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/raid1/www/Hosts/bankrupt/TCREUR_Public/040102.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 Friday, January 02, 2004, Vol. 5, No. 01 Headlines F I N L A N D FINNAIR OYJ: Fined EUR1.8 Mln for Abbreviated Fujitsu Contract F R A N C E RHODIA SA: Long-term Rating Lowered to 'B'; Outlook Negative VIVENDI UNIVERSAL: Observers Welcome U.S. SEC Compromise Deal VIVENDI UNIVERSAL: Accepts Proposal to Settle Ex-CEO's Severance VIVENDI UNIVERSAL: NY Court Allows Securities Lawsuit to Proceed G E R M A N Y BANKGESELLSCHAFT BERLIN: Fitch Affirms Long-term Rating MANNHEIMER AG: Capital Restructuring to Cause EUR200 Mln Loss MOBILCOM AG: Opts to Give up UMTS Licenses L A T V I A LATVIJAS EKONOMISKA: Long-term 'B+' Affirmed; Outlook Stable L U X E M B O U R G STOLT OFFSHORE: Lenders Extend Waiver of Banking Covenants N E T H E R L A N D S IFCO SYSTEM: Shareholders Elect Three New Board Members KONINKLIJKE AHOLD: Talks with Unibanco Enter Homestretch N O R W A Y PETROLEUM GEP-SERVICES: Confirms Extension of Varg Field U K R A I N E INDUSTRIALBANK: Below Investment Grade Ratings Affirmed U N I T E D K I N G D O M AVECIA GROUP: Lowered to 'B-'; Kept on CreditWatch Negative DRAX HOLDINGS: Fitch Lowers Senior Bonds to 'DD' JASMIN PLC: Lenders Remain 'Supportive' Despite Sorry State LEEDS UNITED: Could Still Avoid Administration, Says New Chair MARLON INSURANCE: High Court Sanctions Schemes of Arrangement NORTHERN ELECTRIC: Sets Creditors' Meeting January 7 TRINITY INSURANCE: Creditors Given Until April 4 to File Claim ********* ============= F I N L A N D ============= FINNAIR OYJ: Fined EUR1.8 Mln for Abbreviated Fujitsu Contract -------------------------------------------------------------- The arbitrator set by the Central Chamber of Commerce handed on December 29, 2003 its ruling on the dispute regarding the termination of a contract between Finnair and Fujitsu Services Oy. The arbitrator ordered Finnair to pay damages and legal expenses of approximately EUR1.8 million. Fujitsu Services Oy sought damages of approximately EUR2.2 million because Finnair terminated an I.T. infrastructure management contract between the two companies after the 9/11 World Trade Center terrorist attacks. The drastic savings following the attacks prevented the performance of the contract in its original form, Finnair claimed. As the companies could not reach an agreement on how to proceed in the new situation, Finnair terminated the contract by invoking the termination clause in the contract. Fujitsu Services Oy took the matter to arbitration. The arbitrator held that Finnair did not have a right to terminate the contract. The ruling cannot be appealed. The above sums will be booked as costs in the last quarter of year 2003. CONTACT: Mr. Sami Sarelius, Senior Legal Counsel Phone: +358 9 818 4070 =========== F R A N C E =========== RHODIA SA: Long-term Rating Lowered to 'B'; Outlook Negative ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its long-term corporate credit rating on France-based specialty chemicals group, Rhodia S.A., to 'B' from 'BB-', and placed the long-term corporate credit rating on CreditWatch with negative implications. At the same time, the short-term corporate credit rating on Rhodia was affirmed at 'B'. In addition, Standard & Poor's lowered its long-term senior unsecured and subordinated debt ratings on Rhodia to 'CCC+', from 'B+' and 'B' respectively, and placed these ratings on CreditWatch with negative implications. "The downgrade reflects Standard & Poor's increasing concerns about the group's credit quality, owing to an anticipated dramatic decrease in the group's cash balance, which raises liquidity issues," said Standard & Poor's credit analyst Nicolas Baudouin. "On December 23, 2003, Rhodia announced that it had agreed to a new financing package with its banks. Although this solves the group's immediate liquidity issues, Standard & Poor's remains concerned that Rhodia's liquidity situation will continue to be tight in the first six months of 2004," added Mr. Baudouin. This agreement has averted an early repayment of the group's bank debt this month, but Rhodia remains subject to financial covenants and will rely on asset disposals and fresh equity issuance to meet its financial obligations in the next six months. The group's available cash is expected to be significantly reduced by the possible redemption of its US$290 million private placement, due to a likely covenants breach, depending upon the outcome of the negotiations with the noteholders; the reduced availability under the new bank lines (there is a gap between the group's current bank debt and its new credit facility of EUR758 million that will be put in place as of June 2004); and continued negative free cash flows owing to restructuring expenses and possible working capital deterioration. In addition, Rhodia still needs to negotiate the refinancing of two securitization programs of trade receivables maturing at the end of June 2004 and totaling about EUR200 million. The diversity of Rhodia's receivable balance should, however, facilitate the roll over. The group is contemplating