/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010904.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, September 04, 2001, Vol. 2, No. 172 Headlines * A U S T R I A * LIBRO AG: Few Employees to Be Made Redundant * B E L G I U M * SPECTOR PHOTO: In Talks to Sell Units to Kodak * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Shareholders Okay Capital Increase KINOWELT MEDIEN: Media Company Faces Insolvency KINOWELT MEDIEN: Share Falls Below 1 Euro * N E T H E R L A N D S * KPN NV: Ceases Merger Talks LETSBUYIT.COM: Reduces First-Half Loss * N O R W A Y * ENITEL ASA: Posts Half-Year Accounts ENITEL ASA: S&P Cuts Ratings to SD ENITEL ASA: Telco Meets Its Investors ENITEL ASA: Temporarily Delists Shares ENITEL ASA: To Work on Debt Settlement Proceedings * S W I T Z E R L A N D * 4M TECHNOLOGIES: First-Half Sales Plunge SULZER MEDICA: Shares Up With Court Ruling SWISSAIR GROUP: Chief Hopes Company Will Break Even This Year SWISSAIR GROUP: Cuts 1,250 Jobs After Reporting Loss SWISSAIR GROUP: Plans to Dispose of Assets * U N I T E D K I N G D O M * ATLANTIC TELECOM: Pressured to Seek Voluntary Liquidation ATLANTIC TELECOM: Hoping to Salvage Company ATLANTIC TELECOM: Reduces Quarterly Loss to 12.5MM Pounds BRITISH TELECOM: Unions to Block Wireless Demerger CITYREACH INTERNATIONAL: Appoints KPMG as Administrator CLAIMS DIRECT: Directors Urge Investors to Take 10p Offer EQUITABLE LIFE: Faces Government Inquiry RAILTRACK GROUP: Cuts Staff Members ============= A U S T R I A ============= LIBRO AG: Few Employees to Be Made Redundant -------------------------------------------- Libro AG said few employees would be made redundant, compared to its first estimate of 268, according to the August 31 edition of Die Presse. The Austrian retail group added that the sale of its subsidiary Libro Entertainment has been delayed. Its No buyer is in sight yet for Internet subsidiary Lion.cc. ============= B E L G I U M ============= SPECTOR PHOTO: In Talks to Sell Units to Kodak ---------------------------------------------- Belgian photo group Spector SA has started talks with Eastman Kodak Co. to sell its wholesale photofinishing and photographic distribution businesses in France, Germany and Austria to the U.S.-based company, Dow Jones Newswires in its August 30 edition said. The sale is part of Spector's repositioning plan, which will be announced in detail in October. Spector said the transaction would enable the company to strengthen its focus on direct-to- consumer activities, as well as to improve its financial position. Both companies did not indicate how close they were to a deal. Financial terms were not even disclosed. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Shareholders Okay Capital Increase ----------------------------------------------------------- The majority of Bankgesellschaft Berlin's shareholders has approve the proposed capital increase for Germany's tenth-largest banking group. As a result, up to 2.2 billion euros of fresh capital will be injected into the debt-ridden banking group, which urgently needs the capital in order to the generate the equity required by law. The potential offer from the Sparkasse Group and Norddeutsche Landesbank (Nord/LB) for the beleaguered Bankgesellschaft Berlin is starting to develop. According to reports, Nord/LB will only participate in the impending capital increase for Bankgesellschaft if it receives binding assurances of commitment to an overall solution. Bankgesellschaft has recently posted a net loss of 1.6 billion euros for 2000 and is in dire need of 2 billion euros in fresh capital. Refer to http://bankrupt.com/misc/bgb.pdffor the bank's financial details. KINOWELT MEDIEN: Media Company Faces Insolvency ----------------------------------------------- Munich-based media company Kinowelt faces insolvency after its banks announced their intention to call in a loan of 60 million euros, Handelsblatt & World Reporter in its August 30 edition said, citing a report from Netzeitung publication. The banks, which includes consortium leader BHF-Bank, denied that there was any substance to the story. Kinowelt did not comment on the Netzeitung report, which brought down the company's shares to 15.6% at 0.92 euro. KINOWELT MEDIEN: Share Falls Below 1 Euro ----------------------------------------- Shares of Kinowelt Medien AG were at one stage down 20% at 0.87 euros last week, following repeated speculation that the German media company may not be able to meet payments, the Frankfurter Allgemeine Zeitung reported. There have long been reports of the company's payments crisis, fuelled by finance director Eduard Unzeitig leaving the company at the beginning of August. Despite the significant losses posted in the first quarter of 2001 (see