/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010406.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 Friday, April 06, 2001, Vol. 2, No. 68 Headlines * B E L G I U M * LERNOUT & HAUSPIE: To Discuss Korean Probe Today * B U L G A R I A * BALKAN AIRLINES: Administrators Offer Debt-for-Equity Swap * F I N L A N D * METSA-SERLA: Outlook Remains Negative * F R A N C E * BSN GLASSPACK: On Review for Possible Downgrade WESTERN TELECOM: Shares Dive to 18.71% * G E R M A N Y * BANKGESELLSCHAFT BERLIN: DG Bank Chair to Replace Rupf BANKGESELLSCHAFT BERLIN: To Post Net Loss INTERSHOP COMMUNICATIONS: Chief Sees No Takeover Threat ORTO MAQUET: Getinge to Close Operations * I R E L A N D * AN POST: Post Office System Almost Bankrupt * I T A L Y * ALITALIA-LINEE: To Choose Partner by May * N E T H E R L A N D S * KPN NV: Cancels 10-Year Bond Offering * R O M A N I A * SIDEX: ISPAT to Bid for Steel Mill * R U S S I A * NTV: Ted Turner Offers to Buy Stake * S W I T Z E R L A N D * CALIDA HOLDING: Loss Widens to CHF3.1 Million SAIGROUP: French Airlines to Announce Restructuring Plan SAIRGROUP: Workers Representatives to Hold Meeting on Monday * U N I T E D K I N G D O M * BRITISH TELECOM: Mulls Yell Sale for 3 Billion Pounds COMPASS GROUP: Sells Two of Three Hotel Brands CORUS GROUP: Ex-bosses Face Criticism for Payouts MARKS & SPENCER: Customers Flock in Paris Store MARKS & SPENCER: France Backs Unions MARKS & SPENCER: To Appoint New Finance Director RAILTRACK GROUP: Slides Anew at 4% ============= B E L G I U M ============= LERNOUT & HAUSPIE: To Discuss Korean Probe Today ------------------------------------------------ Troubled speech recognition technology company Lernout & Hauspie will hold a news conference today at 1330 GMT in Brussels to discuss an internal investigation and findings regarding its Korean unit, Reuters' April 4 edition said. L&H's South Korean unit became the focus of regulatory investigations last year following allegations of discrepancies in L&H's sales figures. =============== B U L G A R I A =============== BALKAN AIRLINES: Administrators Offer Debt-for-Equity Swap ---------------------------------------------------------- Administrators of Balkan Airlines have on Tuesday offered a debt- for-equity swap to creditors, Reuters on April 4 reported. "Transformation of debt owed to some creditors into equity has been offered as a possibility for the rehabilitation of the airline but a strategic investor is also needed," administrator Vladimir Petkov told Reuters. The executive director of one of its creditor, insurer Bulstrad, said the debt-for-equity scheme could help rehabilitate the grounded airline. In February, the court placed Balkan in receivership after Bulstrad filed a claim seeking Balkan's insolvency. Global airlines body IATA, Sofia Airport and a local firm renting ticket offices to Balkan also filed insolvency claims. ============= F I N L A N D ============= METSA-SERLA: Outlook Remains Negative ------------------------------------- Moody's Investors Service on April 4 confirmed the current Baa3/Prime-3 ratings for the senior unsecured debt issues by paper and forestry products group Metsa-Serla Oyj. This follows the announcement that Metsa-Serla has successfully completed its global equity offering, raising Euro 245 million in new equity capital. Notwithstanding this equity issuance and the expectation that this will be used for debt reduction, the rating outlook remains negative, reflecting the still weak financial profile of the group and Moody's concerns that 2001 operating cashflow generation for Metsa will not be sufficient to reduce debt given the declining market outlook for pulp and fine paper and the high CAPEX investments for the group during 2001. Ratings confirmed with negative outlook include the Baa3 rating for the Euro 1.5 billion MTN program for Metsa-Serla Oyj, the Baa3 ratings for note drawings under the MTN program and the Baa3 ratings for the $725 million revolving credit facility and the $560 million revolving credit facility of Mets"-Serla Oyj. The ratings confirmation follows the announcement on April 2 that Metsa-Serla had completed a new Euro 245 million equity issuance via the issuance of 35 million Series B shares at a price of Euro 7.00/share. In addition, the Annual General Meeting of Shareholders has authorized the Board of Directors (for up to one year from April 2, 2001) to issue up to a further 5 million in Series B shares in connection with a new issue, an award of options or the issuance of convertible loans. As a result of this current share issue, which was 3 times oversubscribed, the majority shareholder, Metsalitto Osuuskunta, decreased its ownership stake from 41.7% to 39.0% of shares. Moody's rating confirmation recognizes the significant importance of this issuance in restoring in part the group's balance sheet following a number of recent acquisitions, including notably that of Modo Paper for Euro 2.3 billion in June 2000. The negative outlook, however, continues to reflect the currently weak debt protection measures of the group, integration challenges the group will face (for Modo Paper and Zanders), as well our concerns that for 2001 it may be difficult to reduce debt levels further as a result of a weakening outlook for pulp and fine paper prices and given the group's high capital investment plans for the year (estimated at about Euro 550 million by management). As a result, Moody's anticipates that RCF/Debt (including the