/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/020318.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, March 18, 2002, Vol. 3, No. 54 Headlines * F R A N C E * BULL SA: Gets EUR350MM Aid From Government BULL SA: Set to Cut 1,500 Jobs * G E R M A N Y * BIODATA INFORMATION: Court Names New Supervisory Board Members GERLING KONZERN: Loses Anew, Sale Speculation Mounts KIRCHGRUPPE: May Close Premiere TV Arm KIRCHGRUPPE: Premiere to Axe 250 Jobs in Restructuring Plan KIRCHGRUPPE: Set to Sell Entire Formula One Stake, Insider Says PHILIPP HOLZMANN: Rescue Plan Faces Opposition From Banks * I R E L A N D * AIB GROUP: Fires Six U.S. Executives in Trading Scandal AIB GROUP: Ludwig Report Details Fraud in Trading Practices AIB GROUP: Retains Top Officials ELAN CORPORATION: Kaplan Fox Seeks to Recover Investors' Losses * I T A L Y * FIAT SPA: Sells MM's Aftermarket to Concordia Finance * L U X E M B O U R G * CARRIER1 INTERNATIONAL: Bandwidth Provider Collapses, CEO Resigns CARRIER1 INTERNATIONAL: Faces Neuer Markt De-listing * N E T H E R L A N D S * KPN NV: Closes E-Plus Transaction With BellSouth LYCOS EUROPE: Axes 200 More Jobs * N O R W A Y * KVAERNER ASA: Wins EUR 15MM Teijin Twaron Project * P O L A N D * ELEKTRIM SA: Announces Termination of Credit Agreement *S W E D E N * LM ERICSSON: Will Provide Components for DT's IP Backbone * S W I T Z E R L A N D * SULZER MEDICA: U.S. Judge Approves Final Settlement Proposal * U N I T E D K I N G D O M * ABERDEEN PREFERRED: Suspends Dividend Due to Low Market Sentiment ARTHUR ANDERSEN: Faces Charges on Enron Scandal BRITISH AIRWAYS: Moody's Gives BA's Credit Rating a Low Mark COLT TELECOM: Gets Multi-Million-Pound Car Toll Contract ENERGIS PLC: Defaults on $19MM Bond Payment ENERGIS PLC: Delays Shortlist of Bidders ENRON CORPORATION: RBOS Wessex Bid Faces Commission Referral ENRON CORPORATION: RBOS Wessex Bid Faces Commission Referral ENRON CORPORATION: RBOS Wessex Bid Faces Commission Referral GARTON ENGINEERING: Receivers Seek Buyer for Engineering Firm =========== F R A N C E =========== BULL SA: Gets EUR350MM Aid From Government ------------------------------------------ Bull received a breathing space last week after the French government agreed to lend the cash-strapped computer maker a further 350 million euros ($309 million), on top of the 100 million euros already granted in November. According to a report from the Financial Times, the latest government loan is likely to face tough scrutiny from the European Commission, which has been trying to stamp out state aid to companies in difficulty. Bull chairman Pierre Bonelli said he was confident Brussels would approve the latest bailout, in part because the Commission would not want one of the few remaining computer makers in Europe to disappear. Shares in Bull were suspended from trading pending news of the latest bailout. The government, France Telecom, NEC and Motorola each own slightly more than 16% of Bull's equity. Dai Nippon Printing has a further 5.3%. BULL SA: Set to Cut 1,500 Jobs ------------------------------ In an attempt to stem growing losses, Groupe Bull SA will cut 1,500 jobs more, replacing many managers and calling for more coordination between the group's many divisions. For the financial year 2001, it reported a net loss of 253 million euros, following a loss of 242.8 million euros in 2000, highlighting its failure to return to profitability. Operating losses jumped 20.9% to 98.5 million euros during the year. Bull has shaken from one restructuring plan to the next without ever recovering fully. In the past two years, the company has sold many assets to stem losses, including its smart card business and most of its European IT services division. Its workforce also shrank from about 46,000 in 1988 to 10,700 at the end of 2001. ============= G E R M A N Y ============= BIODATA INFORMATION: Court Names New Supervisory Board Members -------------------------------------------------------------- The local court in Korbach has appointed new Supervisory Board members for Lichtenfels-based IT security company Biodata Information Technology AG. The new members are Mrs Bettina Ludewig-Husheer, a lawyer and tax accountant, Dr. Peter Husheer, lawyer, and Mr Ulrich Josephs, lawyer. All of the Supervisory Board members are presently employed at the chambers of Dithmar Westhelle Assenmacher Zwingmann, focusing on corporate law and management consultancy. Before, Bettina Ludewig-Husheer worked for a large accounting and auditing company. Dr. Peter Husheer specialized in economic and corporate law at an important legal office. Ulrich Josephs operates as insolvency administrator as well as insolvency and restructuring consultant. The Board's first legal act will be to announce a new Board of Directors after the former management's resignation. Biodata Information, which reported a consolidated loss of 70 million euros ($60.15 million) in the third quarter of 2001, filed for insolvency at the local court in Korbach in November 20 last year after talks with potential investors failed. The regular insolvency proceedings of Biodata Information commenced on February 1, with Dr. Westhelle as insolvency administrator. For further information, contact Biodata Information Technology AG, Burg Lichtenfels, 35104 Lichtenfels, or at telephone +49 (0) 6454 / 9120-0 of fax +49 (0) 6454 / 9120-180 GERLING KONZERN: Loses Anew, Sale Speculation Mounts ---------------------------------------------------- Gerling