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/raid1/www/Hosts/bankrupt/TCREUR_Public/020531.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, May 31, 2002, Vol. 3, No. 107 Headlines * B E L G I U M * SN BRUSSELS: Outsorces Customer Service Support to Sintel * F I N L A N D * SONERA CORPORATION: Arbitration Parties State Claims SONERA CORPORATION: Partners With Accenture to Offer ASP Services * G E R M A N Y * DEUTSCHE TELEKOM: Confirms 30,000 Redundancies by 2004 DEUTSCHE TELEKOM: Will Get Only Modest Return for Real Properties E.MULTI DIGITALE: Cancels General Meeting Set for June 11 MOBILCOM AG: France Telecom Tries Backdoor in Its Takeover Bid MOBILCOM AG: Shareholders Want Stakes of CEO's Spouse Probed SACHSENRING AG: Keeps Mum on Rumors of Impending Collapse * I R E L A N D * AER LINGUS: Counters Pilots' Strike With Flight Suspension Today * I T A L Y * ALITALIA: Updates on Extraordinary and Ordinary Meeting FIAT SPA: Company Profile FIAT SPA: General Motors Mulls Early Exercise of Takeover Option FIAT SPA: Success of Restructuring in Hands of Moody's, S&P * N E T H E R L A N D S * KPNQWEST NV: Tells Workers to Brace for Possible Liquidation * P O L A N D * ELEKTRIM SA: Nears Final Deal With Bondholders, Pact in 15 Days NETIA HOLDINGS: Telecom Service Group Announces New Tariff Plans * S W I T Z E R L A N D * SWISSAIR GROUP: French Court Says Firm Owes Air Littoral EUR15 MM * U N I T E D K I N G D O M * EUROTUNNEL: Updates on Tender Advances, Stabilization J2C: Beaumont Cornish's Offer for Entire of J2C's Share Capital KINGFISHER PLC: SSSB Says Castorama Picked Bank to Assess Bid MARCONI PLC: Wins Multi-million-pound Contract to Upgrade DT NTL INCORPORATED: Top Executives Got Payouts in 2001 Despite Woes TELECITY PLC: Internet Network Provider Names Hudson as CEO ============= B E L G I U M ============= SN BRUSSELS: Outsorces Customer Service Support to Sintel --------------------------------------------------------- SN Brussels Airlines-- www.brussels-airlines.com -- has selected SITEL to deliver customer service to the carrier's customers in Belgium and Luxembourg, SITEL Corporation -- www.sitel.com --, a leading global provider of outsourced customer support services, said Thursday. Financial details of the 3-year agreement were not disclosed. SN Brussels Airlines, the Brussels-based airline which took over the insolvent airline Sabena SA, currently flies to 36 destinations in Europe, including London, Geneva and Stockholm, and to several African cities. SN Brussels Airlines selected SITEL for its proven ability to cost-effectively deliver world-class customer service and support for companies in the travel sector. "Our ability to exceed each and every customer's expectations for service -- before, during and after the flight -- is critical to our success," said Peter Davies, SN Brussels Airlines CEO. "We must support our rapidly growing customer base with a contact center solution that demonstrates to our customers that we really understand their needs. SITEL, a clear leader in the provision of customer care services, shares this focus on putting the customer first, and we are confident that this new relationship is in the very best interests of our customers and our business." Under the terms of the agreement, SITEL will design and install integrated contact center technology in SN Brussels Airlines' own contact center in Brussels. In addition, SN Brussels Airlines' call center will rely on the assistance of SITEL customer service professionals (CSPs) providing flight information and reservation services via telephone, and later via fax, e-mail and web collaboration, from SITEL's state-of-the-art contact center in Brussels. Eddy Van de Poel and Marc Jans, Co-Managing Directors of SITEL Central Europe, stated, "It's an honor to be working with SN Brussels Airlines. In the travel sector, consumers' expectations for customer service are at an all-time high, even as the pressures on businesses to remain competitive continue to mount. By partnering with SITEL, SN Brussels Airlines will be able to meet the demand for quality service, resulting in increased customer satisfaction and return business, while reducing the overall cost of service. This agreement underscores SITEL's proven ability to deliver sophisticated customer service and support for the European market." ============= F I N L A N D ============= SONERA CORPORATION: Arbitration Parties State Claims ---------------------------------------------------- Tilts Communications A/S, a wholly owned Danish subsidiary of Sonera Corporation and the Republic of Latvia, has filed its main claims in the ICC Arbitration, which continues between Tilts, the Republic of Latvia, Lattelekom SIA, Cable and Wireless plc and Sonera Corporation. The arbitration, which was commenced under the Arbitration Rules of the International Chamber of Commerce, arises out of an Umbrella Agreement entered into in January 1994 between Lattelekom, Tilts and the Republic of Latvia. Lattelekom is the exclusive provider of fixed line telecommunications services in the Republic of Latvia. Its shareholders are Tilts (49%) and the Republic of Latvia (51%). Tilts claims a total of approx. LVL 87.6 million (MEUR 152) from the Republic of Latvia as compensation for losses sustained as a consequence of the shortening by the Republic of Latvia of the twenty years' exclusivity period granted to Lattelekom as the provider of fixed line telecommunications services