a capital increase of EUR300 million in first-half 2004, which will be necessary in order to avoid a liquidity problem and forms an essential part of the group's refinancing plan. It is, however, contingent on market conditions. The refinancing package also includes EUR700 million of disposals, but the timing of receipt of the proceeds will likely be skewed toward second-half 2004. Three of Rhodia's business units have been earmarked for disposal. Although the cash proceeds will alleviate the debt burden, the group's business profile will be weakened, because the diversity of the group's end-markets will be reduced. Standard & Poor's expects market trends to remain difficult in 2004, albeit slightly more favorable than in 2003. The current refinancing package puts Rhodia bondholders at a disadvantage, as the exposure of other creditors is being lessened while the group's assets will be substantially reduced through the cash used to redeem financial debt and the asset disposals. In addition, the new EUR758 million credit facility will benefit from strong collateral (pledge on the shares of some Rhodia subsidiaries, but not on the operating assets of these subsidiaries), thereby increasing the subordination of the bonds. Rhodia is expected to disclose very weak financial measures at year-end 2003, notably a ratio of funds from operations (FFO) to net debt (adjusted for leases, securitization, guarantees, and pensions) of below 10%. The CreditWatch placement will be resolved before mid-year 2004, depending on Rhodia's ability to improve its financial flexibility, primarily through the success of its planned capital increase or the implementation of another refinancing plan. VIVENDI UNIVERSAL: Observers Welcome U.S. SEC Compromise Deal ------------------------------------------------------------- Analysts and investors believe Vivendi Universal's deal to settle fraud charges with U.S. market authorities should help put a messy episode behind the company but will not end all its legal problems, Reuters reports. Late Tuesday, the U.S. Securities and Exchange Commission (SEC) reached a deal under which Vivendi agreed to pay US$50 million in civil penalties and former Chief Executive Jean-Marie Messier agreed to pay a US$1 million fine and drop his claim on a EUR20.5 million (US$25 million) severance package, the SEC said. The deal leaves Vivendi facing a class action in the United States, possible penalties by French market authorities and an ongoing investigation by the Paris public prosecutor. "Financially, it's not much," said one Paris-based analyst. "At the group level it is negligible, but in terms of image, it's a good thing. They close the matter with the SEC and they did not have to restate their accounts like Enron, which would have had a negative effect. They come out of it pretty well without paying too much." The SEC said the money from the settlement would go to investors harmed when the company issued false statements, made improper adjustments to earnings and failed to disclose future financial commitments between December 2000 and July 2002. Mr. Messier was forced out as Vivendi chief executive last year after an expansion spree that saddled it with a crushing debt and brought it close to collapse. Neither Mr. Messier nor Vivendi, whose holdings include the world's biggest music company, France's number two cell phone operator and the country's leading pay-TV firm, admitted nor denied the SEC charges. However, the settlement with U.S. market authorities was a big step toward ending the high-profile battle between Mr. Messier and the company he transformed from a staid water utility to an international media and telecoms conglomerate. The fight has captivated France, with public disgust aimed at Mr. Messier for having tried to keep his severance package, which is enormous by the country's standards, despite promising never to seek such a payment, nearly bankrupting Vivendi and causing a massive loss of shareholder value, Reuters reports. Financial analysts said the settlement was a net positive, but noted the possible legal action the company still faced. They said many investors had already priced in a deal. Vivendi shares were up 1.8 percent at 19.19 in morning trading, outperforming the CAC-40 index of French blue-chip shares and the DJ Stoxx index of European media companies, Reuters states. Small shareholders also welcomed the deal, but said the score was not settled. "Morality has been flouted," said long-time shareholder activist Colette Neuville, whose ADAM minority shareholder defense group is the lead plaintiff in the U.S. class action. "Holiday cheer is not relevant in this matter," she told Reuters. "This was a battle where everyone defended their interests as best they could and tried to find a solution to avoid a conflict that could have forced them to reveal embarrassing information. If Jean-Marie Messier is giving up his severance, no doubt it is to avoid paying more in another situation. Don't think he was overcome by grace." Mr. Messier had accepted the payment when he left, but Vivendi refused to pay and vowed Mr. Messier would get nothing. As part of the SEC