/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010907.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 Friday, September 07, 2001, Vol. 2, No. 175 Headlines * B E L G I U M * CITY BIRD: Thomas Cook in Talks to Buy Charter Airline * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Berlin Searches Aubis Group Homes BAYER AG: State Launches Negligence Probe COMDIRECT: Aims for Zero Cost Increase in 2001 DEUTSCHE TELEKOM: Sells Cable TV Units to Liberty Media * N E T H E R L A N D S * KPN NV: 3G Cost-Sharing Deal to Save Dutch Carrier LAURUS NV: Food Retailer to Hold Bank Talks LAURUS NV: Needs to Raise Interest Cover Ratio to 1.5 * N O R W A Y * ENITEL ASA: Investors and Banks May Be Affected by Insolvency * R U S S I A * PROMSTROIBANK: Central Bank Order Is Legal * S W E D E N * ADCORE AB: Considers Company Breakup * S W I T Z E R L A N D * SWISSAIR GROUP: Government Denies Loan to Aviation Group * U N I T E D K I N G D O M * 24/7 MEDIA: Closes London Office BRITISH TELECOM: Appoints mmO2 Directors BRITISH TELECOM: Names Groger as New Viag Interkom CEO BRITISH TELECOM: Sets Timetable for Demerger BRITISH TELECOM: Shopping Mall Disputes BT Name Change DANKA BUSINESS: Sells Ameritrend for $1MM EQUITABLE LIFE: Appoints Actuary to Evaluate Compromise Scheme ICELAND GROUP: Sales Drop 2.3% More MARCONI PLC: Lord Simpson in a 1-MM-Pound Pay-Off MARCONI PLC: Offers Read to Revive Marconi MARCONI PLC: Shares Plummet by 28% MARKS & SPENCER: Finds Buyer for European Stores ============= B E L G I U M ============= CITY BIRD: Thomas Cook in Talks to Buy Charter Airline ------------------------------------------------------ Leisure company Thomas Cook AG is in discussion with City Bird Holding SA to acquire the assets and operations of Belgian charter airline City Bird for about 400 million Belgian francs, the Tuesday edition of Reuters said. According to Thomas Cook AG's Executive Vice President Wim Desmet, the deal would need approval by Belgium's competition authorities. He said there were other undisclosed procedures necessary before the acquisition could succeed. City Bird Holding, which is listed on the Nasdaq Europe market, last week said it was in talks with an undisclosed buyer for the airline and that it would present the plan to its shareholders on September 13. A Belgian commercial court granted City Bird Holdings protection from its creditors in early July through to September 26. City Bird operates 12 commercial aircraft and employs more than 600 people. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Berlin Searches Aubis Group Homes ---------------------------------------------------------- The Berlin district attorney has had offices and homes searched throughout the whole of Germany on Tuesday as part of its investigations into the Aubis Group. The real estate company aggravated Bankgesellschaft's difficult circumstances as a result of lending business of more than 600 million deutsche marks. A total of 18 premises were searched, including the homes of Aubis partners Klaus-Hermann Wienhold and Christian Neuling and a further five liable persons. Extensive evidence has been secured. Wienhold and Neuling caused a party donation scandal with a cash donation to the Chairman of the Board of Management of Berlin Hyp, a member of the Bankgesellschaft Group, and the then Chairman of the CDU coalition party in the House of Representatives, Klaus Landowsky. They contributed to the collapse of the major coalition. Bankgesellschaft Berlin, with around 16,800 employees, is a banking and finance group listed on German stock exchanges. Its largest individual shareholder is Land Berlin with 56.6%, followed by Norddeutsche Landesbank with approximately 20% and the Parion insurance group with 7,5%. The rest of the shares are in free float. Bankgesellschaft Berlin is currently undergoing a phase of fundamental restructuring, as part of which Bankgesellschaft requires additional capital of 2 billion euros, secured by a guarantee from the majority shareholder Land Berlin. BAYER AG: State Launches Negligence Probe ----------------------------------------- The state prosecutor in the German city of Cologne has launched an inquiry into the way the troubled German chemicals and pharmaceuticals group Bayer handled the withdrawal of its anti- cholesterol drug that was linked to fatal side effects, the Financial Times reported on Tuesday. No individuals will be named yet in connection with the probe. The inquiry, which could lead to the prosecution of company executives, adds to the troubles that Bayer has faced since the withdrawal of the Baycol/Lipobay drug, expected to generate sales of more than $1 billion this year. Shares of Bayer have fallen 20% since the drug's withdrawal in the market on August 8 because of concerns over profit implications, uncertainty over the company's