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/raid1/www/Hosts/bankrupt/TCREUR_Public/020701.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 Monday, July 1, 2002, Vol. 3, No. 128 Headlines * A U S T R I A * RHI AG: Successfully Completes Sale of Engineering Operations * F R A N C E * GENSET SA: Serono Offers EUR 107.4MM in Cash at EUR 9.75/Share GENSET SA: Pharmaceuticals Group Continues Suspension of Trading * G E R M A N Y * BABCOCK BORSIG: Parts of Babcock Borsig Eyed by Alstom CARGOLIFTER AG: Announces Management Board Changes DIALOG SEMICONDUCTOR: Foresees Losses in Q2 2002 DIALOG SEMICONDUCTOR: Company Profile E.MULTI DIGITALE: Changes in Supervisory Board HELKON MEDIA: Posts EBIT EUR -18.9MM in Nine Months to April 2002 * I R E L A N D * AIB: Discloses Worldcom Exposure Less Than USD 50MM ELAN CORPORATION: Reaches Settlement With FTC on Licensing Deal * I T A L Y * FIAT SPA: Announces Former Finance Director Galateri as New CEO * N E T H E R L A N D S * KPN NV: Accepts Proposal of OPTA Allowing Consumer Liberalization KPNQWEST: Trimoteur Placed EUR 200MM Bid on KPNQwest Network VERSATEL TELECOM: Announces De-listing From Nasdaq VERSATEL TELECOM: Launches IP VPN Fiber Access * P O L A N D * ELEKTRIM SA: Court Declares VPN Subsidiary Company Bankrupt * S P A I N * REPSOL YPF: Company Profile * U N I T E D K I N G D O M * RAILTRACK PLC: To Be Sold to Network Rail for GBP500 Million TELECITY: Announces New Investment in Paris Facility WORLDCOM, INC: Directors Probed on Failure to Spot Fraud WORLDCOM, INC: Banks Refuse to Extend Worldcom Loan ============= A U S T R I A ============= RHI AG: Successfully Completes Sale of Engineering Operations ------------------------------------------------------------- The sale of the RHI Groups engineering activities to Deutsche Beteiligungs AG, which was announced on June 3, 2002, was successfully completed Thursday following the approval of the transaction by the competent anti-trust authorities, the refractories group announced last week. With the sale of Engineering, RHI has realized an important step towards the groups restructuring and concentration on the core business Refractories. The targets of the business plan, which RHI presented in the context of the capital restructuring, will not be affected by the sale. Rather, the loss of potential earnings will be than compensated by positive liquidity and risk effects. =========== F R A N C E =========== GENSET SA: Serono Offers EUR 107.4MM in Cash at EUR 9.75/Share -------------------------------------------------------------- Serono S.A. and Genset S.A. disclosed Wednesday that they have agreed on the terms of a recommended cash tender offer by Serono for all outstanding shares, American Depositary Shares (ADSs), convertible bonds (OCEANEs1) and certain warrants of Genset. Serono's Offer was unanimously recommended by the board of directors of Genset on June 25, 2002. It consists of EUR 9.75 in cash for each Genset share, EUR 3.25 in cash for each Genset ADS and EUR 102.64 in cash for each Genset OCEANE. The filing of this Offer with the French and U.S. stock exchange authorities is subject to Genset's shareholders voting to amend the provision in its by-laws, which currently limits any shareholder's voting rights to 20%, at Genset's Extraordinary Shareholders' Meeting to be held today. The Offer is also subject to acceptance by holders with a minimum of two-thirds of the voting rights of Genset, taking into account the OCEANEs on an as-converted basis. "The offer for Genset is a continuation of our strategy of selective R&D investments. This investment will further develop our genomics drug discovery platform and feed our pipeline," said Ernesto Bertarelli, Chief Executive Officer of Serono. "There is an excellent fit between Serono and Genset and I am looking forward to a successful transaction." "This offer will enable Genset to fully realize the potential of our unique genetics expertise in combination with the development and marketing strengths of Serono, Europe's leading biotechnology company," said Marc Vasseur, Chief Executive Officer of Genset. "The Board believes this is an outstanding opportunity for the company and its shareholders, and we are committed to ensuring its success." Both Serono and Genset see this as a significant opportunity to create a unique and integrated genomics discovery platform. This acquisition will enhance Serono's development pipeline of novel proteins and small molecules. There is a strong complementary fit between Genset's genetics- driven gene and protein discovery platform and Serono's functional genomics program. Serono will have the competitive advantage of an integrated process combining all the key elements needed to move from understanding the human genome to producing a molecule for human clinical trials. Genset will be able to fully exploit its genetics expertise and benefit from Serono's integrated organization as Europe's leading biotechnology company. 1 Obligations a option de Conversion et/ou d'Echange en Actions Nouvelles ou Existantes Upon completion of the Offer, Serono will benefit from the following key assets of Genset: - Leading expertise in linking gene to disease and disease to gene; - A strong scientific team; - Extensive cDNA library of secreted proteins and valuable targets; - Integrated technology platform of bioinformatics, genetics, biostatistics, therapeutic genomics; and - Promising protein therapeutic (Famoxin) in metabolism, as well as other early stage projects in CNS and metabolism. The key members of Genset's scientific and management team are committed to the success of the new organization. It is envisaged that Genset's scientific site in Evry, France, will become Serono's worldwide genetics center of expertise within Serono's global R&D organization. Evry would complement Serono's existing drug discovery sites in Geneva, Switzerland (focused on central nervous system, metabolism, genomics, chemical screening); Boston, USA (focused on reproductive endocrinology) and Ivrea, Italy (focused on toxicology). Both companies will analyze the financial and human resource synergies of the combined discovery organization, and consequently it is contemplated that there will be appropriate transfers of staff between the sites. As part of this integration, it is intended that support activities currently performed at Genset's head office in Paris be transferred to the Evry site, and a preliminary estimate is that the current Genset workforce in France would be reduced by about 20%. Even if this Offer were not to occur, Genset's management would have