and the disposition of VUP assets in 2002 and 2003, as if these transactions had occurred at the beginning of 2002. It also illustrates the accounting of Veolia Environnement using the equity method at January 1, 2002 instead of December 31, 2002. Additionally, the cash flows from Universal Studios international television networks are reported by Vivendi Universal Entertainment instead of Canal+ Group. (b) In the first half of 2002, the loss on settlement of put options on treasury shares were included in net cash provided by operating activities. ============= G E R M A N Y ============= JENOPTIK AG: Senior Unsecured Debt Assigned 'BB' Rating ------------------------------------------------------- Fitch Ratings assigned Jenoptik AG's a Senior Unsecured Debt rating of 'BB.' The Outlook is Stable. The ratings are based on Jenoptik's current organizational structure and reflect the group's strong market positions, most notably in clean systems, and leading positions in niche photonics-related sectors. Despite the group's relatively conservative financial strategy, improved transparency (as the earnings of DEWB are no longer consolidated under the group's results), and greater clarity regarding the clean systems strategy, the weakening of both its margins and financial profile is of concern. However, some comfort is gained from Jenoptik's strategy in the past two to three years to reduce the clean systems division's exposure to the more volatile semiconductor market, which accounted for roughly 30% of divisional revenues in FY02 (50% in FY01) and to diversify the customer base. Management has also sought to increase the contributions from the more profitable photonics division, due to the more bespoke nature of the products and the greater proportion of customized products in the portfolio. The photonics division also generates more stable and predictable revenues due to the long-term nature of the contracts. With the announced refinancing plan, including the issuance of 8.14 million shares and a debt financing, management will strengthen the company's capital structure and improve its debt maturity profile. The group will also seek to strengthen market positions through organic and acquisitive growth, while continuing to establish partnerships in order to reduce the group's risk exposure. Fitch notes that the issuer rating may change as and when the group establishes a partnership within the clean systems division, which is expected to take place within the next two years. At 1H03 the group increased sales by 18% to EUR665 million, but registered an operating loss of EUR13.2 million (profit of EUR19.5 million in 1H02). The increase in sales is largely due to the first time consolidation of business acquired in FY02, mainly in the facilities management operations. The loss was exaggerated by a high base effect in 1H02, inflated by the EUR30 million of disposal proceeds from the sale, and the fact that DEWB's results are no longer consolidated under the group. Excluding this effect the operating result in 1H03 was roughly stable. The order book strengthened, driven by an improvement in the facilities management and photonics businesses, which should help to support future revenues. Net debt rose to EUR158 million at 1H03 (EUR80 million at FYE02) due to the group's working capital needs, increased use of the commercial paper facility and seasonal nature of the business. WESTLB AG: Close to Selling Pubmaster Stake, Says Report -------------------------------------------------------- WestLB could soon announce the sale of its 22% stake in pub chain, Pubmaster, to the Punch Group. The German bank is selling the holdings for more than GBP1 billion, Der Spiegel's reported without citing sources. An on-line report from The Publican previously said the pub chain is worth GBP1.2 billion, including debt. Pubmaster is U.K.'s third biggest tenanted pub company, and the only one independently owned. A deal could make Punch a 7,700-strong giant. Investment banks Citigroup and Goldman Sachs are handling the negotiations, the report said. WestLB is currently trying to recover from a EUR1.67 billion loss in 2002 as a result of significant writedowns on its refinancing of BoxClever, which is not part of the unit's portfolio. ============= H U N G A R Y ============= K&H EQUITIES: Police Track Down Assets Involved in Scandal ---------------------------------------------------------- Authorities have confiscated the properties of nine suspects connected to the K&H Equities' brokerage scandal, according to the Budapest Business Journal. The properties sequestered currently await the decision of the court. The move is part of the campaign of the Anti-Organized Crime Department of the Hungarian National Police to recover the HUF100 billion embezzled by the equities firm's brokers. According to the head of the department, Lt. Colonel Csaba Molnar, about 10% of the embezzled amount has now been secured. The police have heard 82 of the 200 VIP clients of K&H Equities and further 21 witnesses, the report said. The State Financial Institutions Supervision suspended some of K&H Equities' operations from July 31 until September 30 after Hungarian bank Kereskedelmi es Hitelbank came under investigation for engaging in fraudulent activities involving as much as EUR76 million worth of investments. CEO Tibor Rejto, who admitted the fraud before resigning, said the bank's brokers indeed knowingly promised high returns on as much as EUR76 million in investments from high net-worth and institutional investors. ========= I T A L Y ========= AVIO HOLDING: Assigned 'B+' Credit Rating, Stable Outlook --------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' long-term corporate credit rating to Italy-based aerospace group, Avio Holding SpA. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' subordinated debt rating to Avio's proposed EUR200 million ($224 million) notes due 2013 issued by ASPropulsion Capital B.V. -- a Netherlands incorporated wholly owned subsidiary of Avio. The notes are guaranteed on a subordinated and conditional basis by Avio and Avio SpA, which is the group's primary operating company. This rating is ranked two notches below the corporate credit rating because it is subordinated to the company's senior credit facilities, which are secured by a pledge over group assets. "The ratings on Avio reflect the group's exposure to the depressed civil aviation and U.S. power generation markets, relatively modest size, and very aggressive financial profile," said Standard & Poor's credit analyst Leigh Bailey. "Avio benefits, however, from strong niche market positions, a high level of technological content in its products, and its presence on less cyclical military programs." The group's primary operating company, Avio SpA, comprises the aerospace business previously contributed by Fiat SpA (BB-/Stable/B). Avio's acquisition of Avio SpA is expected to close at September 30, 2003, and pro forma total funded debt is expected to be EUR975 million. Standard & Poor's does not expect to see further deterioration in Avio's civil engines business from the current levels and the group's full-year 2003 credit ratios should not deteriorate from the half-year levels. The ratings do not factor in any acquisitions or significant business diversification. ===================== N E T H E R L A N D S ===================== IFCO SYSTEMS: Rated 'B+' A Year After Dropping to 'D' ----------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' long-term corporate credit rating to Netherlands-based provider of reusable plastic containers and pallet services, IFCO Systems N.V. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' senior secured debt rating to the group's proposed EUR110 million ($126 million) bond. "The ratings on IFCO reflect the group's aggressive financial profile due to high leverage and a high business risk in the group's RPC business," said Standard & Poor's credit analyst Vanessa Brathwaite. The proposed bond would be rated two notches lower than the corporate credit rating on the group to reflect structural subordination. The bond would be used to repay existing senior secured bank debt. This is part of the final phase of IFCO's financial restructuring after the company's ratings were lowered to 'D' in March 2002, and subsequently withdrawn. At June 30, 2003, IFCO had total debt of $114 million. After the proposed bond the group's total debt is expected to be nearly $149 million. "For the first six months of 2003, IFCO's revenues increased, which might be an indication that the group has remedied past difficulties," added Ms. Brathwaite. "If this is the case, IFCO should be well positioned to reap the benefits of its position as the largest independent supplier of recyclable plastic containers in Europe for the transport of fruit and vegetables, and as the leading provider of pallet services in the competitive and fragmented U.S. market." A number of factors combine to limit the group's free cash flow generation capabilities in the short-to-medium term, however, including an aggressive financial profile, high business risk in the company's recyclable plastic container operation, and structural subordination. Standard & Poor's expects IFCO to generate sufficient operating cash flow to fund working capital, replacement, and maintenance capital expenditures in the next 18 months. The ratings do not factor in any debt-financed acquisitions. ROYAL PHILIPS: Opens EUR20 Mln Factory for Next-generation TV ------------------------------------------------------------- Royal Philips Electronics (AEX: PHI, NYSE: PHG) opened a new production facility for the production of components for the new screen technology LCOS (Liquid Crystal on Silicon) in Boblingen. The investment volume amounts to EUR20 million. The Boblingen site will produce the first mass-produced high-definition panels for the next generation of televisions to be available throughout the industry. The new facility plant was opened by Mrs. Edelgard Bulmahn, the German Federal Minister for Research. Mrs. Bulmahn said: "it is only with innovations of this type that we can achieve growth and create attractive high-tech jobs in the long term." For Philips, LCOS is an important step towards a better picture quality, emphasized Ad Huijser, Chief Technology Officer and member of the Board of Management of Royal Philips Electronics. The technology uses the principle of back projection and provides extremely high, flicker-free resolution. Projection TV units with large image diagonals can be made flatter, lighter and more affordable using LCOS. Philips expects demand for LCOS technology to increase rapidly over the next few years. The new production facility for LCOS panels uses the infrastructure and combined production of the existing chip factory in Boblingen to ensure rapid capitalization on quality and cost benefits. "We found exactly what we needed here: highly qualified employees, know-how from semiconductor production and excellent contacts to external research establishments," emphasized Mr. Huijser. Philips is anticipating a rapid increase in demand for the new projection displays, which are characterized by their efficient light yield and high contrast. They provide realistic, colorful images. The image resolution of 1280 x 768 represents around one million pixels and means it can be integrated into terminals for high-definition television (HDTV). At the same time, it makes texts considerably more legible. This is an important requirement for new services, such as Internet TV. A digital interface also enables a high degree of system integration. Background information on LCOS: LCOS consists of a silicon component, a glass plate and an interim layer of liquid crystal. A CMOS-type silicon chip serves as an active matrix and a light-reflecting layer at the same time. An extremely thin film of liquid crystal is inserted between the reflection layer and the glass plate. Unlike the previous, transparent systems used today, the advantage of the reflective LCOS system lies in the fact that the electric control remains concealed behind the image pixels. This means better brightness from the same pixel size, and the pixel grid structure is almost invisible. As the production of LCOS panels is largely based on conventional silicon technology, they can also be manufacturer on standard production lines for chip production. About Royal Philips Electronics Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR31.8 billion in 2002. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 164,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at http://www.philips.com/newscenter =========== P O L A N D =========== DAEWOO-FSO: Korean Creditors OK Debt-for-Equity Swap ---------------------------------------------------- The Korean creditors of troubled Daewoo-FSO finally agreed to subscribe to a debt-for-equity swap and a capital injection after nine hours of grueling negotiations, Warsaw Business Journal said. Deputy Economy Minister Jacek Piechota managed to convince the Daewoo Motor representatives to back the plan, which includes dividing half of the troubled carmaker's liabilities into installments with maturity at the end of 2006. The representatives opposed to the debt proposals at the original September 18 extraordinary general meeting, but had said this was due to lack of familiarity to the details of the deal. The meeting was postponed to September 29. The agreement brings good news for the Zeran-based car manufacturer, as it could mean that the company is already saved, or at least its operations will be prolonged for a couple of years, the report added. Separately, contracts have also been signed at the Seoul negotiations where parties agreed to export Matiz and Lanos models to Ukraine. General Motors, now the owner of the Daewoo brand, also approved the continued production of the models over the next few years. Mr. Peichota recently visited the U.S., where he convinced Lockheed Martin to widen its offset offer to support the Zeran plant, thus the deal on producing the models. Exporting cars to Ukraine is one of the most significant achievements of the manufacturer, as the number of 60,000 cars exported this year is to reach 100,000 in 2005. All the issues agreed upon will be finalized during the company's general shareholders meeting on September 29, the report said. CONTACT: DAEWOO-FSO MOTOR CORPORATION Ul. Jagielloivska 88 03-215 Warszawa Phone: +48-22-676-3955 Fax: +4822-676-1501 Homepage: http://www.daewoo.com.pl ELEKTRIM SA: Deutsche Telekom Withdraws Bid for PTC Stake --------------------------------------------------------- Deutsche Telekom has cancelled its bid for the 51% stake of Polska Telefonya Cyfrowa (PTC) that it does not own. Deutsche Telekom, Vivendi Universal and Elektrim had reached an agreement in principle over the sale on September 14, but Elektrim's failure to reach a definitive agreement with its bondholders caused deal to collapse. Deutsche Telekom remains committed to PTC on the basis of its current shareholding and will seek to ensure that all necessary steps are taken to continue the successful development of PTC's business. ***** Polish conglomerate, Elektrim, filed for bankruptcy in September last year after failing to meet repayments on US$480 million convertible bonds. It