in the Republic of Latvia, and failure by the Republic of Latvia to ensure that telecommunications tariffs were fixed at contractually agreed levels. The Republic of Latvia has quantified counterclaims of a total of approx. LVL 599,499 million (MEUR 1,040) and reserved its right to make further claims against Tilts. These claims arise principally from the alleged failure by Tilts to digitalise the fixed line network in Latvia within the time frame specified in the Umbrella Agreement, alleged failure to procure the transfer of Sonera's shares in Latvijas Mobilais Telefons SIA (LMT) to Lattelekom, alleged failure to make certain inward investments in Latvia and other alleged breaches by Tilts of its obligations under the Umbrella Agreement. Tilts considers that it has valid claims against the Republic of Latvia and will pursue these. It however believes that the counterclaims asserted by the Republic of Latvia are unfounded and it will vigorously defend these. The Arbitral Tribunal will rule on the claims in due course. Sonera Corporation is 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. Contact Information: Sonera Corporation Jari Jaakkola Executive Vice President Corporate Communications and IR Christer Nykopp, Chairman of the Board, Tilts Communications A/S Tel. +358 2040 54220 Email: christer.nykopp@sonera.com SONERA CORPORATION: Partners With Accenture to Offer ASP Services ----------------------------------------------------------------- Sonera Corporation and Accenture announced Thursday that they will co-develop and jointly market a mobile application service provider (ASP) offering across Europe. As part of the non-exclusive agreement, Accenture and Sonera will jointly provide research and development and professional services to support their customers in the converging Information Communication Technology (ICT) market. In addition, the two companies will jointly offer full-range SAP services in Finland and in Sweden. Sonera will also engage Accenture to help run its SAP Competence Center, which provides SAP application management services for Sonera. "B-to-B market is one cornerstone of Sonera's growth strategy. This partnership with Accenture is one important step in implementing our strategy and demonstrating our commitment to further develop Sonera's capabilities in providing services to Corporate customers in the ICT market", says Harri Koponen, CEO, Sonera Corporation. "Through this agreement with Accenture, we will be able to offer fully integrated solutions and add value for our customers by combining the leading edge ICT services from Sonera with world's leading management and technology services from Accenture. "Accenture is always looking for innovative ways to add value for our customers", said Diego Visconti, managing partner of Accenture's Communications & High Tech operating group in Europe and Latin America. "One of the ways we do this is by teaming with leading telecommunications providers to bring the most advanced technology to market Through this agreement with Sonera, we will be able to more effectively help customers as they migrate to 2.5/3G based mobile business services." The agreement supports Sonera's aspiration to become the leading telecommunications and ICT services group in the Nordic and Baltic regions. The agreement also supports, and is fully aligned with, the recently announced global alliance between Hewlett Packard and Sonera. Sonera and Accenture plan to start offering the mobile ASP solutions later this year. Accenture -- www.accenture.com -- is the world's leading management and technology services organization. Through its network of businesses approach-in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities-Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of US$11.44 billion for the fiscal year ended August 31, 2001. Contact Information: Niklas Sonkin, CSO Sonera Corporation Telephone: +358 2040 63496 Email: niklas.sonkin@sonera.com Alex Pachetti Director, Media Relations Communications & High Tech Accenture Telephone: +1.917.452.5519 Email: alex.pachetti@accenture.com Minna Ranta Media Relations Accenture, Finland Telephone: +358 (0) 205 725 627 Email: minna.ranta@accenture.com ============= G E R M A N Y ============= DEUTSCHE TELEKOM: Confirms 30,000 Redundancies by 2004 ------------------------------------------------------ German telecom incumbent Deutsche Telekom confirmed early this week the 22,000 job cuts that will be implemented before the end of next year, reports cable news channel CNN. The confirmation was made during the annual meeting in Cologne recently, where the company said the measure will save US$9.2 billion. CNN says the job cutback will total 30,000 by 2004. The telecom giant currently employs 245,000 individuals. The company bared losses of US$3 billion for 2001, including US$1.66 billion for the first quarter this year. According to the company, a substantial part of the losses last year was related to the acquisition of U.S. mobile phone company VoiceStream. Heavy investments in mobile phone services also took a toll on the balance sheet, the report says. DEUTSCHE TELEKOM: Will Get Only Modest Return for Real Properties ----------------------------------------------------------------- Deutsche Telekom is expected to derive only a modest profit in its asset disposals this year involving real estate properties, says Frankfurter Allgemeine Zeitung. The German daily also adds that the process would be