/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010906.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 Thursday, September 06, 2001, Vol. 2, No. 174 Headlines * A U S T R I A * LIBRO AG: Speculation Mounts on Management Buy-Out * F I N L A N D * SONERA CORP.: Ready for Alliance as Soon as Market Recovers SONERA CORP.: Shares Dive Over Delayed Merger Talks * F R A N C E * BULL SA: Will Sell Integris to Steria MOULINEX SA: Peugeot, Airbus, IBM Consider Moulinex Staff Members * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Two Arrested in Connection With Bank DAIMLERCHRYSLER: Sees No Recovery in U.S. Truck Market Next Year DAIMLERCHRYSLER: To Close Plant in Brazil EDEL MUSIC: Considers Restructuring to Reduce Bank Debt KABEL MEDIA: BBDO to Take Over Internet Empire KABEL MEDIA: Begins Insolvency Proceedings MET@BOX AG: Insolvency Proceedings Postponed * N E T H E R L A N D S * KPN NV: Considers Buying Back Debt KPN NV: First-Half Losses Grow to 1.04BB Euros KPN NV: Ratings Remain on CreditWatch Negative KPN NV: Selloff Talks Accelerate * P O L A N D * ELEKTRIM SA: Inks Deal With Vivendi * S W E D E N * LM ERICSSON: Recovery Looks Dim LM ERICSSON: Shares Drop 16% * S W I T Z E R L A N D * CARRIER1 INTERNATIONAL: S&P Lowers Ratings to 'CCC' SWISSAIR GROUP: Moody's Cuts Rating to B1 * U N I T E D K I N G D O M * ATLANTIC TELECOM: S&P Drops Ratings to CCC CAMMELL LAIRD: Workers Fight for Pensions EQUITABLE LIFE: Actuaries Attack Troubled Insurer MARCONI PLC: Bosses Resign After Trading Slump MARCONI PLC: Cuts 2,000 More Jobs ============= A U S T R I A ============= LIBRO AG: Speculation Mounts on Management Buy-Out -------------------------------------------------- Speculation is mounting that a management buy-out could take place in Libro AG as there are no investors in sight willing to acquire the ailing Austrian retailer, Der Standard/FT Information reported on Monday. Libro board spokesman Werner Steinbauer said that if the management could raise enough money, it was possible that a management buy-out would take place. The Troubled Company Reporter Europe earlier reported that PBS Austria owner Anton Stahrlinger has expressed his interest to bid for the insolvent retailer, which agreed to sell its troubled Internet subsidiary Lion.cc. ============= F I N L A N D ============= SONERA CORP.: Ready for Alliance as Soon as Market Recovers ----------------------------------------------------------- Sonera Corp's acting CEO Aimo Eloholma said that the company, an international forerunner in mobile communications and mobile-based services and applications, would be ready to enter into an alliance as soon as the telecoms sector recovers, according to the Monday edition of AFX Europe. Eloholma said all serious merger talks ended already last year, when the telecoms operators' shares started to decline in value. Sonera recently sold about 21.9 million shares of Deutsche Telekom AG for approximately 565 million euros. The company previously announced it would use the proceeds from the sale of the shares to reduce its debt. After the sale, Sonera's net debt is approximately 4.7 billion euros. SONERA CORP.: Shares Dive Over Delayed Merger Talks --------------------------------------------------- Shares in Sonera Corp were down 6.74% at 4.15 eur in midday trade following reports that merger talks between the Nordic telecoms operators have been postponed, according to AFX News' Monday report. Analyst Petri Korpineva at Evli Securities PLC in Helsinki said another reason for the sharp drop is that Sonera's assset values are coming down. Last week, a source at Telia was quoted as saying that talks on acquiring Finland's Sonera and Denmark's TDC had been put on hold indefinitely, awaiting more stability both in the companies. Analysts have linked the move to the appointment of Harri Koponen as Sonera's president and CEO effective October 1. =========== F R A N C E =========== BULL SA: Will Sell Integris to Steria ------------------------------------- French computer-services firm Bull SA will sell most of its Integris information-technology services unit to French rival Steria in a 190-million-euro deal, according to Wall Street Journal's Monday edition. The transaction, made up of some 100 million euros in stock and the rest mostly in share warrants, concerns all of Integris outside France and a small chunk of Integris in France. It will leave Bull with Steria shares valued at around 15% of its capital. With the sale of Integris, which offers IT consultancy and electronic-business systems and support services in 14 European countries, Bull will shed some 4,500 employees, or around a third of its staff, as they move to Steria. The deal will leave Bull with just systems hardware and infrastructure activities. Bull already sold 361 million euros in assets, including its CP8 smart-card unit, earlier this year. MOULINEX SA: Peugeot, Airbus, IBM Consider Moulinex Staff Members ----------------------------------------------------------------- Peugeot