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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

            Wednesday, May 24, 2000, Vol. 1, No.13

                           Headlines

G E R M A N Y

ASTA MEDICA: Sale to Single Buyer Fails, Focus on Restructuring
FLOWTEX TECHNOLOGIE: Hunt for Collapsed Company's Assets


I T A L Y

TIN: Internet Deal Threatens to Undermine Telecom Italia Ratings


N E T H E R L A N D S

BAAN: Shares to New Lows Added Gloom to Loss-Making Software Firm
UPC NV: Suffered Bumps and Bruises, Bonds Get Battered


S W I T Z E R L A N D

BANQUE CANTONALE: Swiss Bail Out Debt-Ridden Geneva Cantonal Bank


U N I T E D   K I N G D O M

BASS PLC: To Sign Away 250 Yrs. Of Brewing History
BRITISH AIRWAYS: Unveils Losses of More Than ?250 Million
LAND ROVER: Uncertainty Surrounds Carmakers Deal
MILLENNIUM DOME: Conditions Set for Bailing Struggling Attraction
NET IMPERATIVE: Follows Boo on Path to Liquidation
STYLO GROUP: Sells Flagship Barratt to Pay Off Most of Its Debt
VODAFONE AIRTOUCH: EU Doubt that Orange Sale will Wipe Out Debt
WHITBREAD PLC: To Sign Away 250 Yrs. Of Brewing History


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

ASTA MEDICA: Sale to Single Buyer Fails, Focus on Restructuring
---------------------------------------------------------------
HANDELSBLATT ENGLISH SUMMARY, Tuesday, 23 May 2000

German chemicals group Degussa-H?ls AG announced Monday that it
had failed to realize plans to sell its Asta Medica
pharmaceuticals subsidiary to a single buyer. The group said it
would now focus on selling parts of Asta Medica and on
restructuring the remaining core activities.

Degussa, a subsidiary of utility Veba AG, has to make certain
divestments as part of the merger deal between its parent group
and fellow utility Viag AG. Degussa itself is to be merged with
Viag's speciality-chemicals subsidiary, SKW Trostberg.

Degussa said that it now plans to sell Asta Medica's over-the-
counter (OTC) drugs business and its Arzneimittelwerke Dresden
(AKD) pharmaceuticals plant separately. The remaining core
pharmaceuticals activities are to be restructured, made more
profitable, and sold at a later stage.

The restructuring of the remaining activities will lead to 800-
1,000 job losses - one seventh of Asta Medica's workforce. Most
of the job cuts will be in Germany, where 3,000 people are
employed. Degussa said the costs of the reduction in personnel
would be more than offset by the proceeds from the sale of its
OTC drugs business and of AKD.

Asta Medica is to focus in future on treatments for cancer and
disorders of the respiratory tract and of the central nervous
system. Its small French subsidiary Europeptides is to be floated
as a separate unit.

Analysts described the failed sale of Asta Medica as "very bad
news for Degussa". The group would now have to free management
capacity to restructure the pharmaceuticals unit, they argued.
The market on Monday appeared to share this view as the Degussa
stock closed down 4% at 32.70 euros.

Degussa has until recently expressed optimism that it would
succeed in selling Asta Medical to a single buyer. Nevertheless,
the difficulties it encountered did not come as a surprise. With
an operating return of just 7% and declining sales (which last
came in at 830m euros), Asta is considered to be one of the
weakest players in Germany's pharmaceuticals industry.

"Alongside its weak returns, Asta Medica did not have a strong
enough product pipeline to attract a competitor," Christian
Faitz, analyst at Banque Nationale de Paris, commented. Still,
Degussa is believed to have demanded a price of more than twice
the unit's sales.

It became apparent that the divestment plans were set to fail
when Germany's Altana AG pulled out of negotiations in March,
fearing a dilution in profit as a result of Asta Medica's weak
returns and the required restructuring.