out-of-the-money convertibles as debt) is not likely to exceed the low teens for 2001. In order to stabilize the credit at its current rating level, given the group's heightened cashflow cyclicality through its growing exposure to the fine paper market, Moody's would expect to see at least high-teen levels of RCF/Debt through the cycle. =========== F R A N C E =========== BSN GLASSPACK: On Review for Possible Downgrade ----------------------------------------------- On April 4, Moody's Investors Service placed the ratings for glass producer BSN Glasspack S.a.S. on review for possible downgrade following the announcement last week that the company would be undergoing an additional restructuring plan in order to reduce costs and meet higher than expected energy price increases. This move follows a change in outlook for the ratings from stable to negative in November 2000, and reflects Moody's concerns about weakening debt protection measures for the company as a result of the challenging environment for container glass production in Europe. Ratings placed on review include the B1 rating for the Euro 180 million in senior subordinated notes of BSN Financing Co. S.A., the Ba2 senior implied rating for BSN Glasspack S.a.S. and the Ba2 rating assigned to the bank debt facilities for BSN Glasspack S.a.S. Moody's review for possible downgrade will focus on the updated market outlook for European container glass production, on the challenges and merits of management's proposed new restructuring program; on the group's medium-term acquisition strategy and financing options as well as on the likely evolution of the group's debt protection measures as a result of the three factors above-mentioned. Subordination issues, such as the extent of usage of an asset securitization program, will also be considered. WESTERN TELECOM: Shares Dive to 18.71% -------------------------------------- Shares in long-distance telecom service provider Western Telecom, which recently declared itself in payment default with suppliers since March 16, fell 18.71% on Monday to 1.13 euro, Les Echos in its April 3 edition said. The company's shares resumed trade on March 28 after a two-week suspension. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: DG Bank Chair to Replace Rupf ------------------------------------------------------ DG Bank AG's outgoing chairman Bernd Thiemann will replace chairman Wolfgang Rupf of Bangesellschaft Berlin AG, AFX reported on April 4. Both DG Bank and Bankgesellschaft declined to comment on the report. Rupf's position is said to be in doubt due to allegations on his involvement in the bank's ongoing property lending scandal. BANKGESELLSCHAFT BERLIN: To Post Net Loss ----------------------------------------- Bankgesellschaft Berlin AG is yet to produce its 2000 results amidst an audit of its property operations and media reports that the repurchase of Immobilien und Beteiligungen AG (IBAG) would lead to a loss, AFX on April 4 reported. The German government, a majority shareholder, has guaranteed that it will provide any necessary financial support so that the bank will be able to have a future. In February, Bankgesellschaft Berlin transferred all its real estate services to IBAG, as part of plans to list IBAG this year and join it with a strategic partner. INTERSHOP COMMUNICATIONS: Chief Sees No Takeover Threat ------------------------------------------------------- Stephan Schambach, chief executive of Intershop Communications said he is not worried about a takeover of the software maker, Reuters' April 4 edition reported. "There have not been any notable takeovers in the software industry," Schambach said. "It's clear that there is stronger cooperation, especially in this kind of situation but that doesn't mean there has to be a takeover." Schambach further said that partnerships with other companies were more likely than a takeover. He is currently working with U.S. firm Hewlett Packard. ORTO MAQUET: Getinge to Close Operations ---------------------------------------- Getinge, a leading provider of equipment and systems to customers within health care, extended care and pharmaceutical laboratories, has actively endeavored to divest or close Orto Maquet, Business Wire in its April 2 edition said. Orto Maquet, a German based company within the Maquet group of companies specializing in the field of computer assisted surgery for orthopedic implants, suffered a profit loss in the amount of approximately 65 million SEK in 1999/2000. At the beginning of December last year, Getinge started an active process to find a suitable buyer. This process has been working according to plan. Since the possibility of finding a buyer seems improbable, Getinge has decided to close the Orto Maquet operations as from now. ============= I R E L A N D ============= AN POST: Post Office System Almost Bankrupt ------------------------------------------- State post office An Post is technically insolvent and will quickly become bankrupt without a change in the funding method, the Wednesday report of The Irish Times said. According to Public Enterprise Minister O'Rourke, the only option for financing the post offices losses is for the State to pay a subvention to the company. The company will require 83.2 million pounds in subvention by 2005 in a no change scenario, industrial relations consultant Phil Flynn said. Ms O'Rourke on Tuesday established an inter-departmental group to provide a blueprint for the future funding of the post