/raid1/www/Hosts/bankrupt/TCREUR_Public/020530.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 30, 2002, Vol. 3, No. 106


                             Headlines

* F I N L A N D *

SONERA CORPORATION: Merger With Telia Faces Numerous Obstacles
SONERA CORPORATION: Telia Files Notification of Merger With EU

* G E R M A N Y *

CARGOLIFTER AG: In Funding Talks With Investors and State
DEUTSCHE TELEKOM: Chief Jeered at AGM Due to Board Pay Hike
FAIRCHILD DORNIER: State Guarantees on US$90 MM Loan Okayed
GONTARD & METALLBANK: Fritz Nols Applies for Mandates  
GONTARD & METALLBANK: Frankfurter Sparkasse Takes Over Clients
PHILIPP HOLZMANN: O'Rourke May Buy Parts of Holzmann Unit
HUGO BOSS: Irregularities Mar U.S. Books, Profit Forecast Slashed
TEAMWORK INFORMATION: Achieves Sales Target for First Quarter

* I T A L Y *

BLU SPA: Receives Three Offers for Wholesale Transfer of Business
BLU SPA: EU Competition Regulator Against Breakup Plan for Firm
FIAT SPA: Group Junks Proposal to Sell Car Unit to General Motors
FIAT SPA: Creditor Banks, Core Shareholders Wield Greater Power
FILA HODLDINGS: Announces Resignation of Chief Financial Officer

* N E T H E R L A N D S *

KPNQwest: S&P Downgrades Long-term Credit Rating to D From CCC-

* P O L A N D *

BANK OCHRONY: Fitch Individual Rating Drops to "D" From "C/D"
NETIA-HOLDINGS: Shareholders' Meeting Will Be Held June 18

* U N I T E D   K I N G D O M *

AVECIA GROUP: Suffers Several Cuts Due to Electronics Slump
BRITISH TELECOM: To Stop Selling Pre-Paid Phonecards
BRITISH TELECOM: BT Wholesale Sat-internet Trials Start May 31
CONSIGNIA: Brussels Could Stymie Plan to Close 3,000 Counters
CONSIGNIA: Postcomm Delays Postal Deregulation by Another Year
EQUITABLE LIFE: Re-elects Chairman, Five Other Board Members
EUROTUNNEL: Seals Deal With Creditor Banks on GBP400 MM Debt Cut
EUROTUNNEL: Equity Note Deferred Interest Purchase Offer  
EUROTUNNEL: Announces Details of Annual General Meetings
LONDON INTERNATIONAL: Fitch Rates Class "A" and "B" Bonds Junk
P&O PRINCESS: Carnival Will Not Sell Cunard to Seal Takeover Bid
SSL INTERNATIONAL: Lates Financial Results Reveal Losses


=============
F I N L A N D
=============


SONERA CORPORATION: Merger With Telia Faces Numerous Obstacles
--------------------------------------------------------------

Anders Igel, who will head the merged Telia-Sonera entity, admits
that approval of the first pan-Nordic telecom combination will
take time, in part because of a possible formal probe by the
European Competition Commission.

"We are going to have some delays.  This is not only because of
the European Union, but also the U.S. Securities and Exchange
Commission, and various competition authorities which have to
have their say," Mr. Igel said recently.

"We will therefore have a slightly tighter timetable than
planned, but we will try to maintain speed and tempo," he told
Reuters.

In March, Telia announced it would pay 1.5 own shares for each
Sonera share in the first European cross-border merger of former
telecoms monopolists.  The deal is worth EUR7.4 billion, says the
news outfit.

The companies is expecting approval from the EU in June or early
July, but this could be delayed if the Commission starts a
detailed three-month probe, which would delay a potential
approval until autumn, Mr. Igel said.


SONERA CORPORATION: Telia Files Notification of Merger With EU
--------------------------------------------------------------

Telia filed Tuesday, in cooperation with Sonera, a merger
notification with the European Commission with respect to the
planned business combination between Telia and Sonera.

As a result, the European Commission's Phase I review is expected
to be completed by mid-July 2002 at the latest, which is in line
with the previously communicated, preliminary timetable.

Offering circulars, listing particulars and registration
statements are being prepared in Finnish and English, to be filed
with the Finnish Financial Supervision, the Stockholm Stock
Exchange and in the United States with the Securities and
Exchange Commission.

The review process with the Securities and Exchange Commission is
expected to be completed at the end of June or early July 2002,
at which time the offer to Sonera's shareholders can commence.

In view of the vacation period in the Nordic region the offer
period is expected to end in the second half of August 2002, in
order to give Sonera shareholders ample time to tender their
Sonera shares.

Sonera Corporationis a leading provider of mobile and advanced
telecommunications services. Sonera is growing as an operator, as
well as a provider of transaction and content services in Finland
and in selected international markets.

The company also offers advanced data solutions to businesses,
and fixed network voice services in Finland and neighbouring
markets.

In 2001, Sonera's revenues totaled EUR 2.2 billion, and profit
before extraordinary items and taxes was EUR 0.45 billion. Sonera
employs about 9 000 people.

For further information at Sonera Corporation, contact:

Jari Jaakkola
Executive Vice President
Corporate Communications
Investor Relations
Telephone: +358 2040 651 70
Email: jari.jaakkola@sonera.com

In the United States:
Steve Fleischer
Vice President
Investor Relations
Sonera Corporation
Telephone: +1 908 303 9828
Email:steve.fleischer@sonera.com


=============
G E R M A N Y
=============


CARGOLIFTER AG: In Funding Talks With Investors and State
---------------------------------------------------------

Despite all efforts, especially through negotiations with the
central and local government and investors, the company did not
succeed in collecting new financial measures to resolve the current
liquidity crisis.

