/raid1/www/Hosts/bankrupt/TCREUR_Public/010601.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, June 01, 2001, Vol. 2, No. 107


                                           Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Bastiaens to Waive Extradition
LERNOUT & HAUSPIE: Inks License Agreement With Portugal Telecom
SABENA SA: SAS Uninterested in Swissair Stake
SABENA SA: Swissair Will Not Yet Integrate Sabena

* F R A N C E *

AIR LIBERTE: Strike Continues on Monday
KAST FRANCE: Goes Into Receivership
CS COMMUNICATIONS: Posts FFR 702MM Losses for 2000

* G E R M A N Y *

DEUTSCHE TELEKOM: Mulls T-Mobil Float
EHLEBRACHT AG: Plastics Group Shows Losses for 2000
SUNBURST MERCHANDISING: Faces Probe From Prosecutor
TELDAFAX AG: Finds New Partner After Deutsche Telekom

* N E T H E R L A N D S *

LETSBUYIT.COM: Achieves Financing Milestone
UNITED PAN-EUROPE: Loan Adds to Ratings Pressure

* R U S S I A *

GAZPROM: Court Freezes Management-Controlled Shares
MEDIA-MOST: Court Orders Media-MOST Liquidation

* U N I T E D   K I N G D O M *

C&A: Closes Shop Over Accumulated Losses
CHARACTER GROUP: Posts 1.94MM Stg Pretax Loss
CHARACTER GROUP: Toys Investment Agrees to Provide 2MM Stg Loan
EIDOS PLC: To Raise Cash at Deep Discount
EQUITABLE LIFE: Accounting Body to Investigate Auditor Role
MARKS & SPENCER: Lacks Customer Trust


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


LERNOUT & HAUSPIE: Bastiaens to Waive Extradition
-------------------------------------------------

Former Lernout & Hauspie Speech Products NV chief executive
Gaston Bastiaens would waive extradition to Belgium to face fraud
charges if he is released from jail for ten days and allowed to
get his affairs in order in the United States, the Associated
Press in its Tuesday edition said.

Bastiaens was arrested on Saturday at his U.S. home on a Belgian
warrant accusing him of falsification of company earnings, stock
market manipulation and insider trading.

At a hearing in federal court on Tuesday, prosecutors asked that
Bastiaens be held without bail pending a hearing on his
extradition, which could take up to 75 days.

In April, Belgian investigators charged company co-founders Jo
Lernout and Pol Hauspie and former board member Nico Willaert
with falsification of documents and stock manipulation. The three
men have already spent 30 days behind bars, pending trial.


LERNOUT & HAUSPIE: Inks License Agreement With Portugal Telecom
---------------------------------------------------------------

Lernout & Hauspie Speech Products NV, a world leader in speech
and language technology, products and services, announced in its
Wednesday's press release that it recently signed a license
agreement with Portugal Telecom Inovacao, the research and
development branch of Portugal Telecom.

The licensed L&H technologies will be used to create Interactive
Voice Response (IVR) platforms, unified messaging platforms, E-
mail reading, Directory service and a multi-modal information
service.

The agreement allows Portugal Telecom Inovacao to use L&HT
RealspeakT and L&H's Intelliscoper Language Recogniser, an
intelligent content management (ICM) tool for European Portuguese
and UK English. The technologies allow systems to recognize the
language of the textual information so they can answer back in
the appropriate language, using natural sounding synthetic
speech.

These technologies enable users to create multi-modal information
services and retrieve and transmit various types of messages
using a wide array of devices such as a PC, phone, cellular phone
and WAP phone/device. Additional platform-based services, such as
IVR, E-mail reading, UMS and directory services will empower
customers to retrieve a wide range of information ranging from
weather reports, e-mails, phone numbers to faxes through their
phone and/or mobile.


SABENA SA: SAS Uninterested in Swissair Stake
---------------------------------------------

Scandinavian Airline Systems (SAS)has announced that it does not
plan to pursue Swissair AG's 49% stake in Sabena, which needs
both a new owner and a capital injection, according to AFX News'
May 30 report.

"We would prefer a major cooperation in Finland, the Baltic
states and in northern Poland, together with LOT," SAS chief
executive officer Jorgen Lindegaard said.


SABENA SA: Swissair Will Not Yet Integrate Sabena
-------------------------------------------------

Swissair Group AG said it could not afford to integrate Sabena
into its balance sheet, or raise its stake from 49.5% to 85%
right now because of its own financial situation, the AFX News in
its May 29 edition said.

According to a Swissair spokesman, the company's plans to raise
the stake to 85% are on hold, in agreement with the Belgian
state. He further declined to comment on whether Swissair was
willing or able to inject any fresh capital into Sabena.

Sabena will issue its new business plan within the next three
weeks. Its two shareholders, Swissair Group and the Belgian
state, are expected to approve the plan.


