/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010627.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, June 27, 2001, Vol. 2, No. 125 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Company Profile LERNOUT & HAUSPIE: Still on Lookout for Investors SABENA SA: Belgium Fights Swissair Over Funding SABENA SA: Court Meets With Sabena SABENA SA: May Cut Over 2,000 Jobs * F R A N C E * AIR LIBERTE: Aeris to Bid for Air Liberte * G E R M A N Y * EM.TV: Asks Shareholders to Give Chief More Time * H U N G A R Y * GTS HUNGARY: Parent Company Calls Off Unit Sale SYNERGON INFORMATION: Analyst Expects Takeover in IT Firm * N E T H E R L A N D S * KPN NV: Seeks Merger With European Telco SWT FINANCE: Moody's Downgrades Rating to Caa2 * P O L A N D * ELEKTRIM SA: Leans to Vivendi Offer * S P A I N * SINTEL: 2MM Workers Support Sintel Employees * S W I T Z E R L A N D * SWISSAIR GROUP: Shares Rise as Group Cuts Sabena Funding * U N I T E D K I N G D O M * BARINGS: Auditors Face 1BB-Pound Suit BARINGS: Delay Raises Settlement Hopes BRITISH NUCLEAR: To Post 200MM-Pound Loss for 2000 INDEPENDENT INSURANCE: Bright Appoints Burton Copeland INDEPENDENT INSURANCE: FSA Probes Timing of Reports MARKS & SPENCER: Faces Investor Showdown Over Share Scheme MARKS & SPENCER: French Store Reduces Offer in Pay Talks METROCAB: Will Resume Production in Two Weeks ============= B E L G I U M ============= LERNOUT & HAUSPIE: Company Profile ---------------------------------- Name: LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. Flanders Language Valley 50 8900 Ieper, Belgium Phone +32-57-22-88-88 Website: www.lhs.com SIC: Services-Prepackaged Software [7372] Employees: 4300 (February 1, 2001, excluding Mendez Unit) Total Revenue: US$1,065,000(For The Month Ended January 31, 2001) Net Loss: US$8,364,000 (For the month ended Jan. 31, 2001) Total Current Assets: US$1,876,667,000 (As of Feb. 28, 2001) Total Current Liabilities: US$627,584,000 (As of Feb. 28, 2001) Type of Business: Lernout & Hauspie Speech Products N.V. is an international developer, licensor and provider of advanced speech and language technologies, products, solutions and services. The company delivers the broadest array of consumer, business, and industry offerings in automatic dictation, translation, sound compression, voice synthesis, and industrial documentation. Trigger Event: Former chief executive Gaston Bastiaen was charged with fraud, insider trading and stock manipulation. Bastiaens is subject of at least six class action suits. A $100 million was also discovered missing in the firm's South Korean unit. President and CEO: Philippe Bodson CFO and Snr. VP, Finance and Administration: Tim Ledwick Pres. and COO, Dictaphone Healthcare Solutions Group: Rob Schwager Auditor: KPMG International Securities: Shares Outstanding 143,154,761 as of August 8, 2000 Company Notes: Note=11-00 company filed petition under Chapter XI of the Federal Bankruptcy Code in the U.S. Bankruptcy Court in Wilmington, Delaware Note=01-01 Belgian court granted L&H bankruptcy protection. Class Notes: Latest Additional & Secondary Issue=9-97 2,400,000 shares at $45 by Cowen & Co. et al. Last published in TCR-Europe on June 26, 2001 LERNOUT & HAUSPIE: Still on Lookout for Investors ------------------------------------------------- The CEO of Lernout & Hauspie Speech Products NV, Philippe Bodson, said on Monday that the company would file for bankruptcy while it still has some cash in hand if it cannot attract investors soon, Dow Jones Newswires reported. Bodson added that he still hoped to find investors or buyers for some of Lernout's assets and would not wait until the company's last cent is spent to file for bankruptcy. A Belgian court, which rejected Bodson's original recovery plan for the company for lack of substance, extended temporary bankruptcy protection for Lernout to September 30. It said L&H must come up with a new recovery plan by September 10. SABENA SA: Belgium Fights Swissair Over Funding ----------------------------------------------- Swissair Group's fight with the Belgian government over funding of national carrier Sabena looks set to drag on, according to the Wall Street Journal in its report yesterday. Swissair chief executive Mario Corti recently said the company would cut off funding to its money-losing subsidiaries, including its French holdings AOM/Air Liberte and German charter carrier LTU. The Belgian government also doesn't want to keep Sabena afloat, and is legally forbidden by the EU to do so. If Sabena's situation isn't under control, the court could ask the public prosecutor to place the company under bankruptcy protection. Sabena posted a net loss of 325 million euros ($279.2 million) in 2000, while the Swissair's net loss stood at almost three billion Swiss francs. SABENA SA: Court Meets With Sabena ---------------------------------- A commercial court on Monday held talks with Sabena SA executives to assess its financial health after shareholder