/raid1/www/Hosts/bankrupt/TCREUR_Public/020212.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

             Monday, February 11, 2002, Vol. 3, No. 29


                             Headlines

* B E L G I U M *

CUSTOM SILICON: Sets up Jobcenter in Keiberg Zaventem
LERNOUT & HAUSPIE: Judge Grants Dictaphone 3rd Amended Disclosure

* F R A N C E *

AIR LIBERTE: EasyJet Raps Airline for Not Giving up Orly Slots

* G E R M A N Y *

DEUTSCHE TELEKOM: Inks UMTS Supply Contract With Siemens
ELSA AG: Banks Terminate Credit Facility
KIRCHGRUPPE: BayernLB Appeals to Fellow Creditors
KIRCHGRUPPE: Faces Bigger World Cup Costs
KIRCHGRUPPE: Murdoch to Write Off Kirch Stake
LOBSTER NETWORK: Initiates Insolvency Proceedings
SCHMIDTBANK GMBH: Aguado Demands Compensation From Schmidtbank

* I R E L A N D *

ELAN CORPORATION: Receives SEC Notice of Investigation

* I T A L Y *

FIAT SPA: Central Bank Did Not Block Financing
FIAT SPA: Toro Unit Gives up Fondiaria Bid

* L U X E M B O U R G *

CARRIER1 INTERNATIONAL: Bonds Fall After U.S. Trading Suspension
CARRIER1 INTERNATIONAL: Suspends U.S. Voice Traffic

* N E T H E R L A N D S *

LETSBUYIT.COM: Chairman Von Holstein Steps Down From Board
PROLION HOLDING: Files for Suspension of Payment
UNITED PAN-EUROPE: Loses Place in AEX Index

* N O R W A Y *

KVAERNER ASA: Wins $110MM Contract for Kristin Subsea Project

* S W E D E N *

LM ERICSSON: Will Review Employee Bonus System

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

SWISSAIR GROUP: Sells Swissport for $343MM

* U N I T E D   K I N G D O M *

BRITISH TELECOM: Shares Rise on Positive Third-Quarter Earnings
ICELAND GROUP: Asks Workers to Use Salary Pension as Reserve
INVENSYS PLC: Moody's Cuts Debt Ratings to Baa3, Prime-3
P&O PRINCESS: Carnival Raises P&O Offer to GBP3.8BB


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


CUSTOM SILICON: Sets up Jobcenter in Keiberg Zaventem
-----------------------------------------------------

The old management of Zaventem-based Custom Silicon Configuration
Services (CS2), which specializes in advanced packaging and test
services for semiconductors, has set up a jobc enter at the
offices of its major shareholder IT-Partners, located in the
Keiberg Zaventem.

It-Partners has made available sufficient rooms and facilities to
help the employees of the company.

"Although a further search for a takeover is going on, we want to
help everybody with their questions and administration where
possible," CS2 said in a statement.

Mr A. De Ridder and Mr De Mot were appointed as receivers of the
bankrupt company. Their objective is to try to find an investor
who wants to take over the assets and employees.

For further information, contact Yves De Poorter at telephone 32
475750222 or e-mail at ydp@skynet.be


LERNOUT & HAUSPIE: Judge Grants Dictaphone 3rd Amended Disclosure
-----------------------------------------------------------------

On January 31, 2002, Dictaphone filed its Third Amended
Disclosure Statement and related Third Amended Plan, which it has
circulated privately for some months, and Judge Judith Wizmur
immediately entered an Order approving the adequacy of the
information in the Third Amended Disclosure Statement and set the
date for voting on the Third Amended Pkan for March 3, 2002, and
the hearing on plan confirmation for March 13, 2002.

Why Third Amended Disclosure Statement Is Needed

Dictaphone explains why a Third Amended Disclosure Statement was
necessary even though Judge Wizmur had already approved the
Second Amended Disclosure Statement in this case.  On October 18,
2001, the Bankruptcy Court entered an order approving the Second
Amended Disclosure Statement and scheduled, among other things, a
hearing on confirmation of the Second Amended Plan.  However,
because of additional events that transpired in Belgium with
respect to Dictaphone's corporate parent, L&H NV, Dictaphone
determined that it would be more prudent not to solicit votes on
the Second Amended Plan until there was clarity as to the future
direction of the Second Amended Plan's confirmation process, at
least as far as L&H NV's involvement was concerned.