http://bankrupt.com/misc/kinowelt1.pdffor the company's financial statement), Kinowelt did not start its restructuring process until June and stated that it was seeking a strategic partner only in August. ===================== N E T H E R L A N D S ===================== KPN NV: Ceases Merger Talks --------------------------- Dutch telecommunications company Royal KPN and Belgian company Belgacom SA have jointly decided to cease discussions on a possible combination. The move comes, as the current market environment in the telecommunications sector has been a complicating factor at this time. Both parties clarified that it has not been possible to reach agreement on key terms of the merger. KPN is looking for a merger with the Belgian company as a way to help reduce its 23.2-billion-euro debt load. LETSBUYIT.COM: Reduces First-Half Loss -------------------------------------- LetsBuyIt.com N.V. on August 31 said its operating loss for the first half of 2001 has significantly reduced. Please see http://bankrupt.com/misc/letsbuyit1.pdffor Letsbuyit.com's financial report. The reduction in operating expenses year on year is primarily due to the company's restructuring, and a reduction in sales and marketing expenses. The company's planned growth rate in the first half was adversely affected by the non-availability of funds needed to finance investment in current assets. This was due to the repeated delays in payment by one of the lead investors, Shmulik Stein Int. Investments, London (SSII). Meanwhile, LetsBuyIt.com has announced an extensive restructuring program, where operational business units will be merged to Germany and Sweden to significantly improve efficiency and further reduce operating expenses. Website operations in all European markets will be centrally coordinated from Germany. As a result, approximately 60 employees will be laid off in France and the UK (where the company will close its offices), Germany, Sweden. LetsBuyIt.com also said supervisory board member Jorg Duske has resigned from its post effective on August 31. =========== N O R W A Y =========== ENITEL ASA: Posts Half-Year Accounts ------------------------------------ Telecommunications company Enitel said on August 27 it has produced a loss of around 2.2 billion Norwegian krone for the first half-year. See http://bankrupt.com/misc/enitel.pdfto download key figures. The company will write-down its goodwill by 1.5 billion Norwegian krone. This write-down reflects a fall in the expected earnings from the company's products and services. Following the write-down of goodwill, Enitel's book equity is approximately 174 million Norwegian krone. Enitel expects its equity to be lost during the third quarter. Enitel is working on a plan to refinance the company. ENITEL ASA: S&P Cuts Ratings to SD ---------------------------------- Standard & Poor's has on August 29 lowered Enitel ASA's corporate credit ratings on Enitel to 'SD' (selective default) from triple- 'C'-minus. Enitel's single-'C' senior unsecured debt rating remains on CreditWatch with negative implications. The rating action follows the announcement the Norway-based telecommunications company is seeking court protection from creditors while negotiating a refinancing pact with bondholders and creditor banks. Enitel must undertake a refinancing of the company, according to Norwegian law, as its equity will be wiped out by the end of September amid mounting losses. Enitel will not pay any of its other creditors, including interest payments on bank loans, during a three-month grace period according to Norwegian bankruptcy law. Only creditors taken on, in order to be able to run the business on a day-to-day basis, after the start of this grace period will be paid. If Enitel fails to make a scheduled interest payment on its bonds, Enitel's senior unsecured rating will be lowered to 'D'. ENITEL ASA: Telco Meets Its Investors ------------------------------------- Norwegian financier Riulf Rustad held a meeting with Norwegian lawyers Marius Gisvold and Jarle Erik Sandvik from Wikborg, Rein & Co. and the management of Enitel to discuss the future of the telecommunications company, the FT Information in its August 29 edition said. According to Enitel legal manager Pal Kristoffer Sorvoll, a conflict exists between the company's existing shareholders and those who invested in the bond loan and this conflict needs to be solved. Riulf Rustad, who heads a group of investors that have invested in Enitel's 2 billion Norwegian krone bond loan, announced that he is more positive following the meeting. Enitel has recorded large debts and is threatened by insolvency. It's equity capital will be exhausted by September. ENITEL ASA: Temporarily Delists Shares -------------------------------------- Enitel ASA said on