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/raid1/www/Hosts/bankrupt/TCREUR_Public/020321.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, March 21, 2002, Vol. 3, No. 57 Headlines * G E R M A N Y * DEUTSCHE TELEKOM: Downgrade to Up Interest Costs by GBP100 MM FRIEDEL-FRIGEO: Grieves Loss of Top Unit, Files for Insolvency KIRCHGRUPPE: Still Hoping to Turn Back Tide on Premiere Channel PHILIPP HOLZMANN: Observers Do Not Discount Bankruptcy Soon SCHMIDT-BANK: Consors Bares EUR125 Million Loss Ahead of Auction SPAR HANDELS: Schaper Takes Over 25 of SPAR's C&C Stores * I R E L A N D * ELAN CORPORATION: Moody's Cuts Senior Debt Rating to Ba2 * N O R W A Y * KVAERNER ASA: Shareholders Withdraw Demand for Public Probe * S W I T Z E R L A N D * ABB LTD: Says Recent Downgrade Will Not Hike Interest Costs SWISSAIR GROUP: Reaches New Wage Agreement With Ground Crews ZURICH FINANCIAL: US$250 Million "Exchange" Project Vanishes * U N I T E D K I N G D O M * ARTHUR ANDERSEN: KPMG Hurries Talks to Preserve Global Network ARHTUR ANDERSEN: EU Commission Remains Firm Against KPMG Merger ARTHUR ANDERSEN: U.K. Unit Calls DOJ Allegation a Smear Campaign CORDIANT COMMUNICATIONS: Shuffles Key Management Positions EIDOS PLC: Cuts Full-Year Sales Forecast Again by GBP15 Million EIDOS PLC: Shares of Lara Croft Maker Fall After Forecast Cuts FUTURE NETWORK: Preliminary Annual Result for 2001 GLOBAL TELESYSTEMS: Closes KPNWwest Transactions, Cancels Stock INVENSYS PLC: Disposal Plan Gets Positive Review From Investors P&O PRINCESS: Royal Still Keen on Merging With British Rival SSL INTERNATIONAL: Trains Focus on Condoms and Sandals THUS PLC: Completes De-merger From ScottishPower UK COAL: Courts DTI to Extend GBP 100MM "Closure Aid" ============= G E R M A N Y ============= DEUTSCHE TELEKOM: Downgrade to Up Interest Costs by GBP100 MM ------------------------------------------------------------- Debt-laden Deutsche Telekom faces a ratings downgrade and a concomitant increase in interest costs by as much as 100 million euros, Bloomberg said Tuesday. The news agency said a downgrade is likely after the German telecoms giant admitted Monday that its plan to bring down debt to 50 billion euros will not be completed until the end of 2003. The original timetable set the completion of this particular debt-reduction goal this year. But setbacks in the sale of its cable assets and a possible delay on its mobile phone share issue have made it impossible to meet the plan as scheduled. In February, Moody's threatened to cut its "A3" rating, while Standard & Poor's placed its "A-" on review for a possible downgrade, after the German Cartel Office blocked the Bonn-based company's planned sale of cable assets for 5.5 billion euros. Aside from re-scheduling the timetable, the company also said it will slash dividend this year. In addition, the planned EUR10 billion initial public offering of T-Mobile International won't also push through. There is no definite date when the issue will be scheduled. "Management is convinced that the new measures will strengthen the positive development of Deutsche Telekom," the company said in a statement Monday. Deutsche Telekom is currently staring at a 62.1 billion euro debt. FRIEDEL-FRIGEO: Grieves Loss of Top Unit, Files for Insolvency -------------------------------------------------------------- German sweets manufacture Friedel-Frigeo-Gruppe has filed for insolvency, the Frankfurter Allgemeine Zeitung/FT Information said Tuesday. According to the report, the company had little option to take other than the insolvency petition after losing Frigeo, its chocolate division last week. The loss forced banks to draw a line under the group's credit. Frigeo accounts for EUR28 million in the group's turnover, as well as substantial profit. It held more than 50% market in Germany, making it the leader in its sector. The report did not indicate how much the company owed creditors. Neither did the report identify said creditors. KIRCHGRUPPE: Still Hoping to Turn Back Tide on Premiere Channel --------------------------------------------------------------- Kirch Holding GmbH is still trying to save Premiere, its pay-TV unit that analysts say is now losing US$1 million a day. In a report, Bloomberg says the German media firm is set to go around and ask "outside" investors to help overhaul the losing venture, the main reason for its woes. Premiere CEO Georg Kofler is set to meet with representatives from investors including Rupert Murdoch's British Sky Broadcasting Group Plc in Munich, the report says. Mr. Kofler recently said he plans to cut 270 jobs or 11 percent of the 2,400-strong workforce to reduce losses at Premiere. He also wants to bring down costs by EUR500 million from EUR1.8 billion last year, a recent Frankfurter Allgemeine Zeitung report said. Last month, Kirch Deputy Chief Executive Dieter Hahn also told a conference in London that the company is prepared to hand over management control in the media outfit. But analysts say the British Sky Broadcasting Group won't likely be counted on to save Premiere. In fact, the report says, BSkyB intends to exit from the investment by forcing Kirch to buy back its 22% stake in the unit for