/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011213.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, December 13, 2001, Vol. 2, No. 243 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Court Approves ScanSoft Buy of L&H Assets * H U N G A R Y * MALEV AIRLINES: Upgrades Fleet With Boeing * I R E L A N D * EIRCOM PLC: Shares Delisted From Irish Stock Exchange * I T A L Y * FIAT SPA: Inchcape Wins Fiat Auto Contract FIAT SPA: Sells $2.2BB of Exchangeable Bonds FIAT SPA: Stocks Fall on Auto Shake-Up * L U X E M B O U R G * CARRIER1 INTERNATIONAL: Faces Class Action Suit in the U.S. * N E T H E R L A N D S * KPN NV: Completes Sale of Indonesian Mobile Phone Holding KPN NV: Completes Share Deal With Qwest * N O R W A Y * KVAERNER ASA: Withdraws Sale of Pulp & Paper Business * P O L A N D * ELEKTRIM SA: Investors Demand E488MM Repayment * S W E D E N * LM ERICSSON: Wins $143MM Deal for China Project * U N I T E D K I N G D O M * BRITISH AIRWAYS: Radical Option Could Shrink It to Old BOAC Size BRITISH TELECOM: BT Ignite Benelux Appoints New Boss BRITISH TELECOM: Names Ben Verwaayen as New CEO EIDOS PLC: Shares Tumble on Mediocre Results EQUITABLE LIFE: Union Backs Compromise Deal, Assumes Staff Losses MARCONI PLC: Bondholders Fear Loss of Rights MARCONI PLC: Morgan Stanley Buys Marconi Shares MARCONI PLC: Sees 100-MM-Pound Profit in BT Deal NTL INCORPORATED: Owes International Banks $10.6BB P&O PRINCESS: Replaces GKN in FTSE 100 RAILTRACK GROUP: WestLB Suggests "Dream Team" for Management SCOOT.COM: To Exit From FTSE Index ============= B E L G I U M ============= LERNOUT & HAUSPIE: Court Approves ScanSoft Buy of L&H Assets ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has approved ScanSoftr Inc's agreement to acquire all of the operating and technology assets of Speech and Language Technologies business of Lernout & Hauspie (L&H) Speech Products N.V. and L&H Holdings USA, Inc. Among the technology assets to be acquired by ScanSoft are RealSpeak Text-to-Speech, Dragon NaturallySpeaking Product Line and Automatic Speech Recognition Solutions. The bid will comprise of 7.4 million shares of ScanSoft stock valued at $37.34 million, $10 million in cash and a $3.5 million note. ScanSoft, a leading provider of paper-to-digital solutions, expects the purchase to close by the end of the year. A Belgian court declared Lernout bankrupt in October after it failed to pay creditors. The company sought protection from creditors in the U.S. last year. ============= H U N G A R Y ============= MALEV AIRLINES: Upgrades Fleet With Boeing ------------------------------------------ Cash-strapped Malev Hungarian Airlines Rt has signed a contract with International Lease Finance Corporation to lease its first Boeing Next- Generation 737s. "The Next-Generation 737s represent the latest technology available," Malev CEO Jozsef Varadi said. "They also represent our commitment to flying the most modern fleet in Central Europe." The contract, signed in November, consists of a combination of 10 firm 737-600s, -700s and -800s, with options for six more. The airplanes will be delivered on February 2003. Last year, Malev Airlines registered an after-tax loss of 9.35 billion forints. It is struggling to fulfill its restructuring plan that includes 400 job cuts in 2002. ============= I R E L A N D ============= EIRCOM PLC: Shares Delisted From Irish Stock Exchange ----------------------------------------------------- Two and a quarter years after more than 500,000 investors put in their money into Eircom, shares of the former state-owned telecom monopoly were delisted from the Irish Stock Exchange Monday, the Irish Times reported. Some 50,000 investors who bought and sold their shares within a matter of weeks of the flotation made money, while the remaining 450,000 shareholders who held their shares are left with a 30% loss on the amount they paid for each Eircom share. In November, the Irish Stock Exchange removed Eircom from the ISEQ indices after the cash offer from Valentia was declared wholly unconditional. ========= I T A L Y ========= FIAT SPA: Inchcape Wins Fiat Auto Contract ------------------------------------------ London-based motoring solutions provider Inchcape PLC has won a contract to handle the remarketing and fleet management activities for Fiat Auto U.K.'s entire fleet of used vehicles for the next three years, the AFX News reported. The contract, which will be managed by Inchcape Business Services, incorporates vehicle remarketing, refurbishment and logistics. AutoCascade, the vehicle remarketing company jointly owned by Inchcape and Avis Europe, will electronically remarket vehicles to dealers via a web-enabled dealer stock locator and twice weekly electronic auctions, allowing Fiat and Alfa Romeo dealers to "exclusively purchase vehicles online." Fiat Auto is Fiat SpA's unit that makes Alfa Romeo and Lancia models, as well as Fiat-branded vehicles. FIAT SPA: Sells $2.2BB of Exchangeable Bonds -------------------------------------------- Ferrari