SA, Airbus Industrie and IBM France are prepared to take some of the 2,000 unemployed Moulinex workers whose jobs may be axed in the course of the company's current restructuring plan, the AFX Europe reported on Tuesday. Peugeot said the company would consider employing engineers and sales people, but pointed out its biggest employment needs are at its factories in eastern France, while Moulinex is based in the west. IBM France said the company would consider applications from Moulinex employees with service sector and e-commerce experience. Airbus has said it is mainly interested in engineers. The staff of Moulinex recently accused the group's management for failing to implement the law, by not listening to their proposals on avoiding the social plan that involves job cuts. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Two Arrested in Connection With Bank ------------------------------------------------------------- The public prosecutor has on Friday arrested two former employees of crises-ridden bank Bankgesellschaft Berlin AG on suspicion of fraud, aiding and abetting fraud and attempted blackmail. Names of those arrested were not disclosed. The Troubled Company Reporter Europe in August reported that the German police has staged six raids in Berlin as well as in Nuremberg, Holzminden and Schleiden-Olef, and seized a sizeable amount of evidence as the Berlin prosecutor steps up its probe into the ex-managers of Bankgesellschaft Berlin. Bankgesellschaft Berlin has earlier said it would sue unidentified managers if any evidence of fraud emerges. DAIMLERCHRYSLER: Sees No Recovery in U.S. Truck Market Next Year ---------------------------------------------------------------- DaimlerChrysler AG, according to Handelsblatt on Tuesday, does not expect the U.S. trucks market to improve in 2002 and that it will concentrate on boosting earnings at its beleaguered Freightliner unit. Eckhard Corders, head of DaimlerChrysler's commercial-vehicles division, announced that the company would present a restructuring plan for its U.S. trucks subsidiary by the middle of October. Cordes added he saw no need for further write-downs on inventory at Freightliner although the truck unit is struggling with the slump in its market. DAIMLERCHRYSLER: To Close Plant in Brazil ----------------------------------------- DaimlerChrysler AG will be closing down a $315 million plant built at Campo Largo in the southeastern state of Parana in Brazil as part of a global clean up of the carmaker's finances, according to Dow Jones Newswires' Tuesday edition. The plant, which was opened in 1998 and has 250 workers, stopped production as of April 19. EDEL MUSIC: Considers Restructuring to Reduce Bank Debt ------------------------------------------------------- After posting first-half sales of 482.39 million marks, down 11% from 543.6 million marks a year earlier, Edel Music AG said on August 31 it plans to restructure it assets to reduce bank debt. The Hamburg-based company will in future strongly focus on the development of its own A&R (Artist and Repertoire) both in Europe and North America. It has re-evaluated its main distribution assets. The distribution and licensing relationships with both Disney and Newscorp's Mushroom Records have been terminated resulting in significant one time non-cash write-offs. At the same time, edel music's core distribution companies (PIAS, RED and ABCD) have also been written down substantially. Edel said its first-half loss before interest and taxes, including extraordinary items, widened to 172.2 million marks from a loss of 8.6 million marks in the same period last year. It does not project any improvement in results for the 9-month business year in 2001. KABEL MEDIA: BBDO to Take Over Internet Empire ---------------------------------------------- Dusseldorf-based advertising agency BBDO has confirmed it is interested to take over Kabel New Media AG's Cologne and Hamburg locations in Germany, Handelsblatt reported on Monday. "We are close to signing an agreement with the administrator," BBDO spokesman Thomas Huber said. The agency plans to take over 45 Kabel employees, as well as their customers, including public broadcaster ZDF, private TV channel SAT1 and Warner Brothers. The Cologne operation has a total budget volume of 3.5-4 million Deutsche marks. BBDO is also in talks to acquire parts of Kabel's Hamburg operations, with a total budget volume of 8 million Deutsche marks. Only last week, software provider Clarity AG bought the remaining parts of the insolvent web agency's operations in Bonn. KABEL MEDIA: Begins Insolvency Proceedings ------------------------------------------ Hamburg-based Kabel New Media has begun its insolvency proceeding on September 1, according to Handelsblatt's report on Monday. Bankruptcy proceedings were also initiated on the same day for its Kabel New Media Hamburg GmbH, Kabel New Media Berlin GmbH, Kabel New Media M］chen GmbH, Kabel New Media