More specifically, various events in Belgium, including, but not
limited to the denial of L&H NV's new concordat proceeding, which
was initiated on October 22, 2001, the commencement of the L&H NV
Belgian Bankruptcy Case on October 24, 2001, and the appointment
of the Curators, led Dictaphone to determine that it was in the
best interests of its estate to temporarily delay soliciting
votes to accept or reject the Second Amended Dictaphone Plan.
Among other things, deferring the solicitation process allowed
Dictaphone to save the costs associated with printing and mailing
its solicitation packages that would be incurred in the event
revisions were necessary due to events occurring in connection
with the L&H NV Belgian Bankruptcy Case.

The Belgium Case

On November 29, 2000, L&H NV commenced a concordat proceeding in
the Ieper, Belgium Commercial Court. By order dated December 8,
2000, the Belgian Court denied the concordat petition concluding,
among other things, that L&H NV's proposed plan for the concordat
did not satisfy the conditions to obtain concordat protection. On
December 27, 2000, L&H NV commenced another concordat proceeding
in the Belgian Court, which the Belgian Court granted on January
5, 2001. On May 21, 2001, L&H NV filed the Recovery And Payment
Plan in the Belgian Case, which the creditors of L&H NV
overwhelmingly approved on June 5, 2001. On June 20, 2001, the
Belgian Court declined to approve the Belgian Plan as filed but
extended the Belgian Case through September 30, 2001 to allow L&H
NV to file a revised plan by September 10, 2001, which L&H NV
filed on September 10, 2001.

On or about September 18, 2001, the creditors of L&H NV
overwhelmingly approved the Second Belgian Plan. The Belgian
Court conditionally approved the Second Belgian Plan on September
21, 2001, and extended concordat protection to L&H NV from
creditors for an additional nine months. On October 5, 2001, L&H
NV appealed the imposition of the conditions contained in the
September 21, 2001 order to the Ghent Court of Appeals. Oral
argument on such appeal was heard on October 10, 2001.

On October 18, 2001, the Ghent Court issued a ruling denying the
conditional approval of the Second Belgian Plan by the Belgian
Court and officially dismissing the Belgian Case. On October 22,
2001, L&H NV filed a new concordat proceeding with the Belgian
Court.

The "Tag-along" Agreement

On October 24, 2001, the Belgian Court (i) denied the New
Concordat Proceeding; (ii) declared L&H NV bankrupt and (iii)
appointed five curators -- Jean-Marc Vanstaen, Stefaan De Rouck,
Johan Houtman, Marnix Muylle and Frank Seys -- to oversee the
liquidating Belgian bankruptcy case of L&H NV. On October 29,
2001, the Curators sought and obtained from the judge-
commissaires appointed in the L&H NV Belgian Bankruptcy
Case approval to continue the Chapter 11 Case (including the Plan
confirmation process) subject to (i) obtaining a "tag-along"
right from certain of the Lenders, so that if the Lenders sell
the Dictaphone New Common Stock distributed to them under the
Plan, L&H NV (as holder of Allowed Class 8 Loan Agreement Claims)
would be entitled to sell the Dictaphone New Common Stock
distributed to it at the same time, on the same terms and
conditions, and in the same proportion as the Dictaphone New
Common Stock being sold by certain of the Lenders (as holders of
Allowed Class 5 Lenders' Guaranty Claims)) and (ii) attempting to
obtain a larger distribution of Dictaphone New Common Stock from
the Lenders. Other than the Chapter 11 Case, Dictaphone is not
the subject of any other bankruptcy or insolvency case.

Under the Tag-Along Agreement, (1) each of the parties is
afforded the right of first refusal in the event of a potential
transfer of the Dictaphone New Common Stock by another party to
the agreement; and (2) L&H NV is afforded the "tagalong" right
mentioned above in the event these Lenders sell their shares of
Dictaphone New Common Stock. The settlements embodied in the Plan
(as far as they affect L&H NV, as holder of Allowed Class 8 Loan
Agreement Claims) and the Tag-Along Agreement remain subject to
approval by the Belgian Court, which Dictaphone contemplates will
take the matter under consideration in January 2002. Dictaphone
promises that a copy of the Tag-Along Agreement will be contained
in the Plan Supplement Documents.

L&H NV and Dictaphone expect that the Plan confirmation process
will not be affected by the L&H NV Belgian Bankruptcy Case.