CargoLifter AG, the Berlin-based airship manufacturer, admitted
in a statement addressed to the press Tuesday that the group can
no longer pay its debts as the company's financial obligations
fall due.

The group also said Tuesday that Cargolifter will be unable to
make salary payments due at the end of the month.

CargoLifter AG will continue negotiations with its banks,
investors and the State of Brandenburg. The possibility of using
the already granted 80% security is still part of the dialogue
with the State of Brandenburg.

If a consortium of finance partners could be achieved for the
next finance step, existing commitments from investors
could be used. Assuming successful execution of the
negotiations, CargoLifter AG intends to recover solvency.


DEUTSCHE TELEKOM: Chief Jeered at AGM Due to Board Pay Hike
-----------------------------------------------------------

CEO Ron Sommer, the man credited for the boom of "shareholder
culture" in Germany, received a chorus of boos from stockholders
of Deutsche Telekom during its annual general meeting Tuesday.

Displeased over the 90% hike in board members' remuneration last
year, shareholders jeered at Mr. Sommer, who sternly answered
"No" when asked if he had ever considered stepping down.

"This is a slap in the face for every (Telekom) shareholder...  
He who orders caviar in times of cholera can't expect any
sympathy," Jella Brenner-Heinacher said to applause from about
9,000 shareholders.  She represents DSW, a small shareholder
lobby group, according to the Financial Times.

The paper also quoted Lars Labryga of SdK, another shareholder
lobby group, calling Deutsche Telekom stock "an investment for
masochists."

Despite the criticisms, supervisory board head Hans-Dietrich
Winkhaus maintained, "the board [had] done a good job."

The pay hike comes as the company prepares to post EUR6.7 billion
in losses this year, almost double the EUR3.6 billion losses last
year. Since last year's annual meeting, Deutsche Telekom stock
has more than halved to about 12.00, trading under its 1996 issue
price of 14.32, the paper says.


FAIRCHILD DORNIER: State Guarantees on US$90 MM Loan Okayed
-----------------------------------------------------------

European Competition Commissioner Mario Monti will reportedly
announce next month the approval of state guarantees to Fairchild
Dornier, reports Borsen-Zeitung/FT Information via COMTEX.

According to the report, the Commission let through the
guarantees to be given by the German government and the Land of
Bavaria, for as long as it covered only 50% of the US$90 million
loan to the insolvent plane-maker.  The company now has three
months to look for a strong financial backer before losing the
guarantee.


GONTARD & METALLBANK: Fritz Nols Applies for Mandates  
-----------------------------------------------------

Fritz Nols Global Equity Services AG, the German financial
service provider, is applying for some of the mandates held by
Gontard & Metallbank as a designated sponsor, Frankfurter
Allgemeine Zeitung and FT Information reports.

The move comes after the Frankfurt District Court (Amtsgericht
Frankfurt am Main) initiated insolvency proceedings against
Gontard & MetallBank AG http://www.Gontard-MetallBank.comthis  
month due to the German bank's overindebtedness.

Fritz Nols is interested solely in designated sponsor's mandates
involving companies in the medical technology sector. The group
is currently refocusing its business from brokerage to banking
services.


GONTARD & METALLBANK: Frankfurter Sparkasse Takes Over Clients
--------------------------------------------------------------

Frankfurter Sparkasse, the German savings bank, has agreed to
take over customers' accounts from insolvent group Gontard &
Metallbank, the Frankfurter Allgemeine Zeitung and FT Information
said Tuesday.

The deposit guarantee fund and compensation body of the German
banking sector will guarantee Gontard & Metallbank's customer
deposits to a limit of EUR 12.09 million.

The report adds that the customers will be compensated upon the
client's opening of an account with Frankfurter Sparkasse.

The insolvency, according to the paper, will not affect custody
accounts with Gontard & Metallbank.


PHILIPP HOLZMANN: O'Rourke May Buy Parts of Holzmann Unit
---------------------------------------------------------

O'Rourke, the U.K.-based construction group, is interested in
acquiring parts of Imbau, the industrial subsidiary of insolvent
German construction giant Philipp Holzmann, Die Welt and FT
Information said.

The company is expected to make a decision by mid-June 2002.

Angelika Amend, the insolvency trustee of Holzmann, announced
Monday that O'Rourke was keen to buy both the regional offices
and the equipment of the subsidiary.

Imbau, which closed in 2001 with annual turnover of about EUR 500
million, has been hard hit by the substantial drop in the demand
for prefabricated parts.

The subsidiary, with current workforce of 1,200, specialises in
prefabricated parts for industrial construction activities.


HUGO BOSS: Irregularities Mar U.S. Books, Profit Forecast Slashed
----------------------------------------------------------------

German fashion group Hugo Boss disclosed early this week that it
had dismissed its U.S. management due to the discovery of
accounting irregularities in the unit, says the Independent.

Citing an HSBC research note, the paper says US CEO Marty Staff
and CFO Vincent Ottomanelli were temporarily suspended over
possible accounting irregularities and massive structural
problems in the US operations.  HSBC cut its rating on Boss to
"reduce" from "add".