was then expected that Elektrim's key assets will go into receivership, pending a ruling by a Polish court. ===================== S W I T Z E R L A N D ===================== WINTERTHUR GROUP: Sells Italian Operations for EUR1.4 Billion ------------------------------------------------------------- Winterthur Group has completed the sale of its Italian insurance operations to Unipol Assicurazioni SpA. At completion, Winterthur Group received cash consideration of EUR1.465 billion. The transaction will result in a capital gain to be recorded in Credit Suisse Group's third quarter results. Winterthur Group and Unipol entered into the agreement to sell Winterthur's Italian operations on June 22, 2003. Under the terms of the agreement, the buyer is expected to continue using the Winterthur brand for a transitional period ending mid-year 2004. Winterthur Italy is based in Milan and writes both life and non-life business. In 2002, aggregate premium volume was EUR2.04 billion. Winterthur Italy offers tailor-made, innovative and high-quality insurance products to approximately 1.9 million customers. Its current book of business is split into 65% non-life business and 35% life business. Winterthur Group Winterthur Group is a leading Swiss insurance company with head office in Winterthur. As an international company, the Group provides a broad range of property and liability insurance products, as well as insurance solutions in life and pensions that are tailored to the individual needs of private and corporate clients. Winterthur Group has approximately 23,000 employees worldwide. The company achieved a premium volume of CHF37.4 billion in 2002 and reported assets under management of CHF149.6 billion as of June 30, 2003. Credit Suisse Group Credit Suisse Group is a leading global financial services company headquartered in Zurich. The business unit Credit Suisse Financial Services provides private clients and small and medium-sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. The business unit Credit Suisse First Boston, an investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group's registered shares (CSGN) are listed in Switzer�land and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 64,000 staff worldwide. As of June 30, 2003, it reported assets under management of CHF1,234.2 billion. =========================== U N I T E D K I N G D O M =========================== AVON ENERGY: Fitch Affirms 'C' Ratings; Outlook Negative -------------------------------------------------------- Fitch Ratings affirmed Avon Energy Partners Holding's ratings at senior unsecured 'CC', Outlook Negative, and short-term 'C'. The change is dictated by the announcement made by Scottish and Southern Energy of the termination of discussion with Avon Energy Partners Holding's bondholders as a result of their unsuccessful bid to buy Aquila Sterling Ltd. Midlands Electricity and Aquila Power Network's ratings were placed on Rating Watch Evolving at the end of May, as a result of the announcement of the offer made by Scottish & Southern (rated 'AA-/F1+' Outlook Stable) to buy Aquila Sterling Ltd., Midland Electricity's ultimate U.K. holding company, to reflect the uncertainty surrounding the outcome of the proposed offer. The ratings on Midlands Electricity and Aquila Power Networks were now affirmed at 'BBB-/F3' and 'BBB+/F2' respectively. They were also removed from Rating Watch Evolving. The Outlook for both companies is Stable. The Rating Watch Evolving was predicated upon uncertainties surrounding completion of the sale; the Stable Outlook is now is predicated upon the nature of the 'ring-fenced' cash flows of Aquila Power Networks and the relatively low leverage of Midland Electricity. The affirmation of Avon Energy's ratings is predicated upon the visible open market valuation of the business in the light of Scottish and Southern Energy's formal offer, representing a shortfall to the value of the debt held in the group (i.e. 86% of subordinated bonds' nominal value). The behavior of Avon Energy bondholders' shows, on one side, a very determined position in preventing any agreement that might be detrimental to the subordinated debt nominal value and to the advantage of equity holders. On the other side, it shows a high degree of confidence in their ability of gaining control of the company in two years time when the Avon Energy sterling bond dated 2006 becomes due. Unless an undisclosed second bidder is coming along with a better offer, Fitch believes that Avon Energy bondholders are highly exposed to the risk that Midlands will not be able to refinance its debt in 2006. As far as the ability of the company to service interest payments on Avon Energy's bonds (please refer to Fitch Credit Analysis of the Avon Energy Group dated January 10, 2003), according to Midland Electricity's management, notwithstanding the restrictions placed by the Regulator on cash flows up-streams from Aquila Power, the agreed exceptions to those restrictions are still enough to cover Avon Energy's coupons obligations. However, even if interest payments on Avon Energy's bonds are likely to be honored, Fitch believes that the refinancing risk over the rating horizon is such to justify the affirmation of the existing 'CC/C' ratings. The Negative Outlook is predicated upon the uncertainties of any further restrictions on dividends upstream that might be required by the Regulator going forward. AVON ENERGY: Ratings Unchanged Despite Breakdown of Buyout Talks ---------------------------------------------------------------- Standard & Poor's Ratings Services said the ratings on U.K. distribution network operator Aquila Networks PLC (BBB-/Watch Pos/A-3) and its holding companies, Midlands Electricity PLC (B/Watch Pos/--) and Avon Energy Partners Holdings (AEPH; CC/Watch Neg/--), remain unchanged following the decision by Scottish and Southern Energy PLC (SSE; AA-/Stable/A-1+) to withdraw from the acquisition process. Scottish & Southern Energy plans to buy Midlands Electricity for GBP1.1 billion from its U.S. owners, but it decided to end the talks after failing to reach agreement with bondholders regarding the purchase of some of the company's debt. The offer for the firm depended on the approval of bondholders in Midlands' holding company, Avon Energy. Early in the month, it was reported that the bondholders were demanding for an increased offer. The bondholders, who are owed around GBP600 million, want an extra GBP50 million. At that time, the Telegraph said that while the proposal was seen as a coup, Scottish & Southern Energy remained unwilling to pay more for the acquisition as it insisted that it faces uncertain regulatory risks. The CreditWatch with negative implications on Avon Energy reflects the strong possibility that bondholders at the company will receive less than par for the outstanding bonds. BOOSEY & HAWKES: Hg Investment Mulls 195p-a-share Bid ----------------------------------------------------- Following its announcement on September 10, 2003, where HgCapital stated it was seriously considering making an offer for Boosey & Hawkes in excess of that made by Regent Street Music Limited, HgCapital is pleased to announce that it has now substantially completed its due diligence procedures. HgCapital is now in the final stages of formulating an offer for Boosey & Hawkes at a premium to 195 pence per share, which it expects, within a short period, to conclude satisfactorily, at which point a formal offer would be announced. ***** Boosey & Hawkes placed itself for sale in October 2001 after its U.S. operations ran into financial trouble and its instrument-making plant in north London was found