/raid1/www/Hosts/bankrupt/TCREUR_Public/020104.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, January 04, 2002, Vol. 3, No. 3


                             Headlines

* B E L G I U M *

SABENA SA: Virgin Continues Merger Talks With DAT

* G E R M A N Y *

DAIMLERCHRYSLER: Shares Fall With Euro's Launch
WINDHOFF AG: Seeks New Investor

* I T A L Y *

WIND TELECOMUNICAZIONI: Gets EUR7BB Bank Loans

* S W E D E N *

LM ERICSSON: Gets Criticism for Lay Offs

* S W I T Z E R L A N D *

ASCOM HOLDING: Likely to Post CHF250MM Loss

* U N I T E D   K I N G D O M *

ALLIANCE & LEICESTER: May Be Takeover Target, Say Analysts
ARC INTERNATIONAL: Chairman Says 10MM Options for New CEO Normal
BRITISH TELECOM: Mm02 Issues Bonds to Refinance Debt
BRITISH TELECOM: MmO2 Picks 3 Banks to Run Bond Sale
CLAIMS DIRECT: To Advance This Year, Climbs 14%
COOKSON GROUP: Sells Plastic Molding Businesses for $54MM
CORUS GROUP: Share Increase Eases Sale of Products
EMONDO.COM: On the Brink of Insolvency
EQUITABLE LIFE: Accused of Refusing to Release Compromise Data
GLOBAL CROSSING: In Talks to Stave Off Bankruptcy
MG ROVER: Partnership May Prove Key to Survival, Analyst Says
NTL INCORPORATED: Provides Haslemere Shoppers Phone Coverage
P&O PRINCESS: Regulators Control Merger Ballgame
PPL THERAPEUTICS: To Spinoff Organ Transplantation Project
RAILTRACK GROUP: Railway Repair Backlog Puts Safety at Risk
RAILTRACK GROUP: Swiftrail Claims 5-year Funding Short by US$10B
REGUS PLC: Recovers to 51.5p as Investors Dismiss Bond Issue
SMG PLC: Mum on Report of Possible Restructuring


=============
B E L G I U M
=============


SABENA SA: Virgin Continues Merger Talks With DAT
-------------------------------------------------

Investors in Sabena's former short-haul subsidiary Delta Air
Transport (DAT) and Virgin Express, the Brussels-based airline of
British entrepreneur Richard Branson, continued their merger
talks Wednesday, Reuters reported.

Negotiations are expected to conclude by the end of the first
quarter of this year.

The new airline, which would operate under a new brand name,
would be Brussels-based. It would serve the main European
destinations and be aimed at both business and low-fare
passengers.

DAT's investors have been trying to raise funds to launch DAT as
a successor to Sabena, the Belgian national flag carrier that
went bankrupt in November.


=============
G E R M A N Y
=============


DAIMLERCHRYSLER: Shares Fall With Euro's Launch
-----------------------------------------------

DaimlerChrysler AG shares dropped as much as 1.05 euros, or 2.2%,
to 47.3 euros as the euro became legal tender, Bloomberg reported
Wednesday.

The carmaker was trading recently at 47.75.

Price differences for cars in the countries sharing the euro have
been partially masked by the need to convert currencies.

With all prices now quoted in euros, analysts expect carmakers to
face mounting pressure to reduce the gap between prices, which
may reduce profit margins.

DaimlerChrysler said earlier it might reduce its German workforce
by 5,000 to 6,000 this year because its commercial-vehicles
business has been hit by the stalling global economy.


WINDHOFF AG: Seeks New Investor
-------------------------------

Creditor banks and the insolvency trustee for Rheine-baed plant
and machinery group Windhoff AG are looking for new investors for
company, as negotiations with potential investors have failed.

Windhoff trustee Hubertus Bange said that the company's bank
debts total between 20 million euros and 25 million euros.

Windhoff, which last paid a dividend during fiscal year 1998, is
expected to begin insolvency proceedings in March.

For further information, contact Windhoff at telephone 05971/58-0
or via email at info@windhoff.de


=========
I T A L Y
=========


WIND TELECOMUNICAZIONI: Gets EUR7BB Bank Loans
----------------------------------------------

Wind Telecomunicazioni SpA, Italy's leading integrated
alternative fixed and mobile telecom operator, has signed a
definitive loan financing with several banks for 7 billion euros.