considered closing Genset's operations in San Diego, USA, and Serono is supportive of this move at this stage. The Offer will be launched by Serono France Holding S.A., a wholly-owned subsidiary of Serono, in France and in the United States, for all outstanding shares, ADSs, OCEANEs and warrants, except for the warrants issued by Genset to Societe Generale for the purpose of its Equity Line since these warrants cannot be tendered to the Offer. The Offer will be EUR 9.75 in cash for each Genset share and EUR 3.25 in cash for each Genset ADS (each ADS representing one third of a share). These prices represent a premium of approximately 195% and 188% to the average volume weighted market prices on the Nouveau Marche of Euronext Paris and Nasdaq, respectively, for the month up to June 18, being the last trading day for Genset shares and ADS prior to this announcement. The Offer will be EUR 102.64 for each Genset OCEANE, which corresponds to their redemption value as of June 26, 2002 and represents a premium of 389% to the last traded price of EUR 20.99 on May 23, 2002. Genset OCEANEs are listed on the Nouveau Marche of Euronext Paris. The Offer price for Genset's warrants that are currently outstanding will be EUR 1 for each warrant. The exercise price of each of these warrants is higher than the Offer price per share. The price offered for Genset's warrants to be granted by the June 26 Genset's Extraordinary Shareholders' Meeting will be equal to the difference between the Offer price per Genset share and the exercise price of each such warrant, i.e. EUR 6.5 assuming a EUR 3.25 exercise price. The estimated net cash position of Genset (excluding the impact of the OCEANEs) as of end of June 2002 is EUR 27.7 million. Therefore the Offer implies a firm value of EUR 107.4 million. Serono's Offer will be subject to a threshold condition that securities will be tendered representing two-thirds of Genset's voting rights on a diluted basis, including all Genset's shares, ADSs and OCEANEs outstanding as of the end of the offer period. As of June 26, Serono does not hold any security of Genset. The transaction is not subject to any regulatory prior notification or approval other than from French and U.S. stock exchange and market authorities. The board of directors of Genset met on June 25, 2002 to consider the cash tender offer proposed by Serono. All of the members of the Board were present or participated by teleconference and were represented. Based on the industrial rationale and expected synergies and the financial conditions provided in Serono's proposal, Genset's board of directors unanimously voted to support the Offer which it considered to be in the interest of the company, its shareholders and its employees. In reaching its decision the board relied upon the opinion of its financial advisors, Lehman Brothers Europe Limited. The board unanimously recommended that the holders of Genset securities tender to the Offer. The board also unanimously decided to file with Serono a joint notice of information with the French Commission des Operations de Bourse. Planned timetable The Offer will be filed by Serono with the Conseil des Marches Financiers in France as soon as practicable after the Extraordinary General Meeting of Genset to be held on June 26, 2002 and subject to the shareholders of Genset voting at that meeting to repeal Section 19.5 of Genset's statutes (which currently limits any shareholder's voting rights to 20%). A joint draft notice of information will be filed without delay thereafter with the Commission des Operations de Bourse. It is the intention of Serono and Genset that the Offer be launched and carried out concurrently in France and in the United States as soon as the Offer and the notice of information are approved by the Conseil des Marches Financiers and the Commission des Operations de Bourse, respectively. Subject to the approval of French and U.S. stock exchange and market authorities, Serono and Genset expect the Offer to close by end of August. Genset is a genomics-based biotechnology company focused on generating a pipeline of drug targets and drug candidates in the areas of CNS and metabolic disorders. Genset has successfully used its integrated technology platform and association studies approach to identify and characterize drug targets and drug response markers in the fields of CNS, metabolic and other diseases. Building upon the expertise accumulated in various alliances with pharmaceutical partners and its portfolio of genomic patents, Genset discovers and validates novel drug targets and candidates for its own account. Its teams have already discovered and launched the development of a lead protein candidate in the metabolism field named Famoxin, and are continuing their research with a view to discovering and developing other drugs. Contact Information: Investor Relations Telephone : + 41 22 739 36 01 Fax : +41 22 739 30 22 GENSET SA: Pharmaceuticals Group Continues Suspension of Trading ---------------------------------------------------------------- Genset S.A., confirms that discussions concerning a possible major strategic transaction continue, the French group declared recently in a statement to the Press. The preliminary discussions contemplate that a third party would offer to acquire all the ordinary shares, American Depositary Shares (ADSs) and convertible bonds of the Company for cash. Although there is no certainty as to whether the discussions will result in an offer by the third party or as to the terms of the potential offer, the potential acquirer has informed the Company that no offer will be made unless the shareholders of Genset vote to eliminate the 20% cap on voting rights presently contained in Article 19.5 of the Company's bylaws at the general meeting of the shareholders to be held on Wednesday June 26. The Company expects to receive more specific terms concerning the offer, if any, by the end of the day on Tuesday, June 25. The trading of the Company's shares and convertible bonds on Euronext and of its ADSs on Nasdaq will continue to be suspended until at least the completion of its shareholders' meeting on Wednesday, June 26. ============= G E R M A N Y ============= BABCOCK BORSIG: Parts of Babcock Borsig Eyed by Alstom ------------------------------------------------------ Some divisions of troubled company Babcock Borsig AG have attracted the interest of French company Alstom SA, a report obtained from AFX News said. Citing Alstom SA's managers, the report indicated that the Alstom is particularly eyeing Babcock Borsig Power Environment. The French company is also said