turning out defective products. CONTACTS: HG CAPITAL Nick Martin Phone: 020 7089 7940 DELOITTE & TOUCHE Corporate Finance Jonathan Hinton/Byron Griffin Phone: 020 7936 3000 Holborn Public Relations Limited David Bick Phone: 07831 381 201 ENDEVA: CEO Agrees to Take Part in Management Buyout ---------------------------------------------------- Talks regarding a management buyout of Endeva, provider of back-up services for core rental business of BoxClever, are expected to resume this week, according to The Independent. The negotiations with private equity business Alchemy Partners stalled after the former insisted that a deal must involve Endeva's CEO Roger Mavity. The loss-making unit employs most of BoxClever's 4,000 staff. It was maintained as a going concern after WestLB placed BoxClever into receivership on account of the British TV rental group's debt to the German bank. WestLB pulled Endeva's lifeline during negotiations for a GBP100 million management buyout. PricewaterhouseCoopers is the receiver of Endeva and a number of other companies in the BoxClever group. INTER-ALLIANCE GROUP: Sees Return to Positive Cashflow by 2004 -------------------------------------------------------------- "As we reported in July, the performance of Inter-Alliance during the first half of this year was below our expectations. At that time, we announced that we were taking a number of corrective actions and successfully raised GBP15 million gross to meet working capital requirements. I am now pleased to confirm that these actions are on track to deliver material improvements in the second half of the year and, with current trading well on plan, we remain confident that the Group will be cash flow positive during the first half of 2004 without recourse to further funding," Keith Carby, Chairman and Chief Executive Inter-Alliance Group plc, said. Current trading in line with expectations (a) The Directors confirm that current trading is in line with expectations and that they remain confident that the Group will be cash flow positive during the first half of 2004 without recourse to further funding, as stated in their announcement dated July 18, 2003. (b) The recovery in turnover in the second quarter, after a weak start to the year, has been maintained through July and August, and levels of submitted business in September are encouraging. (c) PMH Alliance, the new non-regulated business channel for the Group's Registered Individuals, was launched in June and is performing in line with expectations. 488 of the Group's 1,256 Registered Individuals are now contracted to transact non-regulated business through PMH Alliance. The value of business submitted though PMH Alliance to date exceeds GBP2 million. (d) Significant cost cutting measures have been taken and will continue in the second half of the year. The Directors are confident that these measures will reduce cash overheads to less than GBP21 million per annum by the end of this year. (e) Whilst the Directors continue to expect the Group to incur losses throughout the second half of the year, as stated in the announcement dated July 18, 2003, they are encouraged by the Group's progress against plan. (f) The Group had 1,256 Registered Individuals s in the U.K. as at June 30, 2003. Financial performance for the half year to June 30, 2003 in line with recent trading statements (a) Turnover up 21% to GBP28.9 million (H1 2002: GBP23.9 million, restated). (b) Gross Profit, after payment of commissions to Inter-Alliance's advisers, up 67% to GBP8 million (H1 2002: GBP4.8 million, restated). (c) Operating loss after exceptional items GBP14.7 million (H1 2002: GBP5.1 million, restated). (d) Net cash GBP4.9 million (2002: GBP16.2 million). Successful share placing in July 2003 (a) Placing was fully subscribed and raised GBP15 million gross, providing sufficient working capital to allow the Group to realize the benefits of the actions taken. The Directors remain confident that this will result in the Group achieving positive cash flow during the first half of 2004. Inter-Alliance Group plc is the largest National firm of Independent Financial Advisers in the U.K. It has 1,256 is the largest National firm of Independents in the UK.. Its shares are listed on the Alternative Investment Market. Chairman's Statement Summary and update on current trading The first six months of 2003 were dominated by fundamental restructuring and intense development for Inter-Alliance. As we reported in June, we have substantially completed the restructuring of the 87 limited companies thereby giving us far greater control over the business. We introduced improved technology and the ATLAS operating system, which bring the potential for significant economies of scale and the opportunity to leverage the value of our national brand. In addition, the implementation of a rigorous rationalization program to reduce costs is progressing with a significant reduction in headcount. Plans to realize efficiencies from our properties and the centralization of all group purchasing are now being acted upon. We strengthened the management team, which included the appointment on June 19 of Steven Hartley as Group Finance Director. There is no doubt that we have made demonstrable progress in 2003. The cost cutting program is on plan to ensure that cash overheads of the consolidated Group will fall to less than GBP21 million per annum by the end of 2003. The quantitative results for the six months ended June 30, 2003 reflect the investment cost of these initiatives as well as a particularly difficult trading environment in the first quarter of the year. Since then trading has recovered. The second quarter showed a strong improvement in turnover and this has been sustained through July and August. Levels of submitted business in September have also been encouraging. PMH Alliance, the new non-regulated business channel launched in June of this year, is growing strongly. From a total of over 1,200 advisers in the Group, we now have 488 Registered Individuals transacting non-regulated business through PMH Alliance. The value of business submitted though PMH Alliance since its launch in June 2003 is now GBP2 million. The improvements in turnover, corporate structure, operating systems and financial controls mean that we are well set to deliver improvements in trading performance in the second half. Results for the six months ended 30 June 2003 Despite the distractions described above and a weak market, gross turnover increased by GBP5 million, 21% to GBP28.9 million (H1 2002: GBP23.9 million, restated). This included a GBP7.7 million contribution from HST Financial plc (HST), which was acquired in the second half of last year. In the first quarter of this year, trading conditions across the sector were particularly weak and, despite a 29% increase in our own second quarter performance, this impacted on the Group's results and cash resources. After deducting the commissions that we pay to the advisers, gross profit rose by GBP3.2 million, 67% to GBP8 million (H1 2002: GBP4.8 million, restated) reflecting the change in the basis of commissions paid to advisers following the restructuring and the acquisition of HST. Conversely, total operating expenses increased by GBP12.9 million to GBP22.8 million (H1 2002: GBP9.9 million, restated). A significant proportion of this increase represents overheads assumed from the old limited companies, which at January 1, 2003 had an estimated annualized rate of at least GBP17 million. Other non-recurring overheads included consultancy fees and temporary staff costs associated with the restructuring program, as well as costs of the completion, raining