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               T R O U B L E D   C O M P A N Y   R E P O R T E R     

                                  E U R O P E

                     Monday, May 15, 2000, Vol. 1, No. 6
  
                                  Headlines

* B U L G A R I A *

BULBANK: Negotiations for Privatization to Wrap-Up by June 16

* C Z E C H   R E P U B L I C *

KOVOSVIT HOLOUBKOV: Machine Tools Producer to Undergo Bankruptcy
CESKE RADIOKOMUNIKACE: Czech FinMin Aims to Privatise

* F R A N C E *

EUROTUNNEL: Never Ending Twists & Turns on Operator's Financial Confusion

* G E R M A N Y *

MORPHOSYS AG: First Qtr. Loss of DM3 Million

* H U N G A R Y *

RABA: Restructuring Cost Chops Hungarian Truck Maker Q1 Net

* I T A L Y *

CNH Global: EU Approved Sale of Asset Including Plant in Breganze Italy
FESTIVAL: P&O Acquires Cruise Operation, Assuming Festival's Liabilities
SIRTI: Cable Laying Unit Made a Net Loss of Around 1.5 Bln. Lire in Q1

* S P A I N *

HIDROELECTRICA DEL CANTABRICO: Spain Blocks ENBW Bid For Electricity Group

* U N I T E D   K I N G D O M *

ABBEY NATIONAL: Announced Restructuring After Shares Fall
BOO.COM: Executive of Troubled Retailer Leaves Company
BRITISH POLYTHENE: Profit Warning Due to Declined in the Strength of Pound
HELPHIRE: Shares Hit by Adverse House of Lords Ruling
KILN: The Group Saw Losses of �6.7 Million
NMT: Three Directors Resign After Series of Profits Warning & Dive in Sales


===============
B U L G A R I A
===============

BULBANK: Negotiations for Privatization to Wrap-Up by June 16
-------------------------------------------------------------
A consortium consisting of German insurer Allianz AG and Italy's Unicredito
Spa has received the right to exclusive negotiations with the Bulgarian
government on the privatisation of Bulbank, the country's largest commercial
bank.  The talks are to be completed by June 16, HANDELSBLATT relates.


===========================
C Z E C H   R E P U B L I C
===========================

KOVOSVIT HOLOUBKOV: Machine Tools Producer to Undergo Bankruptcy
----------------------------------------------------------------
Kovosvit Holoubkov, producer of drilling devices and machine tools, will
undergo bankruptcy as a fully functioning plant operating in the black and
should soon have a new owner, Jan Klima, one of Kovosvit's bankruptcy
administrators, in today's Mlada fronta Dnes daily (MfD).
  
"The filing of bankruptcy enabled Kovosvit to operate unburdened by
liabilities from the past, and production is now financed by the firm itself
without a need to resort to loans," he said.  

Kovosvit, ISI DAILY NEWS relates, owes over Kc180m to creditors and due to an
inability to pay off loans found itself bankrupt this January.  The new owner
should be known within a month after the creditors' committee evaluates all
bids, and the contract should be signed in July, MfD reports. Several foreign
companies, mainly German, have shown interest in the firm.  Its largest
customer, Weiler, could be one of the contenders, the paper alleges.
Kovosvit, a former subsidiary of ZPS Zlin, has over 220 staff and plans to
hire more employees soon.


CESKE RADIOKOMUNIKACE: Czech FinMin Aims to Privatise
-----------------------------------------------------
From Prague, Reuters reports that the Czech Finance Ministry said on Thursday
it would urge the government to choose a buyer for its 51 percent stake in
telecoms firm Ceske Radiokomunikace at the end of September.  Finance Ministry
spokesman Libor Vacek told Reuters that the proposal called on the buyer to
offer to buy out minority shareholders at the same price as its bid for the
government stake.
He added that price would be the main criterion for the tender. The government
is due to discuss the full privatisation of Radiokomunikace on Monday.
Danish Tele Danmark , which owns a 21 percent stake in Radiokom, has expressed
interest in the state majority stake.  Another expected bidder is Deutsche
Telekom , which holds a 49 percent stake in Radiokom's fast-growing mobile
phone unit RadioMobil, with an option to take a majority.