Swissair Group indicated that it would not expand its stake in the Belgian airline, the Associated Press reported. Sabena refused to comment after the meeting. Meanwhile, unions protested outside the offices of the Transport ministry on Monday, demanding the government better protect of Sabena. Unions wanted to know whether the work force will be able to hold on to their jobs. SABENA SA: May Cut Over 2,000 Jobs ---------------------------------- Sabena Belgian World Airlines SA could cut over 2,000 jobs as part of its recovery plan, according to AFX News' Monday edition. The redundancy plan includes 250 pilots and around 500 navigation personnel. Sabena chief executive Christoph Mueller was also reported to have said that Sabena should refocus itself on European operations, canceling long-distance routes to Washington and Tokyo. =========== F R A N C E =========== AIR LIBERTE: Aeris to Bid for Air Liberte ------------------------------------------ French charter airline Aeris said it would acquire the charter business of Swissair and Marine-Wendel's ailing French regional airline AOM/Air Liberte, according to the Associated Press' Monday report. Aeris would file its proposal to the court by Friday. AOM/Air Liberte's prize assets are take-off and landing rights at Paris' Orly airport, where slots are in demand because there is limited room for expansion. A French court has given AOM/Air Liberte, which filed for bankruptcy earlier this month, three months to find potential buyers for the group. The airline announced a net loss of 2.4 billion francs for 2000, and said 1,328 jobs would be eliminated, prompting strikes and protests by worried staff. ============= G E R M A N Y ============= EM.TV: Asks Shareholders to Give Chief More Time ------------------------------------------------ EM.TV & Merchandising AG will ask its shareholders to postpone until next year a decision on whether to replace chief executive Thomas Haffa and two of its supervisory board members, according to Wall Street Journal's report yesterday. The media company wants the decision delayed until shareholder lawsuits and an investigation into possible insider trading and fraud have been resolved. Haffa and his brother Florian Haffa, EM.TV's former chief financial officer, have acknowledged selling shares last year. EM.TV also badly misforecast its results for 2000, ultimately reporting a loss of 1.35 billion euros and selling a controlling stake in the Formula One auto racing circuit to Kirch Group. EM.TV will seek approval at the shareholder meeting replace supervisory board members Matthias Schwarz, a Munich lawyer who has close ties to Kirch, and business consultant Axel Kollar, who has close ties to EM.TV's main investment bank Westdeutsche Landesbank, with Roland Berger and lawyer Ralph Wollburg. ============= H U N G A R Y ============= GTS HUNGARY: Parent Company Calls Off Unit Sale ----------------------------------------------- Global TeleSystems Inc. has decided not to sell its Central European Division, including GTS Hungary Kft, Budapest Business Journal in its Monday edition said. According Global TeleSystems, the $125 million May sale of Russian subsidiary Golden Telecom Inc. will allow it to keep its Central European subsidiaries. Recently, GTS announced it would not pay its bondholders. The fiber-optic network group has also been facing difficulties with its listing on the New York Stock Exchange and has in May discussed about a $1.9 billion debt restructuring. SYNERGON INFORMATION: Analyst Expects Takeover in IT Firm --------------------------------------------------------- Analysts expect a takeover at IT services firm Synergon Information Technology Rt, after its CEO Tibor Gyuros and two members of the board died in a plane crash, Budapest Business Journal reported on Monday. Merrill Lynch analyst Thomas Chadwick said that without Gyuros, the value of the company is diminished. The company should try to find an investor, otherwise, the company will lose further value. Gyuros was responsible for the restructuring of Synergon, which has had hard times recently. It was first shaken by tax fraud charges against former deputy CEO Zsolt Szaloczy. He was charged in October of accepting fictitious invoices of about Ft825 million. Synergon closed 2000 with a loss of Ft695 million. ===================== N E T H E R L A N D S ===================== KPN NV: Seeks Merger With European Telco ---------------------------------------- Telecom group KPN had dropped plans for a rescue rights issue in favor of seeking a merger with another European telecom group, the Electronic Telegraph reported yesterday. KPN said it was in merger talks with several companies including Belgium's state-controlled phone company Belgacom. Other parties were not named, although analysts at BNP Paribas suggested that tie-ups with Switzerland's SwissCom or Denmark's TeleDanmark were possible. The company was considering whether to raise up to 5 billion