offices. PricewaterhouseCoopers has compiled a separate study submitted to a working group composed of members from An Post, the Department of Public Enterprise and the Department of Finance, which itself has been assessing the business. ========= I T A L Y ========= ALITALIA-LINEE: To Choose Partner by May ---------------------------------------- Alitalia SpA is expected to have chosen a partner by the annual general meeting to be held on May 23 or 30, Dow Jones reported on Wednesday, citing chief executive Francesco Mengozzi. The CEO said the company began working with Air France Groupe and KLM Royal Dutch Airlines NV, while talks with SAirGroup AG's Swissair are on hold. Mengozzi further said he wanted to revisit the company's 2001- 2004 plan and examine the possibility of a capital increase. ===================== N E T H E R L A N D S ===================== KPN NV: Cancels 10-Year Bond Offering ------------------------------------- Telecom company KPN NV has dropped plans for a 10-year Eurobond since the demand for the five- and seven-year bond was sufficient to raise funds to refinance 3.8 billion euros in short-term loans that are due in June and July. According to KPN spokesman Marinus Potman, the demand for the shorter term bonds was higher, where a five-year with 2 billion euro issue and a seven-year with 279.7 million euro issue. Lead managers of the issue are ABN Amro NV, Barclays Capital and Credit Suisse First Boston. Last month, KPN said it expected to cut 5 billion euros from its 22 billion euro debt by selling off various assets and floating its mobile telephone unit KPN Mobile NV. ============= R O M A N I A ============= SIDEX: ISPAT to Bid for Steel Mill ---------------------------------- Steel giant LNM's ISPAT International NV unit has submitted the sole binding bid for the 74.33% stake of Romanian steel mill Sidex, Reuters in its April 4 edition said. Last month, the government postponed an initial deadline for bids to April 4, citing the need to modify the deal's terms and allow other bidders to submit offers for Sidex. The deadline for completion of Sidex privatization remains in June. Turkey's Erdemir, France's Usinor, Germany's Salzgitter AG and Kazakh conglomerate Eurasian Bank had shown interest in Sidex, which runs big debts estimated at $900 million due to the decline in productivity and high operating costs in recent years. =========== R U S S I A =========== NTV: Ted Turner Offers to Buy Stake ----------------------------------- US media mogul Ted Turner offered to buy 30% of television network NTV and related companies under an agreement with leading shareholder Vladimir Gusinsky on Tuesday night, Wall Street Journal reported yesterday. The offer, which would require an initial investment of less than $100 million (111.6 million euros), surfaced a day after state- controlled gas giant Gazprom took control of NTV's board. Individuals familiar with the talks said that a consortium of foreign investors led by Turner aims to leave Gusinsky with about 20%, Gazprom to retain close to its current 46% stake in the company, while Capital Research & Management would retain its 4.5% stake. ===================== S W I T Z E R L A N D ===================== CALIDA HOLDING: Loss Widens to CHF3.1 Million --------------------------------------------- Underwear producer Calida Holding AG'a loss before extraordinary items increased to CHF3.1 million in 2000 from CHF2.5 million in 1999, according to Dow Jones in its April 4 report. The net loss stood at CHF10.1 million after a CHF7 million charge due to a revaluation of assets, prompted by accounting changes. In 2000, Calida Holding's earnings before extraordinary items were -3.20 million Swiss Francs, or -1.6% of sales. SAIGROUP: French Airlines to Announce Restructuring Plan -------------------------------------------------------- Marc Rochet, chief executive of struggling French airlines AOM, Air Liberte and Air Littoral, will present radical restructuring plans in an attempt to rescue the companies and save more than 7,000 jobs, the Financial Times in its April 4 edition said. Rochet said he will seek judicial protection from creditors for the companies while they undergo restructuring. SAirGroup chief executive Mario Corti has cut off funding for Air Littoral, following reports that the Swissair parent has been losing SFr80 million a month on its French operations, and the French airlines have accumulated net losses of FFr3 billion in 2000. A decision would be made on AOM-Air Liberte on April 25. No buyers have emerged for the French airlines. SAIRGROUP: Workers Representatives to Hold Meeting on Monday ------------------------------------------------------------ Workers representatives at SAirGroup AG units AOM and Air Liberte will hold a meeting Monday to discuss the company's financial situation as well as efforts to appoint a court mediator, AFX in its April 4 edition said. The move will help the company set up a restructuring plan, following SAirGroup's decision to withdraw support for its unit Air Littoral. SAirGroup will decide on April 25 whether to continue supporting AOM and Air Liberte. =========================== U N I T E D K I N G D O M =========================== BRITISH TELECOM: Mulls Yell Sale for 3 Billion Pounds ----------------------------------------------------- British Telecommunications is in talks with a private equity consortium about the sale of Yell, its yellow pages business for more than 3 billion pounds, the