The transaction includes 1.5 billion euros to refinance
Infostrada Spa's existing indebtedness and 5.5 billion euros to
finance Wind's mobile and fixed broadband networks.

The coordinators for the Infostrada loan were BNP Paribas, Credit
Agricole Indosuez, Dresdner Kleinwort Wasserstein, IntesaBci,
Mediobanca and J.P. Morgan Chase.

ABN Amro, BNP Paribas, Citigroup, Dresdner, IntesaBci and J.P.
Morgan coordinated the network lending.

Enel SpA owns 73.4% of Wind, while France Telecom owns 26.6%.

Wind posted losses of 1.438 trillion lire ($691 million) in 2000
due to heavy investments.


===========
S W E D E N
===========


LM ERICSSON: Gets Criticism for Lay Offs
----------------------------------------

Ericsson Ireland was criticized over the manner in which it laid
off staff on Christmas Eve.

According to a report from The Irish Times, a number of employees
complained about the company's decision.

One employee said that they were not given any notice or any
explanation as to the criteria the company used in determining
who was redundant.

"People accept there will be cutbacks but the manner and timing
in which they did this is just a disgrace. They have devastated
40 families for Christmas," another caller remarked.

The lay offs are part of the Swedish group's global efficiency
program in March, involving 17,000 redundancies worldwide.

The mobile phone manufacturer earlier signed a sale-lease back
agreement regarding test plant equipment for US$750 million to
improve its cash position.

The company posted a pre-tax loss of 5.8 billion Swedish krona
($548.7 million) in the third quarter.


=====================
S W I T Z E R L A N D
=====================


ASCOM HOLDING: Likely to Post CHF250MM Loss
-------------------------------------------

Telecom supplier Ascom Holding AG could post a net loss of up to
250 million Swiss francs in 2001, Dow Jones Newswires reports.

The news agency says the expected loss stems mainly from special
charges of 200 million Swiss francs tied to divestments and
restructurings.

The group's net debt is likely to rise to 800 million Swiss
francs from 669 million Swiss francs mid-year.

The Bern-based company has 10,741 employees.


===========================
U N I T E D   K I N G D O M
===========================


ALLIANCE & LEICESTER: May Be Takeover Target, Say Analysts
----------------------------------------------------------

Analysts say mortgage lender Alliance & Leicester is a possible
target of a takeover bid this year, as its protection from
unsolicited advances expires in April.

According to a Bloomberg report, market observers believe
Alliance is an attractive buy for rivals wanting a bigger slice
of Britain's GBP577 billion (US$835 billion) mortgage market.

There are indications that Abbey National Plc, the UK's No. 2
mortgage lender, is eyeing Alliance. Late last month, a report
surfaced that a meeting between their respective advisers had
transpired.

Accordingly, a merger would be beneficial to both parties,
particularly Alliance, which is under pressure to cut costs and
boost profit after new lending dropped to zero in the first half
of 2000. The company also suffered a first-half profit decline
last year and in November cut a target for how much it plans to
boost revenue.

Abbey, on the other hand, can reduce costs at the enlarged
company by an annual GBP200 million (US$289 million) in three
years by shutting branches, firing workers and combining
transaction processing.

Other British banks like HSBC Holdings Plc and Royal Bank of
Scotland Group Plc are also potential buyers, say analysts
interviewed by Bloomberg.

Alliance ended its customer-owned status when it went public in
1997. Under the terms of the conversion, the company received
protection from unsolicited advances for five years.


ARC INTERNATIONAL: Chairman Says 10MM Options for New CEO Normal
----------------------------------------------------------------

Troubled semiconductor developer ARC International recently
defended the 10 million share options it is awarding to new CEO
Michael Gulett, saying the package is nothing extraordinary.

In an interview, ARC Chairman Jan Tufvesson told The Times that
former CEO Bob Terwilliger was also granted 10.2 million options
before the company floated in 2000.

Mr. Tufvesson says both executives hail from the United States,
where larger pay schemes are normal.

"There will be a trend in Europe where awards will have to be
bigger than before to attract the right people," he said.

Investors and shareholders have recently criticized the generous
package, as it is not based on any performance targets.