What's Changed

On January 31, 2002, Dictaphone filed a Third Amended Disclosure
Statement Pursuant To Section 1125 Of The Bankruptcy Code With
Respect To Third Amended Plan Of Reorganization Of Dictaphone
Under Chapter 11 Of The Bankruptcy Code and the Third Amended
Plan Of Reorganization Of Dictaphone Corporation Under Chapter 11
Of The Bankruptcy Code. On January 31, 2002, the Bankruptcy Court
entered an order amending the Disclosure Statement Approval Order
and approving the Third Amended Disclosure Statement.  The Third
Amended Disclosure Statement is a revised version of the Second
Amended Disclosure Statement. The Third Amended Disclosure
Statement modifies, amends and supercedes the Joint Plan (as it
relates to Dictaphone), the L&H Group Disclosure Statement (as it
relates to Dictaphone), the First Amended Plan, the First Amended
Disclosure Statement, the Second Amended Plan and the Second
Amended Disclosure Statement.

The only substantive difference between the Plan and the Second
Amended Plan involves a settlement reached among the Lenders and
L&H NV after the Second Amended Plan was filed. Specifically, the
Lenders have agreed to provide L&H NV with a larger distribution
of Dictaphone New Common Stock and therefore to re-allocate the
original distribution of Dictaphone New Common Stock -- which
formerly was sixty-five percent to the Lenders and eight percent
to L&H NV -- to a new allocation of sixty-three percent to the
Lenders and ten percent to L&H NV.

Furthermore, certain of the Lenders (specifically KBC Bank NV,
Fortis Bank nv-sa and Artesia Banking Corporation NV/SA) have
agreed to a "tag-along" right so that if these Lenders sell the
Dictaphone New Common Stock distributed to them under the Plan,
L&H NV (as holders of Allowed Class 8 Intercompany Loan Agreement
Claims) would be entitled to sell the Dictaphone New Common Stock
distributed to it at the same time, on the same terms and
conditions and in the same proportion as the Dictaphone New
Common Stock being sold by these Lenders (as holders of Allowed
Class 5 Lenders' Guaranty Claims)).

The agreements among the Lenders and L&H NV with respect to the
revised distribution percentages of Dictaphone New Common Stock
and among KBC Bank NV, Fortis Bank nv-sa, Artesia Banking
Corporation NV/SA and L&H NV with respect to the "tag-along"
right remain subject to approval of the Belgian Court. (Lernout &
Hauspie Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609-392-0900)


===========
F R A N C E
===========


AIR LIBERTE: EasyJet Raps Airline for Not Giving up Orly Slots
--------------------------------------------------------------

EasyJet CEO Ray Webster recently criticized bankrupt Air Liberte
for refusing to give up its entire slots at Paris Orly airport,
calling the move "scandalous."

"It is a piece of blatant anti-competitive protectionism. Air Lib
is an airline struggling to survive, and I don't believe that it
can seriously use all of the slots it is now holding for the
coming summer season. This means that slots will go unused and
the real loser is the French consumer," Mr. Webster told the
Financial Times.

EasyJet has applied for 20,000 annual take-off and landing slots
at the airport, following Air Liberte's filing for creditor
protection in July last year.

As a precondition for the granting of protection, the insolvent
airline promised to give up at least 20,000 of its 75,000 slots
at Orly. It has so far returned only 12,000 slots. As a result,
EasyJet just has 2,190 slots in the airport.

Mr. Webster says it was "scandalous" that Air Lib had failed to
comply with the terms of the restructuring ordered by the court
in return for receiving protection from bankruptcy.

EasyJet plans to establish a base at Orly for its Paris
operations if only it could win sufficient slots.


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


DEUTSCHE TELEKOM: Inks UMTS Supply Contract With Siemens
--------------------------------------------------------

Bonn-based telecom giant Deutsche Telekom AG has signed the first
binding supply agreements for UMTS network systems with
technology and engineering giant Siemens AG, Handelsblatt
reported.

Under the deal, which is valid for ten years, Siemens will supply
UMTS mobile networks and switching systems for Telekom's UMTS
networks in Germany, the Netherlands, Britain and Austria.

Both companies did not provide details of the value of the
agreement, but industry insiders estimate that the value of each
outstanding agreement runs into hundreds of millions of euros.

Deutsche Telekom aims to cut its debt of 65 billion euros ($55.8
billion) to 50 billion ($42.9 billion) euros by the end of this
year.


ELSA AG: Banks Terminate Credit Facility
----------------------------------------

Software specialist Elsa AG is facing the threat of insolvency
after a banking pool decided Thursday to cancel a 28 million
euros credit to the group effective February 15.

Sweden's SEB and the Netherlands' ABN Amro, according to a
Handelsblatt report, are believed to have been the driving force
behind the creditors' action.