===========
F R A N C E
===========


EUROTUNNEL: Never Ending Twists & Turns on Operator's Financial Confusion
-------------------------------------------------------------------------
From The Times, May 12, 2000:

IT IS apt that the latest revelations surrounding Eurotunnel should appear
first in a French satirical newspaper. For Moli�re, the grand French satirist,
would be proud of the never-ending twists and turns in the tale of financial
confusion continuing to haunt the Channel Tunnel operator.

Since 1974 indignant French shareholders have hounded the company over
inaccurate financial forecasts that it made in its prospectus before an �858
million rights issue.

While British shareholders have shrugged off the inaccurate projections as a
sad memory, their French counterparts are about to intensify their pursuit of
Eurotunnel directors, past and present. The battle will enter the French
judicial system, and may lead to criminal charges.

Patrick Ponsolle, the Eurotunnel chairman, and his predecessors, Andr� B�nard
and Sir Alastair Morton, could face charges of misuse of corporate funds and
supplying false financial information.

Yet those senior figures appear to view the legal commotion almost with
amusement, despite the fact that, at best, their legal bills are about to
spiral upwards.

Sir Alastair, chairman of the Shadow Strategic Rail Authority, said: "I have
learnt that my former co-chairmen and I have been included in a very French
process of judicial examination of certain aspects of Eurotunnel's affairs in
1994, founded on complaints made some years ago. I advise everyone not to
expend too much time and energy on the news."

Two current executives, Christian-Georges Chazot and Alain Bertrand, face
similar investigations, while Graham Corbett, a former finance director, is
expected to be investigated over allegations of insider dealing. Under French
law, being placed under judicial investigation is a preliminary step that can
lead to indictment if wrongdoing is found, although the investigation can also
be dropped.

Corbett, now deputy chairman of the Competition Commission, appears
unconcerned at the latest twist. "I am not aware of any suggestion that I have
been, or am about to be, accused of having traded based on insider
information. I assert unequivocally that at all the relevant times neither I,
nor anyone connected with me, engaged in any transactions in Eurotunnel
securities."

The inquiry, which was confirmed by Eurotunnel, is linked to the publication
of the firm's 1994 prospectus - a document that is alleged to contain
unrealistic traffic and revenue projections and deceptive information on
finances.

Analysts do not believe the investigation will have any lasting effect on the
performance of the company or its shares. However, it brings back the past and
present financial difficulties of the Anglo-French group, which after 13 years
of operation remains hampered by image, communications and debt problems.
"Eurotunnel has been performing in line with expectations recently and is
being helped by a very strong freight market," said Ian Wild, of Soci�t�
G�n�rale in London. "But I don't think that adds up to saying they are on the
upswing. It's not a company that institutions own or have much interest in
owning."


=============
G E R M A N Y
=============


MORPHOSYS AG: First Qtr. Loss of DM3 Million
-------------------------------------------
Biotechnology group Morphosys AG, according to a report circulated by
HANDELSBLATT, reported its first-quarter loss at DM3m, after DM1.7m a year
earlier.  However, the group said this increase was in line with expectations.
Sales rose 83% to DM2.2m but operating expenditure increased 86% to DM5.4m. In
a poor market environment, the Morphosys share on Thursday remained unchanged
at 263.99 euros.



=============
H U N G A R Y
=============

RABA: Restructuring Cost Chops Hungarian Truck Maker Q1 Net
-----------------------------------------------------------
From Budapest, Reuters reports that Hungarian truck and axle maker Raba's net
income in the first quarter of 2000 rose at a lower pace than its sales and
operating profits, mainly due to one-off restructuring costs.

"The growth in net income was smaller than the rise in operating profits,
which can be mainly attributed to an extraordinary loss of 235 million
forints," said analyst Miklos Bonis at IE-New York Broker.  

In its consolidated, unaudited earnings report Raba said it posted an
extraordinary loss of 235 million forints ($819,100) in the January-March
period due to one-off costs related to efficiency enhancement projects
launched in 1999.

Raba's first-quarter net income rose to 847.9 million forints on net sales of
13.740 billion, compared with a 838.6 million profit on sales of 11.414
billion forints in the same period of 1999.

However, the company's operating profits rose dramatically, surging 41.5
percent to 1.33 billion forints year-on-year.