"Investors would like to see the right person in the post and it
may be appropriate to pay a bit more, but this should be related
to specific performance targets," a spokesman at the National
Association of Pension Funds recently said.

"There are pros and cons to this. It is unusual to award such a
high number, but we are keen to see the business work and this is
what you have to offer for good people," Mr. Tufvesson said.

Mr. Gulett replaces interim CEO John Stockton, who himself
replaced Mr. Terwilliger whose watch ended when the company
issued two profit warnings last year.


BRITISH TELECOM: Mm02 Issues Bonds to Refinance Debt
----------------------------------------------------

British mobile phone group mmO2 plans to raise around 1 billion
euros later this month by issuing its first bonds, reports the
Daily Telegraph.

"It was always our plan to raise money in the debt markets
shortly after we floated. We want to reduce and eventually
replace a 1.75-billion-pound bridging facility we have with
cheaper money," says an Mm02 spokesman.

Prior to its demerger from national operator British Telecom in
November, mm02 arranged a 3.5 billion pound loan with six banks,
including Deutsche Bank, HSBC and Schroder Salomon Smith Barney.
It is split between a five-year facility and a 364-day revolving
credit facility.

The unprofitable company was spun off carrying debts of about 500
million pounds.

Credit rating agency Standard & Poor's put the company's status
at BBB- while Moody's Investors Service last month assigned a
Baa2 rating to mm02's 5-billion-euro senior unsecured European
Medium Term Note program. Fitch assigned a senior unsecured
rating of BBB.


BRITISH TELECOM: MmO2 Picks 3 Banks to Run Bond Sale
----------------------------------------------------

MmO2 Plc chose Deutsche Bank AG, HSBC Holdings Plc and Schroder
Salomon Smith Barney to act as joint bookrunners for the
company's bond issue this year.

The investor roadshow would start on January 7.

The mobile phone company has arranged its loan facility to the
three banks prior to its demerger from British Telecom last year.


CLAIMS DIRECT: To Advance This Year, Climbs 14%
-----------------------------------------------

Personal injury specialist Claims Direct Plc climbed 14% to
14.25p as the Mirror newspaper said that its stock would most
probably advance this year, Bloomberg reported.

Claims Direct earlier said it had just 3.1 million pounds
available for working capital on September 30.

Interim pre-tax loss was 11.5 million pounds while turnover fell
to 9 million pounds.

The company further said it needs 2,300 cases a month to break
even. It just had 1,500 in September.

The falling case load was partly the result of uncertainties
triggered by a bid from founders Tony Sullman and Colin Poole.


COOKSON GROUP: Sells Plastic Molding Businesses for $54MM
---------------------------------------------------------

Cookson Group plc, the international materials technology
company, announced Wednesday the sale of its plastic moldings
businesses to four separate buyers for a total of 38 million
pounds (US$54 million).

Proceeds from the sale, which comprise 36 million pounds of cash
paid at the closing of each transaction and a subordinated note
of 2 million pounds repayable over five years, will go towards
paying off some of the company's debt mountain of 800 million
pounds.

The plastics molding activities include the design, manufacture
and sale of plastic pallets for the material handling industry,
plastic in-ground swimming pool panels and accessories and custom
molded components for a variety of applications.

The businesses generated total sales of 93 million pounds in the
twelve months to September 30 and an operating profit of 2
million pounds.

Last week, the debt-laden company gave warning that it would
suspend dividend payments for at least a year while it sought to
steady its finances.

The company has issued a string of profits warnings in recent
months.


CORUS GROUP: Share Increase Eases Sale of Products
--------------------------------------------------

Corus Group Plc shares rose 6.3% to a seven-month high of 76.5p
after the British pound weakened against the euro, making it
easier for the U.K.'s biggest steelmaker to sell its products in
continental Europe, Bloomberg reported.

Earlier, Corus Group announced it is selling as much as 287.5
million euros ($255.9 million) of bonds convertible into stock to
help repay its debt.

Moody's Investors Service has put the company's senior unsecured
ratings under review for a possible downgrade, affecting $630
million of debt securities.


EMONDO.COM: On the Brink of Insolvency
--------------------------------------

Emondo.com has announced that it faces insolvency unless new
investment is found.

According to a report from the Daily Telegraph, chief executive
Fabio Cavalli of the Alternative Investment Market business-to-
business software group said that the company would need to cease
trading and enter into insolvency proceedings unless funds are in
the offing.

