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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 22, 2000, Vol. 1, No. 11

                       Headlines

G E R M A N Y

BOO DEUTSCHLAND: Set to Follow British Parent Into Insolvency
DRESDNER BANK: Restructuring Plans Lead to 5,000 Job Losses
PHILIPP HOLZMANN: Recorded Higher Net Loss for its Crisis Year


I T A L Y

TECNOST SPA: S&P may Cut Unit Ratings with Negative Implications
TELECOM ITALIA: S&P Expresses Doubt on Group Debt


N E T H E R L A N D S

EQUANT NV: Investors Punished Company for Widening Q1 Losses


U N I T E D    K I N G D O M

III: Losses Rise to ?9.6 Million
BCCI: Liquidators Closer to Winning ?500Mln. Damages
BOO.COM: Liquidator Seeks Retailer's Sale by Next Week
GOODYEAR DUNLOP: To End Production in UK; 600 Job Losses
HYDER UTILITIES: WPD Launches a Takeover Bid for Welsh Utility
WILLIAM NASH: Hit by Paper Mill Disposal


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

BOO DEUTSCHLAND: Set to Follow British Parent Into Insolvency
-------------------------------------------------------------
HANDELSBLATT ENGLISH SUMMARY, Friday, 19 May 2000

Boo.com, the British firm that aimed to become the world's first
global e-tailer of designer clothes, has gone into receivership.

The company revealed Thursday that it had spent all but $500,000
of the $91m it had raised and had called in KPMG to act as
liquidators. The firm's German subsidiary will also have to
close.

The German subsidiary's chief executive Christoph Vilanek
expressed his astonishment that the parent had actually gone
bust.

When his phone rang at 11.30pm on Wednesday, he said, he expected
to learn "who had gone and bought us". The news that Boo had
instead gone into liquidation, was "genuinely surprising", he
stressed. Vilanek instituted insolvency proceedings for the
German unit on Thursday.

In response to speculation that sportswear giant Adidas-Salomon
was interested in buying Boo, Vilanek merely said that
discussions with numerous investors had taken place. He said it
was still not inconceivable that someone would come along and
"pick out all the wheat from the chaff".


DRESDNER BANK: Restructuring Plans Lead to 5,000 Job Losses
-----------------------------------------------------------
Financial Times  May 18, 2000

Dresdner Bank, Germany's third largest private sector bank, will
announce restructuring plans on Friday that are expected to lead
to a cut of about 5,000 jobs in its retail banking operation.

The bank wants to reduce costs in the underperforming retail
division by closing up to a third of its 1,150 branches, shedding
around 10 per cent of its 51,000 staff. The restructuring is
aimed at reducing costs to raise the return on equity from 9.8
per cent last year to 15 per cent by 2003.

The announcement will come at the annual shareholders' meeting in
Frankfurt when Bernd Fahrholz, the new chairman, will outline his
plans for the bank following the acrimonious collapse of its
merger with Deutsche Bank in April.

Mr Fahrholz succeeded Bernhard Walter at the beginning of the
month after the resignation of his predecessor and has been
wrestling with a new strategy to restore the bank's fortunes.

He is also expected to say more about the future role of Dresdner
Kleinwort Benson, the investment banking arm whose future led to
the bitter dispute that derailed the merger plans.

DrKB suffered damaging defections when morale plummeted after it
became clear Deutsche saw no place for it in the merged entity.
It has lost more than 200 staff in the last three months.

In April the investment banking operation was given greater
autonomy, including its own management board - leading to
speculation that it was a candidate for disposal. However, it has
begun recruiting again and has a string of mandates for share
offerings in Germany, particularly in new economy companies
heading for the Neuer Markt.

Mr Fahrholz will also announce first-quarter results for the bank
including the cost of retention payments for DrKB staff agreed by
the two banks before the merger collapsed. These expire in July,
but Dresdner later guaranteed bonuses at levels linked to last
year's after the collapse of the merger led to a further drop in
morale.

The merger, announced in March, would have led to the combination
of the underperforming retail banking businesses of Dresdner and
Deutsche, Germany's largest bank.

About a third of the combined 3,800 branches would have been
closed and the retail bank would have been spun off with a view
to flotation in the future.

Increasing margins is difficult in a market dominated by mutual
and co-operative savings banks which are not primarily motivated
by profit and are effectively bid-proof.

Last month Deutsche said it would resume the closure of 300
branches, part of a plan originally announced in January to
reduce the number of employees from 19,200 to 18,000 by mid-2001.

The failure of the merger plans has left Dresdner looking
vulnerable to foreign bidders. Allianz, the insurance group that
owns 21.7 per cent of Dresdner, has indicated it no longer
regards the bank as a strategic partner.