to be interested in Steinmuller, another unit of Babcock Borsig AG. Babcock has been in the news lately for currently facing financial trouble. In order to pay for the salary of its 22,000 employees and its outstanding bills, the near insolvent company has to obtain EUR 200 million loan from its creditor banks. The company also faces thousands of job cuts worldwide following the sale of some of its production sites as part of their restructuring plan, the report said. CARGOLIFTER AG: Announces Management Board Changes -------------------------------------------------- At its meeting Thursday, the Supervisory Board of CargoLifter AG created the conditions for leading the company out of the start- up phase and into a phase of industrial realization. This step will be supplemented by the creation of a technology center at the Brand site. It will focus on running research and development for basis technology of Lighter Than Air Engineering. In this context, the Supervisory Board also granted the request of the Chairman of the Management Board, Dr.v.Gablenz, to move to the company's Supervisory Board. Dr.v.Gablenz. who initiated the CargoLifter project in 1994 and has guided CargoLifter AG through the start-up phase since 1996, will thus also be available to the company in the next phase, providing both experience and global contacts. In the course of the planned creation of the technology centre, Prof. Dr. Kroplin, previously the member of the Management Board responsible for technology, will, in conjunction with his position as head of the Institute for Statics and Dynamics of Aeronautical and Aerospace Constructions at the University of Stuttgart, assume the role of creating an important center of aeronautical engineering at the Brand site with the focus on Lighter Than Air Engineering. The range of services offered in research and development will go significantly further than the co-operation with CargoLifter. In future, CargoLifter AG will be managed by a two-man Management Board headed by Dr. Wolfgang Schneider, a recognized and experienced manager in the aeronautical industry, who most recently worked as head of development at Airbus Germany in Hamburg. Dr. Schneider's main task will be to use his experience to lead the company into a phase of industrial realization, coupled with the organization of the structure of the company realigned to achieve this. Mr Karl Bangert, who created CargoLifter AG together with Dr.v.Gablenz, will continue to serve on the Management Board, thus also safeguarding the continuity and application of experience in a responsible position. This reorientation of CargoLifter AG is being carried out in close agreement with the provisional insolvency administrator, Prof. Dr. Monning. DIALOG SEMICONDUCTOR: Foresees Losses in Q2 2002 ------------------------------------------------- Dialog Semiconductor Plc revealed June 27 that the electronics group anticipates Q2 results, which will be lower than general market expectations and will show a reduction in revenues of about 10% compared to the first quarter of 2002. These results will reflect the ongoing depressed trading conditions in the semiconductor and wireless sectors. The lower revenues have given rise to a lower gross margin and, combined with the maintenance of the company's investment in research and development, this will result in operating losses increasing compared to Q1 2002. Loss per share (EPS), after taking account of a further recovery of EUR 0.8 million of the ESM write off, may show a shortfall against the consensus estimate of around EUR -0.07 and is estimated to be EUR -0.09 for the second quarter 2002. Dialog anticipates continued difficult market conditions through the third quarter 2002. Dialog will release its final results for the second quarter 2002 on July 24, 2002. DIALOG SEMICONDUCTOR: Company Profile ------------------------------------- Name: Dialog Semiconductor Plc Neue Strasse 95 73230 Kirchheim-Nabern, Germany Telephone: +49-7021-805-0 Fax: +49-7021-805-100 Website: http://www.diasemi.com SIC: Electronics Manufacturing Employees: 287 Net Loss: EUR 41.8 million (2001) Total Assets: EUR 178.4 million (2001) Total Liabilities: EUR20.7 million (2001) Type of Business: Dialog semiconductor develops and supplies mixed signal component and system level solutions for wireless communications and automotive applications. Dialog, which outsources its manufacturing, specializes in audio codecs (coder/decoders) and power management ASICs for mobile telephones. Investment firm Apax Partners owns more than a quarter of the company, which began as the semiconductor operation of Daimler- Benz (now DaimlerChrysler). Trigger Event: Dialog Semiconductors announced recently a warning the the electronics group expects losses this year after posting EUR 41.8 million in negative results. Chairman: Jan O. I. Tufvesson President, CEO, Director: Roland Pudelko VP, Finance and Controlling: Martin Kloble Chairman: Jan O. I. Tufvesson Auditor: KPMG, Germany No. of Shares in Issue: 44.1 million shares E.MULTI DIGITALE: Changes in Supervisory Board ---------------------------------------------- The Supervisory Board of the e.multi Digitale Dienste AG, Ettlingen, Germany, listed at the German Neuer Markt, resolved to comply with the wish of Matthias Gartner (CEO) and Markus Wojnar (CFO) to resign from the managing board. Mr. Gartner and Mr. Wojnar will leave the company as at June 30, 2002. The supervisory board also resolved to appoint Mr. Thomas Lumper (CEO) from Regensburg and Mr. Hans Weiss from New York to the managing board of e.multi Digitale Dienste AG as of July 1, 2002. Dr. Friedrich-Georg Hoepfner, Detlef Dietrich and Andreas Beck resigned from the supervisory board. 