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/raid1/www/Hosts/bankrupt/TCREUR_Public/020425.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, April 25, 2002, Vol. 3, No. 81 Headlines * F I N L A N D * SONERA CORPORATION: Records 64% Hike in Net Profits for Q1 SONERA CORPORATION: Adjusts Business Organization * F R A N C E * RHODIA: Sells Teris SA and Teris LLC Stakes to Sita RHODIA: Shareholders Question Debt-restructuring Strategy * G E R M A N Y * AHAG WERTPAPIERHANDELSBANK: Threatened by Insolvency Due to Suits CONSORS AG: Sale Uncertain as Investors Now Show Little Interest DEUTSCHE TELEKOM: Board Members Reward Themselves 90% Pay Hike DEUTSCHE TELEKOM: Sees Return to Profitability This Year FAIRCHILD DORNIER: Management Says Boeing Partnership Talks Dead KIRCHMEDIA: DT Plans to Invest in Content, Not Acquire Stake HERLITZ AG: Six Affiliates Follow Firm to Insolvency Court KIRCHMEDIA: Administrators to Hire Leo Kirch as Consultant PREMIERE WORLD: CEO in Talks With Bertelsmann, Deutsche Telekom * I R E L A N D * ALLIED IRISH: Hires Top-notch Banker to Advise on Risk Management ELAN CORPORATION: CEO Says Joint Ventures Are Legitimate Projects * I T A L Y * ALITALIA: Holds Combination Talks With Rival Volare Group ARTHUR ANDERSEN: Deloitte Moves to No. 1 in Italy With Buy * N E T H E R L A N D S * HAGEMEYER N.V.: Chairman Confirms Lower Sales and Results * P O L A N D * ELEKTRIM SA: Ruling on Discontinuing the Composition Proceeding ELEKTRIM SA: Creditors to Force Bankruptcy, Management to Appeal * S W E D E N * LM ERICSSON: Moody's Eyes Downgrade of Baa2, Prime-2 Ratings LM ERICSSON: Cadence Expands Partnership With Ericsson * S W I T Z E R L A N D * SWISSAIR GROUP: Sale of SR Technics to Lufthansa in Jeopardy * U N I T E D K I N G D O M * BALTIMORE TECHNOLOGIES: Introduces SAML-based Services BIOCOMPATIBLES: Shareholders Give Nod on 'Stent' Sale to Abbott BRITISH TELECOM: Announces New Approach on Broadband Services EGG PLC: Q1 Financial Results and New Business Figures ENODIS PLC: Equipment Maker Sells Belshaw Brothers for US$24.2MM ITV DIGITAL: Gov't Eggs Other Broadcasters to Rescue Network ITV Digital: Shuts Down Film Channel to Minimize Expenses ITV DIGITAL: Football Clubs Face Closure Due to Sale Decision XENOVA GROUP: In US$63MM License Agreement With Genetech XENOVA GROUP: Company Profile ============= F I N L A N D ============= SONERA CORPORATION: Records 64% Hike in Net Profits for Q1 ---------------------------------------------------------- Finnish telecom operator Sonera revealed a huge jump in first quarter profits Tuesday, giving it new hopes of better core earnings at the end of the year, says the Financial Times. The company said net profits rose 64% to EUR270 million from EUR165 million a year ago. Revenues also climbed 2% to EUR536 million from EUR525 million. According to the company, the positive figures were primarily caused by improvement in its service businesses as well as the continued strong performance of its Finnish mobile unit and Sonera Telecom, its fixed-line operations. Debt levels of the company also showed improvements. It now stands at EUR2.4 billion. A substantial chunk was chipped off from the imposing debt mountain when the company received EUR889 million from the sales of Pannon GSM, Sonera Info Communications, and its remaining Deutsche Telekom shares. The company is confident that the full-year results will be printed in black as cost-cutting measures start paying off. SONERA CORPORATION: Adjusts Business Organization ------------------------------------------------- In autumn 2001 Sonera set itself a goal of transferring to a customer-driven business organization, the telecom group said in a statement Tuesday. To meet the goal, Sonera will merge most of its wholly owned subsidiaries to the Group's parent company Sonera Corporation by the end of 2002 and rearrange its business organization to comprise three business layers as of July 1, 2002. The measures will not have any direct personnel effects and are not linked to the pending merger of Sonera and Telia. The new structure supports customer-driven management and shifts the controlling focus more to customer interface. Customer profitability becomes a common goal, and the customers will be shared. The efficiency of operations will also improve, as there is no longer in-house competition for customers, says Sonera's President & CEO Harri Koponen, reflecting the benefits of the new business model. The three business layers of the new business model are: 1. Sales and Marketing, centrally in charge of the Group's sales and marketing processes. The layer comprises the following functions: centralized customer care, marketing, four customer segment functions (strategic, major, business and consumer customers), solution integration / concepts and development. The customer segment functions provide all Sonera's services to the customers of the segment in question in a centralized manner. 2. Products and Services, in charge of the service provider's product portfolio. The layer comprises the following functions: business customer products, consumer products, international business operations, service provision, service systems, research and development. 3. Production and Networks, which comprises the following functions: Mobile Networks Finland, Sonera Carrier Networks Ltd, Primatel Ltd, Unibase Ltd and IsoWorks Ltd. Each layer has been assigned a manager to lead the layer and report directly to the President & CEO of Sonera Corporation. The acting head of the Sales and Marketing layer will be Deputy CEO Aimo Eloholma, Products and Services will be headed by Executive Vice President Juha Varelius, and Production and Networks by Executive Vice President Jaakko Nevanlinna, all members of Sonera's Executive Management Team. The support functions now situated in different business units (e.g. financial and HR management) will be combined into a single, layer-specific function. The domestic geographical business areas of Sonera's different business operations will be combined into a single regional organization. Sonera's area directors will have matrix responsibility for the business customer relationships of the area concerned and they will also be responsible for the area's stakeholder group operations. After the merger, the following companies will continue as independent companies, selling their services outside Sonera to a notable extent: Sonera Carrier Ltd, Unibase Ltd, IsoWorks Ltd (Sonera 50%), Sonera Zed Ltd and Sonera SmartTrust Ltd. Also, Sonera's fully or partly owned distribution companies Paamies- kauppiaat Oy (Sonera 58%), Telering Ltd, Data-Info Oy and Infonet Finland Ltd (Sonera 90%) will continue as independent companies. For further information at Sonera, please contact: Aimo Eloholma, Deputy CEO tel. +358 2040 58700 e-mail: aimo.eloholma@sonera.com Jari Jaakkola, Executive Vice President, Corporate Communications & IR, tel. +358 2040 65170 e-mail: jari.jaakkola@sonera.com In the United States, Steve Fleischer, Vice President, Investor Relations, tel. +1 973 448 4616 e-mail: steve.fleischer@sonera.com =========== F R A N C E =========== RHODIA: Sells Teris SA and Teris LLC Stakes to Sita --------------------------------------------------- In a press statement published Monday,the waste services division of Suez, Rhodia announced its decision to sell its interest in Teris SA and Teris LLC