FLOWTEX TECHNOLOGIE: Hunt for Collapsed Company's Assets
--------------------------------------------------------
Financial Times   May 22, 2000

Three months after the collapse of FlowTex Technologie, the
German drilling equipment maker that ran up debts of at least
DM2.3bn (E1.18bn, $1.05bn) through questionable funding schemes,
only about E300m ($268m) of creditors' money has been recovered.

In one of Germany's biggest corporate scandals, the prosecutor's
search for the assets of FlowTex's two owners has stretched as
far as Uruguay and reportedly involved the seizure of a yacht in
Miami and a luxurious chalet in St Moritz.

Creditors of the privately owned group, comprising about 80 banks
- including Dresdner Bank and Commerzbank - and around 60 leasing
companies, meet on Tuesday for a second time to discuss the
extent of the damage.

FlowTex's demise comes only a few months after the near-collapse
of Phillip Holzmann, Germany's largest construction group, which
accumulated debts of DM2.4bn on property deals.

Manfred Benkert, the auditor overseeing the FlowTex case, said
that while it was still unclear how many assets remained,
creditors stood to recover little of their money.

Assets seized so far were worth E300m at most, while the [DM2.3bn
debt] level could well be exceeded," he said.

Mr Benkert said the complex structure of the Schmider-Kleiser
holding, which owns FlowTex, had certainly "played a role" in the
alleged deception.

Prosecutors in Mannheim say Manfred Schmider and Klaus Kleiser,
FlowTex's two founder-directors, used a web of banks and leasing
firms to set up complex contracts under which they leased non-
existent drilling equipment to companies under their control.

Auditors have said they have found roughly 3,500 leasing
contracts for drilling equipment, of which only about 270
machines physically existed. Mr Schmider and Mr Kleiser were
detained in February, and are under investigation for tax evasion
and fraud.

The scandal is a blow to Dresdner Bank and Commerzbank, which
were forced to withdraw a E300m bond issue for FlowTex hours
after a preliminary seizure by prosecutors of the Ettlingen-based
group's assets.

It is understood the issue was withdrawn before investors had
paid for the bonds.

Standard & Poor's, the rating agency, had given FlowTex a triple
B minus rating beforehand, based on audits by the Berlin arm of
KPMG.

The two banks, S&P and KPMG, have said they were helpless in the
face of the perfect criminal deception by FlowTex.

Commerzbank and Dresdner Bank have fully written down their
losses, which they refused to quantify.

Some bankers, however, say the episode demonstrates a failure of
the due diligence process by which a company's financial records
are examined before it issues securities.

"A glance at the Handelsregister [the German corporate register]
would have been enough to see that the groups these machines were
being leased to belonged to the FlowTex holding or, for example,
that one key company was run by Mr Schmider's former secretary,"
said one industry observer.


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

TIN: Internet Deal Threatens to Undermine Telecom Italia Ratings
----------------------------------------------------------------
BBC NEWS:  May 20, 2000

A major acquisition by Italy's leading internet portal, Tin, is
threatening to go wrong, undermining the credit ratings of Tin's
parent company, Telecom Italia.

Telecom Italia was taken over last year in a controversial and
debt-laden deal by Olivetti.

Now its plan to acquire internet rival Seat has gone badly wrong
as a result of the collapse of internet shares across Europe.

Telecom Italia had pledged to buy up any Seat shares at 4.2
euros, but had hoped it would not have to take up the tender
offer.

But, with Seat shares plunging from their earlier price of nearly
8 euros, TI may have to pay out as much as $14bn to Seat
shareholders. -

That would force it to draw down much of the borrowing it made on
European markets this year and threaten its own credit rating.

The new company could be worth as much as $40bn, making it
Europe's largest internet firm.


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

BAAN: Shares to New Lows Added Gloom to Loss-Making Software Firm
-----------------------------------------------------------------
AMSTERDAM, May 22 (Reuters) - Shares in Baan Company plummeted to
new lows on Monday as reports of a stake sale by a major
shareholder added to the gloom surrounding the loss-making
business software firm.

Baan shares skidded as much as 18 percent to 1.16 euros on Monday
afternoon, before a modest recovery to close at 1.26 euros, a
loss of 11.3 percent. At its peak in April 1998 the share traded
at 49.33 euros.