Bonn GmbH and Kabel New Media Friedrichshafen GmbH units. It is not yet clear yet whether the company's shares will remain listed on the Neuer Markt. Under new rules drawn up by German stock market operator Deutsche Boerse, insolvent companies will be delisted from the segment with effect in October. The administrator of a company then has the option of applying for a listing on the regulated market. Handelsblatt further reported that chief executive Peter Kabel has resigned from the insolvent Internet agency effective August 31. MET@BOX AG: Insolvency Proceedings Postponed -------------------------------------------- The insolvency proceedings of the ailing German set-top box manufacturer Metabox has been postponed until the general meeting planned in October, the Monday edition of Borsen-Zeitung/FT Information said. The move was due to an expert opinion voiced by the insolvency administrator, as the company's liquidity is secure until the general meeting and so the postponement will prevent problems for creditors. The report added that the company had received a loan of 2 million Deutsche marks from private investors. ===================== N E T H E R L A N D S ===================== KPN NV: Considers Buying Back Debt ---------------------------------- Dutch telecoms company Royal KPN NV will consider buying back its own debt under some circumstances, Dow Jones Newswires reported on Tuesday, citing chief financial officer Maarten Henderson. The move comes as an analyst pointed out that some of KPN's debt is trading as low as 93 cents on the dollar. KPN is looking for ways to reduce its debt load of 22.8 billion euros. KPN NV: First-Half Losses Grow to 1.04BB Euros ---------------------------------------------- Dutch telecoms firm KPN said on Monday its net loss for the first half of 2001 increased to 1.038 billion euros, compared to a net loss of 19 million euros for the same period in 2000. The decline, it said, was largely attributable to the increase in depreciation and amortization, and higher financing costs resulting from the acquisition of 77.49% of E-Plus and the UMTS licenses, the book loss on KPN's share in Cesky Telecom, and the 107-million-euro loss related to KPN's interest in eircom. The company's sales, however, increased by 17.5% in the second quarter of 2001, compared with the same period last year. Sales rose from 2.7 billion euros to 3.2 billion euros. KPN, which admitted that its merger talks with Belgium's Belgacom had failed on Friday, is struggling to contain its 23-billion- euro debt mountain. It currently fears a liquidity crisis as its secured funding will only last until next summer. KPN NV: Ratings Remain on CreditWatch Negative ---------------------------------------------- Standard & Poor's on Monday said that ratings of KPN NV remain on CreditWatch with negative implications, where they were placed on June 12, after news that the Netherlands-based telecommunications company ceased merger talks with Belgium-based telecoms company Belgacom S.A. The ratings affected are KPN's BBB+ long-term corporate credit and senior unsecured ratings, its BBB subordinated debt ratings and A-2 short-term corporate credit, short-term debt and commercial paper ratings. Given that Standard & Poor's considers it highly unlikely that KPN will be able to deleverage sufficiently to reduce its ratio of net debt to EBITDA to 5x by the end of the year, KPN's ratings remain under considerable pressure and a ratings downgrade is a strong possibility. KPN NV: Selloff Talks Accelerate -------------------------------- Royal KPN NV, which earlier reported it is struggling with debt of 22.8 billion euros, aims to reduce it by selling non-core assets, according to the Tuesday edition of Dow Jones Newswires. The Dutch telecommunications company said it was preparing a memorandum of understanding on its 16.3% stake in Ukraine's UMC. It noted that it has reached an agreement with the Czech government on the sale of its 20.3% stake in Cesky Telecom. There was also acceleration in negotiations on its 22.3% stake in Indonesia's Telkomsel. Furthermore, the company said it has received non-binding bids on its 51% stake in Internet service provider Euroweb International (EWEB), on its 75.2% stake in Hungary's PanTel, its Polish and Czech cable television operations Vision Network, and its satellite assets. KPN said the sale of its 17.7% stake in Infonet (IN) had been hindered by Infonet's share price performance. =========== P O L A N D =========== ELEKTRIM SA: Inks Deal With Vivendi ----------------------------------- Polish telecommunications and engineering group Elektrim SA, according to Dow Jones Newswires' Tuesday report, has signed an agreement with France's Vivendi Universal SA in exchange for much-needed funding, giving the French media group control over its telecommunications assets. Under the deal, the cash-strapped conglomerate will sell a 2% stake in its telecom unit Elektrim Telekomunikacja and 1% stake in