/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011101.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, November 1, 2001, Vol. 2, No. 214 Headlines * B E L G I U M * LERNOUT & HAUSPIE: To Lay Off 72 Employees From Belgian Offices SABENA SA: Virgin Express-DAT Merger Under Consideration SABENA SA: To Cut Four U.S. Flights, Other Destinations Next Week SABENA SA: Needs $112 Million to Keep Flying * G E R M A N Y * BIODATA INFORMATION: Imminent Insolvency Seen in 19 Days EM.TV: Bondholders Uneasy Over Deal With Kirch for F1 Stake TELESENSKSCL AG: Undergoing Liquidity Difficulties Again * I T A L Y * GANDALF AIRLINES: Flies Itself a Step Closer to Bankruptcy * N E T H E R L A N D S * KPN NV: Inks 44.66% Stake Divestment in PannonGSM KPN NV: CEO Mulls Pay Cut to Empathize With Workers PHARMING GROUP: Appeals Court Decision Favoring Genzyme Bid * N O R W A Y * BRAATHENS ASA: SAS May Buy Braathens, Says NCA KVAERNER ASA: Welfare of 34,000 Workforce Uncertain * S P A I N * SINTEL: Union Gives Nod to Televik Offer, Ends Stalemate * S W E D E N * FRAMFAB AB: On Track With January-September 2001 Forecasts * S W I T Z E R L A N D * SWISSAIR GROUP: Gov't Won't Offer More Money, Says Treasurer SWISSAIR GROUP: Zurich Urges Gov't to Tap Other Cantons SWISSAIR GROUP: Internet Travel Subsidiary Declares Bankruptcy * U N I T E D K I N G D O M * BALTIMORE TECHNOLOGIES: Executives Allow Cuts to Bloated Salaries EQUITABLE LIFE: Treasury to Consider Payment for Policyholders MARKS & SPENCER: Galeries Lafayette to Operate Most French Stores ============= B E L G I U M ============= LERNOUT & HAUSPIE: To Lay Off 72 Employees From Belgian Offices --------------------------------------------------------------- Some 72 employees are going to be laid off from Lernout & Hauspie's Belgian offices in Wemmel and Ypres, De Financieel Ekonomische Tijd/FT Information reported Tuesday. This recent job cut is still part of the restructuring plan announced by management in September, the report clarified. According to the receivers of the insolvent company, the remaining 180 employees might be absorbed by the new management, which is now negotiating the company's acquisition. German software distributor MediaGold is reportedly interested in both the US and Belgian units of the company and wants to maintain most jobs, the report said. Meanwhile, the receivers say they will not appeal last week's decision of the Ypres court declaring the company insolvent. SABENA SA: Virgin Express-DAT Merger Under Consideration -------------------------------------------------------- A merger of Virgin Express and Sabena's short-haul subsidiary Delta Air Transport is currently under study, an unnamed Reuters source said Tuesday. Accordingly, the merger is among "a range of options" being considered to salvage ailing Sabena, which is presently under bankruptcy protection. Citing an anonymous source, Reuters says Virgin majority owner Richard Branson has been in talks with Belgian Minister for Public Enterprises Rik Daems and CEO Christoph Mueller since Monday. Should the merger talks materialize, a new airline will likely be formed, the source told Reuters. Sabena and the public enterprise ministry have so far declined to comment on the report. SABENA SA: To Cut Four U.S. Flights, Other Destinations Next Week ----------------------------------------------------------------- Plunging passenger bookings in recent weeks is forcing troubled Sabena SA to cut next week flights to several destinations, including three to the U.S., reports Reuters. Spokesman Olivier Gillis told the news agency that the carrier's flights to Chicago, Dallas, and one of two daily flights to New York are going to be suspended next week. Flights to Montreal, Ouagadougou, Burkina Faso, and Bamako, Mali are also going to be halted, the spokesman added. Gillis says since the airline went under protection last month, bookings have substantially dropped, pushing it closer to bankruptcy. The carrier has until November 8 to present a recovery plan to the bankruptcy court, which granted it a one-month temporary relief. Up until now, no major investors have signified interest in its plan to form a medium-size airline, save for Virgin Express, which is reportedly pursuing a merger with subsidiary Delta Air Transport. SABENA SA: Needs $112 Million to Keep Flying -------------------------------------------- All it needs to turnaround ailing Belgian carrier Sabena SA is BEF5 billion ($112 million) says Victor Hasson, CEO of recently bankrupt City Bird. Hasson made the foregoing prognosis along with his announcement recently that he and George Gutelman are ready to invest BEF1 billion ($22 million) in a "new Sabena." He suggests that all outstanding debts, except to the government, be converted