euros, since its financial situation is now so weak that analysts estimate that it is no longer generating enough cash from its operations to finance debt repayments and capital expenditures. SWT FINANCE: Moody's Downgrades Rating to Caa2 ---------------------------------------------- Moody's Investors Service on June 22 downgraded to Caa2 from Caa1 the rating for SWT Finance B.V.'s (Netherlands) Senior Subordinated Notes. At the same time, the Senior Implied Rating for the parent company Weigh-Tronix LLC was downgraded to B3 from B2 and the Issuer Rating to Caa1 from B3. This rating action concludes the rating review for possible downgrade initiated in early February. The outlook for the ratings is negative. The downgrade is based on the company's tight financial situation, especially its weak interest coverage as well as the marginal flexibility provided by the covenant structure for any performance shortfalls in the near term. The negative outlook reflects the company's considerable challenges to deliver its forecasted performance improvements and remain covenant compliant. As the rating is based on the achievement of the substantial performance improvement reflected in the bank covenant requirements, any shortfalls, especially in EBITDA, would put strong pressure on the rating. WT will need to improve performance significantly if it is going to meet debt obligations with any modicum of comfort. If the operating environment continues to deteriorate, the ability of management to take out additional costs over and above the $17 million identified will become extremely difficult and over the longer term further cost reductions may impede the company's overall competitive position. To reduce indebtedness, the company has announced a disposal program of certain non-strategic assets, which is estimated to generate cash flow of approximately US$25 to 30 million until fiscal year end 2001/02. Proceeds from these asset disposals will be used to repay senior debt and improve the company's capital structure. =========== P O L A N D =========== ELEKTRIM SA: Leans to Vivendi Offer ----------------------------------- Elektrim is close to accepting Vivendi Universal's offer to ease the debt load of the troubled Polish conglomerate in exchange for control of its mobile phone franchise, the Financial Times reported on Monday. The proposed deal would see $480 million in convertible bonds shifted from Elektrim's balance sheet to that of Elektrim Telekomunikacja, which Vivendi has co-owned with Elektrim since 1999. Vivendi's shareholding in the telecom unit, which owns 51% of Elektrim's mobile unit Polska Telefonia Cyfrowa, would rise from 49 to 51%. Elektrim, which is expected to advise the board on its decision tomorrow, needs debt relief and an end to the struggle for control of PTC. ========= S P A I N ========= SINTEL: 2MM Workers Support Sintel Employees -------------------------------------------- Over 2 million workers throughout Spain took part in a general strike called by the CCOO union to support the employees of telecom equipment manufacturer Sintel, who called for job security and a negotiated solution to the conflict between themselves and the company, El Mundo & World Reporter in its June 23 edition said. Sintels' employees that have camped in a Madrid street for 145 days in a call for the wages that the company owes, warned the government that more radical measures would be taken if solutions are not found soon. Sintel is currently in the process of liquidation and has debts of more than Pta40 billion. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Shares Rise as Group Cuts Sabena Funding -------------------------------------------------------- Shares of Swissair Group were up 2.5% on Monday as CEO Mario Corti said the group will cease its funding of Sabena SA, Dow Jones Newswires reported. According to Corti, the Swiss airline cannot continue to pour in new capital to the Belgian partner, which posted a net loss of 325 million euros in 2000. The CEO also said he would announce cost-saving plans on July 12. Corti described Swissair's financial situation as serious but said he was confident the airline's problems could be solved. =========================== U N I T E D K I N G D O M =========================== BARINGS: Auditors Face 1BB-Pound Suit ------------------------------------- Barings Bank liquidator Ernst & Young is suing two other accounting firms in the High Court for 1 billion pounds over the collapse of Barings in 1995, according to the Financial Times' Monday edition. E&Y is suing Coopers & Lybrand Singapore, now part of PricewaterhouseCoopers, and its fellow auditor Deloitte & Touche for their alleged failure to spot the problems at Barings, which collapsed after trader Nick Leeson incurred 830-million-pound of losses through illicit trading in derivatives. Deloitte is not thought to be involved in the settlement talks. Both Coopers and Deloitte deny liability. BARINGS: Delay Raises Settlement