Dutch newspaper De Volkskrant said the 1999 annual report of the
Vanenburg Groep, Baan's investment vehicle controlled by brothers
Jan and Paul Baan, showed they had cut their stake to 11 percent
from 20 percent in the course of last year.

The paper said the 20 percent stake had been valued at 880
million euros ($784 million).

No one at Vanenburg was prepared to comment. Analysts and traders
said the news was not overly significant in the light of Baan's
severe financial troubles, but was certainly negative.

"Baan is in the middle of a vicious cycle. Vanenburg has its own
investment issues and needs some cash.... But the (Baan's) deal
with Bear Stearns is also a problem. The fundamentals are poor at
Baan. It's a loss-making company," said Peter Bekius, who manages
500 million euros of large cap funds at Kempen & Co.

Baan, which once rivalled Europe's leading maker of business-
management software SAP, is wracked by worsening financial
difficulties and has had to find a number of backers to keep it
afloat. For a time, investors believed the funds would help Baan
last until profits returned.

However, at the current rate, analysts believe Baan cannot last
much more than two to three quarters. A number also believe Baan
will not break the present loss-making cycle.

Intermittent speculation links Baan with a would-be buyer, but
few credible names have surfaced. Baan does have attractive
products and customers, but many analysts believe buyers are
prepared to wait.

"A company interested in Baan would be interested in their
clients and in their people. If it goes bankrupt they could get
those anyway, and it's a lot less hassle that way... If more
parties become involved then there's a chance of a bid but that's
not very likely," said Bekius.

Vanenburg, until April 1999 known as Vanenburg Ventures and
before that as Baan Investments, was created amid investor
dissatisfaction with the complex inter-relationships of the
various Baan companies. Founder Jan Baan left Baan in July 1997
after a drop in sales and as concerns mounted over accounting
procedures. It marked the beginning of a series of problems for a
company that was once the darling of the Amsterdam bourse.

At the start of this year, Baan lost both its chief executive and
chief financial officer, while last month, the company reported
its seventh consecutive quarterly loss.


UPC NV: Suffered Bumps and Bruises, Bonds Get Battered
-------------------------------------------

New York, May 22 (Reuters) - United Pan-Europe Communications NV
(UPC) is Europe's No. 2 cable television operator but bond
investors, like their equity counterparts, have been tuning it
out lately.

Concerns about the Amsterdam-based company's rapid expansion, and
the hiccups it has faced along the way, have led investors to
beat down the company's bond prices.

UPC has suffered its share of bumps since Friday.
First, it said it would raise less money than expected from
floating the shares of its chello Internet service provider.

Then it abandoned its $2.8 billion takeover of Luxembourg TV and
radio operator SBS Broadcasting System SA.

Meanwhile, a Wall Street Journal article raised concern about the
exposure of Goldman Sachs Group Inc. to UPC through a $2 billion
bridge loan -- a short-term loan a company often pays down by
selling other securities -- as UPC's stock sank.

Finally, European bankers said a separate 4 billion euro ($3.6
billion) loan, meant to finance the SBS takeover and refinance
existing debt, likely would be scaled back, according to Reuters
unit Loan Pricing Service.

The news avalanche is significant to junk bondholders, for whom
UPC is already a familiar name.

UPC sold more than $4.1 billion of junk bonds between July 1999
and January 2000. The market value of many of these has fallen
roughly twice as fast as junk bonds in general.

The company's 11.5 percent notes maturing February 2010, sold
Jan. 14 at 99.261, were bid at 83.5 on Monday, down from 85 on
Friday and 88 on Thursday. They now yield about 15 percent.

Meanwhile, its 13.75 percent senior discount notes maturing
February 2010, sold Jan. 14 at 51.224, were bid at 42 on Monday,
down from 44 on Friday and 45 on Thursday. The yield to maturity
on those notes approaches 17 percent.

Junk yields more than investment-grade debt to compensate
investors for increased risk.

