/raid1/www/Hosts/bankrupt/TCREUR_Public/010626.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, June 26, 2001, Vol. 2, No. 124


                            Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Founders Remain in Custody
SABENA SA: EU Will Not Approve State Aid
SABENA SA: Swissair to Renegotiate Deal With State

* C Z E C H   R E P U B L I C *

KRALOVOPOLSKA: Sustains Kc1.16BB Loss

* G E R M A N Y *

WASCHBAER UMWELT: Mail Order Company Files for Insolvency

* G R E E C E *

OLYMPIC AIRWAYS: Technical Staff Stages Strike

* I T A L Y *

ALITALIA-LINEE: Cancels Flights in Rome

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

KPN NV: May Opt for Discounted Rights Issue
NEWCONOMY NV: Unit Seeks Creditor Protection
UNITED-PAN EUROPE: May Face $200MM Liability
VERTO: Bondholders Receive Fl 12MM

* R U S S I A *

NTV: Court Reschedules Kiselyov Case

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

SWISSAIR GROUP: Posts SFR 400MM Loss in Four Months
SWISSAIR GROUP: Will Propose KPMG as New Auditor

* U N I T E D   K I N G D O M *

GLOBAL TELESYSTEMS: Company Profile
INDEPENDENT INSURANCE: FSA Probes Private Investors
INDEPENDENT INSURANCE: Investors Consider Legal Action
MARKS & SPENCER: Consultant Seeks to Block Two Directors
MARKS & SPENCER: French Staff Poses Strike
METROCAB: Kamkorp Buys Taxi Company
RAILTRACK GROUP: Rail Regulator Warns Byers on Management
REDSTONE TELECOM: Calls for Share Issue


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


LERNOUT & HAUSPIE: Founders Remain in Custody
---------------------------------------------

Lernout & Hauspie Speech Products NV founders, Jo Lernout and Pol
Hauspie, and former board member Nico Willaert were ordered to
remain in custody on Friday, awaiting trial on charges of fraud
and stock manipulation.

The former bosses' pre-trial detentions were extended for a third
month because an Ieper judge determined that their release would
endanger the ongoing investigation.

L&H official Gaston Bastiaens was extradited from the United
States on Wednesday and taken into custody on Thursday.

The speech company, which filed for bankruptcy protection late
last year amid an accounting scandal, needs to come up with a new
recovery program before September 10.


SABENA SA: EU Will Not Approve State Aid
----------------------------------------

European transport commissioner Loyola de Palacio said the EU
would not allow any Belgian state aid to support Sabena, the AFX
News reported on Friday.

According to de Palacio, Sabena's crisis would have to be
resolved purely by market forces and not with government
subsidies. She intends to follow developments closely, including
expected final decisions on Sabena's future this week.

The commission did not oppose a capital injection earlier this
year because it was market-based.


SABENA SA: Swissair to Renegotiate Deal With State
--------------------------------------------------

Swissair Group AG announced it will renegotiate the deal signed
with the Belgian government, vowing to raise its current 49.5%
stake in Sabena to 85% once the EU regulations allow it, the
Friday edition of AFX News said.

European transport commissioner Loyola de Palacio made it clear
on Friday that the EU would not approve any Belgian state aid in
favor of Sabena unless it is market based.


===========================
C Z E C H   R E P U B L I C
============================


KRALOVOPOLSKA: Sustains Kc1.16BB Loss
-------------------------------------

Engineering company Kralovopolska (KP)posted a Kc1.16bn loss for
2000, attributed to the creation of reserves necessary for the
completion of financial restructuring, Czech News Agency & World
Reporter in its June 22 edition said.

Last year's performance was affected by the company's bankruptcy
in February, which was revoked by the High Court in late August.

300 employees were laid off by subsidiary Kralovopolska strojirna
in 2000 due to the bankruptcy. KP is also in the process of
looking for a suitable investor.


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


WASCHBAER UMWELT: Mail Order Company Files for Insolvency
---------------------------------------------------------

The eco product mail-order company Waschbaer Umwelt Produkt
Versand GmbH and its subsidiary Alb Natur GmbH have filed for
insolvency at the Freiburg municipal court, Frankfurter
Allgemeine Zeitung reported in its June 22 edition.

Waschbaer blames the current crisis in the market and its
acquisition of the struggling Alb Natur as the cause of its
financial burden.

Waschbaer now hopes that United Nature AG becomes a shareholder.
United Nature has submitted a restructuring plan to the Freiburg
court.


===========
G R E E C E
===========


OLYMPIC AIRWAYS: Technical Staff Stages Strike
----------------------------------------------

The technical support staff of Greek carrier Olympic Airways has
staged a one-day strike on June 19, forcing the airline to cancel
more than 40 of its 70 planned flights, M2 Communications Ltd. in
its June 20 report said.

The strike came just as the Greek government accepted binding
bids from Greek carrier Axon Airlines, Cyprus Airways, the Greek
Restsis shipping group's Golden Aviation Holdings and Australia's
Integrated Airline Solutions Consortium for a stake in the
carrier. The technical workers are protesting because they do not
wish Olympic Airways to be sold.