EUR1.7 billion this October. Some observers say the only way out for Kirch is to shut down the channel. According to them, the German market is not ideal for the venture as viewers in the country can receive more than 30 channels via cable, including five stations that are controlled by Kirch. "The German market isn't made for a pay-TV service because of the big choice of free-TV channels for which viewers already pay a fee," said Oliver Rupprecht, an analyst at M.M. Warburg, in an interview with Bloomberg. Already, some investors have divested their stakes in Premiere. Early this year, RTL Group exercised an option to sell its remaining 5% in the channel for EUR124 million. In 1999, the broadcaster sold a 45% stake in Premiere to Kirch for EUR800 million. Kirch is now close to defaulting on a US$5.7 billion debt after an estimated US$4 billion in investments failed to attract viewers in Premiere and banks called in loans. The media giant needs about US$1 billion next month to pay back loans and buy out minority shareholders. PHILIPP HOLZMANN: Observers Do Not Discount Bankruptcy Soon ----------------------------------------------------------- German builder Philipp Holzmann AG is now walking on a tightrope according to some analysts who believe a failure to come up with a rescue plan soon will hasten its return to a bankruptcy court. The company that nearly collapsed in 1999 held another discussion with creditors Tuesday to firm up backing on a rescue plan drawn up by number one creditor Deutsche Bank. "A bankruptcy of the company seems possible," wrote Merck Finck & Co. analyst Konrad Becker in a note to investors, Bloomberg said. There has yet to be any word about the outcome of the meeting, but if recent indications are to be relied on, the possibilities are slim. Last week Dresdner, Commerzbank, HVB Group and Bankgesellschaft Berlin AG, the major creditors of the German company, refused to back the plan. Deutsche Bank's original plan calls on creditors to inject EUR86 million into the company and in return get Holzmann's HSG building services division, whose output and order backlog each amounted to about 145 million euros in 2000. On top of that, the creditor banks would also be handed the company's 500 million euros real estate assets, including debt and rental guarantees. But in addition to the cash injection, creditors would have to waive EUR114 million in debt, and some of them would have to reopen their credit lines. But the banks refused the offer. Holzmann woes began after the German building industry failed to recover in the years following the $2 billion bailout in November 1999 that aborted the company's first date with a bankruptcy court. German Chancellor Gerhard Schroeder, who brokered the rescue two years ago, won't intervene this time, a government spokesman said Monday. The firm currently has 1.5 billion euros in bank liabilities. It posted a loss of 237 million euros last year, exceeding the company's equity of 126 million euros, according to newspaper reports. Deutsche Bank's loan exposure to Holzmann amounts to about EUR320 million. The company also owns a 20% stake in the 152-year-old builder, making it the top shareholder. A wind up of the company will have devastating effects to its 23,000 employees worldwide. SCHMIDT-BANK: Consors Bares EUR125 Million Loss Ahead of Auction ---------------------------------------------------------------- Soon-to-be-auctioned Schmidt-Bank unit Consors Discount Broker AG took close to EUR100 million off its revenues last year, charging the money on special items, Handelsblatt said Tuesday. The move raised the unit's losses to EUR125.5 million, with after-tax operating losses totaling EUR62.8 million. The unit says the special items stood for unscheduled write-downs on shareholdings and goodwill of EUR79.5 million, in addition to planned write-downs on goodwill of EUR14 million and a EUR5.6 million restructuring charge. According to the paper, these charges surfaced after the unit tidied its books in preparation for its disposal. Paul Wieandt, administrator of Schmidt-Bank, which was rescued from insolvency last year by a consortium of private and public- sector banks, plans to auction off Consors beginning next month. At the moment, a few bidders, including Societe Generale and BNP in France and from Germany's Commerzbank have signified interest in the unit, Europe's second biggest online broker by client numbers. According to the report, BNP is widely seen to stand the best chance of success because of its financial power. However, there is also speculation that U.S. online bank E-Trade may submit a last-minute offer. Meanwhile, the report says Mr. Wieandt was expected yesterday to present the restructuring program for Schmidt-Bank as well as its loan losses. Many have speculated the bank's losses to reach EUR500 million SPAR HANDELS: Schaper Takes Over 25 of SPAR's C&C Stores -------------------------------------------------------- C+C Schaper GmbH, Hanover, a wholly owned subsidiary of Metro Grobhandelsgesellschaft mbH, Duesseldorf, and a member of Germany's largest retailer Metro AG, will take over 25 Cash & Carry stores of Intermarche's SPAR Handels-AG located in Schenefeld near