The company declined to give details but admitted there were
problems with its books.

"Inventory discrepancies during stocktaking in the United States
along with a continuing weak U.S. economy are the main reasons (for
lowering the forecast)," Boss said in a statement, which also
warned that full-year profits will be 11% short of earlier
forecasts.  The statement also said that its top managers in the
U.S. were momentarily sent on paid leave.

The company says it now expects net income of EUR95 million for
2002 compared with its earlier target of maintaining the level of
last year's EUR107 million.  

Of the EUR12 million shortfall, EUR6 million was due to inventory
differences, EUR4 million to lower deliveries of the women's
range, and EUR2 million to weak U.S. sales, Boss spokesman Philipp
Wolff told the Independent.

HSBC said it could not rule out that there would be extraordinary
expenses resulting from the U.S. operation.


TEAMWORK INFORMATION: Achieves Sales Target for First Quarter
-------------------------------------------------------------

Teamwork information management AG, the Paderborn-based IT
management group, announced Wednesday the company was able to
conclude the first quarter of 2002 with group sales of EUR 2.1
million.

As a result, the sales target of approximately EUR 2 million
forecast for this period was achieved. The EBIT for the first
three months of the current fiscal year is EUR -0.77 million.

Cost-cutting measures have been instigated to improve results and
will allow the company to break even in the third quarter of 2002
on quarterly sales of just EUR 1.7 million.

A positive EBIT is expected as of June 2002 thanks to these
measures. A positive result is also anticipated for the third
quarter of the current fiscal year.

The first capital increase as part of the company's
reconstruction was concluded with the end of the subscription
period on May 27, 2002.

Following acceptance by the creditors of the insolvency plan to
be submitted next week and the second capital increase, the
company's insolvency could be ended in August.

Completion of the insolvency proceedings will bring about an
improvement in credit worthiness that should allow the company to
achieve project sales in the 2nd half of 2002 possibly well in
excess of the conservative sales and results budgeted for the
second half of the year.

Listed on the Neuer Markt since July 1999, teamwork information
management AG is an international provider of collaborative
business solutions for the intranet and intranet.

Collaborative business allows electronic information management
both within companies and in their dealings with customers and
business partners.

With collaborative business, control of the information flow is
automated and business processes are electronically mapped.

Teamwork AG services offered include consulting, development,
implementation, support and training. The group's has over a
thousand clients in Germany and the UK.

For futher information, contact Investor Relations: Dr. Sabine
Brummel, phone: +49 (0)5251 - 5201- 145, e-mail:
sbrummel@teamwork.de


=========
I T A L Y
=========


BLU SPA: Receives Three Offers for Wholesale Transfer of Business
-----------------------------------------------------------------
     
Tele2, Sweden's second largest telecom operator, expressed
Tuesday its interest to buy Blu SpA, raising hopes that the
business will be sold intact.

The Swedish firm said it will team up with London-based Star
Capital Partners, which will provide the financing.  The
potential buyer did not say how much it will offer, says Reuters.

"Tele2's intention is to become a Mobile Virtual Network operator
on the Blu network, allowing both the company and Blu to
capitalize on Tele2's existing success in the Italian fixed
telephony market," Tele2 said in a statement in Stockholm.

Tele2 currently operates in the Italian fixed-line telephony
business but does not have its own network, says the news agency.

Blu has already announced that Italian telecom consortium
Anthill and consultancy E-Do had also presented purchase offers.
Based in southern Italy and grouping several small- and medium-
sized firms, Anthill said Monday its bid would be made with an
international partner.

Anthill's offer may, however, face rough sailing with the Italian
communications ministry, which has indicated that Blu should only
be sold to a mobile license holder.  Anthill and E-Do neither has
a mobile operating license, says Reuters.

Blu recorded a net loss of EUR727 million in the year to December
31, 2001.


BLU SPA: EU Competition Regulator Against Breakup Plan for Firm
---------------------------------------------------------------

The European Competition Commission warned recently against selling
off mobile phone operator Blu SpA in pieces, reminding the
Benetton family of its commitment to the body eight months ago.

Although the Commission did not explicitly say that it will block
the break-up proposal of the family, Commissioner Mario Monti
made known Friday his displeasure to the plan, says The Deal.

The Benetton family owns 41% of Blu: 9% directly through Edizione
Holding SpA and 32% through Italian motorway operator Autostrade.  

Eight months ago, the family and Pirelli SpA got a conditional
approval from the EU for its joint acquisition of Olivetti SpA
and Telecom Italia SpA.  The condition was the sale of the
family's stake in Blu to avoid further strengthening of Telecom
Italia's position in the country's mobile phone market. The
Italian phone incumbent owns Telecom Italia Mobile, a competitor
of Blu.

"The sale of Blu is a condition for clearing the Pirelli/Telecom
Italia merger and the parties involved are under a legal
obligation to explore, in good faith, every possibility to comply
with the undertaking given," Mr. Monti said in a statement.

"It does not appear that until now sufficient consideration has
been given to the interest expressed by several bidders," he
said.

Early this month, Blu submitted to Italy's Communications
Ministry a plan to sell the company in pieces to various rivals:
London-based Vodafone Group Plc; Wind, a venture between Enel SpA
of Italy and France Telecom SA; H3G, an Italian mobile phone
company led by Hong Kong group Hutchison Whampoa Ltd.; and
Autostrade.  Each has made a non-binding bid for all or part of
Blu, says The Deal.