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 in May 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. The district court in Karlsruhe is handling the company's insolvency procedure. HELKON MEDIA: Posts EBIT EUR -18.9MM in Nine Months to April 2002 ----------------------------------------------------------------- Helkon Media AG's earnings before interests and taxes (EBIT) amounted to EUR - 18.9 million in the period from August 1, 2001 to April 30, 2002, the entertainment group announced Friday. Earnings from usual business activities amounted to EUR - 20.7 million, earnings per share in accordance with DVFA/SG was EUR - 1.94. The company has been able to increase its turnover by 48% to EUR 145 million (previous year: EUR 98 million) within the first nine months of fiscal year 2001/2002. Earnings before interest, taxes, depreciation and amortization (EBITDA) was increased from EUR 68.8 million in the same period of the previous year to EUR 78.8 million, corresponding to an increase of 14.5 %. Cashflow in accordance with DVFA/SG increased by 20.5% to EUR 78.1 million as compared to the same period of the previous year. Cash funds increased by 84.5% to EUR 15.7 million as compared to July 31, 2001. This nine-month performance results from two factors. First, we have made special depreciations on our film library amounting to EUR 10 million due to the insecure forecasts for the German Pay- TV market and the price decay for Pay-TV rights resulting from this. Therefore, all accounted Pay-TV rights were depreciated to 5% as compared to previously 15-25% of the license value. Another factor affecting operating results was the cinema exploitation of Rollerball, which was left far behind our expectations and the non-recurring expenses amounting to TEUR 2.080 incurred by our reorganisation measures. Helkon Media AG's reorganisation measures initiated in fall 2001 are now shortly before completion and has lead to considerable cost reductions, successfully streamlining our internal organization and a leaner M&A-structure. Contact Information: Helkon Media AG Anke Ludemann Investor Relations/Corporate Communication Telephone: 0049/89/99805-842 Fax: 0049/89/99805-111 Email: Anke.luedemann@helkon.de ============= I R E L A N D ============= AIB: Discloses Worldcom Exposure Less Than USD 50MM --------------------------------------------------- Allied Irish Banks Plc's exposure to troubled company Worldcom is less than US$50 million, Afx News said, citing a banking source. The banking source told AFX News "there has been all sorts of speculation out there today but that is all grossly over- estimated. The exposure is more in the lower tens of millions of dollars than in the hundreds (of millions) and does not exceed 50 mln us." An AIB spokesperson also indicated that it was their company's policy not to divulged information or comments regarding individual exposures for confidentiality reasons, AFX reported. AIB shares were trading down 0.95 cents at 12.78 eur as of June 26, 11.51 am. ELAN CORPORATION: Reaches Settlement With FTC on Licensing Deal --------------------------------------------------------------- Elan Corporation, plc announced in a statement Thursday that it has entered into a settlement with the U.S. Federal Trade Commission (FTC) resolving the FTC's investigation of a licensing arrangement between Elan and Biovail Corporation relating to nifedipine, the generic version of the hypertension drug Adalat CC. The settlement with the FTC is reflected in an Agreement Containing Consent Order, which does not include a monetary fine or penalty and does not constitute an admission by Elan that any law has been violated. Under the Consent Agreement, Elan will reacquire all rights to its nifedipine 30 mg and 60 mg products that had been transferred to Biovail under the licensing arrangement. Until Elan received the first Food and Drug Administration (FDA) approval of its generic nifedipine 30 mg, the pioneer drug (Adalat CC) was supplied to the market only by Bayer AG. Because Elan does not distribute generic products directly, and because it had no other means to distribute its generic nifedipine at the time, Elan entered into a licensing arrangement with Biovail and its distributor Teva. Through this distribution arrangement, Elan was able to supply the first generic copy of Adalat CC 30 mg to the US market. At present, seven of ten prescriptions for nifedipine 30 mg are filled with Elan's generic nifedipine, savings millions of dollars for the US consumer. As part of the licensing arrangement, Biovail was required to bring a second generic nifedipine 30 mg to the market. However, Biovail has been unable to do so. Consequently, Elan has agreed with the FTC that it is time to unwind the licensing arrangement. Under a new plan approved by the FTC through the Consent Agreement, Elan will bring its nifedipine 30 mg to the market through a second generic distributor, while at the same time Elan will continue to manufacture and supply Biovail with nifedipine 30 mg for distribution through Teva. When Biovail is able to manufacture its own nifedipine 30 mg (or until May 31, 2003, whichever comes first), Elan will stop supplying Biovail with the drug. Thus, consumers of nifedipine will continue to benefit from competition under the new arrangement contained in the FTC Consent Agreement, as they had under the existing arrangement. Elan will also bring a nifedipine 60 mg to the market through its new distributor. Biovail received the first FDA approval for nifedipine 60 mg, and has been distributing the nifedipine 60 mg through Teva. Thus Elan's nifedipine 60 mg will be the second generic copy of Bayer's Adalat CC 60 mg on the market. Elan will not be manufacturing nifedipine 60 mg for Biovail. Elan is pleased to have reached resolution with the FTC whereby consumers will continue to have access to Elan's nifedipine 30 mg, while Biovail continues to work on manufacturing the drug and Elan arranges for an additional generic distributor. Elan expects to announce shortly the launch of its nifedipine 30 mg and 60 mg products through a major generic distributor. Elan anticipates that there will not be a significant impact on its business under the settlement. While Elan will not receive royalties from Biovail, it will gain revenue from two products sold through a new distributor. Elan Corporation, plc is global integrated biopharmaceutical company headquartered in Ireland, with its principal facilities located in Ireland and the United States. Elan is focused on the discovery, development, manufacturing, selling and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases and the development and commercialization of products using its extensive range of proprietary drug delivery technologies. Elan shares trade on the New York, London and Dublin Stock Exchanges. Contact Information: Investors: (US) Jack Howarth Telephone: 212-407-5740 Investors: (Europe) Emer Reynolds Telephone: 353-1-709-4000 ========= I T A L Y ========= FIAT SPA: Announces Former Finance Director Galateri as New CEO --------------------------------------------------------------- Troubled company, Fiat SpA, has named Mr. Gabrielle Galateri di Genola as its new Chief Exective Officer, news from the Independent and CNN Europe said. The news said that Mr. Galateri's arrival into Fiat has boosted up the company's flagging share price. Fiat stock climbed up to 12.58 euros from 12.42 euros on the day of the announcement. A long-term member of