One of the creditors, rumored to be Dresdner Bank, notified Elsa
that the credit facility of 10 million euros, provided until
March 30, 2002, will not be extended.

Negotiations with the banks about a credit buyout through a third
party investor have failed, despite intensive arbitration
attempts also of the banking pool leader. Funds for a return of
the outstanding credits are presently unavailable.

"Going concern of the company is therefore unsecured. The
management board is evaluating its obligation to initiate
insolvency proceedings," the group said in a statement.

Elsa has a current market valuation of less than 20 million
euros.


KIRCHGRUPPE: BayernLB Appeals to Fellow Creditors
-------------------------------------------------

Bayersiche Landesbank (BayernLB), Kirch group's largest single
creditor, has urged its fellow creditors, including Deutsche
Bank, Dresdner Bank, HypoVereinsbank and JP Morgan, not to act
unilaterally in calling in their loans and to commonly agree on a
sensible solution to the troubled media group's problems,
Handelsblatt reported.

Kirch's total gearing currently stands at 6 billion euros. Of
this, a sum of 1.9 billion euros is owed to BayernLB. The first
tranche falls due for repayment at the end of June.

And there's also a credit of 460 million euros ($398 million)
issued by Dresdner Bank, which is due for repayment in April.

BayernLB chief executive Werner Schmidt is certain that a
solution will be reached in the next few weeks.

As to the nature of that solution, either an investor such as
Rupert Murdoch's News Incorporated would enter the Kirch group's
capital or the banks and Kirch group would work out a solution
among themselves.


KIRCHGRUPPE: Faces Bigger World Cup Costs
-----------------------------------------

The decision to stage the 2002 World Cup in two countries has
increased the costs faced by Kirch, the cash-strapped Munich-
based media group with the broadcast rights for the next two
tournaments, by an estimated 80 million Swiss francs ($47
million), the Financial Times newspaper reported.

Kirch Media, the majority-owned subsidiary with broadcast rights
for the 2002 competition in Japan and South Korea, is investing
more than 200 million Swiss francs ($118.3 million) in broadcast
production.

The paper added that the equivalent broadcasting costs for the
tournament in France in 1998 came to about 70 million Swiss
francs.

KirchGruppe expects to make a considerable profit from the
tournament, when the World Cup will be staged in Germany,
enabling matches to be played at prime time in Europe and meaning
that costs should be far lower.

Kirch, which has amassed debts of some $5 billion due to losses
at its pay-television business, may have to cough up billions to
repay debt and cover options to banks and media partners this
year.


KIRCHGRUPPE: Murdoch to Write Off Kirch Stake
---------------------------------------------

Rupert Murdoch has decided to write off its 22% stake in Kirch's
loss-making pay-TV platform Premiere World service, instead of
demanding the 1.6 billion euros payable to him under a put option
due in October, the Financial Times reported.

The media mogul said he has effectively decided to cut off
commercial ties with Kirch.

Murdoch and the executives at British Sky Broadcasting, the U.K.
satellite broadcaster holding the option, are said to have given
up the idea, as they do not want to shoulder Premiere's
substantial losses.

The media empire is saddled with 5.6 billion euros ($4.8 billion)
of debt and a further 2.3 billion euros of contingent
liabilities.

Dieter Hahn, the executive in charge of the day-to-day management
of Kirch, has said the company does not have the cash to honor
the BSkyB put option. Kirch will either have to negotiate a
settlement with Murdoch and find another strategic investor who
can provide the money or face bankruptcy.

Meanwhile, Kirch's main creditor, Bayerische Landesbank
Girozentrale, has urged the group's six main German creditor
banks, including Deutsche Bank AG and Dresdner Bank AG, to help
rescue the media company.


LOBSTER NETWORK: Initiates Insolvency Proceedings
-------------------------------------------------

The Charlottenburg court on Thursday has informed the board of
its decision to initiate the insolvency proceedings over the
assets of Berlin-based data storage and backup solutions provider
Lobster Network Storage AG and its subsidiary Lobster Storage
Solutions GmbH effective February 1, 2002.

Lawyer Peter Leonhardt, Berlin, was named insolvency
administrator.

After failing to convince investors to take part in a 3-million-
euro capital increase, Lobster Network in November filed for
insolvency on behalf of its wholly owned subsidiary Lobster
Storage Solutions GmbH, Berlin.