future corporate strategy and the prospect of potentially costly legal action from those claiming to have suffered from the drug. The company is facing more than 15 applications for class action in the US. COMDIRECT: Aims for Zero Cost Increase in 2001 ---------------------------------------------- Europe's largest e-broker comdirect bank has launched tougher controls as it aim to reach a zero-cost growth in 2001, according to Reuters' Tuesday report. The planned marketing costs for 2001 were being dramatically reduced, expansion of the company's technical platform was being put on hold, and over half of its 1,300 staff was being put on reduced working hours. The plan does not envisage layoffs or cancel plans to expand in countries outside comdirect's core market in Germany. The company, therefore, was not withdrawing from plans to expand in Italy, France and the UK. Analyst Joern Kissenkoetter at private bank MM Warburg in Hamburg said he sees administrative costs of 245 million euros in 2001. Comdirect had 221 million euros in administrative costs in 2000. DEUTSCHE TELEKOM: Sells Cable TV Units to Liberty Media ------------------------------------------------------- After two months of tense negotiations, Deutsche Telekom has finally agreed to the 5.5-billion-euro sale of its six remaining regional cable television companies to American group Liberty Media, the Financial Times reported on Tuesday. Telekom wants to cut its net debt level from 65.5 billion euros to 50 billion by the end of next year through the sale of non- core assets and the flotation of its T-Mobile subsidiary. Under the deal, the full consideration will be paid subject to approval by the German cartel authorities. It will include 3 billion in cash, Liberty shares with a guaranteed floor value of 1.5 billion euros, and a 1-billion-euro senior secured note. One banker said there was a risk the cartel office would reject or impose conditions on the DT/Liberty Media deal because of Liberty's content activities and fears it could deny access to competitors. ===================== N E T H E R L A N D S ===================== KPN NV: 3G Cost-Sharing Deal to Save Dutch Carrier -------------------------------------------------- Dutch telecommunications company Royal KPN NV, Spain's Telefonica Moviles SA, and Finland's Sonera Corp. are close to finalizing a cost-sharing deal for rolling out third-generation mobile phone networks in Germany, the September 6 edition of Dow Jones Newswires said. The deal would give a much-needed boost to KPN, which continues to be hammered by poor investor confidence over its ability to pay down its mounting debt of 22.3 billion euros. KPN's German cellphone subsidiary E-Plus, which accounts for more than half the debt load, faces difficult spending obligations as it straighten out a German 3G network. Analysts said a 3G cost-sharing deal for E-Plus would be a positive move in terms of reducing capital expenditure. LAURUS NV: Food Retailer to Hold Bank Talks ------------------------------------------- Laurus NV, Netherlands' second-largest food retailer behind Ahold, will be forced to discuss loan terms with its bank after the Dutch supermarkets group posted a worse-than-expected first- half net loss of 44 million euros and failed to meet a key financial benchmark, Reuters reported on Tuesday. The company did not name the bank or the size of the loan. Company spokesman Frank van Ooyen said that Laurus agreed with its bank the interest cover ratio, or ratio of operating results to interest charges, had to be at least 1.5. Laurus, which earlier this year issued two profit warnings, said the ratio was 1.2 in the first half. The ratio works like a benchmark for the financial situation a company is in. Analysts expected Laurus would have to pay higher interest and might have to sell some supermarket brands to cut its debt, which as of the first half of 2001 reaches 1.3 billion guilders. LAURUS NV: Needs to Raise Interest Cover Ratio to 1.5 ----------------------------------------------------- Company spokesman Frank van Ooijen said Laurus NV must raise its interest cover ratio to 1.5 from 1.2 in the first half of next year in order to meet its agreements with a consortium of Dutch banks, AFX News reported on Tuesday. The company's interest cover ratio (EBIT divided by interest charges) has plunged, from 14 in 1999 to 3.7 in 2000 and 1.2 in the first half of 2001. Van Ooijen said a low interest cover ratio could lead to more demanding loan conditions and higher interest rates on loans. Due to the company's poor first half results, it no longer meets the interest cover ratios agreed earlier this year with its banks. =========== N O R W A Y =========== ENITEL ASA: Investors and Banks May Be Affected by Insolvency ------------------------------------------------------------- It has been rumored that private investors may own about 80% of the NKr2-billion debenture loan in the Norwegian telecommunications and data services supplier Enitel, according to the Tuesday edition of Dagens Naeringsliv/FT Information. If Enitel is declared insolvent, it will affect not only the private debenture investors, but also perhaps the banks, including Nordic banking group Nordea, that lent the capital to investors. 