quite lengthy, with incoming liquid assets from the sales to be only moderate. According to the paper, the asset sale will be managed by Sireo Real Estate Asset Management GmbH, a joint venture set up with US investment bank Morgan Stanley and property group Corus. Last year, the company sold real estate with a total value of EUR700 million. This year, the company is expected to sell about EUR1.5 billion worth of real estate assets. The heavily indebted telecom firm has around 25,000 properties with 12.2 million square meters of rentable floor space. It estimates these holdings to be worth EUR15 billion, the paper says. E.MULTI DIGITALE: Cancels General Meeting Set for June 11 --------------------------------------------------------- Insolvent computer games group E.multi Digitale Dienste AG will not push through with its general assembly scheduled for June 11, says Borsen-Zeitung/FT Information. The report did not state the reason for the cancellation, but pointed out that the decision had the blessings of the insolvency administrator. The company filed for insolvency late last week after posting losses of EUR8.65 million with turnover of around EUR4.5 million in 2001. Earlier, the company had estimated full-year losses to amount to at least half of the company's share capital of roughly EUR3.7 million. E.multi shares, last quoted at EUR 0.32, were suspended last week upon news about the group's insolvency filing. The Ettlingen- based company is now merely valued at EUR1.3 million, the Troubled Company Reporter-Europe said Tuesday. The district court in Karlsruhe is handling the company's insolvency procedure. MOBILCOM AG: France Telecom Tries Backdoor in Its Takeover Bid -------------------------------------------------------------- France Telecom is reportedly close to a deal with banks that will allow it to takeover German mobile phone subsidiary MobilCom AG without consolidating the latter's debts to its already overburdened balance sheet. A source told The Deal recently that the French phone giant has offered four main creditor banks of MobilCom convertible securities, which analyst say could represent as much as 20% of its equity. This offer was made on condition that the banks will restructure the EUR4.7 billion (US$4.3 billion) debts of MobilCom. It is not clear whether France Telecom will move ahead with its plan to takeover the entire business after this transaction. Accordingly, both sides are near a pact, although a definitive agreement has yet to be reached on the premium to the current share price that the security would offer. The source, however, said that the security would likely be convertible at a much higher price, possibly up to twice their current trading level. The four banks are Deutsche Bank AG, Merrill Lynch & Co., ABN Amro Holding NV and Societe Generale. A final deal, however, must be approved by the 13 other member-banks of the subsidiary's lending syndicate. "This solution means they will never have to pay any cash to the banks," the unnamed source told The Deal. News of the potential deal gladdened investors, who do not favor a highly dilutive rights issue. The market responded Tuesday with a 4.4% nudge on the shares that closed at EUR21.61. A source close to France Telecom say talks with the banks have so far been exclusively about addressing the MobilCom debt situation and have not dealt with the ownership of the German subsidiary just yet, says the report. The French company currently holds a 28.5% stake in the Budelsdorf-based mobile phone operator. In March, however, the company announced that it had reached an agreement to buy out the other shareholders, including founder Gerhard Schmid, for about EUR700 million. "There are many different scenarios as to what will happen with MobilCom once the debt situation has been resolved," another source told The Deal. "First of all, you have to restructure, then you can decide who will own the company." This person also said that France Telecom's priority is to ensure that it is not forced to assume the debt at MobilCom and has not ruled out bankruptcy as a possible option for the German company, the report says. Another option would be for banks to buy out the other MobilCom shareholders, in a deal that would see France Telecom effectively park the stake momentarily with the banks before buying it back at some later date when its finances would be a lot healthier, The Deal says. MOBILCOM AG: Shareholders Want Stakes of CEO's Spouse Probed ------------------------------------------------------------ DSW, an advocacy group for shareholders rights, threatens to delay the sale of Gerhard Schmidt's 40% stake in MobilCom, the company he founded that is currently involved in a row with France Telecom. German daily Handelsblatt said early this week that the advocacy group is bent on calling for a special investigation on how Mr. Schmidt's wife Sybille was able to use MobilCom funds to acquire a 6% stake in the company. According to the report, Mrs. Schmidt acquired her stake through Millennium GmbH, a company she controls. The group says they will move to make public the findings of an investigation that MobilCom commissioned from BDO Deutsche Warentreue. The shareholder lobby wants to establish whether, and to what extent, the share dealings had an erosive effect on MobilCom's finances, since this would impact on the value of small shareholders' investments, the German daily says. "If MobilCom won't provide the details, a