Konzern, the Koeln-based insurance group, plans radical restructuring measures following a loss of around 500 million euros for its reinsurance arm Gerling-Konzern Globale Ruckversicherungs-AG (GKG) in 2001. The main reason for the losses at GKG was an increase in claims following the terrorist attacks in the United States, for which the unit had to set aside 270 million euros. In order to reduce the deficit, Deutsche Bank AG has once again come to the rescue of the insurance group with fresh funds of 300 million euros via a capital increase. With the move, speculation is mounting that Deutsche plans to sell the whole Gerling group or just the reinsurance arm. Deutsche declined to comment. Through the transaction, the stake held by majority investor Rolf Gerling has been reduced by 4.5% to 65.5%. Deutsche's stake in the Gerling group will rise to 34.5% from 30%. Last December, Deutsche and Rolf Gerling transferred 408 million euros in fresh funds to the Gerling group. This makes the total capital injection required by the world's third-largest industrial insurer some 708 million euros. KIRCHGRUPPE: May Close Premiere TV Arm -------------------------------------- To fend off bankruptcy, debt-laden Kirch Group may have to close its pay television unit Premier, which is losing 2 million euros a day and will run out of cash before September. "A closure of Premiere is not something that can be ruled out," one person close to Kirch said on Thursday. "Given the seriousness of the situation, there are not that many options that can be excluded." A possible closure of Premier was discussed at a meeting between the management and Kirch's creditor banks, including Bayerische Landesbank and Deutsche Bank. A minority banks with loans to Premier is said to oppose it. Kirch is looking for buyers for assets that range from Formula One racing to a stake in the top-selling newspaper Axel Springer AG in order to pay back some of its 6.5 billion-euro ($5.7 billion) debt. KIRCHGRUPPE: Premiere to Axe 250 Jobs in Restructuring Plan ----------------------------------------------------------- KirchGruppe's loss-making pay-TV arm Premiere World is set to axe 30%, or 250 jobs, at Premiere's Hamburg call center, while another call center in Munich with 120 employees will be closed by the end of the year as the unit struggles for survival. For months, the number of subscribers in the call centers has stagnated at just under two and a half million, while the need for customer support eased off after Premiere gave up production of its own decoder, the D-Box, a Premier spokesman said. The survival of Premiere remains uncertain. The supervisory board will meet on Tuesday to discuss the restructuring strategy of Premier chief executive Georg Kofler. As part of the restructuring, viewers will in future be able to receive the channel on decoders provided by other firms and not only on Premiere's d-Box. KIRCHGRUPPE: Set to Sell Entire Formula One Stake, Insider Says --------------------------------------------------------------- A Kirch Group insider said Wednesday the Munich-based media group is ready to sell its entire stake in Formula One racing. According to the insider, there were no offers yet for the Formula One stake from the carmakers that sponsor the racing circuit, including DaimlerChrysler's Mercedes-Benz, Ford Motor Co.'s Jaguar, Renault SA, Bayerische Motoren Werke AG and Fiat SpA. Earlier this month, a DaimlerChrysler spokesperson said the manufacturers want to protect their interests in Formula One, a major marketing venue. In particular, they fear Kirch may switch the popular sport to pay television, which would limit their audience. The debt-laden Bavarian empire said that it would only consider letting go of the stake as a last resort. In an interview with KirchGruppe founder Leo Kirch, he said that last year's $1.5 billion purchase of Formula One's television rights was the climax of his career and to have to get rid of the stake will be a "really bitter pill to swallow." Kirch paid 1.83 million euros for its 75% stake in SLEC, the holding group for Formula One, which it acquired in October. The stake is now one of its most valuable assets, accounting for annual turnover of some 2.5 billion euros via television rights, sponsoring deals and merchandising. PHILIPP HOLZMANN: Rescue Plan Faces Opposition From Banks --------------------------------------------------------- The coordination discussions of the banks regarding the first catalog of measures for Philipp Holzmann AG have not been finalized yet. Three major creditors of Philipp Holzmann - Dresdner Bank, HypoVereinsbank and Bankgesellschaft Berlin - are unwilling to support the rescue package drawn up by Deutsche Bank, which is also a major shareholder of the beleaguered construction group. According to people close to the three banks, Deutsche Bank's plan lacked a future strategy for the construction group. The latest development also puts a question mark over the 200 million euros capital injection, which Holzmann needs to avoid insolvency, Handelsblatt reports. Holzmann said that approval of the rescue package was still required from three creditors. Current talks would therefore continue, it said. Two years ago, Chancellor Gerhard Schroder rescued Holzmann from bankruptcy but the construction group has failed to make a recovery since then. At the time, creditors came up with a rescue package worth around 1.5 billion euros. In addition, the government made available