PHILIPP HOLZMANN: Recorded Higher Net Loss for its Crisis Year
--------------------------------------------------------------
HANDELSBLATT ENGLISH SUMMARY, Friday, 19 May 2000

German construction company Philipp Holzmann said Thursday it had
recorded a higher net loss than anticipated for its crisis-year
of 1999 - largely because of a delay in booking an extraordinary
item.

The final figure of DM2.63bn would represent a 9% advance on the
DM2.4bn originally forecast. The extra losses had arisen in part
from the non-inclusion of once-only income of DM130m on the sale
of the building that houses its headquarters. This income would
now be booked in the 2000 accounts.

The 150-year-old company was brought to the brink of insolvency
in November 1999 as a result of the discovery of losses on real-
estate projects. But it was rescued thanks to the intervention of
Chancellor Gerhard Schroeder, who persuaded creditors toadopt a
rescue package worth DM4.3bn.

Holzmann on Thursday said the remaining DM100m losses incurred
last year had been due to higher-than-expected costs incurred in
connection with its suspension of activities while it filed for
insolvency proceedings, and to extra provisioning for old
burdens.

Without giving further details, the Holzmann spokesman said in
key business areas, the result posted in the first quarter of
2000 had also fallen short of expectations. But he added that the
group had been able to generate first-quarter construction output
of DM3bn, some 5.3% higher than anticipated, on the back of
significantly improved revenue from foreign orders. Orders in
hand, at 14bn euros, were in line with expectations, thespokesman
added.


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

TECNOST SPA: S&P may Cut Unit Ratings with Negative Implications
----------------------------------------------------------------
NEW YORK, May 18 - Standard & Poor's today placed its triple-'B'-
plus corporate credit rating on Tecnost SpA (Tecnost), and its
triple-'B'-plus senior unsecured rating on Tecnost International
N.V. (guaranteed by Tecnost), on CreditWatch with negative
implications. Tecnost is a holding company, 72.8%-owned by
Olivetti SpA (not rated).


TELECOM ITALIA: S&P Expresses Doubt on Group Debt
-------------------------------------------------
MILAN, May 18 (Reuters) - Shares in the Telecom Italia group came
in for a rough ride on Thursday amid concerns about the falling
price of its Internet ally Seat that also sparked ratings agency
S&P to express doubts on group debt.

Shares in portal operator Seat Pagine Gialle , which is due to
merge with Telecom Italia's Tin.it Internet unit, ended down 0.63
percent to 4.285 euros, hovering close to a key level of 4.2
euros for most of the day.

If Seat falls below 4.2 euros, Telecom Italia risks having
shareholders accept its opt-out bid at that level for Seat,
designed as a safety net in its plan to merge Tin.it with Seat
but not expected to be taken up.

"With Seat share prices trading at or near these offer prices,
there is a strong probability that shares will be tendered to
Telecom Italia," S&P said, announcing it had placed debt ratings
for Tecnost, the unit through which Olivetti bought Telecom last
year, on CreditWatch with negative implications.

"The CreditWatch placement follows the continued weakness in the
share price of Seat-Pagine Gialle SpA, which increases the chance
that Telecom Italia could have to fund its acquisition of Seat
with debt," S&P said in a statement.

Telecom Italia could have to fork out as much as 16 billion euros
($14.3 billion) if its bid for Seat is fully taken up, meaning it
might have to raise its debt by tapping a 17.3 billion euro
syndicated loan that was set up in March but never expected to be
used.

Its bid runs from May 8 to 26 but at the time the deal was
announced the price was seen as so low shareholders would not
take it up. Seat has tumbled from a peak of 7.3689 in February.
On Thursday, Telecom Italia shares ended down 2.42 percent, while
parent companies Olivetti and Tecnost dropped 2.16 percent and
3.63 percent in a moderately positive market.

Olivetti and Tecnost shares were also weighed on by a delay in
clarifying terms of a planned merger between them, traders said,
while S&P said it was concerned about the credit implications of
the merger.


=====================
N E T H E R L A N D S
=====================

EQUANT NV: Investors Punished Company for Widening Q1 Losses
------------------------------------------------------------
PARIS, May 18 (Reuters) - Equant shares were hammered down 20
percent on Thursday as investors punished the communications
network company for widening losses in the first quarter and what
they saw as a lack of transparency.

Equant, which trades in Paris and New York, announced late
Wednesday, after the close of New York trading, that its first-
quarter loss widened to $24.6 million, or 12 cents a share, from
$7.1 million or four cents a share a year earlier.