Fiat's board and former finance director, Mr. Galateri, 55, will head restructuring plans with Mr. Paolo Fresco acting as his co-CEO, the papers said. Mr. Galateri has served the company in its various investments in Europe including as chief executive of Ifil, one of the family holding companies through which the Agnellis control Fiat. According to the papers, the arrival of Mr. Galateri spells hope for the troubled car-manufacturing company to speed up the sale of its losing car unit Fiat Auto. Due to his long-term relationship with the Agnelli family, he has been heavily favored to succeed the CEO post since Paolo Cantarella resigned two week ago. Mr. Cantarella left the company amidst pressure from Fiat's creditor banks. Last month, the banks forced Fiat to accept a drastic debt restructuring and refinancing plan to avoid the company's debt ratings from being downgraded to junk bond status. Papers reported on Wednesday that Moody's has cut Fiat's long- term debt rating close to junk status. It further said that the group's survival depended on exercising an option to sell its 80% stake of Fiat Auto in 2004 to General Motors, which already own 20%. Despite Mr. Giovanni Agnelli's repeated refusal to sell Fiat Auto, his younger brother Mr. Umberto Agnelli, Gianni's has publicly indicated that Fiat Auto could be sold, the papers said. Fiat has recently agreed to sell some of its assets to cut down its gross debt of o35.6bn. Meanwhile, the company has also hired Mr. Alessandro Barberris as its chief operating officer. Sixty-five year old Mr. Barberris has served Fiat executive for 32 years before leaving in 1996. He has worked with Sanpaolo IMI, among other institutions. ===================== N E T H E R L A N D S ===================== KPN NV: Accepts Proposal of OPTA Allowing Consumer Liberalization ----------------------------------------------------------------- Dutch telecom group KPN announced in a statement to the press Thursday the measures that OPTA has proposed in an effort to increase freedom of choice for consumers. Many of the measures concern improvement of wholesale services with the aim of giving an extra boost to market mechanisms. This liberalization process, initiated six years ago, is now approaching completion. It is in line with the most recent amendment of EU telecommunications rules that must be incorporated in the Dutch Telecommunications Act mid-2003. Ultimately, all consumers can make their own choice in the marketplace and, consequently, the direct involvement of the regulator in consumer affairs could cease to exist, a situation that KPN welcomes. As a result of this package, for its retail fixed telephony tariffs KPN will be relieved of the mandatory pre-inflation price reduction of 5% per year that applied in the July 1999 - June 2002 period and, as was the case before 1999, will be able to compensate for inflation in its tariffs. KPNQWEST: Trimoteur Placed EUR 200MM Bid on KPNQwest Network ------------------------------------------------------------ KPNQwest NV's network has recently found interested buyers in Dutch investment group Trimoteur and U.S.-based AT&T, reports obtained from AFX News said. Citing the bankrupt company's receiver Eddy Meijer, the reports said that Timoteur has placed its bid of worth EUR 200 million to buy KPNQwest NV last Wednesday. However, the reports said that Trimoteur is currently considering its position after it only received "limited formal responses" from the bankrupt carrier's receivers. The group gave KPNQwest's receivers 24 hours to react to the offer. The deadline was set until 5:00 pm last Wednesday. Dutch consortium Trimoteur has also signified its interest in buying complete network. It has already contacted the KPNQwest's administrators in France to make known its bid of 1.5 mln eur for the French portion of the network. Mr. Meijer, also indicated that administrators from various countries have decided to sell the entire network after a meeting last Tuesday, AFX said. Meanwhile, U.S.-based AT&T is yet to announce its offer soon, the reports said. As of press time, Troubled Company Reporter has yet to obtain updates on KPNQwest receivers' formal reaction to Trimoteur's offer. VERSATEL TELECOM: Announces De-listing From Nasdaq -------------------------------------------------- Versatel Telecom International N.V. announced June 27, 2002 that as a result of the commencement on June 19, 2002 of its suspension of payments proceeding in The Netherlands and its Chapter 11 proceeding in the United States in respect of the holding company, Versatel Telecom International N.V., it has received a letter from Nasdaq giving notice that the company's ADSs will be delisted from The Nasdaq Stock Market effective June 27, 2002. Versatel -- http://www.versatel.com-- has decided not to appeal this decision. Versatel's ADSs will continue to trade in the United States on the over-the-counter markets. This action will not affect the listing of the company's shares on Euronext Amsterdam. Versatel Telecom International N.V. is based in Amsterdam, and is a competitive telecommunications network operator and a leading alternative to the former monopoly telecommunications carriers in our target market of the Benelux and Northwest Germany. Founded in October 1995, the Company holds full telecommunications licenses in The Netherlands, Belgium and Germany and has over 79,000 business customers and 1,267 employees. Versatel operates a facilities-based local access broadband network that uses the latest network technologies to provide business customers with high bandwidth voice, data and Internet services. Versatel is a publicly traded company on Euronext Amsterdam (VRSA). Contact Information: AJ Sauer Investor Relations/Corporate Finance Manager Telephone: +31-20-750-1231 Email: aj.sauer@versatel.nl VERSATEL TELECOM: Launches IP VPN Fiber Access ---------------------------------------------- Versatel Nederland B.V. said Thursday that it will introduce a new VPN (Virtual Private Network) product for the business market in the Netherlands and Belgium. In addition to the tailor-made IP VPN solutions, which the company has offered to larger companies for over a year, Versatel will now provide ready-made VPN solutions to large companies as well as small and medium enterprises. Versatel will market the product under the name IP VPN. It offers a reliable data telecommunication service combining xDSL and fiber optic access technology with the advantages of an own IP- network that is based on MPLS (Multi Protocol Label Switching). Versatel is the only service provider that can offer such a private