around 130 million euros in funding. The company is now in urgent need of a capital injection to avoid insolvency after it booked losses of 237 million euros in 2001. Equity capital totaled just 126 million euros at the end of 2000. Holzmann's debt mountain already stands at 1.46 billion euros. ============= I R E L A N D ============= AIB GROUP: Fires Six U.S. Executives in Trading Scandal ------------------------------------------------------- Allied Irish Banks Plc fired six key officials at its U.S. subsidiary, Allfirst Bank, saying they were mainly to blame for failing to uncover the transactions by rogue trader John Rusnak that resulted in $691 million in losses over the past five years. Singled out were Allfirst executive vice president and treasurer David Cronin and Allfirst senior vice president Robert Ray. Also dismissed were Jan Palmer, senior vice president of Allfirst's treasury operations administration; Lawrence Smith, assistant vice president of operations and financial analysis; Michael Husich, head of internal audits, and Lou Slifker, a team leader in the internal audit unit. The firings followed a month-long inquiry by former U.S. bank regulator Eugene Ludwig into how trader John Rusnak allegedly piled up losses over five years without being caught. Ludwig found the fraud was carefully planned and implemented by Rusnak over a long period and involved falsification of bank records and documents. AIB GROUP: Ludwig Report Details Fraud in Trading Practices ----------------------------------------------------------- Foreign-exchange trader John Rusnak created fictitious options to conceal massive losses that apparently began to accumulate since 1997, according to a report. The report was prepared by Mr Eugene Ludwig, a former U.S. Treasury official tasked to investigate fraud in the trading practices of Mr. Rusnak, a trader at Allied Irish Bank. By mid-2001, Mr Rusnak was trading financial instruments with notional positions totalling up to $4 billion each day, the report says. "To hide his losses and the size of his positions he created fictitious options. These fictitious options also tended to give the appearance that his real positions were hedged," the report states. Mr. Rusnak was using currency forwards in trading for financial instruments. Mr. Rusnak's scheme, largely unchecked, involved creating two bogus trades, claiming that he had sold a deep-in-the-money put option on Japanese yen to a counterparty in Tokyo or Singapore and that he had purchased an offsetting option from the same counterparty. The questionable trading practices sent ripples through the investment market soon after it was uncovered and after Allfirst, a subsidiary of AIB, disclosed for the first time that it has amassed losses from Mr. Rusnak's transactions. "Mr. Rusnak's bogus options were designed to exploit weaknesses in the control environment around him. Allfirst prepared no reports listing the expiring one-day options. And no one at Allfirst paid any attention to them," the report says. Nobody even examined Mr Rusnak's daily profit-and-loss figures and reconciled them against the general ledger. The report states that the policy at Allfirst treasury was to confirm all trades under usual industry practice but Mr. Rusnak was somehow able to bully and cajole the operations staffer responsible for confirming his trades into not confirming all of them. "The upshot is that Mr Rusnak's scheme empowered him to create at will, assets on Allfirst's books - false assets - without ever having to pay for them," concludes the report. The report also mentions the heavy reliance by Allfirst and AIB on the Allfirst treasurer as "proved misplaced." It said Allfirst internal audit suffered from "inadequate staffing, lack of experience and too little focus on foreign exchange trading." In 2001, Mr Rusnak began to sell real year-long, deep-in-the money options enabling him to fund his losses and keep trading. He was able to sell five options for $300 million, which raised cash that was used to fund the monthly settlement of his foreign exchange forward transactions. "The unfortunate story of Mr Rusnak's fraud came as the result of numerous deficiencies in the control environment at Allfirst Treasury. No single deficiency can be said to have caused the entire loss," Mr. Ludwig said in his report. The U.S. Ofice of the Comptroller of the Currency raised concerns before 1998 about risk management in the foreign exchange trading area at Allfirst was also noted in the report. AIB GROUP: Retains Top Officials -------------------------------- Despite early speculation that they would be fired, Allfirst's top officers, chairman Frank Bramble and chief executive and president Susan Keating, retained their jobs. Dublin's Allied Irish Bank also gave a vote of confidence to CE Michael Buckley and chairman Lochlann Quinn. Buckley and Quinn offered to step down, saying the trading losses raised questions of accountability and credibility at their level. The AIB board disagreed. ELAN CORPORATION: Kaplan Fox Seeks to Recover Investors' Losses --------------------------------------------------------------- Kaplan Fox -- http://kaplanfox.com/-- has filed a class action in the United States District Court for the Southern District of New York against Elan Corporation PLC. and certain of the Company's officers and directors. The suit is brought on behalf of all persons or entities who purchased American Depository Shares of Elan between April 23, 2001 