Hopes -------------------------------------- The High Court case between Baring liquidators Ernst & Young and former auditors was delayed again on Monday, raising hopes of a last-minute settlement, according to The Times in its June 26 edition. Ernst & Young is in talks with Coopers & Lybrand, now PricewaterhouseCoopers, over settling the action, but co- defendant Deloitte & Touche (Singapore) says it wants to clear its name in court. The case was due to open on Monday in Central London. Proceedings were adjourned until Thursday. No explanation was given, but Ernst & Young is presumed to have requested more time to continue discussions with Coopers & Lybrand. BRITISH NUCLEAR: To Post 200MM-Pound Loss for 2000 -------------------------------------------------- State-owned UK atomic services group British Nuclear Fuels is expected to report an operating loss of about 200 million pounds for last year, following problems at its Wylfa power station in north Wales and Thorp reprocessing plant at Sellafield in northwest England, the Financial Times reported yesterday. Wylfa has been out of action since the group found flawed welds on its steam pipes in March 1999, while Thorp has been down for most of the past six months due to a blockage in a downstream treatment plant. The operating loss will be partially offset by a 200 million pound exceptional payment by the Ministry of Defense. This should limit the loss before tax to 65 million pounds compared with a loss of 337 million pounds last year. INDEPENDENT INSURANCE: Bright Appoints Burton Copeland ------------------------------------------------------ Former Independent Insurance chief executive and founder Michael Bright has appointed fraud lawyers Burton Copeland to act for him during the Serious Fraud Office investigation into the company, according to The Times' report yesterday. Bright declined to comment. The move came as the Serious Fraud Office is examining allegations that Independent inflated the value of new business on its books by as much as 400%. If the allegations prove correct, the company and its directors could be prosecuted for falsifying accounts. INDEPENDENT INSURANCE: FSA Probes Timing of Reports --------------------------------------------------- The financial services authority is investigating allegations that directors of commercial insurer Independent Insurance failed to warn the watchdog to the scale of its problems, according to The Guardian's Monday report. The inquiry centers on a May letter from Watson Wyatt, the company's external actuary, that Independent faced unquantifiable liabilities in its London Market business. The letter was allegedly passed to the FSA only on June 12, but Independent maintained that the company contacted the FSA in late May. Independent was placed into liquidation over a week ago after insolvency specialist PricewaterhouseCoopers said the company was running out of cash. MARKS & SPENCER: Faces Investor Showdown Over Share Scheme ---------------------------------------------------------- Marks & Spencer has failed to prevent a potential showdown with investors over its employee share schemes, according to The Times' report yesterday. Corporate governance watchdog Pirc is unhappy with the retail group's response to its concerns over remuneration packages. It will recommend its members to vote against re-electing non- executive directors Tony Ball and Kevin Lomax at the annual meeting next month. Pirc is angry at M&S's refusal to reveal financial targets determining directors' bonuses, and the potential doubling of share options with no rise in performance targets. MARKS & SPENCER: French Store Reduces Offer in Pay Talks -------------------------------------------------------- Marks & Spencer France has gone back to its initial offer of 3% instead of the 4.5% offer on Friday in its pay talks with its employees, saying that UK shareholders refused to approve the measures, the Monday edition of AFX News said. Employees at the company's 2 main stores in Paris voted to remain on strike following the new proposals. The majority of Marks & Spencer stores in France have been on strike since Friday following the failure of the latest round of pay talks. The proposed bonus to be awarded to employees has also been cut. METROCAB: Will Resume Production in Two Weeks --------------------------------------------- Production at taxi manufacturer Metrocab will resume within the next two weeks following the purchase of its assets from administrative receivership. The Singapore-based buyer Kamkorp Europe has committed a five- year, multi-million pound investment program for the taxi company, including the electronic and engineering interests in Europe, the US, Asia and Australia. During the receivership, the company was left with 20 employees, engaged in service and parts supplies. It now plans to recruit another 50 employees. ************ 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. * * * End of Transmission * * *