settlement, Mr. Messier was barred from holding an officer or director position at a U.S. public company for 10 years and Vivendi agreed to pay a portion of Mr. Messier's legal fees. VIVENDI UNIVERSAL: Accepts Proposal to Settle Ex-CEO's Severance ---------------------------------------------------------------- The U.S. Securities and Exchange Commission filed settled injunctive actions against Vivendi Universal S.A., its former CEO Jean-Marie Messier, and its former CFO Guillaume Hannezo. The settlements include Vivendi's consent to pay a US$50 million civil money penalty. The settlements also include Mr. Messier's agreement to relinquish his claims to a US$21 million severance package that he negotiated just before he resigned his positions at Vivendi, and payment of disgorgement and civil penalties by Mr. Messier and Mr. Hannezo that total over US$1 million. The Commission's complaint describes a course of fraudulent conduct by Vivendi, Mr. Messier, and Mr. Hannezo that disguised Vivendi's cash flow and liquidity problems, improperly adjusted accounting reserves to meet earnings before income taxes, depreciation, and amortization (EBITDA) targets, and failed to disclose material financial commitments. Specifically, the Commission's complaint alleges that during 2001 and the first half of 2002, Vivendi issued misleading press releases authorized by Mr. Messier, Mr. Hannezo, and other senior executives. The press releases falsely portrayed Vivendi's liquidity and cash flow as "excellent" or "strong" and as sufficient to meet Vivendi's future liquidity requirements. These statements were misleading in light of Vivendi's inability unilaterally to access the cash flow of two of its biggest subsidiaries, a situation that substantially impaired Vivendi's ability to satisfy its debt burden and other operating costs. The suit also alleges that Vivendi, at the direction of its senior executives, made improper adjustments that raised Vivendi's EBITDA by approximately US$59 million during the second quarter of 2001 and by at least US$10 million during the third quarter of 2001. These adjustments were made so that Vivendi could meet ambitious earnings targets that it had communicated to the market. The suit further alleges Vivendi failed to disclose future financial commitments regarding two of its subsidiaries. Vivendi failed to disclose the commitments in Commission filings and in meetings with analysts. If Vivendi had revealed those commitments, they would have raised doubts about the company's ability to meet its cash needs. Vivendi and the other defendants also allegedly failed to timely disclose all of the material facts about Vivendi's investment in a fund that purchased a 2% stake in Elektrim Telekomunikacja Sp. zo.o (Telco), a Polish telecommunications company in which Vivendi already held a 49% stake. All of the defendants consented to the settlements without admitting or denying the Commission's allegations. The settled action permanently enjoins Vivendi, Mr. Messier, and Mr. Hannezo from further violations of the federal securities laws and includes other substantial relief. Vivendi is required to pay a civil money penalty in the amount of US$50 million and disgorgement of US$1. Mr. Messier is required to relinquish his claim to a severance package of about US$21 million, which includes back pay and bonuses for the first half of 2002, and to pay a civil money penalty of US$1 million and disgorgement of US$1. Mr. Hannezo is required to disgorge US$148,149, and to pay a penalty of US$120,000. Finally, Mr. Messier and Mr. Hannezo are prohibited from serving as an officer or director of a public company for, respectively, 10 and 5 years. The Commission intends to direct that disgorgement and penalties paid in this case be paid to defrauded investors, including those who held Vivendi's ordinary shares and its American Depository Shares during the time period alleged in the Commission's Complaint, pursuant to Section 308 (Fair Funds for Investors) of the Sarbanes-Oxley Act of 2002. The US$21 million payment, now valued at approximately US$25 million (including interest), to which Mr. Messier is relinquishing his claim, has already been placed in an escrow account as a result of the Commission's successful litigation pursuant to Section 1103 of the Sarbanes-Oxley of 2002. On the SEC's motion, the District Court in New York ordered Vivendi to place those funds in escrow on September 24, 2003. The suit is styled "SEC v. Vivendi Universal S.A., Jean-Marie Messier, and Guillaume Hannezo, 03- CIV-10195." VIVENDI UNIVERSAL: NY Court Allows Securities Lawsuit to Proceed ---------------------------------------------------------------- The United States District Court for the Southern District of New York allowed the consolidated securities class action filed against Vivendi Universal S.A. to proceed with most of its claims intact. The suit, styled "In re Vivendi Universal S.A. Securities Litigation (Master File No. 02 CV 5571)," names as defendants the Company, its former chairman Jean-Marie Messier and its former chief financial officer Guillaume Hannezo. The suit, filed on behalf of shareholders who acquired Company securities between February 11, 2002 and July 3, 2002, inclusive, charges that defendants violated the 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, an earlier Class Action Reporter story (March 12,2003) states. On November 6, 2003, the court issued an Opinion on Vivendi Universal's motion to dismiss the suit, allowing the plaintiffs to proceed with most of their claims against the Company. Plaintiffs and defendants, including Vivendi Universal, have since filed motions asking the Court to reconsider certain findings in its Opinion. Those motions remain pending. This litigation was recently transferred to Judge Richard Holwell. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Fitch Affirms Long-term Rating ------------------------------------------------------- Fitch Ratings on December 23 affirmed Bankgesellschaft Berlin's (BGB) Long-term rating at 'A-' ('A minus'), Short-term at 'F1', Individual at 'D/E' and Support rating at '1'. The Long-term rating Outlook remains Evolving. The 'AAA' Long- and 'F1+' Short-term ratings for both BGB's subsidiary, Landesbank Berlin (LBB) and the USD15 billion EMTN Programme of BGB Finance (Ireland) plc, guaranteed by LBB, are affirmed. These are currently covered by guarantees from the State of Berlin (rated 'AAA') in the form of 'Anstaltslast' (maintenance obligation) and Gewaehrtraegerhaftung, both running until 18 July 2005. Outstanding obligations at that date will be grandfathered in the form of Gewaehrtraegerhaftung, and in Fitch's view these guarantees would be honored on a timely basis. Fitch will assign new, unguaranteed ratings to LBB in due course (see the agency's press release on German Landesbanks published on Monday, 24 November). The rating affirmation follows the announcement on Thursday 18 December of a long-awaited agreement between the European Commission (EC) and the German government on the state aid provided to BGB by its majority owner, the State of Berlin. The agreement sets deadlines for the sale of various parts of the business, including the sale of BGB by end-2007, and requires some break-up of the dominant sales franchise in Berlin. Details of how this might be achieved technically are still outstanding. BGB's Long-term rating is at its support rating floor. It was downgraded to 'A-' (A minus) from 'A' in November to reflect Fitch's view of the stricter EC observation any future support from the State of Berlin would be subject to. In spite of the requirement to sell the bank by end-2007, Fitch considers that the probability of further support from the State of Berlin in case of necessity remains extremely high. The Evolving Outlook indicates the possibility that there might be a change in ownership over the next two years. ***** Bankgesellschaft Berlin barely avoided collapse in the summer of 2001 after the government injected EUR1.8 billion into its coffers. The European Union at the time gave its preliminary approval to the bailout, but in December of the same year, the city again came to its rescue by setting up a "risk shield" to guarantee the bank's debts for up to 30 years. In April, the Commission, evaluating the risk to come as high as EUR35 billion, opened an investigation into the aid and other government guarantees provided to the bank. The probe determined that the bailout could safely pass competition concerns if Bankgesellschaft Berlin divests some of its assets. According to the European Union Commission: "The agreed divestment of Berliner Bank will reduce the strong position in the Berlin regional retail market, which the state aid allowed the bank to maintain." CONTACT: Gordon Scott, London Phone: +44 (0) 20 7417 4307 Bridget Gandy, London Phone: +44 20 7417 4346 Olivia Perney Guillot, Paris Phone: +33 1 4429 9180 Media Relations Campbell McIlroy Phone: +44 20 7417 4327, London MANNHEIMER AG: Capital Restructuring to Cause EUR200 Mln Loss ------------------------------------------------------------- Insurer Mannheimer AG Holding, whose several officers are under investigation for breach of trust in relation to failed stock investments that led to the collapse of its life unit, expects to post a 2003 net loss of nearly EUR200 million. According to Dow Jones Newswires, the insurer announced Tuesday a plan to improve its finances, which includes cutting its equity capital to EUR10.08 million from EUR25.8 million. A capital increase worth a nominal EUR53 million at EUR1.50 a share will then be conducted, which could bring it EUR79.5 million in fresh funds. The new shares will be sold to Austria's UNIQA Versicherung AG, a minority stakeholder of Mannheimer. The insurer said German finance agency BaFin has ruled it doesn't need to offer new shares to other shareholders in the capital increase because majority control by UNIQA is necessary for the viability of the company. UNIQA will hold 87.16% of Mannheimer following the completion of the process. The sum of EUR25 million will also be paid to German emergency fund Protektor AG, which took over all of Mannheimer Lebensversicherung AG in October. The life insurance unit got badly hit by a high percentage of stock market investments. It ceased writing new