Carcom to a third party, which immediately after receiving all necessary permits will transfer these holdings to Vivendi SA. Furthermore, Elektrim will have a right to appoint three out of seven members of Elektrim Telekomunikacja supervisory board. In parallel, Elektrim Telekomunikacja will not only buy all Elektrim's fixed telecom assets for 491 million euros, but also the assets in cable TV companies for $150,000. The concluded deal will significantly improve the financial standing of Elektrim. =========== S W E D E N =========== LM ERICSSON: Recovery Looks Dim ------------------------------- Swedish telecoms equipment group Ericsson, according to Reuters' Tuesday report, sees no clear signs of the company's recovery in the market next year. "No one can tell when we will see an end to the downturn," Ericsson chief executive Kurt Hellstrom said. The outlook drove the company's already languishing share down by as much as 11.6%. Chief financial officer Sten Fornell added Ericsson need to do much to reach positive cash flow for the full year 2001. For the long term, the telecoms group was targeting sales growth of over 20% and an operating margin of over 10%. In the short term, markets had become more uncertain because of the European operators' huge debts linked to third generation mobile licenses. LM ERICSSON: Shares Drop 16% ---------------------------- Shares of mobile infrastructure leader Ericsson LM Telephone were down 16.1%, or 80 cents, on Monday after the company warned that conditions in its mobile systems market appear to be worsening, according to the September 4 edition of Reuters. Ericsson executives said the company's market environment is even more uncertain and the mobile systems market will show flat to modest growth in 2002 a result of a slow uptake by carriers of next-generation data communications technology. The telecommunications equipment company disclosed in July it was reviewing non-core operations for possible divestment to bolster its balance sheet and help it maintain profitability. It recently found a buyer for its spacious corporate head office in London's St. James's Square. ===================== S W I T Z E R L A N D ===================== CARRIER1 INTERNATIONAL: S&P Lowers Ratings to 'CCC' --------------------------------------------------- Standard & Poor's on Tuesday has lowered to triple-'C' from single-'B'-minus the long-term corporate credit and senior unsecured debt ratings of Carrier1 International S.A., a Switzerland-based Pan-European wholesale provider of voice and data transmission services. The rating action reflects the company's third consecutive quarter of weakening operating performance, higher-than-expected cash burn rate, limited financial flexibility, and strong strategic uncertainties following the recent departure of the company's former chief executive officer. Carrier1's wholesale-oriented business model appears vulnerable in an industry in which many large and alternative operators have been investing heavily in the construction of international fiber-optic backbones, resulting in overcapacity and falling prices. Despite recording a revenue increase of 22% over the previous quarter, Carrier1 reported a negative gross margin and a much higher-than-expected EBITDA loss for the second quarter of 2001. The company's high exposure to the very competitive wholesale voice and data transmission market has constrained margin development, while financial problems experienced by some of Carrier1's customers have resulted in a strong increase in bad- debt expenses. In the event of any further deterioration in operating performance, S&P said the ratings of Carrier1 could be lowered again. SWISSAIR GROUP: Moody's Cuts Rating to B1 ----------------------------------------- Moody's Investors Service has on August 31 downgraded the long- term issuer rating of Swissair Group to B1 from Ba3 and confirmed the short-term rating of Not-Prime. The rating action reflects the Swiss aviation group's very high financial leverage, the low cash flows of the core operations relative to its debt level, the financial commitments towards its underperforming German affiliate LTU and its tight financial flexibility. The credit ratings agency believes that while most of Swissair's core operations (airlines, catering, ground handling, airport retailing, aircraft maintenance etc.) are profitable, their current operating cash flows are marginal compared to the group's debt level. In order to reduce bank debt, management has decided to accelerate its asset disposal program and also sell a majority stake in the ground handling business Swissport as well as a majority stake in or the entire airport retail-company Nuance to target total proceeds of 4.5 billion Swiss francs. Swissair Group is headquartered in Zurich, Switzerland. The group generated revenues of about 8.2 billion Swiss francs and recorded a net loss of 234 million Swiss francs in the first half of 2001. =========================== U N