For further information, contact Kira Baitalskaia at
Zimmerstrasse 68, 10117 Berlin, telephone 030.896.72-0, fax
030.896.72-499, or via e-mail info@lobster.de


SCHMIDTBANK GMBH: Aguado Demands Compensation From Schmidtbank
--------------------------------------------------------------

Ramon Azin Aguado, a Spaniard and key shareholder of Consors-
Discount Broker AG, is demanding compensation from the Nuremberg-
based online brokerage firm's troubled parent, Schmidtbank, the
Friday edition of Dow Jones Newswires said, citing a Financial
Times Deutschland report.

The report relates that Aguado, who sold his online brokerage
Siaga to Consors in 1999, believes he was intentionally misled
about the true financial situation of Schmidtbank and its unit
Consors.

Through a 300,000 shares issue worth about 20 million euros at
that time, Consors financed a 75% acquisition in Siaga, the
reports says.

The shares have since dropped by 80%.

Consors has been up for sale since November during the near
collapse of its parent company SchmidtBank, which was rescued
from bankruptcy by a consortium of Germany's largest banks,
including HVB, Deutsche Bank, Commerzbank, Dresdner Bank and the
Bavarian savings banks.

Schmidtbank holds a 65% stake in Consors.

The online broker is valued at around 450 million euros ($398
million).


=============
I R E L A N D
=============


ELAN CORPORATION: Receives SEC Notice of Investigation
------------------------------------------------------

The U.S. Securities and Exchange Commission notified Elan
Corporation that the agency is investigating the Dublin-based
pharmaceutical company, Bloomberg reported.

Analysts have questioned Elan's use of joint ventures to book
revenue.

The drug maker has also faced three cases from the United States
for issuing misleading press releases and using accounting
techniques that artificially inflated the company's earnings.

The suit names top Elan executives and the company's auditor,
KPMG LLP.

Elan earlier lost some $9 billion in value as the company
released a grim 2002 profit warning and accounting concerns.


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


FIAT SPA: Central Bank Did Not Block Financing
----------------------------------------------

A source at the Bank of Italy said Thursday that the central bank
has not lodged any complaints to the country's banks extending
credit lines to carmaker, Fiat, Reuters reported.

According to financial newspaper MF, the central bank urged
Italian bank Sanpaolo IMI SpA and Banca di Roma not to help
finance a multibillion-euro loan to Edipower, an energy
consortium partly owned by Fiat.

The report said the Bank of Italy objected to the possible
financing because of the banks' existing exposure to Fiat, whose
Italenergia power group is participating in the bidding
consortium.

Fiat's shares slid 6.2% after the report.

A Fiat spokesman had declined to comment on the MF article but
reiterated that cutting debt was a priority of a Fiat
restructuring plan unveiled in December.


FIAT SPA: Toro Unit Gives up Fondiaria Bid
------------------------------------------

The Toro insurance unit of Turin-based car manufacturer Fiat SpA
agreed to give up on buying a 24% stake in Fondiaria SpA from
agro-energy holding Mondtedison, also controlled by Fiat, to
rival suitor SAI and three allies, Reuters reported.

Fiat's move will allow allies of rival SAI, which has been trying
to strike an alliance with Fondiaria since July, to proceed with
their 812 million-euro bid to create the country's second-
largest property and casualty insurer.

Montedison in January had given Toro an option to bid 9.5 euros a
share for the stake, matching the price of SAI's initial bid,
which had been held up by regulatory objections.

Toro, which in January offered 6.73 euros per Fondiaria share,
was forced to pay the higher price of a 65% premium to
Fondiaria's market price after SAI allies JP Morgan Chase,
Interbanca and financier Francesco Micheli agreed to pay 9.5 euro
a share, or 812 million euros.

Fiat's decision to waive its rights to the Fondaria stake comes a
day after its shares tumbled to a four-month low of 6.2% on
concern about the group's debt levels.

The debt burden of Fiat is among the highest of the European auto
sector, with a net debt of about 6 billion euros ($5.21 billion)
at the end of 2001.

Fiat announced in December a drastic restructuring aimed at
bringing its car unit into the black. In January, it raised the
target for 2002 asset sales to 3 billion euros from 2 billion
euros to halve the debt by year's end.


===================
L U X E M B O U R G
===================


CARRIER1 INTERNATIONAL: Bonds Fall After U.S. Trading Suspension
----------------------------------------------------------------

Prices of bonds issued by Carrier1 International SA fell Thursday
after the struggling telecoms provider announced the suspension
of its U.S. voice traffic service.

