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/raid1/www/Hosts/bankrupt/TCREUR_Public/020322.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, March 22, 2002, Vol. 3, No. 58 Headlines * F R A N C E * MOULINEX-BRANDT: Whirlpool Corporation to Acquire Polar S.A. * G E R M A N Y * AUTO BECKER: Volkswagen Terminating Bentley Contract, Says Report BIODATA INFORMATION: Acquires Subsidiary Worldwide Sales Rights DEUTSCHE TELEKOM: Analysts See Cold Reception on Dividend Cut DEUTSCHE TELEKOM: Renewing Talks With Buyers Eyeing Cable Assets EM.TV: Pres Becomes General Manager Starting April 8 KIRCHGRUPPE: Abandons Kirch Media-ProSiebenSAT.1 Joint Listing SCHMIDT-BANK: 2001 Losses Greater Than Previously Predicted * I R E L A N D * ALLIED IRISH: U.S. Investors Want Irish Heads to Roll, Mull Suit ELAN CORPORATION: Receives FDA Approval of AVINZA * N E T H E R L A N D S * LAURUS NV: EUR442 MM-Loss Surpasses Expectation by a Mile * P O L A N D * NETIA HOLDINGS: Announces Resolutions to Be Proposed NETIA HOLDINGS: Says Shares Resume Trading on NASDAQ * S P A I N * JAZZTEL PLC: Cost Cutting a Prerequisite for Uni2 Deal * S W E D E N * CELL NETWORK: Adjusts Target for 2002 Due to Weaker Market * S W I T Z E R L A N D * ABB LTD: Analysts Say Finance Arm Could Raise US$ 1.8BB If Sold ABB LTD: Wins US$ 22MM Contract From Korea Power Exchange * U N I T E D K I N G D O M * ARTHUR ANDERSEN: European, Asian Units Now With KPMG, Says Report BARINGS BANK: High Court Orders Deloitte to Stand Trial in May CONSIGNIA: Leighton to Be Named Permanently to Post ENRON CORPORATION: Royal Bank of Scotland to Get Wessex This Week MARCONI PLC: Peddles Another Unit in Ongoing Drive to Raise Cash RAILTRACK GROUP: Operator Raps Byers' Claim on Rail Condition =========== F R A N C E =========== MOULINEX-BRANDT: Whirlpool Corporation to Acquire Polar S.A. ------------------------------------------------------------ Whirlpool Corporation announced Wednesday the acquisition of Polar S.A., a leading major home appliance manufacturer based in Poland. The Commercial Court of Nanterre in France is overseeing the disposition of Polar, which had been part of the former Moulinex- Brandt Group. Moulinex-Brandt filed for bankruptcy in September 2001. The Polar acquisition further expands Whirlpool's manufacturing operations in the fast growing Central European market. In addition, Whirlpool is acquiring the Polar brand, one of the strongest appliance brands in Poland. Under terms of the French court-approved transaction and pending government review in Poland, Whirlpool will pay US$24 million in cash and assume approximately US$19 million of debt in return for the 96 percent of Polar shares formerly owned by Brandt Group. Transfer of ownership is expected to be complete in the second quarter of 2002. David R. Whitwam, chairman and chief executive officer, Whirlpool Corporation said "We believe this acquisition will allow Polar and Whirlpool Europe to deliver more innovations and cost- effective choices to consumers in Poland and throughout Central Europe." The Polar brand is a leading brand name in refrigeration and laundry within Poland's domestic market and Central Europe. The firm produced sales of US$80 million in 2001. Polar is expected to be accretive to earnings in 2003. Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances. Headquartered in Benton Harbor, Michigan, the company manufactures in 13 countries and markets products under 11 major brand names in more than 170 countries. Additional information about the company can be found on the Internet at www.whirlpoolcorp.com. Please contact Tom Kline of Whirlpool Corporation at Tel. 616/923-3738 or email at thomas--e--kline@email.whirlpool.com for media relations inquiries. For financial information, please contact Thomas Filstrup of Whirlpool Corporation at Tel. 616/923-3189 or email thomas--c--filstrup@email.whirlpool.com. ============= G E R M A N Y ============= AUTO BECKER: Volkswagen Terminating Bentley Contract, Says Report ----------------------------------------------------------------- The impending separation of Bentley and Rolls-Royce brands threatens to break-up as well a contract between Bentley and partially insolvent car dealership Auto Becker. Auto Becker, which operates in Dusseldorf, holds the contract to sell Bentley, the luxury UK car brand. According to Financial Times Deutschland, a contract termination will pose a severe setback on Helmut Becker's plan to focus on luxury brands. A plan to sell the mass brands Opel and Nissan is already in the works to achieve this end. But sources say Volkswagen is intent on separating its Bentley and Rolls-Royce brands and in the process terminate existing dealer contracts, including that of Auto Becker. There are talks that the differences between the management of Volkswagen and Becker are actually behind the ending of the contract, the report said. BIODATA INFORMATION: Acquires Subsidiary Worldwide Sales Rights --------------------------------------------------------------- The insolvency administrator of Biodata Information Technology AG reported