/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010327.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 Tuesday, March 27, 2001, Vol. 2, No. 60 Headlines * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Needs Fresh Capital HERZOG TELECOM: Seeks Partners As Sales Tumble * I T A L Y * ALITALIA-LINEE: Staff Sues Alitalia Over Share Promise * N E T H E R L A N D S * KPN TELECOM: KPNQwest Expects Shareholder to Keep Stake * S W E D E N * BOLIDEN LIMITED: Industrialist Submits Restructuring Proposal * U N I T E D K I N G D O M * BREATHE.COM: Retail Group to Close ISP BRITISH TELECOM: Expects CEO Bonfield to Step Down BRITISH TELECOM: May Sell Esat to Cut Debt BRITISH TELECOM: Shortlists Bidders for BT Property CIRO CITTERIO: Administrators Close 40 Shops CORUS GROUP: Union Resolves Plans to Save Steel Jobs ICELAND GROUP: Sells Stores to Reduce Debt INTERACTIVE INVESTOR: Personal Finance Company Seeks Buyer MILLENNIUM DOME: Director Kane Refuses Bonus MOTOROLA: Cuts Jobs Anew RAILTRACK GROUP: Railtrack to Ink 1.5 Billion Pound Subsidy SCOOT.COM: Shares Strike to Five-year Low ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Needs Fresh Capital -------------------------------------------- Bankgesellschaft Berlin AG is in need of a capital injection for DM2 to 3 billion, Handelsblatt reported yesterday, citing Peter Strieder, who leads the Social Democrats (SPD) in the state parliament. Bankgesellschaft Berlin is 56.5% owned by Berlin city state, which will therefore have to pick up the tab for most of the capital injection. This will put paid to Berlin's hopes of restoring its budget to health after years of effort. According to reports, politicians and Bankgesellschaft representatives have discussed the possibility of revamping the bank's real-estate operations, which are currently subject to a probe by banking regulator BAKred. The bank has been unable to complete its 2000 financial accounts, but it is clear that it will post a loss for 2000. HERZOG TELECOM: Seeks Partners As Sales Tumble ---------------------------------------------- Herzog Telecom will shut outlets, fire staff and get new investors on board in its bid to return to profit, the Financial Times reported on Thursday. The company said it is suffering because many customers are taking out pre-paid packages rather than signing up for the two- year contracts that are the main sales generator at Herzog. The absence of sales has led to payment delays. The mobile phone services provider is currently in talks with two potential investors about taking a stake in the company and buying interesting sites, the Times added. ========= I T A L Y ========= ALITALIA-LINEE: Staff Sues Alitalia Over Share Promise ------------------------------------------------------ Its own employees in the United Kingdom, including pilots and air hostesses, are suing Italy's national airline Alitalia after failing to hand out promised shares in the company totaling 10,000 pounds for each worker, the Independent News reported on Sunday. The 200 past and present UK staff claimed that Alitalia has taken them for a ride and were all asked to make sacrifices to save the company from bankruptcy in the early 1990s. The airline promised them shares in return for their extra hard work, but when the time came to distribute the shares, Italian- based staff were the only ones to benefit. Of the 14,000 people employed by Alitalia only the 12,000 who work in Italy have received their entitlement. Two thousand members of staff in other parts of the world have been neglected. Disgruntled Alitalia employees in Germany, Belgium, Spain and France are also putting cases together. ===================== N E T H E R L A N D S ===================== KPN TELECOM: KPNQwest Expects Shareholder to Keep Stake ------------------------------------------------------- Data communications company KPNQwest expects shareholder KPN Telecom to keep its 44% stake, rather than sell it as part of plans to cut debt of about 21 billion euros ($18.8 billion), according to Reuters' March 23 report. Some analysts have suggested KPN could merge its data infrastructure and services with those of KPNQwest, KPN's joint venture with U.S. carrier Qwest, as a way to cut its debt. =========== S W E D E N =========== BOLIDEN LIMITED: Industrialist Submits Restructuring Proposal ------------------------------------------------------------- Industrialist Carl Bennet is submitting a rescue plan for mining group Boliden Limited to Sweden's Industry Minister Bjorn Rosengren, according to Dagens Industri in its March 23 edition. Bennet's proposal involves the Swedish government taking a 30% stake in Boliden by way of a 1.5 billion Swedish krona placing of new Boliden stock. Bank lending should be capitalized, halving