Financial Times in its April 4 edition said. At least three parties are interested to buy Yell. These include Seat Pagine Gialle, the Italian yellow pages business part-owned by Telecom Italia and a group headed by US private equity firms Kohlberg Kravis Roberts and Texas Pacific Group. BT is said to be concentrating on talks with the third consortium, which includes Apax Partners and Hicks, Muse, Tate & Furst. However, the telecom giant has not made a firm decision to opt for a sale rather than a demerger. Both BT and the consortium declined to comment on the talks. COMPASS GROUP: Sells Two of Three Hotel Brands ---------------------------------------------- Contract catering group Compass Group PLC sold Posthouse and Heritage Hotels to enable the group to pay down debt from recent catering acquisitions and to fuel further purchases in the future, Wall Street Journal on April 5 reported, citing Compass Chief Executive Michael Bailey. Posthouse Hotels, a midscale chain of 79 properties in the United Kingdom and Ireland, was sold for 810 million pounds (1.3 billion euros or $1.16 billion) to hotel giant Bass PLC, owner and operator of Holiday Inn, Intercontinental and Crowne Plaza. Compass sold Heritage Hotels, a collection of 47 rural properties in England and Scotland, for 235 million pounds ($336.9 million) to U.K.'s Macdonald Hotels PLC and Bank of Scotland. The group still has to find a buyer for Le Meridien. Negotiations on the sale have taken longer because of difficulties in hitting out a price for the portfolio. Compass won't disclose with whom it is negotiating, but people familiar with the talks say Marriott International Inc. is the chain's most likely buyer. A Marriott spokesman declined to comment. CORUS GROUP: Ex-bosses Face Criticism for Payouts ------------------------------------------------- Ex-joint chief executives John Bryant and Fokko van Duyne and another retired Dutch executive of steel giant Corus face attacks from general secretary John Edmonds of the GMB union for their receipt of payouts of more than 2 million pounds, BBC News in its April 4 edition said. The details, disclosed in Corus' annual report, have angered union officials who are still fighting to save some of the 6,000 jobs being axed by the company in their plants across UK. Bryant was paid 876,310 pounds to cover his two-year basic salary contract while Dutch counterpart van Duyne received more than 1.1 million pounds because of more generous pension-linked arrangements. The other Dutch executive who retired last year received 633,500 pounds. MARKS & SPENCER: Customers Flock in Paris Store ----------------------------------------------- Customers have flocked in retailer Marks & Spencer's Paris store to buy their favorites, following its sudden announcement that it will close its loss-making stores in continental Europe, according to Reuters in its April 3 edition. "I think people are afraid that we're going to close in the coming days so they are coming to build up stocks, definitely. We have people buying five pairs of shoes or 10 pairs of trousers, which we have never seen previously," Sylvie, a manager in the womenswear department said. MARKS & SPENCER: France Backs Unions ------------------------------------ The French government on Wednesday gave its full backing to unions representing employees of retailer Marks and Spencer to challenge restructuring plans that involve store closures and redundancies, the Financial Times reported. The support came in a meeting with French labor minister Elisabeth Guigou, but finance minister Laurent Fabius said he would not reintroduce legislation that would require administrative authorization to lay off workers. Furthermore, France's trade union federations have launched judicial proceedings against M&S for failing to observe labor laws. The obstruction of labor law carries a FFr25,000 fine or maximum one-year jail term. MARKS & SPENCER: To Appoint New Finance Director ------------------------------------------------ Marks & Spencer announced that Finance Director Alison Reed of UK Retail has been appointed as Finance Director Designate of Marks and Spencer PLC, an April 2 press release said. She will take up her position as an Executive Director on the Board on a date to be confirmed, when she will replace current Finance Director Robert Colvill. Alison Reed, 44, is a Chartered Accountant, qualifying with Touche Ross in London in 1981 after graduating from Exeter University. She joined Marks & Spencer in 1984 and after a wide range of roles in the Finance Group, was appointed in 1990 to be the Executive Assistant to the Chairman & Chief Executive. In 1992, she became the Commercial Executive for Home Furnishings and Gifts, and, in 1995, was appointed Divisional Director for Logistics. She returned to the Finance Group as Financial Controller in 1996 and was appointed UK Retail Finance Director in 1999. She is also a non-executive director of HSBC Bank plc, a position she has held since 1996. RAILTRACK GROUP: Slides Anew at 4% ---------------------------------- Shares in Railtrack Group PLC were again sharply lower at 19-1/2 pence, or 4%, at 460-1/2 in late morning trading as the stock was pounded on its third consecutive day, AFX in its April 4 report said. The collapse in Railtrack's share price means its FTSE 100 index status is now seriously threatened. ************* 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. 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