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        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 15, 2001, Vol. 2, No. 117


                            Headlines

* B E L G I U M *

CUSTOM SILICON: Suspended on Nasdaq Europe
LERNOUT & HAUSPIE: Ex-CEO Bastiaen Denied Bail

* F R A N C E *

AIR LIBERTE: Finds Ways to Implement Restructuring Plan
AIR LIBERTE: May File for Bankruptcy Today
AIR LIBERTE: Strike Disrupts Flights

* G E R M A N Y *

DAIMLERCHRYSLER: To Post Second-Quarter Results on July 20
INTERSHOP COMMUNICATIONS: Drops Over Warning of Higher Losses
MEDIANTIS AG: To Wind Up Operation
REFUGIUM: Considers Insolvency Filing
SPORTGATE AG: Boris Becker Internet Firm Files for Bankruptcy

* I T A L Y *

GRAPES COMMUNICATIONS: Moody's Lowers Ratings to Ca
GRAPES COMMUNICATIONS: Sells Spanish Interests for 68.5MM Euro

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

KPN NV: Seeks for European Partner

* P O L A N D *

ELEKTRIM SA: Faces Injunction Over Asset Sale

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

SWISSAIR GROUP: Partners Confirm Commitment

* U N I T E D   K I N G D O M *

BRITISH TELECOM: Appoints First BT Wireless Chief
BRITISH TELECOM: Sells Properties for 2.3BB Pounds
MARKS & SPENCER: May Profit on Baker Street Redevelopment
MARKS & SPENCER: Shareholders Rage Over Double-Cash Plan
RAILTRACK GROUP: Dives on Tough Talks
REDSTONE TELECOM: Plummets on Rights Issue
UNITED ENGINEERING: Calls in Administrators

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


CUSTOM SILICON: Suspended on Nasdaq Europe
------------------------------------------

Nasdaq Europe suspended the trade of Custom Silicon Configuration
Services (CS2) on Wednesday because the Belgium-based company,
which is operating under bankruptcy protection, posted its
recovery plan on its Web site only in Dutch, the Wall Street
Journal reported Wednesday.

CS2 will remain suspended until it publishes an English version.


LERNOUT & HAUSPIE: Ex-CEO Bastiaen Denied Bail
----------------------------------------------

U.S. Magistrate Charles Swartwood denied Lernout & Hauspie's
former chief executive Gaston Bastiaens' request for three days
of freedom, Reuters reported on Wednesday.

Bastiaen will be held until Saturday, when he will be turned over
to Belgian authorities to face charges of fraud, insider trading
and stock manipulation.  He faces a possible 15-year prison
sentence in Belgium if convicted.

Bastiaens' lawyers claimed he needed the three days of freedom to
arrange for the mortgage payment of his house in the United
States. He also needed to take care of utility bills and consult
with counsel about his other legal cases, Reuters said.

The magistrate noted that Bastiaens, who has filed for protection
under Chapter 7 of the U.S. Bankruptcy code, is the subject of at
least six class action suits.

He has also been subpoenaed and has testified before the U.S.
Securities Exchange Commission and a U.S. grand jury, Reuters
noted.


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


AIR LIBERTE: Finds Ways to Implement Restructuring Plan
-------------------------------------------------------

Chairman Marc Rochet of ailing airlines AOM and Air Liberte has
called a meeting with employee representatives to explore ways of
implementing a 3-billion franc restructuring package to keep the
airlines afloat, Dow Jones Newswires reported on Wednesday.

Rochet unveiled his plan last month to salvage the two cash-
strapped carriers. The plan includes cutting 1,328 jobs and
reducing AOM and Air Liberte's fleet to 27 aircraft from a
current fleet of 52 jets. The two companies shall also stop
servicing routes where they directly compete with Air France
Group and France's TGV fast train.

Since AOM and Air Liberte shareholders have agreed to provide
financing for the carriers only through June, Rochet might soon
be left with no other choice than filing for bankruptcy.

Swissair, which owns 49% of the two carriers, repeated it would
finance Rochet's restructuring plan with 2 billion francs only
after new investors have been identified. However, the
shareholder has not yet received a serious proposal.