and Maserati owner Fiat SpA sold $2.2 billion of bonds exchangeable for stock in U.S. company General Motors Corp., Bloomberg reported. The five-year bonds can be exchanged for stock in General Motors at $69.54. The bonds represent Fiat's stake of about 6% in General Motors. Fiat has the right to repay investors with cash and not General Motors shares, to give the Italian carmaker time to restructure its debt, company spokesman Gualberto Ranieri said. Fiat is reducing its reliance on auto manufacturing in favor of utilities and other businesses that provide steady cash. It earlier said it is cutting 6,000 jobs, closing 18 factories and raising 1 billion euros by selling stock to existing investors in addition to raising money by selling the exchangeable bonds. The company plans to reduce net debt by 1.5 billion euros to about 6 billion euros by the end of the year. FIAT SPA: Stocks Fall on Auto Shake-Up -------------------------------------- Stocks of Fiat SpA slumped 6.9%, or as low as 16.78 euros Tuesday, on doubts that the Italian automaker could solve its more deeply rooted problems, the Herald Tribune reported. Early this week, Fiat said that it would restructure through cutting 6,000 jobs, selling assets, closing factories and raising $3.1 billion from bonds and new shares to reduce debt. The No. 5 European carmaker expected its plan to cut debt to 3 billion euros by the end of 2002. =================== L U X E M B O U R G =================== CARRIER1 INTERNATIONAL: Faces Class Action Suit in the U.S. ----------------------------------------------------------- Pan-European bandwidth provider Carrier1 International SA, together with some of its officers and its underwriters, is facing a class action suit in the U.S. from the purchasers of its common stock between February 24 and December 6, 2000. The action is pending in the United States District Court, Southern District of New York. In February 2000, Carrier1 commenced an initial public offering of 9.375 million of its shares of common stock at 87 euros or $17.4835 per ADS. In connection, Carrier1 filed a registration statement that incorporated a prospectus with the SEC. The complaint further alleges that the prospectus was materially false and misleading because it failed to disclose the underwriters had solicited and received excessive and undisclosed commissions from certain investors and that the underwriters had entered into agreements with customers to allocate Carrier1 shares. Jundge Shira A. Scheindlin appointed Bernstein Liebhard & Lifshitz, LLP, Milberg Weiss Bershad Hynes & Lerach LLP, Schiffrin & Barroway LLP, Sirota & Sirota LLP, Stull, Stull & Brody and Wolf Haldenstein Freeman & Herz LLP to serve as the plaintiffs' Executive Committee. For more information regarding the case, contact Stull, Stull & Brody, Tzivia Brody, Esq., 6 East 45th Street, New York, NY 10017 or by e-mail at SSBNY@aol.com ===================== N E T H E R L A N D S ===================== KPN NV: Completes Sale of Indonesian Mobile Phone Holding --------------------------------------------------------- Debt-laden Dutch telecom group KPN said that its subsidiary, KPN Mobile International B.V., has completed the sale and transfer of the 22.28% stake in Indonesia's P.T. Telkomsel Tbk. The sale to Singapore Telecom Mobile Pte. Ltd., which grossed $601 million, is part of a series of non-core asset sales disposal designed to reduce its debt pile of 22 billion euros. So far, the total announced divestments of non-core assets add up to approximately 3 billion euros. Through this Telkomsel settlement, the total amount of cash received has increased to 2.3 billion euros. SingTel Mobile will also settle KPN Mobile's remaining technical service obligation to Telkomsel valued at 28 million euros. KPN NV: Completes Share Deal With Qwest --------------------------------------- Pan-European data communications and hosting company KPNQwest said that the share transaction between Qwest Communications International Inc. and Koninklijke KPN N.V., in which KPN sold approximately 14 million shares of KPNQwest shares to Qwest and 6 million of KPNQwest shares to Qwest shareowner Anschutz Company has been completed. The transaction completes the transformation of KPNQwest from a joint venture ownership structure. Under the share transaction agreement, the voting power of each Class A shares held by KPN and Class B shares held by Qwest was reduced from 10 votes per share to one vote per share. There are currently approximately 451 million KPNQwest shares outstanding. Qwest now hold approximately 214 million Class B shares, or about 47.5% of the voting power, and KPN holds 180 million Class A shares, or approximately 40% of the voting power. As part of the transaction KPN has surrendered its strategic veto rights, but retains certain minority shareholder rights. =========== N O R W A Y =========== KVAERNER ASA: Withdraws Sale of Pulp & Paper Business ----------------------------------------------------- Anglo-Norwegian construction