to Sita. Teris SA and Teris LLC are jointly owned subsidiaries specializing in hazardous waste processing, respectively in Europe and the United States. The transaction will be effective on July 1, 2002. This move is part of Rhodia's overall plan to divest non- strategic assets that was announced at its annual results in January. The entire divestment program should reduce the Group indebtedness by EUR 500 million this year. This divestment is consistent with Rhodia's commitment to divest assets which can be valued, without destroying shareholder value, and which do not fit into Rhodia's business model based on the cross-fertilization of technologies and high added-value solutions to its customers. In the case of Teris SA and Teris LLC, the combination of Rhodia's different technologies with the treatment of hazardous industrial waste is marginal and the market synergies with the other activities of the Group are low. After the letter of intent signed in March earlier this year with Raisio providing the sale of all Group assets in latex for paper applications, this withdrawal from the hazardous industrial waste business constitutes a new major step both in the pursuit of Rhodia's divestiture plan of non core assets and in the drive to reduce the indebtedness. Rhodia provides specialty chemical products and services to the automotive, health care, fragrance, apparel, electronics, personal care and environmental markets. Rhodia generated net sales of EUR 7.2 billion in 2001. The company employs 27,000 people worldwide. Rhodia is listed on the Paris and New York stock exchanges. Contact Information: Rhodia Press Relations: Jean-Christophe Huertas, 33-1 55 38 42 51 Lucia Dumas, 33-1 55 38 45 48 David Klucsik, 609-860-3616 or Investor Relations: Angelina Palus, 33-1 55 38 42 99 Sylvie Marchal, 33-1 55 38 41 79 RHODIA: Shareholders Question Debt-restructuring Strategy --------------------------------------------------------- World's leading chemicals specialist Rhodia has reaped several criticisms from minority shareholders for its alleged tardiness in disposing of non-strategic assets, La Tribune said Tuesday. The company slipped into the red in 2001 with a net loss of EUR213 million (US$183.5 million). Before the publication of the results, the company issued three profit warnings. The company has promised to do better this year, aiming a return to profitability by speeding up its restructuring program. The company's operating profit in 2001 dropped to EUR16 million from EUR 496 million, but the company said it expects a boost of EUR394 million this year. The shareholders are also deploring Rhodia's plan to reduce its social capital after cutting the nominal value of its shares to EUR, the report says. Shareholders group ADAM has accused the company of using the operation as an excuse to set up a new stock-option plan, which would not be in the interests of the shareholders. Shareholders did not also spare Franco-German pharmaceuticals group Aventis from criticism, blaming the partner that holds a quarter of Rhodia's capital for the failure of the merger with DSM of the Netherlands, the report says. The group will hold a general meeting on May 21. ============= G E R M A N Y ============= AHAG WERTPAPIERHANDELSBANK: Threatened by Insolvency Due to Suits ----------------------------------------------------------------- German securities bank Ahag Wertpapierhandelsbank warns it could succumb to insolvency due to several legal actions instituted by those opposed to a capital increase at the bank. Frankfurter Allgemeine Zeitung says the Cobra group, which also figured in a similar incident at Commerzbank, is among those that have pending lawsuits against the bank. At an annual general meeting recently, 90% of the bank's shareholders voted in favor of a cash capital hike. CONSORS AG: Sale Uncertain as Investors Now Show Little Interest ---------------------------------------------------------------- The sale of Consors AG, the discount brokerage unit of the troubled Schmidt Bank, is reportedly heading nowhere. According to Handelsblatt, potential buyers Hypo-Vereinsbank, Commerzbank and France's Soci,t, G,n,rale have lost interest in the unit, while BNP is the only remaining bidder. The latter, however, wants a lower price. The troubled bank wants to unload its 65% stake in the brokerage unit valued EUR570 million euros. The stake is worth EUR380 million. The report says there's probably none in the market right now that is willing to part ways with this amount, especially with weakened state of the capital markets. But Paul Wieandt, the man who took over the helm of Schmidt Bank, is willing to wait. He says the bank is under no pressure of time. "Good things take a while to come," Handelsblatt quoted Mr. Wieandt as saying during a shareholders general meeting. The sale of Consors is part of the turnaround plan for the troubled bank, which bared a loss of EUR1.3 billion recently. According to the bank, EUR700 million of the amount was used to cover bad debts. The remaining losses were due to restructuring costs and write-downs on real estate. The bank is set to cut around 40% of its jobs and to close around 60 of its 125 branch offices. Provided all goes according to plan, the bank will post an operating profit in 2006, Mr. Wieandt claims. The bank's defective lending policy was the factor that brought it to the edge of insolvency last November, the German daily says. DEUTSCHE TELEKOM: Board Members Reward Themselves 90% Pay Hike -------------------------------------------------------------- Members of Deutsche Telekom's management board think they ought to be rewarded with a pay hike, despite the losses absorbed by the company recently and its ever-ballooning debts. The struggling German telecom operator disclosed Wednesday that the eight members of the board earned EUR17.4 million last year, compared to EUR9.2 million in 2000. The board also sanctioned a 40% cut in shareholders' dividends. The 90% pay increase came at a time when the company saw its share price shed 40% in the market. This board also presided over the company when it booked its first full-year loss since the phone company went public in 1996, the report says. The company admitted Wednesday that its debt had swelled to EUR67 billion at the end of March. The company recently moved a year later to end of 2003 its self-imposed deadline to bring down debt levels to EUR50 billion. DEUTSCHE TELEKOM: Sees Return to Profitability This Year -------------------------------------------------------- Deutsche Telekom expects to reverse its dismal 2001 performance with a projected EUR15.9 billion to EUR16.9 billion net profit for this year. According to BBC News, the company is confident that it will be able to achieve its growth targets this year due to the reduction of unnecessary expenses and disposals of assets. Citing the company's first quarter report that will be fully published on May 22, the news channel said the telecom giant is expecting a 16% year on year growth in revenues. Key to this growth is T-Mobile, the cellular phone unit that saw revenues surge 66% during the quarter. The disclosure says the division will probably record a EUR1.2 billion profit during the first quarter as a result of a return to profitability at Voicestream, the US unit that it acquired for US$34 billion last year. The German telecom operator booked net losses of EUR3.5 