Edizione Holding, the holding company of the Benetton family,
insists that the break-up of Blu was the "only industrial option"
so far that offers guarantees to Blu's clients, suppliers and
staff.  Edizione said there had been no of expressions of
interest for Blu from "other adequate" candidates.

"Blu has been on the market since November 2000 and there have
been no credible offers... industrial and market logic prohibits
further useless waste of resources," Edizione Holding said in a
statement late Friday.

Meanwhile, Italian Communications Minister Maurizio Gasparri
called on shareholders of Blu to come up with a solution that
will save it from liquidation, and urged them to take into
account Mr. Monti's position on the future of the group.

"I am making a public appeal to Blu shareholders to respond to
the position put forward by the European Commission and look at
whether there are any feasible offers on the table," said Mr.
Gasparri in a statement.

The minister said Blu is basically faced with the choice of a
"technical liquidation," which is a forced breakup and sale of
the company, or bankruptcy.

Pirelli and its allies, which include the Benetton family paid
EUR7 billion (US$6.5 billion) for a 23% of Olivetti.  Edizione
later pledged to the Commission it would divest Blu to address
concerns arising from the overlap of Blu and Telecom Italia
Mobile.  


FIAT SPA: Group Junks Proposal to Sell Car Unit to General Motors
-----------------------------------------------------------------

Fiat SpA is reportedly keeping its car division, ruling out a
possible sale to General Motors, which already owns 20% of the
unit and has an option to buy the entire business between 2004
and 2008.

An Independent report Tuesday said the Italian industrial group
has dismissed demands by banks to sell the unit as a condition
for their participation in a refinancing deal.  Accordingly,
banks had called for the disposal of Fiat Auto, the world's
sixth-biggest car manufacturer, which has lost money in seven of
the last eight years.

The report says no less than Gianni Agnelli, the patriarch of the
family and the honorary chairman of Fiat, is opposed to any sale
of the car business to General Motors.

Meanwhile, reports have it that banks are allegedly being offered
a stake in Ferrari, ahead of the planned floatation of the racing
car unit later year.  Fiat plans to float about 25% of the high-
end car division, which is valued at about US$2.5 billion.

This sale is part of the strategy recently announced by the
company to help lower its EUR6.6 billion debt.  The group plans
to halve this debt pile by year's end through a series of asset
disposals.  The company is under threat of possible downgrades to
junk bond status by credit-rating agencies.

Some investors fear Fiat will attempt to sell off profitable
businesses, such as its insurance division Fiat Toro and its
aerospace arm Fiat Avio, rather than let go of Fiat Auto.


FIAT SPA: Creditor Banks, Core Shareholders Wield Greater Power
---------------------------------------------------------------

Fiat SpA has allegedly given core shareholders and creditor banks
considerable say in restructuring the company and the first
casualties of the shakeup will come from top management, says the
Financial Times.

Automotive group CEO Paolo Cantarella is expected to reap most of
the blame and will likely be replaced.  Chairman Paolo Fresco,
however, will remain chairman.  Without venturing into specifics,
bankers told the paper that several people are currently being
floated to replace the senior management team.

Among the privileges handed by the group to banks, according to
the paper, is the power to force the sale of Fiat's truck,
insurance or aviation divisions if financial targets are not met
over the next three years.  The paper says banks will review
progress every six months.  

For this year, Fiat must cut about EUR16 billion (US$15 billion)
in debts out of about EUR40 billion gross debt from its books.
This can be achieved through asset disposals, which if not enough
will be supplemented by a EUR3 billion rights issue.

Assets lined up for sale include half of its car leasing
business, which will be sold to the banks, thus removing EUR8
billion in debt.  The banks are also outlining a plan to remove
much of the EUR8 billion in debt that Fiat is exposed to via its
stake in Italenergia, Italy's No.2 electric utility.  Fiat is
expected to reduce its stake, possibly through a sale to another
company, an insider told the Financial Times.

The banks, meanwhile, will refinance EUR3 billion of loans in the
coming weeks.  This financial package is designed to help Fiat
retain its investment grade credit rating and prevent the group
plunging into even deeper financial troubles, says the paper.


FILA HODLDINGS: Announces Resignation of Chief Financial Officer
----------------------------------------------------------------

Fila Holding S.p.A. announced on May 28 that Euro Trapani has
resigned as Chief Financial Officer of the Fila Group, effective
at the end of June.

Mr. Enzio Bermani will temporarily assume the duties of Group
Chief Financial Officer pending the appointment of a new C.F.O.

Mr. Trapani has served as C.F.O. since July 1999 and he is now
leaving to pursue a new professional challenge.

Fila Holding S.p.A., headquartered in Biella (Italy), is a
leading designer and marketer of athletic and casual footwear and
of activewear, casualwear and sportswear.

Fila has created strong brand recognition by marketing products
with a high design and style content and by securing professional
athletic endorsements.


=====================
N E T H E R L A N D S
=====================


KPNQwest: S&P Downgrades Long-term Credit Rating to D From CCC-
---------------------------------------------------------------

Standard & Poor's, the credit ratings agency, cut KPNQwest's
long-term corporate credit rating on to "D" from "CCC-" after the
company filed for bankruptcy protection under Dutch law last
week.

According to a report obtained from the AFX News, S&P said the
agency has removed KPNQwest from its CreditWatch list where it
was placed since April 25.