into shares of a holding company composed of two airline activities, an AFX News said. These two airline activities will be composed of a regional network based on the present activities of subsidiary Delta Air Transport and a restricted middle-distance network composed of 8 planes serving 8 destinations. Hasson projects the new Sabena to carry 4 million passengers a year and employ 2,500 workers. On the other hand, he sees the "new Delta Air Transport" to fly 2.5 million passengers a year, utilizing 25-30 planes. Hasson also envisions the company to be listed on a stock exchange. However, he says, more partners must be enticed to help the company in order to fully succeed. Virgin Express is reportedly ready to invest BEF2 billion ($44 million) in Sabena, the report said. ============= G E R M A N Y ============= BIODATA INFORMATION: Imminent Insolvency Seen in 19 Days -------------------------------------------------------- The time for Biodata Information Technology AG to find an investor or strike a deal with banks and creditors to stave off imminent insolvency has been reduced to days. AFX Europe says the company has approximately 19 days from today to solve its financial crisis. Company spokesman Heiko Scholz says one solution currently being studied is to pay 20% of its obligations and ask creditors to write off the remaining sum. Biodata is reportedly running out of cash. Its current cash position allegedly stands at E1.9 million ($1.7 million) and it owes an unnamed bank E13.5 million ($12.2 million), plus "other debts." Scholz declined to give the reason for this recent financial crisis, saying: "It is too early to say." The company shocked the markets lately with a series of grim news, including the insolvency of its Munich unit, Biodata Security Maintenance GmbH, staff layoffs, and a $4.415 million compensation claim for two former management board members. A failed Australian order that could have netted the company E20 million ($18 million) a year was blamed early last month when it issued a profit warning. EM.TV: Bondholders Uneasy Over Deal With Kirch for F1 Stake ----------------------------------------------------------- Half of EMTV bondholders are reportedly concern over the valuation of the media group's stake in SLEC, which is purportedly being offered to rival Kirch Gruppe. According to the Financial Times, the group has allegedly hired the law firm of Bingham Dana to make sure they are not shortchanged in the ensuing deal. Kirch is planning to take 75% control of SLEC, which holds the media rights to the Formula One racing series. EMTV owns 16.7% stake in SLEC. According to the report, Kirch is allegedly offering to EMTV its 24.2% stake in Constantin, a Neuer Markt-listed media outfit now with a market capitalization of E95 million ($86.1 million). On top of that, the rival German group is also offering 50% share in Junior TV in exchange for the latter's SLEC share. Still the group of bondholders, which holds nearly half of EMTV's E400 million ($363 million) bonds, is not impressed. The group has already written to EMTV's supervisory board, expressing their uneasiness to the impending deal with Kirch. TELESENSKSCL AG: Undergoing Liquidity Difficulties Again -------------------------------------------------------- German telecommunications services company TelesensKSCL AG admitted recently that it is again experiencing liquidity problems, says Borsen-Zeitung/FT Information. The company says, however, that the E15 million ($13.5 million) cash injection it recently received has effectively steered the company away from insolvency. Some 350 employees, however, are not as lucky as the company. Telesens has decided to cut worldwide personnel by one third. The measure is expected to net the company E5 million ($4.5 million) in savings per quarter. ========= I T A L Y ========= GANDALF AIRLINES: Flies Itself a Step Closer to Bankruptcy ---------------------------------------------------------- The board of directors of Gandalf Airlines met Monday to discuss solutions to a capital requirement if company needs to avoid collapse, a report from Il Sole 24 Ore and FT Information says. Consob, Italian stock market regulator, suspends shares in Milan- based airline Gandalf from trading on Monday. The Italian airline is urgently obliged to raise 15.5 million euro to cover outstanding short term debts with suppliers and another 12.4 million euro owed to banks. ===================== N E T H E R L A N D S ===================== KPN NV: Inks 44.66% Stake Divestment in PannonGSM ------------------------------------------------- Following the Heads of Terms, signed in July, KPN Mobile and Telenor Mobile have signed a definitive share purchase agreement for the sale of KPN Mobile's 44.66% stake in Hungarian mobile operator PannonGSM, a press statement revealed Monday. Also co-shareholders Sonera (Finland) and TeleDanmark Communications Mobile International (Danmark) have signed this agreement with respect to the disposal of their stakes in PannonGSM (23% and 6,56% respectively). As a result Telenor will hold 100% of PannonGSM. The sale proceeds of KPN Mobile's stake will be 603 million euro, equivalent to an equity value of 1,350 million euro for 100% of the shares. The consideration is payable in cash on completion and the proceeds will be used to reduce KPN's net debt. The agreement is subject to regulatory approval in Hungary. Telenor will apply for such approval shortly, and anticipate that the transaction will be completed by the first quarter of 2002. KPN NV: CEO Mulls Pay Cut to Empathize With Workers --------------------------------------------------- As a gesture to 4,800 KPN workers about to be laid off by the company, CEO Ad Scheepbouwer is reportedly considering a cut in his paycheck, Dow Jones Newswires said. KPN wants to cut jobs to reduce its debt but unions have reacted angrily to the layoff plans. The report did not give any further details. PHARMING GROUP: Appeals Court Decision Favoring Genzyme Bid ----------------------------------------------------------- Biotech company Pharming Group N.V. announces that it will appeal the decision made today by the Court in Turnhout, the group's press release disclosed Tuesday. The court decided to accept the agreement between Genzyme and the trustees of Pharming N.V., Pharming Group's Belgian subsidiary, so that the legal moratorium can be lifted. Pharming Group believes, however, that it is treated unlawfully under this agreement because its status as creditor of Pharming N.V. is not recognized and it is discriminated against other creditors. Furthermore, Pharming Group believes that the bid of Genzyme on the manufacturing plant in Geel is unacceptably low. On October 23, 2001 Pharming Group announced that it had received a second bid that did not suffer from the above objections while it took into full account the interests of the employees and all creditors. Pharming Group is under legal moratorium since August, together with Fortis Bank Investment Banking, is implementing a restructuring and refinancing plan for the company. Also in this context it is important that the manufacturing plant, currently owned by Pharming N.V., will be sold under conditions that are acceptable to all parties. Pharming Group N.V. focuses on the development, production and commercialization of human therapeutic proteins to be used in highly innovative therapies. The company's product portfolio is aimed at treatments for genetic disorders, blood-related disorders, infectious and inflammatory diseases, tissue and bone damage, and surgical and traumatic bleeding. Pharming has operations in Belgium, Finland, the Netherlands and the USA. For more information, contact Rein Strijker by Phone: +31-71 5247 406 =========== N O R W A Y =========== BRAATHENS ASA: SAS May Buy Braathens, Says NCA ---------------------------------------------- The Norwegian Competition Authority (NCA) has ended its evaluation of SAS' acquisition of 68.8% of Braathens ASA's shares and concludes that conditions for an intervention in accordance with Section 3-11 of the Competition Act have not been met. Braathens ASA's financial situation is regarded as being of such a nature that the company is on its way out of the market. There are no alternative purchasers and bankruptcy is not considered as a better alternative than letting SAS carry through the purchase. Nor will NCA intervene against the two companies' frequent flyer programs, large customer discounts or agreements with travel agencies, the report said. In the most recent evaluation of Braathens' insolvency, NCA stressed the company's operating loss, equity, credit liabilities, possibilities for refinancing and the general market situation. The Competition Authority has also taken into account the changed market conditions after the U.S. terrorist attacks. In the current situation, the Competition Authority assumes that it will be difficult for Braathens to release capital by selling planes. NCA also considered whether bankruptcy could be a better alternative for competition than SAS' purchase of Braathens and concluded that this is not the case. According to the Competition Authority, Braathens' market shares would not be taken over by other market participants in the advent of bankruptcy. Therefore, the competition would be the same with or without the acquisition taking place. NCA will continue to consider the market situation in the Norwegian airline industry and, accordingly, the need for a possible intervention in accordance with Section 3-10 of the Competition Act. KVAERNER ASA: Welfare of 34,000 Workforce Uncertain --------------------------------------------------- The Engineering and construction firm Kvearner held a total of 34,000 workers worldwide in suspense after failing to announce to its workers a solution to the company's financial riddle Monday. Employees within Kvarner Olje og Gass, its oil and gas unit in Stavanger, are still hopeful that management can establish concrete answers to the crisis. The company's oil and gas division have recently been built back to profitability through restructuring efforts and the employees find it a disgrace that it may soon undergo a repeat disaster. ========= S P A I N ========= SINTEL: Union Gives Nod to Televik Offer, Ends Stalemate -------------------------------------------------------- The protesting union of bankrupt Spanish telecom network company Sintel accepted recently the offer of Russian group Televik, ending the long-standing stalemate with management. According to a report by El Mundo/FT Information, the workers see the Russian offer as compatible to the plan they agreed with the Spanish government. Televik is offering to own ESP9 billion ($48 million) of the ESP24 billion ($130 million) debt of the company, the report said. The Russian firm is set to contact this week the creditors of Sintel that includes the Spanish treasury, social security service and Spanish telephone company Telefonica. =========== S W E D E N =========== FRAMFAB AB: On Track With January-September 2001 Forecasts ---------------------------------------------------------- The Board maintains its forecast that Internet service provider Framfab will show operating profit (EBITA) at some point during the fourth quarter of 2001, the company announced in a statement Monday. Furthermore the Board believes that the company's liquidity is sufficient to sustain operations until the company starts to generate a positive cash flow expected in the first quarter of 2002. Framfab's losses are decreasing in accordance with the plan. Third-quarter costs were down by 35% while revenue was found to be 26% down as compared to the second quarter of 2001. Operating profits after depreciation on fixed assets (EBITA), adjusted for one-off items, improved by 65.7 million Swedish kroner (43%) in the the second and third quarters of 2001, from - 151.7 million Swedish kroner to -86.0 million Swedish kroner. Costs are expected to be down by 30% from 200.3 million Swedish krona to 140.0 million Swedish krona during the fourth quarter of 2001. Revenue for the fourth quarter of 2001 is expected to exceed that generated in the third quarter. Revenue for the period July- September 2001 amounted to 114.3 million Swedish krona. The Board has decided to write down all remaining goodwill by 428.1 million Swedish kroner. The equity ratio now amounts to 45.5%. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Gov't Won't Offer More Money, Says Treasurer ------------------------------------------------------------ Switzerland's treasurer Peter Siegenthaler says the government is not going to shell out any more money for the carrier's other troubled subsidiaries. This in reference to the maintenance unit SR Technics and information technology unit Atraxis, which both need immediate cash injection to avoid a second grounding of Swissair's fleet. The maintenance subsidiary must have at least CHF100 million ($61.6 million) by mid-January, while the IT unit is expected to have a shortfall of CHF35 million to 50 million ($21.5 million to 30.8 million) by mid-November. As part of the CHF4.2 billion ($2.5 billon) rescue package put together last week, the government has committed to advance CHF1 billion ($616 million) to allow the carrier to continue its international flights. Siegenthaler says, aside from this advance, the government is no longer willing to offer more. According to Reuters, Siegenthaler has appealed to the other cantons/provinces and main creditor banks UBS and Credit Suisse Group to come up with the needed cash for the subsidiaries. So far, UBS has said it is open to explore financing solutions for the troubled units, provided that they are made creditworthy either by restructuring or by getting a guarantee from the cantons. The two subsidiaries play an essential role in keeping the Zurich international airport running. SWISSAIR GROUP: Zurich Urges Gov't to Tap Other Cantons ------------------------------------------------------- Count Zurich Canton out. The Swiss canton or province of Zurich says it is not inclined to heed the call of the national government to come to the rescue of Swissair's other troubled subsidiaries. According to Zurich's Economics Minister Ruedi Jeker, it is enough that the province has pledged CHF300 million ($184 million) into the rescue package put together last week. Jeker suggested that the other cantons like Basel and Geneva, and those with airports, banks and airport-operators be tapped to provide credits for SR Technics, Atraxis and Swissport. The above companies, which play critical roles in the country's airport operations, are currently in a financial fix that could lead to another grounding of Swissair's planes, now operated by Crossair. SWISSAIR GROUP: Internet Travel Subsidiary Declares Bankruptcy -------------------------------------------------------------- Like a house of cards, Swissair Group AG is crumbling part by part. Internet travel portal subsidiary Beyoo filed for bankruptcy Monday, adding another 40 workers to the growing Swiss unemployment statistics, Reuters reported recently. The subsidiary was formed in 1999, with its portal www.Beyoo.ch going live only last March. Swissair's financial trouble is being blamed for the fold up. =========================== U N I T E D K I N G D O M =========================== BALTIMORE TECHNOLOGIES: Executives Allow Cuts to Bloated Salaries ----------------------------------------------------------------- Restructuring Irish security software company Baltimore Technologies has joined the trend towards cutting bloated salaries of executives. Baltimore's newly appointed CEO Bijan Khezri and the members of the board, including Chairman Peter Morgan, accepted hefty pay cuts Tuesday, according to the Financial Times. Khezri will just receive a salary of GBP150,000 ($218,000) for the year compared to the GBP450,000 ($654,000) his predecessor Fran Rooney was receiving during the latter's tenure. Morgan, on other hand, allowed his check to be reduced from GBP90,000 ($130,000) to GBP50,000 ($72,000), while the rest of the directors will now be paid GBP18,000 ($26,000), down from GBP25,000 ($36,300). Aside from this, the company also cancelled the guaranteed bonus payments for senior executives worth between GBP300,000 ($436,000) and GBP500,000 ($726,000), the report said. According to the report, this move underlines the company's desire to take aggressive action to staunch its losses and conserve cash. Its valuation has recently fallen from more than GBP5 billion ($7.2 billion) to about GBP94 million ($136.6 million), amid concerns about its future, the report said. In recent weeks, executives from struggling companies like Marconi, Hewlett-Packard, British Airways, and Marks & Spencer had either turned down their bonuses or allowed hefty cuts to their bloated salaries. EQUITABLE LIFE: Treasury to Consider Payment for Policyholders -------------------------------------------------------------- Equitable Life policyholders may be given some form of compensation should it be proven "maladministration" occurred while it was under control by the Financial Services Authority. A ranking official from the treasury told a select committee recently that it might consider paying policyholders if a probe by the parliamentary ombudsman could show that mismanagement had indeed occurred. Economic secretary to the treasury Ruth Kelly told members of parliament Tuesday that the ministry will wait for the result of the ombudsman's probe before it decides whether to pay or not. Equitable was forced to close to new business last year and came under regulation by the Financial Services Authority, the City watchdog acting on behalf of the treasury. Authority Chairman Sir Howard Davies has claimed that the authority could have done better had the former management of Equitable did not resist regulators "at every turn." Equitable on Tuesday stressed to policyholders that even if the report by the ombudsman found they may be entitled to compensation, it was still important the society reached a compromise deal over its guaranteed annuity rate liabilities. MARKS & SPENCER: Galeries Lafayette to Operate Most French Stores ----------------------------------------------------------------- The new owners of Marks & Spencer have started dividing the spoils. SA des Galeries Lafayette is set to operate ten of the M&S stores in France, while Hennes Mauritz AB will run eight under lease, according to a report by AFX News. The remaining stores are to be occupied by Lagardere SCA unit Virgin Megastore in Toulouse and CA Brenninkmeijer in Villiers en Biere, Surcouf in La Defense near Paris. Pinault-Printemps-Redoute unit FNAC will operate the Nice outlet, including a Galeries Lafayette annex, the report said. The report also disclosed that Galeries is going to operate 60% of total selling space and retain 60% of existing M&S staff. Hennes, on the other hand, will operate 27% of space and retain around 20% of the employees. *********** 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 * * *