billion in 2001, the first full-year loss recorded by the company since it went public in 1996. The company blamed write-downs and other balance-sheet expenses for the poor figures. FAIRCHILD DORNIER: Management Says Boeing Partnership Talks Dead ---------------------------------------------------------------- US aircraft manufacturer Boeing Co. is not going to invest in Fairchild Dornier, the insolvent German regional plane-maker, says Suddeutsche Zeitung. The paper says management confirmed early this week that the U.S. firm has left the negotiating table. The report did not state the reason why Boeing backed off. The company had earlier estimated that its 728 and 928 jet models are similar to the product range of the American group; hence investing in the troubled firm was ideal and possible. The company says it will now consider other investors. A potential partner is China, which indicated recently its willingness to import the company's 328JET for the carrier Hainan Airlines. KIRCHMEDIA: DT Plans to Invest in Content, Not Acquire Stake ------------------------------------------------------------ Deutsche Telekom is willing to invest in troubled media rights unit KirchMedia, but its involvement in the company will only be limited to buying content. Telekom Chairman Ron Sommer recently told AFX News that he plans to use the KirchMedia content for its broadband ISP unit T-Online International AG. Asked whether Telekom is mulling taking a stake in KirchGruppe, Mr. Sommer said: "The question is content. That doesn't mean we're investing in new businesses. We're investing in content." The German telecom giant had been earlier hinted as a possible buyer for some of KirchMedia's sports rights portfolio. Mr. Sommer refused to confirm the speculation. HERLITZ AG: Six Affiliates Follow Firm to Insolvency Court ---------------------------------------------------------- The troubles of German office supplies maker Herlitz AG has spread to several of its subsidiaries, which have now followed its insolvency petition. According to the Financial Times Deutschland, Diplomat, Susy Card, Herlitz Kunstoffverarbeitungs GmbH and three other companies have similarly declared insolvency recently. The report says Diplomat booked dead-even turnover-to-losses results in 2000 at EUR30 million. KIRCHMEDIA: Administrators to Hire Leo Kirch as Consultant ---------------------------------------------------------- The man widely seen as responsible for KirchMedia's collapse will reportedly become its consultant, charged to untangle the whole mess. Leo Kirch, the founder of the erstwhile media colossus in Germany, has allegedly been offered a EUR2 million to EUR3 million consultancy contract, says the Financial Times. "Mr. Kirch has been running this business for 40 years. If they [the administrators] want to get to a big man in the US, they may not get anywhere. If Mr. Kirch calls, doors open in a minute," an executive close to the 75-year-old media mogul told the paper. The interim administrators of KirchMedia have yet to confirm the report. Some investors and creditors, however, are not too excited with the idea. They believe Mr. Kirch's spending-spree brought the company down. The consultancy contract will be discussed at a meeting of creditors on Friday. This is not the first time that former executives and advisers have ended up as consultants of the insolvent group. The paper says top managers are now acting as advisers to the insolvency team. New KirchMedia CEO Wolfgang van Betteray is a former adviser of the company. The paper says Dieter Hahn, Mr. Kirch's protege and current managing director of TaurusHolding, is also up for promotion as adviser to the holding company in the event that it follows KirchMedia into insolvency. Meanwhile, the paper says Michael Jaffe, the administrator appointed by the courts, will receive an initial EUR5 million for managing the insolvency process. The German court allegedly set the figure, the paper says. PREMIERE WORLD: CEO in Talks With Bertelsmann, Deutsche Telekom --------------------------------------------------------------- Georg Kofler, CEO of hemorrhaging Premiere World, says he is willing to take up a one-digit percentage stake in the company once the losing pay-TV is rescued from its dire state. Mr. Kofler says he is also in talks with Bertelsmann AG and Deutsche Telekom to convince them to follow him into investing in the company and help avoid filing for insolvency. Many observers believe the channel is likely to declare bankruptcy soon as it heavily depends on KirchMedia for funding. With the financial backer now insolvent, few believe Premiere can hold out for long. Meanwhile, media mogul Herbert Kloiber is reportedly ready to assume the rights to screen the matches of Germany's premier soccer league, the Bundesliga. These rights are currently held by KirchMedia. German daily Handelsblatt says the Mr. Kloiber has been eyeing the rights for years now, but has always been beaten to it by archrival Leo Kirch. He expects the price to be significantly lower, owing to the "changes in market conditions." Industry experts believe that the Bundesliga rights, excluding pay-TV, are worth less than EUR200 million. Including pay-TV, a premium of EUR100 million at the most could be expected. In the 2000-2001 season, Kirch still paid around EUR355 million for the complete rights, the paper says. ============= I R E L A N D ============= ALLIED IRISH: Hires Top-notch Banker to Advise on Risk Management ----------------------------------------------------------------- Scandal-hit Allied Irish Banks Plc has hired former Merrill Lynch banker John G. Heimann to advise it on risk management controls across its operations, says Dow Jones Newswires. The move is a realization of the bank's promise last month to implement safeguards to avoid a repeat of the Allfirst scandal that raided its coffers of US$691.12 million over five years. Mr. Heimann will "provide assurance to the board that the group's risk structures, policies, procedures and governance conform to the best international practice and address all of the risk- related issues identified in the independent report," the company said in a statement. The banker is a former superintendent of banks for the State of New York, U.S. Comptroller of Currency, and member of the board and acting chair of the Federal Deposit Insurance Corp., among other high-profile roles, the newswires says. The bank says it hired Mr. Heimann because of his reputation of "independent standing." At Merrill Lynch, Mr. Heimann held the posts of chairman of Merrill Lynch Global Financial Institutions, chairman of Merrill Lynch Europe and the Middle East, and vice chairman of Merrill Lynch Capital Markets. ELAN CORPORATION: CEO Says Joint Ventures Are Legitimate Projects ----------------------------------------------------------------- ELAN Corporation chairman and chief executive Donal Geaney denies its joint venture arrangements with other companies in developing its products are vehicles for hiding the true state of the company's finances. He says the arrangement is really a key part of its strategy to develop new products. "The progress we've made is lost in the arguments about accounting. If you look at the joint ventures themselves, we've got 55 active. We know they are not all going to succeed, but ...there are 36 compounds in the JVs that are in one form or another