business in June and has put an asset management and an Internet unit up for sale to help replenish reserves. Mannheimer's Chief Financial Officer Ulrich Lichtenberg; head of the supervisory boards, Hans Schreiber; and the supervisory board head of Mannheimer Lebensversicherung AG now face charges for making unsafe financial decisions that caused the demise of the unit. MOBILCOM AG: Opts to Give up UMTS Licenses ------------------------------------------ The Board of Management and Supervisory Board of MobilCom AG, Budelsdorf, decided on December 23 to return the licenses for operating a UMTS network, which have been held in MobilCom Multimedia GmbH, to the Regulatory Agency for Telecommunications and Post. Thus MobilCom has paved the way for the company to participate in the emerging market and is now also free to offer UMTS services as a service provider. This would not have been possible had the company insisted on keeping its own license, as licensees may not be service providers at the same time. The boards have yet to decide further steps. ***** In 2000, MobilCom ran into financial trouble and was threatened with bankruptcy. MobilCom is 28.5% owned by France Telecom S.A., which had a falling out with the German company over the cost and pace of the UMTS project. =========== L A T V I A =========== LATVIJAS EKONOMISKA: Long-term 'B+' Affirmed; Outlook Stable ------------------------------------------------------------ Fitch Ratings on December 23, 2003 affirmed Latvijas Ekonomiska Komercbanka's (Lateko) ratings at Long-term 'B+', Short-term 'B', Individual 'D' and Support rating at '5'. The Outlook on the Long-term rating remains Stable. Lateko is a locally owned bank, with an established position in payment and settlement services as well as the finance of non- resident trade. While its niche businesses have provided it with a relatively diversified revenue stream, the bank remains small in absolute terms. It also has a high proportion of non- resident funds on its balance sheet, which, while ample, remain subject to greater volatility. Lateko's loan portfolio is small but well performing. At end-June 2003, the bank's total capital ratio was 12.30%. CONTACT: Claudia Nelson Tim Beck, London Phone: +44 20 7417 4222 =================== L U X E M B O U R G =================== STOLT OFFSHORE: Lenders Extend Waiver of Banking Covenants ---------------------------------------------------------- Stolt Offshore S.A. (NasdaqNM: SOSA; Oslo Stock Exchange: STO) said on December 29, 2003 that it has obtained an extension from December 15, 2003 until April 30, 2004 of the waiver of banking covenants. Stolt Offshore continues discussions with its lenders towards a long-term agreement. Stolt Offshore is a leading offshore contractor to the oil and gas industry, specializing in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas CONTACT: Julian Thomson/Fiona Harris Stolt Offshore S.A. Phone: US +1 877 603 0267 (toll free) UK +44 1224 718436 E-mail: Julian.thomson@stoltoffshore.com Patrick Handley (UK) / Tim Payne (US) Brunswick Group Phone: UK +44 207 404 5959 US +1 212 333 3810 E-mail: phandley@brunswickgroup.com tpayne@brunswickgroup.com ===================== N E T H E R L A N D S ===================== IFCO SYSTEM: Shareholders Elect Three New Board Members ------------------------------------------------------- The Extraordinary General Meeting of IFCO Systems N.V. accepted the resignation of former Directors C, Jeremy Brade, Antonius C.M. Heijmen and Richard J. Moon from the board under full discharge with effect from December 29, 2003. Michael Phillips, Ralf Gruss and Dr. Philipp Gusinde were elected as the new Directors C to the Board of Directors of IFCO Systems N.V., effective immediately. The Extraordinary General Meeting of IFCO Systems N.V. also adopted the 2002 Annual Accounts and discharged the members of the Board of Directors for the fulfillment of their duties during the financial year 2002. IFCO Systems is a worldwide logistics service provider with approximately 160 locations in Europe and North America. IFCO Systems operates a pool of more than 65 million RPCs (Reusable Plastic Containers) globally, which are used as a logistic system predominantly for fresh produce by leading grocery retailers. In the United States, IFCO Systems also provides a national network of pallet management services. With more than 45 million wooden pallets recycled annually, IFCO Systems is the market leader in this industry. In 2002 IFCO Systems generated revenues of 380.7 million USD. In the United States, IFCO Systems also provides a national network of pallet management services. With more than 45 million wooden pallets recycled annually, IFCO Systems is the market leader in this industry. In 2002 IFCO Systems generated revenues of 380.7 million USD. KONINKLIJKE AHOLD: Talks with Unibanco Enter Homestretch -------------------------------------------------------- Unibanco-Uniao de Bancos Brasileiros S.A. is close to taking over Ahold's Brazilian credit card business, as talks on what could potentially be a US$150 million deal advance, Dow Jones Newswires said. According to sources, Ahold's Hipercard would help