Boliden's net debts to 3.5 billion Swedish krona, while Boliden's shareholders' equity would rise from 3 billion to 6.5 billion Swedish krona. Boliden explores for, processes and markets metals and mineral products, including zinc, copper and gold, and fabricates and markets copper tubing and brass products. =========================== U N I T E D K I N G D O M =========================== BREATHE.COM: Retail Group to Close ISP -------------------------------------- Retail group Great Universal Stores Plc is preparing to close the Internet service provider of breathe.com, just three months after buying it, Reuters reported on Sunday. Breathe, which came financially unstuck at the end of 2000 along with many rival dot-coms, had once hoped to achieve a 100 million-pound floatation. BRITISH TELECOM: Expects CEO Bonfield to Step Down -------------------------------------------------- Chief executive Peter Bonfield of British Telecommunications Plc is expected to quit when a debt-reduction program goes before shareholders next month, according to Reuters on Sunday. A BT spokesman declined to comment, referring to the newspaper reports as market speculation. The board has decided to spare chairman Sir Iain Vallance for the time being so as to provide continuity for the group. However, Sir Iain is unlikely to stay on until his scheduled retirement date in July next year, the Independent News reported yesterday. BT said on Friday it would raise around two billion pounds ($2.9 billion) by selling telephone exchanges as the group struggles to reduce a 30 billion-pound debt mountain in order to retain its credit rating. BRITISH TELECOM: May Sell Esat to Cut Debt ------------------------------------------ British Telecom may agree to a management buyout at Esat Digifone to raise part of the 10 billion sterling pound needed to cut its massive debt, the Sunday Business Post reported. Esat Digifone chief executive Barry Maloney refused to comment on the buyout. BT has come under severe criticism due to its failure to tackle its 30 billion sterling pound debt mountain, including a forced resignation of chief executive Sir Peter Bonfield and company chairman Sir Iain Vallance. BT, which has been in talks with its bankers, has cancelled a meeting last week with leading investors. The telco giant now seems willing to sell all of its assets outside Europe and Japan. Esat Digifone indicated losses of 27.49 million pounds in 1999 against 21.7 million pounds in the previous year. BRITISH TELECOM: Shortlists Bidders for BT Property --------------------------------------------------- Heavily indebted British Telecom has shortlisted Land Securities Trillium and Mapeley, a company backed by George Soros, to bid for the sale of its UK property portfolio, according to The Times' Saturday report. BT has acted quickly to sell its estate of 7,500 properties, as investors have become increasingly concerned about its mounting 30 billion-pound debt. The property sale, which would contribute 2 billion pounds in cash to reduce 10 billion pounds of its debt, comes with strings attached, as BT will have to lease back a substantial part of the estate for the next 30 years. Land Securities Trillium provides property services to the Department of Social Security and has been selected as preferred bidder in a 500 million-pound property partnership with the BBC. Mapeley struck the private sector's first property outsourcing deal last year with Abbey National and will also provide property services to the Inland Revenue and Customs and Excise from April. CIRO CITTERIO: Administrators Close 40 Shops --------------------------------------------- Joint administrator Gurpal Johal of the corporate recovery experts Kroll Buchler Phillips may close 42 of the 160 shops in the crashed Ciro Citterio menswear chain, resulting in the loss of 260 jobs, Birmingham Post in its March 22 report said. The future of 27 unprofitable outlets was placed under review on March 13. A further 15 were added to the list, bringing the total to 42. Ciro Citterio, which is believed to have debts of about 30 million pounds, applied to the High Court in London for administration three days before it was due to have paid 7 million pounds to one of its founders. "The restructuring of the company is going ahead and we are receiving calls from a wide range of potential buyers," Johal said. CORUS GROUP: Union Resolves Plans to Save Steel Jobs ---------------------------------------------------- Union leaders are finalizing plans to save 6,000 jobs ahead of two crucial meetings with the Government and steelmaker Corus, Press Association in its yesterday's edition said. The Iron and Steel Trades Confederation is putting together a scheme worth almost 90 million pounds