and January 30, 2002. The complaint alleges that Elan and certain of its officers and directors violated Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934. Specifically, it is alleged that Elan improperly reported revenues and earnings from entities in which Elan had joint ventures and/or invested in. In a Wall Street Journal article published on January 30, 2002 questioning the propriety of Elan's accounting practices, former SEC Chief Accountant, Lynn Turner reportedly characterized certain of the types of accounting practices utilized by the Company referred to in the article as a "charade." It is alleged that as a result of Defendants improper accounting practices during the Class Period, the price of Elan ADSs traded at artificially inflated prices. Plaintiff seeks to recover damages on behalf of the Class and is represented by Kaplan Fox & Kilsheimer LLP. Our firm, with offices in New York, San Francisco, Chicago and New Jersey has many years of experience in prosecuting investor class actions and actions involving financial fraud. For questions about the notice, the action, or member's rights or interests, please e-mail at mail@kaplanfox.com ========= I T A L Y ========= FIAT SPA: Sells MM's Aftermarket to Concordia Finance ----------------------------------------------------- In a further step towards the planned disposal of the auto manufacturer's activities in the automotive components sector, Fiat SpA has reached an agreement with Interbanca and RGZ for the creation of Concordia Finance SA and the sale to Concordia of Magneti Marelli's aftermarket activities. Concordia's equity is held by RGZ with a share of 45%, by Interbanca with a share of 25% and by Fiat with the remaining 30%. The new company will continue to operate under Magneti Marelli's trade name in the distribution of automotive spare parts to the aftermarket, acquiring the product portfolio of Magneti Marelli After Market SpA. The transaction values the activities of Magneti Marelli After Market S.P.A. approximately 80 million euros, with cash proceeds for Fiat, net of its reinvestment in Concordia Finance, of approximately 70 million euros, half of which at closing. Magneti Marelli After Market S.P.A. generated 261 million euros in net revenues in 2001, with a return on sales of approximately 4% (Ebit). RGZ is an industrial holding company with investments and specific competencies in the automotive sector, already active in the production and distribution of automotive components. Interbanca, the Merchant Bank of the Banca Antoveneta Group, acted as Advisor for RGZ, as investor and as underwriter and arranger for the acquisition's financing. Magneti Marelli is a leader in the manufacturing of hi-tech automotive systems and components. With 2001 net revenues of 4,073 million euro and around 25,000 employees, Magneti Marelli is present in 23 countries with activities in powertrain systems, on-board info-communication systems, lighting systems, suspensions and shock absorbers. =================== L U X E M B O U R G =================== CARRIER1 INTERNATIONAL: Bandwidth Provider Collapses, CEO Resigns ----------------------------------------------------------------- As announced on February 22, Carrier1 International S.A. has petitioned for bankruptcy with the Luxembourg court of competent jurisdiction. By a decision dated the same day, the Luxembourg Court declared Carrier1 International S.A. in bankruptcy (etat de faillite) and appointed Matre Alain Rukavina, Avocat, as official receiver (Curateur). The receiver also expects the Pan-European bandwidth provider to be liquidated in the course of the bankruptcy proceedings and does not expect there to be any recovery for the shareholders. The same day, Mr. R. Michael McTighe resigned his employment by Carrier1 UK Ltd. as, inter alia, CEO of Carrier1 International S. A. As of February 5, the company and its subsidiaries had approximately $88.9 million of cash and cash equivalents, restricted cash and available for sale securities. On a stand- alone basis (i.e., unconsolidated), the company had approximately $33.9 million of cash and cash equivalents, restricted cash and available-for-sale securities. Carrier1 is registered in Luxembourg. Its senior management is in Switzerland and London. For inquiries, contact Alex Schmid at telephone +44 20 7001 6362, or via e-mail at alex.schmid@carrier1.com CARRIER1 INTERNATIONAL: Faces Neuer Markt De-listing ---------------------------------------------------- Shares of bankrupt Carrier1 International will be suspended on the Neuer Markt of the Frankfurt Stock Exchange on March 28, 2002, following the receiver's application for suspension to Deutsche Borse AG. Court-appointed receiver Matre Alain Rukavina has also applied for transfer of the shares' listing to the Regulated Market on April 2, 2002. The receiver seeks to further reduce the costs connected with a listing on a stock exchange and intends to file for a total de- listing of the company's shares from the Regulated Market. ===================== N E T H E R L A N D S ===================== KPN NV: Closes E-Plus Transaction With BellSouth ------------------------------------------------ Royal KPN N.V., the heavily indebted Hague-based telecom company, now has full control of Germany's E-Plus after it has successfully completed the acquisition of BellSouth's 22.51% stake in the German mobile operator. In exchange for its interest in E-Plus, BellSouth received 234.7 million newly issued ordinary shares of Royal KPN representing a fair market value of Euro 1,253 million (based on the closing price on March 13 on Euronext Amsterdam). As a result of the transaction, BellSouth holds 9.42% of KPN's 2,491 million outstanding shares. As previously announced, BellSouth surrendered its existing warrant on KPN shares, all of its rights regarding KPN Mobile and all of its contingent rights pertaining to KPNQwest. The newly acquired interest of 22.51% in E-Plus will be held directly by Royal KPN. KPN Mobile holds the remaining 77.49%. As a result of the transaction and consolidation of 100% of E- Plus, KPN's net consolidated debt will increase by approximately 930 million euros, based on third-quarter 2001 figures. The effect on revenues (Jan-Sep 2001) would have been an increase of 377 million euros (128 million euros in third-quarter 2001) and an increase of 60 million euros (38 million euros in third- quarter 2001) on Ebitda. Royal KPN will announce its financial 2001 results today, together with a pro-forma statement incorporating the effect of this transaction. The exchange right as recorded on the balance sheet of KPN, as of September 2001 amounting to 7.6 billion euros, will be valued at the fair market value of 712 million euros, which will result in an incremental financial income for 2001 of 6,848 million euros. Royal KPN also announces a write down of Euro 13.7 billion of goodwill on the 77.49% interest in E-Plus held by KPN Mobile. Including the effect of the minority interest of NTT DoCoMo in KPN Mobile, this will have a net effect on Royal KPN's results of 2001 of 12.4 billion euros, a figure larger then the earlier indicated range of 9-11 billion euros. LYCOS EUROPE: Axes 200 More Jobs -------------------------------- Lycos Europe, the leading Internet destination in Europe with more than 25 million users every month, is axing a further 200 jobs throughout Europe in an effort to reach EBITDA breakeven by fourth quarter of 2002. In September 2001, the management announced a plan that enabled the Group to dramatically improve its cost position that allowed Lycos Europe, in the last quarter of the calendar year 2001, to achieve better EBITDA losses than previously expected. Continuing to focus on its core competencies search, communication, e-commerce and key content channels, Lycos Europe has decided to speed up this program throughout the organization. The overall restructuring program consists of several elements, including reduced marketing spendings and a new network concept, translating into lower network cost. Part of the overall program is also to further reduce headcounts. Therefore, Lycos Europe plans to reduce the number of employees by about 200 people across Europe, from currently 1,100. =========== N O R W A Y =========== KVAERNER ASA: Wins EUR 15MM Teijin Twaron Project ------------------------------------------------- Kvaerner, the international oil services, engineering and construction and shipbuilding Group that almost went bust last year, announced Thursday it has signed a contract valued at approximately 15 million euros with Teijin Twaron, one of the world's largest producers of high performance fibres. The project entails the engineering, procurement and construction management services for a major capacity increase of Teijin Twaron's spinning facilities at Emmen, in The Netherlands, representing an investment of 100 million euros. The project will increase Teijin's annual Twaron production in The Netherlands by 7,500 metric tons, to a total of 18,500 metric tons. The overall project also involves the production increase of monomers and polymers in Delfzijl, which, together with the spinning facilities in Emmen, takes the total investment by Teijin in The Netherlands to approximately 200 million euros. Kvaerner has already been involved in the project since early 2001, assisting in the finalising of the basic engineering together with a joint team of Teijin Twaron, Akzo Engineering and Kvaerner engineers. The fast-track project is scheduled for full completion in April 2003, and will be executed from Kvaerner E&C's operations in Zoetermeer, The Netherlands. Activities on the construction site have already commenced to ensure the challenging schedule is achieved. The award of this project to Kvaerner once again underlines Kvaerner's leading position in the European market and the confidence of Teijin Twaron in Kvaerner to execute this important project. Kvaerner staved off bankruptcy in November by agreeing to merge its Oil & Gas business with rival Aker Maritime. Following the restructuring of debt, the injection of new equity into the company, and the forthcoming integration with Aker Maritime, the group now has a sound financial basis and a good industrial platform for further development. Earlier, Kvaerner said that pre-tax result after exceptional items for the year ending December 31 was a loss of NOK5 billion ($563 million). For further information, contact Paul Emberley, Vice President for Group Communications, Kvaerner ASA, at telephone +44 (0)20 7339 1035 or +44 (0)7768 813090 or via e-mail at paul.emberley@kvaerner.com or Eiso Alberda van Ekenstein, Chief Strategic Planning Officer of Teijin Twaron BV at telephone +31 26 366 2423 or visit the company's website at http://www.twaron.com. =========== P O L A N D =========== ELEKTRIM SA: Announces Termination of Credit Agreement ------------------------------------------------------ The Management Board of Warszawa-based telecommunications and power conglomerate Elektrim S.A. announces that on March 13, MHB Mitteleuropaische Handelsbank Aktiengesellschaft Deutsch - Polnische Bank notified Elektrim about the termination of the Credit Agreement dated September 17, 1997, as amended by annex 1 and 2, for the amount of 5,634,241.54 euros. The Bank has terminated the agreement with Elektrim S.A. with immediate effect and has called for the repayment within 30 days, i.e. by 15 April 2002, at the latest. Elektrim's liability, as at the day of termination of the credit, amounts to a total of 5,723,953.44 euros, together with interest and costs. On the same day, MHB Mitteleuropaische Handelsbank Aktiengesellschaft Deutsch - Polnische Bank notified Elektrim S.A. that it terminated the Agreement for extending guarantees by the Bank for contracts on behalf of German customers and demanded that Elektrim return by April 15, 2002, all originals of guarantees extended by the bank, or pay 1,774,702.18 euros by April 15. Elektrim has been suffering serious liquidity problems since 1999, when the then CEO Barbara Lundberg launched an ambitious and high leveraged round of telecom and cable TV acquisitions. In January, as reported in the Troubled Company Reporter Europe, a group of bondholders filed a petition in a Warsaw court calling for Elektrim's bankruptcy after a December 17 payment default on the 480 million euros in bonds. The court dismissed the petition and ordered Elektrim to begin composition, or debt restructuring proceedings to repay its bondholders. Elektrim filed its own petition with the Court, proposing a 40% reduction of its debt and a three-year grace period for repaying the remainder. In the composition proceeding, 124 creditors assert claims totaling PLN2.33 billion ($560 million). =========== S W E D E N =========== LM ERICSSON: Will Provide Components for DT's IP Backbone --------------------------------------------------------- Germany's Deutsche Telekom has signed a frame agreement with Ericsson to integrate IP routers based on the Juniper Networks M- series platform for its global IP backbone. Under the contract, Ericsson will deploy its industry leading AXI 580 and AXI 520 Internet Protocol (IP) Backbone routers (based on the Juniper Networks M-Series IP routers). As part of Ericsson's Packet Backbone Network solution, the routers will be used to extend Deutsche Telekom's IP network. The new routers will help Deutsche Telekom significantly increase the bandwidth of its backbone to provide superior quality, low latency and high availability for the services it delivers to its enterprise and consumer customers. As the end-to-end solution provider, Ericsson will also provide installation, implementation, system support, spare part management and professional services. Implementation began in October 2001, as part of a special ad-hoc contract. Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. As reported by the Troubled Company Reporter Europe in February, analysts expect Ericsson's 3G mobile Internet networks will 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 ===================== SULZER MEDICA: U.S. Judge Approves Final Settlement Proposal ------------------------------------------------------------ Sulzer Medica, Europe's largest orthopedics company, said that US District Court Judge Kathleen O'Malley had given preliminary approval to the $1 billion settlement proposal to end thousands of class action cases arising from faulty hip-and-knee-joint replacements. The preliminary approval from the U.S. court comes after months of discussions between the company and patients who had suffered after having the faulty knee and hip implants, manufactured by Sulzer Orthopaedics, Medica's US subsidiary. The news was welcomed by the group, which faced the prospect of bankruptcy over the compensation payouts. Medica also raised the ire of its investors when it presented a $780 million settlement plan that would see the group give away 30% of its equity and up to half its net income over the next five years. Under its reworked proposal, patients would receive about $200,000 each. Patients involved in the class action still have a period between April 12 and May 14 when they can opt out of the deal. A final fairness hearing is still scheduled for May 6. =========================== U N I T E D K I N G D O M =========================== ABERDEEN PREFERRED: Suspends Dividend Due to Low Market Sentiment ----------------------------------------------------------------- Deterioration in market sentiment was looked upon by GBP192 million Aberdeen Preferred trust as the cause of suspension of its interim dividend, which brought added dismay to the dwindling split capital investment trust market, The Times reported. As of September 2001, Aberdeen Preferred Income Trust has current assets of 130.87 million pounds and current liabilities of 157.04 million pounds. Aberdeen, the biggest manager of splits managing 19 funds underwent a reconstruction at the end of January trying to wake up the sector despite of current investigation by the Financial Services Authority for alleged collusion and mis-selling. "About 15 trusts are dead, another 25 need to be heavily reconstructed," according to stockbroker Nick Greenwood, head of investment trusts at Christows. He said that other trusts would soon unwind to follow Aberdeen. Other split capital trust had spoken up, like Exeter Investment Managers expressing concerns through intermediaries over the condition, and Geared Income, which placed down reconstruction due to prevailing market climate. Analysts predict that banks will possibly call investment trusts to turn in loans if the split capital shares market does not recover fast. ARTHUR ANDERSEN: Faces Charges on Enron Scandal ----------------------------------------------- The U.S. Department of Justice is pressing charges for criminal obstruction of justice against accounting firm Arthur Andersen over its role in the Enron scandal destroying key financial documents, adding to other related lawsuits costing $26 billion (GBP18 billion) in damages. Speculators view Andersen to collapse amid the indictment while its clients drop out one by one, according to The Times. In a letter sent to the Department of Justice, Andersen posed that an indictment would be "a gross abuse of governmental power" and could "destroy the firm, taking the livelihoods from thousands of innocent Andersen employees and retirees." FedEx and Delta Airlines have already dropped Andersen followed by U.K. engineer Mayflower and US consumer finance group, Household International. More clients are expected to pull out from the accounting firm soon. The likelihood of bankruptcy is highly speculated for Andersen to use it as its bargaining chip in its negotiations with private litigants, the Justice Department and the Securities and Exchange Commission, which wanted the firm to post a fund for former Enron investors and be penalized for at least $100 million. Andersen's ability to survive bankruptcy appears less likely, however, as few clients are willing to remain with the firm. BRITISH AIRWAYS: Moody's Gives BA's Credit Rating a Low Mark ------------------------------------------------------------ Moody's Investors Service gave British Airways a low mark in its credit rating, placing the airline's senior unsecured debt rating down to Ba2, from the highest speculative grade of Ba1 due to still negative market outlook. The poor rating created a great impact around 940 million of BA's debt securities, which further burdened the borrowing expense of the airline, plus the fact that 89% of the company's total debt of 7.2 billion pounds is secured against aircraft assets subordinating the unsecured bonds and putting senior unsecured debt holders in a weak light. Risk of Industrial action hangs around in spite of employment reduction and cost-saving plans, which seek to set aside $920 million savings a year. Previous report said that the airline's Future Size and Shape plan includes a cut of 5,800 jobs, or 12% of its workforce, and costs by 650 million pounds within two years. The negative outlook served as a challenge for BA to live up to the cost savings on time without sacrificing service quality and lessening disruption of service. Uncertainty also attends in planned asset sales and the future demand for air travel. BA was also graded to junk status last year by rating agencies Moody's and Standard & Poor's following the September 11 bombings in the U.S. COLT TELECOM: Gets Multi-Million-Pound Car Toll Contract -------------------------------------------------------- Colt Telecom Group PLC won a GBP15 million contract to provide Transport for London with the telecommunication services for its new road congestion charging scheme. Designed to lessen the traffic by 10 to 15%, the scheme is set to lever up at least GBP130 million for public transport improvements in the capital. The proposed congestion charging scheme will use a technical design created by the London-based company, with DWDM (dense wave division multiplexing) technology to link the central data hub with each of the network cameras over analogue video circuits. Images of car license plates, taken by cameras around the capital, will be transmitted over the network to centers, which will check whether the car owner has paid the necessary charge. Meanwhile, Capita Group PLC won a GBP230 million deal to administer the new scheme. It will deliver and manage the customer services infrastructure for the scheme, plus multi- contact customer service centers. With these centrs, payment through telephone, web and interactive voice recognition may be availed. The back office administration processes and the retail network may pay through retail outlets, such as shops, kiosks and petrol stations. The traffic congestion scheme is set to begin by October 2002 and will go live the following year. Early this month, COLT Telecom spent 2.2 million pounds ($3.1 million) buying back bonds issued by it with a face value of 5.9 million pounds. The company already spent 13 million pounds buying back bonds worth 34 million pounds in February. ENERGIS PLC: Defaults on $19MM Bond Payment ------------------------------------------- Energis Plc delivered a further blow to its attempts to restructure massive debts when the London-based Internet traffic carrier defaulted on a 13.7 million pound ($19 million) bond interest payment due Friday. The default, which will remain a "technical" default during a 30- day grace period, came as little surprise to the debt market. Some equity analysts expected Energis would go out of its way to avoid missing the payment, given its existing financial struggles. Traders said the 300 million pound 9.125% bond due 2010, on which Energis missed the payment, was bid at 16% of face value, with few buyers around. Early last week, bondholders of more than half the bonds issued by Energis that they are willing to infuse money into the company, as WorldCom denied having interest in the cash-strapped firm. The erstwhile telecom giant is now facing a wholesale financial restructuring after announcing early this year that a dramatic drop in demand will leave it in breach of covenants linked to its GBP725 million overdraft facility. The company also has GBP550 million of bonds it must restructure. A possible debt for equity swap would leave bondholders with majority control. Energis, which has lost 99% of its value over the past year, is close to collapse after it racked up with more than one billion pounds ($1.4 billion) of net debt. Its shares dropped by a third to 2.60 pence with the default, valuing the equity of the former London blue chip at just 47 million pounds. ENERGIS PLC: Delays Shortlist of Bidders ---------------------------------------- Energis delayed its decision to shortlist bidders for the struggling telecom network last week. The reason for the delay, rumors say, is that the scant financial information given out by Energis has led prospective bidders to put in low offers. Following its February statement, Energis announces that it is in discussions with a number of parties who have expressed interest in the Group's businesses. These will be assessed according to their ability to deliver maximum value for company stakeholders in the context of the overall financial restructuring of Energis. ENRON CORPORATION: RBOS Wessex Bid Faces Commission Referral ------------------------------------------------------------ A Royal Bank of Scotland Group, which has been involved in water utility acquisitions lately, will face antitrust scrutiny should its bid for Enron Corp.'s Wessex Water unit in England succeeds, Dow Jones Newswires reports. According to Director General Philip Fletcher of Office of Water Services, or Ofwat, there would be a mandatory reference of RBOS' bid to the Competition Commission, given that the bank already holds a substantial stake in Brockhampton Holdings, the parent of Portsmouth Water. Ofwat has been clear about its opposition to mergers or consolidated ownership of water companies but has left it up to the Competition Commission to decide on individual cases. The bank, together with Abbey National PLC, has emerged as the likely winner in the bid to bag the Enron asset worth GBP1.2 billion. Cheung Kong Infrastructure Holdings, a majority-owned firm of Hong Kong's Hutchison Whampoa, and YTL, a large Malaysian development and energy group, are also trying to grab the water utility supplying the southwest district of England. U.S. investment bank Schroder Salomon Smith Barney is handling the Wessex sale. Wessex Water, which provides water to 1.2 million people in southwest England, was put up for sale last year, before debts and a loss of trading counterparty confidence drove U.S. energy trader Enron into bankruptcy. Enron bought Wessex in 1998 for 1.36 billion pounds (then worth $2.2 billion, now worth $1.9 billion). GARTON ENGINEERING: Receivers Seek Buyer for Engineering Firm ------------------------------------------------------------- The Joint Administrative Receivers of Garton Engineering and certain of its subsidiaries are offering for sale the business and assets of the group. Garton is manufacturer of cast and hot and cold forged components and fasteners. Annual turnover of the company is in excess of 27 million pounds. The business, with blue-chip client base, serves the automotive, construction, truck and trailer, off-road, aerospace and agricultural vehicle and white goods industries. The group employs about 475 people and operates from 7 freehold locations in the West Midlands, Manchester and Scotland. The Group's main activities are summarized below: Charles, located in Wednesbury, manufacturers washers, clips, pressed parts and sub assemblies. It has annual turnover circa 13.2 million pounds, approximately 139 employees. Dartcash Engineering, is Garton's subsidiary engaged in the manufacture of fabricated assemblies and presswork. It records annual turnover of about 1.9 million pounds and employs approximately 47 employees. Its Hampton and Beebee operations involve bar turning, machining, precision grinding and assembly of components. Annual turnover totals about 4.7 million pounds. It has a workforce of about 93 employees. Garton's Kinnings Marlow unit, employing around 28 employees, designs and manufactures specialized hollow and solid cold formed components and reports an annual turnover of about 1.7 million pounds. The company's Advanced Precision unit, employing approximately 8 employees, makes fasteners and components and has an estimated annual turnover of 400 thousand pounds. Smith Bullough, Garton's unit that manufactures and distributes standard and non-standard commercial fasteners, has annual turnover of about 2.8 million pounds and employs approximately 56 employees. The business' H Goodwin arm is an iron foundry with annual turnover of approximately 2.4 million pounds. It employs around 76 employees. For further information, please contact Chris Marsden or Leighton More of Arthur Andersen at 4 Brindleyplace, Birmingham B1 2HZ, England or call at telephone number 0121 644 2460/644 2291; Fax: 0121 644 2231. One may also email at chris.marsden@uk.andersen.com or leighton.more@uk.andersen.com. *********** 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. 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. 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