I T E D K I N G D O M =========================== ATLANTIC TELECOM: S&P Drops Ratings to CCC ------------------------------------------ Standard & Poor's has on August 31 lowered the long-term corporate credit ratings of Atlantic Telecom Group PLC from single-'B'-minus rating to triple-'C', and the senior unsecured debt rating was lowered to triple-'C'-minus from single-'B'- minus. At the same time, all ratings were placed on CreditWatch with negative implications. The downgrade of the corporate credit ratings reflects the company's operational and financial underperformance relative to Standard & Poor's expectations, as well as its ongoing high cash burn rate, weak liquidity, and limited financial flexibility. The unrestricted cash balances Atlantic, a provider of direct and indirect access telephony services to the residential and small and midsize enterprise (SME) markets in the U.K., Germany, and France, declined by 52.5 million pounds in the three-month period ending June 30, due to EBITDA losses of 12.5 million pounds, capital expenditure of 13.2 million pounds, and a substantial working capital cash outflow. As a consequence, the company's available unrestricted cash balances declined to only 55.5 million pounds on June 30. Furthermore, Atlantic's financial flexibility, or its ability to access further capital, is considered to be very poor given the ongoing extreme weakness of the company's share and bond prices, and the generalized negative sentiment toward telecommunications companies in the equity and credit markets. CAMMELL LAIRD: Workers Fight for Pensions ----------------------------------------- At least 50 of Cammell Laird workers who worked at the shipyard between 1960 and 1990 has fought for pension cash that they say has not been paid, the Monday edition of icLiverpool said. Wilf Ireland, who is leading the campaign, is seeking legal advice from Chester-based solicitor Alan Roberts, who specializes in employment law. Ireland, who worked all his life as a boilermaker at Laird's, said he is disgusted at the way he has been treated. He has been told he did not work at Cammell Laird and there are no records for him. Roberts added he intends to make a claim against the company if it refuses to settle, as many of the men could be owed several thousand pounds. Men who worked at Cammell Laird between 1960 and 1990 who have not been paid a pension are urged to contact Alan Roberts at 01244 548816. Cammell Laird has laid off 117 shipyard workers in August and 24 job cuts at the Birkenhead yard earlier, leaving only a skeleton staff of maintenance men at the yards. The ship-repair group went into receivership in April after the loss of a 50-million-pound Italian cruise ship contract. EQUITABLE LIFE: Actuaries Attack Troubled Insurer ------------------------------------------------- Actuarial firm Bacon & Woodrow, according to the Tuesday edition of The Guardian, has accused Equitable Life of giving a positive assessment of its finances in July, days before the troubled insurer cut the value of policies by up to 16%. Equitable prompted outrage on July 16 when it reduced the value of with-profits policies. Early this week, the company denied that it had misled Bacon & Woodrow, saying it had given it straightforward factual information. "We do not believe that we gave any inappropriately upbeat indications as to the state of the society," chief executive Charles Thomson said. MARCONI PLC: Bosses Resign After Trading Slump ---------------------------------------------- Marconi chairman Sir Roger Hurn and chief executive Lord George Simpson have resigned with immediate effect, after the struggling telecoms equipment maker issued its second profit warning in two months, The Irish Times reported on Tuesday. Mike Parton, head of the company's networks division, was appointed chief executive, while Derek Bonham was named interim chairman. The British company said it suffered a first-quarter operating loss of 227 million sterling pounds, and would not break even in the first half as it predicted in its previous warning in early July. Marconi added its first-quarter sales fell 12% to 1.13 billion pounds, with a slump of more than 25% in the core networks business. MARCONI PLC: Cuts 2,000 More Jobs --------------------------------- Troubled telecoms equipment company Marconi will further cut 2,000 jobs, taking the job cuts toll this year to 10,000, from 39,000 employed last March, the BBC News reported on Tuesday. About 600 of the cuts will be made in the UK, 1,000 in the US and the remainder in continental Europe, central America and Asia Pacific, the firm said. Union leaders, who said they had been given no warning of the announcement, condemned the job cuts. They have pledged to fight any compulsory redundancies. "It was completely unexpected," Marconi's trade union committee chairman Danny Carrigan said. "The company is clearly in turmoil." *********** 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 * * *