Wednesday it sold the company subsidiary "Biodata Information Technology North America Inc." to "Biodata Systems GmbH". Under the terms of the agreement, Biodata Systems has bought all the shares of the US company holding offices in New York, New York and Berkeley, California. Both parties agreed not to disclose the financial figures of the purchase. Biodata Systems GmbH, with 50 employees in Frankenberg (Germany), now holds worldwide exclusive sales rights to the Biodata communications and network security products. The Berkeley office in California was established in 1998, while the New York subsidiary operated busincess since 2000. All the service and support agreements in the U.S. will be continued. For inquiries, please contact Biodata Information Technology AG at Burg Lichtenfels, 35104 Lichtenfels: Tel. +49 (0) 6454 / 9120- 0 or Fax. +49 (0) 6454 / 9120-180; or Dithmar Westhelle Assenmacher Zwingmann, Wilhelmshoher Allee 270, 34131 Kassel at Tel. +49 (0) 561 / 3166-0 or Fax. +49 (0) 561 / 3166-312. DEUTSCHE TELEKOM: Analysts See Cold Reception on Dividend Cut ------------------------------------------------------------- The decision to cut dividend this year is expected to alienate Deutsche Telekom from its retail shareholders, a process that may have already begun. According to the Financial Times, shares of the debt-laden telecom giant fell 2.4% to EUR16.63 in late trading Tuesday, suggesting that a "divorce" could well be forthcoming. While in other countries measures like cutting dividend to save money and increase a company's free cashflow are usually taken as a positive move, in Germany that could be fatal, the report said. Analysts say Germany's fledging equity culture is still trained towards getting returns on investments rather than helping companies stay clear of troubles. They say Deutsche Telekom's retail investors are expected to divest their holdings. A backlash from shareholders was expected since the firm's share happens to be the most widely held equity in Germany. The report says when government floated the telephone monopoly in 1996 the stock was heavily marketed to retail investors. The report says ordinary Germans now hold 40% of the 57% shares the telecoms firm has floated since then. Accordingly, for many Germans, the company was their first equity investment and a trigger for switching more of their savings from government bonds into stocks. But with the shares now 84% off their March 2000 peak and the first dividend cut since the IPO, ordinary Germans are reconsidering their investment strategy, the report says. Stock market observers fear a sudden drop of appetite towards equities could follow Deutsche Telekom's dividend cut -- a situation that can have profound effects on plans to privatize other government assets. Bankers say the situation could scupper government's plan to list Deutsche Bahn, the train operator, and go ahead with a secondary offering for Deutsche Post shares. DEUTSCHE TELEKOM: Renewing Talks With Buyers Eyeing Cable Assets --------------------------------------------------------------- Reports have surfaced that debt-laden Deutsche Telekom is again in talks with investors who are interested with its six remaining cable regions. Citing Chairman Ron Sommer and CFO Karl-Gerhard Eick during an investor conference in Hannover Tuesday, the Financial Times Deutschland said the telecom will dispose three regions this year and another three next year. Proceeds are expected to be around EUR5 billion, the report said. Rumors are rife that the U.K.'s Compere Associates and Deutsche Bank AG's DB Investor are among those interested, the paper said. EM.TV: Pres Becomes General Manager Starting April 8 ---------------------------------------------------- As of April 8, 2002 Dr. Andreas Pres (37) will enter the company as general manager with comprehensive responsibility for the areas of finance, accounting, controlling and IT at EM.TV & Merchandising AG -- http://www.em-ag.de/. He will report directly to the chairman of the board Werner E. Klatten, who is responsible for finance and controlling. Until April, 2001 Pres, a master of business and doctor of law, was the speaker of the board of Odeon Film AG in Munich, a TV production company listed on the New Market. There he also worked as chief financial officer. Pres had previously worked for five years in various functions at The Boston Consulting Group in Munich and Chicago. Among other things, he was responsible for projects in the areas of e- commerce and media. Chairman Klatten said Dr. Pres has extensive knowledge of the capital market and the media industry and has experience in the restructuring and reorientation of companies. Further details may be obtained by contacting Thomas Mosig of EM.TV Investor Relations Phone: +49 89 99 500 436; Fax: +49 89 99 500 466 or E-mail: thomas.mosig@em-ag.de. KIRCHGRUPPE: Abandons Kirch Media-ProSiebenSAT.1 Joint Listing -------------------------------------------------------------- The plan to merge Kirch Media and ProSiebenSAT.1 and then raise money for the near-bankrupt media empire through the stock market has been scrapped. According to the Financial Times, Kirch disclosed early this week that the merger is practically terminated. The company did not offer any explanation. Citing unnamed sources, the paper said one of the scenarios being considered by the creditor banks right now is swapping debt for shares in Kirch Media and float them in the market at a later date. The original plan was for Kirch Media to be listed this year to raise needed cash for the ailing media group. The merger with ProSieben was added later on to sweeten the transaction, which would have meant a de facto listing of the German group's film and TV rights business, the paper said. Analysts say the scrapping of the plan, considered to be its last hope, adds pressure on the German media giant to find a way out of its financial fix or commence insolvency proceedings. Meanwhile, Geog Kofler, managing director of loss-making Premiere, revealed Wednesday that Kirch had offered several US studios equity stakes in Premiere in exchange for relinquishing some of their financial claims to the group. He said an agreement could very well come within three months. SCHMIDT-BANK: 2001 Losses Greater Than Previously Predicted ----------------------------------------------------------- The truth is finally out -- Schmidt-Bank lost at least EUR1 billion last year, not EUR200 million as earlier projected. In his report Wednesday, administrator Paul Wieandt said that the bank will pen between EUR1.2 billion and EUR1.3 billion on its 2001 balance sheet. "It is alarming. The bank is in a far worse situation than was assumed in November," Wieandt said Wednesday. The figure contradicts the claim of Karl Gerhard Schmidt last summer that the bank only had a EUR200 million deficit. But despite the huge loss, the supervisory board, composed of the German banks that came to Schmidt-Bank's rescue last year, unanimously decided to continue majority of the bank's business. According to Frankfurter Allgemeine Zeitung, the banks rehabilitation will cost almost EUR1.3 billion, making it the most expensive rescue operation by private banks in Germany to date. The report says money will come mostly from Deutsche Bank, HypoVereinsbank, Dresdner Bank and Commerzbank -- the four large banks that came to the firm's aid late last year. They will cough up the money from their deposit insurance funds. Industry sources interviewed by the paper say EUR75 million will likely be provided by the public sector, two-thirds of which to come from Bavaria's state bank Bayerische Landesbank. The remainder of the funds will be provided by public sector institutes and Bavarian savings banks. The report says the supervisory board hopes to break even by 2005. The rescue plan foresees splitting the bank's activities into two parts: Loans that entail risks will be settled and the performing core business will be maintained. Wieandt says the part subject to settlement involves 1,200 business clients, He says maintaining the core business will require substantial cost-cutting measures, pointing to a loss of EUR30 million in 2001, excluding one-off effects. The administrator says between 50 and 60 of the 140 branches of the bank will be closed and 750 to 850 of 2000 jobs will be cut. However, it will maintain its presence in northern Bavaria, Saxony and Thuringia. He expects credit volume to rise steadily to EUR3 billion, with the number of private and business clients to reach 340,000 and corporate clients to 5,000 in three years. ============= I R E L A N D ============= ALLIED IRISH: U.S. Investors Want Irish Heads to Roll, Mull Suit ---------------------------------------------------------------- US investors are reportedly mulling a US$50 million suit against senior executives of Allied Irish Banks, the Times of London said Tuesday. According to the report, American law firm Finkelstein, Thompson & Loughran is studying the suit for the disgruntled US investors, who want to pin down executives from the head office in Ireland. The law firm says Allfirst institutional investors believe the huge losses ran up by rogue trader John Rusnak was a result of management failings, including that of the main office. A report by Eugene Ludwig that resulted in the firing of six executives last week failed to satisfy the investors, the law firm said. "The report really leaves a lot of questions unanswered. It appears that AIB is trying to pin the blame on David Cronin (Allfirst's head of Treasury) and others in his department," Finkelstein lawyer Conor Crowley told the paper. He said the report was inconclusive and that they believe culpability should extend up to Ireland. There are talks that Allied CEO Michael Buckley had known about the illegal transaction all along but did not do something about it. Crowley said that Ludwig should have taken more time to establish what went on at Allfirst. He said: "You would not buy a house in 30 days, let alone find out what rogue trader Rusnak was doing." Crowley also pointed out that the report was incomplete in relation to the failure to make contact with PricewaterhouseCoopers, AIB's auditor, or to contact Rusnak's counterparties. ELAN CORPORATION: Receives FDA Approval of AVINZA ------------------------------------------------- The U.S. Food and Drug Administration has granted marketing approval of Elan Corporation, plc's new drug application for AVINZA (morphine sulfate extended-release) capsules for the once- daily treatment of chronic, moderate-to-severe pain in patients who require continuous, around-the-clock therapy for an extended period of time, Elan announced yesterday. AVINZA (formerly Morphelan(TM)) was developed by Elan Corporation, plc, which licensed the U.S. and Canadian marketing rights to Ligand Pharmaceuticals Inc. in 1998. Elan retains marketing rights for the rest of the world and regulatory filings are pending in major territories. The product will be manufactured by Elan in the United States and is expected to be launched in the second quarter of 2002. "AVINZA represents a major technical achievement for Elan and a medical advance in the management of chronic pain," said Donal J. Geaney, Chairman and Chief Executive Officer of Elan. "Using our proprietary controlled release technology (SODAS(R)), we have engineered a morphine capsule product, which gives patients protection from moderate to severe pain over a 24-hour period. In safety and effectiveness trials conducted by Elan, AVINZA, given once daily, provided effective 24-hour pain relief. AVINZA will provide an important therapeutic option for many patients who live with the pain associated with cancer and other medical conditions." AVINZA's novel dual release formulation contains immediate-and sustained-release morphine beads. Once steady-state plasma levels of morphine are achieved, the immediate-release beads enable AVINZA to provide rapid exposure to morphine. The sustained- release beads enable morphine to be absorbed by the body gradually, thus maintaining plasma morphine levels over a 24-hour dosing period. Elan is a leading worldwide, fully integrated biopharmaceutical company headquartered in Ireland, with its principal research, development, manufacturing and marketing facilities located in Ireland and the United States. Elan is focused on the marketing of therapeutic products and services in neurology, pain management, infectious disease, dermatology, oncology and the development and commercialisation of products using its extensive range of proprietary drug delivery technologies. Elan shares trade on the New York, London and Dublin Stock Exchanges. Details regarding U.S. investors relations may be obtained by contacting Jack Howarth, Tel. 212-407-5740 / 800-252-3526; For additional investors relations in Europe, please contact Emer Reynolds at Tel. 353-1-709-4000 / 0800 28352600. Contact Bruce Hayes of E.V.P. Healthcare Communications in Edelman at Tel. 212 642 7790. ===================== N E T H E R L A N D S ===================== LAURUS NV: EUR442 MM-Loss Surpasses Expectation by a Mile --------------------------------------------------------- Huge losses in Spain and Belgium, coupled by a failed attempt to revamp operations in Netherlands weighed heavily on the 2001 results of Laurus NV. Surprising analysts, the ailing Dutch supermarket retailer bared Wednesday a whooping EUR442 million loss last year, surpassing earlier projections that it would only ink between EUR40 million and EUR63 million in deficits. "2001 proved an exceptionally bad year for Laurus...a loss was sustained in all countries," the company said in its report "In broad terms, the increase in the loss may be attributed to costs and operating losses associated with the conversion - now suspended - of all stores in the Netherlands to a single 'Konmar' format." The company said it run into distribution problems at converted stores, and said stores in the Edah and Super de Boer supermarket chains that weren't converted made a profit. Sales in Belgium fell to EUR609 million from EUR617 million while Spain's figure dropped to EUR911 million from EUR956 million. "Margins were squeezed in all three countries...gross operating income fell to an average of 16.6% from 17.6%," Laurus explained. The company says it will record a total after-tax extraordinary loss of EUR226 million, following charges and write-downs. The company plans to cut jobs and limit investments this year to only those that are essential. It will not also pay dividend just like in 2000. Laurus says it will issue up to EUR400 million in new equity to improve its financial position. The share issue will take place at the end of June. The company also said that it has been granted a new credit facility worth EUR910 million. But despite admitting that its shareholder equity is now negative, Euronext Amsterdam said it will not put the company on a penalty bench - which acts as a warning to investors that a company is financially troubled - for the time being due to Laurus' restructuring announced earlier this month. French retailer Casino Guichard just recently extended Laurus a lifeline, promising to take a 37.6% stake in the troubled company. Casino said it expects to sign a definitive deal in mid- May, after the completion of an audit. Below is a summary of the company's recent financial disclosure: Laurus NV - Den Bosch, The Netherlands 12 Months Dec. 31: 2001 2000 Net Profit (EUR442 million) (EUR53 million) Operating Profit (136 million) (114 million) Sales 6.40 billion 6.40 billion Figures in parentheses are losses. =========== P O L A N D =========== NETIA HOLDINGS: Announces Resolutions to Be Proposed ---------------------------------------------------- Netia Holdings S.A., Warsaw-based alternative fixed-line operator, announced Wednesday the resolutions to be proposed at the Company's Extraordinary General Meeting of Shareholders on March 27, 2002. As previously announced by Netia, the proposed resolutions, among other things, emphasizes a conditional increase of the Company's share capital by up to PLN 83,222,437 through the issuance of ordinary bearer series "J" shares, with the aim of facilitating the issuance of warrants to existing shareholders (up to 64,848,652), as well as a stock option plan for Netia's key employees (up to 18,373,785). In accordance with the terms of the Restructuring Agreement, dated March 5, 2002, the Company will not allocate more than 5% of its post-restructuring share capital, before the issuance of warrants, to this stock option plan. These proposed resolutions are the result of the terms of the Restructuring Agreement, as announced previously, and are subject to the approval of Netia's Supervisory Board. Prior to the Shareholders' Meeting on March 27, 2002, Netia's Management Board will present an opinion of the Supervisory Board on these issues. For more information, contact Anna Kuchnio of Investor Relations Tel. +48-22-330-2061; or Jolanta Ciesielska of Media Relations Tel. +48-22-330-2407; In London, one may call Taylor Rafferty or Jeff Zelkowitz Tel. +44-(0)20-7936-0400; In New York, inquire from Taylor Rafferty or Andrew Saunders Tel. 212/889-4350, for more details. NETIA HOLDINGS: Says Shares Resume Trading on NASDAQ ---------------------------------------------------- Netia Holdings S.A. -- http://www.netia.pl-- announced Wednesday that the Nasdaq Stock Market announcement Tuesday that the trading in Netia Holdings' American Depositary Shares on the Nasdaq National Market resumed Teusday at 8:00 a.m., New York time. Netia's trading on Nasdaq was previously halted after its filing of arrangement proceedings in Poland. Nasdaq also announced that its review of the continued listing status of Netia is ongoing. If Nasdaq determines to delist a company, the company will be notified in accordance with Nasdaq's rules and will be required to issue a press release announcing such determination. Nasdaq's rules further provide that a company can request a review of such a determination. ========= S P A I N ========= JAZZTEL PLC: Cost Cutting a Prerequisite for Uni2 Deal ------------------------------------------------------ Struggling Iberian telecom operator Jazztel Plc must cut its spending dramatically or it could forget a planned merger with rival Uni2. Analysts interviewed by Bloomberg recently said the cost reduction is the first step towards any consolidation of phone operators struggling to compete with former monopolies in the Iberian Peninsula. According to analysts, Jazztel has to do something about its bonds, which eat up EUR7.8 million or almost half of its revenues every month. "The priority for Jazztel should be to restructure its balance sheet and a debt-for-equity swap may be the way, although bondholders would probably also like to get a cash component," said Bear Stearns debt analyst Louis Landeman in an interview with Bloomberg. In November, Jazztel announced that it was considering a merger with Uni2, the Spanish unit of France Telecom SA. Jazztel Chairman Martin Varsavsky recently said the plan has been expanded to include other smaller rivals in the combination. He said merging all small-time operators in the region is the only way to provide a more viable competition against Telefonica SA and Portugal Telecom SGPS SA, the former monopolies in the Iberian Peninsula. A merger involving Jazztel would also shore up its sagging performance in the bond and equity markets. Jazztel's EUR400 million of 13.25 percent bonds maturing 2009 is currently trading at about 25 cents in the euro, giving a yield of about 56.26%, based on prices provided by Morgan Stanley Dean Witter & Co. They were issued at face value in December 1999 at a yield of about 13.24%, the report said. "Something has to happen, and a merger would improve the company's outlook," Banesto Bolsa SA analyst Sergio Gamez told Bloomberg. Last month, Moody's cut Jazztel's credit rating on concern the phone company may have trouble paying its debts. The ratings agency lowered the company's unsecured notes to "Caa3" from "Caa1". It also reduced the senior implied rating to "Caa2" from "B3". =========== S W E D E N =========== CELL NETWORK: Adjusts Target for 2002 Due to Weaker Market ---------------------------------------------------------- Cell Network -- http://www.cellnetwork.com/--, IT and telecoms solutions provider, assumed in its business plan with slightly lower revenues dictated by market weakness at the beginning of 2002. As a result, the company is adjusting its gross margin forecast to at least 5% during 2002. The streamlining of Cell Network's range of services is completed and the rationalization of operations have reduced the group's cost base against earlier forecast. Cell Network maintains its objective to generate a gross margin (EBITA margin) of at least 10% over a full business cycle, but will not be announcing a new target for 2002 since the market outlook is difficult to assess, with investment decisions being centralized, sales cycles extended and orders postponed. For more information, please contact Niklas Flyborg, President Cell Network at Tel. 0705-949 678; Robert Karlsson, Dir. Corporate Communications, Cell Network at Tel. +46(0)709 565141. ===================== S W I T Z E R L A N D ===================== ABB LTD: Analysts Say Finance Arm Could Raise US$ 1.8BB If Sold --------------------------------------------------------------- If ABB Ltd. decides to sell its financial services unit as earlier hinted, it could fetch as much as US$1.8 billion, analysts told Bloomberg Wednesday. Analysts say the unit, which provides leasing and insurance services and helps customers buy products without going to banks, is an attractive asset given its financial history and holdings. According to the report, the unit was ABB's most profitable division in 2000, although in the last three months, it had sold leases and exited some of its private-equity ventures to help cut debt. However, the finance unit has lease and loan assets worth nearly US$4 billion, including a US$362 million in Scandinavian leasing contracts that ABB took over from Xerox Corp. last year, Bloomberg said. "You have a very sellable set of leasing assets [here]," said Julian Beer, an Enskilda Securities analyst, in an interview with Bloomberg. He said the company could also find joint-venture partner for portions of the unit. The unit was moved placed under the control of new Chief Financial Officer Peter Voser this month in what analysts said is a prelude to a sale. Last week, Chairman Jurgen Dormann hinted that the financial unit could be disposed to raise cash, as it had already outlived its purpose. "It was linked to the power generation business when we had to finance a portion of those projects. Now the basis for the business is gone," Dormann was by the New York Times as saying last week. Speculations point to General Electric Co. as a possible buyer. It is believed that the company is offering as much as US$8 billion for Tyco International Ltd.'s finance unit, according to people familiar with the parties. ABB is currently in dire need of money after investors snubbed its IOUs last week. The industrial engineering group booked a US$691 million lost in 2001, as orders fell and it doubled provisions for asbestos claims. It plans to sell assets to help cut debt by US$1.5 billion this year. ABB LTD: Wins US$ 22MM Contract From Korea Power Exchange --------------------------------------------------------- ABB -- http://www.abb.com/--, the global power and automation technology company, said Wednesday it has won a US$22 million contract from the Korea Power Exchange to provide the IT systems and software infrastructure to operate South Korea's deregulated energy market. The automation company won the project as part of an international consortium with local company Korea Electric Power Data Network. ABB will supply the systems and software for market participants to submit bids, receive awards and interact with the central exchange. The IT system also executes the mathematical models used to determine market prices, create power generation schedules and ensure the security of the electricity supply for the entire country. Noting that several developing countries in Southeast Asia have begun energy market restructuring, Richard Siudek, executive vice-president and head of ABB Utilities division, said; "This important project will set the standard for deregulated powermarkets for the whole of Southeast Asia, and will help the South Korean energy market to meet the demands of a robust economy, as well as provide for future growth." ABB sub-contractor OM Technology Energy Systems will provide the financial settlement systems. Korea Electric Power Data Network will provide part of the system hardware and local implementation and support, while its subcontractor Samsung SDS will supply more of the hardware and the metering systems. The total value of the project is more than US$37 million (KRW 50 billion). The IT systems are planned for delivery in July of 2002. The deregulated power market in South Korea is scheduled to open on January 1, 2003. Korea Power Exchange executive director, Kim Young Chang said "Their (ABB's) system can optimize both energy markets and ancillary services simultaneously. They also have substantial experience, having delivered the IT systems that serve the energy markets of the large economies in the U.S. and Canada. That was also an important factor in our decision." The Korean energy market is similar in size to California and growing rapidly, with 48,000 megawatts of generation and a 2000 peak demand of 41,000 megawatts. Over the last decade, generation capacity has more than doubled while demand has increased by an average of 10% per year. ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. ABB has 155,000 employees in more than 100 countries. For more information please contact Thomas Schmidt of Media Relations at ABB Corporate Communications, Zurich ; Tel: +41 43 317 6492; Fax: +41 43 317 6494 or email at media.relations@ch.abb.com. Further details may also be obtained from the Investor Relations Office: Switzerland Tel. +41 43 3 7 3804; Sweden: Tel.+46 21 325 719; USA: Tel. +1 203 750 7743 or email at investor.relations@ch.abb.com. =========================== U N I T E D K I N G D O M =========================== ARTHUR ANDERSEN: European, Asian Units Now With KPMG, Says Report ----------------------------------------------------------------- Unconfirmed reports say British, Italian, German and 13 units of Arthur Andersen in Asia are now merged with KPMG International. La Stampa/FT Information quoted yesterday Enzo de Angelis as saying that Andersen Italia will start operating under a different name. Neither the U.S. operation nor the administrator of the global network based in Switzerland has made any official confirmation on the report. Early this week, reports surfaced that KPMG is close to bagging a merger deal that would likely propel it to the No. 2 spot in the ranking of global accounting firms. Andersen's operations outside the U.S. contributed US$4.85 billion to its last financial year. BARINGS BANK: High Court Orders Deloitte to Stand Trial in May -------------------------------------------------------------- Deloitte Touche Tohmatsu will square off with liquidators of bankrupt Barings Bank beginning May, as the High Court in London ruled Wednesday that the auditor had a case to answer. Justice Evans-Lombe denied the firm's attempt to exculpate it from a long-running negligence claim related to the collapse of Barings. Deloitte claims that it had no part in the fall-down because its transactions with the bank were all above board. The accounting firm audited the Singapore unit of Barings in 1993, two years before the bank collapsed under the weight of GBP830 million of derivatives losses run up by "rogue trader" Nick Leeson. The accounting firm says it was entitled to rely on "representation letters" signed by Simon Jones, finance director at the bank's Singapore subsidiary and Leeson's boss. But Justice Evans-Lombe said that although representation letters cited by Deloitte were inaccurate and false, the trial should go ahead because. Jones had not been "recklessly fraudulent" in signing them. The trial in May, which could last until next year if an out-of- court settlement is not reached soon, is not however causing any distress in Deloitte, says the paper. Rick Murray, director of legal and regulatory affairs at Deloitte, told the paper that the company's case is strong, saying the preliminary hearing had "established much of the foundation of our several defenses." According to the report, Barings liquidators are claiming GBP100 million (US$142 million) in damages from Deloitte. CONSIGNIA: Leighton to Be Named Permanently to Post --------------------------------------------------- After impressing ministers with his performance as interim chairman of Consignia since January, Allan Leighton is reportedly going to take the post permanently. According to Financial Times, only a few more details are being hammered out between Leighton and the Department of Trade and Industry. The report says the interim chairman, who also holds several directorships in City boardrooms, had impressed ministers with his knack for tough-talking. Leighton has been interim chairman of the former Post Office for only two months, but had been with the company since April 2001, when he was appointed a non-executive director to its board. The report says Leighton also holds 10 lucrative directorships outside Consignia. He is chairman of BhS, a director of Scottish Power, BSkyB, Dyson and George Weston. He also chairs Race for Opportunity, Wilson Connolly Holdings, Lastminute.com and Cannons Group and is deputy chairman of Leeds Sporting. It is understood that Leighton will keep his job as BhS chairman even if he is appointed head of Consignia, the paper says. Meanwhile, the report says Leighton will take over Consignia at a critical time. Along with the battle with postal regulator PostComm, he faces a rough ride with the trade unions over Consignia's GBP1.2 billion restructuring plan, details of which are expected within weeks. A recent disclosure that it was planning 30,000 job cuts, from which the group later tried to backtrack, inflamed a tense relationship with the Communication Workers Union. A CWU official told the Financial Times that it was vital that the Leighton meet postal unions for talks. ENRON CORPORATION: Royal Bank of Scotland to Get Wessex This Week ----------------------------------------------------------------- Enron Corporation's water utility asset in the United Kingdom will have a new owner before the end of the week, Dow Jones Newswires said yesterday. The news agency said talks between the bankrupt US energy trader and Royal Bank of Scotland over Wessex Water are already in the homestretch, with a deal likely to be sealed by weekend. A source privy to the talks told the newswire that the delay is due to "technical" problems involving documents on the U.S. side, but that those difficulties were likely to be resolved in the next few days. In a warning last week, U.K.'s water regulator said the acquisition faces rough sailing as it would likely attract a "mandatory reference to the [EU] Competition Commission." The Office of Water Services pointed out Royal Bank's 45% stake in Brockhampton Holdings, the parent company of Portsmouth Water. But the source says the issue is already resolved and no longer poses a hindrance to the present deal. "They have 45% now, and that will go down to under 10%," he said. Royal Bank of Scotland is expected to sell all but 9% of its holding in South Downs, the parent of Brockhampton Holdings, to Abbey National, its bidding partner for Wessex, the report said. Meanwhile, the source also disclosed that a deal over Wessex would also cover bondholders of Azurix Corp., the Enron unit that owns Wessex and other subsidiaries of the former energy giant. Wessex Water creditors are owed US$813 million, and those of Azurix Europe, a unit of Azurix Corp., are owed US$401 million according to documents Azurix filed with the U.S. Securities and Exchange Commission in February. The bondholders must approve any deal for the sale of Wessex. "There's enough in the pot to make them pretty much satisfied. There's no evidence that anyone is prepared to pay any more, so what is their choice?" the source said. MARCONI PLC: Peddles Another Unit in Ongoing Drive to Raise Cash ---------------------------------------------------------------- Cash-strapped Marconi Plc is disposing another unit to cut costs, in a continuing effort to shore up its finances, Bloomberg said Wednesday. The disposal, however, will reduce sales by GBP50 million to GBP100 million in the year ending March 2003. The unit makes radio systems for faster access to the Internet and had sales of GBP410 million in the six months ending September 30, the report said. Spokesman Joe Kelly told Bloomberg that the company has already held talks with potential buyers or partners. He said the company decided to peddle the unit, as it now wants to focus on technology that allows phone companies to offer faster Internet access over existing copper lines. He said the disposal of the unit means that Marconi will stop spending on products used in fiber-optic networks. Marconi is trying to stay afloat after recently seeing its value plummet to less than half a billion pounds from a peak of GBP35 billion. The company is blaming the current glut in telecoms spending for most of its woes. A series of disposals involving non-phone equipment assets in the past few months has so far raised GBP1.5 billion for the company. RAILTRACK GROUP: Operator Raps Byers' Claim on Rail Condition ------------------------------------------------------------- Britain's biggest train operator National Express belied Wednesday Transport Secretary Stephen Byers' claim that Railtrack's performance have improved since administration. The operator, which holds nine of the 25 rail franchises in the UK, said that on the contrary the conditions of the rail network have gone from bad to worse since then. National Express CEO Phil White pointed out the number of speed restrictions as one of the evidences that Railtrack's condition is not any better as what Byers claims. He said speed restrictions on its routes rose from 450 to 535 after the rail operator was brought under administration. He said several cracked rails on its ScotRail franchise have also been discovered, while its WAGN franchise on the east coast had persistent infrastructure problems. "Administration cannot have helped. There appears to have been some tightening of the belt on operating expenditure, such as day-to-day maintenance," National Express Finance Director William Rollason told the Electronic Telegraph. "Overall, the position has deteriorated on our franchises," White said. The paper said Janette Anderson, Railtrack's head of the Scottish zone, wrote to National Express in January warning that by the end of March there would be "a much greater level of temporary speed restrictions resulting from rolling contact fatigue." A Railtrack spokesman, however, denied the claims of National Express, saying there were only 72 speed restrictions on ScotRail. He also denied the firm's allegation about the dip in maintenance expenditure. "This year's maintenance budget is 20% up on last year's GBP706 million," the spokesman said. ************ 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 US$575 per half-year, delivered via e-mail. 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