and engineering group Kvaerner ASA said it has decided to call off the sale process of its Pulp & Paper business. Kvaerner will instead focus on improving operation and results in the division. "I think there is room for further improvements, and this will result in a stronger business all round, improved profitability and a higher value in the long run," Kvaerner Investments chief Hans Petter Finne said. Kvaerner recently announced that its Pulp & Paper, Shipbuilding, and other mechanical engineering businesses and investments would be organized under Kvaerner Investments AS. Athol Trickett is President of Kvaerner Pulp & Paper. For more information, contact Paul Emberley, Vice President Group Communications at telephone +44 (0)20 7339 1035 or +44 (0)7768 813090 or paul.emberley@kvaerner.com =========== P O L A N D =========== ELEKTRIM SA: Investors Demand E488MM Repayment ---------------------------------------------- Warsaw-based telecommunications, cable manufacturing, and power engineering conglomerate Elektrim SA asked for more time to meet demands of investors who sought early repayment of 488 million euros of bonds and interest, the Bloomberg reported. The move came after the Polish company's transformation into a phone operator failed. Elektrim must pay off the bonds they intent to buy back by Monday after holders exercised an option to redeem them 19 months ahead of schedule. The heavily indebted company said earlier it is planning to cut jobs at its three Internet subsidiaries before selling them next year. It has been considering the fate of its eight Internet and data transmission subsidiaries since Vivendi Universal failed to acquire them in September. Elektrim shares plunged 22% in Tuesday's trading, cutting the company's market value to $194 million. =========== S W E D E N =========== LM ERICSSON: Wins $143MM Deal for China Project ----------------------------------------------- Ericsson, the largest manufacturer of equipment for mobile phone networks, has signed a $143 million contract with China's Sichuan Mobile Communication Company for expansion of the GSM/GPRS network in Sichuan Province. The expansion project will be completed in June 2002, raising the capacity of the dual band network provided by Ericsson to 4.2 million subscribers. The contract also covers expansion of the Mobile Intelligence Network (MIN), enabling Sichuan Mobile to provide intelligent services including pre-paid services, private numbers, and private virtual networks, and will also expand GPRS functionality to the entire network. Nanjing Ericsson Panda Communication Co., Ltd and Dalian Ericsson Communication Co., Ltd., will provide equipment and service for this project. Ericsson, which made a 5.8 billion Swedish krona ($548.7 million) pre-tax loss in the third quarter, is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. For further information, contact Antoinette Torell, Press Manager, Ericsson Corporate Communications at telephone +46 70 676 9279, or email Antoinette.torell@lme.ericsson.se =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Radical Option Could Shrink It to Old BOAC Size ---------------------------------------------------------------- British Airways could look like its predecessor British Overseas Airways Corporation (BOAC) in the 70s should a radical strategic plan be pursued and the economic condition deteriorates further. A company executive told the Financial Times recently that a team of five senior managers is currently studying the best possible "size and shape" of the airline amid the industry slump. According to the unnamed senior executive, the options include downsizing the airline back to its old BOAC mold before it merged with British European Airways early in the 70s. The executive, however, said this option is just the most radical, which means that there are other favorable options the carrier will be more inclined to take. Chief Executive Rod Eddington recently pointed out to leading institutional investors that the short-haul activities of the airline needs to be plugged as it is causing the most bleeding. Financial analysts expect the airline to focus its short-haul operations on the routes to the main business destinations in Europe. "The focus will be on Heathrow, on stand-alone profitable short haul routes and on those providing profitable 'fat feed' (of transfer passengers) to the long haul services," said a leading aviation analyst. "We think there is a business model that can be an alternative to the low cost carriers in short haul with some added value that people will pay for," said the executive who talked to the Financial Times. The strategies under study will be presented to the company's main board on February, the paper said. BRITISH TELECOM: BT Ignite Benelux Appoints New Boss ---------------------------------------------------- BT Ignite, BT Group's international solutions and broadband business, has appointed Michel De Coster as Region Manager for the Benelux. Coster's experience in Colt