Reuters reported that Carrier1's 13.25% 2009 euro bonds were
being offered at 9% of face value but no bids were being seen.

Earlier in the week, the bonds dropped to 10 from 20% of face
value after Carrier1 said it had been forced to abandon a
proposed debt-for-equity swap due to a cash shortage and
Luxembourg laws preventing it from issuing new shares.

Carrier1 is registered in Luxembourg. Its senior management are
in Switzerland and London.


CARRIER1 INTERNATIONAL: Suspends U.S. Voice Traffic
---------------------------------------------------

Unprofitable Pan-European bandwidth provider Carrier1
International S.A. has suspended its U.S. voice traffic.

Carrier1 International AG said it has suspended its US voice
traffic services because some key suppliers have refused to
continue to provide services without full payment for outstanding
invoices or credit support for future voice services.

The company's US subsidiary, Carrier1 Inc., had to suspend its US
voice traffic because some of key suppliers refused to continue
to provide services without full payment for past invoices or
credit support for future voice services.

Carrier1 believes that the suspension of its U.S. voice traffic
is unlikely to affect the company's prospects for finding a
buyer, but it is not certain whether any agreement with a buyer
will be reached in time to enable the company's operations to
continue.

However, a sale of all or part of the business will not result in
any satisfactory solution for the company's shareholders, it
added.

It was rumored earlier that Telia AB was interested in acquiring
parts of the provider of end-to-end Internet, voice, bandwidth
data center and access solutions. A company spokesman declined to
comment.

At the end of January, Carrier1 had approximately $90.7 million
of cash and cash equivalents, restricted cash (cash that is
pledged as collateral on outstanding lines and letters of credit
and guarantees to telecommunications companies) and available-
for-sale securities.

Contact Keith Johnson at telephone +44 20 7001 6357 or via e-mail
at Keith.Johnson@carrier1.com


=====================
N E T H E R L A N D S
=====================


LETSBUYIT.COM: Chairman Von Holstein Steps Down From Board
----------------------------------------------------------

Online retailer LetsBuyIt.com N.V. said Thursday that Johan Stael
von Holstein resigned as chairman and member of the supervisory
board for personal reasons with immediate effect.

The ability of the supervisory board to act effectively remains
unaffected.

In the third quarter, LetsBuyIt.com revealed that operating loss
narrowed to 14 million euros from a loss of 26 million euros,
while sales decreased to 335,000 euros from 9.3 million euros in
the year-earlier period.

In February 2001, a Dutch court lifted a moratorium that was
granted to Letsbuyit.com in December 2000, allowing the
restructured company resume trading through its websites.


PROLION HOLDING: Files for Suspension of Payment
------------------------------------------------

The shortage of funds has forced Vijfhuizen-based milk machine
company Prolion Holding N.V. to apply on Thursday for suspension
of payments for Prolion Sales B.V., the operating company of
Prolion containing nearly all operating activities.

Prolion has been faced by disappointing results as a result of
lower than expected sales of milking robots. In the first half of
the 2001-2002 fiscal year, Prolion posted a net loss of 5.0
million euros.

The total number of staff in the Netherlands has been reduced
from 69 to 54. This includes the termination of the employment of
Finance Director Wijmans.

In order to come to a solution for the arisen liquidity problems,
Prolion has agreed a deal with an unnamed venture capital firm
regarding the strengthening of Prolion's shareholders' equity
with a minimum of 10 million euros ($8.7 million) against the
issue of new ordinary Prolion shares.

Before Prolion can carry out its plans, it needs to agree to a
significant restructuring of debt with its creditors and
financiers, Rabobank and NIB Capital.

Prolion Holding N.V. has reached an agreement in principle with
Trako Holding B.V. concerning the acquisition by Prolion of all
Gascoigne Melotte distribution companies, the Gascoigne Melotte
production activities and the assembly activities of the milking
robot, and a purchase guarantee for the related stocks, under the
condition that the financing transaction is to be effectuated.
Prolion will pay for the acquisition partly in cash and partly in
new ordinary Prolion shares.

The new share issue would result in a dilution in the stake of
existing shareholders to about 15 to 20% of the enlarged share
capital.

Prolion shareholders include Trako Techniek B.V (13.4%),
Alpinvest PPM B.V. (7.6%), NPM Garantievermogen N.V. (7.6%) and
P.A. Oosterling B.V. (5.3%).


UNITED PAN-EUROPE: Loses Place in AEX Index
-------------------------------------------

United Pan-Europe Communications will lose its place in the AEX
index effective March 4, Europemedia.net and Telecom Paper
reported.

This adds another blow at the broadband communications company,
which began last week its battle to secure Europe's biggest debt
restructuring and avoid financial collapse through a series of
critical negotiations.

UPC, which has more than eight billion euros of debt, was on
January 2 removed from the Next 150 Index because the Amsterdam-
based company did not meet rules regarding market capitalization,
weighted price requirements and negative shareholders equity.


===========
N O R W A Y
===========


KVAERNER ASA: Wins $110MM Contract for Kristin Subsea Project
-------------------------------------------------------------

Anglo-Norwegian engineering, construction and shipbuilding group
Kvaerner ASA received a Letter of Intent to provide equipment for
ten subsea wells, production controls, and support structures for
the Kristin field operated by Statoil, on the Norwegian shelf.

The order, which will be awarded to Kvaerner Oilfield products,
will be worth in excess of US$110 million, and will involve the
supply of equipment from Kvaerner companies in the U.S., the
U.K., and Norway.

The scope for the project includes the delivery of wellheads,
valve-trees and subsea production control systems for ten wells.
Four, 4-slot wellhead templates are also included. The high-
pressure components for the valve-trees are to be provided by
Kvaerner Oilfield Products in Houston, the control systems are to
be built by Kvaerner in Aberdeen, Scotland, and the Company will
assemble the wells at its Tranby site outside Oslo, Norway.

Kvaerner expects to formalize the contract within the next few
weeks. Production will start at the Kristin field on October 1,
2005.

Kvaerner staved off bankruptcy in November by agreeing to merge
with its oil service rival Aker Maritime. Aker's merger with
Kvaerner's Oil & Gas business area is expected by the middle of
March 2002.

For further information, please contact Paul Emberley, Vice
President, Group Communications, at telephone +44 (0)207 339 1035
or +44 (0)7768 813090 or via e-mail at paul.emberley@kvaerner.com


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


LM ERICSSON: Will Review Employee Bonus System
----------------------------------------------

Stockholm-based telecom equipment maker Telefon AB LM Ericsson
will review its employee bonus system that is presently linked to
the telecommunication group's cash flow, the Thursday edition of
Dow Jones Newswires said, citing a report from Swedish paper
Dagens Industri.

According to an Ericsson spokeswoman, the linking of the bonus
system to cash flow was a special measure applied last year and
will be reviewed again this year.

LM Ericsson recorded a loss of 21.1 billion Swedish crowns ($2
billion) for 2001, or 30.3 billion Swedish crowns after including
restructuring costs and exceptional gains, and 5.1 billion
Swedish crowns in the final quarter.

Analysts expect Ericsson's 3G mobile Internet networks to lose
between 10 billion Swedish crowns ($940.8 million) and 15 billion
Swedish crowns this year due to very high development costs.


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


SWISSAIR GROUP: Sells Swissport for $343MM
------------------------------------------

UK buyout firm Candover has finally completed the management
buyout of Swissport, the airport ground handling business of the
collapsed Swissair Group AG.

According to a Private Equity report, the deal totaled 580
million Swiss francs ($343 million), with Candover contributing
274 million in equity finance, plus a senior debt component
coming from five banks led by RBS, and a mezzanine tranche coming
from Intermediate Capital Group. Management is also investing.

The MBO includes the existing management of Swissport, led by
Joseph In Albon, who joined Swissair in 1984 and has been
President and CEO of Swissport since 1997.

The Candover-Swissport deal had originally been set to go through
in August 2001 but the September terrorist attacks in the U.S.
and the collapse of Swissair Group into receivership on October 4
caused the deal to be put on hold.

Swissport is the second largest ground handling agent in the
world. It operates in 23 countries at 130 airports, servicing
over 550 airlines worldwide.

The company currently has 13,000 full time employees.

For the year ended December 31, 2001, Swissport had revenues of
1.2 billion Swiss francs.

KPMG Corporate Finance advised Swissair in the Swissport sale.


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


BRITISH TELECOM: Shares Rise on Positive Third-Quarter Earnings
---------------------------------------------------------------

Shares of BT Group, hit by sector troubles in recent weeks, rose
5% to close at 238.5p on Thursday after the fixed-line phone
company posted a solid result in the third quarter, Reuters
reported.

Pre-tax profit before exceptional items and goodwill amortization
came in ahead of forecasts at 381 million pounds in the three
months to the end of December.

Third quarter exceptional items include 900 million pounds from
property sales, a 165 million loss from investment sales, a 58
million charge for shutting Concert and a 58 million goodwill
impairment charge on its stake in Italian mobile firm Blu.

Net debt fell 2.9 billion pounds to 13.6 billion, though BT said
it would rise to below 15 billion in the fourth quarter.


ICELAND GROUP: Asks Workers to Use Salary Pension as Reserve
------------------------------------------------------------

Frozen-food retailer Iceland, which issued three profit warnings
in 2001, is asking 4,400 of its staff members to leave the final
salary pension scheme as contributions to that retirement reserve
that is presently taking 25% of the group profits, reports AFX
News.

The proposals controlled by the scheme's trustees will mean that
shop workers will switch to a defined benefits scheme.

Last year, Iceland had to make a 71.6 million pounds provision
for its pension scheme, which cut profits of 51.9 million pounds
for the same period.

An Iceland spokesman however said that the plans for the pensions
were currently at the proposal stage and that a compromise deal
could well be negotiated.

He added that the decision would be made by the pension trustees
and not by the management of Iceland.

One of the major catalysts, the report relates, for change has
been the FRS17 accounting rule, which means a pension fund
deficit can be directly translated to the parent company profit
and loss account.

At the end of December, Iceland's net debt stood at 425 million
pounds, down 70 million pounds on the same period in 2000.

Iceland owns the Booker cash and carry business, as well as the
frozen food chain. It employs 28,000 people in the U.K.


INVENSYS PLC: Moody's Cuts Debt Ratings to Baa3, Prime-3
--------------------------------------------------------

Moody's Investors Service on Thursday lowered the long-term debt
ratings of Invensys plc to Baa3 from Baa2 and short-term debt
rating to Prime-3 from Prime-2, adding that the outlook is
negative.

The review will affect around $3.7 billion in securities, Moody's
said.

The rating downgrade reflects the Invensys's limited financial
flexibility in review of its substantial refinancing needs in
2002 and tight financial covenants on its major credit facility.

Management is currently going through a strategic review, results
of which will be announced on February 19.

The lowered ratings assume the new strategy will include plans to
improve the group's financial flexibility materially, an
operating performance that at least meets the covenant test in
Invensys' bank agreement, and continued access to bank and
capital markets to refinance maturing debt.

The negative outlook reflects concerns over the significant
challenges in achieving these goals, which includes the
adjustment of the company's cost base to the weak demand levels
and the conclusion of asset sales at reasonable prices.

Britain's largest engineering company has a large portfolio of
businesses that are still cash generative in the current soft
operating environment. These assets provide support for the
relatively high debt levels of the company.

The weak market for business interests makes it challenging to
realize assets at full value near term.

The ratings also assume the near term completion of the planned
asset sales and the continued support of the company's investors
and lenders.

The London-based company was battered last year with two profit
warnings, change of its chief executive, the layoff of 6,300 jobs
and 3.3 billion pounds ($4.7 billion) of debt at September 30.


P&O PRINCESS: Carnival Raises P&O Offer to GBP3.8BB
---------------------------------------------------

U.S.-based Carnival Corporation, the world's biggest cruise
operator, has once again raised its hostile bid for P&O Princess
to 550p per share, the Financial Times reported.

This is the third time Carnival lifted its offer for the London-
based cruise operator, valuing the group at 3.8 billion pounds
($5.5 billion), up from 3.6 billion pounds.

The new offer is made up of 0.3004 Carnival shares for every P&O
Princess share. The partial cash offer of 250p per P&O share
remained.

The FT added that there are signs Royal Caribbean is growing
impatient with what it sees as the spoiling tactics of Carnival.

P&O Princess shareholders are due to vote on whether or not to
agree the proposed merger with Royal Caribbean on February 14.

In November, Moody's Investors Service downgraded the senior
unsecured debt rating of P&O Princess to Baa3. The action
reflected the expectation of higher combined debt levels
following the company's merger announcement with Royal
Caribbean.

The world's three biggest cruise liners are engaged in a bid
battle as they seek to cut costs, boost market share and reduce
overcapacity.

Schroder Salomon Smith Barney is advising P&O Princess on the
deal. Goldman, Sachs & Co. and Cazenove & Co. Ltd, which are
regulated in the United Kingdom by the Financial Services
Authority, are acting for Royal Caribbean, while Merrill Lynch &
Co. and UBS Warburg are advising Carnival.

                                      ***********

          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-
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USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam,
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Copyright 2002.  All rights reserved.  ISSN 1529-2754.

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