special examination is unavoidable," a DSW spokesman told Handelsblatt. A spokesman for MobilCom points out, however, that only the supervisory board can decide whether or not to release the findings. The special probe was expected to be raised in the company's annual general meeting yesterday. If approved, a special inquiry could take weeks and would slow down the planned sale of Mr. Schmidt's 40% stake to a banking consortium, the report says. In addition to its application for an inquiry into Mrs. Schmidt's share dealings, DSW said it also plans to move that discharge should not be granted to the management and supervisory boards for the losses that MobilCom incurred in full-year 2001. Meanwhile, Handelsblatt has learned that MobilCom and France Telecom are preparing to go to a court of arbitration to settle their disagreement over the latter's commitment to the company's 3G mobile phone rollout. SACHSENRING AG: Keeps Mum on Rumors of Impending Collapse --------------------------------------------------------- Sachsenring AG, the Neuer Markt-listed supplier to the auto industry, is reportedly on the brink of insolvency, says Handelsblatt. The report says speculations about its woeful financial health are mounting because of the refusal of the company, banks and workforce representatives to state otherwise. A spokeswoman for the company did admit Monday that management would meet with representatives of its creditor banks Wednesday, according to Die Welt/FT Information. Meanwhile, it was also learned early this week that Canadian firm Magna is not pushing through with its plan to buy Sachsenring Fahrzeugtechnik, the unit that accounted for two thirds of the group's turnover last year. The Zwickau-based company employs 1,400 employees. It emerged from the ashes of the plant that used to make Communist-era Trabant cars, says Handelsblatt. Management has been seeking a partner for some time now without success. Many believe the group's future is now in the hands of creditors. Shares close 57% down Monday at EUR1.58. Market experts are convinced that management at Sachsenring has known of the imminent insolvency for a while and argue that the company might have violated the ad-hoc regulations of Germany's stock market, Die Welt says. ============= I R E L A N D ============= AER LINGUS: Counters Pilots' Strike With Flight Suspension Today ---------------------------------------------------------------- Cash-strapped Irish flag carrier Aer Lingus will suspend all but three flights today in response to the decision by pilot union IMPACT to go on strike Thursday, says Reuters. "As a result of Thursday there is going to be a huge knock-on disruptive effect. There is still the threat of further industrial action and it is just not possible to fly on Friday," an airline spokeswoman said. Reuters sources say the suspension will cost the company EUR2 million daily and affect around 20,000 passengers. Only flights to New York, London and other cities in Ireland will remain operational today. Accordingly, Aer Lingus has hired three aircraft and crews to maintain the skeleton service. All the other 160 flights are temporarily cancelled. "This position will be kept under review on a daily basis," the unnamed spokeswoman said. IMPACT decided to go on strike yesterday after the airline refused to back down on its proposal to shorten rest period for pilots between flights. The new measure is ostensibly part of its survival plan. Aer Lingus points out that the survival plan was the product of the mediation before the Labor Relations Commission in October. The company claims that IMPACT's position is irrelevant and "totally at variance with the views of the vast majority of Aer Lingus staff." "There's no reason why the airline needs to be closed, certainly not on Friday," IMPACT spokesman Bernard Harbor told Reuters. "They've taken the decision it's better to close the airline than to talk to pilots. It's crazy stuff." The company, which had been due to be sold off before it plunged into the red, racked up losses of EUR150 million last year and has projected losses of around EUR27 million this year, says Reuters. ========= I T A L Y ========= ALITALIA: Updates on Extraordinary and Ordinary Meeting ------------------------------------------------------- The extraordinary and ordinary meeting of Alitalia - Linee Aeree Italiane S.p.A. shareholders took place Tuesday, adopting the following resolutions: approved the financial balance sheet at December 31, 2001, deliberating to cover the operating loss of EUR 905,348,021.65 by using reserves available from the Company assets and by reducing the Company capital to EUR 572,924,342.16 (consequently, the nominal value of the shares goes down from 0.52 euros to 0.37 euros); decided to increase the Company capital to EUR 715,843,029.30 - reserving this increase, to be carried out by June 30, 2002, for the Ministry of Economy and Finance - by means of issuing 386,266,722 shares at a price of EUR 0.96 each, of which EUR 0.59 represents a surcharge; delegated the Board of Directors: to further increase the Company capital and to issue convertible bonds for a maximum nominal amount of EUR 1,431,686,058.60 of which half to be used for share subscription and the other half for the conversion of convertible bonds. The shares and the bonds will be issued at a price of EUR 0.37 each; to carry out a subsequent increase in capital for a maximum amount of EUR 66,600,000, reserved for