and launch of the ATLAS software, the cost of exiting former business remises, and professional fees relating to acquisitions and financing projects all contributed further to this increase in costs. The result of the above is an operating loss of GBP14.7 million (H1 2002: GBP5.1 million, restated). Specific one-off costs and provisions of GBP4.3 million relating to liabilities acquired during the restructuring have been included as exceptional costs below the line. The Group elected to make these fundamental changes and to incur the related costs. As a consequence of this expenditure, our advisers are now benefiting from centralized management of support functions, including research, premises, accounting, and technology, which allows for economies of scale and enables them to focus on client acquisition and client servicing rather than administration. Positive outlook The Independent Financial Adviser market in the U.K. offers significant opportunities for long-term profitable growth. Over two thirds of new business in regulated products is sold by Independent Financial Advisers. If non-regulated products are included, such as mortgages, Independent Financial Advisers account for approximately 30% of all new business in retail financial products in the U.K. As a result, the Independent Financial Advisers channel is a vitally important means of distribution for the product producers, particularly as many of these no longer have direct sales forces. Two major developments are expected to impact our marketplace in the near future. Firstly, the sector's regulatory environment is about to change and the Financial Services Authority is expected to implement a number of measures following the publication of its Consultation Papers CP121 and CP166. The current framework ('polarization') segregates the market into two distinct and mutually exclusive groups. Under the new proposals, the concept of Independent Financial Adviser and tied agent will be retained, but there will also be a middle ground that allows advisers to be 'multi-tied'. Multi-tied advisers will be able to offer products from, not just one, but a range of producers. Secondly, the arrival of 'Wrap' propositions, whereby clients can be offered a comprehensive service covering all their investments in aggregation and independent of individual product providers, will be a major benefit to advisers. Some of the biggest financial institutions in the U.K. are placing major importance on this development and they appreciate clients are much more likely to use Wraps when guided by an adviser. This development will further increase the importance of advisers and also provide an opportunity for them to generate more revenue. We believe that, as the leading independent National Independent Financial Adviser by number of advisers, Inter-Alliance is particularly well placed to benefit from both of these changes. Inter-Alliance is a national brand, which we believe will give us competitive advantage. The first half of 2003 has undoubtedly been a period of considerable upheaval for the Group. Much has been achieved to give us the appropriate platform to succeed in the new regulatory environment. The re-building of Inter-Alliance to suit the needs and opportunities of the modern Financial Services Market has been difficult and costly. There is clearly more to do but we are well on plan. In August, the company raised GBP15 million before expenses which the Board believes will be sufficient to ensure that the Group will become cash flow positive during the first half of 2004. We look forward to building on this platform to achieve the kind of return made possible by such investment. Keith Carby Chairman and Chief Executive To See Financial Statements: http://bankrupt.com/misc/Inter_Alliance.htm CONTACT: INTER-ALLIANCE GROUP PLC Keith Carby, Chairman & Chief Executive Phone: 020 8971 4400 Geoffrey Pelham-Lane Phone: 020 8971 4400 Carey Shakespeare, Marketing Director Phone: 01793 441 456 FINANCIAL DYNAMICS Steve Hartley, Finance Director Phone: 020 7269 7194 Emma Buchanan Phone: 020 7269 7294 MIDLANDS ELECTRICITY: Ratings Unchanged by Buyout Talks Failure --------------------------------------------------------------- Standard & Poor's Ratings Services said the ratings on U.K. distribution network operator Aquila Networks PLC (BBB-/Watch Pos/A-3) and its holding companies, Midlands Electricity PLC (B/Watch Pos/--) and Avon Energy Partners Holdings (AEPH; CC/Watch Neg/--), remain unchanged following the decision by Scottish and Southern Energy PLC to withdraw from the acquisition process. Scottish & Southern Energy plans to buy Midlands Electricity for GBP1.1 billion from its U.S. owners, but it decided to end the talks after it failed to reach agreement with bondholders regarding the purchase of some of the company's debt. The offer for the firm depended on the approval of bondholders in Midlands' holding company, Avon Energy. Early in the month, it was reported that the bondholders were demanding for an increased offer. The bondholders, who are owed around GBP600 million, want an extra GBP50 million. At that time, the Telegraph said that while the proposal was seen as a coup, Scottish & Southern Energy remained unwilling to pay more for the acquisition as it insisted that it faces uncertain regulatory risks. The CreditWatch with positive implications on Aquila Networks and Midlands Electricity reflect the likelihood that they will ultimately be acquired by an entity with higher ratings, notwithstanding Scottish and Southern Energy's withdrawal. Their current owners, Aquila Inc. (B/Negative/--) and First Energy, are expected to continue to push for a sale. MIDLANDS ELECTRICITY: Fitch Affirms 'BBB-' Ratings -------------------------------------------------- Fitch Ratings, the international rating agency, has affirmed Midlands Electricity and Aquila Power Networks' ratings at 'BBB-/F3' and 'BBB+/F2' respectively, removing them from Rating Watch Evolving. The Outlook for both companies is Stable. At the same time the agency has also affirmed Avon Energy Partners Holding's ratings at senior unsecured 'CC', Outlook Negative, and short-term 'C'. The change is dictated by the announcement made by Scottish and Southern Energy of the termination of discussion with Avon Energy Partners Holding's bondholders as a result of their unsuccessful bid (see separate Fitch press release 26 September 2003). Midlands Electricity and Aquila Power Network's ratings were placed on Rating Watch Evolving at the end of May, as a result of the announcement of the offer made by Scottish & Southern (rated 'AA-/F1+' Outlook Stable) to buy Aquila Sterling Ltd., Midland Electricity's ultimate U.K. holding company, to reflect the uncertainty surrounding the outcome of the proposed offer. The Rating Watch Evolving was predicated upon uncertainties surrounding completion of the sale; the Stable Outlook is now is predicated upon the nature of the 'ring-fenced' cash flows of Aquila Power Networks and the relatively low leverage of Midland Electricity. The affirmation of Avon Energy's ratings is predicated upon the visible open market valuation of the business in the light of Scottish and Southern Energy's formal offer, representing a shortfall to the value of the debt held in the group (i.e. 86% of subordinated bonds' nominal value). The behavior of Avon Energy bondholders' shows, on one side, a very determined position in preventing any agreement that might be detrimental to the subordinated debt nominal value and to the advantage of equity holders. On the other side, it shows a high degree of confidence in their ability of gaining control of the company in two