The London-based company earlier revealed that for the year to
December 31 2000, it made a pre-tax loss of 1.6 million on tiny
revenues of 124,827 pounds.

It had 87,000 pounds in the bank in June but owed 318,000 pounds.

Emondo.com's auditor is PKF.


EQUITABLE LIFE: Accused of Refusing to Release Compromise Data
--------------------------------------------------------------

Pensions expert David Blake has accused Equitable Life of
refusing to release essential information about the compromise
being offered to policyholders.

According to a Financial Times report, the professor said that
policyholders would be entitled to conclude that the information
was being deliberately withheld unless the beleaguered UK life
assurer releases the data.

Professor Blake of the Pensions Institute at the University of
London urged Equitable in December to publish information on its
website about the number of policyholders who have left the fund,
solvency, and current value of its with-profits fund.

Equitable argued that the number of policyholders was not
relevant because some people have more than one policy,
increasing the life assurer's liabilities.

The company's 485,000 with-profits policyholders and 7,000
occupational pension trustees will vote by January 11 on the
compromise scheme that will allow the assurer to cap its
liabilities to holders of valuable guaranteed annuity rate
policies (GARs), estimated at about 1.5 billion pounds.


GLOBAL CROSSING: In Talks to Stave Off Bankruptcy
-------------------------------------------------

U.S.-based telecom carrier Global Crossing is continuing talks
with its bankers and potential investors in its ongoing attempts
to avert bankruptcy, reports the Daily Telegraph.

The negotiations follow an eleventh-hour deal last week when
Global Crossing's banks, led by J.P. Morgan Chase and Citibank,
agreed to ignore potential violations of financial covenants
until February 13.

The waiver resolved immediate concerns that the company would be
out of compliance with the covenants at the end of 2001.

Global Crossing previously announced that it anticipated the need
for such a waiver that requires the company to maintain certain
cash balances in order to keep the waiver in force.

The company further dismissed rumors that its assets in the U.K.
are up for sale.


MG ROVER: Partnership May Prove Key to Survival, Analyst Says
-------------------------------------------------------------

Partnership may prove to be the key to the survival of British
car company MG Rover, Ananova reported, citing Graeme Maxton of
Autopolis.

According to the motor industry analyst, MG Rover has a declining
market share and a lot of liabilities, and a partnership deal
with an overseas carmaker of similar size may be just the
solution it needs.

MG Rover is reportedly in talks with China Brilliance about
working together on a range of new vehicles and a joint engine
strategy.


NTL INCORPORATED: Provides Haslemere Shoppers Phone Coverage
------------------------------------------------------------

Property group Haslemere will team up with debt-laden cable
operator NTL Inc. to provide shoppers with better mobile phone
coverage.

According to an Ananova report, the deal should guarantee
services from the major phone operators at Haslemere's shopping
centers in Bangor in Northern Ireland, Chelmsford, Hartlepool,
Kirkcaldy, Leeds, Sutton and Edinburgh.

The financial terms of the agreement were not disclosed.

The announcement comes as the Hampshire-based NTL seeks to cut
its debts back from 12 billion pounds and fend off the threat of
insolvency.


P&O PRINCESS: Regulators Control Merger Ballgame
------------------------------------------------

The question "whose bid is better?" is not as important as
"whether or not regulators will approve the bid," say market
observers who see a minefield up ahead for P&O Princess.

According to a report by the Independent, industry analysts
believe the key is really in the hands of regulators in the
United States, United Kingdom and Germany.

Observers say in essence regulatory clearance will come down to
one issue: how authorities define the cruise market.

"If cruising, as the companies claim, falls within the broader
vacation market then neither deal is expected to stumble. This
assumption received some support from the post-11 September
nosedive that threatened to topple the travel industry. Holiday
prices fell across the board as tour and cruise operators touted
for business," says the report.

"However, if the regulators take a narrower view based on, say,
the near 50% U.S. market share that a Carnival takeover would
yield, competition lawyers warn that both deals would be
blocked," the report adds.

According to Alastair Gorrie, a competition partner at Coudert
Brothers, Brussels will likely take the harsher line.

"The EC has a tendency to make narrow market definitions. They
made that clear in their decision about Airtours [when they ruled
that the U.K. tour operators market could not condense from four
to three]. On that basis Carnival would have quite a problem," he
said.


