/raid1/www/Hosts/bankrupt/TCREUR_Public/010326.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

             Monday, March 26, 2001, Vol. 2, No. 59


                            Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: In Software Distribution Deal With MediaGold

* C Y P R U S *

BANK OF CYPRUS: Ratings on Watch for a Possible Downgrade

* F R A N C E *

FRANCE TELECOM: To Reduce Debt Load by 2004

* G E R M A N Y *

DEUTSCHE TELEKOM: Chief Sommer Says He Isn't Quitting
DEUTSCHE TELEKOM: Moody's Places Rating for Possible Downgrade
SUNBURST MERCHANDISING: Posts Annual Accounts for 2000

* I R E L A N D *

3COM CORPORATION: To Axe Jobs in May

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

ZURICH FINANCIAL: CEO To Keep Dual Role
ZURICH FINANCIAL: May Sell Non-Life Operations
ZURICH FINANCIAL: Shares Tumble On Profit Drop

* U N I T E D   K I N G D O M *

ASHLEY WITTER: Court Winds Up Wine Dealer
BCCI: Liquidators Sues Bank of England for Up to 1 Billion Pounds
BRITISH TELECOM: Bosses Under Pressure As BT Slides Anew
BRITISH TELECOM: Ends Fiscal Year With Mounting Debt
BRITISH TELECOM: Seeks to Refinance 16.5 Billion Loan
CORUS GROUP: Faces Possible Welsh Strike
HUNTINGDON LIFE: Widens Loss in 2000
INVENSYS PLC: To Cut 5,000 Jobs
TELEWEST COMMUNICATIONS: Loss Causes Fall in Shares


=============
B E L G I U M
=============


LERNOUT & HAUSPIE: In Software Distribution Deal With MediaGold
---------------------------------------------------------------

Lernout & Hauspie Speech Products NV, a world leader in speech
and language technology, products and services, in its March 22
company release announced a republishing agreement for the EMEA
region with MediaGold, a premier, European business development
company for IT, software and e-commerce publishers.

Under the terms of the agreement, MediaGold has the right to
localize, manufacture, package, market and distribute current and
future versions of L&HT and Dragon Systems® voice recognition and
translation packaged software for retail markets in Europe, the
Middle East and Africa. MediaGold's activities will include
marketing, sales, production, public relations and first-line
technical support.

The new agreement strengthens L&H's longstanding relationship
with MediaGold, which has been representing L&H and Dragon
Systems' products in France and Germany since 1998. The
republishing agreement maintains broad-line channel distribution
of the following L&H products (available in UK English, French,
German, Dutch, Spanish and Italian) in the EMEA region:

L&H Voice XpressT Standard
L&H Voice XpressT Professional
L&HT VoiceCommandsT
L&HT SimplyTranslatingT
L&HT PowerTranslator® Pro
L&HT WebTranslatorT
L&HT Talking MaxT
Dragon Naturally Speaking® Essentials
Dragon Naturally Speaking® Standard
Dragon Naturally Speaking® Preferred
Dragon Naturally Speaking® Mobile


===========
C Y P R U S
===========


BANK OF CYPRUS: Ratings on Watch for a Possible Downgrade
---------------------------------------------------------

Moody's Investors Service announced on March 20 that it is
confirming the negative outlook on the long-term deposit ratings
of Cypriot banks. Moody's also announced that it is placing the
financial strength rating (FSR) of each bank on watch for a
possible downgrade.

With regard to the deposit ratings, Moody's stated that it is
concerned with the Cypriot authority's continued ability to
support the rapidly growing foreign operations of the Cypriot
banks on a timely basis as these continue to increase in size
relative to the banks' domestic operations. Pertaining to the
FSR's, Moody's cited increasingly volatile earnings, recent rapid
loan growth by some banks and a deteriorating operating
environment as items that may compound already weak asset quality
problems and diminish each banks' intrinsic financial strength.
The impact of these items on the banks' financial health and
their ability to monitor and control additional risks will be the
focus of the review.

The following ratings are affected by this action:

Bank of Cyprus Ltd:
A2 long-term deposit ratings: confirmed with a negative outlook;
C financial strength rating: placed on watch for a possible
downgrade.

Cyprus Popular Bank (Laiki Bank):
A2 long-term deposit ratings: confirmed with a negative outlook;
C financial strength rating: placed on watch for a possible
downgrade.

Hellenic Bank Limited:
A2 long-term deposit ratings: confirmed with a negative outlook;
D+ financial strength rating: placed on watch for a possible
downgrade.


