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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

            Thursday, June 22, 2000, Vol. 1, No. 33


                        Headlines

B E L G I U M

ARINSO:  Shares Fall Further After Profit Warning


R U S S I A

VIMPELCOM:  Phone Operator Posts $11.83 Million Loss in Q1


U N I T E D   K I N G D O M

ALLDAYS: Reports Higher Losses
SAATCHI & SAATCHI: Advertising's Leading Light Dims
TRANSACSYS: B2B Operator's Shares Fall Further
YORKSHIRE WATER: Regulator Offers Dim View of Restructuring Plan


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B E L G I U M
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ARINSO:  Shares Fall Further After Profit Warning
------------------------------
REUTERS, June 20, 2000

BRUSSELS, June 20 (Reuters) - Shares of Belgian software and
consulting firm Arinso face further falls after tumbling a total
of 21.7 percent since issuing a profit warning last week,
analysts said on Tuesday.

Arinso on Tuesday closed down 5.26 percent at 27.00 euros, after
trading as low as 26.80 euros.

Arinso has lost 29 percent of its share value since going public
at an issue price of 40 euros, barely three months ago.

The share had closed at 34.50 euros on June 14 before the company
warnings of difficult market conditions in the United States.

"This is a kind of profit warning and it might continue to put
pressure on the stock for the next few months," analyst Sylvie
Van Houtte at KBC Securities said. "The confidence of the
investors has been shocked."

One analyst said the company's statement was a poor omen after
having gone public so recently.

Arinso officials were not immediately available for comment.

Bank Degroof on Tuesday cut its rating to "hold" on Arinso and
reduced its 2000 and 2001 earnings estimates, blaming U.S. market
conditions and uncertainties about growth prospects in France.

According to Degroof, North America contributed to 22 percent of
1999 sales and France accounted for 24 percent of 1999 turnover.

KBC and Petercam Securities both said they would also revise
their earnings forecast for the firm.

Arinso had forecast 2000 net turnover at 100 million euros and
pre-tax profits at 21 million euros.


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R U S S I A
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VIMPELCOM:  Phone Operator Posts $11.83 Million Loss in Q1
----------------------------------------------------------
REUTERS, June 20, 2000

Russian mobile phone operator Vimpelcom on Tuesday pinned most of
the blame for a wider first quarter loss on tax provisions and
said new high-end users would bring profit to its key Moscow
network in 2001.

Vimpelcom reported a net loss of $11.83 million in the first
quarter after a loss of $5.08 million in the same period a year
ago on net operating revenues of $62.98 million against $55.35
million.

It said in a statement the higher net loss was mostly due to a
change in provisions for income taxes, pointing to a $5.5 million
income tax expense in the first quarter due to differences
between Russian and U.S. standard accounts.

Earnings before interest, taxes, depreciation and amortisation --
EBITDA -- rose to $11.16 million from $8.25 million a year
earlier.

Vimpelcom estimated it ended the first quarter with 47 percent of
the Moscow mobile market and that by Tuesday it had 543,400
subscribers in Moscow and 30,300 in other regions.

Its American Depositary Receipts edged down to $26 1/2 at 1730
GMT from a previous close of $27 10/16 and an open of $27 3/8 in
New York.

Vimpelcom competes for first place in the crowded Russian mobile
market with Mobile TeleSystems (MTS), which is due to make a U.S.
initial public offering at the end of the month.

Vimpelcom officials said the key battle ground was GSM standard
and business users would be attracted by new services.

"A successful implementation of this strategy will yield an
increase in our share of higher revenue generating customers, an
increase in overall ARPU (average revenues per user), and as a
result return the Moscow operation to profitability in 2001,"
Chief Operations Officer Jo Lunder told a conference call.

Moscow GSM users, up 46 percent quarter on quarter, rose to
193,000 at the end of the quarter, though ARPU was off to $43
from $148 in the first quarter of 1999.

"Winning back high end individual customers and corporate
customers is a tough job, and we do not expect dramatic short-
term results in terms of revenues," Lunder added.

Operationally Vimpelcom said it was paying less to connect to
other networks, roaming fees were up and the cost of new
subscriber acquisitions had fallen to $78 in the first quarter
from around $250 a year earlier.

It had ended subsidies on handsets sold with prepaid calling
cards at retail outlets, its so-called phone-in-a-box programme,
company officials said in the conference call.

Lunder said that April and May sales had been a bit slow but that
summer sales appeared to be picking up. He saw Moscow area gross
sales for all companies increasing by 100,000 per month.
"We don't see less competition in the market," he added.


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

ALLDAYS: Reports Higher Losses
------------------------------
CITYWIRE, June 21, 2000

Alldays, the convenience store group where a new concept in
franchising went horribly wrong, has reported higher losses in
the year to 30 April.

Even stripping out exceptional losses the deficit came to ?5.5
million, up from ?3.4 million last time. Adding in exceptionals
gave a pre-tax loss of ?40.4 million, mush worse than the already
horrendous ?27.1 million loss in the previous 12 months.

The poor results came despite a 21% rise in turnover to ?257
million thanks to higher store sales and the effect of acquiring
more outlets. Like-for-like sales were up 7.1% and margins in
stores owned by the company improved to 3.1%. These gains were
more than offset by higher interest charges.