Like many high-tech companies, UPC has also seen its stock swoon,
down 74 percent from an all-time closing high of 79 hit on March
8. It closed Monday on Nasdaq at 20-1/2, up 1, after trading down
2-3/4 points at one point. Its Amsterdam-listed shares fell 12.76
percent on Monday.

Though UPC bond prices have fallen more slowly, they reflect
concern the company may be overextending itself.

Few expect junk bonds to be the answer. Market conditions don't
allow it. "With companies seeing some of their existing debt in
the mid-teens, financing paper becomes very onerous," said Thomas
Haag, who helps manage $3 billion for the Lutheran Brotherhood in
Minneapolis.

Moody's Investors Service rates UPC's senior debt B2, a medium
junk grade. Standard & Poor's rates it a roughly identical
single-B.

When the company sold $1.6 billion of junk bonds in January, UPC
promised to raise coupons by 25 basis points if it were to sell
more bonds within six months.

Though UPC may not try to tap debt capital markets soon, some
believe the company is ripe for a return engagement.

"There is probably reason to believe the company can last until
at least the fourth quarter of 2000 or first quarter of 2001
before tapping the high-yield market," said the analyst. "But I
think it's a question of when, not if, they come back."


=====================
S W I T Z E R L A N D
=====================

BANQUE CANTONALE: Swiss Bail Out Debt-Ridden Geneva Cantonal Bank
-----------------------------------------------------------------
GENEVA, May 22 (Reuters) - Geneva's cantonal parliament has
endorsed a rescue package for the debt-ridden Banque Cantonale de
Geneve to transfer $2.9 billion of its bad loans to a state-
guaranteed trust, a senior bank official said on Monday. Banque
Cantonale de Geneve's (BCG) treasury chief Neil Carnegie said the
foundation would acquire the bank's five billion Swiss franc
portfolio of bad loans linked to property which currently have an
annual return of just two percent.

In addition to these bad loans linked to property deals, the bank
has bad loans totalling 1.4 billion, linked to commercial
credits, which will be kept on the books, Carnegie said.

In another boost to the troubled bank, Carnegie said the cantonal
parliament had also given the green light for a capital increase
of up to 300 million Swiss francs from the current 530 million
francs. The capital increase would start on June 5.

"We are back on. The Geneva government is standing behind the
bank," Carnegie told Reuters.

BCG, Switzerland's oldest cantonal bank, ended up with a huge
portfolio loan portfolio incurred during the 1980s Swiss property
bubble. It reported a loss of 427 million Swiss francs last year
after heavy writedowns on its bad loans.

Under the restructuring plan agreed by the Geneva state council
and the Swiss Federal Banking Commission, the bad loan portfolio
will be liquidated by a stabilisation trust, Carnegie said.

Bank officials said the bank had extended inadequately secured
loans to as many as 1,360 properties. But they said they hoped
the assets transferred to the trust would gain in value.

Following its 1999 loss, the bank has announced that its chairman
and another senior executive would step down.

The Canton of Geneva owns 29.5 percent of the bank and the City
of Geneva 20.7 percent. The balance is held by local Geneva
communes and private shareholders.


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

BASS PLC: To Sign Away 250 Yrs. Of Brewing History
--------------------------------------------------
LONDON, May 22 (Reuters) - Two of Britain's biggest brewers,
Whitbread Plc and Bass Plc, are preparing to call time on their
UK beermaking operations as the heat builds up for consolidation
within the European beer sector.

Whitbread is set to sign away over 250 years of brewing history
to Belgian privately-owned Interbrew [ITB.CN] for 350-400 million
pounds ($520-594 million) over the next few days, while Bass is
expected to confirm a beer sale is its most likely option later
this week, industry sources say.

Both look to gain from high prices as potential predators vie for
a bigger share of Europe's beer market, and seek a boost to their
lacklustre share prices as they aim to focus on other parts of
their businesses with greater growth potential.

Whitbread, advised by Dresdner Kleinwort Benson, is edging closer
to the sale of its UK beer operations, which employ 3,900 people
at three breweries in South Wales, Manchester and Lancashire in
northwest England and its distribution centres.

