/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010321.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 Wednesday, March 21, 2001, Vol. 2, No. 56 Headlines * G E R M A N Y * DAIMLERCHRYSLER AG: Mulls Mitsubishi Merger ROESCH AG: Posts 2.08 Million Euros Loss SACHSENRING AUTOMOBILTECHNIK: Posts 16 Million Euro Loss * H U N G A R Y * MALEV AIRLINES: Gov't May Inject Ft 23 Billion Aid * N E T H E R L A N D S * KPN TELECOM: To Sell Teledynamic Stake * P O L A N D * DAEWOO-FSO: Hyundai May Take Over Daewoo * S W E D E N * LM ERICSSON: Cancels Meeting With Employees * S W I T Z E R L A N D * SAIRGROUP: New Chairman Promises to Reorganize Group * U N I T E D K I N G D O M * BRITISH TELECOM: Faces New Pressure to Oust Vallance BRITISH TELECOM: Moody's Places Rating on Review BRITISH TELECOM: Will Not Sell Assets Cheaply CAMMELL LAIRD: S&P Downgrades Shipbuilder Rating CORUS GROUP: Workers Consider Industrial Action FUTURE NETWORKS: Posts Pretax Loss of GBP59.3 Million FUTURE NETWORK: Strengthens Management Team J2C PLC: To Cease Operation in Subsidiaries JOHN LAING: Fitch Downgrades Rating to BBB-/F3 RAILTRACK GROUP: Sidelined by Stretched Finances SCOTIA HOLDINGS: Administrators to Report on Scotia Progress TILLINGBOURNE: Bus Group Cuts 140 Jobs WIGGINS GROUP: FSA Investigates 74 Million-pound Error ============= G E R M A N Y ============= DAIMLERCHRYSLER AG: Mulls Mitsubishi Merger ------------------------------------------- DaimlerChrysler, which owns 34% of Mitsubishi Motors Corp, is considering merging with the Japanese automaker, Car and Driver in its March 19 edition said. DaimlerChrysler said that the decision whether to take control of Mitsubishi will depend on the outcome of a restructuring program and the troubled Japanese company's debt situation. ROESCH AG: Posts 2.08 Million Euros Loss ---------------------------------------- Roesch AG Medizintechnik, a developer and manufacturer of a wide range of medical equipment, supplies and services, has posted a preliminary net loss of 2.08 million euros for the first six months fiscal 2001, which ends in July, Handelsblatt's Monday edition said. This compares with a forecast net loss of 3.06 million euros. SACHSENRING AUTOMOBILTECHNIK: Posts 16 Million Euro Loss -------------------------------------------------------- Car parts and specialty vehicles maker Sachsenring Automobiltechnik AG has reported a 2000 loss of 16 million euros ($14.4 million) on unspecified one-time charges, according to Bloomberg in its Monday's edition. Meanwhile in December, Sachsenring said it sold a majority stake in semiconductor unit Zentrum Mikroelektronik Dresden AG to Global ASIC GmbH for 91.9 million euros to pay for rising costs. The company's long term debt as of December 1999 was 57.29 million Euro and total liabilities were 186.82 million Euro. ============= H U N G A R Y ============= MALEV AIRLINES: Gov't May Inject Ft 23 Billion Aid -------------------------------------------------- The government may support a plan to inject Ft 23 billion ($80 million) into Malev Hungarian Airlines to reduce losses and continue the airline's restructuring, according to Budapest Business Journal on Monday. Although the issue is still being evaluated, the State Privatization and Holding Co. is leaning toward the cheapest solution to give Malev a Ft 20 billion credit guarantee plus a capital increase of Ft 3 billion. Last year, the ailing national carrier lost over Ft 10 billion despite cost cutting measures. An attempt to sell the company to a foreign airline failed when a January tender drew no bids. ===================== N E T H E R L A N D S ===================== KPN TELECOM: To Sell Teledynamic Stake -------------------------------------- KPN Telecom NV said it would sell its stake in call center systems company Teledynamics to data services group TietoEnator, according to Reuters' March 19 edition. No financial details of the transaction were released. The telecom company, which will first sell a 16% stake and later 40%, also seeks to cut its debt of about 21 billion euros by selling about 27 non-core business assets. =========== P O L A N D =========== DAEWOO-FSO: Hyundai May Take Over Daewoo ---------------------------------------- Hyundai Motor has been named as a possible savior of Daewoo Motor's ailing Polish operations, Warsaw Business Journal in its March 19 edition said. A spokeswoman for Daewoo-FSO Motor in Warsaw said she doubted that the two Korean giants, which have been in a tough battle for the Korean market, could come to an agreement in Korea. She, however, believed Hyundai's