S&P has placed the "C" unsecured debt rating on the company's
bonds on CreditWatch with negative implications.

The ratings agency said that there is a great possibility
KPNQwest will be unable to pay the interest coupons due June 1,
2002, on its 8.125 % US$450 million and 7.125 % EUR 340 million
senior notes.

On May 23, KPNQwest announced its filing for protection under
Dutch moratorium law while negotiations with investors and works
with banks and advisors to find funding continue.


===========
P O L A N D
===========


BANK OCHRONY: Fitch Individual Rating Drops to "D" From "C/D"
-------------------------------------------------------------

Fitch Ratings downgraded Tuesday the individual rating of Bank
Ochrony Srodowiska to "D" from "C/D", despite affirming its Long-
term, Short-term and Support ratings at 'BBB-', 'F3' and '4',
respectively.

"The rating action reflects the bank's deteriorating risk
profile, pressure on earnings and falling, although still
adequate, capitalization," Fitch said.

The rating agency blames the high loan loss provisions as a
result of asset quality problems and stagnation in revenues for
the huge losses in 2001.

"[The bank's] profitability is not likely to improve
significantly in the short term, due to cautious lending
expansion, lack of income diversification and necessary IT
investments, while further provisioning charges cannot be
excluded," Fitch said.

According to Fitch, the bank was in 1991 to finance environmental
projects in Poland but has diversified to serve corporate and
retail customers on a commercial basis.

Its Long- and Short-term ratings are supported by its ownership
structure, with Skandinaviska Enskilda Banken holding 47% and the
quasi-government National Environment Protection and Water
Management Fund holding 44% in the bank.

For more information, contact:

Dorota Skala, Warsaw, Tel: +48 22 693 6600
Sophie Childs, London, Tel: +44 (0)20 7417 4222


NETIA-HOLDINGS: Shareholders' Meeting Will Be Held June 18
----------------------------------------------------------

Netia Holdings S.A., Poland's largest alternative provider of
fixed-line telecommunications services, announced Tuesday that it
will hold an Ordinary Shareholders' Meeting in Warsaw on June 18,
2002.

At the scheduled conference, the group will seek the approval of
the Management Board's report and financial statements for the
2001 financial year, appoint an expert auditor to examine the
financial statements for the 2002 financial year, approve the
remuneration granted in 2001 and later to members of the
Supervisory Board and re-adopt certain shareholders' resolutions
from the March 12, 2002 Extraordinary General Shareholders'
Meeting.

Netia is proposing to re-adopt the resolutions regarding the
issuance of series "H" shares, previously adopted by the
Extraordinary General Shareholders' Meeting on March 12, 2002 in
connection with the Company's ongoing restructuring.

Pursuant to Polish law, a resolution increasing the Company's
share capital may not be filed with the registry court later than
six months after its adoption.

The re-adoption therefore extends the time during which the share
capital increase can be registered. Arrangement proceedings in
connection with Netia's restructuring were opened in Poland on
May 15, 2002.

Contact Information:

Netia Holdings S.A.
Anna Kuchnio (IR)
+48-22-330-2061

Jolanta Ciesielska (Media)
+48-22-330-2407

Taylor Rafferty, London
Jeff Zelkowitz
+44-(0)20-7936-0400

Taylor Rafferty, New York
Andrew Saunders
212/889-4350


===========================
U N I T E D   K I N G D O M
===========================


AVECIA GROUP: Suffers Several Cuts Due to Electronics Slump
-----------------------------------------------------------
    
Specialty chemicals maker Avecia Group Plc suffered several
downgrades Tuesday, after Moody's modified its ratings due to the
weak demand in the electronics industry.

Approximately GBP640 million of debt securities were affected as
a result of these ratings cut:

     (i) The US$540 million in senior notes of Avecia Group PLC
         lowered to B3 (from B2).

    (ii) The senior implied rating for Avecia Group PLC lowered
         to B1 (from Ba3).

   (iii) The rating assigned to the bank debt facilities for
         Avecia Investments Ltd lowered to Ba3 (from Ba2).

    (iv) The senior unsecured issuer rating for Avecia Group PLC
         lowered to B3 (from B2).

     (v) The preferred stock rating on the US$45m PIK Preference
         shares for Avecia Group PLC lowered to Caa1 (from B3).

"The rating action reflects continuous weak demand in the
electronics industry; limited prospects for any material
improvement in debt protection measures given the group's
significant capital investments and its priority on growth; and
the heightened business risk following the disposal of the Stahl
division and the recently announced large capital investments in
biotechnology," Moody's said in explaining its action.

According to the rating agency, the weak demand in agrochemicals
and intermediate products, coupled by the continuous inventory
de-stocking at equipment manufacturers, are seriously hurting the
group's operating performance and profitability.  Moody's,
however, believe the second half will bring significant
improvement, especially in the biotechnology segment.  

Moody's still rates the company "stable" and "views its business
portfolio, degree of geographic and business diversity and focus
on higher growth and margin businesses as positive."

"Avecia's liquidity is sound with current headroom (as of 31
march 2001) of around GBP91 million with nonetheless expectations
of a reduction in the group's liquidity due to forthcoming
capital investments," Moody's said.


Regarding the B3 rating on the US$540 million notes, Moody's
said: "[This] reflects the structural subordination of the notes
relative to a significant amount of secured bank facilities
available to Avecia and the subsidiaries of the group."