Swissair also wants AOM and Air Liberte's majority shareholder
Marine- Wendel to co-finance the rescue plan. Marine-Wendel
chairman Ernest-Antoine Seilliere continued to decline the
financing.


AIR LIBERTE: May File for Bankruptcy Today
------------------------------------------

Air Liberte could file for bankruptcy today if Swissair fails to
come up with a plan to rescue its French unit, Dow Jones
Newswires reported on Wednesday.

To recall, Swissair said it would finance the French airline's
restructuring plan through June. Shareholder Marine-Wendel also
declined the financing.


AIR LIBERTE: Strike Disrupts Flights
------------------------------------

About 30 flights out of Orly airport in Paris were delayed by up
to half an hour as nearly 3,000 airline employees marched on
parking areas on Wednesday over a plan to eliminate hundreds of
jobs at AOM and Air Liberte, according to Wednesday's Dow Jones
Newswires report.

Employees of Aeroport de Paris and Charles de Gaulle joined
workers of the French airlines. Trade unionists from national
carrier Air France also showed up.

Workers from AOM and Air Liberte, which recently announced a
restructuring plan, walked off the job last month to protest
planned layoffs of about 1,328 persons.


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


DAIMLERCHRYSLER: To Post Second-Quarter Results on July 20
----------------------------------------------------------

DaimlerChrysler AG said it would report its second-quarter
earnings on July 20, according to Dow Jones Newswires in its
Wednesday report.

The date was moved up from the original July 26 date for internal
reasons. A DaimlerChrysler spokesman declined to elaborate.

Investors will be watching the report closely for clues as to
whether the automotive giant is on track to turnaround the group
and struggling U.S. operations Chrysler and truck arm
Freightliner, which dragged the group's worldwide operation into
a loss of $118.2 million at the end of the first quarter.


INTERSHOP COMMUNICATIONS: Drops Over Warning of Higher Losses
-------------------------------------------------------------

Shares in e-commerce software company Intershop dropped sharply
on Wednesday after it said it would incur a higher-than-expected
loss this year.

Intershop chief operating officer Wilfried Beeck said the net
loss for the year would be higher than last year's 39.3 million
euro. The company was hit last year by heavy investments, a fast-
rising headcount and poor sales in the US, and recently by the
general downturn in information technology spending.

The company relocated some overseas positions back to Germany
after it posted a profit warning in January, reshuffled the US
operation's management, and initiated a drive to boost sales
through third-party channels.


MEDIANTIS AG: To Wind Up Operation
----------------------------------

Internet book retailer Mediantis AG and German shareholders
association SdK are set to call for the company's closure at its
AGM on July 24, Frankfurter Rundschau & World Reporter in its
June 9 edition said.

The association says it is doubtful that Mediantis could be
profitable, since share price stands at just 1.15 euro, down from
19 euro in 1999.


REFUGIUM: Considers Insolvency Filing
-------------------------------------

Retirement home operator Refugium is considering whether to file
for insolvency or to keep hoping for external aid, according to
Suddeutsche Zeitung & World Reporter in its June 12 edition.

Chief executive Klaus Kuthe said that if he could guarantee a top
insolvency administrator, the company would file for insolvency.

The company may request that competitor Marseille-Kliniken enter
Refugium. Another option would be for Lehman Brothers to
accumulate capital from investors and inject it into the company.
Deitrich Walther, supervisory board head of German financial
consultancy Gold-Zack and former Refugium board chairman, could
also help find a solution for Refugium.


SPORTGATE AG: Boris Becker Internet Firm Files for Bankruptcy
-------------------------------------------------------------

Sports Internet portal Sportgate AG, owned by the former German
tennis star Boris Becker, filed for bankruptcy in a Berlin court
after talks on a rescue plan failed, according to Suddeutsche
Zeitung & World Reporter's Wednesday edition.

Chairman Helmut Thoma said that all the primary finance had been
used up, as debt has reached DM1.2 million.

Becker, who owns 55% stake, and Pixelpark (5%) were not prepared
to inject the extra DM6 million required to keep the business
afloat.

Sportgate has unsettled claims against all of the partners in the
venture.