network to the business market, regardless the size of the company. This IP VPN service directly connects customer locations to the Versatel network and enables these offices to exchange data in a secure environment. The density of Versatel's fiber optic network enables Versatel to provide reliable IP VPN connections for main offices and larger locations. With the use of xDSL technology both smaller offices and employees that work at home can be connected to the IP VPN service with a bandwith of up to 2 Mbps. The service allows companies to easily combine real-time traffic, like voice and video, with data traffic in the VPN surroundings. With optional services, such as Quality of Service differentiation, extensive end-user reporting and premium service levels, Versatel can meet the present and future demands of the customer. The Versatel IP MPLS network includes a powerful and reliable infrastructure based on Cisco Systems equipment. This gives organizations the performance of an optimal secured private network with the scale advantages of the use of an IP-protocol. Furthermore, extranet connections are available to connect business partners to the VPN. The transport speed of the IP VPN service varies from 64 kbps up to 155 Mbps. Atilla Gultuna, Managing Director of Versatel Nederland: "Versatel has provided tailor-made IP VPN solutions to large enterprises for more than a year. With our new IP VPN product we are now capable to service the entire business market with flexible and ready-made VPN solutions. IP VPN is not only an unique solution for large companies, but with our IP VPN service small and medium enterprises can also profit from a cost efficient private network." Services via the Versatel network are certified as Cisco Powered Network services, which guarantees the flexibility, scalability and availability of the IP VPN service and the underlying network. In close cooperation, Versatel and Cisco Systems designed and implemented the network and its management environment and they control its performance continuously. =========== P O L A N D =========== ELEKTRIM SA: Court Declares VPN Subsidiary Company Bankrupt ----------------------------------------------------------- The Management Board of telecom and power conglomerate Elektrim S.A. announced that on June 26, 2002, it received a decision dated June 25, 2002 from the Warsaw District Court, XVII Economic Division, relating to the declaration of bankruptcy of VPN Service Sp. z o.o., based in Warsaw (98% Elektrim's subsidiary). The judge of the Warsaw District Court appointed Ms Miroslawa Pindelska as judge commissioner, and Mr Bogdan Dobkowski as receiver. The decision will become effective within one week from the date of delivery. The audited 2001 and 2002 profit and loss and balance sheet postings of VPN's parent company Elektrim SA may be viewed at: http://bankrupt.com/misc/Elktrim2001pl.doc ========= S P A I N ========= REPSOL YPF: Company Profile --------------------------- Name: Repsol YPF, SA Paseo de la Castellana, 278 28046 Madrid, Spain Telephone: +34-91-348-81-00 Fax: +34-91-348-28-21 Website: http://www.repsol-ypf.com SIC: Petrochemical Refining Employees: 35,452 Net Profit: US$263 million Total Assets: US$43.7 million (March 2002) Total Liabilities: US$31.4 million (March 2002) Type of Business: Spain's largest oil company, Repsol YPF, operates as a fully integrated oil and gas company providing reserves of 5.6 billion barrels of oil equivalent, mostly in Latin America, the Middle East, and North Africa. The company owns 99% of YPF, an integrated oil company in Argentina and has operations in 30 countries. Repsol YPF has five refineries in Spain (as well as stakes in five Latin American refineries) and produces chemicals, plastics, and polymers. It sells gas under the brands Campsa, Petronor, and Repsol at more than 3,700 service stations in Spain and has 3,500 stations in Argentina and elsewhere. It is Spain's major supplier of liquefied petroleum gas. To date, the Repsol YPF Group owns 47.042% (210,643,172 shares) of the capital stock of Gas Natural, accordingly, upon closing the sale, Repsol YPF's stake in Gas Natural will be 24.02% Trigger Event: Spanish petrochemical group Repsol YPF divested 50% of its stake in the Ayoluengo oilfield to British group Northern Petroleum and Teredo in May. The sale is part of the company's plan to counteract the negative impact of Argentina's financial crisis to its balance sheet. The Spanish group also negotiated the sale of 23% Stake in Gas Natural SDG, SA in May. The proceeds obtained through the sale pursuant to the Private Offering, will be principally used in the reduction of Repsol YPF's financial debt. Chief Executive Officer: Alfonso Cortina de Alcocer Chief Financial Officer: Carmelo de las Morenas Lopez No. of Shares in Issue: 1.2 billion shares Last published on TCR Europe: June 17, 2002 =========================== U N I T E D K I N G D O M =========================== RAILTRACK PLC: To Be Sold to Network Rail for GBP500 Million ------------------------------------------------------------ Railtrck Group plc, the parent company of train operator in administration, Railtrack plc, announces the following trading updates: - Suspension of Railtrack shares lifted and recommencement of trading - Sale* of Railtrack PLC to Network Rail for GBP500 million - Sale* of interests in the Channel Tunnel Rail Link to London & Continental Railways for GBP375 million, with part being sold on to Network Rail - Directors expect sales to be tax free - Approximately GBP350 million recoverable from Railtrack PLC - Conditions include shareholder approval, state aid and other regulatory clearances - Sales expected to be completed by the end of September 2002 - Directors estimate a return of 245 to 255 pence per Share** - First instalment of return of cash expected to be 160 to 180 pence per Share within four months of completion of the sales** - Options for returning cash to shareholders in a tax efficient manner and on a timely basis are being considered. The Board's present intention is to effect a solvent voluntary liquidation of Railtrack Group - Agreement* not to proceed with litigation - Preliminary audited results for 12 months to 31 March 2002 announced - loss before tax from continuing operations of GBP11 million - exceptional write down of investment in Railtrack PLC of GBP1,988 million * subject to the conditions as detailed in Part IV of this announcement ** subject to factors described in "Return of value" in Part I of this announcement Proposed Disposals Railtrack PLC was placed into Administration on October 7, 