Around one third of Whitbread's annual beer volume is already
accounted for by Interbrew's Stella Artois, brewed under licence,
and the two groups have moved closer since the UK brewing deal
was first agreed in 1976. Whitbread also brews Heineken in the UK
under licence and owns Boddingtons.

However, analysts point out this deal was cleared by the then
Monopolies and Mergers Commission but blocked by the Department
of Trade and Industry Minister Margaret Beckett. This time around
a deal would not involve any pubs, and the new Competition
Commission has greater independence.


BRITISH AIRWAYS: Unveils Losses of More Than ?250 Million
---------------------------------------------------------
The Times   May 23, 2000

BRITISH AIRWAYS has declined to comment on reports that it is
seeking to link with KLM, the Dutch carrier.

BA, which today unveils full-year losses estimated at ?250
million or more, is said to be mulling over a financial stake in
KLM. The Dutch airline recently terminated its alliance with
Alitalia, the Italian state airline.

KLM's chairman, Leo van Wijk, reported last week that he was
seeking a European merger and would be willing to be the minority
partner. He said BA was among "many good airlines" with which
ties could be considered. However, a KLM spokesman yesterday
denied talks with BA.

BA and KLM have common ground in their respective low-cost
subsidiaries, Go and Buzz. Both low-cost carriers are loss-
making, and a merger would bring benefits. BA and KLM are among
11 European airlines to collaborate in a new Internet travel
agency.

BA's current focus is on securing a link with an American
airline, and analysts said they would be surprised to see a tie-
up with KLM. Chris Tarry, of Commerzbank, said: "BA's main focus
must be on winning anti-trust immunity with a US carrier."

BA has tried without success to win such a link with American
Airlines. Other potential partners include USAir, in which it
formerly held a stake, and Delta Air Lines, which has a separate
agreement with Air France.

Mr Tarry expects BA to unveil a 1999 loss of ?263 million before
exceptionals, restructuring charges and currency-related
shortfalls. The deficit will be the first since privatisation in
1987. BA's results will mark the debut for Rod Eddington, who
last month succeeded Bob Ayling as BA chief executive.


LAND ROVER:  Uncertainty Surrounds Carmakers Deal
-------------------------------------------
The Times   May 23, 2000

THE FUTURE ownership of Land Rover was thrown into uncertainty
last night after it emerged that Ford wants to hold back a third
of the ?1.8 billion it had promised to pay BMW.

Ford agreed to acquire Land Rover from its German parent for
euro3 billion in March under a provisional memorandum of
understanding. After two months of negotiation, however, it is
understood that the US carmaker wants to delay paying euro1
billion or ?600 million, for, it is believed, up to five years.

Despite Ford's tough negotiating stance, a final deal to buy Land
Rover - a subsidiary of Rover whose German parent BMW has sold
the mass-produced car division to the Phoenix consortium - may
yet be reached this week and Ford could take possession as early
as June.

If the German carmaker rejects Ford's terms, the future of Land
Rover and hundreds of jobs will be thrown into uncertainty once
more.

BMW is under massive pressure to make sure the Land Rover deal
goes through after the weeks of uncertainty over Rover cars.
The German manufacturer has been wounded in the public relations
fiasco of its handling of the counter-bids for Rover cars. After
it dallied with an offer from Alchemy Partners, the venture
capitalist, it eventually sold to Phoenix, led by John Towers,
which signed a deal buying the operation for ?10.

Ford's position in the Land Rover negotiations has already been
strengthened by the slump in the value of the euro, which has
knocked $200 million from the dollar value of the original agreed
price.

Ford is understood to have set Land Rover a target of becoming
profitable by 2002.

A Ford spokeswoman refused to comment on what effect this would
have on jobs at Land Rover although all operations will be
reviewed when - and if - it takes possession.

Land Rover is said to have made losses in the past two years and
one of Ford's challenges will be to save money by sharing more
parts across different product ranges.

Ford sees Land Rover as the perfect companion for its Jaguar
brand in the United States. Jaguar has enjoyed a renaissance
under Ford's management, partly because of a boom-time demand for
luxury cars.