years time when the Avon Energy sterling bond dated 2006 becomes due. Unless an undisclosed second bidder is coming along with a better offer, Fitch believes that Avon Energy bondholders are highly exposed to the risk that Midlands will not be able to refinance its debt in 2006. As far as the ability of the company to service interest payments on Avon Energy's bonds (please refer to Fitch Credit Analysis of the Avon Energy Group dated January 10, 2003), according to Midland Electricity's management, notwithstanding the restrictions placed by the Regulator on cash flows up-streams from Aquila Power, the agreed exceptions to those restrictions are still enough to cover Avon Energy's coupons obligations. However, even if interest payments on Avon Energy's bonds are likely to be honored, Fitch believes that the refinancing risk over the rating horizon is such to justify the affirmation of the existing 'CC/C' ratings. The Negative Outlook is predicated upon the uncertainties of any further restrictions on dividends upstream that might be required by the Regulator going forward. MOTHERWELL BRIDGE: Management Eyes Buyout as Receivership Looms --------------------------------------------------------------- The management of Motherwell Bridge is working on plans to buy the troubled engineering company ahead of a possible receivership, according to Scotland on Sunday. The move is expected to save 2,000, including 800 in Lanarkshire. The report quoted sources saying Executive Chairman Hugh Hayes will hold crunch talks with other members of the buy-out team, shareholders including private equity firm 3i, and their advisers, including Dundas & Wilson, a certain law firm. This is in preparation for the planned receivership of the company this week. The management is planning to offer GBP30 million, and could announce the move early this week. It is expected to have the backing of the firm's banks, and could include a debt-for-equity swap. Motherwell Bridge owes GBP45 million to Bank of Scotland, Royal Bank of Scotland and Clydesdale Bank. It recorded a GBP13 million loss in its last filed accounts to December 2001 against a GBP20 million pre-tax profit the previous year. NETTEC PLC: Details Benefit of Selling Trading Subsidiary --------------------------------------------------------- Statement of Chairman Nick Butler: Shareholders will already be aware of the significant changes that have occurred in the Group in the first six months of the year. On May 2, 2003 we announced the proposed disposal of Nettec Solutions Limited to Aspect Internet Holdings Limited for GBP0.6 million and on May 30, 2003 we announced completion of the disposal. Since the disposal, the Board's primary concern has been the reduction of costs, the preservation of the company's cash resources and the minimizing of the Group's contingent liabilities. I am pleased to report that the Group has made significant progress in each of these areas: (a) The disposal has significantly reduced the Group's losses. The Group currently has only one full-time employee and will have only one part-time employee from October 1, 2003. In addition the costs of the Chairman and the non-executive directors have been reduced. (b) The Group has successfully sub-let approximately 7,500 square feet of the 4,500 square feet of the Group's premises in Kingston-upon-Thames. The property has 3 floors; the second floor has been sub-let at GBP67,000 per annum for one year (commencing 1st September 2003) and thereafter at GBP134,000 per annum. (c) In May 2003 the High Court approved the cancellation of the company's share premium account. The reserve produced by the cancellation was used to eliminate the accumulated deficit on the company's profit and loss account and create positive reserves. The company may now purchase it's own shares (subject to the necessary shareholder approval) or declare a special dividend if the Board consider this the most effective method of delivering shareholder value. (d) On August 29, 2003 the purchaser of Nettec Solutions agreed that the warranties and indemnities given by the company at the time of the sale should cease with immediate effect; in return the company has given up its right to require the purchaser to obtain the company's approval before granting a charge over its assets. However a number of significant issues remain: To View Full Report and Financials: http://bankrupt.com/misc/NETTEC_plc_Interim_Results.htm CONTACT: CITIGATE DEWE ROGERSON Patrick Toyne Sewell Phone: +44 (0)7767 498195 NETTEC PLC: Warns of Potential Problems in Real Property Biz ------------------------------------------------------------ Although the company has managed to sub-let some of the Malt House property, it will be harder to find tenants for the remaining areas of the property as the accommodation is of a lower standard than the floor that is currently let. The Board has been advised by its agent that the market for office space in Kingston remains weak. Consequently even if tenants can be found for the remaining vacant space it is likely that this will be at a discount to the passing rent payable by the company. The annual rental cost for the Malt House property is GBP435,000, with the lease terminating in November 2006. The total rental liability for the property is therefore approximately GBP1.4 million although dilapidation and maintenance costs are likely to add approximately GBP0.3 million to this liability. This liability should however be offset by approximately GBP0.6 million of rental income from current and expected tenants. These accounts include a provision of approximately GBP0.9 million for the vacant property provision. This is the Board's best estimate of the difference between the expected future rental income and the profit and loss charge for the Malt House property. To View Full Report and Financials: http://bankrupt.com/misc/NETTEC_plc_Interim_Results.htm CONTACT: CITIGATE DEWE ROGERSON Patrick Toyne Sewell Phone: +44 (0)7767 498195 NETTEC PLC: Contests Cases Brought by Former Supplier, Staff ------------------------------------------------------------ The company faces a claim for alleged Patent infringement. The claim is brought by Ablaise Limited, a former supplier to the Group. The Board have been advised that the company should not be a defendant in the case as the company has not traded since 1 January 2001 and cannot therefore have been in breach of the patent. However the company gave an indemnity to the purchaser of Nettec Solutions from all claims relating to the alleged infringement of the patent. Consequently, the company has a potential liability relating to the patent dispute and has the right, under the Sale and Purchase agreement, to defend the claim. Ablaise, the owners of the patent originally requested GBP40,000 per annum for a 3-year license to use the patent. When Nettec declined to take up the license, based on advice that the patent was not valid, Ablaise requested GBP300,000 per annum for the license. More recently Nettec has received a letter from Ablaise claiming that the total liability for breach of the patent could exceed GBP3 million. The company is contesting and will continue to contest the case vigorously. Following action by the company, the Court required Ablaise to pay GBP60,000 into court for security of the Company's costs. The company submitted its defense on August 4, 2003 and will request additional security for costs at the case management hearing, which is likely to occur in October 2003. The Board has received advice from a patent agent, solicitors and Counsel that the Patent is not valid. The Board has also advised that the GBP3 million quoted by