of clinical testing, four are in phase III (the final phase). That in itself is an enormous pipeline," Mr. Geaney told Reuters recently. Market concerns over the company's accounting have contributed to the slide in its share price during the first quarter of the year. Critics say the joint ventures, which allow the company to shift some of its research and development expenses off its income statement while at the same time recording technology licensing fees as contract revenues, are not transparent. Several shareholders suits are currently filed in the United States, alleging fraud committed against investors by artificially inflating earnings. Elan shares have lost around 70% of their value since the start of the year due to setbacks in the firm's Alzheimer's research program and a profit warning for 2002, the Irish Independent says. The company is due to report first-quarter earnings on May 2, the paper says. ========= I T A L Y ========= ALITALIA: Holds Combination Talks With Rival Volare Group --------------------------------------------------------- Restructuring Alitalia SpA is reportedly holding exploratory talks with rival carrier Volare Group for a possible partnership. According to Il Sole/FT Information, the discussions include forging a code-sharing agreement and selling some of Alitalia's assets to Volare. The rival carrier may also be offered the domestic and European routes, that Alitatlia recently abandoned. Pilots union Anpac, however, is opposed to the tie-up because Volare allegedly does not share Alitalia's cost cutting strategies. The group runs two airlines: Volare and Air Europe. The two had a combined turnover of more than EUR500 million in 2001. Alitalia reported consolidated gross operating margin of only EUR6.6 million in the same period. ARTHUR ANDERSEN: Deloitte Moves to No. 1 in Italy With Buy ---------------------------------------------------------- Deloitte & Touche has managed again to snatch a foreign affiliate of Arthur Andersen, signing up on Tuesday the Italian office, reports The Wall Street Journal. The acquisition pushes Deloitte to No. 1 from No. 4 in the country's auditing hierarchy. The Italian practice of Andersen has been largely spared from the scandal in the U.S., but the deterioration of the global network has forced it to seek new partners, the paper says. Andersen has led the Italian market since 1957 with 13 local branch offices and 2001 revenues of EUR243 million, a 19% surge from the year before, the report says. "The decision is an excellent solution in that it allows us to safeguard the professionalism and values of the Andersen group in Italy," Andersen Italia managing partner Enzo De Angelis told the paper. ===================== N E T H E R L A N D S ===================== HAGEMEYER N.V.: Chairman Confirms Lower Sales and Results --------------------------------------------------------- During the annual general meeting of shareholders of Dutch wholesale trading company Hagemeyer N.V. Tuesday, Chairman Rob ter Haar will confirmed the previously announced expectation that sales and results for the first half of 2002 will be lower compared to the same period last year. Following a disappointing fourth quarter in 2001, market conditions for the core PPS activity and the other activities remained weak. This applies for both North America and Europe where especially in Germany the construction and installation market continues to be very weak. It is expected that these conditions will continue in the second quarter. Despite encouraging news on the economic front the company reiterates that there remains too much uncertainty to express an opinion as to the likelihood of a recovery in the second half of 2002. Rob ter Haar said: "because external market conditions which affect Hagemeyer's sales are beyond our control, we will concentrate on the continued execution of our change program to be in a position to benefit from a future recovery of our markets to the fullest extent possible." Last year, Hagemeyer feared to lose millions after the insolvency of its former subsidiary Freetime in September, the Troubled company reporter said. Hagemeyer announce last November to cut 1,200 jobs in response to rapidly deteriorating market conditions. It already shed 800 jobs in October last year. Contact Information: Taylor Rafferty Associates Andrew Saunders, 212-889-4350 =========== P O L A N D =========== ELEKTRIM SA: Ruling on Discontinuing the Composition Proceeding --------------------------------------------------------------- The Management Board of telecoms and power conglomerate Elektrim S.A. on April 23, 2002, said a new composition proposal has been presented to the Company's creditors at the Meeting of Creditors. The Management Board's proposal provided for a full repayment of receivables to all creditors, except for the bondholders of exchangeable bonds who would be satisfied by 30 July 2002 to the amount of EUR200 million with the repayment of their remaining receivables by June 15, 2005. After reviewing the new proposal of the Company's Management Board and discussing it, the proposal was voted. The bondholders of the exchangeable bonds representing a total of 80% of the total amount of receivables voted against the acceptance of the new composition proposal. In view of the above, the court decided to discontinue the composition proceeding owing to the lack of the required majority of creditors voting for the composition. The Management Board of Elektrim S.A. will continue to seek solutions and have a dialogue with creditors to protect the Company's and its Shareholders' interests. ELEKTRIM SA: Creditors to Force Bankruptcy, Management to Appeal ---------------------------------------------------------------- The management of ailing Elektrim SA plans to appeal the court decision Tuesday, lifting the company's protection from creditors after bondholders junked its debt-settlement plan. If approved, the appeal process could hold up the bankruptcy filing of the company for several months. The company says it still plans to talk with the convertible bondholders to reverse their votes. Management has seven days to appeal. Some 80% of bondholders turned down the EUR200 million partial payment for the EUR480 million worth of bonds the company defaulted in mid-December. Management promised to pay the balance of the company's PLN2.3 billion total debts by 2005. "What was rejected today was a full repayment proposal," Elektrim President Maciej Radziwill pointed out to Dow Jones Newswire in explaining his optimism that the votes could still be reversed. He said "new circumstances might occur" that will allow the company to fully repay its liabilities, but refused to say whether it means a bridge loan organized by its major shareholder, BRE Bank SA. Elektrim is currently negotiating the sale of its main asset, a 49% stake in joint venture Elektrim Telekomunikacja, which controls Eastern Europe's largest mobile telephone operator Polska Telefonia Cyfrowa. The company has received two rival offers, one made by a consortium of BRE Bank and Netherlands-registered retailer Eastbridge NV, which has reportedly offered EUR400 million for the stake. The other bid was tabled by London-based investment funds Elliot Advisors Ltd. and Centaurus Alpha Master Fund, both members of the bondholders group. These two funds have placed a competing bid of EUR450 million. The