=========
I T A L Y
=========


GRAPES COMMUNICATIONS: Moody's Lowers Ratings to Ca
---------------------------------------------------

Moody's Investors Service on June 13 lowered the ratings of
Grapes Communications N.V. to Ca.

Ratings affected with the downgrade are senior implied rating,
which was lowered to Ca from Caa2, unsecured issuer rating
lowered to Ca from Caa3 and 200.0 million euro 13.5% senior notes
due 2010 lowered to Ca from Caa3.

The ratings downgrade followed Grapes' announcement that, in the
context of a strategic re-focusing on the Italian market, the
company had sold its interests in its Spanish fixed-line and
wireless local loop activities and had acquired Swisscom AG
subsidiary Swisscom S.p.A.

Moody's expects that the divestiture of the company's Spanish
assets will have an adverse impact on the company's cash flows
and tangible asset base going forward.

For the quarter ending March 31, 2001, Grapes' Spanish operations
accounted for approximately 58.3% of consolidated revenues, and
29.8% of total consolidated assets.


GRAPES COMMUNICATIONS: Sells Spanish Interests for 68.5MM Euro
--------------------------------------------------------------

Grapes Communications N.V. sold its interests in its Spanish
fixed-line and wireless local loop services to Portugal's largest
alternative telecommunications operator ONI.

ONI has agreed to pay 68.5 million euro and take existing
liabilities of approximately 7 million euro.

The company used proceeds of the sale to repay in full its debt
under the Senior Credit Facility entered on September 2000.


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


KPN NV: Seeks for European Partner
----------------------------------

Telecommunications firm KPN is seeking a partner in Europe, Dow
Jones Newswires reported on Wednesday.

"KPN is looking around very openly in Europe to see with whom a
partnership is possible," chief Uwe Bergheim of KPN Mobile's E-
Plus said.

Meanwhile, KPN plans to sell up to 5.5 billion euro of shares to
its existing shareholders at a discount to help relieve its
$19.4-billion debt burden.


===========
P O L A N D
===========


ELEKTRIM SA: Faces Injunction Over Asset Sale
---------------------------------------------

Netherlands' PenneCom BV, the Wall Street Journal in its
Wednesday edition said, has served telecommunications
conglomerate Elektrim SA with a second court injunction against
the disposal of its mobile telecommunications assets.

Elektrim said it would appeal the June 6 ruling by the Warsaw
district court, which ordered the seizure of share rights valued
at $31.9 million in telecommunications unit Elektrim
Telekomunikacja in order to enforce a London International
Arbitration Court ruling in favor of PenneCom.

The Warsaw court's decision follows a similar injunction issued
in April to secure a $36.9-million claim by Eastbridge NV against
Elektrim for failing to carry out an agreed purchase of two
Eastbridge-owned Internet units.

Elektrim said the latest ruling was a flagrant breach of Polish
civil law procedures. The company would appeal to get the
injunction overturned, the Wall Street Journal added.


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


SWISSAIR GROUP: Partners Confirm Commitment
-------------------------------------------

Swissair Group in its Wednesday press release said the presidents
of Qualiflyer Alliance airlines have confirmed their commitment
to the alliance.

All Qualiflyer Alliance members, composed of Belgium's Sabena,
TAP Air Portugal, France's AOM and Air Littoral, Turkish
airlines, Swiss regional carrier Crossair, Italy's Air Europe and
Volare as well as Poland's LOT, are determined to jointly enhance
the customer benefits that the Qualiflyer alliance offers.

The benefits include the frequent flyer program, joint alliance
call centers in London, Milan, Frankfurt, Barcelona, Istanbul,
Stockholm, New York and Brisbane, joint airport organizations and
joint sales offices in the main European countries.


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


BRITISH TELECOM: Appoints First BT Wireless Chief
-------------------------------------------------

British Telecom has appointed David Varney to be chairman of BT
Wireless on its planned demerger from the BT Group later this
year. The move is designed to boost the performance of BT
operations, struggling under a 30-billion-pound debt mountain.

In a statement on Wednesday, BT said Varney would work with BT
management and BT Wireless chief executive officer Peter Erskine
in the run-up to the demerger.

David Varney has a strong track record of leading businesses that
have improved their performance on a sustained basis. He has
experience in both UK and overseas markets gained during his four
years as chief executive of the BG Group. Varney has also had a
variety of senior roles at Shell.

