/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010404.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, April 04, 2001, Vol. 2, No. 66 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Annual Report Misses SEC Deadline SABENA SA: SairGroup's Loss Dims Sabena Hope of Survival * G E R M A N Y * EM.TV: Reshuffle in the SLEC Board Seat GRUNDIG AG: Cuts 900 Jobs in Restructuring Plan TELDAFAX AG: Applies for Insolvency * I T A L Y * ALITALIA: Foresees Another Loss This Year * N E T H E R L A N D S * UNITED PAN-EUROPE: Loss Nears 2 Billion Euros * S W I T Z E R L A N D * SAIRGROUP: Unveils Restructuring Plan SAIRGROUP: Moody's Downgrades Ratings to Baa3 SAIRGROUP: Posts Big Loss for 2000 SAIRGROUP: Requests Suspension of Share Trade SAIRGROUP: Shareholders Call CFO to Step Down SAIRGROUP: To Sell Swissotel, Real Estate Holdings * U N I T E D K I N G D O M * BEENZ.COM: Victim of Internet Collapse HUNTINGDON LIFE: GlaxoSmithKline to Continue HLS Services MARKS & SPENCER: Unions Take M&S to Court MILLENIUM DOME: Faces Third Query From Financial Watchdog PURE ENTERTAINMENT: Chief Dewar Resigns RAILTRACK GROUP: Gets 1.5 Billion Pounds in Funding RAILTRACK GROUP: Shares Drop Over Control Fears SHALIBANE PLC: Requests Appointment of Receivers SKYEPHARMA PLC: Posts 19.7 Million Pounds Pre-tax Loss VIRGIN EXPRESS: Shuts Down Irish Unit ============= B E L G I U M ============= LERNOUT & HAUSPIE: Annual Report Misses SEC Deadline ---------------------------------------------------- Lernout & Hauspie Speech Products NV, which hasn't completed its financial statements for 2000, will miss the filing deadline of its Form 10-K annual report with the Securities and Exchange Commission, according to Dow Jones on Monday's edition. The company is also unable to estimate its operating results for 2000 because of the pending restatement of its financial statements for 1998, 1999 and the first half of 2000. The statements were said to contain errors and irregularities identified in an ongoing audit committee inquiry. In November, L&H filed for bankruptcy protection in the U.S. and Belgium amid an accounting scandal that has prompted government investigations in both countries. LERNOUT & HAUSPIE: Founders to Waive Right to Control Board ----------------------------------------------------------- The founders of Lernout & Hauspie, Jo Lernout and Pol Hauspie, have agreed not to object to plans by chief executive Philippe Bodson to scrap their right to appoint nine of the board of executive's 17 members, Reuters reported on Saturday. "We share Bodsman's view that it would be better for the credibility of the group to constitute a majority through a normal democratic process," Lernout said. No one at L&H was immediately available for comment. L&H is undergoing a restructuring of its operations after obtaining bankruptcy protection in Europe and the United States. The stock of voice recognition firm has been delisted from the U.S. Nasdaq market and suspended from trade on the pan-European Easdaq market. SABENA SA: SairGroup's Loss Dims Sabena Hope of Survival -------------------------------------------------------- Belgium's national airlines company Sabena has faced another blow on Monday when one of its two major shareholders, Swiss aviation conglomerate SAirGroup, revealed a US$1.67 billion net loss in the year 2000, Xinhua New Agency reported. The Swiss group blamed its foreign airline sector and rising fuel prices for the huge loss it had suffered this year. SAirGroup has pledged to cut stakes in its loss-making foreign airlines to stop a huge cash drain. The move will certainly damage Sabena's hope to survive its current financial crisis. The Belgian company, which made a loss of 286.8 million dollars last year, had to undergo a restructuring reform before the shareholders would inject in new funds to bail it out of its operation losses. ============= G E R M A N Y ============= EM.TV: Reshuffle in the SLEC Board Seat --------------------------------------- German media company EM.TV & Merchandising and partner Kirch will appoint six of the eight members of the supervisory board of SLEC, the holding company that organizes Formula One motor racing, Reuters in its April 2 report said. The Bambino Trust, controlled by racing guru Bernie Ecclestone, would appoint the other two members of SLEC's supervisory board. The board reshuffle follows EM.TV's announcement that it and Kirch have raised their stake in SLEC to 75%. EM.TV Chief Executive Thomas Haffa, Kirch deputy chief Dieter Hahn, ex-director of Walt Disney International Europe Etienne De Villiers, and ex-chief of Philip Morris' European operations Walter Thoma would join SLEC's controlling body. EM.TV and Kirch will appoint two other board member at SLEC in the upcoming days. The members would elect the chairman of the controlling body later. GRUNDIG AG: Cuts 900 Jobs in Restructuring Plan ----------------------------------------------- Electronics company Grundig, best known for its televisions and radios, on Friday said it will cut some 600 positions at its headquarters and more than 200 at its plant in the southern German city of Bayreuth as part of a restructuring program, Dow Jones reported. Contracted strategy advisers have recommended the layoffs to Grundig. They also recommended transferring the company's television production to Vienna, Austria and completely closing the Bayreuth plant. Labor leaders, who said they would protest the layoff plans, have asked investment house Deutsche Bank to extend its credit to the troubled