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. =========== R U S S I A =========== PROMSTROIBANK: Central Bank Order Is Legal ------------------------------------------ The Moscow arbitration court has confirmed the legality of an order from the Russian central bank, which in June 2000 denied Russian bank Promstroibank further license to conduct banking operations, Commersant Daily/FT Information reported on Tuesday. Promstroibank once again moves a step closer to bankruptcy. This postpones indefinitely the planned transfer of Promstroibank's well-developed and large regional chain of subsidiaries to the Russian Development bank (RBR). Some say that RBR may easily obtain the subsidiaries if Promstroibank files for bankruptcy. =========== S W E D E N =========== ADCORE AB: Considers Company Breakup ------------------------------------ Adcore AB is considering selling the profitable parts of the company, dismantling the remaining operations and dividing the profit among shareholders, according to the Wednesday edition of Dow Jones Newswires. As reported in the Troubled Company Reporter Europe in August, the beleaguered Internet and information technology consultant has agreed to divest its German IT services operations to Adcore Germany CEO Holger Lueke. The company's net loss for the second quarter widened to 1.46 billion Swedish kronas, compared with the 89 million of the same period last year. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Government Denies Loan to Aviation Group -------------------------------------------------------- The Swiss Federal Cabinet, according to Dow Jones Newswires' Wednesday report, will not offer a loan to the financially strapped airline company Swissair Group AG. The cabinet, which cited international conventions that discourage government aid for airlines, still believes the company can turn itself around with its own resources. Swissair recently reported a first-half net loss of 234 million Swiss francs (see http://bankrupt.com/misc/swissair1.pdffor the group's consolidated income statement). The Swiss aviation group plans to reduce its net debt by 2 billion Swiss francs by the end of 2002, and by a further 1 billion Swiss francs by the end of 2003. It also plans to dispose of more than 4.5 billion Swiss francs in assets over the next 18 months. On August 30, Swissair said it would cut 1,250 jobs, or about 1.7% of its worldwide work force, and sell its ground handling and airport retailing businesses to raise funds. =========================== U N I T E D K I N G D O M =========================== 24/7 MEDIA: Closes London Office -------------------------------- Internet media sales organization 24/7 Media Europe has closed its London office after its US board backing investors backed out from the firm, the Europe Media reported on Wednesday. Company COO Carl White said that the backers, who intended to rescue the firm, failed to find a representative for the new management board. With the US parent withdrawing their funding, the employees will not be paid for the notice, White added. BRITISH TELECOM: Appoints mmO2 Directors ---------------------------------------- mmO2, the mobile business of BT, on Wednesday announced the appointment of two new non-executive directors to its Board. Neelie Kroes was appointed on August 31 and Stephen Hodge will take his seat on October 1. Both directors will join chairman David Varney, chief executive officer Peter Erskine and chief financial officer David Finch in the board, along with the other non-executive directors Paul Myners and deputy chairman Andrew Sukawaty. Neelie Kroes, 60, is an experienced stateswoman who has built an impressive political career. At the age of 36 she became Secretary of State for Transport and Public Works in The Netherlands and served two periods as a Cabinet Minister. During these years she handled the privatization of the Dutch PTT, which became the example for privatization of state owned activities in The Netherlands. She has written papers and conducted several studies for the European Commission on regulatory affairs, employment and economic issues. Neelie currently holds other non- executive board positions with a number of national and international companies. Stephen Hodge, 59, is currently Director of Finance of the Royal Dutch/ Shell Group where he is responsible for all the financial and investor relations issues for the Group and its Parent Companies. Stephen