Alldays appointed regional franchisees rather than local ones
covering small areas. The concept ended in acrimony between
Alldays and its franchisees. Alldays has now bought out 27 of the
32 `regional development companies', a move that accounts for
most of the exceptional charges and the higher interest bill.

The shares opened unchanged at 32.5p. c2000


SAATCHI & SAATCHI: Advertising's Leading Light Dims
---------------------------------------------------
Saatchi & Saatchi, once the shining symbol of innovation and
style in the UK advertising industry, yesterday succumbed to a
?1.24bn all-share takeover offer from French advertising group
Publicis. The link-up will create the world's number five
advertising group.

Shareholders in the UK company will receive 1.64 new Publicis
shares for every 100 Saatchi & Saatchi shares, valuing the stock
at 500p. That marks a 51 per cent premium to the 331p closing
price on Friday, the last trading day before Saatchi & Saatchi
said it was in talks.

Investors' response ranged from muted in London to outright
disappointment in Paris. Saatchi & Saatchi stock dropped 1.5p to
419.5p, while Publicis stock closed down 12.05 per cent at 418
euros.

The discrepancy between Saatchi & Saatchi's share price and the
offer price, denominated in Publicis stock, remained even though
the merger incorporates a collar arrangement that will see
shareholders in the UK group receive more shares in the French
company should the latter's stock price fall further.

Bob Seelert, chairman of Saatchi & Saatchi, said: "There is
exceptional complementarity in our two businesses: excellent
geographic fit and ... two similar creative cultures."

Analysts blamed the market's cool reception to the deal, which
follows WPP's $5bn buyout of Young & Rubicam of the US last
month, on fears that the higher revenue growth rate of the French
company will be diluted. Those concerns were not alleviated by
company forecasts that the merger will be earnings enhancing in
its first full year of operation.

Despite the collar guarantee, analysts also expressed concern
about the share price of Publicis after the arrangement expires
in September, when the deal is expected to close. They also said
many investors had bought into Saatchi & Saatchi as a play on
industry consolidation and were content to bank profits.

Shares in the new entity, to be called Publicis Groupe, will be
listed in New York and Paris with Saatchi & Saatchi shareholders
owning 30 per cent of the enlarged group. Last night, industry
watchers tipped Aegis, the advertising buying group, and
Coordiant, which spun off Saatchi & Saatchi in late 1997, as
possible future targets in the sector's consolidation. Cordiant
stock gained 5.5p to 338.5p, while Aegis added 8p to 178p.


TRANSACSYS: B2B Operator's Shares Fall Further
----------------------------------------------
CITYWIRE, June 20, 2000

Shares in Transacsys, the business-to-business portal operator,
tumbled 10% after it reported a ?47,000 loss in the year to
March.

Citywire previously noted a number of shrewd investors selling
their stakes in the company when it transformed itself from
GiroVend Cashless Systems earlier this year. We alerted
shareholders to mass selling when the shares were at 76p. Today's
3p fall takes them to 33p.

Chairman Sir Keith Bright attempted to offer some comfort to
shareholders who bought shares in the ?16 million placing at
100p.

`We recognise that shareholders entrusted us with their funds and
we are working hard to identify new initiatives which will
fulfill their expectations of enhanced shareholder value without
undue risk in current capital market conditions,' he said.

He added: `We also believe that with our cash resources
conserved, we are in an ideal position to take advantage of
synergistic acquisition opportunities which will undoubtedly
arise over the coming months as the current liquidity constraints
bite on many other e-commerce businesses.'


YORKSHIRE WATER: Regulator Offers Dim View of Restructuring Plan
----------------------------------------------------------------
The Financial Times, June 20, 2000

UK water industry regulator Sir Ian Byatt on Tuesday expressed
serious reservations about plans to split Yorkshire Water in two
and sell its physical assets to a non-profit making mutual
company.

Kelda, which owns Yorkshire Water, initially would continue to
operate the business for the mutual which would be owned by
customers and financed entirely by debt.

More than ?1bn ($1.5bn) is expected to be returned to Kelda
shareholders from the sale of pipes, water treatment works and
other infrastructure.

Sir Ian, who retires as regulator in July, said he needed to be
reassured that a change from equity to mutual ownership would
benefit consumers.

"The equity model has been very successful in improving water
quality and, more recently, has produced lower prices for
customers. The industry has become much more efficient under
privatization. I do not want to spoil that in any way.

"We know this deal (mutualization) will benefit shareholders but
will it benefit customers?"

The regulator has asked for comments on the new structure, to by
July 17, before deciding whether to trigger an investigation by
the Competition Commission.

At least three other water companies, Pennon, Mid Kent and
Anglian are considering similar plans following big price cuts
imposed by the regulator in April.

Sir Ian questioned whether a non-profit making body would have
the same incentive to cut costs. He said it would be "disastrous"
if mutualization produced only a "cozy relationship" between two
halves of previously a single business."

The regulator said it would be better if the bulk of service
contracts were opened to competitive bidding within two to three
years of a mutual being formed. Kelda has proposed that it should
rebid for contracts within 3-5 years.

Sir Ian said it might also be necessary to unbundle water and
sewage contracts, to encourage competition. The cost of sewage
services at Yorkshire Water was ?400m over five years. This might
be too large for some potential service operators to bid for as a
single contract, said the regulator.

He added that he would not be "bounced" into making a decision,
but would leave it to his successor if more time was needed.
Kelda shares yesterday dipped 2p to 355p.



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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