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


FRANCE TELECOM: To Reduce Debt Load by 2004
-------------------------------------------

France Telecom SA has remained committed to cut its 61 billion
euro debt load by 2004 partly through a series of asset sales,
Dow Jones in its March 22 edition said.

Since February, France Telecom has successfully issued $16.4
billion in bonds as part of its financial restructuring.
According to Chief Financial Officer Jean-Louis Vinciguerra, the
bond issue has eased pressure on France Telecom to sell its non-
strategic assets.

With the disposal of non-core assets, Vinciguerra said France
Telecom could raise between 15 billion to 20 billion euro. The
company could also raise up to 10 billion euro through the
listing of its own shares it is buying back from Vodafone PLC
(VOD), or 4 billion euro by selling its 11% stake in
semiconductor maker STMicroelectronics NV.

At the end of 2000, France Telecom had a debt of 61 billion euro,
or 5.6 times the group's earnings before interest, tax,
depreciation and amortization (EBITDA).


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


DEUTSCHE TELEKOM: Chief Sommer Says He Isn't Quitting
-----------------------------------------------------

Deutsche Telekom AG Chief Executive Ron Sommer denied speculation
that he will leave Europe's biggest telecommunications group, The
Wall Street Journal in its March 22 edition reported.

According to Sommer, the company has to improve its performance
and is in the middle of massive restructuring.

"I hate the present stock market situation, but I'm not going to
waste my time complaining about this. I'm going to continue to
work hard with my team to continue to be a growth company, to
continue to become more productive, to continue to deliver what
we promised. It's all I can do," Sommer added.


DEUTSCHE TELEKOM: Moody's Places Rating for Possible Downgrade
--------------------------------------------------------------

Moody's Investors Service has on March 20 placed the A2 long-term
and Prime-1 short-term debt ratings of Deutsche Telekom AG and
its guaranteed subsidiary Deutsche Telekom Finance B.V. on review
for possible downgrade. The rating action reflects Moody's
increased concern regarding the ability of DT's management to
execute in a timely fashion its committed asset disposal plan,
given the value erosion in the equity markets.

The ratings agency will also review the extent to which business
risk might be increasing due to the ever more competitive German
wireless market, as well as growing concerns related to the
progress and costs involved in developing 3G (third generation
wireless) networks.

Although the German operator's management has achieved
substantial asset disposals of approximately EUR10 billion over
the past year - including partial sale of certain cable TV
assets, equity stakes in Global One and in WIND, as well as the
IPO of T-Online - some of the more challenging cash-raising
disposals are still to come later in 2001. These include the IPO
of T-Mobil International amongst other assets.

On the positive side, Moody's review process will balance these
risks with the fact that DT will retain its position as Germany's
main provider of basic telephony, while the operator will
continue to benefit from its strong domestic franchise despite of
competitive market conditions. Moody's expects management to
successfully execute its corporate strategy focusing on consumer
Internet, mobile, access and data Internet. Depending on the
perceived changing risk profile of DT going forward, the rating
downgrade could be more than one notch, though it should not
exceed two.

The A2 ratings on review are:
Deutsche Telekom AG's EUR2 billion bonds and EUR3 billion MTN
(Medium Term Note) program and drawdowns under the program.
Deutsche Telekom International Finance B.V.'s EUR2 billion bonds
and EUR3 billion MTN program and drawdowns under the program.
The Prime-1 short-term rating was also placed on review for
possible downgrade.


SUNBURST MERCHANDISING: Posts Annual Accounts for 2000
------------------------------------------------------
FRANKFURT STOCK EXCHANGE, March 21

According to the most recent figures the total turnover of
Sunburst Merchandising AG, Osnabrück in the year 2000 amounted to
67 Mio. EURO while in 1999 it came to 13,6 Mio. EURO. This is an
increase of close to 400%.

In 2000, the EBITDA was -6,1 Mio. EURO after 1,0 Mio. EURO in
1999. The EBIT in 2000 came to -9,8 Mio. EURO while in 1999 it
was 0,4 Mio. EURO. The pretax turnover for 2000 will amount to -
12,2 Mio. EURO while it was 0,3 Mio. EURO in 1999.

These are the chief reasons for the significant deviation of the
predicted from the actual figures for 2000:

The operative business in the last year turned out worse than
expected. One of the reasons for this is the fact that the cinema
shops turned out to work at a dramatic loss.