involvement would be a good solution for Daewoo's factories overseas. =========== S W E D E N =========== LM ERICSSON: Cancels Meeting With Employees ------------------------------------------- Telefon AB LM Ericsson cancelled a meeting with employees at its mobile phone plant in Linkoeping, Sweden on Monday following a warning last week that it expects to lose as much as SEK5 billion in the first quarter, according to Dow Jones on Monday. Company officials first want to present the details of a turnaround plan for its ailing handset unit. The meeting was planned to give employees further information about the plant's impending transfer of handset production to Singapore-based Flextronics International Ltd. (FLEX) on April 1. Ericsson's phone unit, responsible for about 20% of the company's revenues in 2000, has been troubled by both design and production problems. ===================== S W I T Z E R L A N D ===================== SAIRGROUP: New Chairman Promises to Reorganize Group ---------------------------------------------------- The newly-appointed executive chairman of SAirGroup, Mario Corti, said that the group will not tolerate losses at its foreign subsidiaries and pledged to simplify the group's structure, M2 Communications in its March 19 edition said. Corti will summarize his plans for SAirGroup on 2 April. =========================== U N I T E D K I N G D O M =========================== BRITISH TELECOM: Faces New Pressure to Oust Vallance ---------------------------------------------------- British Telecom will face fresh pressure this week as some big investors are demanding the swift replacement of chairman Sir Iain Vallance as the price of agreeing to a rights issue, The Scotsman in its Monday report said. They see the rights issue to raise up to 5 billion pounds as an ideal opportunity to oust Vallance, who is seen to move slow in an industry where tough decisions need to be swiftly taken. British Telecom is faced with having to reduce its 30 billion- pound debt by at least 10 billion pounds this year. The telecom firm originally planned to float Yell and 25% of its mobile phones arm BT Wireless by the end of this year. BRITISH TELECOM: Moody's Places Rating on Review ------------------------------------------------ Moody's Investors Service has on Monday placed the long-term A2 and short-term Prime-1 debt ratings of British Telecommunications Plc and its guaranteed subsidiaries on review for possible downgrade. The review was prompted by Moody's increased concerns relating to the extent to which BT might have to prolong its high financial risk. Despite the continued strong commitment of BT to reduce debt by GBP10 billion as of March 2002, the depressed equity market is, in Moody's opinion, likely to impair the ability of BT to achieve this plan. In addition, Moody's will also review the extent to which business risk might be increasing due to the exposure to the increasingly competitive German wireless market, as well as growing concerns related to the progress and costs involved in developing 3G (third generation) networks. The rating agency stated that depending on the perceived changing risk profile of BT going forward, including management's commitment to non-core assets disposal to reduce debt within the short-term, the rating downgrade could be more than one notch, though it should not exceed two. However, there could be further downward pressure on the rating to our currently perceived floor of Baa2, dependent upon any reappraisal by BT of its strategy. The A2 ratings under review for possible downgrade are as follows: British Telecommunications Plc: Euro Medium Term Note (EMTN) program, eurobonds, floating rate Euro notes, unsecured loan stock, zero coupon EMTN and issuer ratings. BT Finance BV: Issuer rating. The Prime-1 short-terms rating of BT and its guaranteed subsidiaries with short-term ratings were also placed on review for possible downgrade. BRITISH TELECOM: Will Not Sell Assets Cheaply --------------------------------------------- British Telecommunications PLC, which is under shareholder pressure to revise its 30 billion sterling debt reduction strategy, said it is prepared to sacrifice its credit rating rather than damage shareholder value by selling assets below their true worth, the Financial Times reported on Monday. Its new stand comes two months after it assured investors that it would do whatever it takes to maintain their credit rating if it failed to reduce debt this year through asset sales and an initial public offering of BT Wireless. British Telecom was reacting to speculation