/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010905.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, September 05, 2001, Vol. 2, No. 173 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Submits Recovery Plan in the U.S. SABENA SA: Pilots to Stage Strike on Thursday * F R A N C E * MOULINEX SA: Lack of Management Response Angers Employees * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Flowers Promises to Revive Bank BANKGESELLSCHAFT BERLIN: Shares Dive on Capital Increase News BAYER AG: Works' Council Objects to Strategy Change BROKAT AG: Appoints Holtermuller as New Supervisory Board Member BROKAT AG: Buys Back High Yield Bond DAIMLERCHRYSLER: Cuts Chrysler, Jeep, Dodge Prices KINOWELT MEDIEN: At the Brink of Bankruptcy PHILIPP HOLZMANN: Posts 56.5MM-Euro First-Half Loss * I R E L A N D * EIRCOM PLC: Providence to Own 50% of Eircom * N E T H E R L A N D S * KPN NV: Shares Tumble Over Debt Obligations * N O R W A Y * ENITEL ASA: Creditors Refuse to Invest Further * P O L A N D * DAEWOO MOTORS: Lublin Plant Files for Bankruptcy * S W I T Z E R L A N D * SWISSAIR GROUP: Chief Corti Plans to Hike Ticket Prices SWISSAIR GROUP: Has No Synergies With LTU * U N I T E D K I N G D O M * BARINGS: Auditors in Final Bid to Stop Lawsuit BRITISH NUCLEAR: Division Sale May End Privatization BRITISH TELECOM: Advances for November Demerger BRITISH TELECOM: BT Wireless Becomes MMO2 BRITISH TELECOM: Video Networks to Reduce Reliance on BT BRUNSWICK HOLDINGS: Goes Into Receivership CORUS GROUP: Cuts Jobs in Netherlands EQUITABLE LIFE: Holders Welcome Government Inquiry EQUITABLE LIFE: May Reverse Bonus Cuts PPL THERAPEUTICS: Wins 30-MM-Pound Rescue Funding RAILTRACK GROUP: Special Unit to Push for Railtrack Break-up ============= B E L G I U M ============= LERNOUT & HAUSPIE: Submits Recovery Plan in the U.S. ---------------------------------------------------- Belgian speech and language technology company Lernout & Hauspie has submitted a recovery plan to the Delaware insolvency court in the United States, showing that the company estimates fraudulent transactions from the past at 400 million euros, De Standaard/FT Information in its August 31 report said. The US court will rule on the recovery plan on September 25. L&H will also submit its Belgian recovery plan to the Ypres commercial court on September 10. Its creditors will vote the plan on September 18, while the Ypres court will decide up to two weeks later. The recovery plan's main points are the sale of its medical dictation systems company Dictaphone, the transfer or sale of Dragon and L&H's activities, then the application of insolvency when the sale of all activities has been completed. SABENA SA: Pilots to Stage Strike on Thursday --------------------------------------------- Pilots at Belgium's troubled flag carrier Sabena have announced a one-day strike this week to protest against planned layoffs in the airline's rescue plan, according to the Irish Independent on Saturday. Belgian Cockpit Association vice president Geert Vertongen said the announcement of a 24-hour strike on Thursday would allow travelers to change their plans. Union members met Sabena management to offer alternatives to its proposed restructuring plan in early August that calls for 1,421 job cuts, including up to 222 of the airline's 1,100 pilots. Pilots have offered to work fewer hours for less pay to avoid layoffs. It would also save Sabena the cost of severance packages. In a statement, Sabena president Christoph Mueller said that an evaluation was underway to calculate all financial consequences of the ideas. =========== F R A N C E =========== MOULINEX SA: Lack of Management Response Angers Employees --------------------------------------------------------- The staff of domestic appliance manufacturer Moulinex has accused the group's management for failing to implement the law, by not listening to proposals from the staff on avoiding the social plan that involves job cuts, the August 31 edition of Liberation said. The management's decision to stick to its social plan resulted to demonstrations by employees at the group's plants in Alencon and Cormelles-Le-Royal. Around 300 employees blocked access to the Alencon plant, while union representatives met with management to submit their counter-proposals. Workers in Cormelles-Le-Royal held an informal general meeting to decide upon further courses of action. Moulinex chairman Patrick Puy has refused to take any notice of the unions after three lots of strike action brought by the announcement of the social plan. A total of 1,698 job cuts are planned at the two sites, which employ a combined workforce of 2,115. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Flowers Promises to Revive Bank -------------------------------------------------------- American banker Christopher Flowers is trying to strengthen his bargaining position for the ailing Bankgesellschaft Berlin by stressing his long-term commitment to reviving Germany's 10th largest bank, the Financial Times reported on Sunday. Flowers has dismissed suggestions he was interested in asset stripping or a quick exit after turning around the bank, which reported a $1.5-billion loss last year because of troubled property activities. Earlier this year, Flowers has raised $1 billion for the bank, but sources close to the deal said this was not earmarked for buying BGB. However, the consortium is expected to raise the money required in time for a deal to be concluded by the end of the year. Berlin mayor Klaus Wowereit has indicated he is willing to sell his entire BGB stake if necessary. Separately, BGB's second- largest shareholder Norddeutsche Landesbank has indicated readiness to subscribe to new shares. Bankgesellschaft Berlin has been plagued by troubles for years, attributed to losses in bad property loans and dealings in real- estate funds. It has posted a net loss of 1.6 billion euros for 2000 and is in dire need of 2 billion euros in fresh capital. BANKGESELLSCHAFT BERLIN: Shares Dive on Capital Increase News ------------------------------------------------------------- Shares of ailing Berlin bank Bankgesellschaft Berlin plummeted by 17.96% to 6.85 euros on Thursday following a decision at the bank's general meeting to offer new shares to existing shareholders at an issue price of 2.56 euros and at a ratio of one to four, Die Welt/FT Information in its August 31 edition said. The bank's majority shareholder, the city of Berlin with 56.6% stake, has agreed to participate in the capital increase, but the other major shareholders, NordLB and Parion, have not. The subscription period for the new shares expires on September 24. BAYER AG: Works' Council Objects to Strategy Change --------------------------------------------------- Bayer's works' council chairman Erhard Gipperich said that he is opposed to a spin-off or a sale of the company's troubled pharmaceuticals division, Handelsblatt reported on Sunday. Chief executive Manfred Schneider announced that the unit would be reorganized after a safety crisis involving its anti- cholesterol drug Lipobay prompted it to slash its earnings outlook for the second time in two months. Chairman Hubertus Schmoldt of IG Bergbau Chemie Energie union and a member of Bayer's supervisory board is also against the break- up of the group. He believes that Bayer's pharmaceuticals business should be supported by taking in a partner. BROKAT AG: Appoints Holtermuller as New Supervisory Board Member ---------------------------------------------------------------- Brokat Technolgoies AG, a leading European provider of software solutions and services for the financial industry, said on August 31 it has appointed Dr. Winfried Holtermuller to the company's Supervisory Board. Holtermuller is a Stuttgart-based attorney and a spokesman of the DSW (Deutsche Schutzvereinigung fur Wertpapierbesitz) Group. Dirk Pfeil, who was appointed to Brokat's Supervisory Board in early August, has now been elected Chairman of the Board. Current members of the Supervisory Board of Brokat are Dirk Pfeil, Lothar Pauly, Angelika Pohlenz, Dr. Boris Anderer, and Dr. Winfried Holtermuller. The German software company recently said it would sell all its North American operations and its mobile telecommunications division in order to concentrate on European e-finance activities, bringing an income of almost 80 million euros to the loss-making company. BROKAT AG: Buys Back High Yield Bond ------------------------------------ German software company Brokat Technolgoies AG said on August 31 it is in the process of seeking a proposed restructuring of its existing High Yield Bond with an ad hoc committee of noteholders. The proposed restructuring will involve Brokat's comprehensive operational and financial restructuring, including previously announced asset sales by the company. In order to move the restructuring process forward, Brokat has purchased, and intends to retire, approximately 26.4 million euros initial principal amount of the High Yield Bond. Following the