Avecia Group PLC, formerly known as ZSC Specialty Chemicals Plc,
is domiciled in Manchester, United Kingdom, and is a holding
company for a diversified specialty chemicals group generating
2001 consolidated revenues of GBP815 million.

For more information, contact:

Paris
Eric de Bodard
Managing Director
Corporate Finance Group
Moody's France S.A.
33 1 53 30 10 20


London
Donald Burri
Senior Vice President
Corporate Finance Group
Moody's Investors Service Ltd.
44 20 7772 5454


BRITISH TELECOM: To Stop Selling Pre-Paid Phonecards
-----------------------------------------------------

The BT Group said in its press statement Tuesday that it will
stop selling pre-paid phonecards.

BT introduced phonecards into the U.K. in 1981, but annual sales
have declined from a peak of GBP74 million in 1990/91 to just
GBP7.2 million last year.

Only three per cent of the 587 million BT payphone calls made
last year were made using phonecards with 92 % of calls made with
cash.

BT markets two pre-paid phonecard products, Phonecard plus,
primarily designed for U.K. calls and BT Globalcard, aimed at UK
travellers calling internationally.

Both brands, which are sold through high street retailers, will
be withdrawn from sale across the counter from October 2002. Both
cards will continue to work until their expiry dates, the latest
Phonecard plus expiry date is April 2003, for BT Globalcard it is
September 2003.

BT Payphones will continue to market the BT Chargecard, which it
supplies direct to customers. Calls can be made from payphones
and other fixed lines using the card and can be billed to a
nominated home or business account, a credit card or a U.K. bank
account.

The BT Chargecard can be used in the U.K. and in more than 120
countries worldwide. There are more than four million BT
Chargecards in circulation.

Angus Porter, managing director of BT's Consumer Division, said:
"While most customers have always preferred to use cash,
phonecards were very popular during the 1980s and early 1990s,
before the mobile phone explosion. But pre-paid phonecards is now
a loss-making business. We have therefore taken the necessary
decision to pull out of this market.

"This is one more step in restructuring our payphone business to
ensure it is on a firm footing. Today's announcement, together
with our investment to create the world's largest public network
of Internet kiosks and the review of our street payphones, gives
us confidence that there is a solid future for payphones."

Phonecard plus was introduced in May 2000, and combines the
microchip BT Phonecard and 0800 access phonecard technologies,
allowing customers to use the card to pay for calls from
residential, business and mobile phones, as well as BT public
payphones.
  
Phonecard plus removed the need for phonecard specific payphones
because the card could be used without inserting it into the
payphone.

BT Globalcard, was introduced in 1998 and like Phonecard plus
uses 0800 access technology.

To complete its withdrawal from the phonecard market BT also
intends to turn-off date expired BT Phonecards, the microchip
cards replaced by Phonecard plus two years ago. Cards that are
already past their expiry date will be turned-off in June and
July 2002. The latest expiry date for BT Phonecards is December
2002.

BT has written to all retailers of its phonecards to tell them
that it will stop selling cards to them from July 31, 2002 and to
formally end the company's agreement with them with effect on
October 31, 2002.

Retailers will be able to continue selling the cards until
October 31, 2002.

For further information please contact: Leslie King at BT
Payphones on 020 8666 7083. For further information about BT
Payphones visit: http://www.bt.com/payphones.Customers  
interested in a BT Chargecard can call free 0800 345 144 or e-
mail: cardserv.helpline@bt.com.

*Figures for year 2001/02. Total 587 million calls, three per
cent made by phonecard, 92 % by cash, five per cent made by other
payment methods, including BT Chargecard, Freefone, other
phonecards and transfer charge calls.


BRITISH TELECOM: BT Wholesale Sat-internet Trials Start May 31
---------------------------------------------------------------

BT Wholesale confirmed Tuesday that trials of its new Internet
satellite service, capable of delivering fast Internet to
customers right across the U.K., will begin on May 31.

The six-month trial will involve six independent satellite
service providers, which together with BT will look at customer
usage and demand for the service.  The trial will allow always-on
receipt of e-mail from the major U.K. Internet service providers,
as well as fast download of music, photos and other documents.  

Paul Reynolds, chief executive of BT Wholesale, said: "We are
absolutely committed to bringing the latest communication
services to as many people as possible on the best terms
possible.   This satellite solution enables us to offer
affordable high-speed connections where it is impossible with our
other technologies.

"Our aim is that it will become part of the framework that will
build up to enable broadband Britain."

The satellite service providers selected to work on the trial
include: PlusNet; Eclipse Internet; izR Solutions; and KB Media.

The wholesale price for the trial will be o10 a month rental to
service providers, with a one-off connection charge of o360 for
the equipment and installation of the dish at the end user's site
for most sites.


CONSIGNIA: Brussels Could Stymie Plan to Close 3,000 Counters
-------------------------------------------------------------

Consignia's plan to close 3,000 urban post offices could face
resistance from the European Commission, which has threatened to
scrutinize the GBP270 million cost that will be borne by the
British government.

According to the Independent, officials in Brussels will closely
examine the deal in the light of EU rules on state aids.

Regulators point out that the closures are the direct result of
the government's decision to switch payments of state benefits
from post offices to bank accounts.  This policy-change robs
counters of GBP400 million of business or a third of total
revenues, making many post offices unviable.  The payment of
benefits direct to bank accounts using automatic credit transfer
will begin in April 2003.

Brussels officials believe the aid would not be necessary if the
Government were to reverse its policy and allow claimants to
continue receiving benefits from their local post office.