Warsaw district court's ruling Tuesday to end the debt settlement procedure opens the way for creditors to file for Elektrim's bankruptcy next week, if no appeal is made. =========== S W E D E N =========== LM ERICSSON: Moody's Eyes Downgrade of Baa2, Prime-2 Ratings ------------------------------------------------------------ Moody's Investors Service placed under review Tuesday Telefonaktiebolaget LM Ericsson's Baa2 long-term and Prime-2 short-term debt ratings for possible downgrade. The ratings agency cited as reasons for the review "the deeper than expected decline in Ericsson's order bookings in the first quarter 2002, and the associated cash burn and margin levels as well as the company's revised business plan which now expects a return to profitability not before [but] some time in 2003." Moody's says the review will focus on the firm's ability to return to cash flow positive. To do this, the ratings agency "will assess the impact of recent CAPEX-saving measures of the European mobile network operator, including network sharing, extension of build-out schedules to the license minimum penetration level, and the renegotiation of existing contracts, on Ericsson's projected order profile." "The extent and timing of [a] proposed equity increase will be an important factor in this analysis, even though Moody's would expect to conclude the rating review well before actual completion of the transaction," Moody's said. Domiciled in Stockholm, Sweden, Ericsson is a leading developer and manufacturer of mobile telecom and datacom equipment, and recorded revenues of about SEK232 billion (EUR25 billion) in fiscal year 2001. Ratings under review are the Baa2 of: Telefonaktiebolaget LM Ericsson - for Euro Medium Tem Notes, the US$600 million revolving credit, and the issuer rating. And the Prime-2 ratings of: Ericsson Treasury Services AB -- for guaranteed US-commercial paper, Ericsson Treasury Services U.S. Inc. -- for guaranteed US- commercial paper, and Ericsson Treasury Ireland Ltd.-- for guaranteed Euro-commercial paper. The review covers approximately US$5.2 billion worth of debt securities. For more information, contact: Frankfurt Juergen Berblinger Managing Director European Corporates Moody's Deutschland GmbH +49 69 707 30 700 Frankfurt Wolfgang Draack Senior Vice President European Corporates Moody's Deutschland GmbH +49 69 707 30 700 LM ERICSSON: Cadence Expands Partnership With Ericsson ------------------------------------------------------ Cadence Design Systems Inc. announced a major extension to its strategic license agreement with Ericsson. The multi-year agreement gives Ericsson, the world's leading telecommunications supplier, access to all Cadence(R) electronic design automation (EDA) software, services and training to support its design operations worldwide. Cadence has been a strategic supplier of Ericsson for more than a decade and the new agreement represents the latest in a running series of collaborations by the two companies with an expansion to use Cadence's entire portfolio. Among the design technologies covered under the new agreement are synthesis place and route (SP&R), analog/RF design, logic verification, system level design, Quickturn(R) design verification systems and printed circuit board (PCB) design. Cadence is the largest supplier of electronic design automation products, methodology services, and design services. Cadence solutions are used to accelerate and manage the design of semiconductors, computer systems, networking and telecommunications equipment, consumer electronics, and a variety of other electronics-based products. With approximately 5,700 employees and 2001 revenues of approximately US$1.43 billion, Cadence has sales offices, design centers, and research facilities around the world. Cadence stocks are traded on the New York Stock Exchange under the symbol CDN. More information about the company, its products and services is available at http://www.cadence.com. Contact Information: Cadence Design Systems Helen Petts, +44 (0) 1344 865305 hpetts@cadence.com ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Sale of SR Technics to Lufthansa in Jeopardy ------------------------------------------------------------ The sale of Swissair Group's SR Technics to Lufthansa Technik is in danger of falling apart due to the refusal of the former to provide necessary financial data. Financial Times Deutschland says the German firm has accused the insolvent counterpart of withholding critical data so that it cannot gain valuable insights into its true financial footing. Together, Lufthansa Technik and SR Technics would constitute the world's largest provider of maintenance services for commercial aircraft, the paper says. It is not known whether there are other bidders for the unit. =========================== U N I T E D K I N G D O M =========================== BALTIMORE TECHNOLOGIES: Introduces SAML-based Services ------------------------------------------------------ Bringing to market the first commercially available solution to leverage the Security Assertions Markup Language (SAML) standard, Baltimore Technologies -- http://www.baltimore.com--- announced Tuesday the latest release of its next-generation access and authorization management solution, SelectAccess 5.0. In addition to its SAML-based "affiliate services" capability, SelectAccess 5.0 eases security administration with its innovative "management free" techniques, and leverages existing IT investment with concurrent, multiple directory support. SelectAccess 5.0 builds upon its industry recognized superior ease of use and management features such as the intuitive graphical user interface, automated user and resource discovery and flexible delegated administration. "SelectAccess gives us the ability to quickly translate our business rules into online access policy - significantly speeding our deployment process and keeping us responsive to changing business needs," said Alexis Michaelides, Chief Technology Officer, Easybroker International. "Adding additional servers is no problem, with its management-free installation and configuration SelectAccess components are automatically enabled with a few mouse clicks - reducing the need for programming and administration resources." "Today's (April 23, 2002) market release of SelectAccess 5.0 reflects our uncompromising commitment to technology leadership," said Bijan Khezri, CEO Baltimore Technologies. "Ease of use, return on investment and seamless interoperability are the defining principles of our development strategy. SelectAccess 5.0 not only exemplifies all three principles but sets the benchmark for next-generation digital authorization. This product will ultimately shape and define the importance to businesses of web services." Baltimore SelectAccess enables businesses to capitalize on the potential of extranets, intranets, and portals by providing web- based single sign-on for a seamless user experience. SelectAccess greatly reduces administration cost and complexity by providing a unified approach to defining authorization polices and securely managing role-based access to online resources, such as a URL on a web site or a file on an FTP server. SelectAccess 5.0 is the first commercially available access control and authorization product to be built with SAML, an XML standard for exchanging security credentials between online business partners, regardless of