consolidate Unibanco's lead as South America's largest credit card provider. It already has a strong foothold in the region with 2.2 million clients in Brazil's northeast and annual sales of more BRL250 million. The acquisition is just part of a bigger process involving Unibanco and Wal-Mart Stores Inc. It is noted that the world's biggest retailer, which brought Unibanco on board, is hoping to purchase Ahold's Brompeco and G. Barbosa supermarket chains. If completed, the deal could see Wal-Mart take charge of running some 100 stores while Unibanco would administer the credit business and work on increasing customer loyalty by tying clients into other financial services. Sources say the deal is expected to close by mid-January. Ahold is pulling out of Latin America to help reduce its EUR11 billion debt after it emerged earlier this year that it was involved in one of Europe's biggest accounting scandals. It is hoping to close the Brazilian deals as soon as possible to help raise EUR2.5 billion as part of its broader asset sales program. Ahold has sold its businesses in Peru, Chile and Paraguay. =========== N O R W A Y =========== PETROLEUM GEP-SERVICES: Confirms Extension of Varg Field -------------------------------------------------------- Petroleum Geo-Services ASA (OSE: PGS; OTC: PGEOY) announced on December 29, 2003 that Pertra AS, a wholly owned subsidiary of PGS, has completed appraisal well 15/12-14, confirming the western extension of the Varg field. The field is located in PL038 (Block 15/12) in the Norwegian North Sea. The well was drilled down to 3254 meters. 78 meters of oil- bearing sands were discovered, confirming the revised reservoir model based upon new PGS seismic data. The well will be converted to an oil producer and is expected to be brought on- stream mid January 2004. PGS expects production from the Varg field to double from today's level of approximately 1800 Sm3/day (11,000 bopd), and for field life to be extended beyond 2004. The Varg field is being produced by the Petrojarl Varg FPSO, owned and operated by PGS Production. Pertra AS is the operator of PL038 with 70% interest and co- venturer Petoro AS holding the remaining 30%. The Norwegian Petroleum Directorate has also made an independent announcement today (December 29). Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com CONTACT: Sam R. Morrow Svein T. Knudsen Phone: +47-67-52-6400 Suzanne M. McLeod Phone: +1 281-589-7935 ============= U K R A I N E ============= INDUSTRIALBANK: Below Investment Grade Ratings Affirmed ------------------------------------------------------- Fitch Ratings on December 23 affirmed Industrialbank's (INB's) ratings at Long-term 'CCC', Short-term 'C', Individual 'D/E', and Support '5'. The ratings reflect INB's small size by international standards, and the high levels of related party customer and industry concentration on both sides of the balance sheet, which are unlikely to fall significantly in the near future. The bank's revenues are also undiversified and its capital position has deteriorated in 2003, although a UAH110 million capital injection set to take place in January 2004 should rectify this situation. However, the ratings also take into account INB's reasonable liquidity and profitability, as well as its relatively limited exposure to market risk compared with many other CIS banks. Nevertheless, Fitch comments that, while the bank's performance has been supported, thus far, by a relatively strong net interest margin and a healthy cost/income ratio, profitability is likely to be more difficult to sustain in the longer-term, given INB's limited franchise and growing competition. INB's planned diversification into retail and SME lending should help diversify the bank's revenue streams to a degree, but the bank will need to demonstrate its ability to manage the risks associated with these new business lines successfully. Industrialbank was established in 1990 as Bank Sodruzhestvo and re-registered under its current name in 1996. It is a very small bank, ranked 17th in Ukraine in terms of assets (per Ukrainian Accounting Standards). The bank is based and operates in Zaporizhzhia, south east Ukraine, one of the country's key industrial regions and a focal point of iron, steel and non- ferrous metals production. INB's largest shareholder (35%) is West Reserve Insurance Company, a Ukrainian company, which has a significant shareholding in Zaporizhstal. INB conducts a significant proportion of its business with Zaporizhstal. At end-2002 it employed 259 staff. Contact: Lindsey Liddell, London Phone: +44 (0) 20 7417 3495 Alexander Giles, London Phone: +44 (0) 20 7417 6330 =========================== U N I T E D K I N G D O M =========================== AVECIA GROUP: Lowered to 'B-'; Kept on CreditWatch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services lowered on December 23, 2003 its long-term corporate credit rating on U.K.