that it may be forced into severe measures to appease investors and credit rating agencies, the newspaper added. CAMMELL LAIRD: S&P Downgrades Shipbuilder Rating ------------------------------------------------ Credit ratings agency Standard & Poor's has downgraded the rating of shipbuilder and repairer Cammell Laird Holdings Plc to CC from CCC and its senior unsecured debt to C from CCC-minus, the Evening News in its March 19 edition reported. It added that the company's ratings would stay on review for a further downgrade. S&P explained that the ratings cut stemmed from Cammell Laird's failure to secure aid from the Government to clinch a contract with US start-up cruise liner Luxus. In January, Cammell Laird hit stormy waters in when Italian customer Costa Crociere cancelled a 51 million-pound contract to refit a liner. S&P said large contracts such as Costa and Luxus were important for the company's income and ongoing viability. CORUS GROUP: Workers Consider Industrial Action ----------------------------------------------- Main steel union ISTC said it had received requests for industrial action from Corus' jobs at plants in Wales and Llanwern, BBC News in its Monday edition said. Workers at other sites are, however, waiting to see the company's response to the union's rescue proposals before planning their next move. Last week, steel giant Corus revealed heavy losses of 1.15 billion pounds, blaming it on the strength of the pound against the euro. The company, which has been constantly under attack since revealing its major job-cutting program earlier this year, was criticized by a committee of MPs for poor management and failing to involve the government in key talks over job cuts. FUTURE NETWORKS: Posts Pretax Loss of GBP59.3 Million ----------------------------------------------------- Consumer publishing group The Future Network PLC said its pretax losses for the 12 months to December 31 were GBP59.3 million, as compared to a loss of GBP3.5 million the previous year, Dow Jones in its Monday edition said. Low levels of activity in the computer games market, uncertainty over new economy businesses, and fears of economic slowdown have created a difficult environment for its publishing activities. Over-ambitious investment plans, accounting problem in its French operations and poor newsstand sales performance in mainland Europe have also contributed to the losses. In order to restore longer-term profitability, Future has streamlined its operations by closing or selling 20 loss-making magazines in the US and UK, reducing Internet investment and cutting staff numbers by 17%. The company said it has also scaled back its activities in France and Germany, closed its Netherlands activities and editorial office in Japan. FUTURE NETWORK: Strengthens Management Team ------------------------------------------- International specialist magazine publisher Future Network Plc announced in its Monday's press release the strengthening of its board and management team. Colin Morrison, Future's Deputy Chief Executive, assumes the position of Chief Operating Officer, with direct responsibility for Future's UK and European businesses, for international licensing, and for strengthening Group operating procedures. He will continue to report to Chief Executive Greg Ingham. Non-executive Board Member Michael Penington is to become Interim Finance Director, pending recruitment of a full-time replacement for Ian Linkins who steps down in April to become Group Finance Manager. Roger Parry, a non-executive Director of Future since its flotation, becomes Deputy Chairman, and takes over PLC and governance responsibilities of the Board, freeing up Future's founder Chris Anderson to focus on group strategy as non- executive Chairman. J2C PLC: To Cease Operation in Subsidiaries ------------------------------------------- The Board of J2C announced on 1 February its decision to dispose three of the Group's subsidiaries, namely Webfreight, Granite Rock and Pulp&Paper.Net. Further to that announcement, the Board announces that having failed to find a buyer for Webfreight and Granite Rock, it has resolved to close both of the businesses, its Monday's press release said. It is expected that the closure of both businesses will be finalized by the end of April 2001. On March 16, J2C agreed to sell Pulp&Paper.Net for a nominal sum to Philip van Harn, a member of its management team. As at September 30, 2000, Webfreight, Granite Rock and Pulp&Paper.Net had net liabilities of 494,000 pounds, 396,000 pounds and 689,000 pounds respectively. As at that date, no