The news, which followed rumours of a profit warning, unleashed a
flood of downgrades from brokerage and triggered a record trading
volume of over 10 million Equant shares in Paris as investors
baled out of the stock.

The share price plunged to a low of 50.70 euros before picking up
slightly to close at 53.50 -- still 21.32 percent down from
Wednesday and 60.9 percent below a year's high of 137 euros set
on February 11.

In New York the share price slid to $48-3/4, down 20.57 percent
from Wednesday.

Equant began trading on the Paris Bourse in July 1998 at a launch
price of 240 francs (37 euros) and was among the bourse's top
performers last year, gaining 90 percent as investors piled into
"New Economy" plays, driven by a global Internet frenzy.

"The stock's collapse is pretty big but it reflects the market's
disappointment given Equant's high valuations. I don't even think
this is an excessive reaction," one trader said.

Several major brokers immediately revised down their
recommendations on the stock and traders said they were braced
for more revisions in coming days.

Merrill Lynch cut Equant to intermediate "neutral" from
"accumulate" and Morgan Stanley Dean Witter to "outperform" from
"buy", lowering its price target to 109 euros from 135.

Dresdner Keinwort Benson cut the stock to "hold" from "add",
deploring what it called a lack of visibility and transparency.

"The bottom line is that it is not just the first quarter that is
disappointing but the trend," Dresdner analysts said.


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

III: Losses Rise to ?9.6 Million
--------------------------------
This is London   May 19, 2000

With 93.5 million page impressions at the end of March, III
claimed to be Britain's second most popular website behind
BBC.co.uk. But shares in the company, which hit 415p after its
150p February stock market debut, languished at 8112p.

Chief executive Tom s Carruthers said: 'The price is up to the
markets. We're just going to keep running the business.'
Pre-tax losses in the six months to March 31 widened to ?9.6
million from ?2.1 million at the same stage a year earlier.

The group ramped up investment in advertising and website
development, while a one-off tax and accounting charge for share
options wiped a further ?4 million off the bottom line. Turnover
improved from ?1.1 million to ?2.8 million.

New services in the pipeline include online mortgages, unit
trusts and general insurance.


BCCI: Liquidators Closer to Winning ?500Mln. Damages
----------------------------------------------------
The Times   May 19, 2000

The liquidators of BCCI have claimed they are a step closer to
winning ?500 million in damages from the Bank of England over its
alleged willful recklessness in the regulation of the scandal-
ridden banking operation, shut down in 1991.

Five Law Lords yesterday handed down opinions on a seven-year
case in which the liquidators are attempting to bring the Bank to
court over their claims that 6,000 creditors of BCCI lost money
because of the Bank's failure to regulate BCCI properly.

The Law Lords will reconvene in October to determine whether the
liquidators can reasonably argue their case at trial. The
liquidators hailed yesterday's legal opinions as a relaxation of
the level of negligence which they will have to prove against the
Bank.

Christopher Grierson, a solicitor with Lovells, legal advisers to
Deloitte & Touche, the liquidators, said: "This is good news. The
case we have to prove now has been made much easier. Previously
we had the heavy burden of proving that the Bank knew that from
its actions - or failures to act - losses to third parties would
flow. Now we are being asked to show that the Bank was reckless
in its exercise of power. Now it is enough to show that the Bank
turned a blind eye or did not care."

The Bank, however, took issue with Mr Grierson's analysis. "It is
wrong and misleading as an interpretation," said a Bank official.

He said the level of misfeasance - or wilful recklessness, a
legal definition stricter than negligence - had been
"substantially upheld" by the Lords.

He added that the liquidators still had to prove that the Bank
deliberately intended to damage the interests of BCCI's creditors
and depositors.

The Law Lords also ruled that the case could not be taken to the
European Court.

Brian Quinn, the executive director in charge of banking
supervision, and Roger Barnes, the head of the supervision unit,
in BCCI's latter years have long since left the Bank.


BOO.COM: Liquidator Seeks Retailer's Sale by Next Week
------------------------------------------------------
LONDON, May 18 (Reuters) - Liquidators appointed to collapsed
online sportswear retailer boo.com said on Thursday they aimed to
sell the business by early next week.

"It will be in days rather than weeks. We're aiming to do it by
early next week," joint provisional liquidator Nick McLoughlin of
KPMG told a news conference.

"As we speak, all the parties who are interested are being
contacted and informed that to be allowed access to the sale
process they must lodge a refundable deposit of one million
pounds ($1.48 million) by the close of business tomorrow," he
added.

The liquidators have received some 30 inquiries from potential
buyers. They hope to sell the business as a going concern either
as a whole or possibly in its two constituent parts -- comprising
separate business-to-business and business-to-consumer Websites.