August 31 that it has requested the Oslo Stock Exchange to temporarily delist its shares for up to four months due to the uncertainty relating to the price of its shares. Temporarily delisting means that price quotation and the company's duties as a listed company ceases. Restrictions for the brokerage houses existing during a suspension are not valid in this case. According to the request from Enitel, the company will no longer be able to fulfill the requirements stated in the stock exchange regulations. ENITEL ASA: To Work on Debt Settlement Proceedings -------------------------------------------------- Telecommunications company Enitel has filed a petition for debt settlement proceedings with Asker and Baerum Bankruptcy Court in Norway. The move comes after Enitel presented its first half-year results, prompting them to work on a plan to refinance the group. The boards of Enitel ASA, Enitel Holding AS and Enitel AS have concluded that the further work of refinancing the companies can best be carried out within the framework of the Bankruptcy Act's regulations regarding voluntary debt settlement proceedings. On August 29, the group has liquid assets of around 350 million Norwegian krone, of which 80 million Norwegian krone are in Enitel AS and 270 million Norwegian krone in Enitel ASA. In addition, the group has some 238 million Norwegian krone, tied up to pay interest on the high-yield debt offering up until April 15, 2002. Contact persons for the group are CEO Svein Berntsen at telephone number 450 02 600 and CFO Knut Oversjoen at telephone number 450 02 002 ===================== S W I T Z E R L A N D ===================== 4M TECHNOLOGIES: First-Half Sales Plunge ---------------------------------------- 4M Technologies, one of the world-leading manufacturer of production systems for optical discs (CD/DVD), said on August 30 its first- half sales plunged to 19.9 million Swiss francs. The lack of financing and support from its creditors lead to the delays in its delivery and cancellation of orders. Due to the aforementioned condition, the group made a net consolidated loss of 18.9 million Swiss francs at the end of June 2001. Unless there is a drastic change of conditions, second half results will remain negative. SULZER MEDICA: Shares Up With Court Ruling ------------------------------------------ Shares of Sulzer Medica, Europe's largest maker of artificial hips, jumped by 20% to close at SFr131 on Thursday after federal judge Kathleen O'Malley in Cleveland, Ohio, threw a lifeline to save it from mounting legal claims that threaten to bankrupt the company, the August 30 edition of the Financial Times said. The US district court judge gave preliminary approval to a plan to settle class-action suits against Sulzer Medica on behalf of up to 4,000 people who had been fitted with its faulty artificial hips. Sulzer Medica has offered $780 million to resolve its cases. Under the settlement, affected patients will be awarded a mix of two thirds cash and Sulzer Medica American Depositary Receipts (ADRs) over a period of several years. It is the first of more than 1,000 lawsuits that have been filed against Sulzer Medica. SWISSAIR GROUP: Chief Hopes Company Will Break Even This Year ------------------------------------------------------------- Swissair Group Chief Executive Mario Corti hopes the airline group will more or less break even this year, according to the August 30 edition of Dow Jones Newswires. "I hope we will more or less break even, or at least won't make fresh headlines," Corti said. Swissair last week reported a first-half net loss of 234 million Swiss francs, compared with a net profit of 3 million Swiss francs in the same period a year ago. The Swiss aviation group aims to achieve cost savings of around 500 million Swiss francs this year. The cost savings measures will include a reduction of flight capacity of around 7%-8%. SWISSAIR GROUP: Cuts 1,250 Jobs After Reporting Loss ---------------------------------------------------- Swiss aviation group Swissair, according to BBC News in its August 30 edition, will cut roughly 1,000 airline jobs and around 250 management positions this year. The move comes as it reported a smaller than expected loss of 234 million Swiss francs for the six months ending June 30, compared with a profit of three million francs in the first half of last year. Refer to http://bankrupt.com/misc/swissair1.pdffor Swissair Group's consolidated income statement. The group also plans to cut routes and change its fleet. The heavily indebted Swissair group is in the middle of a restructuring program after it ran into financial difficulties following an ambitious expansion program. Swissair posted a loss of 2.9 billion Swiss francs in 2000 after taking 2.7 billion francs in