Ablaise should be significantly in excess of any potential liability, even if Nettec were to lose the case. In addition to the company's advisers believing that the patent is invalid, the Board has been advised that, should the patent be held to be valid, the company may be able to offset its liability by making claims against a number of its suppliers. Other litigation Mr. Boulet, a former employee of the Group, has made a claim against Nettec for approximately GBP850,000 (further details are provided in note 11 to the accounts). Nettec do not believe Mr. Boulet's claim has any foundation and are contesting the case. In addition, Nettec has counter claimed for GBP760,000. The Court heard the case on the September 23, 2003 and judgment on the case is expected within six weeks of that date. Our lawyers have advised the Board that the claim of Mr. Boulet should be dismissed by the Court. To View Full Report and Financials: http://bankrupt.com/misc/NETTEC_plc_Interim_Results.htm CONTACT: CITIGATE DEWE ROGERSON Patrick Toyne Sewell Phone: +44 (0)7767 498195 NETTEC PLC: Outstanding Contingent Liabilities Total GBP5.6 Mln --------------------------------------------------------------- The total potential contingent liabilities that the Board are aware of amount to approximately GBP5.6 million, with contracted and expected rental income of approximately GBP0.6 million which should reduce this liability. Although the Board has been advised that the company is unlikely to lose either the litigation brought by Ablaise or by Mr. Boulet, the Board are treating both claims very seriously. If the Board decide a cash return is the most effective way of delivering shareholder value, the company will have to retain sufficient cash to meet all its expected and potential contingent liabilities. Current financial position As at June 30, 2003 the Group had net assets of approximately GBP10.2 million. This equates to approximately 8.5p per share. However no provision has been made in the accounts for any of the litigation and the provision for the vacant property, of GBP0.9 million, is based on an assessment of current market conditions and is less than the total potential liability. At the balance sheet date the company had the majority of its liquid resources invested in Open Ended Investment Companies. These investments are low risk and generate marginally better returns than cash deposits. The company has overnight access to these funds. The net assets include cash and liquid resources of approximately GBP11.2 million. To View Full Report and Financials: http://bankrupt.com/misc/NETTEC_plc_Interim_Results.htm CONTACT: CITIGATE DEWE ROGERSON Patrick Toyne Sewell Phone: +44 (0)7767 498195 NETTEC PLC: Board Looking for Reverse Takeover Opportunities ------------------------------------------------------------ In the circular to shareholders dated May 2, 2003 it was noted that the disposal would leave Nettec without any trading subsidiaries and the company would be a cash shell company with greater opportunities to create value for shareholders. The opportunities available to the Group include returning cash to shareholders in a tax efficient manner or taking the Group forward through a reverse takeover. Since the completion of the disposal of Nettec Solutions your Board has looked at the opportunities for a reverse takeover and the possibility of returning cash. No firm decision on the appropriate strategy has been made. Until the contingent liabilities have been settled or capped, the ability of the company to return cash to shareholders is limited. In addition, while the Group has a number of contingent liabilities it will be a less attractive cash shell for any reverse takeover. NETTEC PLC: Chairman Steps Down; Founder to Assume Post ------------------------------------------------------- As announced on September 10, 2003, I have decided to step down as Chairman, although I will remain on the Board as a non-executive director, and David Rogers and Peter Kemkers are leaving the Board from the 30 September 2003. Since my appointment as Chairman in July 2002 our only subsidiary has faced extremely difficult trading conditions and following its disposal, membership of the Board has been difficult. Throughout this time David and Peter have been unstinting in the support and help they have given the company and myself and I would like to thank them very much for this. Jeremy White, the founder and the company's largest shareholder, will become the Chairman and we have appointed David Shaw FCA to the Board as part time Finance Director. David has over 20 years experience of corporate finance work and will, I am sure, be invaluable in helping to guide the Company through the opportunities that lie ahead. Nick Butler, Chairman 25 September 2003 To View Full Report and Financials: http://bankrupt.com/misc/NETTEC_plc_Interim_Results.htm CONTACT: CITIGATE DEWE ROGERSON Patrick Toyne Sewell Phone: +44 (0)7767 498195 SAFEWAY PLC: Morrisons Gets Green Light to Acquire Safeway ---------------------------------------------------------- Competition Commission Chairman Sir Derek Morris welcomed Trade and Industry Secretary Patricia Hewitt's decision to accept in full the Commission's recommendations on which bidders may proceed with their acquisition of Safeway. Sir Derek said: "I am pleased that our report and recommendations have been accepted in full. If Morrisons are successful with their bid for Safeway we would expect them to become a strong national player. They should exert a positive competitive effect on the grocery retail sector, and benefit shoppers. "The Commission had just over four and a half months to investigate four merger situations. All of these needed to be assessed as to their likely impact on competition, at the national and local levels, in the one-stop grocery retail sector, and more widely. "This was in part achieved by undertaking isochrone analysis (mapping the positioning of stores area by area and the customers they serve). This provided detailed information on which areas would be affected as a result of reduced local competition. "Morrisons bid was found to be against the public interest in certain local areas where the number of competing supermarkets would be reduced. However, subject to divestment of certain stores in these areas, Morrisons bid for Safeway will be allowed to proceed. "Asda, Sainsbury and Tesco will not be allowed to acquire Safeway as a whole although any of these may be allowed to bid for certain Safeway stores which Morrisons would be required to divest should their bid for Safeway be successful. "We have provided the OFT with a framework within which these store divestments are to be handled." ***** The proposed acquisition of Safeway by (i) Asda Stores Ltd, (ii) W M Morrison Supermarkets plc, (iii) J Sainsbury plc, (iv) Tesco plc were referred to the Competition Commission under the Fair Trading Act 1973 by the Trade and Industry Secretary, Patricia Hewitt on March 19, 2003. Copies of the report "Safeway plc and Asda Group Limited (owned by Wal-Mart Stores Inc); Wm Morrison Supermarkets PLC; J Sainsbury plc; and Tesco plc - A report on the mergers in contemplation" (Cm 5950) are available from The Stationery Office, price GBP46.70. The report will also be available on the CC website: http://www.competition-commission.org.uk Further information can be obtained from the Commission's website at http://www.competition-commission.org.uk CONTACT: COMPETITION COMMISSION Francis Royle, Press Officer Phone: 0207 271 0242 SAFEWAY PLC: Ratings, Outlook Unaffected by DTI Ruling on Bids -------------------------------------------------------------- Standard & Poor's Ratings Services said that the announcement by the U.K. Department of Trade & Industry (DTI) on Sept. 26, 2003, to only allow the U.K.'s fifth largest supermarket operator WM Morrison to bid for Safeway PLC, has no affect on the CreditWatch listing on Safeway (BBB+/Watch Dev/A-2), or on the respective ratings and outlooks on Tesco PLC (A+/Negative/A-1) and J. Sainsbury PLC (A-/Negative/A-2). Although Morrison is the only trade buyer allowed to bid, financial buyers could still emerge, in particular retail entrepreneur Philip Green. In order to satisfy the competition authorities, Morrison will have to divest 53 Safeway stores if it acquires Safeway. Although the detail as to which trade buyer is eligible to buy these stores has yet to be clarified, Tesco and Sainsbury, if allowed to proceed, are likely to bid for these outlets. Overall, the DTI announcement is in line with Standard & Poor's expectations as outlined in its publication 'Consumers To Win Out in Bidding War for Safeway PLC's U.K. Stores Portfolio', published on Aug. 20, 2003, on Ratings Direct, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com WHYTE & MACKAY: Moves Bottling Operations to Grangemouth Plant -------------------------------------------------------------- Whyte and Mackay Ltd. announced that Grangemouth is to be the home of its new GBP20 million state-of-the-art bottling plant. This plant will consolidate Whyte and Mackay's existing operations in Leith and Grangemouth and follows a restructuring announcement made at the end of July to position the business for long-term success and ensure competitiveness in the global spirits industry where prices are continually under pressure. After extensive consultation both internally and with Trade Unions, the Scottish Executive, Scottish Enterprise, MPs, MSPs and Leaders of both the Councils, the decision to locate to Grangemouth has been made. Whyte and Mackay Ltd is currently working on the final configuration of the plant, which will be rebuilt on the existing Grangemouth site, to ensure speed and cost efficiencies prevail. In the highly competitive market of white spirit, where production in Scotland carries no premium, Whyte and Mackay Ltd is currently looking at the options for outsourcing which could include Europe. The final decision on this will depend on the outcome of discussions with the Scottish Executive as to what grant assistance can be provided for this side of the business. Vivian Imerman, chief executive and chairman at Whyte and Mackay Ltd, said: "There were a number of social and economic factors that we had to consider in reaching the decision to locate the new plant in Grangemouth, including the long-term sustainability of our investment and the relative land values of the sites. Grangemouth is a central location with excellent transport links, whilst we had some concerns over long-term accessibility and the transport infrastructure at Leith." The new site will employ around 220 staff -- 140 are currently employed in the bottling halls at Grangemouth and 220 in Leith. A period of consultation will now commence with affected employees, looking at the skill sets that will be required at the new site, establishing which employees will be willing to relocate from Leith and assisting in finding alternative employment for those now facing redundancy as a result of this consolidation process. Vivian Imerman added: "We will do everything in our power to help find new employment opportunities for those who regrettably are affected. The overall redundancy figures within the company will remain well within the headcount reduction from 700 to 500 employees already announced. "The creation of the new bottling plant together with the �50m investment behind our core brands - Whyte and Mackay, Vladivar, Isle of Jura, The Dalmore and Glayva - will put the company back on a growth path positioning it for long-term success with the ability to focus on meeting the needs of our customers and consumers." The new bottling plant will be operational in around two years. CONTACT: Lesley Alexander/Fergus Reid, Citigate SMARTS Phone: 0141 222 2040 Mobile: 07968 525783 * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Shareholders Total Working Equity Assets Capital Ticker (US$MM) (US$MM) (US$MM) ------ ----------- ------ -------- AUSTRIA ------- Libro AG (111) 174 (182) BELGIUM ------- Real Software REAL (35) 244 (1) CZECH REPUBLIC -------------- Ceskomoravska Kolben & Danek Praha Holding (89) 192 (2,186) DENMARK ------- Elite Shipping (28) 101 19 FRANCE ------ Banque Nationale de Paris Guyane (41) 352 N.A. BSN Glasspack (101) 1,151 179 Bull SA BULP (760) 893 (130) Compagnie des Machines Bull (116) 136 (20) Compagnie Francaise de l'Afrique Occidentale (65) 256 21 Cofidur SA (5) 102 19 Dollfus-Mieg & Co. DOLP 0 187 28 European Computer System (110) 682 377 Grande Paroisse SA (845) 383 107 Pneumatiques Kleber SA (34) 480 139 SDR Picardie (135) 413 N.A. Soderag (3) 404 N.A. Sofal SA (305) 6,619 N.A. Spie-Batignolles (16) 5,281 75 St Fiacre (FIN) (1) 111 (33) Trouvay Cauvin TRCN (0) 134 10 Usines Chauson (23) 249 35 GERMANY ------- Dortmunder Actien-Brauerei DABG (13) 118 (29) Eurobike AG EUBG (32) 158 (31) F.A. Guenther & Sohn AG GUSG (8) 111 N.A. Kaufring AG KAUG (19) 151 (51) Nordsee AG (8) 195 (31) Schaltbau AG SLTG (16) 163 20 Vereinigter Baubeschlag-Handel Holding AG VBHG (24) 307 (63) ITALY ----- Binda SpA BND (11) 129 (20) CIRIO FINANZIARI CBDI (422) 1,583 (396) Credito Fondiario e Industriale SpA CRF (200) 4,218 N.A. NETHERLANDS ----------- Baan Company N.V. BAAN (8) 610 46 NORWAY ------ Pan Fish ASA PAN (117) 806 (259) Petroleum-Geo Services PGO (32) 2,963 (5,250) POLAND ------ Animex SA (1) 108 (86) Exbud Skanska SA EXBUF (9) 315 (330) Stalexport SA (57) 229 (51) SPAIN ----- Altos Hornos de Vizcaya SA (116) 1,283 (278) Santana Motor SA (46) 223 41 Sniace SA (11) 128 (24) Tableros de Fibras SA TFI (43) 2,107 125 SWITZERLAND ----------- Kaba Holding AG KABZN (64) 515 252 UNITED KINGDOM -------------- Abbot Mead Vickers (2) 168 (16) Alldays Plc ALD (120) 252 (202) Amey Plc AMY (49) 932 (47) Bonded Coach Holiday Group Plc (6) 188 (44) Blenheim Group (153) 198 (34) Booker Plc BKRUY (60) 1,298 (8) Bradstock Group BDK (2) 269 5 Brent Walker Group (1,774) 867 (1,157) British Energy BGY (5,342) 3,438 229 British Nuclear Fuels Plc (2,627) 36,359 1,948 British Sky Broadcasting BSY (175) 3,347 (144) Compass Group CPG (668) 2,972 (298) Costain Group COST (34) 329 (12) Dawson Holdings DWSN (32) 135 (25) Easynet Group Plc ESY (12) 332 53 Electrical and Music EMI Industries Group (885) 3,053 (435) Euromoney Institutional ERM (119) 173 20 Gallaher Group GLH (543) 5,527 68 Gartland Whalley (11) 145 (8) Global Green Tech Group (156) 408 (18) Heath Lambert Fenchurch Group PLC (10) 4,109 (10) HMV Group PLC HMV (211) 762 (66) Imperial Tobacco Group ITY (117) 10,083 (190) Intertek Testing Services ITRK (134) 425 (67) IPC Media Ltd. (685) 254 16 Lambert Fenchurch Group (1) 1,827 (3) Lattice Group (1,290) 12,410 (1,228) Misys PLC MSY (161) 949 41 Orange PLC ORNGF (594) 2,902 7 Regus PLC RGU (46) 367 (60) Rentokil Initial Plc RTO (1,130) 2,809 (37) Saatchi & Saatchi SSI (119) 705 (41) Seton Healthcare (11) 157 0 Yell Group PLC (196) 3,964 289 Each Tuesday edition of the TCR-Europe contains a list of companies with insolvent balance sheets based on the latest publicly available balance sheet available to our editors at the time of publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* 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. 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. 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