The Ford has called Land Rover "the Jaguar of four-wheel-drive
vehicles".

Jac Nasser, Ford's chief executive, visited the Land Rover
factory in Solihull for the first time last Friday. Mr Nasser
reportedly said that Ford will "respect" BMW's desire to remain
independent despite repeated speculation that Ford might try and
buy the German motor group outright.


MILLENNIUM DOME: Conditions Set for Bailing Struggling Attraction
-----------------------------------------------------------------
BBC News   May 23, 2000

The Millennium Commission has demanded the resignation of the
Millennium Dome's most senior executive as a condition for
bailing out the struggling attraction.

Bob Ayling has been asked to step down as chairman of the New
Millennium Experience Company as part of a "non-negotiable"
package which includes a further grant of ?29m from the National
Lottery.

The former head of British Airways is expected to offer his
resignation at a NMEC board meeting on Tuesday.

The Millennium Commission offered the cash injection on Monday
but warned there would be 'stringent conditions' attached.

It is concerned that the present management has not kept a firm
enough grip on the Dome's finances.

The attraction has already had ?509m of lottery money and almost
all the last ?60m instalment paid in January has been spent.

A spokesman for the Millennium Commission said: "The chairman is
the only person who has been required to depart, but we have also
requested a strengthening of the finance team, including a
Millennium Commission monitor being in place at NMEC."

In addition, the Dome's new business plan must place greater
emphasis on cost savings and marketing.

The commission said it had "serious reservations" about providing
the money but decided it would be "foolish to withdraw support
when the best of the year is yet to come.

"The value of the Dome as the centrepiece of the nation's
millennium celebrations should be recognised and continued," it
added.

A NMEC spokesman said he could not comment whether or not Mr
Ayling would be resigning but confirmed that a meeting to discuss
the commission's package would take place on Tuesday.

Earlier, Pierre-Yves Gerbeau, the Millennium Dome's chief
executive, welcomed the commission's "vote of confidence" but
expressed concerns that the full ?38.6m requested had not been
forthcoming.

But he insisted it was "definitely" the last time the Dome would
ask for more funds.

"I am seeking the opportunity to draw a line in the sand," he
said.

The new business plan is based on what organisers believe are
realistic estimates of the number of likely visitors, many fewer
than the 12m originally predicted.

But the cash injection could be reduced if an eventual buyer of
the site agrees to pay in advance, or even take control of the
Dome before the end of the year.

Shadow Culture Secretary Peter Ainsworth said that many people
would feel "a sense of outrage" at the extra money being spent on
the attraction.

"Lottery money was intended to be used for good causes - the Dome
no longer meets this description.

"I'm concerned that lottery money is now being used to save the
government's face," he said.

Stephen Bayley, a former creative director of the Dome who has
become one of its fiercest critics, said the attraction was
paying the price for patronising the public.

"In PR terms the thing is a disaster, it's a national disgrace,
and it's probably best to let it die quietly," he said.

Mr Ayling's departure would be the second high-profile casualty
for the Dome - in February chief executive Jennie Page was forced
to resign after a disastrous opening night and disappointing
early attendances.


NET IMPERATIVE: Follows Boo on Path to Liquidation
--------------------------------------------------
Citywire   May 22, 2000

Net Imperative, a web site for Britain's Internet and technology
community, is set to go into liquidation, its major shareholder
Durlacher said today.

Durlacher, which owns 28.5% of Net Imperative, said a board
meeting this morning resolved to commence liquidation
proceedings. The news followed weekend reports that Net
Imperative was seeking an urgent cash injection of around
?800,000.

Durlacher said its ?570,000 investment in Net Imperative
represented 1.9% of its investment portfolio at cost.

While Durlacher chairman Geoffrey Chamberlain said today that
turnover and profits hit record levels in the three months to
March, Durlacher's share price continues to plummet.

The shares were down 6p at 71p today, having peaked at 441p in
February.