purchases, negotiations with the ad hoc committee of noteholders are expected to continue. DAIMLERCHRYSLER: Cuts Chrysler, Jeep, Dodge Prices -------------------------------------------------- DaimlerChrysler AG will slash prices on the 2002 models of Chrysler, Jeep and Dodge cars and trucks, an average cut of $199 a vehicle, to pump up sales and minimize profit-eating incentives, according to the August 31 edition of Detroit News. Chrysler's move comes as automakers search for ways to combat a slowing economy, slipping vehicle sales and fierce competition that have combined to push incentive spending up and profits down. "Some of our products were just too overpriced in the segments where they compete," Chrysler Group's senior vice-president for marketing George Murphy said. Overall, Jeep sales are down 12% through July, while Grand Cherokee sales falling nearly 20% and Wrangler sales off almost 23%. KINOWELT MEDIEN: At the Brink of Bankruptcy ------------------------------------------- The management of ailing film producer and distributor Kinowelt Medien AG is looking for a last-minute rescue plan to fight against the prospect of bankruptcy, the September edition of Suddeutsche Zeitung & World Reporter said. The company's creditor banks will now have to decide whether the refinancing plan is viable. The Munich-based company, which is in desperate need of fresh capital (refer to http://bankrupt.com/misc/kinowelt1.pdffor the company's financial statement), has recently denied rumors that Kinowelt faced insolvency and that it was planning to sell its home entertainment operations. PHILIPP HOLZMANN: Posts 56.5MM-Euro First-Half Loss --------------------------------------------------- German construction company Philipp Holzmann AG, closely rescued from bankruptcy in 1999, posted a first half net loss of 56.52 million euros (See http://bankrupt.com/misc/philipholzmann1.pdf for the company's financial statement). According to Agence France-Presse's reported on Friday, the weak results were due to a general downturn in the German construction sector, as well as to high restructuring costs for the company. Orders have dropped by 11.5% to 3.02 billion euros in the first six months of the year, while sales rose to 0.7% to 3.1 billion euros. Philipp Holzmann head Konrad Hinrichs said the company would remain in the red this year, with debts likely to be around 1.58 billion euros at the end of the year. He expects to lay off 700 more workers, 600 jobs have already been eliminated since the beginning of 2001. ============= I R E L A N D ============= EIRCOM PLC: Providence to Own 50% of Eircom ------------------------------------------- International venture capital group Providence will have the biggest stake of Eircom, at 48.90%, if Sir Anthony O'Reilly's Valentia consortium buys the phone company, the Irish Independent reported on Saturday. The offer document shows that Sir Anthony O'Reilly will hold 5.03% of Eircom through his overseas company, Lionheart, while international investor George Soros' company will hold 19.5%. The bid also shows that investment bank Goldman Sachs will have 1.56% of the company and Eircom's employee share ownership trust (ESOT) to have a 25% shareholding. O'Reilly will become Eircom chairman if shareholders approve the deal. ===================== N E T H E R L A N D S ===================== KPN NV: Shares Tumble Over Debt Obligations ------------------------------------------- Shares of KPN shed 23% to E3 on Friday and have lost more than 90% of their value this year, the Financial Times reported on Sunday. The company is under mounting pressure to indicate how it intends to meet debt obligations in the wake of the collapse of merger talks with Belgacom. KPN is expected to execute its remaining options, including alliance talks with other European telecoms companies. It may talk with banks about refinancing its debt load if it becomes clear that it will not reduce debt to the 17-billion-euro level. In spite of previous denials, the Dutch telecommunications group said it might sell core assets such as its fixed-line operations, its German mobile unit E-Plus or its stake in datacommunications company KPNQwest. =========== N O R W A Y =========== ENITEL ASA: Creditors Refuse to Invest Further ---------------------------------------------- Enitel's creditor banks, represented by US investment bank Chase Manhattan, made it clear at a meeting with the management of telecommunications and data services supplier that they are not willing to invest further in the company, according to Dagens Naeringsliv/FT Information's August 31 edition. The move comes following last week's ruling that Enitel cannot be declared insolvent for as long as negotiations continue. The creditors, which include Nordic banking group Nordea, said that Enitel has violated one of the banks' requirements for investing in the company by applying for insolvency protection. The banks will only receive their capital if Enitel is declared insolvent. Enitel's debts to the banks currently total 1.45 billion Norwegian krone. The company is said to have enough capital to survive only for another four to six weeks. =========== P O L A N D =========== DAEWOO MOTORS: Lublin Plant Files for Bankruptcy ------------------------------------------------ Daewoo Motors Polska has filed for the bankruptcy of its Lublin- based van plant owing to mounting debts and failure of talks to find a buyer, AFX News reported on Monday. In June, Daewoo agreed to sell a 75% stake of the company to Polish group Pol-Mot Holding SA, but the deal was contingent on restructuring the company's bank loans that totaled over US$100 million. The South Korean carmaker's other major Polish plant, Daewoo-FSO, posted a full-year loss of 590 million euros, against a loss of 7.3 million euros the previous year. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Chief Corti Plans to Hike Ticket Prices ------------------------------------------------------- Swissair Group chairman and chief executive Mario Corti has announced plans to raise airline ticket prices in a further bid to reduce net debt and turn the troubled company around, the Swiss Info reported on Monday. "We must have the courage to separate ourselves from our competitors through our services and prices," Corti said. The troubled Swissair Group last month reported a loss of 234 million Swiss francs for the first half of the year, compared with a profit of 3 million Swiss francs during the same period last year. The Swiss aviation company posted a loss of 2.9 billion Swiss francs for 2000. Swissair also announced it would shed 1,250 jobs. The company employs 72,450 people worldwide. SWISSAIR GROUP: Has No Synergies With LTU ----------------------------------------- Swissair Group AG's chief executive Mario Corti has said that nothing has been decided between his company and its German charter operator LTU, AFX News reported on Sunday. His comment comes only days after he denounced LTU for weighing heavily on Swissair's balance sheet. Corti also denied recent reports that Swissair is in code-sharing talks with Lufthansa AG and wants to join the Star Alliance frequent flyer program. He also said the Swiss aviation group has no intention of selling SR Technics or Swisscargo. The Swissair chief said his company would be a smaller group in two years' time, but performing better. =========================== U N I T E D K I N G D O M =========================== BARINGS: Auditors in Final Bid to Stop Lawsuit ---------------------------------------------- Deloitte & Touche and PriceWaterhouseCoopers (PwC), the accountancy firms involved in the collapse of Barings, will demand this week that all their legal costs be paid by the liquidator if they win in the negligence case set to start next month, according to The Sunday Times' report. The request for reimbursement could mean that Ernst & Young, the firm representing the creditors bringing the case against Deloitte & Touche and PwC, could be forced to pay hundreds of millions of pounds if it loses. The firm tried to agree terms earlier this year, when it is thought to have offered about 90 million pounds to avoid a trial. PWC's proposal was provisionally agreed but was then blocked by a group of American funds that had bought up part of the debt after the collapse of Barings. The trial, scheduled to run for 30 weeks, will decide whether the auditors of Barings and Barings Futures Singapore, Coopers & Lybrand (now part of PwC) and Deloitte & Touche Singapore, were negligent and should pay compensation. The bank collapsed in 1995 after trader Nick Leeson incurred 830- million-pound of losses from unauthorized trading. BRITISH NUCLEAR: Division Sale May End Privatization ---------------------------------------------------- The proposed sale of the fuel manufacturing business of British Nuclear Fuels to British Energy could make it impossible to privatize the state-owned atomic services group next year. The Independent on Sunday reported that safety breaches and poor financial