company. TELDAFAX AG: Applies for Insolvency ----------------------------------- World Access, Inc. on Monday said that its German subsidiary, TelDaFax AG, was forced to file for insolvency in an attempt to avoid the cancellation of services from its largest supplier, Deutsche Telekom AG, PR Newswire reported. World Access owns approximately 70% of the shares of TelDaFax following the closing of its tender offer. Deutsche Telekom had threatened to discontinue services to TelDaFax, unless TelDaFax could confirm in writing its ability to meet a scheduled repayment of its obligations to Deutsche Telekom. TelDaFax could not provide such confirmation without a formal funding commitment from World Access. World Access had advised Deutsche Telekom that its Board of Directors was scheduled to meet this week to approve a funding plan for TelDaFax, and had requested that the deadline be extended until April 6. World Access was prepared to pre-pay for TelDaFax services until such deadline, thereby removing any credit risk associated with Deutsche Telekom granting the requested extension. "This is an apparent example of Deutsche Telekom's desire to take any measures required to restore its monopoly position in the German market," Phillips said. "There was absolutely no risk involved in DTAG extending the deadline, as we were willing to pre-pay on TelDaFax's behalf." ========= I T A L Y ========= ALITALIA: Foresees Another Loss This Year ----------------------------------------- Italy's flag carrier Alitalia is expected to post another loss in 2001 but added that it would be smaller than its net loss in 2000, according to Reuters' April 2 report. Alitalia, which posted a 495 billion lire loss in 2000, said its gross operating margin fell 394 billion lire compared to 1999. ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: Loss Nears 2 Billion Euros --------------------------------------------- The net loss of Europe's biggest cable and broadband United Pan- Europe Communications N.V. for 2000 more than doubled to nearly 2 billion euros, the Financial Times in its Monday edition reported. Investments in new digital cable television, Internet and phone services, combined with surging interest costs and massive depreciation costs, triggered the losses. UPC has been struggling with debts of 9.5 billion euro and a cash burn rate of 250 million euro a month. Its troubles were enlarged by last year's failure to merge its Chello Internet business with Excite@Home's non-U.S. assets. As of December 1999, UPC's long term debt was 3.90 billion Euro and total liabilities were 4.77 billion Euro. ===================== S W I T Z E R L A N D ===================== SAIRGROUP: Unveils Restructuring Plan ----------------------------------- SAirGroup has announced a change in strategy after suffering losses of 2.885 billion Swiss francs (1.17 billion pounds, $1.66 billion) in 2000, BBC News reported on Monday. The airline said it would sell off recently acquired share holdings in several European airlines to concentrate on a limited number of airline and airline-related activities where it can stand apart from the competition, SAirGroup chairman and chief executive Mario Corti said. The group would also sell its hotel group Swissotel, while its 1.5 billion Swiss franc real-estate portfolio will be halved. SAirGroup described 2000 as the worst year for the group, with sizable losses incurred by its airline investments, particularly in France, Belgium and Germany. The group also blamed high fuel prices and tough competition for a shortfall in earnings. SAIRGROUP: Moody's Downgrades Ratings to Baa3 --------------------------------------------- Moody's Investors Service has on Monday downgraded the long-term issuer rating of SAirGroup to Baa3 from A3 and the short-term rating to P-3 from P-2. The rating action was prompted by the company's failure to turn around its partner airlines in the near term and, the need for additional restructuring efforts to limit group exposure to these activities and to reposition itself in the consolidating global airline industry. SAIRGROUP: Posts Big Loss for 2000 ---------------------------------- PRESS RELEASE, April 2 The SAirGroup's operating revenue rose 25% to CHF 16 229 million in 2000 but the aviation group recorded a substantial consolidated net loss for the year. A key factor in this far- from-favorable result was the strongly adverse impact of the Group's airline investments, which required exceptional depreciation and provisions to be effected for the year. Results from the Group's airline-related divisions were encouraging, but could not offset the adverse influences on the airline side. Thus, earnings before interest and taxes (EBIT) before equity-accounted investments amounted to CHF 603 million (1999: CHF 674 million), corresponding to an operating profit margin of 3.7% (1999: 5.2%). EBIT including equity-accounted investments produced a CHF 2 592 million negative result (1999: plus CHF 643 million). The Group thus incurred a net loss for the year of CHF 2 885 million (which compares to a CHF 273 million net profit recorded for 1999). The Group intends to realign its overall business strategy to lay a sound foundation on which to substantially enhance its revenue and earnings performance. In financial terms, 2000 was the worst year in the history of Swissair/SAirGroup. Operating revenue was increased by 25%, largely through acquisitions and organic growth. But the earnings targets in the airline sector fell far short of objectives, and the sizable losses incurred by its