GOODYEAR DUNLOP: To End Production in UK; 600 Job Losses
--------------------------------------------------------
Financial Time   May 18, 2000

Goodyear of the US and Sumitomo Rubber Industries of Japan on
Thursday took another step towards integrating their joint tyre
operations in Europe, by announcing the end of production of
Dunlop-branded tyres for cars and light trucks at Birmingham in
the UK.

The move, which will mean the loss of 600 jobs by the end of the
year, follows the forging of a global alliance between Goodyear
and Sumitomo last year.

Under the alliance, Goodyear is the majority stakeholder in
Goodyear Dunlop Tyres Europe, the joint venture company charged
with rationalising both production and marketing of the Goodyear
and Sumitomo's Dunlop brands in Europe.

The two companies are seeking cost savings of up to $360m for
their global operations in the first three years of the alliance.
Although they have joint venture companies covering the rest of
the world, most of the restructuring is taking place in Europe.
Goodyear said on Thursday that "substantial" further
restructuring has still to take place.

The Birmingham production is to be moved to other joint venture
plants in Europe, although Goodyear last night was not prepared
to identify where.

So far the only continental European plant to be hit by the
restructuring is Goodyear's Cisterna di Latina plant in southern
Italy, which closed this year.

Goodyear controls four of the six joint ventures under the
alliance, with Sumitomo the majority partner only for operations
in Japan. Last month Goodyear reported first quarter net income
of $63.6m on world sales of $3.5bn, compared with $25.5m and $3bn
respectively in the first quarter of 1999.


HYDER UTILITIES: WPD Launches a Takeover Bid for Welsh Utility
--------------------------------------------------------------
The Times   May 19, 2000

WPD, the American-owned power group, is set to launch a takeover
bid for Hyder, the troubled Welsh multi-utility.

The offer, which is likely to value Hyder at up to ?460 million,
is expected next week and will outbid an existing offer from
Nomura, the Japanese investment bank, worth ?400 million.

WPD was forced to delay its bid plans earlier this month, when
Barclays Capital withdrew its financial support. The company is
now unlikely to seek external finance, drawing funds from
Southern Company, its US parent, instead. Hyder has debts of
about ?1.9 billion.

Yesterday WPD, which already owns the Sweb electricity business
in southwest England, dropped plans to transfer Hyder's water
business into a not-for-profit division.

The proposal, designed to gain support for the takeover from
members of the Welsh Assembly, received a cool response from Ian
Byatt, the water regulator. Mr Byatt, Director-General of Water
Services, expressed concern a non-profit-making water company
would lack financial incentives to make efficiencies.

His concerns also have implications for Kelda, the owner of
Yorkshire Water, whose shares fell 38¬p to 355p, compared with a
12-month high of 779p.

Kelda wants to split its assets and operations, and analysts
believe that other water companies are looking at similar
restructuring exercises.

The water sector is poorly valued by the stock market, reflecting
investors' concern over increased regulation, and companies are
looking increasingly at debt financing rather than equity.

Hyder shares rose 4¬p to 282p yesterday, compared with a 12-month
high of 779p, valuing the business at ?434 million. Nomura's
current offer is worth 260p a share. It is not yet clear whether
Nomura is prepared to increase its bid to thwart WPD.


WILLIAM NASH: Hit by Paper Mill Disposal
----------------------------------------
Citywire  May 18, 2000

Property company William Nash saw pre-tax profits hit by the
disposal of its paper-making business.

The paper mill had been struggling for two years as a result of
the increase in the value of sterling. It also lost its major
customer in December 1998. The directors therefore took the
decision to sell the business in 1999. Chairman FR Murphy said
that he had hoped that the sale could have been achieved on
better terms, but a quick sale was the priority.

The loss on disposal of ?1.5 million pulled pre-tax profits down
from ?2.637 million in 1998 to ?356,000 for the year to 31
December 1999. Murphy said that following the resolution of the
papermaking problems 'the directors are confident in the future
of the group and therefore propose an immediate return to their
previous policy of distribution growth'. A dividend of 8.5p for
the full year was declared, up from 8p last year.

William Nash is now looking to sell its wallpaper business,
Johnsons, which was bought to prop up the paper-making business
and is now largely redundant to the group's strategy.

The group now intends to focus on property, which saw a rise in
pre-tax profits from ?2.034 million to ?2.206 million. An office
development project at Crayfields business park started in July.
This is the most ambitious project ever undertaken by the
company.

Shares were unchanged at 140p.



S U B S C R I P T I O N   I N F O R M A T I O N

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