"Net sales and operating profits justified our optimistic expectations and the
results of rationalisation measures have an increasingly strong impact," said
Istvan Csardas, analyst at MKB Securities.

However, the results of the new strategy are not so strongly prevalent yet
that they would improve investors' judgement of the share, he added.
At 0924 GMT Raba traded at 2,680 forints on the Budapest Stock Exchange, down
15 forints from Wednesday's close.

In 1999 Raba was restructured into a holding company and set out a strategy
which aims to integrate the company into the global vehicle industry and aims
to ensure its stable growth based mainly on axle and auto parts production.
However, Raba's stock is not expected to benefit from these rationalisation
efforts unless the government puts out a long-awaited tender for an upgrade of
the Hungarian army's fleet, in which Raba could take an active part, Csardas
said.

"This would have a determining (positive) impact on Raba's growth prospects,"
he said.



=========
I T A L Y
=========

CNH Global: EU Approved Sale of Asset Including Plant in Breganze Italy


FESTIVAL: P&O Acquires Cruise Operation, Assuming Festival's Liabilities
------------------------------------------------------------------------
From The Independent, May 12, 2000:

P&O, the cruise, ports and logistics group, yesterday extended its reach into
the European cruise holiday market, with the acquisition of an Italian-based
business for up to �447m.

It bought Festival, which has operations in Italy, France and Germany, mostly
in shares, and P&O will take on some 300m euros of debt.

P&O's cruise business, which will be demerged in October this year, currently
makes 75 per cent of its revenues from the US and about 20 per cent from the
UK. At the end of last year, P&O bought Aida, a German cruise operator and
analysts said yesterday's deal extended P&O strong standing.

Ian Wild, an analyst at SG Securities, said: "P&O will dominate Europe now. It
will be very difficult for its American competitors to gain a strong presence
here."

Lord Sterling, P&O's chairman, said: "Cruising is only just now beginning to
take off in Europe. They're about 15 years behind America and seven to 10
years behind Britain. This is an important strategic move."

He said that the European cruise market was growing at 15 per cent, compared
with about 9 per cent in the US. The company plans to keep Festival's brand
and product separate from its German Aida business.


SIRTI: Cable Laying Unit Made a Net Loss of Around 1.5 Bln. Lire in Q1
----------------------------------------------------------------------
Sirti, the cable laying unit of Telecom Italia, announced a 1.5 billion lire
net loss for the first quarter of 2000, compared to a net profit of 8.4
billion lire in the first quarter of last year.

Sirti attributed the loss to a reduction in earnings from financial
operations, which fell to 678 million lire from nine billion lire in the first
quarter of 1999.  That was due, Reuters relates, to lower funds available for
financial operations after the distribution of a special dividend at the end
of 1999.  Sirti said its operating profit was 3.4 billion lire, down from 6.5
billion in the first quarter of last year, while total production value rose
16 percent to 220 billion lire.  It said the fall in operating profit was due
to a significant amount of work being completed but not yet signed off, for
which the earnings would appear later in the year.


===========
P O L A N D
===========



=========
S P A I N
=========


HIDROELECTRICA DEL CANTABRICO: Spain Blocks ENBW Bid For Electricity Group
--------------------------------------------------------------------------
The Financial Times reports that the Spanish government has blocked a
competing bid by Germany's Energie Baden-W�rttemberg (ENBW) for Hidroel�ctrica
del Cantbrico, the electricity group, because ENBW is part-owned by
Electricit� de France, the state-controlled utility.  The German group
formally withdrew its planned bid on Thursday -- the deadline for competing
offers - after learning that the government objected to the fact that EdF has
a 25 per stake in ENBW.
The decision caused dismay among investment bankers. They said Spain risked
being left on the sidelines of business consolidation in Europe because of the
centre-right government's refusal to allow companies to fall into foreign
government hands through state shareholdings.

"We are starting to look like fortress Spain," one senior banker said.
"Government fundamentalism over state holdings threatens to limit the growth
of Spanish companies, destroy shareholder value and undermine the open market
values that it claims to defend."

The Madrid government last week thwarted a plan by Telef�nica, the dominant
local telecommunications group, to absorb KPN of the Netherlands, because the
Dutch operator is 43.5 per cent state-owned.

Legislation introduced last year in effect barred foreign state-controlled
companies from taking over Spanish electricity utilities. The changes were
specifically directed against EdF, which Madrid accuses of preventing cheap
electricity imports to Spain by imposing high transmission fees.
ENBW's withdrawal appears to leave the field clear for a E2.7bn ($2.4bn) offer
for Hidrocantbrico launched by Uni�n Fenosa, a rival domestic power company .
The German group had been willing to pay "substantially" more than Uni�n
Fenosa's E24-a- share cash and paper offer, according to bankers.

Although it is now the sole bidder for Hidrocantbrico, the outcome of Uni�n
Fenosa's takeover attempt is far from clear. The offer is conditional on
acquiring 80 per cent of Hidrocantbrico, but its bid is opposed by TXU, the
US power group, and by Cajastur, a local savings bank. The bank and TXU
together hold at least 23 per cent of the target company.

Uni�n Fenosa is willing to reduce its purchase to a 51 per cent stake if
Hidrocantbrico's shareholders remove a key company bylaw that sets a 10 per
cent ceiling on shareholder voting rights. But at a stormy shareholder meeting
two weeks ago, TXU and Cajastur prevented Hidrocantbrico's board - most of
whose members favour Uni�n Fenosa's bid - from gaining the 75 per cent
majority required to abolish the "poison pill" voting restrictions.



===========================
U N I T E D   K I N G D O M
===========================

ABBEY NATIONAL: Announced Restructuring After Shares Fall
---------------------------------------------------------
After its shares fall by more than 40 per cent in the past year, ABBEY
NATIONAL announced a significant restructuring last week.  The bank will
divide into eight businesses, four focused on customers and four on back-
office administration.  The structure will Abbey's Internet bank into a
separate business including stockbroking and fund management, that will target
affluent individuals.

The reorganisation will not lead to any significant departures in senior
management, although Charles Villiers, Abbey National deputy chairman, will
retire next year.  He is expected to be replaced by Yasmin Jetha, IT and
infrastructure director, press reports relate.

Abbey National shares rose 34p to 819p yesterday. But they remain 42 per cent
below last year's peak of �14.35.  The low rating of Abbey National shares has
led to speculation about a takeover of the former building society.  Lloyds
TSB has also been named as a possible suitor, with both Lloyds and Barclays
known to be keen to significantly increase their share of the mortgage market.
However, Ian Harley, Abbey National's chief executive, is believed to be
against a deal.


BOO.COM: Executive of Troubled Retailer Leaves Company
------------------------------------------------------
From The Guardian, May 12, 2000:

Boo.com, the troubled online sportswear retailer, has lost the executive
widely credited with resolving its heavily publicised technology problems
seven months after he joined the company.  Rob Shepherd, the chief technology
officer who joined fromBSkyB last November, yesterday confirmed that he is
leaving to become managing director of interactive ser vices at Chello
Broadband in Amsterdam.  Mr Shepherd is the second senior Boo.com executive to
defect to Chello. A few weeks after joining from Adidas, Dean Hawkins recently
left his job as Boo's chief financial officer to take up the same position
with the Dutch company. Boo.com and Mr Shepherd insisted that the parting was
amicable and allowed him to return to his roots in digital media.
A spokeswoman for the company added that Boo.com was optimistic it would
"imminently" secure new funding from its existing shareholders, estimated to
be as much as $30m (�19m), after rumours that it is burning cash at a faster
rate than it had planned.
  
Core shareholders Europe@Web, a division of French billionaire Bernard
Arnault's LVMH luxury goods empire, and 21Investimenti, a media investment arm
of the Benetton family, are likely to have to supply most of the funds after
minority shareholders Goldman Sachs and JP Morgan declined to participate in
the latest round.  Chief executive Ernst Malmsten said in a statement: "We're
sad to see Rob go and wish him the best for the future. The technology team
are fully focused on numerous projects that will deliver exciting developments
for Boo later in the year - including version 2.0 of the site." Two new
technology experts have been hired to work with the existing vice president of
technology and operations, Mr Malmsten added.
Mr Shepherd said he had not been seeking a new job before he was approached by
Chello which made him an offer that was impossible to turn down. "This has all
been very amicable," he said. "I have a lot of time for Boo.com and the people
who work for it."  He also issued a broadside against the negative reporting
of the company by the media.

"Clearly there is a replanning exercise that the company is sensibly looking
at but some of what has been said about us has been incredibly unfair. We have
a technology platform that is recognised as very good. We're taking 5,000
orders a day. Those aren't the figures of an internet basketcase. Most online
retailers would die for them."

The Boo.com spokeswoman insisted that it was "categorically untrue" that the
company was in talks about a trade sale. Some shareholders have indicated that
they would like to see the company sold.  She said she was unable to comment
on rumours that a leading accountancy firm is valuing Boo's technology
platform in case new funds do not materialise and another company makes an
offer for it, or that Boo was considering reining in its costs by
concentrating on serving a European rather than global customer base. "I don't
know anything about that," she said.

Mr Shepherd said he is due to leave Boo today but will spend a few more days
with the firm over the next few weeks to ensure a smooth handover to his
successors. At Chello he will be responsible for defining its content strategy
and developing its broadband services.


BRITISH POLYTHENE: Profit Warning Due to Declined in the Strength of Pound
--------------------------------------------------------------------------
Citywire reports that British Polythene profits warning Operating profits will
be 'significantly down' in the first six months of this year, British
Polythene Industries chairman Cameron McLatchie warned the annual meeting
today.  The shares slumped 80p to 137.5p just before 1 pm. They are down from
a peak of over 400p less than 12 months ago.   McLatchie complained to
shareholders: 'With the current strength of sterling our competitive position
in both exports and imports continues to decline. The ever increasing costs of
energy and transport, and the growing burden of regulation, continue to bear
down on the UK manufacturing industry.'  Not only is British Polythene
affected: many of its customers have seen their trading affected by similar
pressures, he said. Foreign competitors see markets for high value added
products as particularly attractive given their 'ever more competitive pricing
in sterling'.  He said the previously announced programme of disposals and
closures was being accelerated.


HELPHIRE: Shares Hit by Adverse House of Lords Ruling
-----------------------------------------------------
Shares in Helphire, the vehicle hire and accident management group, the
Financial Times reports, fell more than 40 per cent after a technical ruling
in the House of Lords.  Helphire makes its money from renting cars on credit
to the people it believes to be the innocent victims of accidents. The cost is
claimed back directly from the insurers of the negligent drivers.

On Thursday, the House of Lords endorsed the Court of Appeal's view - taken in
April 1999 - that credit hire agreements could be exempt from the provisions
of the Consumer Credit Act 1974. A cross appeal on the mitigation of loss and
damages was also dismissed.  The shares tumbled 731/2p to close at 1151/2p -
well under half the price of a share placing last November that raised �35m.
Michael Symons, chief executive, said the insurers had used a technical
argument involving the Consumer Credit Act for not paying the company, and had
succeeded. But for some time the group had been drawing up its contracts to
comply with the Act.  

Thousands more cases are in the wings waiting for the ruling, the FT relates.


KILN: The Group Saw Losses of �6.7 Million
------------------------------------------
Lloyd's of London underwriter Kiln lost �6.7 million in 1999 due to "soft
underwriting conditions."  

David Gilchrist, executive chairman at the Lloyds insurance business, says:
"While these results are disappointing, I believe we have now contained the
adverse impact of previous years' soft underwriting conditions.  Following the
strategic review, we now have in place the right structure to expand,
capitalising on our underwriting capability and secure capital base.  We
therefore expect, subject to the vicissitudes of the investment markets, that
there will be a significant improvement in the company's position by the end
of 2000."


NMT: Three Directors Resign After Series of Profits Warning & Dive in Sales
---------------------------------------------------------------------------
The Times reports that three directors for NMT, the Scottish healthcare
company, resigned after a series of profits warnings and a dive in sales.
Garry McGrotty, commercial director, Harry Bocker, finance director and
Michael Brander, corporate director, will depart immediately.  Tony Fletcher
is to be acting chief financial officer while a new finance director is
sought.  Roy Smith, who was last month made chief executive, yesterday
announced the resignations, and plans to raise up to �20 million for
expansion.  Mr Smith is to hold talks with West LB Panmure, NMT's financial
adviser, on the possibility of a rights issue or of a third party taking a
significant stake in the company.




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
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