As this develops, the Independent says the compensation scheme
alone for sub-post masters have been oversubscribed with about
3,200 branches offering to close down against the government
target of only 2,500 to 3,000.  Under the plan, sub-post masters
are being offered GBP60,000 or two years' income if they agree to
close shop.  


CONSIGNIA: Postcomm Delays Postal Deregulation by Another Year
--------------------------------------------------------------

British postal services regulator Postcomm is allegedly extending
the timetable for the industry's full deregulation to afford
state-owned Consignia ample time to prepare for competition,
reports the Independent.

The paper says the market will only be opened to full competition
in 2007. Postcomm had earlier planned to begin phasing in
competition immediately and then throw the entire GBP5 billion
postal market open from April 2006.

Postcomm will begin awarding long-term licenses to competitors on
January 1, 2003.  This will allow competition initially for bulk
mail users who send out 4,000 or more items at a time.

According to the regulator, this segment accounts for 30% of UK's
postal market.  Consignia, however, claims this will put 50% of
its business at risk.  By 2005, the threshold will be lowered to
companies that mail out more than 500 to 1,000 items at a time
before complete liberalization is introduced in 2007.

Since the publication of Postcomm's initial proposals in January,
Consignia and postal unions have warned that the speed at which
the deregulation is being planned threatens the "universal
service" of Consignia.  This service refers to the guarantee to
deliver to every home in the country at a standard price.

Consignia estimates that Postcomm's proposals will cost it GBP250
million a year in lost profits and force it to raise the price of
a first-class stamp by as much as 3p a year to generate enough
income to safeguard the universal service, the paper says.


EQUITABLE LIFE: Re-elects Chairman, Five Other Board Members
------------------------------------------------------------

Equitable Life policyholders re-elected Monday Chairman Vanni
Treves during the society's annual general meeting, giving him
273,700 votes of confidence.  He was opposed by 62,579, says
Ananova.

Five other board members were also re-elected.  Ron Bullen, the
former chairman of the Equitable Policyholders' Action Group who
became a director earlier this year, garnered the most votes with
276,396.  Chief finance and investment officer Charles Bellringer
and Fred Shedden, a former non-executive director of Standard
Life, who were both appointed at the same time as Mr. Bullen,
were also re-elected, the report says.

Independent candidate Paul Braithwaite failed to get elected, the
report adds.


EUROTUNNEL: Seals Deal With Creditor Banks on GBP400 MM Debt Cut
----------------------------------------------------------------

Eurotunnel has come to terms with banks regarding a refinancing
scheme that will allow it to pay its existing junior debts and
cut its interest bill by at least GBP40 million, says the
Independent.

The company will reportedly raise roughly GBP740 million through
a new bond issue and use the proceeds to pay down existing debt.  
This debt specifically refers to a GBP335 million junior debt
that will be paid at face value.  The company will then make a
tender offer for a further GBP405 million of debt, paying between
30% and 48% of face value.

At present, the company's junior debt stands at GBP3.3 billion,
down from more than GBP7 billion at one point. Four years ago,
the company executed a debt-for-equity swap that halved its
debts, but also gave its 160-strong consortium of banks effective
control of the Channel Tunnel.

Eurotunnel says following the refinancing, there would be no
increase in its interest charges up to 2006 and reductions in
charges thereafter.

Last year, Eurotunnel made an operating profit of GBP183 million,
though it had increased bottom line loss of GBP147 million after
incurring interest charges of GBP330 million.  This slightly
higher loss for 2001 was mainly due to a collapse in income from
renting capacity in the tunnel to telecom operators, says the
paper.


EUROTUNNEL: Equity Note Deferred Interest Purchase Offer  
--------------------------------------------------------

Eurotunnel Group, the Anglo-French transport operator, announced
last week the result of the company's Deferred Interest Purchase
Offer in respect of the Equity Notes as of the Early Tender Date.

The aggregate amount of Deferred Interest Amounts validly
tendered as at the Early Tender Date on May 22, 2002 was GBP 1.6
million and EUR 2.5 million, corresponding to an aggregate
purchase price of EUR 1.0 million.

In accordance with the terms of the Deferred Interest Purchase
Offer (as amended on May 8, 2002), the amount tendered is the
Maximum Purchase Amount.

The Redemption Offer for Equity Notes will remain open until June
26, 2002. The results of the Redemption Offer will be announced
shortly thereafter.


EUROTUNNEL: Announces Details of Annual General Meetings
--------------------------------------------------------

The Annual General Meetings of Eurotunnel plc and Eurotunnel SA
will take place on Thursday May 30, 2002, at 2.00 pm,
in London at Westminster Central Hall, Storey's Gate,
Westminster, London SW1H 9NH.  

A shareholder information meeting will be held on Friday May 31,
at 2.00 pm (local time), at Cap 15, 1-13 quai de Grenelle, 75015
Paris.

Notice of the meetings and voting forms will be sent to all
registered shareholders at the end of April. Bearer shareholders
wishing to vote should contact their financial intermediaries
from the beginning of May.

For further information, contact Eurotunnel Shareholder
Information Center, telephone: 08457 697 397 or email
shareholder.info@eurotunnel.com


LONDON INTERNATIONAL: Fitch Rates Class "A" and "B" Bonds Junk
--------------------------------------------------------------

London International Exhibition Centre Plc slipped to junk status
Tuesday, after Fitch Ratings shoot down its serial bonds due to
the company's planned restructuring.  The company's Class A bonds
dropped to 'CC' from 'BB-', while its Class B is now rated 'D'
from 'CC'.