the authorization product used by either partner. Users can now sign-on to one site with the transparent transfer of security credentials and information across affiliated sites. By providing online business partners with the ability to easily and securely share authentication and authorization information across corporate boundaries, SAML enables online business partners to strengthen their business relationships among each other and maintain a faster, seamless, and hassle-free experience for the user. "SAML is the emerging industry standard for federating diverse access management and security environments," says James Kobielus, a senior analyst at Burton Group. "Baltimore is one of many vendors in the Web access management market to have embraced SAML, which leverages Web services standards such as Extensible Markup Language (XML), Simple Object Access Protocol (SOAP), and XML Digital Signatures (XML-DSig). SAML 1.0 is nearing ratification by the Organization for Advancement of Structured Information Standards (OASIS), so it's clear that Baltimore has implemented a stable, broadly supported initial version of the standard." With its unique "management free" feature, SelectAccess 5.0 provides unparalleled speed of deployment and ease of runtime maintenance, resulting in significant operational efficiencies. Centralized component management through the LDAP directory enables administrators to effortlessly add SelectAccess components for real-time scalability. New components are registered to the directory and their configurations are automatically downloaded. Configurations updates are greatly simplified since updates are made once, thereby reducing the manual effort and margin for error. Baltimore's e-security technology gives companies the necessary tools to verify the identity of who they are doing business with and securely manage which resources and information users can access on open networks. Baltimore provides e-security technology to conduct business more efficiently and cost effectively over the Internet and wireless networks. Baltimore also offers worldwide support for its authorization management and public key-based authentication systems. Baltimore's products and services are sold directly and through its worldwide partner network, Baltimore TrustedWorld. Baltimore Technologies is a public company, trading on London (BLM). Contact Information: Baltimore Technologies Jessica O'Connor, +353 1 881 6407 joconnor@baltimore.com or Brands2Life Emma Flack, +44 (207) 386 6200 Sarah@brands2life.com BIOCOMPATIBLES: Shareholders Give Nod on 'Stent' Sale to Abbott --------------------------------------------------------------- Shareholders of Biocompatibles International approved overwhelmingly the sale of the company's core stent business to Abbott Laboratories during a "lively" EGM Tuesday, the Financial Times says. The paper says only less than 2% of shareholders opposed the deal, while shareholders representing 34.4% of the capital voted to accept the GBP134 million-offer from Abbott. In return, however, for the overwhelming support, shareholders forced management to give them every penny generated from the sale. The opposition plans to elect one of their own to the board in June when the company holds its annual meeting. Management ignored calls for resignation on Tuesday, the report says. Another extraordinary meeting to vote on the proposed special dividend -- worth 70p initially and up to 30p over the next year or so -- is likely to be called following the company's annual meeting, the paper says. The disposal of the stent business leaves the company with only a handful of early-stage projects. Management, however, expects the sale proceeds to last it for another three years. The company owns a technology for masking medical devices from the body's immune system. BRITISH TELECOM: Announces New Approach on Broadband Services -------------------------------------------------------------- BT unveiled its new approach to broadband, dubbed "BT Broadband", the company said in a statement yesterday. Its "no-frills" broadband product aims to generate 500,000 additional residential connections by Summer 2003, playing a critical role in helping meet the one million connections target set by BT Group chief executive, Ben Verwaayen. By separating access to the internet from value-added services, BT has created the first complementary alternative to the ISP business model which makes it easier for customers to choose what services they want delivered in the way they want. Pierre Danon, chief executive of BT Retail, said: "Creating a mass-market for any product or service needs affordability plus innovation. BT Broadband delivers both. As a result, our customers and the competitive market that provides content, applications and services, will benefit. From this autumn, residential customers will have a new, simpler alternative for surfing the internet on one phone line, while service and content providers will have a wider target market and a simpler, easier and more compelling route to generating revenue." The key elements of the plan announced were: Access: the launch of BT Broadband: a "no frills" DSL access product which allows customers always-on high-speed direct access to the internet over a single home phone line for just GBP27 a month if paying by direct debit or monthly payment plan, plus the standard line rental charges. A modem and micro-filters pack will cost GBP80 from BT, although they can be obtained elsewhere. There is also a one-off connection charge of GBP60. The connection fee can be spread with the monthly direct debit facility available with the BT phone bill. The new service strips out value-added services like email, free personal web space and content. This leaves customers free to create the portfolio of services and content they want and means they do not have to pay for services they may not need. BT Broadband will be widely available from autumn 2002 following extensive trials this summer. Content: a wide range of partnerships have been agreed with companies to guide consumers through the potential of broadband internet content and services. They include ISPs Clara.net, Plus.net and BTopenworld, as well as UKonline (the government's initiative to help the UK get the most out of the internet), MSN, Yahoo, Sky, BTLooksmart and Google (portals and search engines), BBCi, Infogrames, Clubbed.com (news, information and entertainment), MacAfee (security), totaljobs.com (jobs) and lastminute.com (travel). As well as established online brands, BT is initiating joint marketing to help smaller providers raise the profile of their broadband services. BT is keen to talk to as many service and content providers as possible to widen consumer awareness of broadband's potential. Shopping: an innovative micropayment service, based on proven technology, which enables consumers to 'pay-as-they-go' when buying online content and services, whether or not they are BT customers, and without the need for subscription. The system is ideal for relatively low-price 'loose change' download services such as games and music. The micropayment service will be available from autumn 2002 and BT is looking to attract a wide range of providers interested in offering cost-effective charging structures while giving consumers the benefit of paying securely online. Pierre Danon said: "We are offering a suite of new