employees of the Company and of controlled companies, by means of assigning them subscription rights for newly issued ordinary shares at the price of EUR 0.37 each. Furthermore - within the framework of the Decree dated March 30, 2000, no. 162 issued by the Ministry of Justice together with the Ministry of the Treasury, Budget and Economic Planning - Tuesday's Meeting approved a modification to article 29 of the Company Statute concerning the professional qualifications of the Auditing Board. The Meeting nominated the following members of the Auditing Board for the three-year period 2002-2004: Mr Bruno Steve President Mr Luca Arnaboldi Standing auditor Mr Leone Barbieri Standing auditor Mr Claudio Bianchi Standing auditor Mr Luigi Pacifico Standing auditor Mr Mauro Cicchelli Substitute auditor Mr Giorgio Ferrari Substitute auditor as well as confirming the following Directors until the expiry date of the current Board of Directors: Mr Michele Cicia and Monsieur Jean-Cyril Spinetta, President and CEO of Air France, already co-opted by the Board. The Meeting also commissioned the firm Deloitte & Touche to audit the accounts for the three-year period 2002-2004. Finally, the Meeting approved the project for merger by incorporation with ALITALIA of the controlled companies Alitalia Team S.p.A. and Racom Teledata S.p.A.. FIAT SPA: Company Profile ------------------------- Name: Fiat Group S.p.A (Fabbrica Italiana Automobili Torino) 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Website: www.fiatgroup.com SIC: Auto-manufacturing company Employees: 223,953 (2000) Net Loss: 299 EUR or $280.202(Q1 Quarter 2002) Total Assets: 92,613.92 EUR or US$86,782.0 (quarter ending June 2001) Total Liabilities: 80,336.98 EUR or $75,285.0 (quarter ending June 2001) Type of Business: Century-old Fiat has a plethora of auto offerings, which range from compacts and sedans such as the Fiat Seicento to its Alfa Romeo, Ferrari, and Maserati sports cars. Having sold some non-core businesses, Fiat refocused on its auto business, CNH Global agricultural and construction equipment, and Iveco commercial vehicles. It also operates insurance, aviation and publishing subsidiaries. The founding Agnelli family owns about 30% of Fiat. Trigger Event: With the intention to expand its auto business outside Western Europe, Fiat exchanged 20% in Fiat Auto for a 6% stake in GM. Under the agreement Fiat Auto has the option to sell an 80% stake to GM. The group's first quarter 2002 financial results revealed EUR 529 million in losses and posted total debt of EUR6.6 billion. The huge losses were attributed to continued slump in the auto division, Fiat Auto. The group is currently negotiating with Banca di Roma SpA, IntesaBci and Sanpaolo IMI for a possible EUR 3 billion funding to allow Fiat to continue operations and reschedule its short- term debt in exchange for an option to take part in a capital increase in three years and other conditions. Honorary Chairman: Giovanni Agnelli Chairman: Paolo Fresco Group CEO and Director: Paolo Contarella Stockbrokers: Cesare Ferrero - Chairman Giorgio Ferrino Lamberto Jona Celesia Auditors: Cesare Ferrero - Chairman Giorgio Ferrino Lamberto Jona Celesia No. of Shares in Issue: 392.526 EUR or US$367.4 (quarter ending June 2001) Creditor Banks: Banca di Roma, IntesaBCI, Sanpaolo IMI, UniCredito Italiano and Banca Nazionale del Lavoro Bank Debt: EUR 19 billion FIAT SPA: General Motors Mulls Early Exercise of Takeover Option ---------------------------------------------------------------- People close to General Motors Europe say the group is considering making an early bid for the 80% stake that it does not own yet in Fiat Auto, reports Handelsblatt. According to the German daily, many people in Zurich, where the European base of the world's No.1 carmaker is headquartered, believe the current price of Fiat's shares makes it an attractive buy this early. At present, General Motors controls 20% of Fiat's car-making division, but holds a four-year option to buy the rest beginning 2004. Fiat shares are currently trading EUR13. Fiat, however, has maintained that the auto division is not for sale, or at least in the meantime. The unit is the largest loss- maker within the Italian industrial group, carving a EUR429 million operating loss in the first quarter. The conglomerate had just signed an agreement with banks to restructure its debts. Assets are now being line-up for disposal, but Fiat Auto is not one of them. FIAT SPA: Success of Restructuring in Hands of Moody's, S&P ----------------------------------------------------------- Rating agencies have a critical role in the restructuring of Italian industrial giant Fiat SpA, reports the Financial Times. The paper says the group is banking on Moody's and Standard & Poor's to approve the complex arrangement it entered into with creditor banks Tuesday and calm market speculations that it is about to be downgraded to "junk" status. Moody's currently grades Fiat "Baa2" or just two notches above "junk." A slide to the latter grade would mean an increase in the cost of financing debts of about EUR35 billion (US$31.5 billion), the paper says. The group is hoping to get the nod from the rating agencies today. Last Tuesday, the conglomerate gave creditor banks -- Banca di Roma, IntesaBCI, Sanpaolo IMI, UniCredito Italiano and Banca Nazionale del Lavoro -- a substantial say in restructuring its operations. This special arrangement is backed by the Bank of Italy, the