He left BG plc. in 2000, having steered the Group to a successful
demerger and put in place a strong management team for the two
new companies, BG Group plc., and the Lattice Group plc.


BRITISH TELECOM: Sells Properties for 2.3BB Pounds
--------------------------------------------------

British Telecom said on Wednesday it has sold its UK properties
for 2.3 billion pounds ($3.1 billion) as it strives to reduce its
huge debts. BT sold the properties to Telereal Holdings Limited,
a joint venture owned by Land Securities Trillium and The William
Pears Group.

Telereal, which will raise finance on the bond markets to
complete the transaction, will supply property management
services to BT on an ongoing basis to  enable BT's management to
focus on the core communications business.

BT plans to reduce its debt by about 10 billion pounds this year.
It sold its Yell business pages unit last month. The company is
also considering the sale of its stake in business services unit
Concert to joint venture partner AT&T.


MARKS & SPENCER: May Profit on Baker Street Redevelopment
---------------------------------------------------------

Retailer Marks & Spencer could profit from up to 400 million
pounds after it puts its head office in London's Baker Street up
for redevelopment, according to the Times' report yesterday.

The 400-million-pound windfall will go towards a 1.4-billion-
pound saving. M&S is aiming to raise fund from its UK assets as
it has pledged to return 2 billion pounds to shareholders by
March next year.

A spokesman for M&S said that the company is still considering
how to redevelop Baker Street in order to maximize the possible
returns.


MARKS & SPENCER: Shareholders Rage Over Double-Cash Plan
--------------------------------------------------------

Marks & Spencer has angered major shareholders by proposing to
double the salary top directors can earn if performance criteria
are met, the Wednesday edition This Is London said.

When the scheme was introduced last year, the executives could
receive a maximum amount of 1.5 times salary. This year, M&S is
keen to improve the scheme but left the performance criteria
unchanged. The plan means chairman Luc Vandevelde would receive
shares worth about 2 million pounds.

Details emerged after M&S reported a decline in pre-tax profits
from 417.5 million pounds to 145.5 million pounds.

M&S and its remuneration consultants New Bridge Street are
discussing the scheme with institutions and major bodies such as
the Association of British Insurers.


RAILTRACK GROUP: Dives on Tough Talks
-------------------------------------

Tough talks from rail regulator Tom Winsor has sent shares in the
cash-strapped Railtrack Group Plc diving more than 4% on
Wednesday, according to Reuters' Wednesday edition.

Winsor told Railtrack in a radio interview on Wednesday to "put
away the begging bowl" and "get a grip."

"I can reassess the regulated company's charges if additional
work on the network is required, but the company must make a
compelling case for that and my message is cut out the nonsense
about additional money now," he told BBC radio.

Railtrack's share price has fallen as much as 76% since October
due to the fatal train crash blamed on a broken rail. A massive
repair program and cost overruns followed. Railtrack has also
revealed a 3.8 billion pounds funding shortfall as it struggles
to overhaul Britain's crumbling railways.


REDSTONE TELECOM: Plummets on Rights Issue
------------------------------------------

Shares of Redstone Telecom dropped 7.9% to 8.75% on Wednesday
after a the Financial Times reported the UK group was considering
a deeply-discounted rights issue of new stock at just 5 pence,
Reuters' reported.

The FT said Redstone would have to issue 500m new shares to raise
25 million pounds. Analysts said that a further fall could force
the company to seek alternative ways to raise funds.

No one at the company could immediately be reached for comment.


UNITED ENGINEERING: Calls in Administrators
-------------------------------------------

Motor parts supplier United Engineering Forgings has run out of
cash and was forced to call in accountants KPMG as
administrators, This Is London in its Wednesday edition said.

UEF, which has six plants in Central and Northern England and
Scotland, sends nearly 50% of its products abroad. The high value
of the pound in recent years has been partly blamed for the
problems.

Chief executive Bob Bates said it had been seeking a buyer for
the past 12 months but had failed to cut a deal in time. A series
of measures is now being put in place to try to return the
company to profitability.

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

     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
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Information contained herein is obtained from sources believed to
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