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


AIR LIBERTE: Strike Continues on Monday
---------------------------------------

AOM/Air Liberte flights to Bordeaux, Geneva, Marseille,
Montpellier and Toulouse were cancelled on May 28 due to
continued strike action, according to the Tuesday edition of M2
Communications Ltd. All long-distance services continued to run
on schedule, however.

The protest action started due to plans to cut 1,300 jobs as part
of AOM/Air Liberte's restructuring program.


KAST FRANCE: Goes Into Receivership
-----------------------------------

Kast France SA has been placed in receivership after being in
default of payment, Les Echos in its May 29 edition said.

According to chairman Magdi Houry, he prefers to use funds to
continue supplying voice and Internet services rather than pay
his suppliers.

Kast France also plans to cut cost that will include 50 job
redundancies.


CS COMMUNICATIONS: Posts FFR 702MM Losses for 2000
--------------------------------------------------

Computer and telecom-systems producer CS Communications &
Systemes reported its net loss last year for the fourth year
running was FFr702 million for a turnover of FFr3.3 billion, La
Tribune & World Reporter in its May 29 edition said.

In April, the company announced the receivership of its
unprofitable CS Telecoms and CS Electronics units.

The company now plans to concentrate on engineering, information
management and IT and communications systems integration.


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


DEUTSCHE TELEKOM: Mulls T-Mobil Float
-------------------------------------

Deutsche Telekom said it might consider an IPO for its T-mobil
cellular unit in the fourth quarter of this year as the company
cannot afford any more financially damaging moves, CIT Online in
its May 29 edition said.

Chief executive Ron Sommer has been the subject of criticism from
Deutsche Telekom shareholders after the company's value was
halved in a year. Its debt also ballooned to 60 billion euro.

The IPO plan is widely seen as a move to prevent further
downgrading of the company's credit rating.


EHLEBRACHT AG: Plastics Group Shows Losses for 2000
---------------------------------------------------

Ehlebracht AG showed an annual deficit of almost DM60 million
last year, Suddeutsche Zeitung & World Reporter in its May 26
edition said.

The operating loss surpassed DM28 million, while earnings were
also burdened by value adjustments following a rescue program.

The plastics group reached a DM255 million turnover for 2000.


SUNBURST MERCHANDISING: Faces Probe From Prosecutor
---------------------------------------------------

The public prosecution service will investigate Sunburst
Merchandising AG on suspicion of insider trading and publication
of false information, Die Welt & World Reporter in its May 26
edition said.

The German developer, producer and marketer of licensed products
applied for insolvency in April due to its inability to pay.

On March, it gave a turnover warning for the year 2000, putting
it at around 67 million euros, with an Ebitda loss of 6.1 million
euros.


TELDAFAX AG: Finds New Partner After Deutsche Telekom
-----------------------------------------------------

TelDaFax AG, which filed for insolvency in early April, confirmed
the group found a new partner but he declined to give any names,
Reuters in its May 29 edition said.

Telephone service provider TelDaFax earlier on Tuesday was cut
off from the network of rival Deutsche Telekom because of overdue
access fees of around 73 million marks ($31.96 million).

"The 30,000 router customers will be switched to the network of
our new partner," TelDaFax spokesman Rainer Hoffmann said.


=====================
N E T H E R L A N D S
=====================


LETSBUYIT.COM: Achieves Financing Milestone
-------------------------------------------

With the first-quarter results for the period ending March 31,
2001, LetsBuyIt.com has achieved the second milestone of its 3
million euro financing agreements with Shmulik Stein Int. and
NesBIC, the Frankfurt Stock Exchange in its May 29 press release
said.

The company has thereby fulfilled all its obligations to receive
further 7.4 million euro against issuance of new shares.

LetsBuyIt.com has started selling products on its websites on
February this year, upon its Moratorium release and reports an
actual order volume for the first quarter of 1.1 million euro and
net revenues of 734,000 euro. Total order value has increased in
April and May to approximately 4.0 million euro.

Furthermore, LetsBuyIt.com has decreased its operating expenses
for the same period to 15.3 million euro, compared with 24.9
million euro a year earlier.  The decrease is primarily due to
the company's downsizing. LetsBuyIt.com anticipates further
reduction of the operating expenses as the costs reported for the
first quarter 2001 include payments of liabilities from the
fiscal year 2000, moratorium costs and 4.8 million euro
restructuring costs.

The company also incurred net operating loss of 15.2 million euro
as compared to 24.8 million euro in 2000.


UNITED PAN-EUROPE: Loan Adds to Ratings Pressure
------------------------------------------------

Credit ratings agency Moody's Investors Service said on Tuesday
that a one billion euro exchangeable loan for cable operator
United Pan-Europe Communications NV will put further negative
pressure on the company's ratings, according to Reuters' report.

The one billion euro loan from Liberty Media is exchangeable into
UPC shares at eight euros per share, replacing a planned rights
issue. It replaces a more expensive 750 million euro bridge loan
facility for the company and adds 250 million euros of
incremental financing.

Moody's also rates UPC's senior unsecured debt Caa1 with a
negative outlook.