The bids have been submitted to Credit Suisse First Boston

Olympic Airways is burdened with massive debts and analysts have
suggested that the government will have to make extra concessions
to effect a sale.


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


ALITALIA-LINEE: Cancels Flights in Rome
---------------------------------------

Alitalia was forced to cancel 86 flights and reschedule another
150 because of five separate strikes on Friday at Leonardo da
Vinci airport in Rome, the Associated Press reported.

Airport workers are demanding benefits that include better
healthcare. 50 of the canceled flights were domestic, while 36
were international.


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


KPN NV: May Opt for Discounted Rights Issue
-------------------------------------------

KPN Telecom is reportedly planning for a discounted rights issue
to stabilize KPN's finances prior to a possible merger with
another European telco, CIT Online in its June 22 edition said.

If the plan proceeds, KPN is expected to ask its public
shareholders for around 2.5 billion euros.

Dutch institutions would also be offered preference shares that
could amount to around 10% of the offering, while the Dutch
government would take a further 35% if it chooses to subscribe to
the offering. In total, the issue could raise 5 billion euros.


NEWCONOMY NV: Unit Seeks Creditor Protection
--------------------------------------------

Internet hothouse fund Newconomy said its Macropolis unit would
file for protection from creditors, Reuters in its Friday edition
reported.

Newconomy has held talks with various companies about taking over
Macropolis, but said these had not been successful so far. The
additional financing to the unit earlier this year had proven to
be insufficient to solve Macropolis' liquidity problems.

Newconomy has suffered a net loss of 69.4 million euros in 2000.
It said it could survive until July 2002 after a more structural
solution for its problems in the medium term.


UNITED-PAN EUROPE: May Face $200MM Liability
----------------------------------------------

Merrill Lynch analysts said United Pan-Europe Communications NV
would face a US$200 million liability claim if the company does
not float its Priority Telecom unit by October 1, the Friday
edition of AFX News reported.

As part of Priority's acquisition of Cignal Global Communications
last year, UPC agreed to compensate Cignal shareholders if
Priority is not listed by October. Cignal shareholders received a
16% stake in Priority as payment for 100% of Cignal.

UPC spokesman Bert Holtkamp declined to comment on how UPC
expects to resolve the agreement with the Cignal shareholders.

The company is still seeking private financing for Priority and
is in the process of working out the relevant shareholder issues
as well, AFX added.


VERTO: Bondholders Receive Fl 12MM
----------------------------------

Bondholders of liquidated steel cable manufacturer Verto will
receive about Fl 12 million, marking the downfall of the company
that has been in suspension of payment since 1993, De Telegraaf  
& World Reporter in its June 22 edition said.

Verto's liquidation is mainly due to the acquisition of
competitor De Regt Special Cable (DRSC) in 1988. The company was
sold two years later, losing Fl 30 million.

All creditors will be refunded. Their claims amount to about Fl
150 million. However, shareholders will not receive any capital.


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


NTV: Court Reschedules Kiselyov Case
------------------------------------

A local Moscow court rescheduled a hearing in the suit brought by
former NTV director Yevgeny Kiselyov against shareholders
contesting of the television company, RosBusiness Consulting on
Friday reported.

Neither the plaintiff nor former NTV journalists Andrey Norkin,
Nikolay Fyodorov, Vladimir Kara-Murza and Yevgeny Kirichenko
appeared in court.

The defendants in the case are NTV and Gazprom-Media's
subsidiary, Lidvil Investment LTD. Lidvil is known to have
participated in the decision for the date of the court hearings.

Judge Tamara Lobachyova said, however, that they have not yet
been notified of the new hearing date.


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


SWISSAIR GROUP: Posts SFR 400MM Loss in Four Months
--------------------------------------------------

Swissair Group AG posted losses of around 400 million Swiss
francs in the first four months of 2001, the Sunday edition of
AFX News said.

The loss excludes costs of its French, Belgian, German and
Italian operations.

Meanwhile, Swissair has won a temporary reprieve in France as it
is not expected to face the estimated costs of 1.5 billion Swiss
francs from the bankruptcy of its French unit AOM-Air Liberte
until 2002, AFX added.


SWISSAIR GROUP: Will Propose KPMG as New Auditor
------------------------------------------------

The Swissair Group on Friday said it would propose in its
Extraordinary Shareholders' Meeting on November 9 to elect
accountants KPMG as its new statutory auditors.

KPMG are already acting as Swissair's interim statutory and group
auditors following the resignation of PriceWaterhouseCoopers.

KPMG will be auditing the airline's half-yearly results that will
be presented on August 30.