-based specialty chemicals producer, Avecia Group PLC (Avecia), to 'B-' from 'B'. All ratings remain on CreditWatch with negative implications, where they were placed on November 27, 2003. "The ratings action follows our review of Avecia's financial situation and strategy, and reflects deterioration in the group's liquidity and overall credit quality that is largely due to the group's aggressive operating strategy and financial policy," said Standard & Poor's credit analyst Christine Hoarau. The CreditWatch placement continues to reflect Standard & Poor's ongoing concerns about the group's compliance with its bank covenants and its operating strategy. The CreditWatch placement will be resolved once Standard & Poor's has reviewed Avecia's liquidity position and strategy in the course of first-quarter 2004. Despite weak industry conditions and a very leveraged financial structure, Avecia has continued to invest heavily in its fine chemicals division during the past several years, thus showing a very aggressive operating and financial strategy. A series of asset disposals since 2001 has helped to fund these investments and relieve the financial pressure. From a business point of view, Standard & Poor's believes that these disposals and the development of the fine chemicals activities have increased the group's operating risk profile. Avecia has sold its most cash generative businesses and the group's business portfolio is currently skewed towards the most volatile and currently less profitable activities, with the electronic materials and the fine chemicals divisions representing nearly half of the group's sales (pro forma for the divestiture of its additives businesses announced on Dec. 22, 2003). In particular, Standard & Poor's believes that the business risks associated with Avecia's fine chemicals division is very high, given its dependence on a relatively small number of customers and drugs, the complexity of the manufacturing process, and the possibility of failure of clinical trials or regulatory approvals. Moreover, the industry currently suffers from significant overcapacity and the outsourcing of drug manufacturing by pharmaceuticals companies is proceeding at a slower pace than previously expected. From a financial point of view, although the proceeds from asset sales have been largely used to repay bank debt, Avecia has not been able to significantly improve its financial ratios. The group still posted a net debt to EBITDA ratio of more than 6x in the period fourth-quarter 2002 through third-quarter 2003. This ratio is expected to deteriorate in full-year 2003, as the risk that the group may breach its bank covenants suggests that EBITDA generation in fourth-quarter 2003 is likely to be weaker than expected. DRAX HOLDINGS: Fitch Lowers Senior Bonds to 'DD' ------------------------------------------------ Fitch Ratings downgraded on December 23, 2003 Drax Holdings Ltd' senior bonds to 'DD' and withdrawn the rating. At the same time the agency has also withdrawn the 'DD' rating of Inpower Ltd's senior bank debt. These actions follow the restructuring of Drax's senior debt, under which the existing rated debt is converted into four new tranches of debt issued by a new borrowing entity, effective on 22 December 2003. All the debt issues relate to the 3.96 GW coal-fired power station located near Selby in the U.K., which produces around 8% of the annual power produced in England and Wales. For further detail on the restructuring, please consult Fitch's press release dated December 18, 2003. CONTACT: Laurence Monnier, London Phone: +44 20 7417 3546 JASMIN PLC: Lenders Remain 'Supportive' Despite Sorry State ----------------------------------------------------------- The last eighteen months of trading has been a difficult period for the Company in terms of cash management, with various contracts that have overrun. While we have identified these difficult contracts and taken action, cash is tighter than previously thought. Following a review, the Directors are looking at a number of options to find a solution to the cash situation. In the meantime, our lenders remain supportive, the Directors will continue to be vigilant on costs and the Company will update the market at the next development. ***** Nottingham-based Jasmin Plc previously denied speculations that the company is experiencing cash flow crisis, reassuring investors there is no reason to be concerned about its financial footing. In July, Jasmin said a revision to the group's existing accounting policies resulted in a loss of GBP1 million for the period to March 31. In its interim results, the company reported operating loss of -GBP0.6 million on turnovers of GBP5.8 million. Loss before tax was GBP0.9 million. It also suspended dividend payment for the year. CONTACT: JASMIN PLC Roger Plant Phone: 0115 916 5165 BELL POTTINGER FINANCIAL David Rydell / Robin Tozer Phone: 0207 861 3232 LEEDS UNITED: Could Still Avoid Administration, Says New Chair -------------------------------------------------------------- The new chief of Leeds United, Trevor Birch, is optimistic that the troubled football club could avoid the January 19 deadline given by bondholders to attract a buyer or an investor to save it from administration, Sharecast news agency reported. Mr. Birch said at the annual meeting, he was "hopeful that some certainty can be brought to the picture within the next few