to pay half of Corus's wage bill in return for a one-year stay of execution at the company's plants in Llanwern and Ebbw Vale in South Wales, and at Teesside. ICELAND GROUP: Sells Stores to Reduce Debt ------------------------------------------ Iceland is expected to sell its eight stores in the republic, The Sunday Times reported. Industry sources said the company has approached potential buyers, but no firm bidder has emerged. The frozen-food retailer is expected to sell non-core assets to raise money to reduce its debt of more than 550 million pounds. The group has seven stores in the greater Dublin area and one in Letterkenny, as well as 31 in the north. It employs more than 400 people in the republic and more than 1,000 in the north. INTERACTIVE INVESTOR: Personal Finance Company Seeks Buyer ---------------------------------------------------------- Troubled online personal finance company Interactive Investor International has put itself up for sale on Friday, This Is London reported. Discussions with a number of third parties had not led to a deal but some of the talks are still going on. According to Chief executive Tomas Carruthers, Credit Suisse First Boston has been advising the company on options that include a sale. The group has reduced its 128 staff to 95 in a cost-cutting program over the past four months. MILLENNIUM DOME: Director Kane Refuses Bonus -------------------------------------------- Liam Kane, one of the five Millennium Dome bosses that were offered bonuses, decided to turn down his bonus of 31,559 pounds, BBC News in its March 23 report said. "Given the state of the finances of the dome, I didn't want to take any more money out of the project. I am quite happy to see the money given back to the Millennium Commission to distribute to good causes," Kane said. He added that everyone did their best to make the project a success and it was up to each director to decide for himself whether or not to accept their bonuses. The five former executive directors are being offered the cash rewards for their remarkable achievement in opening the beleaguered Greenwich attraction on time. Only former Dome chief executive Pierre Yves Gerbeau has been awarded 90% of his entitlement with a 45,000 pounds bonus. Jennie Page, the CEO replaced by Gerbeau two months after the attraction opened, received 41,031 pounds out of a possible 136,769 pounds. Commercial director Kevin Johnson was awarded 8,768 pounds out of a possible 52,608 pounds and Finance Director Steve Brown received 9,262 pounds of a possible 55,572, Bloomberg reported. MOTOROLA: Cuts Jobs Anew ------------------------ Mobile phone maker Motorola has cut 4,000 more jobs in its network sector, bringing the total eliminated since December to 22,000, and has hinted of more to come, BBC News in its March 23 edition reported. Two weeks ago, US-based Motorola slashed 700 jobs at its Swindon operation in the south of England, which is about a quarter of all the staff employed by Motorola in Swindon. According to Edward Breen, president of Motorola's Networks Sector, reductions are necessary for the company to improve financial performance. RAILTRACK GROUP: Railtrack to Ink 1.5 Billion Pound Subsidy ----------------------------------------------------------- Railtrack Group is set to finalize this week a 1.5 billion-pound state subsidy following intense negotiations with the government and the Strategic Rail Authority, the Scotland on Sunday newspaper reported. Railtrack, which has repeatedly struggled to meet the massive repair bill for its maintenance and renewal program, said it would need to borrow 2 billion pounds over the next two years if the money was not paid. Meanwhile, chairman Sir John Parker of the Lattice Group has agreed to become the new chairman of Railtrack. Parker was also the chairman and chief executive of the Belfast shipyard, Harland & Wolff. Current chairman Sir Philip Beck is set to step down early to make way for Parker. SCOOT.COM: Shares Strike to Five-year Low ----------------------------------------- Shares in online directories group Scoot.com struck a five-year low to 6殆, or 31%, to 14p on Friday after directors appointed Merrill Lynch to conduct a strategic option for the business, according to The Times' March 24 report. Scoot.com denied reports that the appointment meant the company had effectively put itself up for sale. An official said the company hired Merrill to seek partners for geographic and technological expansion opportunities across Europe. News of the review came as Scoot reported a pre-tax loss of 71.5 million pounds for the 15 months to December 31, compared with a loss of 21.1 million pounds in the year to September 1999. 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 * * *