2001. On March 25, 2002, Railtrack Group received an offer from Network Rail, a company sponsored by HM Government, to acquire Railtrack PLC for GBP500 million. As at September 30, 2001, Railtrack PLC had liabilities of approximately GBP7.5 billion. On March 28, 2002, Railtrack Group received an offer from London & Continental Railways Limited to acquire the Group's interest in Section 1 of the Channel Tunnel Rail Link for GBP295 million and a further offer of GBP80 million from Network Rail for the right to operate the completed link and the concession to manage St Pancras Station. The Directors currently expect that, were Railtrack Group to retain its right and obligation to acquire Section 1 of the CTRL, the purchase price would be between GBP1.5 and GBP1.7 billion. Railtrack Group has now entered into conditional agreements to dispose of these assets and has agreed that, if the Proposed Disposals proceed, it will waive its right to pursue litigation against HM Government in respect of the Administration of Railtrack PLC. In view of their size, Shareholder approval is required for the Proposed Disposals. The Board will be writing to Shareholders during the course of the next week to seek their approval for the Proposed Disposals at an Extraordinary General Meeting to be held on Tuesday July 23, 2002. The Board currently estimates that, were all the Group's assets to be realised as expected and were no further liabilities to arise, Railtrack Group would be able to return between 245 and 255 pence per Share and that, subject to certain guarantees being released, a first instalment of between 160 to 180 pence per Share could be returned to Shareholders within four months of the completion of the Proposed Disposals. Therefore, assuming completion of the Proposed Disposals by the end of September 2002 and the release of the guarantees, the Directors expect that the first payment could be made by early January 2003. Further details on the return of cash including factors, which could impact the amount to be returned, and the timing, are set out in Part I of this announcement. Preliminary results The full text of the preliminary announcement of the results of Railtrack Group for the twelve months ended March 31, 2002 is set out in Part II of this announcement. Following Administration and in line with Financial Reporting Standard (FRS) 3 "Reporting Financial Performance" Railtrack PLC has been classified as a discontinued operation. The Group's interest in Railtrack PLC has been treated as a trade investment the book value of which has been written down by GBP1,988 million from GBP2,488 million to GBP500 million in line with the offer received for the shares in Railtrack PLC. This write down has been treated as an exceptional item. Group turnover, before exceptional items was GBP1,797 million (2001: GBP2,476 million). Before exceptional items, interest and taxation, operating profit on ordinary activities was GBP321 million (2001: operating profit GBP261 million). The continuing businesses recorded an operating loss of GBP15 million in the year, reflecting the high level of legal costs and one-off costs associated with the CTRL. The discontinued businesses recorded an operating profit of GBP336 million almost all of which related to Railtrack PLC up to the date of the Administration Order. Exceptional items totalled GBP1,951 million (2001: GBP706 million) representing the write down of GBP1,988 million referred to above less the gain on the sale of assets. After interest of GBP93 million (2001: GBP89 million), the pre-tax loss for the year was GBP1,724 million (2001: GBP534 million). The continuing businesses recorded a loss on ordinary activities before taxation of GBP11 million. The loss per Share for the year was 342.2 pence (2001: 59.6 pence). The Board is not recommending a final dividend. Commenting on the Proposed Disposals, Geoffrey Howe, Chairman of Railtrack Group PLC, said: "The Board looked at all the options in detail and has unanimously concluded, based upon the substantial uncertainties as to timescale and size of any cash return that might become available to shareholders as a result of legal action against the Government or the proceeds from the sale of Railtrack PLC's assets by the Administrators, that the disposals are in the best interests of shareholders. "The Board currently estimates that, were all the Group's assets to be realized as expected and were no further liabilities to arise, Railtrack Group would be able to return between 245 and 255 pence per share and that a first instalment of between 160 to 180 pence per share could be returned to shareholders within four months of the completion of the Proposed Disposals and once certain guarantees have been released." Contact Information: Geoffrey Howe Chairman David Harding Chief Executive Telephone: 020 7544 8435 / 07850 285471 TELECITY: Announces New Investment in Paris Facility ----------------------------------------------------- TeleCity, the pan-European colocation and data center services company, announced Wednesday its continued investment and commitment to the French market through the total renovation and augmentation of its facility in Paris. The refurbishment has been driven by increasing demand for secure and resilient colocation space in Paris, a market which industry analysts IDC predict to grow to $263 million in France by 2006*. The initiative is part of a wider investment programme to ensure TeleCity continues to deliver the optimum data centre environment to its customers. Enhancements to the facility include the installation of a new Building Management System, fire suppression pumps, and an improved power infrastructure to provide N+1 resilience of the UPS system. The security system is also being improved, together with the customer reception area. "This investment demonstrates to our customers that TeleCity is not only committed to the French market, but that we will continue to reinvest in our facilities to ensure that we maintain our industry leading position in terms of service levels, security and resilience," says Michel Brignano, country manager for TeleCity in France. "We are now well-placed to offer our customers even higher levels of service and well-positioned to take advantage of the expected upturn in the market demand for colocation and data centre services." Located in the EMPG business park of Aubervilliers, the TeleCity facility is over 2,500m2 in size and offers a secure, resilient environment for hosting customer platforms through a combination of world-class utilities, multiple levels of connectivity, security, cooling/fire