===========
R U S S I A
===========


GAZPROM: Court Freezes Management-Controlled Shares
---------------------------------------------------

The Simonovsky District Court has issued an order freezing 5.5%
of Gazprom shares controlled by its management, company pension
fund Gazfond and subsidiary Gazprombank, the Financial Times in
its Tuesday edition said.

The court order also bars chief executive Rem Vyakhirev, who is
under strong pressure to retire, as well as five other Gazprom
executives, from standing for re-election as board directors at
the June 29 meeting.

Recent legal orders have succeeded in freezing 2.2% of Gazprom
shares managed by brokerage United Financial Group. UFG claims
the Gazprom management engineered the actions.


MEDIA-MOST: Court Orders Media-MOST Liquidation
------------------------------------------------------

The Moscow Arbitration Court has ruled to liquidate the Media-
MOST closed corporation, RosBusiness Consulting on Tuesday
reported.

Media-MOST intends to appeal the decision to the Federal
Arbitration Court of the Moscow District, citing numerous alleged
violations of law.

According to Media-MOST lawyer Geralina Lyubarskaya, the tax
inspection's actions were discriminative, since it filed lawsuits
to liquidate only companies of Media-MOST, whereas a lot of
organizations have no net assets.

Media-MOST may also appeal the verdict to the Constitutional
Court.


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


C&A: Closes Shop Over Accumulated Losses
----------------------------------------

Retailer C&A closed its last two stores on west London yesterday,
Independent News reported. About six personnel will stay on at
C&A's London head office to ensure that staff is paid and bills
settled.

The Bradford and Hounslow outlets were the last of the 109 stores
C&A have closed since its decision last year to pull out of
Britain after accumulating losses of 250 million pounds over the
past five years.

Around 80% of C&A's stores have been sold. Rivals such as Next,
The Gap and Hennes & Mauritz have acquired most of it.


CHARACTER GROUP: Posts 1.94MM Stg Pretax Loss
---------------------------------------------

The Character Group PLC posted a pretax loss for the interim
period ended Feb 28, 2001 of 1.94 million sterling, compared to a
loss of 5.96 million a year earlier, on sales of 36.65 million,
compared to 45.39 million, the May 29 edition of AFX News said.

Loss per share was 9.32 pence for the six months, compared to a
loss of 19.67 a year earlier. There is no interim dividend.

The Character Group is a retailer of branded and character-
licensed toys and games, watches, clocks, giftware, toiletries,
stationery and computer accessories and digital cameras.


CHARACTER GROUP: Toys Investment Agrees to Provide 2MM Stg Loan
---------------------------------------------------------------

Toys Investment SA, which currently owns 15% of The Character
Group PLC, has agreed to provide a short-term loan of 2.5 million
sterling to the retailer of branded and character-licensed toys
and gadgets, according to AFX News' May 29 report.

The Character Group, severely weakened by poor trading results,
does not foresee making a profit for the full year. A 1.2 million
sterling reduction in overhead should enable the group to improve
its trading performance over time.

The group also said it is close to finalizing the terms of a
rights issue, which will be made at a significant discount to the
current market price.


EIDOS PLC: To Raise Cash at Deep Discount
-----------------------------------------

Due to heavy losses, failed takeover talks and a change at the
helm last year, computer games publisher Eidos will raise capital
through a discounted share price offering, the May 29 edition of
Ananova reported.

Eidos believes it is an appropriate time to raise further equity
capital in view of the strong growth prospects. The equity issue
will be at a deep discount to its share price today of 297p.

In February, Eidos reported a widening in losses for the nine
months to December.


EQUITABLE LIFE: Accounting Body to Investigate Auditor Role
-----------------------------------------------------------

Britain's accountancy watchdog Institute of Chartered Accountants
launched a formal investigation into the role of Ernst & Young
when the firm acted as auditors for life assurance firm Equitable
Life, Reuters in its May 29 edition said.

The watchdog will investigate the roles of all senior Ernst &
Young accountants, and will also look at the conduct of
Equitable's former non-executive director Peter Davis and former
chief accountant Julian Hirst.

Ernst & Young, who had been Equitable Life's auditors for decades
before PricewaterhouseCoopers replaced them last week, denied any
wrongdoing in the financial statements of the company.

Ernst & Young has been criticized by Equitable's policyholders
for not identifying the possibility of a 1.5 billion pound ($2.1
billion) shortfall from guaranteed annuities.


MARKS & SPENCER: Lacks Customer Trust
-------------------------------------

A report has predicted that the embattled retailer Marks &
Spencer has undermined the trust of its core customer base, the
May 29 edition of Namnews said.

According to analysts at Retail Intelligence, there is a place in
the market for M&S's strategy of producing moderately
fashionable, well-made clothes at competitive prices.

However, this strategy could only work if the company maintained
its standards of quality, which had slipped over the past decade
as pressures for higher margins increased.

Recently, M&S chairman Luc Vandevelde unveiled a sharp decline in
profits for the third successive year.


                              ***************

       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 Ma. Cristina D. 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.


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