results have meant the privatization plans have been delayed. BNFL was heavily criticized two years ago when it was found that a nuclear fuel shipment to Japan had breached safety rules, after workers had falsified data records. The fuel manufacturing and nuclear reactor design division was the only BNFL division to bring in a healthy profit of 52 million pounds last year. Other BNFL divisions were less successful. Losses of 199 million pounds and 66 million pounds came from the power station division and nuclear clean-up division, excluding exceptional items. BRITISH TELECOM: Advances for November Demerger ----------------------------------------------- British Telecom will demerge its wireless division, BT Wireless, in November, as part of the company's plans to cut bulging debt, separate faster and slower growth businesses and revive the fortunes of its share price, BBC News reported on Sunday. Analysts estimate the demerged business will be worth about 15 billion pounds. BBC also reported that BT Wireless would be renamed to distance it from its parent group. BT shareholders will automatically receive shares in the demerged BT Wireless as well. Analysts believe BT Wireless needs to join forces with a rival in order to compete effectively in European markets. Candidates for a tie-up include Telecom Italia Mobile, Spain's Telefonica Moviles and KPN Mobile of the Netherlands, whose parent company recently failed to agree merger terms with Belgium's Belgacom. BT Wireless chief executive Peter Erskine and chairman David Varney will present details of the demerged company today. BRITISH TELECOM: BT Wireless Becomes MMO2 ----------------------------------------- British Telecommunications Plc's mobile-phone unit BT Wireless has changed its name to MMO2 to distinguish itself from its parent company before separation in November, according to the Monday edition of Bloomberg. The consumer brand, to be known as O2, was chosen to reflect the company's ambition to provide essential, life-style enabling mobile services. The company said that O2 represents commitment. The MM part of the new BT Wireless name, the company said, could represent either mobile-media, multimedia or be understood in reference to the advent of the second millennium. All of the company's brands will be re-named O2 and the new name will be adopted by Spring 2002. BT declined to comment on the amount spent on O2. BRITISH TELECOM: Video Networks to Reduce Reliance on BT -------------------------------------------------------- Video Networks is in discussions with alternative telecoms company Bulldog Communications about a supply agreement to reduce its crippling reliance on British Telecommunications, the Sunday edition of the Financial Times said. VideoNet is seeking an alternative DSL supplier because it is sustaining heavy losses from the high price of access to BT's digital subscriber lines. The company's income per customer will reach 24 pounds a month, but the charge it pays BT is 60 pounds, plus a connection fee of 625 pounds. Having raised 170 million pounds from private equity backers, VideoNet still needs to raise 100 million pounds more over the next six to 12 months. British Telecom is currently undergoing a restructuring to reduce its debt burden of 16.5 billion pounds. BRUNSWICK HOLDINGS: Goes Into Receivership ------------------------------------------ Brunswick Holdings, Wales' leading property development company, has gone into receivership, icWales on its September 3 issue reported. Auditing firm Ernst and Young was appointed as receivers. It is unclear yet if the company will be sold as one entity or whether its sizable assets will be divided into smaller units to repay its creditors. Brunswick has its headquarters at St. Mellons, Cardiff in Wales. It employs around 180 and has a turnover of about 40 million pounds. The business was established in 1959 and operates property development units, as well as a number of joint venture projects. High profile projects of Brunswick include the Century Wharf apartment complex in Cardiff Bay, the 23-million-pound Millennium Plaza complex, Queen's Hotel redevelopment in Newport and office at Cardiff Gate Business Park. CORUS GROUP: Cuts Jobs in Netherlands ------------------------------------- Corus Group Plc, Europe's second-largest steelmaker, plans to eliminate 1,500 jobs, or 15% of its workforce, at its Ijmuiden factory in the Netherlands over the next few years to curb labor costs, Bloomberg in its August 31 edition said. Ijmuiden, which