ideas to allow as many residential customers to get connected to broadband as easily as possible and at an affordable price. We are making it simple for customers to get the most out of the internet in a way that suits their own interests. These moves are all about providing our customers with the services they have told us they want - faster direct access to the internet, integrated sales and service and real choice of compelling content and online services. We intend to keep broadband direct, simple and fun for the customer, which should also be good news for content and service providers." BT Broadband is expected to generate GBP360 million a year in revenue for BT Retail by 2004/05 and be profitable from 2003/04. Payback on the new service is expected to be 27 months. Digital Support is forecast to generate GBP150 million revenues a year by 2004/05 and the Micropayments business is set to generate GBP40 million revenues a year by the same time. Together with the corporate broadband teleworker product announced earlier this month with Microsoft as the first customer (GBP30 million revenues per annum by 2004/05), this adds up to GBP490 million of new, annual broadband related revenues by 2004/05, allowing for a GBP90 million substitution effect of the new broadband service. While the introduction of these new services is likely to create a substitution effect, with reduced sales of domestic ISDN and second line services for example, the customer service and overall revenue impact will be positive. Pierre Danon said: "It is important to BT that we are driven by customer satisfaction in developing our revenue growth opportunities and today's intentions deliver exactly that. Today (April 24, 2002) BT has gone another step to ensuring broadband is at the heart of BT. We have good products. They are at the right price. And they will be backed by a new approach to customer service, strong marketing, and increasing availability." BT Retail is one of the businesses that make up the BT Group. Others include BT Ignite, BT Wholesale, BTopenworld and BTexact Technologies. It is the UK's leading communications service provider and the prime channel to market for the other businesses in the Group. It has 21 million residential and business customers, a turnover of GBP11.8 billion (in the last full financial year) and around 50,000 employees. For further information: Catherine Spaul, Fishburn Hedges Telephone: 07808 401 632 Sarah Menendez, Fishburn Hedges Telephone: 020 7839 4321 BT Group Newsroom Telephone: 020 7356 5369 EGG PLC: Q1 Financial Results and New Business Figures ------------------------------------------------------ "We are pleased with our first quarter's performance, with our core UK business delivering its first full quarter of profits. With revenues growing strongly and costs remaining tightly controlled, we are sustainably profitable in the UK," Egg plc's Chief executive Paul Gratton said. The company's financial highlights were outlined as follows: -UK profit before tax of GBP4.1 million (Q1 2001: GBP37.2 million loss) -Costs of international expansion GBP1.7 million (Q1 2001: GBP0.7 million) -Operating income up 102% to GBP73.7 million (Q1 2001: GBP36.5 million) -Earnings per share 0.2p (Q1 2001: loss per share of 3.4p) -Total assets increased to o8.8 billion (Q1 2001: GBP7.8 billion) with credit card balances reaching o1.9 billion (Q1 2001: GBP1.3 billion) In summary, the company's business highlights were revealed as follows: -157,000 net new customers in Q1 2002 taking the total to 2.1 million -Credit card customers exceed 1.5 million -On track to launch in France later this year Chief Executive Paul Gratton said: "We are pleased with our first quarter's performance. Customer acquisition remains strong, with 157,000 net new customers acquired during the period, the majority of whom have joined through Egg Card. Our core UK business has delivered its first full quarter of profits. Operating income has increased to o73.7m in the quarter, up 102% on the comparative period in 2001. With revenues growing strongly each quarter, and costs remaining flat we are sustainably profitable in the UK." Mr Gratton continued: "We have had a good start to the second quarter. The repositioning of the online savings offer, including new guarantee and bond products, has had excellent uptake from consumers with o281 million of net inflows in Q2 up to 22 April. The success of our new savings proposition, combined with continuing growth in card customers, has resulted in 50,000 new customers acquired in the first three weeks of Q2. We remain happy with the credit performance of our card portfolio and our proposition continues to attract high quality customers. We continue to monitor this closely. The Egg brand identity and website have recently been updated and refreshed to reflect the development and aspiration of Egg as a global brand. This early move positions us well for our launch in France, plans for which remain on track for later this year." For a complete copy of the company's notice of annual general meeting to be held on April 30, 2002, please refer to: http://bankrupt.com/misc/agm2002.pdf. ENODIS PLC: Equipment Maker Sells Belshaw Brothers for US$24.2MM ---------------------------------------------------------------- Enodis plc, manufacturer of food service equipment, announces that it has sold Belshaw Brothers Inc. for cash consideration of US$24.2 million (GBP16.7 million). The consideration, net of expenses, will be used by Enodis plc to reduce debt. Belshaw, a Seattle based manufacturer of doughnut making equipment, is being purchased by Aga Foodservice Group plc. Belshaw last March had net asset value of $5.9 million (excluding goodwill and inter company balances). This year, the business contributed US$21.5 million to sales and US$4.9 million to operating profit. Commenting on the sale, Andrew Allner, Chief Executive Officer, said: "This transaction, following the disposal of Sammic last December and our recent successful Rights Issue, represents another step in implementing our strategy to reduce debt and improve the focus on our core businesses. Our aim is to consolidate and extend our position as the world's leading manufacturer of heavy core commercial food service equipment through product, distribution and service excellence." Contact Information: Andrew Allner Chief Executive Officer Enodis plc 020 7304 6006 Richard Mountain Financial Dynamics 020 7269 7291 ITV DIGITAL: Gov't Eggs Other Broadcasters to Rescue Network ------------------------------------------------------------ The British government is reportedly working overtime to convince other broadcasters to pool their resources and rescue ITV Digital, says The Times. The paper says Channel 4 is now believed to be in the bag. BBC and BSkyB, on the other hand, are said to be "unreceptive" to the idea. The government's behind the scene maneuvering is not surprising, as it hopes to switch the whole country to digital transmission by 2010. Officials are accordingly worried that ITV Digital's collapse will be a deathblow to the program. Analysts told the paper that BBC's involvement in a rescue bid will prove problematic, partly because it could be accused of squandering license-payers' money. Competition issues, on the other hand, are likely to prevent BSkyB from taking direct part in a deal. It is believed, however, that the football league