Hamburg, with effect from May 1, 2002. The financial details of the takeover were not disclosed. Initially agreed upon, the takeover is subject to approval of antitrust authorities and the supervisory board. The 25 SPAR self-service wholesale stores generated sales of around EUR200 million. The stores employ some 600 personnel in fiscal year 2001. The operations will be integrated into the Schaper outlet chain of 29 Cash & Carry stores. In fiscal year 2001 Schaper outlets generated sales of about 400 million euros serving the hotel, restaurant and catering industries. Its services include delivery to customer premises. In the medium term, the Metro Cash & Carry's objective is to establish a national presence in the small selling space Cash & Carry business with the Schaper outlets. The SPAR self-service wholesale stores ideally supplement the Schaper outlet chain. The takeover of the SPAR self-service wholesale stores will enable Schaper to strengthen its delivery business as well as cut costs in the administrative field. Spar Handels AG's principal activities involve the ownership and management of wholesale businesses and retail outlets. In its primarily food-based retail activities, the company is represented by superstores, hypermarkets, discount stores, DIY stores and cash & carry stores. Wholesale accounted for 48% of SPAR's 2000 revenues; cash & carry wholesale, 7%; food discount stores, 26% and hypermarkets yielded 19%. ============= I R E L A N D ============= ELAN CORPORATION: Moody's Cuts Senior Debt Rating to Ba2 -------------------------------------------------------- Moody's Investors Service has lowered the senior guaranteed debt rating of Elan Corporation, a Dublin-based pharmaceutical company, to Ba2 from Baa3. The ratings agency said the downgrade reflects weak operating cash flow from core product sales together with Moody's expectation that the cash flow generation of Elan's core pharmaceutical product sales will remain modest relative to the company's high debt levels. Although Elan currently holds significant levels of cash and other investments, the values of certain balance sheet investments will likely be volatile because they are comprised of smaller pharmaceutical/biotechnology holdings. Moody's added the ratings remain under review for possible further downgrade because of uncertainties associated with the current SEC investigation into Elan's accounting practices. Until the investigation is concluded, Moody's believes that Elan's ability to access new funds for business development activities or debt refinancing could be limited. Moody's further notes that a negative outcome related to the SEC investigation could have negative effect related to the shareholder lawsuits filed against Elan. =========== N O R W A Y =========== KVAERNER ASA: Shareholders Withdraw Demand for Public Probe ----------------------------------------------------------- Kvaerner ASA, the international oil services, engineering and construction, and shipbuilding Group, said Tuesday it entered into an agreement with one of its shareholders to withdraw the demand for a public investigation on the company. An independent committee will instead be appointed, comprising three members. The committee will prepare a report to be made available to the public. The chairman of the committee will be Dr. Kare Lilleholt, Professor of Law at the University of Bergen, Norway. The other members of the committee will be nominated later. The committee will investigate the administration of the company by the Board of Directors and the Management during the period July 1, 1998 to the present day. If necessary for the probe, the committee will also consider conditions prior to this period. The committee is expected to initiate the work before summer 2002. Additional information regarding the company may be obtained by contacting Paul Emberley, Vice President of Group Communications at Kvaerner ASA telephone number +44 (0)20 7339 1035 or +44 (0)7768 813090. Email address is: paul.emberley@kvaerner.com. Kvaerner ASA's activities are organized in four core business areas: Oil & Gas, E&C (Engineering & Construction), Pulp & Paper, and Shipbuilding. Following the merger between Aker Maritime and Kvaerner's Oil & Gas business, the Kvaerner Group expects revenues in 2002 to reach US$6 billion. The company has a workforce of about 40,000 permanent staff located in over 30 countries throughout Europe, Africa, Asia and the Americas. ===================== S W I T Z E R L A N D ===================== ABB LTD: Says Recent Downgrade Will Not Hike Interest Costs ----------------------------------------------------------- The Swiss-Swedish engineering group ABB Ltd., the Zurich-based industrial machine manufacturer, denied early this week rumors in the market that the recent downgrade by Moody's on its credit rating will result in higher interest cost. The company said the downgrade merely means that the banks are just one step closer to calling its $3 billion facility extended to the company in December. The company says it is confident that another slide in the rating won't happen as it plans to buoy its fragile finances with rapid debt reduction and associated asset