retires from Shell on September 30 after more than 25 years with the Group. He has an extensive knowledge of the financial management of international companies, having worked throughout the world including Australia, The Netherlands, Venezuela, and Argentina in a variety of financial positions. Stephen will chair the mmO2 audit committee. BRITISH TELECOM: Names Groger as New Viag Interkom CEO ------------------------------------------------------ British Telecom on Monday said that Rudolf Groger has been appointed as Chief Executive Officer of VIAG Interkom, mmO2 plc's German business, to take over Keith Cornell. The new chief, who will be responsible for continuing the implementation of VIAG Interkom's strategy in Germany, will take up his responsibilities on October 1. Keith will return to his position as mmO2 plc's European President. Rudolf is currently Managing Director of T-Systems GmbH, Europe's second-largest systems house, and one of the four core activities of Deutsche Telekom. He is also member of the board of Debis Systemhaus GmbH, the joint venture between Deutsche Telekom and DaimlerChrysler. BRITISH TELECOM: Sets Timetable for Demerger -------------------------------------------- British Telecom on Wednesday announced the expected timetable of proposals to split out its main mobile business and create two separate and independent companies - BT Group plc and mmO2 plc. The move is part of BT's strategy to create further shareholder value. BT also announced that mmO2 plc would be demerged with net debt on its balance sheet amounting to 500 million pounds. Key dates in the expected timetable include: 24-28 September - Circular and summary mmO2 plc listing particulars posted to BT shareholders 23 October - EGM and Court Meeting 14 November - Court hearing of the petition to sanction the scheme 16 November - Last day of trading in BT shares 19 November - Demerger complete (subject to Court and shareholder approval). According to BT chairman Sir Christopher Bland, shareholders will own equal numbers of BT Group plc shares and mmO2 plc shares upon the demerger, together replacing their holding in their pre- demerger BT shares. BRITISH TELECOM: Shopping Mall Disputes BT Name Change ------------------------------------------------------ A London shopping center called O2, according to BBC News' Wednesday edition, will take legal action against British Telecoms after the telecommunication giant re-named its mobile phone operation BT Wireless to O2. The retail mall, owned by property groups Burford and Marylebone Warwick Balfour, claimed they registered the name for retail use nearly two years ago. The companies said they would not bow to any pressure BT might use to force them to change the name. However, BT says it has no plans to alter the re-branding because the two businesses are completely different. BT Wireless announced on Monday that the new customer brand for the business would be O2, while the holding company name to mmO2 plc effective immediately. The ordinary shares will be listed under the new name upon demerger from BT in November. mmO2 plc has wholly-owned operations in the UK (BT Cellnet), Germany (VIAG Interkom), The Netherlands (Telfort), the Republic of Ireland (Esat Digifone) and the Isle of Man (Manx Telecom). mmO2 plc also includes Genie, which is one of Europe's leading mobile internet businesses. DANKA BUSINESS: Sells Ameritrend for $1MM ----------------------------------------- Danka Business Systems, PLC on Wednesday said it sold the outstanding capital stock of Danka Holding Company's wholly owned subsidiary Ameritrend Corporation to Method Products Corp. Ameritrend is primarily engaged in the sale and service of telecommunication systems. Under the agreement, Method Products will pay $1 million and will assume approximately $600,000 in liabilities. Danka will also retain certain assets that it expects will be liquidated for approximately $400,000 in net cash proceeds. Danka will use the proceeds of sale and disposition of Ameritrend assets to reduce debt under its newly executed senior bank credit facility. "This sale fits with the company's continuing strategy to aggressively reduce debt," Danka CEO Lang Lowrey commented. Danka Business Systems has headquarters in London, England, and St. Petersburg, Florida. It is one of the world's largest independent suppliers of office imaging equipment and related services, parts and supplies. The company provides office products and services in 30 countries around the world. EQUITABLE LIFE: Appoints Actuary to Evaluate Compromise Scheme -------------------------------------------------------------- Troubled mutual life assurer Equitable Life has appointed Michael Arnold, one of the most experienced actuaries in the City, according to yesterday's edition of Independent News. Arnold will judge