After an in-depth examination of the values, both the range of
goods and the claims were reduced. Moreover, the e-business
company gotmerch.com of which Sunburst holds shares was devalued.

Last year's expansion of the controlling did not keep pace with
the huge growth due to acquisitions. Therefore, the excessive
expenditure only surfaced when the annual accounts for 2000 were
calculated.

Yesterday the supervisory board of Sunburst Merchandising AG
decided that with effect from now Ralf Schwung would take the
position of the CFO. He will replace the former CFO Oliver Butke
two months prior to scheduled time.

Benjamin Gawlik, the CEO since the beginning of February, and the
new CFO Ralf Schwung started the following measures:

In the future, Sunburst AG will act exclusively as a holding and
will assuming the approval by the general meeting--relocate its
headquarter to Munich. The operative business will be taken over
by the subsidiary Sunburst Event.

The main office in Osnabrück will be closed by the summer. Some
of the employees in Osnabrück will be taken over by the Munich
office. Arrangements have been made with the other employees.

The new CFO Ralf Schwung is in the process of remodeling the
controlling as well as the yield management. He intends to
optimize the storage and to enhance the financial plan for the
holding and its subsidiaries.


=============
I R E L A N D
=============


3COM CORPORATION: To Axe Jobs in May
------------------------------------

After dismissing 25 people at its Blanchardstown plant,
networking equipment maker 3Com would make further job cuts
before the end of May, the Irish Times in its March 22 edition
reported.

A spokesman for 3Com in the Republic said it did not expect to
make further cuts at its Irish operations.

The firm, which reported a wider loss and lower fourth-quarter
revenues compared with the third period, said it forecasts a
fourth-quarter pro-forma operating loss of up to $235 million.

In line with 3Com's cost-cutting effort, it has already cut 1,200
jobs worldwide, leaving a total head count of about 8,400.


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


ZURICH FINANCIAL: CEO To Keep Dual Role
---------------------------------------

Zurich Financial Services has no plans to assign the posts of
chief executive and chairman of the board to more than one
person, Dow Jones reported on Thursday, citing Rolf Hueppi, who
currently holds both jobs.

Hueppi has been receiving criticisms about his dual role that he
is overly dominating the group's strategy decisions.

"The board of directors came to this decision in 1995 and it
hasn't changed its opinion since," Hueppi added.


ZURICH FINANCIAL: May Sell Non-Life Operations
----------------------------------------------

Zurich Financial Services AG is likely to dispose its
underperforming, non-core property and casualty insurance
operations in the U.S. and Asia, The Wall Street Journal in its
March 22 edition said.

The Swiss insurance giant has not yet identified all possible
divestments but specified it would shed the reinsurance business
handled by Zurich Re via a spin-off. Proceeds from the planned
spin-off and the other divestments will result in gains of up to
$4 billion. Chief Executive Rolf Hueppi wouldn't give details on
when the spin-off might take place.

For the year ending December 31, Zurich Financial reported a net
profit of $2.1 billion, down 5.5% from a year earlier. With the
drop in its shares, the company expects that its earnings will
fall further this year as investors expressed have their
displeasure at the subpar earnings and the divestment plans.


ZURICH FINANCIAL: Shares Tumble On Profit Drop
----------------------------------------------

Shares of Zurich Financial Services AG fell 139 francs, or
20.20%, to 549 francs after the group reported that its full-year
profit fell to $2.1 billion from $2.22 billion in 1999 and
announced plans to sell some underperforming assets, The Wall
Street Journal in its March 22 edition reported.

The company also warned its net income would further slide to
between $1.8 billion and $2 billion this year.

Chief Executive Rolf Hueppi, however, declined to identify the
noncore and underperforming nonstrategic assets the company will
divest. He added that there would not be any changes in
management despite the decline in earnings and value of the
group's share price.


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


ASHLEY WITTER: Court Winds Up Wine Dealer
-----------------------------------------

On March 21, 2001, the Department of Trade and Industry said in
its press release that the High Court has wound-up Ashley Witter
Limited on a petition presented to the Court by the Secretary of
State for Trade and Industry in the public interest. The petition
followed an investigation under section 447 of the Companies Act
1985.

Ashley Witter sold exclusive wines held in a bonded warehouse for
investment purposes. Purchasers were led to believe that their
wine would appreciate in value but as the price charged was
considerably in excess of the market value the investors were
unlikely to receive the returns suggested by the company.