sales. Following Moody's downgrade last week, which saw the company's guaranteed financial subsidiaries drop to A3 from A2 and the short-term rating to Prime-2 from Prime-1, many speculated that the bank facility will be more expensive to use. The Troubled Company Reporter-Europe said last week that many investors are snubbing the group's commercial papers, denying the firm this form of short-term financing for day-to-day operations. Fund managers say the negative publicity generated by the recent loss absorbed by the company is shooing investors away. This made analysts speculate that the firm will be forced to rely on the more expensive bank facility, the interest of which is pegged on the fluctuation of Moody's and S&P's ratings actions. ABB last month reported a 2001 loss of $691 million, after $1.5 billion in charges, and said it would pay no dividend. At the end of 2001 ABB had net debts of $4.1 billion and equity of $2 billion. It plans to cut debt by at least $1.5 billion in 2002 after slashing $2.2 billion in 2001. Standard & Poor's is maintaining an "outlook negative" opinion on ABB after a downgrade on February 7, the Financial Times said. SWISSAIR GROUP: Reaches New Wage Agreement With Ground Crews ------------------------------------------------------------ Switzerland's new flag carrier Crossair AG, which will be known as "Swiss" by April 1, says its ground handling staff has already accepted its wage proposal. The new wage agreement will pay some 2,300 ground crews a minimum wage of 3,250 Swiss francs for three years. The previous rate was 2,700 Swiss francs. The agreement, however, reduces weekly working hours to 41 hours from 42.5 hours and the retirement age to 63 from 65. The agreement follows that of the wage deal with Swissair's pilots and cabin crews. ZURICH FINANCIAL: US$250 Million "Exchange" Project Vanishes ------------------------------------------------------------ An ambitious project of Zurich Financial Services that has already gobbled up $250 million is now a "white elephant" with little or no use at all. According to unnamed sources of Dow Jones Newswires, the three- year-in-the-making project is sitting idly in a Zurich Financial data center. The project is part of the $1 billion dream of CEO Rolf Hueppi to turn the company into an "e-business powerhouse." This brings to two the number of failed projects included in that "dream," the report said. In January, the company launched its UK Internet bank a year behind schedule at a cost of $200 million. To date it only has 1,300 customers, all of them Zurich employees or their parents. The expensive three-year project originally envisioned a platform that will allow insurers to do many of their processes -- like policy quotes, purchases and underwriting - online. The idea was that Zurich, as its gatekeeper, would eventually collect fees that would grow as usage increased. In time, the exchange would pay for itself and become a profit center, the report said. The company also envisioned that the exchange will unify the technologies used by its business units around the world, and the information available in the exchange's customer database was seen as a springboard for growth in both business and client numbers. Once the exchange technology worked - sometime in 2001 - Zurich found it a hard sell among its business units, said the newswires citing an unnamed source. "Nobody was using it because they didn't understand it," the source told the newswire. But according to the report, there was a more basic and embarrassing flaw: Nobody had thought to invite other insurers to do business on the exchange. "Zurich thought they were buying and building their own exchange. That only works if rival insurers come onboard," the source pointed out. "The people who did understand it said, 'what's the point of having an in-house exchange?'" And so it seems that the project will not go anywhere now, the report said. The company declines to say whether it will write down the exchange project, reiterating its December forecast for the group that it would write down investments by a total $900 million in 2001, including US$100 million in private equity investments. Zurich reported a $387 million loss for 2001. Earlier this month, Hueppi said he'd step down as CEO by mid-year, though he will remain on as chairman. =========================== U N I T E D K I N G D O M =========================== ARTHUR ANDERSEN: KPMG Hurries Talks to Preserve Global Network -------------------------------------------------------------- Poised to become the second-largest global accounting firm, KPMG admitted Tuesday that it is in earnest talks with Arthur Andersen for a possible combination, preferably with regard to its foreign affiliates. Citing various sources, the New York Times described the discussions as a race against time as Andersen's foreign have begun distancing themselves from the global tie-up. The report says it is imperative that KPMG gets a deal done quickly before the global network disintegrates. The network is an asset as it allows KPMG to handle the different requirements of multinational companies in various countries, the report said. "We are continuing to work together to consider