country's central bank. The paper says this endorsement from the central bank was necessary because it considers them to be overexposed to Fiat. They account for more than half the estimated EUR19 billion in bank credit extended to the group. The arrangement gives the banks the power to enforce the sale of significant assets - including its insurance, aviation and truck divisions - should Fiat not meet debt reduction targets. They can also force a EUR3 billion capital hike. In return for this leverage, they will refinance EUR3 billion in short-term debts. Meanwhile, the government is expected to unveil its own aid package in the coming days. Government ministers on Thursday were scheduled to discuss incentives for consumers who purchase new cars with environmentally friendly engines, the report says. ===================== N E T H E R L A N D S ===================== KPNQWEST NV: Tells Workers to Brace for Possible Liquidation ------------------------------------------------------------ KPNQwest NV has reportedly told workers Tuesday night to prepare for the company's liquidation days from now, CommunicationsWeek International said Wednesday. According to the industry publication, an all-employee teleconference was held Wednesday morning to discuss the announcement. Some staff were also told they had lost their jobs during the meeting. Wednesday was the deadline for any bids for the company, but apparently a viable offer has yet to be put on the table. As a result, Deutsche Bank has reportedly taken steps to recover any assets. Sources told the paper that the company will run out of cash for network operations as early as end of this week. Network shutdown will then follow over the next three to six weeks. "This could see the possibility of utility companies locking out KPNQwest staff over unpaid bills," the paper said. The company filed for protection under Dutch moratorium law last Thursday and early this week E.T. Meijer and J.C. van Apeldoorn were appointed joint administrators for the group. The two have pledged to preserve the business as an ongoing entity and to continue discussions with potential strategic investors, said Troubled Company Reporter-Europe Tuesday. A senior telecoms executive sees the Amsterdam-based network operator selling its recently acquired Ebone network, the CommunicationsWeek says. The company reported losses of EUR266 million in 2001. The same annual results also recorded total liabilities of EUR2.42 billion against total assets of EUR3.48 billion. According to the industry paper, KPNQwest's troubles really started early this year when shareholder companies KPN, the national operator in the Netherlands, and Qwest Communications, of Denver, Colorado, refused to provide further financial support. This move affected contracts for wholesale capacity worth US$400 million, creating a wide whole in the company's revenue forecasts. =========== P O L A N D =========== ELEKTRIM SA: Nears Final Deal With Bondholders, Pact in 15 Days --------------------------------------------------------------- Embattled Polish industrial group Elektrim SA will have to sell assets to meet its new commitment with bondholders, says Expansion, citing La Gaceta de los Negocios. On May 15, the Troubled Company Reporter-Europe said the company had already secured a tentative approval for its debt repayment plan from half of the holders of its nearly EUR480 million defaulted bonds. Expansion says a final agreement with bondholders will be signed in 15 days. Under the plan, Elektrim will pay the bonds in full by July 2005 and partly through a syndicated loan raised by BRE Bank. The first tranche of the repayment scheme will be made on June 15 and will amount EUR200 million, TCR-Europe said. The second payment of EUR100 million will be made on December 15, leaving the company with about EUR189 million in outstanding, which Elektrim can redeem at 30 days' notice. The group also plans to issue new, restructured bonds, which will be secured against Elektrim's stake in Telekomunikacja, in which partner Vivendi Universal controls 51 percent. NETIA HOLDINGS: Telecom Service Group Announces New Tariff Plans ----------------------------------------------------------------- Netia Holdings S.A., Poland's largest alternative fixed-line telecommunications services provider, announced its new tariff packages for indirect domestic long distance (Netia's prefix 1055) and ISDN services effective as of June 1, 2002, to supplement its current tariff offerings. With the introduction of Netia 1055 "Active" and ISDN "Effective" tariff plans, Netia will not only broaden the scope of choices for its customers, especially those customers from the business segment, but will also offer easy-to-understand tariff plans billed on a per-second basis. Clients using Netia's indirect domestic long distance services will be given a choice between the existing "Economic" plan, billed on a per-minute basis, and the new "Active" plan which will include: - Unified calling charge of PLN 0.31 per minute (net of VAT) billed on a per-second basis; - Call connection fee of PLN 0.10 (net of VAT); and - Minimum monthly fee of PLN 60 (net of VAT). Clients using ISDN lines will be offered a choice of three tariff plans. In addition to the existing "Versatile" plan for ISDN Duo and "Professional" plan for ISDN Multi, Netia will introduce an "Effective" package for ISDN Multi, with the following fractions of traffic billed on a per-second basis: - Local call charge of PLN 0.10 per minute (net of VAT); - Unified long-distance call charge of PLN 0.31 per minute (net of VAT); - Unified fixed-to-mobile call charge of PLN 1.20 per minute (net of VAT); - International call charge of PLN 1.42, 1.60, 3.20 and 5.70 per minute (net of VAT), depending on the country zone; and - International voice-over-IP call charge of PLN 1.15, 2.25 and 4.05 per minute (net of VAT), depending on the country zone. The call connection fee in the "Effective" package is PLN 0.10 (net of VAT). All other charges are consistent with the "Professional" tariff plan. Further details of the tariff plans are available on request from Netia. Contact Information: Netia Anna Kuchnio (IR) Jolanta Ciesielska (Media) Telelphone: +48-22-330-2061 Taylor Rafferty, London Jeff Zelkowitz Telelphone: +44-(0)20-7936-0400 Taylor Rafferty, New York Andrew Saunders Telelphone: 212/889-4350 ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: French Court Says Firm Owes Air Littoral EUR15 MM ----------------------------------------------------------------- A Montpellier, France-court ordered Wednesday bankrupt Swissair Group to honor its commitment to pay French regional carrier Air Littoral EUR15.25 million, says the Associated Press. Swissair had signed a contract with Air Littoral, promising funding, but it never paid the amount after it filed for bankruptcy in October. But the court said the Swiss carrier was still obliged to pay the sum because the deal was sealed before it went bankrupt. The decision will be charged against the remaining assets of Swissair. Karl Wuthrich of the law firm Wenger Plattner is currently the interim administrator of Swissair. He was not immediately available for comments. =========================== U N I T E D K I N G D O M =========================== EUROTUNNEL: Updates on Tender Advances, Stabilization ----------------------------------------------------- Eurotunnel announces that at the Early Tender Date of May 28, 2002, valid tenders of Resettable Advances and of Stabilization Advances exceeded the minimum amounts required. The tender for Resettable Advances and Stabilization Advances will remain open until July 10. On May 29, 2002, the syndicate of Lenders voted in favor of its Proposals. This enables Eurotunnel to proceed with the final phase of the transaction aimed at reducing its debt by at least GBP400 million (EUR650 million). Eurotunnel is seeking to raise up to GBP740 million of new Junior Debt financing a proportion of which would be used to purchase the tendered debt. Marketing of the bonds has commenced and pricing of the bonds is expected to take place at the end of June. Documentation relating to the proposals has been posted on the Eurotunnel Company Information website: www.eurotunnel.com Eurotunnel manages the infrastructure of the Channel Tunnel and operates accompanied truck shuttle and passenger shuttle (car and coach) services between Folkestone, UK and Coquelles, France and is market leader for cross-Channel travel. Eurotunnel also earns toll revenue from other train operators (Eurostar and EWS and SNCF for rail freight) which use the Tunnel. Eurotunnel is quoted in London, Paris and Brussels. Contact Information: Eurotunnel Kevin Charles (UK media) Telephone: 00 44 1303 288728 Sarah Dorso (analysts & investors) Telephone: 00 333 21 00 64 79 J2C: Beaumont Cornish's Offer for Entire of J2C's Share Capital --------------------------------------------------------------- In relation to the estimate of net cash resources (Cash Estimate) contained in the letter from the Chairman of J2C dated May 20, 2002 recommending the Offer, the financial adviser to J2C, Nabarro Wells & Co. Limited, confirms, at the request of the Panel on Takeovers and Mergers, that it has discussed the Cash Estimate with the Directors of J2C, together with the assumptions on which the Cash Estimate was based, and that, in its opinion, the Cash Estimate, for which the Directors of J2C are solely responsible, was made after due and careful inquiry. At the Annual General Meeting of J2C, held on Wednesday May 22, the resolution to re-elect Alan Davidson as a Director of the Company was defeated by reason of Graeme Lowdon and others, who are acting in concert with Adolphus Limited, voting against the resolution. Accordingly, the sole Director of J2C is now the Chairman, Sir Michael Bett. Due to the collapse in the dot.com industry in February last year, the business-to-business internet company j2c formerly named Just2Clicks, announced to sell three out of its seven e- commerce portals. The group further announced to wind up in June last year. Subsequently, J2C embarked on a rescue program GBP26.5 million and cut its workforce to 58 from 138. In June last year, the company plans to return between GBP33 and GBP35 million to its 5,000 shareholders when it closes, the BBC News reported. KINGFISHER PLC: SSSB Says Castorama Picked Bank to Assess Bid ------------------------------------------------------------- Schroder Salomon Smith Barney parried "conflict of interest" accusations hurled by Castorama recently, pointing out that the French Do-it-yourself chain had agreed to appoint it as the independent bank charged to evaluate whether Kingfisher's bid price was fair. Castorama recently disclosed that the bank had earned fees of US$100-150 million in recent years from its advisory work for Compass, which is chaired by Kingfisher Chairman Francis Mackay. "They were the