airline investments, particularly in France, Belgium and Germany, resulted in a substantial net Group loss for the year. The losses incurred by its airline investments, value adjustments to loans and provisions established for restructuring costs, asset impairments and contractual obligations had a combined negative impact of CHF 3 725 million on the Group's net consolidated result. The problems were exacerbated by the steep rise in the price of aviation fuel in a market that was already suffering from surplus capacity, making it difficult at best to pass on these costs. Sabena, while achieving an 11% increase in total traffic volume, incurred a net loss of EUR 325 million for the year. Results for the French airlines AOM, Air Libert, and Air Littoral also fell far short of their objectives: the three carriers reported a combined loss of CHF 600 million before restructuring costs and value adjustments. The LTU group made further progress in its own restructuring activities and, through its strategic partnership with the Rewe trading group, eliminated its previous competitive disadvantage in the distribution field. Despite these actions, however, LTU incurred a net loss of EUR 224 million for the year. On a positive note, LOT Polish Airlines and South African Airways also recorded black-ink results. Despite increasing their operating revenue by between 10 and 15%, the three Swiss airlines all had poor years. Swissair recorded an EBIT loss of CHF 195 million on operating revenue of CHF 5 791 million; Crossair incurred an EBIT near the break-even point (loss of CHF 20 million) on operating revenue of CHF 1 275 million; and Balair recorded a loss of CHF 25 million (EBIT) on operating revenue of CHF 133 million. The steep increase in kerosene prices played a major role in these results: at Swissair alone, fuel costs were CHF 270 million or 56% higher than in 1999. Crossair saw an even higher increase in percentage terms: the CHF 85 million rise was a 75% increase on the prior year. Including the activities of Flightlease, the Group company that primary serves to finance the aircraft fleets of the Group, the entire SAirLines division concluded the year with an EBIT of CHF 35 million (1999: CHF 188 million). Operating revenue was CHF 7 166 million (1999: CHF 6 414 million). SAIRGROUP: Requests Suspension of Share Trade --------------------------------------------- SAirGroup AG has requested the Swiss Exchange stock market to suspend the trading if its shares on Monday, Dow Jones reported. The request came after an announcement of a CHF2.89 billion net loss for 2000. The company omitted details on the clean up its deteriorated balance sheet. Over the weekend, reports said the company's rescue plan envisioned the issuance of a convertible bond rather than a reduction of the company's share capital. This would be accompanied by an issuance of new shares. SAIRGROUP: Shareholders Call CFO to Step Down --------------------------------------------- Lawyer Hans-Jacob Heitz, representing a group of SAirGroup shareholders, has demanded the resignation of the company Chief Financial Officer Georges Schorderet for lack of credibility, Dow Jones reported on Monday. The lawyer also said that the group's top management should have given warning signs such as the rapidly sinking equity ratio and other parameters. He wasn't currently planning to sue the previous management team but will propose an extraordinary audit of last year's books at the annual general meeting later in April. Schorderet in a press conference said that his continued role would depend on the future development of the company, chairman and chief executive Mario Corti and the board of directors. SAIRGROUP: To Sell Swissotel, Real Estate Holdings -------------------------------------------------- SAirGroup is in advanced talks to sell its Swissotel group this year and will divest real-estate worth around CHF700 million, Dow Jones reported on Monday, citing Chief Executive Mario Corti. Swissotel operates first-class hotels around the world. It employs around 1,000 staff and generated operating revenues of CHF190 million in 1999. SAirGroup also plans to sell real-estate holdings this year or next. The group's total real-estate holdings amount to CHF1.5 billion. Corti added that the group plans to reduce its financial investments in its loss-making Belgium carrier Sabena SA and on its French carriers, Air Liberte and AOM. On Monday, SAirGroup has stopped cash funding on French carrier Air Littoral. =========================== U N I T E D K I N G D O M =========================== BEENZ.COM: Victim of Internet Collapse -------------------------------------- Beenz.com, the company that operates an Internet loyalty points service, is the latest casualty of the Internet recession as it is up for sale and has initiated another round of redundancies, Media Guardian in its March 29 edition said. Beenz.com's board of directors has been looking at ways of restructuring the business. The latest round of job cuts, leaving the company with just 80 employees worldwide, has hit the London office the hardest, although the company will continue to run global networks from its London base. The company refused to give details of how much cash Beenz.com has left in the bank, but said it was already in discussions with several potential strategic partners. HUNTINGDON LIFE: GlaxoSmithKline to Continue HLS Services --------------------------------------------------------- Despite pressures from animal rights protesters, GlaxoSmithKline PLC will continue to use