goodwill in respect of the three businesses was carried on the consolidated Group balance sheet. In the opinion of the directors of J2C, having consulted Brown, Shipley & Co. Limited, the Company's nominated adviser, the terms of the disposal of Pulp&Paper.Net are fair and reasonable so far as shareholders in J2C are concerned. As stated on February 1, the Board of J2C has resolved to seek a major transaction for the Group with the intention of making the best use of the Company's significant cash assets. This process is ongoing and the Board will make a further announcement when appropriate. JOHN LAING: Fitch Downgrades Rating to BBB-/F3 ---------------------------------------------- International rating agency Fitch has downgraded the senior unsecured rating of John Laing plc (Laing) to BBB- from BBB and short-term rating to F3 from F2, Business Wire in its March 19 edition said. Both ratings remain on Rating Watch Negative. The rating action follows Laing's debt funded acquisition of Hyder Investments Limited in January 2001 for GBP91 million, or GBP59 million on a net basis excluding GBP32 million cash, reinforcing the group's strategy to invest in asset based businesses. The Rating Watch Negative status reflects the uncertainties that remain regarding the amount of funds raised, terms and conditions and exact timing of the sale of the Construction division. Fitch would envisage resolving the Rating Watch once greater clarity has been established and disposal of the Construction division completed. Laing is also in the process of disposing of its 50% stake in WL Homes in the US, with net assets of c. GBP60 million, which it hopes to complete in Q201. RAILTRACK GROUP: Sidelined by Stretched Finances ------------------------------------------------ Chairman Sir Alastair Morton of the Strategic Rail Authority doesn't think Railtrack's finances can take any new investment in upgrades because its finances are stretched enough on just maintaining the current assets, according to The Sunday Times. The last important investment of Railtrack in a track upgrade will be the 4.5 billion-pound West Coast Main Line project. After its completion in 2003, all track upgrades will be funded and managed by the SRA's new Special Purpose Vehicles. SCOTIA HOLDINGS: Administrators to Report on Scotia Progress ------------------------------------------------------------ Administrators for Scotia Holdings Plc plans to inform creditors later this week on progress made to solve a funding crisis at the biotech company, Reuters in its March 19 report said. According to administrator Tom Burton, the aim is still to find someone to refinance the business or get a top dollar for its assets. The progress report would precede a meeting of the biotech firm's creditors in early April. The shares of Scotia, which sought protection from its creditors in January and appointed accountancy firm Ernst & Young to run the business, were suspended from trade on the London Stock Exchange after their price collapsed on news that European authorities would follow the United States in denying approval to Foscan, a treatment for head and neck cancer. TILLINGBOURNE: Bus Group Cuts 140 Jobs -------------------------------------- After more than 75 years in operation, bus group Tillingbourne will cease trading, making most of its 140 staff redundant, Press Association in its Monday report said. Nick Hood and Paul Davis of corporate recovery specialists Begbies Traynor have been appointed as the firm's receivers. WIGGINS GROUP: FSA Investigates 74 Million-pound Error ------------------------------------------------------ The FSA probe has increased the number of its ongoing inquiries at Wiggins Group, the Financial Times reported on Monday. The new investigation is related to Wiggins' incurred losses for each of the last six accounting periods instead of profits. Initially, the company declared profits of 48.9 million pounds for the six-year period, but revised this to a loss of 25.2 million pounds, a net change of 74.1 million pounds. Last week, Accountancy Age reported CIMA was investigating the performance of member Geoff Lansbury, the FD at Wiggins, while company auditors HLB Kidsons may face disciplinary action from the ICAEW, which is studying the FRRP's findings. 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 USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Salve M. Mordeno and Cristina Pernites, Editors. Copyright 2001. 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 $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. * * * End of Transmission * * *