BCCI: Liquidators Sues Bank of England for Up to 1 Billion Pounds
-----------------------------------------------------------------

Liquidators for collapsed Bank of Credit and Commerce
International have been granted the right to sue the Bank of
England for up to 1 billion pound in damages, according to The
Times' Friday edition.

Nearly a decade after BCCI was closed, the House of Lords has
ruled that the liquidators Deloitte & Touche can take their case
to trial. Deloittes will sue for 550 million pounds plus interest
accrued over the past ten years of about 500 million pounds.

The receiver claims that officials of Bank of England were
negligent and failed to prevent the collapse of BCCI under 9
billion pounds of debt in 1991.

"The Bank notes the decision was based on a narrow majority
and regrets that it will now be necessary to incur the time
and expense of a trial," the Bank of England said.


BRITISH TELECOM: Bosses Under Pressure As BT Slides Anew
--------------------------------------------------------

Pressure is mounting on bosses of British Telecom, Sir Iain
Vallance and Sir Peter Bonfield, as its shares slide to another
5% low on Thursday, BBC News reported.

During the past three weeks alone, the share price has fallen
more than 20% from 588p to 469p, and more than 66% over the past
year. The problem lies with BT's 30 billion-pound debt mountain
and shareholders want to know what BT intends to do to reduce it.

Earlier this week, British Telecom cancelled a shareholder
meeting and has remained quiet since then.


BRITISH TELECOM: Ends Fiscal Year With Mounting Debt
----------------------------------------------------

British Telecom looks set to end its March financial year with
debt exceeding its entire stock market capitalization after its
shares fell 25p or 5% to a three-year low of 469p on Thursday,
according to The Times' March 23 report.

The slump left BT with a market value of 30.8 billion pounds.
This has caused pressure to grow for clarification of the debt-
reduction strategy.


BRITISH TELECOM: Seeks to Refinance 16.5 Billion Loan
-----------------------------------------------------

British Telecommunications PLC said on Thursday it was
negotiating with banks about refinancing a 16.5 billion-pound
credit line as part of its effort to manage a mountain of debt,
the International Herald Tribune in its March 23 edition
reported.

BT, which is looking at ways to ease its 30 billion-pound debt
load, have plunged more than 100 pence since the beginning of
March.


CORUS GROUP: Faces Possible Welsh Strike
----------------------------------------

Steelmaker Corus on Thursday faces the possibility of a strike by
its Welsh workforce, Reuters reported.

Earlier Britain's ISTC steel union said workers at the Llanwern
plant in Wales had asked for a ballot on industrial action in
protest at the planned cuts. Corus said in February it planned to
cut 1,440 jobs out of a total workforce of 2,500 at Llanwern.

Corus said it would study any proposals from the union at their
meeting this week.


HUNTINGDON LIFE: Widens Loss in 2000
------------------------------------

Huntingdon Life Sciences (HLS), the drug-testing company that
nearly closed after violent protests from animal rights
activists, has reported a net loss after tax and interest of 10.9
million pounds for 2000, compared with a loss of 6.6 million
pounds the previous year, BBC News' March 22 edition said.

According to executive chairman Andrew Baker, the animal rights
campaign had a negative impact on orders and study starts during
the fourth quarter and the early part of 2001.

HLS' exceptional losses totaled to 2.3 million pounds, which
includes costs incurred in refinancing the company's bank debt of
1.2 million pounds.

In January, the company finally managed to refinance its debt,
providing enough working capital for another year.


INVENSYS PLC: To Cut 5,000 Jobs
-------------------------------

Invensys PLC said on Thursday it would cut about 6% of its staff,
or more than 5,000 jobs, by March 31 as part of its cost-
reduction and restructuring program, the Wall Street Journal
reported.

The electronics and engineering group said market conditions have
worsened because of the deteriorating economic environment in the
U.S. Reductions in working capital were difficult to achieve,
while cash severance costs have risen, hurting the cash flow.

At the end of 2000, Invensys' current liabilities were 4.43
billion pounds while total current assets were only 3.68 billion
pounds.


TELEWEST COMMUNICATIONS: Loss Causes Fall in Shares
---------------------------------------------------

Shares in cable operator Telewest Communications Plc on Thursday
dropped 13¾p or 12% to 104½p after the group revealed a full-year
loss of 701 million pounds, The Times in its Friday's edition
said.

Earnings before interest, tax, depreciation and amortization
(EBITDA) rose 11% to 247 million pounds, keeping the company on
target for break-even in 2004 or 2005. However, losses before tax
soared from 530 to 701 million pounds.




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 * * *