the services of Huntingdon Life Sciences PLC, AFX in its April 1 edition reported. Last week, Winterflood Securities and Dresdner Kleinwort Wasserstein withdrew as marketmakers, citing the onslaught from the protesters. Other financial backers and customers have walked away as well. Security has been stepped up at Glaxo's laboratories and the homes of its directors, the report added. MARKS & SPENCER: Unions Take M&S to Court ----------------------------------------- French unions have started legal proceedings in a Paris court, the Tribunal de Grande Instance, to get a judgment blocking on the planned closure of Marks & Spencer PLC shops in France, AFX reported on Monday. They said they also plan a joint union strategy to reverse the closures. MILLENIUM DOME: Faces Third Query From Financial Watchdog --------------------------------------------------------- Following pressures from MPs, the Government will opt for a third National Audit Office inquiry into the Millennium Dome over the handling of its management and finances, according to This Is London's March 30 report. The new investigation will examine why Dome board and managers have not planned for its orderly closure, failed to compile a central register of assets and had no clear indication of contractual liabilities. The government's financial watchdog has already reported on the mismanagement of the attraction that failed to achieve even half of its paying visitor target in 2000 and had to borrow an additional 179 million pounds of Lottery money to stay open. PURE ENTERTAINMENT: Chief Dewar Resigns --------------------------------------- Robert Dewar, the chief executive of Pure Entertainment had resigned with immediate effect, following the closure of its website freeloader.com two weeks ago, according to Financial Times' Monday edition. Non-executive Director Frank Herman also resigned from the board with immediate effect. The company, which offers free computer games over the Internet, said it had been reluctant to close the site but fundraising had not been a realistic option in the current market conditions. Pure Entertainment is pursuing options to sell its unique software. RAILTRACK GROUP: Gets 1.5 Billion Pounds in Funding --------------------------------------------------- Railtrack on Monday got a badly needed 1.5 billion pound ($2.13 billion or 2.43 billion euro) cash advance from the government, BBC News reported. Deputy Prime Minister John Prescott announced the financial package together with other measures designed to boost capacity on Britain's railways by 25%. Under the funding arrangement, Railtrack has been forced to drop plans to build the second stage of the Channel Tunnel rail link. Prescott has also struck a deal with Railtrack management to allow a new passengers' representative to be appointed to the company's board. Furthermore, Railtrack has pledged not to pay any exceptional or special dividends to shareholders over the next five years. Railtrack has been financially struggling following the urgent repair program introduced after the Hatfield crash on October. RAILTRACK GROUP: Shares Drop Over Control Fears ----------------------------------------------- Railtrack shares plunged 17% to 570p on Monday as the Government signaled tougher controls on the rail firm, according to The Times' report dated April 3. Leading investors were nervous about Railtrack's future role after the company said it would not exercise its option to take ownership of the 3.3 billion-pound second stage of the Channel Tunnel rail link. The company also pledged not to pay any special dividends and said that payouts would not exceed earnings growth over the next five years. It also bowed to ministerial pressure to announce plans to appoint a non-executive director. SHALIBANE PLC: Requests Appointment of Receivers ------------------------------------------------ Shalibane PLC said it is effectively insolvent after its bankers refused to extend an existing overdraft facility beyond the expiry date of March 30, AFX reported. The automotive parts manufacturer has requested the appointment of receivers. Shalibane said trading in its shares has been suspended on AIM. At the end of 1999, Shalibane's current liabilities were 9.76 million pounds while total current assets were only 3.79 million pounds. SKYEPHARMA PLC: Posts 19.7 Million Pounds Pre-tax Loss ------------------------------------------------------ SkyePharma Plc, a researcher, developer, manufacturer and retailer of prescription pharmaceutical products, reported a final pre-tax losses of 19.7 million pounds (19.2 million pounds loss), according to The Times yesterday. The company as of December 1999 has total liabilities of 34.68 million pounds. VIRGIN EXPRESS: Shuts Down Irish Unit ------------------------------------- Virgin Express Ireland has ceased trading as a low-cost carrier at Shannon Airport yesterday, according to The Irish Times yesterday. About 80 of 160 employees faced redundancy. Corporate communications manager Yves Panneels said the deadline for a deal with a potential investor passed on Monday and the company was being dissolved. Virgin Express Ireland's chief executive Martin Hamrogue said that a British investment group, which he declined to name, believed it would be able to re-launch the company. In December, Belgium-based Virgin Express Holdings made the decision to sell or close down the subsidiary. Bases at Germany were also closed as part of the rationalization plan. *************** 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 * * *