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


GLOBAL TELESYSTEMS: Company Profile
-----------------------------------

Name:        GLOBAL TELESYSTEMS INC.
             151 Shaftesbury Avenue
             London LOM WC2H8AL
             UK

Phone        +44 (0)20 7769 8000

Website:     www.gts.com

SIC:         Services-Prepackaged Software [7372]

Employees:   2,930 (2000)
Revenue:     US$106.3 million (Quarter Ending March 2001)
Total Net Income:  US$-225.3 million (Quarter Ending March 2001)
Total Assets:      US$2,204.6 billion (Quarter Ending March 2001)
Total Liabilities: US$3,715.6 billion (Quarter Ending March 2001)

Type of Business:  Provider of broadband optical and IP network
services across Europe, serving more carriers, service providers,
dot.coms and European corporations with a range of broadband,
hosting and Internet/IP services than any other company.

Chairman and Chief Executive Officer:  Robert Amman
President and Chief Operating Officer: Duncan Lewis
Chief Financial Officer:               Robert A. Schriesheim

Auditors:  Ernst & Young

Securities:  Shares Outstanding 203.9 million (Quarter Ending
March 2001)

Last published in TCR-Europe on June 22, 2001


INDEPENDENT INSURANCE: FSA Probes Private Investors
---------------------------------------------------

The Financial Services Authority is investigating the private
investors who sold Independent Insurance shares in February,
according to The Sunday Times' report.

The investors will include former staff at the company and
associates of Independent's founder Michael Bright, who is now at
the center of an investigation by the Serious Fraud Office (SFO).

The FSA wants to see if any of those who sold knew of the
company's problems before they were known to the stock market.
The inquiry may also include other cases of heavy trading and the
role of Independent's auditor KPMG.

Independent was placed into provisional liquidation after
insolvency specialist PriceWaterhouseCoopers said the company was
running out of cash. The company also has a huge deficit in its
reserves.


INDEPENDENT INSURANCE: Investors Consider Legal Action
------------------------------------------------------

Institutional investors, who refused to be named, are considering
legal action against the directors of insurance group Independent
Insurance, its non-executives, and its auditor KPMG, according to
the Financial Times report on Sunday.

A representative for some of the company's biggest shareholders
met with Stephen Alexander, a partner at the London-based law
firm Class Law, on Friday.

Provisional liquidators PriceWaterhouseCoopers are expected to
outline this week the redundancy plans for the employees of
Independent, which went into voluntary liquidation last week
after it was revealed that the company was facing losses from
unrecorded claims of more than 62 million pounds.


MARKS & SPENCER: Consultant Seeks to Block Two Directors
--------------------------------------------------------

The corporate governance consultancy has urged Marks & Spencer
shareholders to block the reappointment of two non-executive
directors, the Financial Times reported on Sunday.

A Pirc report recommended that Tony Ball and Kevin Lomax be
barred from reappointment to the M&S board.

Pirc felt that Ball, chief executive of BSkyB, and Lomax,
chairman of Misys, should have acted through M&S' pay committee
to set tough conditions to govern Luc Vandevelde's option
package.


MARKS & SPENCER: French Staff Poses Strike
------------------------------------------

Most of Marks and Spencer's 1,700 French employees went on strike
on Friday following the breakdown of negotiations on a
compensatory package for the closure of the French unit, the
Financial Times reported.

The employees said they were determined to continue the strike
until their demands were met.

According to trade union representatives, the talks brought
little progress. Besides the 4.5% salary increase, the union has
demanded a bonus payment of FF12,000 per employee. It was also
has proposed that the compensation should be based on
individuals' salary rather than a fixed sum.


METROCAB: Kamkorp Buys Taxi Company
-----------------------------------

Receivers on Thursday have sold black taxi company Metrocab to
Kamkorp Europe, Birmingham Post in its June 22 edition said. The
receivers at Leonard Curtis & Co disclosed nothing else.

Kamkorp said it intends to retain the employees at the
manufacturing site in Tamworth, and the dealerships in London and
Manchester. It will shortly be looking to take on further staff
at all three sites.

Metrocab has continued to trade throughout this year, selling a
total of 60 new and used taxis through both its outlets.


RAILTRACK GROUP: Rail Regulator Warns Byers on Management
---------------------------------------------------------

Rail regulator Tom Winsor has warned transport secretary Stephen
Byers that Railtrack's senior management is a major barrier to
improving the industry, the Financial Times in its Sunday edition
said.

Winsor's one concern about the management is the lack of
engineering and railway expertise.

Another barrier to reform is monopoly, where train operators are
running the tracks, and the vertical split between the
infrastructure and train operators.

Re-nationalization was ruled out.


REDSTONE TELECOM: Calls for Share Issue
---------------------------------------

Business communications service provider Redstone Telecom is
planning a 22-million-pound share issue to secure a cash
injection, the Financial Times reported on Friday.

The move may help Redstone survive the telecom downturn. Priced
at just 1p, Redstone has priced the share at just 1p, a fraction
of last year's 949p high.

The company said that although discussions with creditors are in
an advanced stage, there is no certainty they will be concluded
successfully.

It is also expected that the completion of the details of the
rights issue will be followed by the resignation of Redstone
chief executive Graham Cove.


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

     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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