suppression and systems engineering services. TeleCity customers are drawn from different market sectors - web- centric service providers, telecommunications companies and corporate enterprises - and offer a range of value added services to create a virtual marketplace for each other's businesses. *European Colocation Market, 2001-2006 (May 2006). TeleCity is a leading European provider of colocation infrastructure and data centre facilities. Through its network of carrier-neutral data centres, it provides colocation, systems engineering and additional value added services to telecommunications and carrier companies, web-centric service providers, and corporate enterprises. TeleCity's specialist facilities provide best of breed technology hosted in a secure and flexible environment, which means that organizations can concentrate on their core business competencies. The company has 9 locations across Europe, three of which host major Internet backbones; LINX (London), AMSIX (Amsterdam) and MaNAP (Manchester). Other operational sites are located in Dublin, Frankfurt, Paris and Stockholm. Headquartered in London, TeleCity was established in 1998, floated on the London Stock Exchange (TCY.L) in June 2000 and posted a turnover of GPB32.6M in the year to December 2001, a 131% increase on the previous year. TeleCity employs 255 people dedicated to developing and supporting the services and functionality it offers to customers. WORLDCOM, INC: Directors Probed on Failure to Spot Fraud -------------------------------------------------------- Analyts yesterday questioned why Worldcom's board of directors failed to spot an accounting fraud that cause the company's near bankruptcy, a report from the Independent said. The report said that it was Ms. Cynthia Cooper, Worldcom's head of internal audit who discovered the accounting discrepancies. This was when she found out that the company's chief financial officer, Mr. Scott Sullivan, has been listing payments telephone companies under capital expenditures instead of considering them as part of operating costs. Mr. Sullivan was fired on Tuesday after Ms. Cooper reported the misconduct to the firm's auditing committee. Consequently, Worldcom's new chief executive Mr. John Sidgemore, who ordered the audit expressed his outrage and shock when he was told of the accountancy fraud. The board was notified about the discovery last Monday, the Independent said. Worldcom has an eleven-men board of which eight are considered "independent" members under the National Association of Securities Dealers' definition. The review of the company's financial statements is placed on the hands of its audit committee. According to the Independent, Worlcom revealed in its statement filed with the Securities and Exchange Commission (SEC) this year that the four-person audit committee convened five times in 2001 to review the financial statements. Now, Worldcom said these statements were exaggerated indicating earnings overblown by $3.8bn before interest, taxes and depreciation. In a statement released by Worldcom last May, the company said: "The members of the audit committee are not professionally engaged in the practice of auditing or accounting and are not experts in the fields of auditing or accounting. Members of the audit committee rely without independent verification on the information provided to them and on the representations made by management and the independent auditors. "Accordingly, the audit committee's oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations." The SEC has filed civil charges against Worlcom on Wednesday. The SEC immediately filed the charges in order to prevent Worldcom from destroying substantial evidence linked to the fraud. Meanwhile, the Worldcom scandal has prompted the U.S. Department of Justice to conduct a criminal investigation. Furthermore, the controversy has generated several responses from government officials and other concerned individuals regarding the extent of corporate governance laws and other laws pertaining to the matter of corporate disclosures. Some have even advocated criminal prosecution of executives who are found to falsely certify corporate finances, the daily said. The daily disclosed that following developments, analysts foresaw Worldcom's looming bankruptcy within a week. The company has reported assets of more than $100bn in the end of March. If it will declare bankruptcy, its demise would be considered as one of the largest failures in the corporate economy, even bigger than Enron. One of the world's largest Internet networks, Worldcom also owns the MCI long-distance business. WORLDCOM, INC: Banks Refuse to Extend Worldcom Loan --------------------------------------------------- The fate of beleaguered telecom company Worldcom Inc. lays in the hands of its creditor banks. The banks have so far refused to extend Worldcom's outstanding loans and lend it more money following reports of the company's misstated accounts, a report obtained from CNN said. According to CNN, Worldcom has been trying to extend its outstanding of $2.65 billion to $5 billion from the banks this week. But it is improbable that the lenders, which include Bank of America, Citigroup and J.P. Morgan, will give the company more money. Furthermore, the banks are disallowing access to Worlcom's undrawn credit facility of $3.74 billion, which will expire at the end of June, as well as a $1.6 billion facility expiring this June 2006, the report said. What Worldcom has to do convince the banks, is to provide correct financial statements. CNN reported that the company announced Wednesday it has chosen KPMG to be responsible for a comprehensive audit of its accounts. It will continue to release unaudited financial statements for 2001 and first quarter 2002 until KPMG will finish auditing. However, bank sources said Worldcom might have a way out if it will consider securing a loan with its assets. Lenders are also interested in offering the company as debtor-in-possession financing which the company might use in restructuring, CNN reported. Meanwhile, Worldcom disclosed it hired the law firm of Weil, Gotshal and Manges LLP, a bankruptcy specialist, on Thursday. The company has also chosen the Blackstone Group to provide restructuring and corporate governance advice. The company is now considering all its options including the sale of asset, short-term financing and even bankruptcy, CNN said. ********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Maria Lourdes Reyes and Jean Claire Dy, Editors. Copyright 2002. 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 * * *