PPL THERAPEUTICS: To Spinoff Organ Transplantation Project
----------------------------------------------------------

Cash-strapped biotechnology firm PPL Therapeutics says it is
spinning off its organ transplantation and stem cell interests in
order to focus more on its lead product.

According to the company, which created the famed cloned sheep
'Dolly', its limited funding forced the firm to put on hold the
"xenotransplantation program."

The promising program, which aims to transplant pig lungs, hearts
and other organs into humans, needs a joint venture partner or a
venture capital backer, says the company.

The move comes at the heels of a key breakthrough in the program:
It recently produced five cloned piglets in which a gene was
knocked out to allow the transplantation of their cells and
organs into humans.

PPL product development director Martyn Breeze told The Times
that the spin-off will result in a separate company, with PPL
having "a significant share."

The company says the move will allow it to focus more on its lead
product, a treatment for hereditary emphysema produced in the
milk of genetically modified sheep.


RAILTRACK GROUP: Railway Repair Backlog Puts Safety at Risk
-----------------------------------------------------------

Railtrack was said to have put the safety at Britain's railway at
risk as it failed to spend enough on essential maintenance.

The Financial Times reported that RMT rail union leader Vernon
Hince said that risks of accidents were getting worse due to lack
of resources being channeled to jobs such as rail renewal.

The union leader added that transport secretary Stephen Byers had
been right to put Railtrack into administration in October.

Meanwhile, the Railtrack Shareholders' Action Group were on
Tuesday considering their next move after Byers failed to show
them documents relating to his decision to put the company into
administration.


RAILTRACK GROUP: Swiftrail Claims 5-year Funding Short by US$10B
----------------------------------------------------------------

WestLB-backed Swiftrail, the company bidding for Railtrack, says
the government's five-year funding for the troubled firm is short
by GBP7-8 billion (US$10-11 billion).

The bidder says more money is needed if the troubled company
wants to be successful in plugging a GBP3.8 billion (US$5.4
billion) funding gap and completing projects vital for the upkeep
of UK's railways.

According to the Daily Telegraph, the projection challenges the
pronouncement by Transport Secretary Stephen Byers in November
when he said that Railtrack's successor must work within the
GBP15 billion (US$21.7 billion) five-year financial framework.

Rail regulator Tom Winsor, who at the time envisioned a company
limited by guarantee to succeed Railtrack, set this limited five-
year budget.


REGUS PLC: Recovers to 51.5p as Investors Dismiss Bond Issue
------------------------------------------------------------

Shares in international serviced office provider Regus have
recovered 5.5p to 51.5p from its steep fall last week after a 40-
million-pound convertible bond issue, the Daily Telegraph
reported.

Regus, which provides cleaning, security and maintenance services
and also supplies offices with workstations, issued the bonds to
help strengthen its balance sheet as it copes with the effects of
global economic slowdown.

For the three months ended September 30, Regus revealed an
operating loss of 10.6 million pounds. Its turnover was up 7%
123.1 million pounds, compared to 115 million pounds in the
previous year.

Last year, Regus was among the 10 worst-performing stocks in the
FTSE 350. It saw it shares fall from 350p to 12p on fears of
bankruptcy before share-buying by founder Mark Dixon saw the
price quadruple from its year-low.

Contact chief executive Mark Dixon at telephone +44 20 8895 4000
for inquiries.


SMG PLC: Mum on Report of Possible Restructuring
------------------------------------------------

Television program producer SMG PLC remained tight-lipped over a
newspaper report suggesting it was about to break banking
covenants and had initiated talks with lenders for a possible
debt restructuring.

The Independent on Sunday reported, without citing sources, that
the owner of Scottish TV, Virgin Radio and Ginger Media is
expected to break its banking covenants on debts of over 350
million pounds.

The newspaper added the Glasgow-based media company has hired
accountant Deloitte & Touche to advise it on its debt situation.

For the six months ended June 30, SMG posted an EBITDA loss of
4.5 million pounds. Current assets were at 103.3 million pounds,
while net current liabilities were at 176.7 million pounds.

Net debt for the year stood at 365.7 million pounds.

                                   ***********

        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 2002.  All rights reserved.  ISSN 1529-2754.

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