STYLO GROUP: Sells Flagship Barratt to Pay Off Most of Its Debt
---------------------------------------------------------------
The Times   May 23, 2000

STYLO GROUP is to pay off almost all its debt in one stroke by
selling its flagship Barratt shoe shop in London's Oxford Street
for ?11 million and handing over the occupancy to French
Connection.

Michael Ziff, chief executive, said the site at 388/396 Oxford
Street had a book value of ?200,000 when it was bought in 1964.
The site is being bought by Coal Pension Properties and the
transaction costs are ?600,000, leaving Stylo with a ?10.2
million profit.

French Connection yesterday confirmed it is the new tenant of the
15,000 sq ft store, which is opposite Selfridges.

Stylo said last August it was putting much of its property
portfolio on the market, in an attempt to resolve its financial
crisis. In January PricewaterhouseCoopers was asked to find a
buyer for the entire company, so far, without success.


VODAFONE AIRTOUCH: EU Doubt that Orange Sale will Wipe Out Debt
---------------------------------------------------------------
The Times   May 23, 2000

VODAFONE AIRTOUCH could face conflict-of-interests objections
from the European Union if the mobile phone group cancels the
demerger of Orange and sells it to France Telecom.

Concern over the EU's response to a sale of Orange heightened
when Chris Gent, chief executive of Vodafone, said he was "quite
prepared to change course" and sell the UK mobile phone operator.

He added that he was talking to the EU about how to structure a
trade sale. Vodafone, which inherited Orange when it bought
Germany's Mannesmann, could collect up to ?25 billion for Orange.
This would wipe out Vodafone's debt.

However, Hans Snook, chief executive of Orange, is likely to
object strongly to a sale to France Telecom. The flamboyant
executive wants Orange to be re-listed on the stock market, and
has threatened to walk out if it is sold to a company with a
strategy different to his own.

Snook is likely to tell the EU that it is in Vodafone's interests
to make sure that he leaves, and to make sure that Orange is sold
to the weakest bidder. Orange is, arguably, Vodafone's most
dangerous competitor in the UK.

France Telecom was finalising yesterday a ?20 billion loan from
Banque Nationale de Paris, Citibank, Credit Suisse First Boston,
Deutsche Bank, Morgan Stanley and SG Investment Banking, in
preparation for a deal.


WHITBREAD PLC: To Sign Away 250 Yrs. Of Brewing History
-------------------------------------------------------
LONDON, May 22 (Reuters) - Two of Britain's biggest brewers,
Whitbread Plc and Bass Plc, are preparing to call time on their
UK beermaking operations as the heat builds up for consolidation
within the European beer sector.

Whitbread is set to sign away over 250 years of brewing history
to Belgian privately-owned Interbrew [ITB.CN] for 350-400 million
pounds ($520-594 million) over the next few days, while Bass is
expected to confirm a beer sale is its most likely option later
this week, industry sources say.

Both look to gain from high prices as potential predators vie for
a bigger share of Europe's beer market, and seek a boost to their
lacklustre share prices as they aim to focus on other parts of
their businesses with greater growth potential.

Whitbread, advised by Dresdner Kleinwort Benson, is edging closer
to the sale of its UK beer operations, which employ 3,900 people
at three breweries in South Wales, Manchester and Lancashire in
northwest England and its distribution centres.

Around one third of Whitbread's annual beer volume is already
accounted for by Interbrew's Stella Artois, brewed under licence,
and the two groups have moved closer since the UK brewing deal
was first agreed in 1976. Whitbread also brews Heineken in the UK
under licence and owns Boddingtons.

However, analysts point out this deal was cleared by the then
Monopolies and Mergers Commission but blocked by the Department
of Trade and Industry Minister Margaret Beckett. This time around
a deal would not involve any pubs, and the new Competition
Commission has greater independence.



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,
and Beard Group, Inc., Washington, DC.  Peter A. Chapman and
Sharon Cuarto, Editors.

Copyright 2000.  All rights reserved.  ISSN 1529-2754.

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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 $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 $25 each.  For subscription information, contact
Christopher Beard at 301/951-6400.


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