"The 'Class A' rating action reflects the agency's belief that a
restructuring is probable following discussions with the company.
The 'Class B' rating action reflects the non-payment of the
scheduled May 25 Class B interest. The 'D' rating applicable to
the Class B bonds reflects that the bonds are in default and that
Fitch believes recovery potential is low given current
performance of the underlying collateral," Fitch explained.

Fitch says the company has also asked to be yanked out of its
ratings board.

"The reason for the removal of the rating is that the company has
stated its intention to materially restructure the bonds as part
of a corporate re-capitalization, and in this context the ratings
will no longer be relevant.  Management has informed Fitch
Ratings that a majority of bondholders are now party to
discussions over the restructuring," Fitch said.

According to Fitch, the company's finances are under so much
stress due to reduced expenditure on shows.  The agency said
utilization rates remain materially below original expectations,
despite management's claim that retention rate of shows is high
and it has captured a number of key London events.

"This reduction in expenditures on shows, coupled with aggressive
pricing in the sector has resulted in EBITDA in the first quarter
2002 being well below that for last year," Fitch said.

For more information, contact:

Christian Holder, Tel: +44 (0)20 7417 4376
Chris Hillard, Tel: +44 (0)20 7417 6253,
John Hatton, Tel: +44 (0)20 7417 4283


P&O PRINCESS: Carnival Will Not Sell Cunard to Seal Takeover Bid
----------------------------------------------------------------

Leading cruise operator Carnival Corporation will not sell its
Cunard line even if EU competition regulators ask for it as a
precondition to approving its hostile bid for P&O Princess.

The Miami-based company will, instead, peddle its P&O Cruises
U.K. to satisfy any concerns regulators might have over a
Princess-Carnival combination.

"Should it prove ultimately necessary Carnival would, in certain
circumstances, be prepared to consider disposing of P&O Cruises
U.K.," Carnival said in a statement last week.

Cunard is a luxury brand that has a pending order for new ships
worth US$1.2 billion, including Queen Mary 2, which will be the
largest-ever passenger vessel, says Bloomberg.  

P&O Cruises U.K., on the other hand, operates the Oriana, Aurora,
Arcadia and Victoria, which have a combined capacity of nearly
6,000 passengers.  The unit contributed about 25 percent of P&O
Princess's US$361 million full-year profit before interest and
tax in 2001.

It is understood that the European Competition Commission has
already sent Carnival a list of objections to the hostile US$6.8
billion bid for P&O Princess, raised by customers, competitors
and suppliers.

The list, which has not been made public yet, is believed to
contain conditions, which could include asking Carnival to
dispose of assets to lessen the likelihood of dominating the
European market.

In an interview, Lehman Brothers analyst Felicia Rae Kantor told
Bloomberg that the list may have pointed out "[competition]
problems with the Spanish, British and Italian" cruise markets.

"Carnival is weak in countries that P&O Princess is strong, and
opponents say this could create dominance across Europe," she
said.

The Commission is expected to hand down a decision by August.


SSL INTERNATIONAL: Lates Financial Results Reveal Losses
--------------------------------------------------------

SSS International, the troubled healthcare company, revealed a
sharp fall in annual profits Tuesday.

SSL reported pre-tax losses of GBP2.9 million (US$4.23m) compared
with profits of GBP37.6 million last year.

According to the Financial Times ,the group is valued at GBP700
million compared to GBP 1.7 billion in 1998.

This has raised the possibility that SSL, which is under
investigation by the Serious Fraud Office, could become a
takeover target.

Michael King, analyst at West LB Panmure  said, "Given the
difficulties that the company faces and the lack of investor
confidence, we do not believe that shares will recover in the
next 12 months, although the intrinsic value of the brands
suggest that a bid might provide some relief for investors."

A posible bidder for SSL, which makes surgical gloves and
consumer health products, would be Johnson & Johnson, the US
diversified healthcare group. Alternatively SSL could be a break
up target for a private equity group.

Underlying profit before exceptional charges was GBP28.5 million,
below analysts' forecasts of GBP32.5 million.

The losses come only a month after SSL, which is the name behind
Durex condoms and Scholl foot care, closed its GBP3 million
headquarters in Cheshire with the layoff of 300 jobs.

The WestLB analyst said the results were disappointing in spite
of warnings of poor margins and trade de-stocking despite GBP56
million lower sales and a GBP32 million pre-exceptional drop in
operating profit due to trade de-stocking, underlying sales and
lower margins.

Meanwhile a subsequent investigation by accountants from KPMG
found that SSL had overstated sales by GBP22 million and profits
before tax and exceptionals by GBP19 million during the 25 months
to March 31 2000. The discovery of the reported fraud led to an
ongoing investigation at the SFO.

According to SSL, trade loading, which left the company with
GBP63 million of excess stock and distorted earnings in 1999 and
2000, had been completely eliminated.

Turnover for the year was down 8.8 % from GBP649.3 million to
GBP592.4 million.

SSL reported a final dividend of 8.4p, making a total of 12.3p
from basic earnings per share 10.4p before exceptional charges,
compared with 36.3p last year.

                                  ************

        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
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Information contained herein is obtained from sources believed to
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The TCR Europe subscription rate is US$575 per half-year,
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