Telecom and Bosch Telecom Benelux will be a great asset in the reorganization of BT's Belgian and Dutch Sales & Services teams, BT Ignite President for Sales & Services Roberto de Diego said. Michel De Coster joined BT Ignite this month as Country Manager for Belgium. BRITISH TELECOM: Names Ben Verwaayen as New CEO ----------------------------------------------- BT Group has named Lucent Technologies' Ben Verwaayen as their new chief executive in succession to Peter Bonfield. According to a report from the AFX News, Verwaayen will assume his new post on February 1 when Bonfield leaves the British giant. British Telecom has reduced debts by selling stakes in overseas mobile networks, shed jobs in its retail business, and spun off its mobile unit as a separate business. The company lost 1.48 billion pounds in its second quarter ended September 30 due to a writedown of its ill-fated joint venture with AT&T Corp. EIDOS PLC: Shares Tumble on Mediocre Results -------------------------------------------- Shares in Eidos, the computer games company behind cyber heroine Lara Croft, fell 6.5% to a two-month low of 215 pence on Tuesday after the British video games publisher's key title underperformed in the charts, Reuters reported. Eidos said its key titles over the period, version two of Who Wants to be a Millionaire? and Commandos 2: Men of Honour, failed to achieve the levels originally anticipated. A U.K. analyst, who declined to be named, said that Eidos is going down because of a triple factor of the titles having fallen in the charts, cautious comments on the results and concern over the U.S. franchise. Eidos posted first half to end-September results showing sales dropping nearly 43% to 31.0 million pounds from 54.3 million. EQUITABLE LIFE: Union Backs Compromise Deal, Assumes Staff Losses ----------------------------------------------------------------- Britain's Amalgamated Engineering and Electrical Union has offered to assume the losses of its staff due to Equitable Life's attempt to cap its liabilities to policyholders. According to a Financial Times report, the company is also calling others to follow suit and is actively campaigning for the approval of the compromise scheme being peddled by Equitable. The union, one of Britain's biggest and most politically powerful trade group, has about 70 out of 450 staff and officers who will lose in the Equitable deal. Equitable is planning to cut the value of pension funds by 16 percent. The compromise deal, though, is offering an uplift to compensate the loss. Holders of non-guaranteed annuity rate policies, who have been offered only 2.5 percent in uplift, stand to benefit the most. Holders of guaranteed annuity rate policies will get little if any compensation since the 16 percent cut will be made up for by a 17.5 percent uplift offered by the mutual in exchange for waiving the guarantee. The union is urging its 150,000 members to vote in favor of the compromise deal as it is convince there is no more "Plan B" for Equitable. Equitable's 485,000 individual policyholders and 6,000 pension group trustees must decide by January 11 whether to accept the deal. If approved, the scheme will allow Equitable to cap its liabilities to holders of non-guaranteed annuity rate policies, estimated at about US$2.3 billion. MARCONI PLC: Bondholders Fear Loss of Rights -------------------------------------------- Bondholders of Marconi are growing increasingly concerned that their rights will be diminished if the embattled telecoms equipment maker successfully restructures its banking facilities. According to a report from the Daily Telegraph, they are worried that Marconi's banks, led by Barclays and HSBC, will demand to have first rights to any cash the company may generate. In theory, the banks and bondholders are ranked equally in any list of Marconi's creditors. However, the banks argue that the first facility matures in March 2003, which is two years ahead of the first bond. It technically means they currently rank ahead of bondholders because they will be repaid first. The banks argued that this ranking should be preserved, possibly in a legal agreement, if they agree to extend the banking facility. MARCONI PLC: Morgan Stanley Buys Marconi Shares ----------------------------------------------- Marconi said that Morgan Stanley Securities Limited, a member of the Morgan Stanley group of companies, and its direct or indirect holding companies obtained an interest in the shares of the company. The acquisition resulted in a holding of a total of 95,729,946 ordinary shares, being 3.43% of the issued share capital of the Marconi. Marconi is trying to reduce its debt burden of more than 3 billion pounds. It recently raised 25 million pounds from the sale of 6 million shares in Italian company Lottomatica, and has already disposed small non-core assets in recent months. MARCONI PLC: Sees 100-MM-Pound Profit in BT Deal ------------------------------------------------ Marconi PLC expects to make a profit of 100 million