weeks." However, if the rescue plans fail to meet the deadline, Leeds will be the first premier league club to go into administration. Mr. Birch replaced John McKenzie, who recently resigned from chairmanship to concentrate on getting "the best possible levels of funding and the most appropriate form of ownership for the football club." TCR-Europe earlier said a consortium of Chinese businessmen is understood to be in early talks with Leeds United and a bid from Allan Leighton, chairman of Royal Mail, is also on the table. Sheikh Abdulrahman al-Khalifa, a member of the Bahrain royal family, has reportedly made an offer as well. MARLON INSURANCE: High Court Sanctions Schemes of Arrangement ------------------------------------------------------------- Notice is hereby given that, by an Order dated December 15, 2003 made in the High Court of Justice in the matter of Marlon Insurance Company Limited (at all material times known as Vesta (UK) Insurance company Limited) and Aioi Insurance Company of Europe Limited (formerly known as The Chiyoda Fire and Marine Insurance Company (UK) Limited), the schemes of arrangement between Marlon Insurance Company Limited and Aioi Insurance Company of Europe limited and their respective Scheme Creditors in relation to their Trident Pool Business only (as defined in the Trident Pool Scheme) pursuant to section 425 of the Companies Act 1985 which were voted on and overwhelmingly approved by Scheme Creditors at the meetings held on December 4, 2003, were sanctioned. A copy of the Order sanctioning the Trident Pool Scheme was filed with the registrar of companies on December 16, 2003, and the Trident Pool Scheme became effective for both Scheme Companies on that date. Claim Forms will be sent to Scheme Creditors by January 27, 2004, Scheme Creditors must ensure that completed Claim Forms are returned to Omni Whittington Insurance Services Limited at the address shown below by April 20, 2004, the Bar Date under the Trident Pool Scheme. Should you have any questions regarding this Notice, please address them to Omni Whittington Insurance Street, Gloucester GL1 1NA, England, telephone 01452 428100 or if outside the United Kingdom (+44) 1452 428100, fax number 01452 428079 or if outside the United Kingdom (+44) 1452 428079. NORTHERN ELECTRIC: Sets Creditors' Meeting January 7 ---------------------------------------------------- Creditors of Northern Electric will meet in the new year to discuss the future of the retailer, which went into administration earlier this year with the loss of 402 jobs, the Evening Gazette Reported Monday, citing administrators KPMG Corporate Recovery. The meeting will be held at The Embankment, Neville Street, Leeds on January 7, 2004 at 2 P.M. Northern Electric went into administration in October, including its Irish holding company Shop Electric Group and its two subsidiaries, Northern Retail -- trading as Northern Electric -- and warranty support company B2C Support Services. The group suffered from competitive pressures and squeezed margins as the pre-Christmas seasonal upturn failed to emerge. Power company Northern Electric Plc does not own the Gateshead-based group. TRINITY INSURANCE: Creditors Given Until April 4 to File Claim -------------------------------------------------------------- Notice is hereby given that, by an Order dated December 15, 2003 made in the High Court of Justice in the matter of Trinity Insurance Company Limited (formerly known as Trident Insurance Company Limited and Trident General Insurance Company Limited), the scheme of arrangement between Trinity Insurance Company Limited and its Scheme Creditors (as defined in the Scheme) pursuant to section 425 of the Companies Act 1985 which was voted on and overwhelmingly approved by Scheme Creditors at the meetings held on December 4, 2003, was sanctioned. A copy of the Order sanctioning the Amending Scheme was filed with the registrar of companies on December 16, 2003, and the Amending Scheme became effective on that date. Claim Forms will be posted on Trinity's Web site at http://www.trinityinsurance.co.ukby January 27, 2004. Scheme Creditors should access their Claim Form via that Web site and should email their completed Claim Form to trinity@omiwhittington.co.uk by April 20, 2004, the Bar Date under the Amending Scheme. Any Scheme Creditors who require a hard copy Claim Form to be sent by post should contact Omni Whittington Insurance Services Limited, at Omni Whittington Court, Whitfield Street, Gloucester GL1 1NA, England, telephone 01452 428100 or if outside the United Kingdom (+44) 1452 428100, fax number 01452 428079 or if outside the United Kingdom (+44) 1452 428079. Scheme Creditors must ensure that completed Claim Forms are returned to Omni Whittington Insurance Services Limited at the address shown above by the Bar Date of April 20, 2004. Should you have any questions regarding this Notice, please address them to Omni Whittington Insurance Services Limited at the address shown above. ********* 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., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2004. 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 * * *