whether an impending compromise scheme, which will realign the value of policies, is fair and reasonable to all policyholders. Equitable must persuade the majority of both its guaranteed annuity policyholders (GARs) and those without a guarantee to agree to the scheme, in order to cap a potential liability of 2.6 billion pounds and ensure investment freedom in the future. If the scheme will pass, Equitable could receive another 500 million pounds from Halifax, which bought most of the life assurer's assets in February. ICELAND GROUP: Sales Drop 2.3% More ----------------------------------- Chief executive Bill Grimsey of Iceland Group Plc said that the frozen food retailer was still aiming for broadly flat net sales over the full financial year to March 31, after the group announced a 2.3% fall in its sales for the first 22 weeks of its current year, according to the Tuesday edition of Reuters. The 2.3% decline in sales was an improvement on the 3.1% fall registered in the 13 weeks to June 30. The Deeside, Wales-based firm ran into trouble in the second half of 2000 when a gamble to switch to organic foods backfired, with higher prices driving away its value-conscious customers. Iceland's shares plunged around 50% in February after the company issued three profit warnings in quick succession. Since then, the shares have periodically recovered as investors put faith in new CEO Grimsey to turn the business round. Iceland was founded in 1970 by two employees from UK toys and clothing chain Woolworths. It runs more than 750 stores in the UK and Ireland. MARCONI PLC: Lord Simpson in a 1-MM-Pound Pay-Off ------------------------------------------------- Lord Simpson of Dunkeld was in line for a 1-million-pound pay-off from Marconi on Tuesday after he resigned as chief executive of the crisis-torn telecoms equipment manufacturer, the Independent News in its September 5 edition said. Union officials described the pay-off of Lord Simpson, who earned 1.002 million pounds and received extra pension benefits of 425,000 pounds last year, as a disgrace. "If any of our members performed so badly, they would be rewarded with the sack. There appears to be one rule for executives and another for everyone else," a spokesman for the Manufacturing, Science and Finance Union said. Lord Simpson's departure came as the company warned that it was heading for a 5-billion-pound loss this year. Marconi also announced the resignation of chairman Sir Roger Hurn, and a further 2,000 job cuts. The share price of Marconi has plunged by 96% in the past 12 months. On Tuesday, it closed at a new all-time low of 53p, valuing the company at just 1.5 billion pounds. MARCONI PLC: Offers Read to Revive Marconi ------------------------------------------ Telecoms equipment group Marconi is understood to have offered Martin Read, Britain's highest-paid boss, to take charge of restoring the company's fortunes, according to The Guardian's report yesterday. The news emerged as Marconi tilted closer to insolvency when its shares plunged to a record low of 38p, prompted by severe doubts about the credibility of the new management team. Read spent almost 10 years working at the former GEC under managing director Lord (Arnold) Weinstock. He has transformed Logica from a sleepy 300-million-pound IT services firm into a 3- billion-pound global business, the Guardian added. Marconi sacked its chief executive and chairman on Tuesday after being forced to issue a second profits warning and declare it faced losses of up to 5 billion pounds this year. MARCONI PLC: Shares Plummet by 28% ---------------------------------- Marconi shares plunged by 28% on Wednesday to their lowest level in more than two decades, according to Independent News' report yesterday. The latest blow came after brokers were skeptic about the outlook of the troubled telecommunications firm. They also questioned Marconi's ability to meet debt reduction targets as Alcatel chief executive Serge Tchuruk dismissed the idea of a rescue takeover. The renewed retreat in the shares wiped a further 420 million pounds off Marconi's value, reducing its market capitalization to 1.06 billion pounds, and sealing its humiliating exit from the FTSE 100 index. MARKS & SPENCER: Finds Buyer for European Stores ------------------------------------------------ Marks and Spencer may have found a buyer for its French and Belgian stores, following the company's announcement in March to pull out of mainland Europe, Reuters reported on Wednesday. The troubled retailer hopes to close the stores by the end of the year, but M&S has been looking at alternatives, including possible buyers. French department store chain Galeries Lafayette has expressed an interest in buying the 18 French and four Belgian stores, Reuters added. *********** 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 * * *