is mulling a takeover bid for the channel. Accordingly, the league is presently looking for a broadcasting partner to help formalize a bid, the paper says. Meanwhile, Apax Partner, one of several venture capitalists hinted as a possible "white knight," denies it is in the process of making an offer. ITV Digital: Shuts Down Film Channel to Minimize Expenses --------------------------------------------------------- ITV Select, the pay-per-view film channel, of ITV Digital went off the air Monday, becoming the casualty of the decision to put the company on the auction block, the Telegraph said yesterday. According to Emyr Byron Hughes, managing director of the channel, the channel was no longer viable after Deloitte & Touche cut ITV Digital's financial subsidy to the venture. ITV Select offers the digital service's 1.25 million subscribers four channels of Hollywood films and adult entertainment. The Football League was not also spared of a casualty. Roy McFarland resigned his post as manager of the Third Division club Torquay United after the board told him it would have to renegotiate his contract and sack his assistant manager, David Preece, because of uncertainty over ITV Digital's future. ITV DIGITAL: Football Clubs Face Closure Due to Sale Decision ------------------------------------------------------------- About 30 football clubs are in danger of disbanding as a result of the recent decision to sell ITV Digital by administrator Deloitte & Touche, reports The Guardian. The alarming situation has put the culture ministry under fire for not taking a more leading role in the negotiations between the channel and the soccer league. "This is a disaster for football. I hope that even at the 11th hour a solution can be found. Stronger ministerial leadership is needed if ITV Digital subscribers and football are not both to be losers," shadow culture secretary Tim Yeo said. But Culture Secretary Tessa Jowell ruled out any bailout for clubs, insisting that they have largely created their own problem by paying players so highly. "I know that some football clubs have tough times to face. I have spoken tonight to the chief executives of the FA [Adam Crozier], Premier League [Richard Scudamore] and the chairman of the Football League [Keith Harris]; I have urged them to meet as soon as possible to discuss their options. If I can do anything to help those talks, I will," the secretary told the Guardian. Football League CEO David Burns, for his part, says the fight goes on. "This is a course of action that we had anticipated. It does not alter the league's determination to receive full value of the GBP178.5 million it is owed by Carlton and Granada," Mr. Burns told The Guardian in an interview. League lawyers say they will go after Carlton and Granada now that ITV Digital could no longer afford to pay up the remaining due on a three-year broadcasting contract. Carlton and Granada blamed the league's insistence to get paid the full price for the decision to peddle the digital network. "The business was simply not viable as it was," a Carlton source told The Guardian. XENOVA GROUP: In US$63MM License Agreement With Genetech -------------------------------------------------------- Xenova Group plc -- www.xenova.co.uk -- announced Tuesday that it has signed an exclusive development and license agreement with South San Francisco-based Genentech Inc worth up to US$63 million (GBP43.2 million) plus royalties. The agreement provides Genentech with worldwide rights to develop and market products primarily targeting disorders of the immune system based on Xenova's OX40 receptor protein and anti-OX40 Ligand antibody programmes. Genentech will pay Xenova licence fees of up to US$5 million (GBP3.4 million) over the first year of the collaboration. In addition, Genentech will pay Xenova up to US$58 million (GBP39.7 million) in milestones assuming successful development and commercialisation of a product. Significant tiered royalties, depending on the level of sales, are also receivable by Xenova. Genentech has also acquired an option, but not an obligation, to develop a second product. Should a second product be developed and commercialised, further milestone payments and royalties would apply. Xenova will transfer to Genentech responsibility for the further development of the relevant programs, including preclinical and clinical trials, all regulatory filings and the manufacture and sale of any products arising from the agreement worldwide. Genentech will fund all future development activities within the scope of the agreement. Xenova retains for its proprietary development and commercialization in oncology and other applications all rights to OX40 Ligand and stimulatory anti-OX40 antibodies. Xenova's OX40 platform technology is part of the portfolio of pre-clinical research programs acquired through its merger with Cantab Pharmaceuticals plc in 2001. OX40 is a platform technology capable of producing several therapeutic solutions. OX40 and OX40 Ligand are a pair of interacting cell-surface proteins which are important for the induction and regulation of immunity. The therapeutic potential of these cell-surface proteins lies in their ability to modulate the immune system. Modulation of the immune system has the potential to be of benefit in a wide range of diseases including inflammatory and autoimmune disease, infectious diseases and cancer. Xenova is the holder of exclusive licenses to several patents relating to the OX40 platform. Contacts: UK Xenova Group plc Tel: +44 (0)1753 706600 David A Oxlade, Chief Executive Officer Daniel Abrams, Group Finance Director Hilary Reid Evans, Corporate Communications US Trout Group/BMC Communications Tel: 001 212 477 9007 Press: Brad Miles (Ext 17) Lauren Tortorete (Ext 20) Investors: Jonathan Fassberg (Ext 16) Lee Stern (Ext 22) Financial Dynamics Tel: +44 (0)207 831 3113 David Yates/Fiona Noblet XENOVA GROUP: Company Profile ----------------------------- Name: Xenova Group Plc 240 Bath Road Slough, Berkshire SL1 4EF, United Kingdom Phone: (01753) 706600 Fax: (01753) 706607 Website: http://www.xenova.co.uk SIC: Pharmaceutical Manufacturer Employees: 47 Net Loss: US$15.6 million (09-30-02) Total Assets: US$65 million (09-30-02) Total Liabilities: US$15.0 million (09-30-02) Type of Business: Xenova Group plc is a drug development and manufacturing company. The group develops small molecule cancer treatments. Trigger Event: The Xenova group sold the assets of Xenova Discover and MetaXen, its subsidiaries that developed pharmaceuticals from plants and other natural compounds. Intending to focus and expand in the area of cancer drugs, Xenova acquired and merged with struggling vaccines group Cantab Pharmaceuticals last year. Xenova has been loss-making, now valued just under GBP90 million - or barely four times the cash it has in the bank. The company declared no dividends since 1996. Chairman: John B. H. Jackson Group CEO and Director: David A. Oxlade Group Finance Director and Director: Daniel Abrams Bankers: Barclays Bank PLC Financial Advisers: Nomura International PLC Stockbrokers: Nomura International PLC Auditors: PricewaterhouseCoopers Law Firms: Slaughter and May , Heller, Ehrman, White & McAuliffe Anderson & Company Financial PR Advisers: Financial Dynamics No. of Shares in Issue: 90.4 million shares (April 2002) ************ 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *