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/raid1/www/Hosts/bankrupt/TCREUR_Public/020502.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, May 2, 2002, Vol. 3, No. 86 Headlines ********* * G E R M A N Y * KIRCHMEDIA: Rewe Joins EUR800 Million Rescue Proposal of Minority MOBILCOM AG: France Telecom to Settle Ownership Row in 2-6 Weeks SCHMIDTBANK GMBH: Consors Sale to BNP Paribas Nets EUR287 Million SER SYSTEMS: Will Slip Into Insolvency If Made to Pay Bank Debt * N E T H E R L A N D S * UNITED PAN-EUROPE: Priority Shareholders File US$200 Million Suit * P O L A N D * NETIA HOLDINGS: Unit Fails to Pay Interest on Bonds Due May 1 * S W E D E N * LM ERICSSON: Expands CDMA Contracts With China Unicom * S W I T Z E R L A N D * ABB LTD.: US$968 Million 5-year Bond Issue Gobbled up by Market ABB LTD.: Hives Off IT Unit in India to IBM Counterpart PSINET EUROPE: Sold by Bankrupt Parent to Israel Corp., ClearBlue * U N I T E D K I N G D O M * CONSIGNIA: Commons Committee Warns Against Too Much Competition CORDIANT COMMUNICATIONS: Beaten Anew to Hyundai Ad Contract EQUITABLE LIFE: Two Ex-directors in Suit Worth GBP410 Million ITV DIGITAL: Administrator Pulls Plug, Prepares for Liquidation ITV DIGITAL: Several Football Clubs to File for Administration NAVAN MINING: 2001 Results Spell Trouble as Losses Equal Capital RAILTRACK PLC: Administrator, Regulator Bring EWS Case to Court SCOOT.COM PLC: In Serious Trouble as Cash Drops to GBP4.4 MM SPORTSWORLD MEDIA: Ex-shareholder Buys Two Foreign Operations THUS PLC: 2001 Full-year Results Boost Prospects After Demerger ============= G E R M A N Y ============= KIRCHMEDIA: Rewe Joins EUR800 Million Rescue Proposal of Minority ----------------------------------------------------------------- Shareholder Rewe AG has pitched in support for the EUR800 million capital hike at KirchMedia, a proposal recently revived by minority shareholders to rescue the company from insolvency. According to AFX News, the retail giant has allied with Silvio Berlusconi's Mediaset and Rupert Murdoch's News Corp, Saudi Prince Alwaleed bin Talal's Kingdom Holdings and Lehman Brothers, which are now conducting a due diligence on the accounts of KirchMedia. This due diligence has been made a pre-condition for the proposed capital increase. The report says shareholders also want the restructured media rights company to completely withdraw from its pay-TV business. "Fundamentally, we are ready to prevent an insolvency of KirchMedia through a capital hike," a spokesman for Rewe told AFX News. Rewe holds a 6.5% stake in KirchMedia. MOBILCOM AG: France Telecom to Settle Ownership Row in 2-6 Weeks ---------------------------------------------------------------- France Telecom expects to settle the impasse at MobilCom AG, the German mobile unit that it wants controlled by creditor banks momentarily, within the next two to six weeks. The French telecom incumbent says it still wants to takeover the entire unit through its mobile phone unit Orange, but not immediately. The company did not state how it intends to settle the issue, Times Online says. France Telecom had recently said that it will have to adjust its previous arrangement with banks, which was designed to get around a German law that obligates it to takeover the entire MobilCom stakes. The French operator is not about ready to annex MobilCom as it will have to consolidate the latter's debts to its already ballooning debt. MobilCom currently has a EUR6 billion debt- pile. France Telecom, on the other hand, is under pressure to bring down its more than EUR60 billion obligations. SCHMIDTBANK GMBH: Consors Sale to BNP Paribas Nets EUR287 Million ----------------------------------------------------------------- The deal that sent Consors AG to BNP Paribas earned ailing Schmidtbank GmbH EUR287 million, reports the Financial Times. Yesterday, the Troubled Company Reporter-Europe said the deal was sealed between the two parties early this week for an undisclosed amount. Cortal, the online brokerage unit of BNP Paribas, ended up owning 66.4% of Consors as a result of the deal. The report says a public offer for the remainder of Consors will follow within four weeks, bringing the total purchase price to EUR485 million. The sale of Consors is part of Schmidtbank's restructuring after a consortium of banks rescued it from insolvency late last year. SER SYSTEMS: Will Slip Into Insolvency If Made to Pay Bank Debt ------------------------------------------------------------- German software manufacturer SER Systems AG is reportedly close to filing for insolvency and has only until May 15 to negotiate with banks for a postponement of a loan payment, says Borsen- Zeitung/FT Information. The report did not state the amount the company owed creditor banks. It only said that foregoing the payment will help the software maker "fight off the threat of [insolvency]." According to Hoovers, SER Systems provides software for knowledge, document, and workflow management, allowing companies to share, analyze, and distribute information throughout enterprises. The company's core product SERbrainware -- which is based on predictive, neural network technology -- analyzes and classifies content (regardless of format), then associates and stores the information with similar information, allowing users to quickly locate and extract data. SER Systems has used acquisitions to expand from its traditional document management products into broader knowledge management applications. Founder and CEO Gert Reinhardt and family own about 30% of the company. The company reported revenues of US$174.5 million in 2000. At the time, total assets stood at US$339.8 million, while total liabilities only amounted to US$168 million. ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: Priority Shareholders File US$200 Million Suit ----------------------------------------------------------------- A group of minority shareholders in Priority Telecom NV are seeking US$200 million in stock or cash from parent company United Pan-Europe Communications NV in a suit filed before a Dutch civil court in Utrecht, The Wall Street Journal said Tuesday. The suit alleges breach of contract over the way the troubled alternative telecom carrier was listed on Euronext Amsterdam on Sept. 28, the paper said. The group claims the amount in the suit equals that which they were owed under the terms of the sale of U.S.-based Cignal Global Communications Inc. to UPC in 2000. According to the paper, the row centers on whether the listing of Priority shares qualifies as an initial public offering. Shareholders claim that it doesn't, in part because no fresh cash was raised and the shares aren't actively traded. As a result, they believe they are entitled to the US$200 million option they could exercise under UPC's all-stock acquisition of Cignal if the IPO of Priority, which now includes Cignal, didn't happen by Oct. 1, 2001, the paper said. Six months ago, this same group composed of more than 300 US- based shareholders made similar demands to the company, but was rebuffed as the firm claimed that the option rights the group cited no longer existed following the listing of Priority shares. The paper said even if the minority shareholders were to win in court, it's unclear whether UPC would be able to pay. Last month, company auditors expressed doubts that it could still continue as a going concern. The company recently bared losses of EUR4.4 billion, more than double the figures last year. It is valued at just EUR48.8 million on Euronext. Priority Telecom is a voice and data services provider, which reported a net loss of EUR578.7 million for 2001 compared with a loss of only EUR64.8 million in 2000, the paper said. =========== P O L A N D =========== NETIA HOLDINGS: Unit Fails to Pay Interest on Bonds Due May 1 ------------------------------------------------------------- Netia Holdings S.A., Poland's largest alternative provider of fixed-line telecommunications services, announced Tuesday that its subsidiary Netia Holdings B.V. will not make interest payments of US$10,250,000 on the 10 1/4% Dollar Notes due 2007, US$10,887,000 on 11 1/4% Discount Dollar Notes due 2007 or an interest payment of approximately EUR5,823,000 on the 11% Discount DM Notes due 2007. All of these interest payments are due on May 1, 2002. As previously announced, Netia has reached an agreement with its bondholders concerning a consensual reorganization of its balance sheet to reduce its debt and interest burdens. This non-payment of interest announced Tuesday is in accordance with the agreed terms of Netia's restructuring. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on March 28, 2002 and it Current Report on Form 6-K filed with the Commission on April 3, 2002. The Company undertakes no obligation to publicly update or revise any forward-looking statements. CONTACT: Netia Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 or Taylor Rafferty, London Jeff Zelkowitz, +44-(0)20-7936-0400 or Taylor Rafferty, New York Andrew Saunders, 212/889-4350 =========== S W E D E N =========== LM ERICSSON: Expands CDMA Contracts With China Unicom ----------------------------------------------------- Ericsson announced Tuesday the expansion of their original phase one contracts with China Unicom for CDMA equipment and services covering seven provinces in China. Ericsson's total CDMA solution has been expanded in the Jiangsu, Anhui, Sichuan, Yunnan, Henan, Heilongjiang and Liaoning provinces and deployment has already been completed. "Ericsson is committed to supporting China Unicom's continued growth, in network capacity, footprint and the introduction of wireless data services," said Ake Persson, president of Ericsson Mobile Systems CDMA. In addition, Ericsson is currently conducting a CDMA1X trial with China Unicom. Ericsson's total CDMA1X product portfolio is built upon Ericsson's global 3G platform for switching, radio access, IP, services and applications. Focused on providing sustainable value into the future, Ericsson's CDMA1X total solution has been designed to provide operators, like China Unicom, with an easy, cost-effective migration path to Ericsson's CDMA 1xEV-DO (Evolution Data Only) and 1xEV-DV (Data and Voice) solutions. The CDMA1X trial is progressing as planned. "We are honored to be selected by China Unicom to assist them in expanding their CDMA network," said Jan Malm, president of Ericsson (China) Company Ltd. "Ericsson has a long standing relationship with China Unicom and we are pleased to further strengthen our market leadership in China through this continued cooperation with China Unicom in CDMA." Nanjing Ericsson Panda Communications Company Ltd. (ENC), one of Ericsson's largest joint ventures in China, has delivered Ericsson's leading CDMA solution to China Unicom. The total solution contracts include: 800 MHz compact radio base stations (RBS); base station controllers (BSC); mobile switching centers (MSC); home location registers (HLR); and a full portfolio of services including network management, training, network rollout and technical support. Ericsson has also delivered its industry-leading Interworking Function (IWF) solution to China Unicom, which will enable them to offer their subscribers wireless data services such as access to the Internet, WAP portals and corporate intranets, along with circuit switched data and fax services. Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. Read more at http://www.ericsson.com/press About Ericsson CDMA Systems Ericsson's total CDMA2000 solution, which includes infrastructure, applications, devices, services and proven market expertise, is optimized for delivering advanced data solutions. Developed by the industry's premier CDMA experts, Ericsson's true 3G CDMA2000 solution offers operators unique performance and cost-saving advantages by leveraging the full strength of Ericsson's expertise in wireless, IP/datacom and Mobile Internet technologies. Ericsson's CDMA2000 solution, based on innovative product design, global platforms and open standards, provides the flexibility operators need to succeed in an always-evolving wireless market. Read more at: http://www.ericsson.com/cdmasystems/cdmapress.shtml About China Unicom China Unicom was established in July 1994 and listed on the Hong Kong and New York stock markets in June 2000. China Unicom is China's second largest mobile communication operator providing a full range of telecom services such as domestic and international long-distance call service, mobile phone and data/IP network communications. Presently it has over 100 branches and several subsidiaries in the country's 30 provinces, autonomous regions and municipalities directly under the central government. With nearly 50 million users China Unicom is now the only fully licensed service provider in the country. cdmaOne is a trademark of the CDMA Development Group. CDMA2000 is a trademark of the Telecommunications Industry Association. CONTACT: Ericsson Mobile Systems CDMA Tina Asmar, Press Officer, 858/332-5817 tina.asmar@ericsson.com or Ericsson Inc. Kathy Egan, Vice President, Communications, 212/685-4030 pressrelations@ericsson.com or Glenn Sapadin, Manager, Investor Relations, 212/685-4030 investor.relations@ericsson.com or Ericsson (China) Company Ltd. Tu Min, Corporate Communications Director +86 10 6561 5566 min.tu@etc.ericsson.se ===================== S W I T Z E R L A N D ===================== ABB LTD.: US$968 Million 5-year Bond Issue Gobbled up by Market --------------------------------------------------------------- The US$968 million 5-year convertible bond issue of ABB Ltd. is believed to have been subscribed more than 12 times and has reached the top of the target price range, says the Financial Times. The conversion price was set at CHF18.48 - a 30 percent premium to Monday's closing share price - and the coupon was set at 4.625 percent, which was the lowest level of the 4.625 percent to 5.125 percent target range. According to the paper, the issue was completed more quickly than many had expected, buoying the market that nudged ABB shares 1% up to CHF14.55. The proceeds from the transaction accounted for roughly half the US$2 billion that ABB promised to raise. Shares involved in the deal only amounted to 85 million or equal to around 7.5% of the total outstanding. Credit Suisse First Boston and Schroder Salomon Smith Barney arranged the issue. ABB LTD.: Hives Off IT Unit in India to IBM Counterpart ------------------------------------------------------- ABB Ltd.'s Indian unit signed an outsourcing deal with IBM India recently as part of a wide-ranging cost-cutting scheme following the parent company's brief short-term liquidity scare. "The contract includes shifting of people, managing ABB's IT application, and technology upgrades," Abraham Thomas, IBM India's managing director, told Reuters during a joint news conference. Both sides did not disclose financial details, but Mr. Thomas said the deal would be one of the biggest contracts for IBM India. Ravi Uppal, ABB India's managing director, said ABB expected to focus on its core engineering business as a result of the deal. Under the contract, which is for more than five years, IBM would manage ABB's data center, disaster recovery services and technical support of business applications, and act as ABB's IT arm in India, the news outfit said. ABB wants to slash total debts by US$1.5 billion this year. Yesterday, TCR-Europe reported that a Singaporean insurance unit was also put on the auction block recently. PSINET EUROPE: Sold by Bankrupt Parent to Israel Corp., ClearBlue ----------------------------------------------------------------- Bankrupt Internet service provider PSINet Inc. has shipped its European subsidiary PSINet Europe BV to a consortium led by Israel Corp. and ClearBlue Holdings Ltd., says The Deal.com The transaction, which netted US$9.5 million for the troubled American firm, still needs the approval of the U.S. Bankruptcy Court for the Southern District of New York. The unit, along with the rest of the European operations, was not part of the Chapter 11 bankruptcy petition in the U.S. Nonetheless, the sale needs the nod of the court since the unit is considered an asset. Israel Corp. is a Tel Aviv-based investment company with interests in shipping, oil, communications, hotels and finance, the report said. PSINet Europe provides corporate Internet access and Web hosting. It generated revenues of approximately US$160 million in the year ending December 31, 2001 and employs around 600 staff. The sale is the result of the motion filed last month by the parent company, requesting the Court to auction its European operations. Dresdner Kleinwort Wasserstein provided financial advice to PSINet on the deal, and Nixon Peabody LLP and Wilmer, Cutler & Pickering were legal advisers, the report said. Allen & Overy represented Israel Corp. while Heller Ehrman White & McAuliffe represented ClearBlue, the report added. The U.S. operations of PSINet are now controlled by Cogent Communications Group Inc., which bought the company in March for only US$7 million. The company filed for Chapter 11 bankruptcy protection in June 2001. =========================== U N I T E D K I N G D O M =========================== CONSIGNIA: Commons Committee Warns Against Too Much Competition --------------------------------------------------------------- An influential commons committee has accused post regulator Postcomm of "decision making in the dark" and criticized its policy towards Consignia, says the Independent. The report says the comments of the cross-party Public Accounts Committee could pressure the regulator to soften its stand to increase competition in the industry and thereby threaten the viability of Consignia. Later this month, Postcomm is expected to release its proposals that will open the sector to more competition. The committee cautioned that the regulator's actions could mean the death of the universal service that guarantees deliveries to all homes in the country at a single price. "Postcomm have a very difficult task to perform. They have to increase competition, set the price for stamps and ensure the universal service. This task involves delicate management of a conflict of priorities that may be beyond them and which could even result in Consignia going out of business," MP Edward Leigh said. "The postal service that we have always taken for granted is under threat. Soon, most of us may not receive our delivery early in the morning," the Conservative chairman of the committee warned. CORDIANT COMMUNICATIONS: Beaten Anew to Hyundai Ad Contract ----------------------------------------------------------- British advertising firm Cordiant Communications Group Plc has lost a second ad contract with Hyundai Motor Co. worth GBP6 million, Bloomberg said Tuesday. Citing the New York Times, which recently interviewed Dave Weber, the company's vice president for marketing, Bloomberg said the carmaker has instead chosen Dallas-based Richards Group. This is the second time that Cordiant's Bates Worldwide unit lost a contract from Hyundai this year. The news agency said Aegis Group Plc, the biggest independent buyer of advertising time, also cornered a Hyundai contract in January, which was previously held by Cordiant. EQUITABLE LIFE: Two Ex-directors in Suit Worth GBP410 Million ------------------------------------------------------------- Equitable Life got a rare piece of good news lately as it surfaced that two of the former directors it had named in a US$3 billion suit have a combined fortune of GBP410 million. According to the Independent, former non-executive David Wilson, who served between 1994 and 1999, is worth GBP320 million. He presently heads construction giant Wilson Bowden and has about GBP300 million plus worth of stake in other holdings. Another non-executive, Sir Christopher Wates has a family fortune of GBP90 million, the same paper said. A claim against this non- executive, however, is dependent on the House of Lords, which has yet to rule whether or not people can be sued for their actions more than six years ago. Sir Christopher served before 1996. The news buoyed hopes that the suit against 15 former directors could result in a modest compensation. Current estimates of what Equitable might recover if the case is successful stand at between GBP20 million and GBP30 million. The paper says the other source of compensation would be the directors' insurance. This was earlier rumored to stand at GBP5 million per director. ITV DIGITAL: Administrator Pulls Plug, Prepares for Liquidation --------------------------------------------------------------- Some 1,700 staff of ITV Digital are now without jobs after administrator Deloitte & Touche pulled the plug of the pay-TV channel Tuesday night, reports the Telegraph. After days of peddling the company to potential buyers, the administrator finally gave up on the idea of selling it as a going concern and would instead dismantle the network piece by piece. In a statement, Deloitte & Touche said that it had made "strenuous efforts initially to restructure the cost base and latterly to sell the business and assets. Unfortunately, there is no appetite in the market for a preservation of the business as a going concern." ITV Digital's 25 pay services - including Sky Sports, MTV, Discovery, UK Gold, Film Four and Sky Movies - went off air early Wednesday morning. The employees were notified Tuesday night that they were being made redundant immediately, the report says. About 400 staff are based at a call center near Plymouth, with another 400 at the headquarters in Battersea, south London. The other 900 workers are assigned at a call center in Pembroke, a joint venture with the Welsh Development Agency. At the moment, they are the only employees presumably secured at their posts since they also do work for other companies, the paper says. The report says 800,000 subscribers were affected by the switch- off. They will continue to receive free-to-air services such as BBC4 and ITV2, at least "in the short term," the administrator says. A lengthy litigation is expected to follow from this decision, as creditors like BSkyB and UKTV try to recover as much money as they could from the failed venture. Customers with pre-paid subscriptions will also have to take their place in the queue if they want a refund. The shutdown also ended the ambition of Carlton and Granada, co- owners of ITV Digital, to compete with Rupert Murdoch by offering a low-cost alternative to satellite television. The failed venture cost the two companies about GBP1.1 billion. But, perhaps, the biggest loser of all is the government, which had planned to switch off the analogue signal as early as 2006. Shadow culture secretary Tim Yeo says the government was partly to blame for the debacle, as it had refused to take a leading role in rescuing the company. He also said the failure of government to strengthen the weak digital terrestrial signal, which meant ITV Digital viewers received a technically poor service, was one of the key reasons why "no one wanted to take it over." ITV DIGITAL: Several Football Clubs to File for Administration -------------------------------------------------------------- Several clubs in England's First, Second and Third Divisions could apply for administration en masse on the same day that ITV Digital will be put into liquidation several days from now. According to BBC News, the poorer clubs stand to lose a huge amount of funding from the liquidation of the network as it will make uncertain the negotiation of the GBP178.5 million the channel still owes the league. But some clubs are allegedly using the filing as their "legal get-out clause" from many player contracts. They expect the administration proceeding to afford them a chance to restructure the expensive contracts. In addition, they also hope to gain publicity long-sought by some chairmen bitter at a perceived lack of government support, and the refusal of ITV Digital's owners to honor their obligation. Neither club chairmen nor the Football League has commented on the report, the news channel says. NAVAN MINING: 2001 Results Spell Trouble as Losses Equal Capital ---------------------------------------------------------------- Near-bankrupt Navan Mining disclosed Tuesday losses that equaled its market capitalization, following a US$58 million charge for the write-down of its Spanish unit, says the Financial Times. The financial guidance bolstered speculations that the company is about to go bust. The British miner said the cost of its financial restructuring also contributed to the huge losses. The company is currently seeking a buyer for its loss-making Spanish zinc operations, the paper says. "Negotiations are underway regarding the potential sale of the Spanish subsidiaries... If this is not possible, it is probable that the Spanish subsidiaries will have to be liquidated," the company said. The paper said the group's full-year loss before tax was US$83.6 million compared with US$6 million in 2000 on turnover down from US$36.7 million to US$31.8 million. RAILTRACK PLC: Administrator, Regulator Bring EWS Case to Court --------------------------------------------------------------- Railtrack administrator Alan Bloom and rail regulator Tom Winsor are heading to court to get a clear ruling on who between them has the authority to rule over disputes involving Railtrack while it is under administration. According to the Telegraph, Mr. Winsor had been asked by the English, Welsh & Scottish Railway (EWS) to hand down a binding ruling over a new track access contract, which is currently being disputed. EWS believes Mr. Winsor has the authority to adjudicate the row under Section 17 of the 1993 Railways Act. But Mr. Bloom counters that Section 11 of the 1986 Insolvency Act supersedes the authority of the rail regulator while a company is under administration. He believes the dispute falls under the definition of legal proceedings and must therefore require the consent of the administrators or the courts. The case could take several days to hear and will be entirely funded by the taxpayer, says the Telegraph. SCOOT.COM PLC: In Serious Trouble as Cash Drops to GBP4.4 MM ------------------------------------------------------------ Online directory Scoot.com Plc bared losses of GBP27.8 million in 2001 and an alarming cash horde that will only last it until August this year, says The Guardian. The paper says the company was forced to write-down a total of GBP116.3 million, primarily due to the sale of Loot to Daily Mail & General Trust for just one quarter of the GBP189 million it originally paid for. The losses left the company with just GBP4.4 million in the bank. Unless granted a last minute reprieve, the company could have serious trouble or even fold up by August, the report says. The company currently operates in the UK and Ireland, providing directory services both on its own site and through a variety of partners, including Vodafone, says the paper. A spokeswoman told the paper that the company is still pursuing vigorously the three options it had announced in September to keep the company as a going concern. These options are: to sell up, find a joint venture partner or secure new investment. This is not the first time that the company teetered on the brink of bankruptcy, the paper says. Twice in the past the company also courted collapse. In the first instance, the company postponed a trip to the bankruptcy court by selling its stake in Scoot Europe to former shareholder Vivendi Universal in July 2001. The second happened when it sold Loot to DMGT the following August for 75% less than it paid for it just a year earlier, the paper says. SPORTSWORLD MEDIA: Ex-shareholder Buys Two Foreign Operations ------------------------------------------------------------- A former shareholder of Sportsworld Media has snatched two foreign operations of the insolvent global sports marketer, The Guardian said Tuesday. Jeff Chapman, who netted GBP70 million when he sold his stake in the company, bought Sportsworld's Australian and Dubai businesses from the interim administrator for about GBP800,000, the paper said. Accordingly, the Australian unit holds advertising contracts for hoardings at Melbourne cricket ground. The firm was placed in administration on March 27 when it failed to find a buyer after its debt facility expired. The Financial Services Authority is currently investigating the circumstances leading to the collapse. The company sells and manages outdoor advertising in more than 40 sports stadiums, including the Melbourne Cricket Ground. It also produces and distributes sports-related television programs and stages some 50 sporting events such as surfing and snowboarding competitions and triathlons. The company is also involved in athlete representation. In June 2001, the company reported a full-year turnover of GBP35.6 million, with total assets of GBP81.9 million and total liabilities of GBP64.5 million. THUS PLC: 2001 Full-year Results Boost Prospects After Demerger --------------------------------------------------------------- Alternative telecom operator Thus Plc is looking good a month since its demerger from Scottish Power, reporting early this week encouraging results for the year ending March 31. The voice, data and call center services provider said turnover for 2001 grew 17% to GBP268.4 million with turnover in ongoing operations expected to go up further by 22%. EBITDA came in black as well at GBP3.1 million compared with a loss of GBP24.6 million last year. The company also said it had reduced cash outflow from GBP180.3 million last year to GBP86.3 million and boasted that it had not used any of its GBP90 million borrowing facility set up as part of the demerger. The Financial Times says the group is maintaining its forecast of 20-25% growth for 2003 despite adopting stricter accounting rules on controversial capacity lease agreements. The company said it would stop the inclusion of indefeasible rights of use transactions (long-term agreements to lease capacity in bulk on another company's network) as turnover. The paper says the move reflects recent concern that some operators have been booking IRU sales as one-off revenue even though leases can drag on for 25 years. The practice tends to artificially inflate earnings. The company said for the year ending March 31 2003, IRU sales are not expected to exceed GBP5 million. *********** 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 * * *