employs about 10,000 people, is the unprofitable company's biggest plant in the Netherlands. It produces up to 6 million tons of steel a year, or about 40% of total production. According to Corus spokesman David Jackson, the reorganization should take place through natural turnover because the company agreed with the works council and the unions that there would be no forced redundancies until 2005. The Anglo-Dutch company is already in the process of eliminating about 11,000 U.K. jobs and a fifth of its U.K. steelmaking capacity because of falling orders from manufacturers and the pound's strength against the euro. Corus lost 1.35 billion pounds in the 15 months to the end of last year, largely because of the restructuring costs. EQUITABLE LIFE: Holders Welcome Government Inquiry -------------------------------------------------- Policyholders at Equitable Life are welcoming a government plan for an independent investigation, to be headed by Lord Penrose, into the troubled assurer's downfall, the Daily Telegraph reported on Monday. Equitable's chief executive Charles Thomson has warned policyholders that it was now up to them to work with the board to reach a compromise over the society's 1.5-billion-pound liability to guaranteed annuity rate policyholders (GARs). However, policyholder action groups gave the inquiry a more cautious welcome. Equitable Members' Action Group chairman Paul Braithwaite said the move did nothing to restore confidence in Equitable or address the anxieties of the society's 90,000 GAR policyholders. Equitable Policyholders' Action Group chairman Ron Bullen said it was "a step in the right direction" as "any information revealed is an improvement on none". EQUITABLE LIFE: May Reverse Bonus Cuts -------------------------------------- Equitable Life, UK's oldest life assurer, may restore emergency bonus cuts that was introduced last month in a bid to end a crisis prompted by payment guarantees, BBC News on August 31 reported, citing chief executive Charles Thomson. The troubled assurer, facing a 1.5-billion-pound liability to holders of some guaranteed annuity rate (GAR) pensions, slashed with-profits pension funds by 16%, and cut bonuses on life assurance policies by 14%. The statement came hours after the government confirmed it would launch an in-depth investigation into the circumstances surrounding Equitable's financial crisis. While other policyholders are believed to be considering legal action against former Equitable chiefs over lost funds, members of the Equitable Policyholders' Action Group have called on the government for compensation. Equitable Life closed its doors to new business at the end of last year and sold assets to Halifax, after the House of Lords ruled that its decision to cut pension bonuses to holders of guaranteed pension policies was illegal. PPL THERAPEUTICS: Wins 30-MM-Pound Rescue Funding ------------------------------------------------- Scottish biotechnology firm PPL Therapeutics has secured a provisional backing for a 30-million-pound emergency rights issue priced at 50p, according to the September 1 issue of The Guardian. To recall, the Troubled Company Reporter Europe in May 1 said that PPL Therapeutics would make an attempt to raise 20 million pounds in funding, only half the amount it was seeking when its 45-million-pound fund raising failed in April, creating a cash crisis. Managing director Ron James said he was relieved at the news. With just 4.1 million pounds left in the bank, PPL will run out of cash by the end of the year without the new funds. PPL Therapeutics adviser Deutsche Bank has struggled to drum up interest from new investors this year. RAILTRACK GROUP: Special Unit to Push for Railtrack Break-up ------------------------------------------------------------ Chancellor Gordon Brown has formed a special unit, headed by former Warburg banker and the Chancellor's special adviser Shriti Vadera, to examine ways of breaking up Railtrack, the September 2 edition of the Independent News said. The unit, which also includes senior civil servants from the Treasury and the Department of Transport, Local Government and the Regions, will report to Chancellor Brown at the end of the month. Railtrack has been effectively neutered by the stock market, as the City has lost faith in the track owner and operator. The company's market capitalization is now 1.65 billion pounds, roughly half the value of its property assets. *********** 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 * * *