possible ways in which to combine our operations," said Mike Rake, chairman of KPMG for Europe, the Middle East and Africa, in an interview with the paper. The report says a combination would create the second-largest accounting firm behind PricewaterhouseCoopers, with annual revenue of $16.5 billion. However, a merger with KMPG would need the approval of Andersen's local partners in Europe, Africa, the Middle East, Canada, Asia and Latin America, and would require the blessing of antitrust regulators in those regions. European regulators, for one, have in the past frown at trimming the number of big accounting firms to four. In 1998, Ernst & Young and KPMG ditched merger plans after close scrutiny by the European Commission. But antitrust lawyers interviewed by the paper say KPMG could argue that a merger is the only way to save Andersen. On its own, Andersen would probably disappear and the number of big accounting firms would shrink anyway. Meanwhile, as this develops, a number of foreign affiliates have begun distancing themselves from the global network, loosely overseen from Switzerland. The partnerships in Spain and Chile announced recently that it had already severed ties with the worldwide practice. Units in Italy, Portugal, and Switzerland have also signified intent to do the same. In Poland, partners issued Monday a statement saying that the "practice is carrying on independent negotiations with the other Big Five firms concerning the planned merger on the Polish market." In London, Deloitte Touche Tohmatsu has also held merger talks with local partners, while Grant Thornton, the international accounting firm based in Chicago, has expressed an interest in hiring teams of specialists, including those in taxation, corporate recovery and corporate finance. ARHTUR ANDERSEN: EU Commission Remains Firm Against KPMG Merger --------------------------------------------------------------- A merger between KPMG and Arthur Andersen is sure to attract lengthy investigation by regulators in Europe, a Guardian report yesterday said. The paper said UK's Financial Services Authority is sure that the combination will prompt a competition commission review, much like that in 1998 between Ernst & Young and KPMG. A spokesman for EU competition commissioner Mario Monti told the paper that the commission's stance against trimming down the number of big accounting firms has not changed. But Andersen UK chief John Ormerod says they will try to ask for reconsideration over the fact that the combination is an "exceptional arrangement[s] in exceptional circumstances". "We have considered all the options, and the UK practice is absolutely clear that we want to be part of a global network," Mr. Ormerod told the Guardian. A tie-up would create a firm with annual revenues of more than GBP12 billion and include nearly 160,000 partners and staff worldwide. KPMG is the second largest firm in the UK, with 12,000 staff and 690 partners, while Andersen has 6,500 UK employees and nearly 500 partners. Following any takeover Andersen would lose its name and its consulting arm, which is likely to be sold either as part of a management buyout or to a specialist. KPMG has already taken the decision to separate its consulting arm from the rest of the business. ARTHUR ANDERSEN: U.K. Unit Calls DOJ Allegation a Smear Campaign ---------------------------------------------------------------- Andersen UK accused the U.S. Dept. of Justice Wednesday of launching a smear campaign against the U.K. operation, calling the ploy "outrageous" and "totally unjustified." Managing partner John Ormerod was quoted by the Independent as saying that the allegation that the U.K. unit had also taken part in shredding Enron documents was "an outrageous smear." He pointed out that Enron was audited by the Houston practice and therefore the U.K. unit had no hand in the alleged shredding. He said Andersen affiliates around the world operate as distinct legal entities. CORDIANT COMMUNICATIONS: Shuffles Key Management Positions ---------------------------------------------------------- London-based advertising firm Cordiant Communications Group PLC announced recently that it has appointed David Hearn as chairman and chief executive officer of Bates Worldwide. The company said Hearn will join the Cordiant board as an executive director and will be based in New York at Bates Worldwide's headquarters, reporting directly to Cordiant CEO Michael Bungey. Hearn joins Bates Worldwide as a former CEO and managing director of Australian food brand manufacturer Goodman Fielder Ltd, which he held from 1995 to 2001. His career is lined by numerous management positions with several of the world's leading brand and marketing multinationals including Procter & Gamble, Del Monte, Smiths Crisps, Pepsico and United Biscuits. Meanwhile, the company also said it has appointed Bill Whitehead and Ian Smith as regional presidents of Bates Americas and Asia Pacific respectively. Toby Hoare, on the other hand, has been moved up to regional president for Bates Europe, but will continue as chairman of Bates UK. Former chairman of Bates Europe Jean de Yturbe will now be the deputy president of Cordiant charged with multinational client development. Whitehead and Smith will be replaced by Hearn in the Cordiant board, the company said. Bates Worldwide is the principal operating unit of Cordiant Communications Group plc, a publicly held company that is traded on the New York and London Stock Exchanges. EIDOS PLC: Cuts Full-Year Sales Forecast Again by GBP15 Million --------------------------------------------------------------- Computer games developer Eidos has once more cut sales projections its fiscal year ending March 31, blaming the delays to titles designed for the recently launched Xbox games consoles. The cut is the second time in three months. The company says it will end the fiscal year with only 120 million pounds sales, down from the 135 million pounds projected in December. According to the company, sales from six games launched since December had been in line with expectations. It is the delay of four games scheduled for release this month that is causing the sales drop. Hitman 2 for PCs and Deus Ex for PS2, among others, will instead be launched after the end of this fiscal year, the company said. In December, Eidos blamed disappointing sales of "Who wants to be a Millionaire?" in downgrading full-year sales forecasts. Analysts say the warning was not a surprise. However, it was disappointing that the company had not stopped the slippage of launch dates that has plagued it in recent years. "This again raises serious questions about management's ability to deliver on their promises," Merrill Lynch analyst Steve Liechti told the Financial Times. "The only reason you buy or sell Eidos shares is either for Lara Croft, or because you think it is going to be taken over and this doesn't make that any less likely," he said. The report says the impact of the revenue shortfall would be partially offset by ongoing cost-cutting efforts. Gross margins would be in line with previous expectations. EIDOS PLC: Shares of Lara Croft Maker Fall After Forecast Cuts -------------------------------------------------------------- Eidos shares shed as much as 9% after the British video games developer cut its annual revenue forecasts on Tuesday, Dow Jones Newswires reported. Eidos, the company behind cyber heroine Lara Croft, said it expects the company to incur widened pre-tax loss to about nine million pounds, which is at the high end of market estimates. Takeover talks don not come new to the company. Two years ago, Eidos considered a bid approach, reported to be from French rival Infogrames Entertainment SA. However, talks collapsed. Weeks Subsequent to that, both the finance director and chief executive left Eidos. The London-based software gaming company is now valued at about 176 million pounds. FUTURE NETWORK: Preliminary Annual Result for 2001 -------------------------------------------------- Future Network plc, the international games and specialist consumer magazine publisher, announced Tuesday its preliminary results for the year ending December 31, 2001. The group's balance sheet was highlighted by an 89% reduction in net debt to 7.8 million pounds; working capital improvement; vacant properties provisions posting of 4.0 million pounds and Year-end net assets totaling 106.0 million pounds (2000: 195.6 million pounds). The company's profit and loss accounts revealed a turnover from continuing activities, which totaled 142.9 million pounds (2000 - 151.5 million pounds). Operating profit (EBITA - operating profit/(loss) before amortization of goodwill and intangibles and refinancing costs) from continuing activities was recorded at 10.0 million pounds (2000 - 10.8 million pounds). In addition, the group's operating losses (EBITA) from discontinued activities was 15.7 million pounds (2000 - 13.3 million pounds). The business posted net interest payable equivalent to 6.5 million pounds with refinancing costs at 3.8 million pounds. The group's profit and loss statement were further highlighted by a net exceptional gain of 15.4 million pounds from sales and closures; non-cash write-downs of 120.6 million pounds of intangible assets and a consolidated loss before tax of 121.0 million pounds (2000: 59.3 million pounds) For complete details regarding the company's preliminary annual results ending December 31, 2001, please check at the The Future Network plc website at http://www.thefuturenetwork.plc.uk/. Contact Information: The Future Network Greg Ingham, Chief Executive John Bowman, Finance Director Tel: 01225 442 244 Hogarth Partnership James Longfield Georgina Briscoe Tel: 0207 357 9477 GLOBAL TELESYSTEMS: Closes KPNWwest Transactions, Cancels Stock --------------------------------------------------------------- Global TeleSystems, Inc., the broadband service provider serving businesses and data carriers in European countries, announced Monday that in connection with the acquisition by KPNQwest NV of GTS, all common and preferred stock of GTS is cancelled, effective March 15, 2002. Shares can no longer be traded and all quotation and trading has ceased on all exchanges, including the NASDAQ over-the-counter market, NASDAQ Europe and Frankfurt. The company also advises that the NASDAQ Europe market authority has approved the request submitted by GTS for withdrawal of it financial instruments from listing on NASDAQ Europe. The delisting took place at the close of business on March 15, 2002. The company also advises that there will be no distribution to former GTS common or preferred stockholders following the cancellation of the respective stock. GTS announced that subject to the definitive share purchase agreement with GTS, under the terms and conditions in the agreement, KPNQwest, a joint venture between Dutch telecoms provider Royal KPN NV and U.S. company Qwest, has acquired on Monday the business of Ebone and GTS Central Europe. GTS shareholders are advised to contact their financial advisors for further advise, including implication for tax purposes. GTS investors may obtain further details from Steve Bond of Investor Relations at telephone number +44(0)-207-769-8242; Fax: +44(0)-207-769-8053; Email: investor.relations@gts.com. GTS bondholders are requested to address inquiries to Houlihan Lokey Howard & Zukin (Investment Banking advisors)or David Hilty /Tanja Aalto at Tel: +1-212-497-4100 or Email at dhilty@hlhz.com or taalto@hlhz.com. INVENSYS PLC: Disposal Plan Gets Positive Review From Investors --------------------------------------------------------------- Equity investors showed appreciation on the asset disposal program of Invensys Plc, buoying its share value in Tuesday's trading, AFX News said. U.S. broker Goldman Sachs early in the day rated the engineering and controls systems group "market outperformer" in notes sent to clients. Investors responded positively, lifting the firm's share 2-1/4 pence to 121-1/4. Goldman Sachs believes the 1.5 billion-pound-disposal scheme will ultimately make the company value-generative than any other course of near-term action. The broker says the move will deliver 35-40% greater gross cash flow per share than the rights issue alternative by 2004. This justifies a long-term share price target some 34% above the current, cyclically depressed, break-up value, Goldman Sachs thinks. Goldman Sachs told clients that it is a mistaken belief that Invensys must refinance 950 million pounds of debt this year to stay solvent. The broker says this level of refinancing is only necessary for the company to maintain its current 650 million pounds level of debt facility headroom. P&O PRINCESS: Royal Still Keen on Merging With British Rival ------------------------------------------------------------ Royal Caribbean Cruises will pursue its intent to merge with P&O Princess Cruises after all. The Financial Times says Royal CEO Richard Fain was expected yesterday to argue in person at the European Commission against Carnival Corporation's GBP4.8 billion-takeover of the British cruise operator. Yesterday was the deadline for third parties to comment on the proposed Carnival/Royal takeover. It can be remembered that Royal had earlier threatened to take back its GBP6.4 billion-offer for a combination with Princess should shareholders consider other bids. Unfazed by the threats, shareholders tabled a vote last month on the proposal in order to allow Carnival time to clear antitrust regulators. Meanwhile, according to the same report, the regulatory timetable has been put back further after the British government asked the European Commission to hand over responsibility for part of Carnival's bid for the U.K. cruise group. Brussels has a month to take a decision but is likely to send back to London the U.K. aspects of the deal, leaving the two bids to be analyzed by the same regulator. The European Commission will have to decide whether to clear the non-U.K. aspects of the deal or open a four-month probe, the report said. Carnival has until today to offer any disposals to persuade the Brussels authorities to clear the deal. SSL INTERNATIONAL: Trains Focus on Condoms and Sandals ------------------------------------------------------ Healthcare group SSL International sharpened its focus on Durex condoms and Scholl sandals by selling 21 over-the-counter pharmaceutical brands and 13 unused trademarks to Thornton & Ross for 13.5 million pounds ($21.6 million), the Financial Times reports. The products, including Goddards Embrocation, Lloyds Cream and Yeastvite, generated sales of 8.6 million pounds last year, mostly in the U.K., and profits before operating expenses of 5.7 million pounds. The proceeds of the disposal will be used to reduce debt, which in September stood at 283 million pounds. SSL, which is being investigated by the U.K.'s Serious Fraud Office, collapsed at the end of 2000 after it admitted that sales were overstated by 22 million pounds and profits before tax and exceptionals by 19 million pounds in the 1999 and 2000 financial years. THUS PLC: Completes De-merger From ScottishPower ------------------------------------------------ ScottishPower, the Glasgow-based diversified utilities group, announced the completion of the de-merger of its interest in THUS Group PLC at 4.30 p.m. Tuesday. As a result of the demerger, ScottishPower shareholders have been allocated 49.97481096 THUS ordinary shares and 1.34942060 THUS participating preference shares for every 100 ScottishPower ordinary shares held at 5.00 p.m. on March 15, 2002. THUS has convened an extraordinary general meeting at 5.00 p.m. Tuesday to approve the conversion of its participating preference shares into ordinary shares which, if approved, is expected to become effective Wednesday. If the resolution to approve the conversion of the THUS participating preference shares into ordinary shares is passed and becomes effective, ScottishPower shareholders would receive approximately 2.80346820 THUS ordinary shares for every THUS participating preference share. Accordingly, based on the allocation of 1.34942060 THUS participating preference shares for every 100 ScottishPower ordinary shares, ScottishPower shareholders would receive approximately 3.78305773 additional THUS ordinary shares for every 100 ScottishPower ordinary shares. On this basis, the total number of THUS ordinary shares received would be approximately 53.75786869 for every 100 ScottishPower ordinary shares held at 5.00 p.m. on March 15, 2002. Fractional entitlements to THUS ordinary shares or THUS participating preference shares arising on the demerger have not been distributed but will be sold for the benefit of ScottishPower. Similarly, fractional entitlements to THUS ordinary shares arising from the conversion of the THUS participating preference shares into THUS ordinary shares will be sold and the proceeds retained for the benefit of THUS. Accordingly, the exact number of THUS ordinary shares that each individual ScottishPower shareholder will receive will be determined following the deduction of the relevant fractional entitlements. The impact of the deduction of fractional entitlements is noted at the end of this article. It is expected that THUS will announce the outcome of the extraordinary general meeting to approve the conversion before 7.30 a.m. tomorrow and that dealings in THUS ordinary shares arising on conversion will commence at 8.00 a.m. on March 20. For inquiries, please contact: ScottishPower Colin McSeveny, Media Andrew Jamieson, Investors Tel. 0141 636 4515 or 0141 636 4527 HSBC Investment Bank plc Peter Jones John Hannaford Tel. 020 7336 9315 or 020 7336 2006 HSBC Investment Bank plc is acting exclusively for ScottishPower and no one else in connection with the proposals described in this announcement and will not be responsible to anyone other than ScottishPower for providing the protections afforded to its clients or for providing advice in relation to such proposals or the contents of this announcement. The impact of the deduction of fractional entitlements is illustrated below for holders of exactly 100 and 1,000 ScottishPower shares respectively: ScottishPower shares held 100 1,000 Demerger THUS Ordinary shares received 49.97481096 499.7481096 After elimination of fractional entitlements 49 499 THUS Preference shares received 1.34942060 13.4942060 After elimination of fractional entitlements 1 13 Conversion of THUS preference shares to ordinary shares (if approved at THUS EGM) THUS Ordinary shares received (after conversion) 2.80346820 36.4450866 After elimination of fractional entitlements 2 36 Post Demerger and Conversion Total THUS Ordinary shares received 51 535 UK COAL: Courts DTI to Extend GBP 100MM "Closure Aid" ----------------------------------------------------- Britain's largest coal producer UK Coal is asking the government some GBP100 million in state aid to help close the Selby mining complex, its losing coalfield, The Times says. The coal miner says the money is needed for the orderly transition leading to the closure of the complex. The report says if the company does not get the aid, some 2,500 jobs will immediately go along with shutdown of the three-pit complex next year. On the other hand, if the company successfully cajoles the energy and the trade and industry departments to lend the money, the pit could remain open until 2005. The company needs the money for the cost of the withdrawal, redundancy and retraining of employees. But Energy Minister Brian Wilson says further aid is already out of the question. The trade and industry have yet to comment on the request by UK Coal CEO Gordon McPhie contained in a letter recently. In a report by the Troubled Company Reporter-Europe last month, the paper bared that much of UK Coal's woes stem from geological problems and escalating cost that are eating up its bottom line. In that report, UK Coal deep mines managing director Alec Galloway admitted that the company faces 36 million pounds in losses over the next two years due to ground problems that makes coal so expensive to mine. Other estimates place the company's losses at 164 million pounds. "The problem has not been investment - it's all about geology," Galloway was quoted as saying. It is this same problem that's forcing the company to close its Prince of Wales colliery in Pontefract, the country's oldest and most consistently productive pit. Some 500 workers will be displaced from the colliery, which dates back to 1860. Most of the coal from this colliery is used for power stations, including the cluster of Ferrybridge, Eggborough, Drax and Thorp Marsh. *********** 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, Larri-Nil Veloso and Maria Lourdes Reyes, Editors. Copyright 2001. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *