/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011017.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, October 17, 2001, Vol. 2, No. 203 Headlines * B E L G I U M * SABENA SA: Board Reviews New Business Plan * F R A N C E * VALEO SA: To Close German Plant * G E R M A N Y * DAIMLERCHRYSLER: Sets Target for Freightliner Unit KINOWELT MEDIEN: May Reduce Financial Burden * H U N G A R Y * MALEV AIRLINES: To Join KLM, Northwest Alliance * I R E L A N D * AER LINGUS: EU Puts Condition on State Aid * N E T H E R L A N D S * VERSATEL TELECOM: S&P Places Ratings on CreditWatch * S W E D E N * ADERA AB: Company Profile * S W I T Z E R L A N D * SWISSAIR GROUP: Government Takes Lead to Find New Capital * U N I T E D K I N G D O M * ATLANTIC TELECOM: Germany Subsidiary Applies for Insolvency BRITISH TELECOM: To Cut 2,500 Concert Jobs FEDERAL-MOGUL: Wins Contracts of More Than $20MM Annually HUNTINGDON LIFE: De-lists From London Market J2C PLC: Stake Sale Angers Holders MARCONI PLC: Hits Second-Quarter Target MARCONI PLC: May Buy Back Bonds MARCONI PLC: Moody's Cuts Ratings to Ba3 MARCONI PLC: S&P Affirms Ratings to BB NTL INCORPORATED: Will Cut Jobs to Meet Cashflow Target RAILTRACK GROUP: Hides Cash Problems From Shareholders RAILTRACK GROUP: Holders Complain Over Government Move RAILTRACK GROUP: Reveals Events Leading to Administration ============= B E L G I U M ============= SABENA SA: Board Reviews New Business Plan ------------------------------------------ The Sabena Board of Directors reviewed Monday the financial situation of the Belgian carrier and the first hypothesis of the "new Sabena" business plan. The three commissioners designated by the President of Brussels Trade Court attended the meeting. The Belgian State and Sabena Management have launched a plan that guarantees a smooth continuity of activities for Sabena's customers, while looking for private investors willing to invest in this new company. The plan also concentrates on finding industrial partners for the subsidiaries. Furthermore, the Belgian government and the Trade Unions are setting up a social fund to accompany the entire scenario. =========== F R A N C E =========== VALEO SA: To Close German Plant ------------------------------- French car parts supplier Valeo said Monday that its Switches & Detection Systems Branch plans to rationalize its production in Germany, leading to the closure of its Baumenheim plant in Bavaria. The closure is part of the production site restructuring program announced in May. It allows the Switches & Detection Systems Branch to improve its competitiveness and sustain its strong growth in the development of new products. Production in the Baumenheim plant, which employs 470 people, will be transferred to the existing Wemding site, 30 kilometers from Baumenheim. The Works Council is currently being informed and consulted on this project. Early this month, Valeo said it would reduce its factories from 170 to 100 in order to effectively respond to the present industry downturn. Chairman and managing director Christian Morin believes the crisis will intensify next year and predicts a 10% drop in vehicle sales in Europe. ============= G E R M A N Y ============= DAIMLERCHRYSLER: Sets Target for Freightliner Unit -------------------------------------------------- U.S.-German carmaker DaimlerChrysler AG, according to Borsen- Zeitung/FT Information's Saturday edition, has set definite restructuring targets for Freightliner LLC, its loss-making U.S. utility vehicles operations. Eckhard Cordes, director of utility vehicle operations at the group, expects Freightliner to close 2001 with profits despite the worldwide economic slowdown. The group's utility vehicles division registered operating profits of 1.11 billion euros last year. As part of the major restructuring at Freightliner, the management is determined to reduce operating costs by $850 million by 2004. KINOWELT MEDIEN: May Reduce Financial Burden -------------------------------------------- German film company Kinowelt AG may now fight off the threat of insolvency as it may be able to return an overpriced film package to US film studio Warner Brothers, according to the Friday edition of Suddeutsche Zeitung & World Reporter. Brothers Rainer and Michael Kolmel, who head Kinowelt, have been negotiating with the company's banks over a debt restructuring since the middle of the year. There are now indications that the banks are ready to contribute towards the rescue of the company. Kinowelt, also been burdened by unsuccessful investments in cinemas and fan merchandise, will possibly reduce jobs to between 50 and 80 from last year's 975. ============= H U N G A R Y ============= MALEV AIRLINES: To Join KLM, Northwest Alliance ----------------------------------------------- Malev strengthened an existing cooperation deal with Dutch national carrier KLM, enabling the ailing Hungarian airline to join the "Wings" alliance with U.S. carrier Northwest Airlines. According to Reuters' report on Monday, the agreement will help the carriers boost their market position and financial results. Malev Chief Executive Jozsef Varadi said Malev would gain access to a developed European and global network and boost its passenger appeal in Europe and North America. Malev has been searching for a global alliance partner since its owner, the State Privatization and Holding Rt (APV), failed to sell a 50% stake in the company to a strategic investor through a tender in January. The Hungarian airline registered an after-tax loss of 9.35 billion forints on net sales revenue of 108 billion forints last year, and is struggling to fulfill its restructuring plan that includes job cuts totaling 600 in 2001 and 400 in 2002. ============= I R E L A N D ============= AER LINGUS: EU Puts Condition on State Aid ------------------------------------------ The European Commission required that national airline Aer Lingus be insolvent before it can receive fresh loans from the government, the Irish Times reported. Earlier, Aer Lingus claimed a loan or some other state aid would be needed to cover the cost of a redundancy program, put at around 125 million pounds. The program includes a cut of 2,500 of the 6,300 permanent jobs at the airline. The airline said it is losing 2 million pounds a day following the September 11th terrorist attacks in the U.S. ===================== N E T H E R L A N D S ===================== VERSATEL TELECOM: S&P Places Ratings on CreditWatch --------------------------------------------------- Standard & Poor's placed on Monday the B- long-term corporate credit and senior unsecured debt ratings of telecommunications operator Versatel Telecom International N.V. on CreditWatch with developing implications. The CreditWatch placement follows Versatel's announcement of its proposed exchange offer and consent solicitation covering all of the company's outstanding high-yield and convertible debt. Under the terms of the proposal, bondholders are being offered a mix of cash and convertible shares in exchange for their notes. Given the company's existing level of cash balances and the anticipated cash balances that will remain subsequent to the completed offer, bondholders do not face the prospect of imminent default by Versatel if they do not participate in the exchange. Moreover, Standard & Poor's will need to review Versatel's pro forma business, as well as its strategic direction, in the light of a successful completion of the bond exchange. If the offer proves successful, Versatel will have a less leveraged balance sheet and enhanced financial flexibility, which could support an improvement in credit quality. The CreditWatch status will be resolved after the financial and business risks arising from the exchange offer can be better assessed. =========== S W E D E N =========== ADERA AB: Company Profile ------------------------- Name : ADERA AB Address : Ostra Hamngatan 41-43 SE-411 10 Gothenburg Sweden Phone : +46 705-72 72 02 Fax : +46 31-701 67 01 Email : nils-ove.andersson@aderagroup.com Website : http://www.aderagroup.com SIC : IT Consultancy Services Employees : 418 (as of 06/30/01) Revenues : 67.8M Swedish krona (as of 06/30/01) Net Loss : 60.596M Swedish krona (as of 06/30/01) Total Assets : 371.078M Swedish krona (as of 06/30/01) Total Liabilities : 106.2M Swedish krona (as of 06/30/01) Type of Business : Adera AB is an expert in the field of business development, marketing, communications and IT/Internet consultancy. Trigger Event : Due to mounting losses attributed to a decline in market demand, Adera AB in February 2001 announced a 35-million- Swedish-kronor restructuring plan required to return the company into profitability. Company reorganization involved the closing of its units including offices in Munich, Amsterdam, Copenhagen, Belgium, (Stureplan) Stokholm, asset sales in Germany and workforce downsizing. President/CEO : Rolf Jansson CFO : Nils-Ove Andersson Auditor: Ernst & Young AB Total Shares Outstanding: 21,266,817 Last published in TCR-EUR on : October 16, 2001 ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Government Takes Lead to Find New Capital --------------------------------------------------------- The Swiss government is taking the lead in finding 3 billion Swiss francs of fresh capital to rebuild an international airline from the remnants of national flag carrier Swissair, which filed for protection from creditors two weeks ago, the Financial Times reported Sunday. The government, which has already injected 450 million Swiss francs to keep Swissair flying, faces potentially serious problems with the European Commission if it adds fresh capital into the national airline. Crossair chief executive Andre Dose said that the only least costly option was to transfer 26 of Swissair's long-haul jets and 26 of its short-haul jets to Crossair. This move involves the loss of 9,400 jobs and 650 million Swiss francs of redundancy costs. =========================== U N I T E D K I N G D O M =========================== ATLANTIC TELECOM: Germany Subsidiary Applies for Insolvency ----------------------------------------------------------- Atlantic Telecom GmbH, the German subsidiary of Atlantic Telecom Group PLC, applied for insolvency proceedings at a Frankfurt court Thursday. According to the recent issue from Suddeutsche Zeitung & World Reporter, managing director Claudia Schwers had no other choice since the British parent group also applied for insolvency proceedings. Atlantic Telecom entered troubled waters when negotiations with potential business partners failed. The German subsidiary, depending heavily on Atlantic for funding, is currently negotiating with potential investors. It has a workforce of 200. BRITISH TELECOM: To Cut 2,500 Concert Jobs ------------------------------------------ British Telecommunications Plc and AT&T Corp, according to Reuters' Monday edition, will cut about 2,500 staff members with the breakup of their loss-making Concert joint venture. The companies have agreed that AT&T would pay British Telecom between $200 million and $400 million in connection with the division of Concert assets. FEDERAL-MOGUL: Wins Contracts of More Than $20MM Annually --------------------------------------------------------- Federal-Mogul Corporation has been awarded four contracts to supply powertrain and brake components to North American vehicle manufacturers and first-tier suppliers. The contracts have a combined value of more than $20 million annually. The contracts from auto manufacturers and suppliers were awarded since Federal-Mogul voluntarily began financial restructuring proceedings in the United States and the United Kingdom on October 1 to resolve asbestos liabilities. "Federal-Mogul is continuing business operations without interruption and with the full support of our major customers," Chairman and Chief Executive Officer Frank Macher said. The components to be supplied by Michigan-based company will be used as original equipment and replacement parts on passenger cars and light trucks, starting as early as 2002. HUNTINGDON LIFE: De-lists From London Market -------------------------------------------- Animal research company Huntingdon Life Sciences, according to the Financial Times, will de-list from the London stock market and restructure under a new US parent. The announcement brought victory to protestors, who have been campaigning against the company's animal testing for two years. Although HLS insists it is not running scared, it will not be disappointed if the move deflects at least some of the protestors' attention elsewhere. Many Huntingdon brokers, including Barclays, TD Waterhouse and Pershing, have stopped trading or holding shares after being targeted by animal rights protesters. J2C PLC: Stake Sale Angers Holders ---------------------------------- Angry shareholders criticized the three J2C directors after they sold their entire stakes in the business-to-business Internet group, according to the recent report from The Times. Chief executive Karl Watkin disclosed he gained 3.3 million pounds from the share sale on October 12, while non-executive director Luke Johnson gained 690,000 pounds and Alan Donnelly with 410,000 pounds. The sale implies that the three directors sold out at 34.7p a share, more than investors are expected to gain for their shareholdings once the cash has been returned. The company is being wound up after failing to attract customers to its Internet site, which enabled companies to sell goods such as cement and paper online. MARCONI PLC: Hits Second-Quarter Target --------------------------------------- Telecommunications equipment company Marconi reported a 5 million pound operating profit for the second quarter, in line with its previous estimate of breaking even, according to the Financial Times' Monday report. The profit represents a marked turnround on the 277 million pound operating loss recorded in the first quarter. Hitting the targets comes as a first crucial step in restoring the company's credibility that was damaged by two profits warnings, the announcement of thousands of job cuts, and relegation from the FTSE-100 blue chip index earlier this year. Net debt of Marconi was reduced to 4.28 billion pounds at the end of September, from 4.44 billion pounds in August, the FT added. Despite meeting its second-quarter estimates, Marconi did not offer any sales or operating profit guidance for the full year as market conditions remain difficult with continued uncertainty regarding levels and timing of service provider spending. MARCONI PLC: May Buy Back Bonds ------------------------------- Heavily indebted telecom equipment maker Marconi, according to Reuters' report, is considering buying back some of its bonds. Marconi spokesman Joe Kelly stressed that no decision have been made yet. At present, bond buybacks are popular in the high-yield market. Telecom companies are keen to clean up their balance sheets by picking up their bonds while they are trading at distressed levels. MARCONI PLC: Moody's Cuts Ratings to Ba3 ---------------------------------------- Moody's Investors Service downgraded to Ba3 the ratings for senior debt of London-based Marconi plc, affecting approximately $3.3 billion of debt securities. According to Reuters' Monday report, the downgrade reflects the rating agency's concerns about a fast decline of sales and orders in the company's core business, partly offsetting the positive impact of management's cost saving and cash release plan. The current rating is underpinned by the continued support of Marconi's banking group and the expectation of a successful completion of the targeted asset disposals. The negative outlook for the Ba3 rating also points to the low demand visibility and the potential for further revenue decline following recent events in the US. MARCONI PLC: S&P Affirms Ratings to BB -------------------------------------- Standard & Poor's affirmed on Monday the corporate credit ratings of Marconi PLC at BB after the U.K.