pounds over 8 years from a scheme to install Internet terminals in British Telecom phone boxes across the U.K. Marconi's net cash outflow on the project is not expected to be more than 15 million pounds. BT Payphones, part of the consumer division of BT Retail, will install 28,000 new terminals, to be built by Marconi, offering internet access, e-mail and text messaging. Under the terms of the agreement Marconi will invest in the terminals while BT will manage the network, provide content and offer sales and marketing support. NTL INCORPORATED: Owes International Banks $10.6BB -------------------------------------------------- NTL Incorporated, the debt-laden cable company struggling to stay afloat, owes more than 40 international banks $10.6 billion in unsecured loans, the Daily Telegraph reports. American investment bank JP Morgan heads the list with $931.78 million, followed by Morgan Stanley with $621.61 million. In addition to its bank debt, NTL has about $10 billion of outstanding bonds mostly held by specialist investors in high- yield debt. Investors are urgently waiting on how NTL chief executive Barclay Knapp will stave off a major restructuring or possible bankruptcy. Britain's biggest cable operator embarked on a cost cutting exercise with a layoff of 2,000 workers, on top of the 6,000 redundancies earlier this year. It is still exploring a number of funding options, including the sale of its network of 3,000 broadcasting masts. NTL, struggling with debt of 14 billion pounds, said it is fully funded until 2003, but by then it will be down to 5 million pounds of cash, enough for two days' interest payments. Moody's Investors Service earlier cut the debt and preferred stock ratings of NTL Incorporated and its subsidiaries to just three notches above the lowest on a 21-rung scale. P&O PRINCESS: Replaces GKN in FTSE 100 -------------------------------------- London-based cruises operator P&O Princess Cruises will replace engineering group GKN Plc in the FTSE 100 stock market index. According to Reuters' report, the change will be effective after the close of trading on December 21. Companies ranked among the largest 90 companies in the U.K. are automatically included in the FTSE 100, and P&O Princess squeezed into 88th place at Tuesday's close. Shares in the cruises company have surged since November 20, when it announced plans to merge with Royal Caribbean. In November, P&O Princess Cruises received a downgrade review from Moody's Investors Service. Its Baa1 rating for senior unsecured debt was cut to Baa3 on expectation of higher combined debt levels following the company's merger announcement with Royal Caribbean Cruises Ltd. RAILTRACK GROUP: WestLB Suggests "Dream Team" for Management ------------------------------------------------------------ Railtrack plc bidder SWIFTRAIL UK has offered to form an all-star executive team to run the crippled rail infrastructure group as existing officials prepare to vacate their posts. In an article by The Times, Swiftrail adviser David James said they will convince the government to take in the executives while the company is under administration. Mr. James, the miracle worker of Millennium Dome fame, said Switfrail is willing to let go of the executives and allow them to be absorbed by the winning company should it lose in the bid. According to Mr. James, Swiftrail has already engaged recruitment firm Heidrick & Struggles to help form what he called a "dream team." The WestLB-backed Swiftrail has identified six executive positions that are needed at Railtrack or by its successor, for that matter. Aside from a chief executive and finance director, Swiftrail believes the firm or its successor would need the following: (1) a compliance and regulatory officer to deal with the Strategic Rail Authority and the Rail Regulator; (2) a contract management director to work with the train operating companies (TOCs) and freight operating companies (FOCs); (3) a capital projects director to formulate big infrastructure plans such as the West Coast Main Line refurbishment; and (4) a maintenance and engineering director. Railtrack Chairman John Robinson, Finance Director David Harding and Chief Executive Steve Marshall are rumored to be stepping down within the week. SCOOT.COM: To Exit From FTSE Index ---------------------------------- U.K. online directories group Scoot.com PLC is one of the dot.coms to be facing a humiliating exit from the FTSE AllShare this week when the UK's main index provider unveils its quarterly reshuffle, reports the Independent Digital. Other stocks affected are from websites groups QXL and 365 Corporation, the internet-focused investment bank Durlacher, the cash-strapped telecoms group Redstone and software house Infobank. All have seen their market value collapse to less than 40 million pounds. In the nine months to September 30, Scoot recorded a pre-tax loss of 174.8 million pounds, from 34.2 million pounds last year. ********** 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 * * *