charges for writing down its stakes in loss-making Belgian airline Sabena, France's AOM/Air Liberte and LTU of Germany. Swissair plans to cut costs by 500 million francs before the end of the year. SWISSAIR GROUP: Plans to Dispose of Assets ------------------------------------------ Swissair Group said on August 30 it would sell its major assets as it reported a loss of 234 million Swiss francs for the first half of the year. The beleaguered Swiss aviation group will dispose 80% of its stake in Swissport, Swissair's ground handling business, to British private-equity group Candover Investments PLC. Terms were not disclosed. Swissport has a leading market position in the ground handling industry with sales of 557 million Swiss francs in the first six months of 2001. The planned transaction provides Swissport with the financial resources to play a leading role in the industry. The passenger handling operations for Swissair at Zurich Airport will not be part of the divestment and will be reintegrated into Swissair. A considerable number of investors expressed an interest in acquiring Swissport. The company expects to close the deal in two months. Swissair also said it intends to divest all or part of The Nuance Group, a leader in the airport retailing industry. The airline company appointed Schroder Salomon Smith Barney to handle the deal. "With these divestments, we generate considerable equity and accelerate the achievement of our objective to reduce the group's net debt. We are confident that this is also in the best interest of the concerned businesses as they will be able to continue their successful development and growth under the new ownership structures," Swissair Group chairman and chief executive Mario Corti commented. =========================== U N I T E D K I N G D O M =========================== ATLANTIC TELECOM: Pressured to Seek Voluntary Liquidation --------------------------------------------------------- Royal Bank of Scotland and Aberdeen Asset Management are among the bondholders pressing for troubled Aberdeen-based Atlantic Telecom to consider a voluntary winding up amid growing fears over its ability to meet future debt repayments, the Scotsman newspaper in its August 26 edition said. Edinburgh based fund manager Baillie Gifford and American investment bank Morgan Stanley is also certain to increase the pressure on Atlantic to make a statement on its long-term finances. Atlantic has 13 million pounds in an escrow account, which will be used to repay debt, due in January 2002. Bondholders are worried that without a capital injection, the group may be unable to meet the following debt repayment. The company has been working with its financial adviser Close Brothers since July on the options for capital restructuring in a bid to close the gap between its market capitalization and its last stated asset value of 520 million pounds. ATLANTIC TELECOM: Hoping to Salvage Company ------------------------------------------- Phone network group Atlantic Telecom is about to embark on a series of formal discussions with its bondholders in a bid to stave off calls for its liquidation, the Evening Standard & World Reporter in its August 30 edition said. Adviser Close Brothers will take soundings from the bondholders, who are owed about 200 million pounds, to establish how many want to see the company wound up. The adviser will also study other suggestions for realizing value from its infrastructure in Britain, Germany and Holland. The Edinburgh-based group, 19%-owned by embattled telecoms equipment maker Marconi, incurs a 26-million-pound annual interest bill. ATLANTIC TELECOM: Reduces Quarterly Loss to 12.5MM Pounds --------------------------------------------------------- Atlantic Telecom had made progress by cutting its quarterly losses to 12.5 million pounds, according to the Financial Times' August 30 report. The European business telecoms operator said the losses before interest, tax, depreciation and amortization for the period ended June 2001 were down from 13.2 million pounds in the previous quarter, and were much lower than the 20.4 million pounds recorded in the last quarter of 2000. The company, whose turnover doubled to 20.1 million pounds, has been under intense investor scrutiny because of the tightening funding climate in the telecoms sector and subsequent scaling back of its business plans. At June 30 the company's cash balance, including restricted investments and cash deposits, was 81.9 million pounds, compared with 134.6 million pounds at March 31, 2001. Refer to http://bankrupt.com/misc/atlantic1.pdffor Atlantic Telecom's financial statement. Atlantic operates telecoms networks aimed at business markets in the UK, the Netherlands and Germany. It is 19% owned by telecoms equipment maker Marconi. BRITISH TELECOM: Unions to Block Wireless Demerger -------------------------------------------------- The Communication Workers Union, who has long been opposed to the demerger of British Telecom's wireless business, has approached institutional shareholders to strengthen its campaign, the August 30 edition of the Financial Times said. The union has argued a demerger would prevent BT from exploiting synergies between its interests and reduce it to a utility with less growth potential. CWU deputy general secretary Jeannie Drake said the union had already held meetings with fund managers. Some had indicated they would be prepared to re-open the demerger issue. The union hopes BT's sharply-reduced debt mountain will help sway fund managers to reconsider the need for a demerger. Last year, BT proposed floating a minority stake in BT Wireless as part of its debt reduction program. However, in May it opted for a full demerger. CITYREACH INTERNATIONAL: Appoints KPMG as Administrator ------------------------------------------------------- CityReach International, the insolvent operator of eight Internet data centers in Europe, has appointed KPMG Corporate Recovery to handle administration of the company's assets, Newsbytes News Network in its August 29 edition said. CityReach has gone into administration, the equivalent of filing for protection under Chapter 11 of the U.S. Bankruptcy Code. KPMG spokesperson Judith declined to comment about the financial status of CityReach or its subsidiaries. KPMG's corporate recovery partner Jim Tucker said that he and his staff are working with CityReach's management and are confident of selling the core CityReach sites in London, Amsterdam, Dublin, Stockholm and Budapest centers. The firm's eight data centers are located in London, Amsterdam, Budapest, Stockholm, Dublin, Munich, Berlin and Paris. CLAIMS DIRECT: Directors Urge Investors to Take 10p Offer --------------------------------------------------------- Claims Direct's independent directors have advised investors in the ailing personal injury company to take the 10p offer for their shares made by company's founders rather than backing a new deal that surfaced earlier last week, the Independent News in its August 31 edition said. Colin Poole and Tony Sullman, who launched the 10p-a-share takeover bid in June, has announced they were selling a large tranche of their shares at a higher price to the entrepreneur Simon Ware-Lane. Paul Doona and David Gravell, the only remaining directors of Claims Direct, argued that it could leave shareholders in a worse position than if they sold to Sullman and Poole because the founders could continue to exert an influence over the company, making its future even more uncertain. EQUITABLE LIFE: Faces Government Inquiry ---------------------------------------- The government has launched its own investigation in the Equitable Life crisis as to why the mutual life assurer has been brought to its knees, the Independent News reported on Saturday. Commercial law judge Lord Penrose will lead the new inquiry commissioned by the Treasury. His investigation will stretch back five decades to when the society first started selling guaranteed annuity rate (GAR) policies in the 1950s. Lord Penrose is due to report his findings by the middle of next year. The Financial Services Authority has made its own inquiry but has been widely doubted because it has effectively amounted to an investigation into its own actions. The FSA took over from the Department of Trade and Industry as regulator of Equitable in January 1999, since when many of the developments that led to Equitable's downfall took place. Equitable chief executive Charles Thomson welcomed the inquiry saying, "It should mean that what happened at Equitable never happens again. It also gives us clarity as there were some people who still hoped there would be a government lifeboat." RAILTRACK GROUP: Cuts Staff Members ----------------------------------- Railtrack is reducing its agency and consulting staff as part of a massive reorganization of its business, the August 31 edition of The Guardian said. In an internal memo to the company's 13,000 staff, Railtrack chief executive Steve Marshall said that the company would leave its current headquarters in Euston, central London, for a smaller site to reduce costs. Railtrack staff regarded the memo as a cost-cutting exercise with few changes. Many employees are concerned that there may be more in the pipeline that will affect them significantly. "We will be looking at the fall-out on our staff," A spokesman for the white-collar union TSSA said. ********** 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. Lourdes Reyes, 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 * * *