-based telecommunications equipment provider released a trading statement for the second quarter ended September 30. At the same time, the senior unsecured debt ratings on Marconi and guaranteed subsidiary Marconi Corp. PLC were also affirmed at BB. The ratings affirmation reflects Marconi's announcement of second quarter results. Marconi reported an operating profit of 5 million pounds amidst very tough trading conditions. Standard & Poor's added Marconi's outlook remains negative. The key driver of ratings will continue to be the ability of Marconi to restore profitability and the free cash flow generation in an industry that is experiencing extreme adverse structural changes and very limited revenue visibility. The timing and the extent of market recovery are highly uncertain and largely beyond Marconi's control. To maintain the ratings at the existing level, Marconi will have to demonstrate a clear and sustainable operational and financial turnaround, and also resolve in the near term the refinancing risk evident in the first quarter of 2003 to mitigate a potential liquidity issue. NTL INCORPORATED: Will Cut Jobs to Meet Cashflow Target ------------------------------------------------------- Cable operator NTL expects to meet more than 80% of its incremental cashflow targets for next year solely through more job cuts and price increases, the Financial Times reported Sunday. According to chief executive Barclay Knapp, the company will save 275 million pounds by cutting 8,200 staff and increasing average revenue per subscriber from 39 pounds at the end of this year to 46 pounds at the end of next year. NTL is also thought to sell Cablecom in Switzerland and its share in Germany's e-Kabel. RAILTRACK GROUP: Hides Cash Problems From Shareholders ------------------------------------------------------ Railtrack chairman John Robinson, according to the Sunday Times, hid the true scale of its financial situation from shareholders. The documents prepared by Railtrack's financial adviser Credit Suisse First Boston Documents show that receivership was under discussion as early as June 27, two days after Robinson met with transport secretary Stephen Byers to propose a restructuring plan. Minutes from a September meeting between the bank, the government and troubled UK network operator also show that administration was being discussed as a solution. RAILTRACK GROUP: Holders Complain Over Government Move ------------------------------------------------------ Railtrack shareholders have contacted the London Stock Exchange to complain that the UK government's decision to declare the firm insolvent last week may be illegal. According to the Observer's Sunday report, the holders suggest that ministers allowed a false market to develop in Railtrack shares. The LSE has launched an inquiry into the matter. Anyone found to have sold Railtrack shares, knowing its fate had been sealed, could face insider-dealing charges. Details would then be passed on to chief City watchdog Financial Services Authority. RAILTRACK GROUP: Reveals Events Leading to Administration --------------------------------------------------------- Railtrack Group said Monday its Board has reviewed recent press reports about the financial position of its Railtrack PLC subsidiary, now in Administration, and is concerned that some important aspects have been misunderstood. The Railtrack Board wished to assert that the company was not insolvent as of 4.45 in the afternoon of October 5. Railtrack's letter to the government set out very clearly the events that triggered the Administration of Railtrack PLC. This letter was accepted by government on October 7 for the purposes of its disclosure to a High Court judge to support its own application for Railway Administration. Because the government declined to confirm Railtrack Group's ownership of the 370 million pound cash balance and CTRL (Channel Tunnel Rail Link), the letter was not disclosed as permission to do so was declined by Railtrack's board. Railtrack added it was not facing "a funding meltdown," as Secretary of State for Transport Stephen Byers reported to have said. The company said its directors did not propose to the government that Railtrack PLC should be put into Railway Administration. On October 7, Railtrack Group acknowledged that Railtrack PLC had effectively been rendered insolvent as the government made clear that it would not render further financial assistance. Railtrack also said it had repeatedly warned government officials, throughout a series of discussions between July 25 and October 5, that it would need to be advised immediately if the government decided to withdraw support so it could prepare other financial plans. However, Railtrack never received any advice. ********** 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 Maria 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 240/629-3300. * * * End of Transmission * * *