least independent bank on the market," Castorama was quoted by the Financial Times as saying. The bank recently opined that the EUR67 per share offer of Kingfisher for the 45% minority stake in Castorama was "fair." Castorama Chairman Jean-Hugues Loyez, however, insists investors deserve at least EUR70. Under an agreement inked when Kingfisher took 55% control of Castorama four years ago, both firms agreed to appoint an independent investment bank to assess any bid for the rest. If the price is deemed fair, Kingfisher can go ahead despite objections from Castorama minorities, said Troubled Company Reporter-Europe in a report last week. The Financial Times, meanwhile, learned that Merrill Lynch, which is advising Castorama, also acts for Compass as the group's house broker. Merrill said on Tuesday it had not initially told Castorama that Schroder Salomon Smith Barney advises Compass when it was first selected. A French commercial court will rule today whether or not the "fair" valuation of Schroder Salomon Smith Barney is indeed acceptable. As this develops, a delegation of Castorama partners and managers are in Britain right now to lobby UK shareholders on an alternative to Kingfisher's EUR5 billion (US$4.6bn) bid, says the paper. Advisers to Castorama told the Financial Times that they were meeting 15 to 20 institutions owning about 40% of Kingfisher's equity. MARCONI PLC: Wins Multi-million-pound Contract to Upgrade DT ------------------------------------------------------------ Marconi Plc, the heavily indebted telecom equipment maker, has cornered a systems upgrade at Deutsche Telekom's ServiceOn Access worth tens of millions of pounds, says Telegraph. Marconi will provide the German telecom giant with latest top-of- the-line digital subscriber line technology so that future DSL connections can be set up automatically, the report says. ServiceOn Access is a network management system installed at the German carrier since 1991. Deutsche Telekom expects reduced costs and improved availability time, as a result of the upgrade. This project will be completed next year, Marconi says. In addition to this systems improvement, Marconi will also install SDHDSL technology for Deutsche Telekom's future symmetric DSL offering. The German operator plans to launch SHDSL later this year. Marconi will begin delivering SHDSL in the summer. The contract runs until the end of 2005, says the report. NTL INCORPORATED: Top Executives Got Payouts in 2001 Despite Woes ----------------------------------------------------------------- Top honchos of NTL Incorporated rewarded themselves hefty bonuses in 2001 despite the company's financial woes that ultimately ended in bankruptcy early this month. The Financial Times says CEO Barclay Knapp got US$561,138 in bonuses last year, more than double his 2000 windfall. Chairman George Blumenthal also received the same bonus for 2001. CFO John Gregg, whom bondholders blame for NTL's financial woes, topped the other two executives with a US$591,250 payout. Stephen Carter, chief operating officer, was also paid a bonus of US$278,112 over and above his base salary of US$431,790 in 2001. The paper also learned that senior NTL executives had also been given extensive share options, though the shares fall following the bankruptcy filing rendered these worthless. In April, NTL reached agreement with bondholders for a US$10.6 billion debt-for-equity swap that leaves shareholders with virtually nothing. This month the company filed a pre-arranged Chapter 11 bankruptcy in the US with more than US$17 billion of debts. TELECITY PLC: Internet Network Provider Names Hudson as CEO ----------------------------------------------------------- TeleCity plc announces today the appointment of Rick Hudson as Chief Executive Officer of the company with effect from June 19, 2002. Rick has recently been Chief Operating Officer of Netscalibur Ltd, prior to which he had wide experience in Cable and Wireless and Digital Equipment Company. In his role at Netscalibur he was responsible for creating and developing, through acquisitions and organic growth, a high quality pan-European ISP focused on the small and medium sized market. At Cable and Wireless, his roles included developing the Company's ISP strategy for Europe where he was responsible for the acquisition of eighteen ISPs, building the company into one of the region's leading network service providers. He subsequently became Vice President of Global Business Development, where he drove the growth of the Cable & Wireless network service business in the United States and Japan. Michael Hepher, who has been Chairman and CEO in recent months, will now revert to his original role of non-Executive Chairman. Michael Hepher said: "We are delighted that Rick is joining TeleCity at this stage in its development. Over the past year we have experienced a period of difficult market conditions, but have now successfully positioned the company to respond by strengthening our sales and marketing efforts and securing a sound financial position." "Our sales pipeline is strong and we anticipate growth in orders in the coming months. Under Rick's leadership the company is well placed to execute its strategy as the market for colocation services throughout Europe improves." For further information: TeleCity plc Telephone: 020 7638 9571 Michael Hepher Chairman and CEO Martyn Ellis Finance Director *********** 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 * * *