/raid1/www/Hosts/bankrupt/TCREUR_Public/021016.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
Wednesday, October 16, 2002, Vol. 3, No. 205
Headlines
* F R A N C E *
ALCATEL: Renumbers Fixed Telephone Lines in Czech Republic
FRAMATOME CONNECTORS: Parent Considers Severing Ties
FRANCE TELECOM: Considers Divesting Mobile Division
FRANCE TELECOM: Chooses Atrica for Metro Network Services
NORTEL: Positioning Four Key Businesses to Drive Breakeven Model
* G E R M A N Y *
COMMERZBANK AG: HVG Says Takeover Not Viable at the Moment
DEUTSCHE TELEKOM: Not Obliged to Offer Wholesale Flatrate
DEUTSCHE TELEKOM: Plans to Restructure Management Board
* I T A L Y *
TELECOM ITALIA: Selects NetScreen for Security Service
* N E T H E R L A N D S *
SONG NETWORKS: Announces Extraordinary General Meeting
* P O L A N D *
ELEKTRIM: To Settle PTC Dispute With Vivendi and Deutsche Telekom
* S L O V A K R E P U B L I C *
SLOVAK BANKS: Changes Outlook From Stable to Positive
* S W E D E N *
LM ERICSSON: Signs Second Contract With Chinese TCL Mobile
LM ERICSSON: To Release Third-Quarter Report October 18, 2002
* U N I T E D K I N G D O M *
ABERDEEN ASSET: Split Capital Trust Director Resigns
ABERDEEN ASSET: Global Income Fund Announces Monthly Distribution
ABERDEEN ASSET: Asia-Pacific Income Fund Announces Distribution
HP BULMER: Calls Turnaround Specialist for Help
MOTHERCARE PLC: Provides Trading Update for First Half
PACE MICRO: Awards GBP2000 to Its D3 'Dealer of the Year'
PEARL ASSURANCE: Parent's Business Review Clouds Future
P&O PRINCESS: Franklin Resources Discloses Dealings
TXU EUROPE: Fitch Lowers Senior Unsecured Rating to 'CCC'
TXU EUROPE: Parent Takes Dramatic Actions to Protect Credit
TXU EUROPE: Downgrades Rating After Parent Withdraws Injection
TXU EUROPE: S&P Cuts Rating 4 Days After CreditWatch Placement
===========
F R A N C E
===========
ALCATEL: Renumbers Fixed Telephone Lines in Czech Republic
----------------------------------------------------------
Alcatel (Paris: CGEP.PA and NYSE: ALA) announced that the
renumbering of the Czech Republic's fixed telephone lines
connected to the Alcatel 1000 switching systems was successfully
performed over one night. The renumbering was executed flawlessly
and the telephone services are working as planned.
"The renumbering of the Czech Republic's fixed telephone lines in
the course of one single night is really a unique operation in
Europe," said Ludwig De Maeyer, Alcatel's president for voice
network activities. "The change, operated in the incumbent
operator Czech Telecom's network, has caused minimum disruption
to its customers, considering the complexity and scope of the
operation."
Telephone network renumbering was a fundamental requirement of
the continuing deregulation of the Czech Republic's
telecommunication market controlled by the national regulator.
The new telephone numbers, in the uniform nine-digit format, will
enable the enlargement of the charging areas, which should result
in reduced costs for some types of calls for end users.
De Maeyer added: "The Alcatel 1000 switching systems were
upgraded in advance according to the specifications agreed
between Alcatel and Czech Telecom. During the switch over night,
the existing numbering plans (area codes, subscriber numbers and
routing tables) were switched to the new plan already loaded in
the exchange."
Alcatel digital telephone exchanges provide connection for 2.9
million equivalent lines in the Czech Republic.
About Alcatel 1000 switching systems
Alcatel 1000 is a powerful switching platform with fully
distributed processing and control. It has a unique architecture,
providing both network operators and end-users with reliability
and quality of service for voice and multimedia applications. Due
to its high modularity, Alcatel 1000 is a cost-effective solution
throughout the range from very small to large exchange sizes. The
feature-richness software package is suited in a rapidly changing
business and multi-vendor environment. The Alcatel 1000 systems
are present in more than 145 countries and total more than 320
million terminations.
About Czech Telecom
With nearly four million telephone lines in operation, Czech
Telecom, a.s., is the leading telecommunications company in the
Czech Republic. Through its subsidiary company Eurotel Praha,
spol. s r. o., it also has a significant presence in the Czech
mobile services market. Czech Telecom is giving close attention
to the improvement in the growth potential of data and Internet
services. Czech Telecom, a.s., is the leader on the Czech capital
market in terms of capitalization and trading volumes. Its shares
are also traded on the London Stock Exchange in the form of GDRs.
Czech Telecom's main shareholder is the National Property Fund,
which owns 51.1% of its shares. The company's main partner and
second-most prominent shareholder, the Dutch-Swiss consortium
TelSource, owns 27%. TelSource N. V. is a company of Swisscom and
KPN Royal Dutch Telecom. KPN Royal Dutch Telecom also owns an
additional 6.5% of the shares.
About Alcatel
Alcatel designs, develops and builds innovative and competitive
communications networks, enabling carriers, service providers and
enterprises to deliver any type of content, such as voice, data
and multimedia, to any type of consumer, anywhere in the world.
Relying on its leading and comprehensive products and solutions
portfolio, stretching from end-to-end optical infrastructures,
fixed and mobile networks to broadband access, Alcatel's
customers can focus on optimizing their service offerings and
revenue streams. With sales of EURO 25 billion in 2001, Alcatel
operates in more than 130 countries.
Note:
The Troubled Company Reporter in its October 3, 2002 issue
reported that Alcatel's unit, Alcatel Canada, recently announced
employee reductions of over 400 positions or about 12% of the
overall workforce. This was to address the continuing economic
slowdown in the telecommunications networking industry.
FRAMATOME CONNECTORS: Parent Considers Severing Ties
----------------------------------------------------
French state-owned nuclear holding company, Areva, is considering
selling its troubled connector business which accounts for 22% of
its turnover, Framatome Connectors International, according to
reports.
FCI is the company's electronic and electrical interconnection
systems branch that caters to the information technology,
telecommunications and automotive industries. Turnover in the
business is at EUR8.9 billion (US$8.8 billion).
The branch recorded a EUR1 billion loss in 2001 when nuclear
activities failed to provide it with expected fresh funds. After
several delays in the company's IPO, Areva decided to refocus on
its core nuclear business.
While the US$1.8 billion acquisition of American competitor Berg
made it the world's second connectors business, the buy-out also
triggered FCI's debt burden. In 2001, FCI had to write down the
value of Berg and take a EUR1 billion loss.
Unloading the branch, however, would not be consistent with the
company's strategy of basing Areva's business on nuclear and
connectors, says the report.
FRANCE TELECOM: Considers Divesting Mobile Division
---------------------------------------------------
France Telecom is considering selling several assets of mobile
division, Orange SA, as it reduces EUR70-billion (US$69.1
billion) debt load, reports say.
Banking sources say the French telecommunications group may
divest the asset outside the key markets France and the United
Kingdom into Netherlands, Italy and northern Europe.
The company, which has expanded with the integration of parent
France Telecom's mobile phone operations, has about 18 million
mobile phone subscribers in France, where it is number one in the
market, and more than 12 million in the UK, where it is a top-
three carrier along with BT Cellnet and Vodafone. The mobile
telecom unit, however, has difficulties in Netherlands, Italy and
in Scandinavia, where competition is high.
FRANCE TELECOM: Chooses Atrica for Metro Network Services
--------------------------------------------------------
Atrica Inc., a leading provider of Optical Ethernet equipment for
the rapidly expanding Metro networking market, today announced
that France Telecom has chosen the Atrica Optical Ethernet system
for deployment of metro services in the Paris region. Using the
Atrica Optical Ethernet system, France Telecom is evaluating new
service offerings geared towards enterprise clients. France
Telecom has already begun customer trials with services in the
Paris area. The Ethernet services announced are focused on high
bandwidth Internet access; Ethernet leased lines and Transparent
LAN Services.
After an evaluation of equipment offerings, France Telecom
decided to move forward with the Atrica metro solution.
"Now more than ever, service providers must create new revenue
generating services through innovation while reducing costs at
the same time," said Tim Dixon, vice president of marketing,
Atrica, Inc. "These are exactly the attributes offered by the
Atrica Optical Ethernet solution. We are delighted that customers
such as France Telecom are taking full advantage of the rich
service offering and revenue generating potential, and that they
are approaching full deployment at such a rapid pace."
The Atrica Optical Ethernet system offers standards based 10
Gigabit Ethernet over fiber with advanced traffic engineering and
management which offers a price/performance ratio vastly superior
to existing metro solutions based on existing or next generation
SDH. With the A-2100 Ethernet access product, the A-8000 core
optical Ethernet switch and the ASPEN management platform, the
Atrica Optical Ethernet solution delivers a complete set of
features necessary for the deployment of metro Ethernet including
50ms resiliency, SLA guarantees, TDM services and integrated
network management.
About Atrica
Atrica's mission is to deliver the most cost-effective, high-
performance Optical Ethernet platforms to forward-thinking
service providers who are building next-generation Metro networks
today. Atrica is a privately held company based in Santa Clara,
California, with R&D facilities in Israel and business
development and sales offices throughout Europe and Asia Pacific.
The company has received a total of $117 million in funding to
date, including seed funding from 3Com Corporation, first round
financing from prominent Silicon Valley venture funds Accel
Partners and Benchmark Capital, second round financing from five
leading global service providers and a third round led by St.
Paul Venture Capital. For more information, visit Atrica on the
Web at www.atrica.com.
Note:
Newly appointed chairman Thierry Breton is currently negotiating
with creditor banks and the government for a solution to the
company's EUR70 billion debt. The company has an EUR15 billion-
debt payment due next year.
CONTACT: Atrica, Inc.
Ben Gibson, 408/562-9425
ben_gibson@atrica.com
or
LSH Communications for Atrica
Lori Hultin, 818/879-4651
lhultin@sbcglobal.net
NORTEL: Positioning Four Key Businesses to Drive Breakeven Model
----------------------------------------------------------------
In a letter to employees issued Friday, Frank Dunn, president and
chief executive officer, Nortel Networks Corporation (NYSE:NT)
(TSX:NT.) updated the employees on the Company's third quarter
2002 revenues and the Company's progress on its drive to achieve
profitability.
Dunn told employees that the Company's revenues for the third
quarter of 2002 will be US$2.36 billion, in line with previously
stated expectations, and that the Company's cash performance
continued to be strong. Dunn also indicated that the Company is
in the process of positioning itself around its four key
businesses to drive a break-even model (not including costs
related to acquisitions and any special charges and gains) at
quarterly revenues of below US$2.4 billion. This break even model
is expected to be in place by the second quarter of 2003.
Nortel Networks plans to release its financial results for the
third quarter of 2002 on October 17, 2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
Nortel Networks Corp.'s 7.4% bonds due 2006 (NT06CAR2),
DebtTraders reports, are trading at 34 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for
real-time bond pricing.
=============
G E R M A N Y
=============
COMMERZBANK AG: HVG Says Takeover Not Viable at the Moment
----------------------------------------------------------
A takeover by HVB AG of Commerzbank AG is out of the question
because such a move is ill-timed considering the dire state of
the German economy, says HVB Chairman Albrecht Schmidt.
In an interview with Handelsblatt, Mr. Schmidt said the rumored
takeover by the bank "is not on the agenda." He said the
priority of banks in the difficult market environment is to
"quickly and efficiently" do their own homework, rather than make
bold strategic moves. He said the priority right now is to cut
cost rather than entertain ideas about consolidating the German
banking industry.
The recent shrinking of Commerzbank's market capitalization to
only EUR3.9 billion is what triggered the speculation, says AFX
News. Commerzbank had previously been linked to talks about a
possible merger with HVB, the news agency says.
Proof of its disinterest in a merger, Mr. Schmidt told
Handelsblatt that his bank is considering cutting additional jobs
on top of the 9,100 previously announced.
Meanwhile, according to the Troubled Company Reporter-Europe, the
Federal Financial Supervisory Authority (BAFin) of Germany
recently launched an initial investigation into possible market
manipulation of the Commerzbank share on Wednesday, October 9,
2002.
There are suspicions that an external party is attempting to
sabotage the share price by spreading negative rumors about the
bank. The BAFin is thus reviewing the share's recent price
development, but it has explicitly stated that it has no
suspicions against Commerzbank itself, TCR-Europe said on Monday.
The BAFin monitors and analyses the current earnings and risk
situation of German banks as a matter of routine. Regular contact
is maintained with the major German banks in particular. In light
of the general situation in the capital market the BAFin has
increased its supervisory activities, placing even more emphasis
than usual on being thoroughly informed about the forthcoming
annual financial statements, the report says.
DEUTSCHE TELEKOM: Not Obliged to Offer Wholesale Flatrate
---------------------------------------------------------
The Administrative Court in Cologne has ruled that Deutsche
Telekom is temporarily not obliged to offer internet connections
to its competitors at an overall wholesale tariff, says
Telecom.paper.
Deutsche Telekom has requested the provisional order after
complaining against telecom regulator RegTP who demanded that the
German telecommunications group offer a wholesale flat rate.
The court's decision is based on the fact that Deutsche Telekom
doesn't offer a flatrate for interconnections to its end users or
internal business units. The body maintained that Deutsche
Telekom couldn't be obliged to offer its competitors a service,
which the company doesn't have, the report says.
Deutsche Telekom is the number one telecommunications company in
Europe and one of the largest in the world, behind NTT and AT&T.
The former monopoly is still Germany's number 1 fixed-line phone
operator, with about 57 million access lines. DT's T-Com unit
provides network access services; its T-Mobile International
division serves 66.9 million wireless phone customers after
entering the US mobile phone market in 2001 by buying VoiceStream
Wireless and Powertel. The company's majority-owned T-Online,
with 10.7 million customers, is Europe's leading ISP and the
company's T-Systems division specializes in IT services. The
VoiceStream and Powertel acquisitions diluted the German
government's holding in DT to 43%.
DEUTSCHE TELEKOM: Plans to Restructure Management Board
-------------------------------------------------------
Deutsche Telekom, the German telecommunications group which may
possibly choose a non-German chief executive, is also considering
reducing members of its management board from eight to seven.
The proposed structure of the board includes: the company head,
the chief operating officer and the chief financial officer, as
well as the divisional heads for T-Mobile (mobile
telecommunications), T-Com (landline), T-Systems (software) and
T-Online.
The former German state phone monopoly is currently looking for a
new chief executive after Ron Sommer left the post in July. Board
chairman Hans Dietrich Winkhaus disclosed that instead of
announcing the new chairman by November, the proclamation might
come at the latest in December.
The changes in the board structure are also expected to take
place in November or December after the new management board
chairman is appointed.
Candidates for the chairmanship are Kai-Uwe Ricke and Thomas
Holtrop, head of T-Online.
CONTACT: DEUTSCH TELECOM AG
Friedrich-Ebert-Allee 140
53113 Bonn, Germany
Phone: +49-228-181-0
Fax: +49-228-181-8872
=========
I T A L Y
=========
TELECOM ITALIA: Selects NetScreen for Security Service
------------------------------------------------------
NetScreen Appliances Meet Italy's Largest Service Provider's
Ease-of-deployment and Performance Requirements in Tenovis
Newtel-managed Deployment
NetScreen Technologies, Inc. (Nasdaq:NSCN) today announced that
Telecom Italia, in conjunction with service operator and system
integrator Tenovis Newtel, has selected NetScreen devices to
provide managed firewall and VPN functionality for its recently
launched managed Internet security service. Telecom Italia, one
of Europe's most successful post-deregulation incumbent service
providers, offers the managed security service to small and
medium enterprises throughout Italy.
A NetScreen-500 based solution at a central security management
site is linked via 3DES IPSec VPN tunnels to NetScreen-50 and
NetScreen-5XP integrated security appliances at Telecom Italia's
customer sites. The NetScreen deployment secures the 4Mb HDSL
broadband Internet connection provided for Telecom Italia's
managed security service customers, providing high-performance
protection for network servers, local area networks (LANs),
individual PCs and laptops. The service center also collects and
analyzes security activity-related data from the network to
regularly provide Telecom Italia's customers with detailed
service logs for high-quality reports.
Telecom Italia sought to deploy a security service based on
technology capable of providing good performance and
manageability, both in terms of initial installation and
configuration at the end user's premises and on-going operation
from a centralized site.
Roberto Santariello, director of Telecom Italia's Full Business
Security Division, said, "Telecom Italia is the first service
provider in Italy to launch a managed security service, so we
knew from the beginning that we had to set the benchmark on
performance, reliability and price. The introduction of a
firewall also can sometimes create a bottleneck in the network,
but thanks to its ASIC-based approach, the NetScreen solution
gives wire-speed throughput so customer data is not impeded as it
is checked and encrypted. Additionally, installation is very
easy, enabling new customers to be up and running immediately."
"The performance, management and high availability features of
NetScreen devices enable optimized protection of high profile,
premium service infrastructures, such as the one operated for
Telecom Italia," said David Flynn, NetScreen vice president of
marketing. "All our products, from high-end systems for carriers
and enterprises to desktop and remote end-user appliances, are
delivered with hassle-free licensing, common look-and-feel and
architecture, and management capabilities simplifying the
specification and deployment of the service for providers."
About Tenovis Newtel Srl
System integrator and strategic partner of Telecom Italia,
Tenovis Newtel specializes in information security, integrated
solutions of telephony, structured cabling systems and
networking. Set up in 1984 as a small company operating
principally in the telephony sector, Tenovis Newtel joined the
Tenovis Group in 2001. Tenovis Group has some 6,500 employees
taking care of the needs of its 200,000 customers in 82 client
centres throughout Europe. The Secure Business Communications
Integrator offers intelligent and efficient business
communication solutions focusing on the convergence of
telecommunications and the Internet. The product spectrum ranges
from telephone systems, solutions for Internet telephony and
terminals, multimedia services, business contact centres,
outsourcing concepts and industry-specific solutions. In 2001,
Tenovis generated revenue of approximately one billion euros. In
Italy, Tenovis Group has 130 employees in 8 sites and more than
50 qualified Technical Assistance Centres. Tenovis is owned by
the American Private Equity firm KKR (Kohlberg Kravis Roberts &
Co.). For more information on Tenovis and Tenovis Newtel Secure
Business Communications solutions and services, please visit
www.tenovis.com and www.tenovisnewtel.it.
About NetScreen Technologies
NetScreen Technologies, Inc., is a leading developer of
integrated network security solutions that offer the security,
performance and total cost of ownership required by enterprises
and carriers. NetScreen's innovative solutions provide key
security technologies, such as virtual private network, denial of
service protection, firewall and intrusion prevention, in a line
of easy-to-manage security appliances and systems. NetScreen is
located at 350 Oakmead Parkway, Sunnyvale, CA, 94085. More
information on NetScreen's products can be found at
http://www.netscreen.comor by calling toll free at 1-800-638-
8296.
NetScreen is a trademark of NetScreen Technologies, Inc. Other
trademarks are the property of their respective owners.
CONTACT: NetScreen Technologies, Inc.
Jennifer Jennings, 408/730-6243
jjennings@netscreen.com
or
Quetzal Communications
Penny Still, +44-0-1256-478- 309
quetzal@dial.pipex.com
=====================
N E T H E R L A N D S
=====================
SONG NETWORKS: Announces Extraordinary General Meeting
------------------------------------------------------
Shareholders in Song Networks Holding AB (publ) ("Song" or the
"company"), are hereby summoned to an extraordinary general
meeting to be held at 15.00 on Monday 11 November 2002 at City
Conference Centre, Folkets Hus, Barnhusgatan 12-14, Stockholm.
Notification
A shareholder who wishes to participate in the general meeting
must be registered in the share register maintained by VPC AB on
Friday 1 November 2002, notify the company of its intention to
attend the general meeting not later than 12 noon on Wednesday 6
November 2002 to the address: Song Networks Holding AB (publ),
attention Lena Ekedahl, Box 501, 182 15 Danderyd or by fax 08-56
310 101. The notification should also contain the number of
assistants (not more than two) who will accompany the
shareholder. The notification should also state name, address,
social security- / company registration number, telephone number
and the number of shares represented.
A shareholder whose shares are registered in the name of a
nominee must, to be entitled to attend the general meeting,
temporarily re-register the shares in its own name in due time
prior to 1 November 2002.
A shareholder represented by a representative shall issue a power
of attorney. The power of attorney should be dispatched to the
company to the address mentioned above in due time prior to the
general meeting. If a power of attorney is issued by a legal
entity, a copy of a registration certificate for that legal
entity must be enclosed.
MATTERS AND PROPOSED AGENDA
Opening of the general meeting.
Election of a chairman for the general meeting.
Preparation and approval of voting list.
Approval of agenda.
Election of one or two persons to certify the minutes.
Determination of whether the general meeting has been duly
convened.
Information regarding the proposed restructuring of Song.
The board of directors' proposed resolution to amend the articles
of association.
Presentation of documentation pursuant to Ch. 4 Sec. 4 and 6 and
Ch. 5 Sec. 3 of the Companies Act.
The board of directors' proposed resolutions to issue new shares
and convertible debentures.
The board of directors' proposed resolution to amend previous
adopted option conditions.
Closing of the general meeting.
MOTIONS
Amendment to the articles of association (item 8)
A. Amalgamation and introduction of a new class of shares, etc.
The board of directors proposes that the general meeting resolves
to amend 6-11 in the articles of association. In summary, the
amendments entail the following. The amendment in 6 refers to
the increase of the nominal value of the shares from 5 "re to SEK
5, which means that an amalgamation of shares in the ratio 100:1
is proposed. As set out below, the amendment is conditional on
that a guarantor will contribute and provide to VPC AB's disposal
the necessary number of shares for settlement of holdings which
are not equally dividable by 100. The amendments in 7-11 refer
to the introduction of a new class of shares; preference shares.
The preferences share shall be subordinated in several aspects,
but can be converted into ordinary shares under certain
conditions. Furthermore, a redemption clause regarding preference
shares is introduced. The new wording of the clauses is set out
below.
" 6 Nominal value of shares
The nominal value of each share shall be SEK 5.
7 Class of shares
The Company may issue ordinary shares and preference shares. The
number of ordinary shares shall not exceed 100 per cent of the
share capital and the number of preference shares shall not
exceed 20 per cent of share capital.
A preference share does not entitle to dividend or participation
in a bonus issue. If the company is wound up, holders of ordinary
shares shall have a preferential right to obtain the nominal
amount of the shares prior to holders of preference shares. The
surplus, if any, shall after distribution to the holders of
preference shares in its entirety be allocated to the holders of
ordinary shares.
8 Votes
An ordinary share shall bear ten votes and a preference share
shall bear one vote.
9 Preferential rights
If the company resolves to increase the share capital through an
issue of shares against cash, an old share shall carry a
preferential right to a new share of the same share class in
proportion to the previous holding (primary pre-emption right).
Shares, which are not subscribed for by shareholders having a
preferential right, shall be offered to all shareholders
(subsidiary pre-emption right). Where the total number of shares
subscribed to following the last mentioned offer cannot be
issued, the shares shall be distributed between the subscribers
in relation to the number of shares they already own and, to the
extent this cannot be effected, by the drawing of lots.
In case of a bonus issue, new ordinary shares shall be issued in
relation to the number of shares of the same class being issued
previously. In this respect, the old ordinary shares shall have a
preferential right to new shares of the same class in relation to
their participation in the share capital. As stated in 7 second
paragraph, preference shares do not entitle to participation in a
bonus issue.
What has been stated above shall not constitute any limitation in
resolving on an issue of shares against cash whereby
shareholder's preferential right is deviated from.
10 Conversion of shares
A preference share can be converted into an ordinary share.
Upon a conversion into ordinary shares through conversion of the
convertible notes issued by the company at the extraordinary
general meeting held on 11 November 2002, whereby registration
and entry in the share register have taken place in respect of
the new ordinary shares, and when such conversion correspond to
more than 10 per cent of the total aggregate nominal amount of
the aforementioned convertible notes, preference shares could be
converted into ordinary shares according to the following
formula:
The number of shares that has been converted through conversion
of convertible notes / The total number of shares that has been
and could be converted through conversion of the convertible
notes * The total number of issued preference shares = The number
of preference shares that can be converted into ordinary shares.
Upon a conversion into ordinary shares through conversion of the
convertible notes corresponding to more than 80 per cent of the
total aggregate nominal amount of the aforementioned convertible
notes, all preference shares shall automatically be converted
into ordinary shares.
The board of directors shall announce in at least one daily
newspaper having nationwide coverage when conversion of the
convertible bonds has occurred to such extent as stated in the
second paragraph and thereafter when conversion of the
convertible bonds corresponding to a percentage equally dividable
with 10 have occurred and when conversion of the convertible
notes have occurred to such extent set forth in the third
paragraph. Such announcement shall also take place on the
company's Internet web site. The board of directors shall, when
announcing, state the total number of preference shares that
could be converted to new ordinary shares and in which way
holders of preference shares shall give notice of conversion.
Such announcement shall be inserted not later than two weeks
after the end of that month during which conversion was carried
out to such extent that the above limits were passed.
Holders of preference shares shall have the right to request that
preference shares be converted into ordinary shares through a
written application to the board of directors of the company no
later than 31 March 2008. Such application shall state how many
preference shares the request refers to.
The board of directors shall deal with matters related to
conversion of preference shares into ordinary shares which owners
have requested such conversion at the first board meeting
following expiration of each calendar quarter, however first time
when conversion corresponding to more than 10 per cent of the
total aggregate nominal amount of the convertible notes has taken
place pursuant to the second paragraph.
In the event that the total number of preference shares requested
to be converted exceeds the number of preference shares that can
be converted to ordinary shares according to the second paragraph
the distribution of ordinary shares among those who have
requested conversion shall take place in relation to the number
of preference shares requested to be converted.
Conversion to ordinary shares shall be filed for registration.
The conversion to ordinary shares shall be deemed effective upon
registration and entry in the share register.
11 Redemption
Reduction of share capital may take place by redemption of
preference shares pursuant to the following paragraph.
Preference shares that have not been converted in accordance with
10 above, may, upon request by the board of directors, be
redeemed following the expiry of the last day for application for
conversion according to 10.
A request by the board of directors to redeem the preference
shares shall encompass all outstanding preference shares. A
reduction of the share capital may not have the result that there
is not full coverage of the restricted equity. A reduction may
not have the result that the share capital falls below the
minimum share capital limit, pursuant to 5.
Holders of preference shares that have been notified of
redemption shall immediately upon receipt of a notification of
the redemption decision be obligated to receive the redemption
price for such share. The redemption price shall correspond to
the nominal value of the share."
As a consequence of the new clauses 7-11 in the articles of
association, the current clauses 7-12 will be re-numbered.
As regards the amendment to 6, the increase of the nominal
value per share through amalgamation of shares, the resolution is
conditional on that Handelsbanken Securities, or another third
party, will provide such shareholders whose holdings are not
equally dividable by 100, such number of shares that would cause
their holdings to become equally dividable by 100, and that such
shares, the number of which has been estimated at not more than
200,000, have been placed at VPC AB's disposal for distribution
to shareholders - without consideration - to adjust their
holdings.
The board of directors proposes that the board of directors shall
be authorised to effect such actions necessary to execute the
amendment to 6 of the articles of association.
B. Increase of the limits for the share capital in the articles
of association
The board of directors proposes that the general meeting resolves
to amend 5 of the articles of association, which is proposed to
have the following wording:
" 5 Share capital
The share capital of the Company shall be no less than SEK
80,000,000 and no more than SEK 320,000,000."
The resolution on amendment to 5 of the articles of
association, is conditional on the general meeting resolving on
issuances under item 10 below.
The board of directors proposes that the board of directors shall
be authorised to submit an application for amendment to the
articles of association, according to this item B., to the Patent
and Registration Office, in connection with the filing of
applications to register the issuances proposed under item 10
below.
The board of directors' proposals to resolve on new issuances of
shares and convertible notes (item 10)
The board of directors proposes that the general meeting resolves
on the issuances of shares and convertible notes as set out
below. The proposals form part of a negotiated action plan with
the purpose to achieve a financial reconstruction of the company.
Resolutions in accordance with proposals A to I below are
therefore conditional on (i) each other and (ii) that the
subsidiary Song Networks N.V. receives a final sanction of a plan
of re-composition (homologatie) in Netherlands. In case of full
subscription in all issuances and full conversion of issued
convertible notes, the ownership of the company will be the
following. Out of the company's total amount of shares, the
previous shareholders will own approximately 12.9 per cent, the
holders' of obligations approximately 60 per cent, Vattenfall AB
approximately 19.8 per cent and Stena Adactum AB approximately
7.3 per cent.
The proposals in A to I below presuppose an amalgamation in
accordance with item 8.A.
A. Issue of new ordinary shares and new preference shares against
payment in kind composed of bonds issued by the company's
subsidiary Song Networks N.V. in series "USD 150,000,000 13.0%
Senior Notes due May 15 2009" (four separate resolutions on
issuances)
Series 1:1
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
50,383,045 by issuing no more than 9,084,102 new ordinary shares
and no more than 992,507 new preference shares, each share of a
nominal value of SEK 5 (after a reverse split 100:1). Holders of
bonds, issued by the company's subsidiary Song Networks N.V. in
the series "USD 150,000,000 13.0% Senior Notes due May 15 2009",
shall have the sole right to subscribe for the new shares, with a
right and an obligation to pay for the new shares by way of
transferring bonds with an aggregate nominal value of USD
136,455,000 whereby bond note of nominal value of USD 1,000
entitles to subscription of 66.4989 new ordinary shares and
7.2002 new preference shares. Subscription for the new shares
shall be made on a subscription list as from 4 December 2002 and
until no later than 19 December 2002. Payment for the new shares
shall be made by way of transferring the property in kind no
later than 19 December 2002. The new ordinary shares shall be
issued at SEK 26 per share and the new preference shares shall be
issued at SEK 5 per share.
Series 1:2-1.4
The board of directors further proposes that the general meeting
resolves on an increase of the company's share capital on the
conditions which follow from the in kind resolution of series 1:1
above, nevertheless with the following general amendments.
Subscription for the new shares shall be made on a subscription
list as from 20 December 2002 and until no later than 31 January
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 31 January 2003.
(In kind resolution series 1:2)
Subscription for the new shares shall be made on a subscription
list as from 3 February 2003 and until no later than 14 Mars
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 14 Mars 2003. (In
kind resolution series 1:3)
Subscription for the new shares shall be made on a subscription
list as from 17 Mars 2003 and until no later than 2 May 2003.
Payment for the new shares shall be made by way of transferring
the property in kind no later than 2 May 2003. (In kind
resolution series 1:4)
Allotment of shares in each in kind resolution of series 1:2-1:4
can be made to such extent that the increase of the share capital
corresponds to the maximum amount of shares that could be issued
reduced by the number of shares subscribed for in the previous
resolutions on issuances of shares against property in kind in
series 1:1, 1:2 and 1:3.
B. Issue of new ordinary shares and new preference shares against
payment in kind composed of bonds issued by the company's
subsidiary Song Networks N.V. in series " EUR 100,000,000 13.0%
Senior Notes due May 15 2009" (four separate resolutions on
issuances)
Series 2:1
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
32,422,105 by issuing no more than 5,842,862 new ordinary shares
and no more than 641,559 preference shares, each share of a
nominal value of SEK 5 (after a reverse split 100:1). Holders of
bonds, issued by the company's subsidiary Song Networks N.V. in
the series "EUR 100,000,000 13.0% Senior Notes due May 15 2009",
shall have the sole right to subscribe for the new shares, with a
right and an obligation to pay for the new shares by way of
transferring bonds with an aggregate nominal value of EUR
89,315,000 whereby bond note of a nominal value of EUR 1,000
entitles to subscription of 65.3066 new ordinary shares and
7.0711 new preference shares. Subscription for the new shares
shall be made on a subscription list as from 4 December 2002 and
until no later than 19 December 2002. Payment for the new shares
shall be made by way of transferring the property in kind no
later than 19 December 2002. The new ordinary shares shall be
issued at SEK 26 per share and the new preference shares shall be
issued at SEK 5 per share.
Series 2:2-2.4
The board of directors further proposes that the general meeting
resolves on an increase of the company's share capital on the
conditions which follow from the in kind resolution of series 2:1
above, nevertheless with the following general amendments.
Subscription for the new shares shall be made on a subscription
list as from 20 December 2002 and until no later than 31 January
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 31 January 2003.
(In kind resolution series 2:2)
Subscription for the new shares shall be made on a subscription
list as from 3 February 2003 and until no later than 14 Mars
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 14 Mars 2003. (In
kind resolution series 2:3)
Subscription for the new shares shall be made on a subscription
list as from 17 Mars 2003 and until no later than 2 May 2003.
Payment for the new shares shall be made by way of transferring
the property in kind no later than 2 May 2003. (In kind
resolution series 2:4)
Allotment of shares in each in kind resolution of series 2:2-2:4
can be made to such extent that the increase of the share capital
corresponds to the maximum amount of shares that could be issued
reduced by the number of shares subscribed for in the previous
resolutions on issuances of shares against property in kind in
series 2:1, 2:2 and 2:3.
C. Issue of new ordinary shares and new preference shares against
payment in kind composed of bonds issued by the company's
subsidiary Song Networks N.V. in series " EUR 150,000,000 11 7/8%
Senior Notes due December 1 2009" (four separate resolutions on
issuances)
Series 3:1
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
44,995,015 by issuing no more than 8,111,775 new ordinary shares
and no more than 887,228 new preference shares, each share of a
nominal value of SEK 5 (after a reverse split 100:1). Holders of
bonds, issued by the company's subsidiary Song Networks N.V. in
the series "EUR 150,000,000 11 7/8% Senior Notes due December 1
2009", shall have the sole right to subscribe for the new shares,
with a right and an obligation to pay for the new shares by way
of transferring bonds with an aggregate nominal value of EUR
125,089,000 whereby bond note of a nominal value of EUR 1,000
entitles to subscription of 64.7681 new ordinary shares and
7.0128 new preference shares. Subscription for the new shares
shall be made on a subscription list as from 4 December 2002 and
until no later than 19 December 2002. Payment for the new shares
shall be made by way of transferring the property in kind no
later than 19 December 2002. The new ordinary shares shall be
issued at SEK 26 per share and the new preference shares shall be
issued at SEK 5 per share.
Series 3:2-3.4
The board of directors further proposes that the general meeting
resolves on an increase of the company's share capital on the
conditions which follow from the in kind resolution of series 3:1
above, nevertheless with the following general amendments.
Subscription for the new shares shall be made on a subscription
list as from 20 December 2002 and until no later than 31 January
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 31 January 2003.
(In kind resolution series 3:2)
Subscription for the new shares shall be made on a subscription
list as from 3 February 2003 and until no later than 14 Mars
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 14 Mars 2003. (In
kind resolution series 3:3)
Subscription for the new shares shall be made on a subscription
list as from 17 Mars 2003 and until no later than 2 May 2003.
Payment for the new shares shall be made by way of transferring
the property in kind no later than 2 May 2003. (In kind
resolution series 3:4)
Allotment of shares in each in kind resolution of series 3:2-3:4
can be made to such extent that the increase of the share capital
corresponds to the maximum amount of shares that could be issued
reduced by the number of shares subscribed for in the previous
resolutions on issuances of shares against property in kind in
series 3:1, 3:2 and 3:3.
D. Issue of new ordinary shares and new preference shares against
payment in kind composed of bonds issued by the company's
subsidiary Song Networks N.V. in series " EUR 175,000,000 12 3/8
% Senior Notes due February 1 2008" (four separate resolutions on
issuances)
Series 4:1
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
47,254,055 by issuing no more than 8,519,443 new ordinary shares
and no more than 931,368 new preference shares, each share of a
nominal value of SEK 5 (after a reverse split 100:1). Holders of
bonds, issued by the company's subsidiary Song Networks N.V. in
the series "EUR 175,000,000 12 3/8 % Senior Notes due February 1
2008", shall have the sole right to subscribe for the new shares,
with a right and an obligation to pay for the new shares by way
of transferring bonds with an aggregate nominal value of EUR
126,135,000 whereby bond note of nominal value of EUR 1,000
entitles to subscription of 67.4630 new ordinary shares and
7.3046 new preference shares. Subscription for the new shares
shall be made on a subscription list as from 4 December 2002 and
until no later than 19 December 2002. Payment for the new shares
shall be made by way of transferring the property in kind no
later than 19 December 2002. The new ordinary shares shall be
issued at SEK 26 per share and the new preference shares shall be
issued at SEK 5 per share.
Series 4:2-4.4
The board of directors further proposes that the general meeting
resolves on an increase of the company's share capital on the
conditions which follow from the in kind resolution of series 4:1
above, nevertheless with the following general amendments.
Subscription for the new shares shall be made on a subscription
list as from 20 December 2002 and until no later than 31 January
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 31 January 2003.
(In kind resolution series 4:2)
Subscription for the new shares shall be made on a subscription
list as from 3 February 2003 and until no later than 14 Mars
2003. Payment for the new shares shall be made by way of
transferring the property in kind no later than 14 Mars 2003. (In
kind resolution series 4:3)
Subscription for the new shares shall be made on a subscription
list as from 17 Mars 2003 and until no later than 2 May 2003.
Payment for the new shares shall be made by way of transferring
the property in kind no later than 2 May 2003. (In kind
resolution series 4:4)
Allotment of shares in each in kind resolution of series 4:2-4:4
can be made to such extent that the increase of the share capital
corresponds to the maximum amount of shares that could be issued
reduced by the number of shares subscribed for in the previous
resolutions on issuances of shares against property in kind in
series 4:1, 4:2 and 4:3.
E. Issue of new ordinary shares with deviation from preferential
rights of the shareholders
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by SEK 57,692,310 by
issuing 11,538,462 new ordinary shares, each share of a nominal
value of SEK 5 (after a reverse stock split 100:1). With
deviation from the shareholders preferential rights Vattenfall AB
shall have the right to subscribe for 7,692,308 new shares and
Stena Adactum AB shall have the right to subscribe for 3,846,154
new shares. Subscription for the new shares shall be made a
subscription list during the period 19 December 2002 and up to
and including 9 January 2003. Payment for the new shares shall be
made no later than 9 January 2003. The new shares shall be issued
at SEK 26 per share.
F. Issue of new ordinary shares with preferential rights for the
shareholders
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
18,662,085 by issuing no more than 3,732,417 new ordinary shares
(with reservation for such increase of the share capital and the
number of shares that may follow from the exercising of
warrants), each share of a nominal value of SEK 5 (after a
reverse stock split 100:1). The right to subscribe for the new
shares is granted to the company's shareholders in proportion to
their holding of the share capital, where four old shares share
shall entitle to subscription for nine new ordinary shares. The
record date for allocation of the subscription rights shall be 16
December 2002. Subscription for the shares shall take place
between 20 December 2002 and 17 January 2003. Subscription of the
shares by using subscription rights shall be made through cash
payment. The new shares shall be issued at SEK 26 per share.
G. Issue of convertible debentures with preferential rights for
the shareholders
The board of directors proposes that the general meeting resolves
to issue convertible debentures by raising a convertible loan in
the nominal amount of no more than SEK 82,942,000 (with
reservation for such increase that may follow from the exercise
of warrants). The convertible debentures shall, if subscribed for
and fully converted to ordinary shares in the company, increase
the company's share capital by no more than SEK 10,633,585
through issue of no more than 2,126,717 new ordinary shares, each
share with a nominal value of SEK 5 (after a reverse stock split
100:1).
The right to subscribe for the convertible debentures is granted
to the company's shareholders in proportion to their holding of
the share capital, where 20 old ordinary shares shall entitle to
subscription for a convertible debentures with a nominal value of
SEK 1,000. The record date for allocation of the subscription
rights shall be 16 December 2002. The convertible debentures
shall be issued at a rate corresponding to 100 per cent of the
nominal value of the convertible loan, i. e. no more than SEK
82,942,000.
Subscription for the convertible debentures shall take place
between 20 December 2002 and 17 January 2003. Subscription of the
convertible debentures shall be made through cash payment.
The loan carries annual interest equal to seven (7) per cent. The
loan matures on 30 December 2007 except to the extent of prior
conversion. Conversion into new ordinary shares can take place
during the period as from 1 March 2003 up to and including 30
November 2007. The conversion price is SEK 39.
H. Issue of convertible debentures with deviation from
preferential rights of the shareholders
The board of directors proposes that the general meeting resolves
to issue convertible debentures by raising a convertible loan in
the nominal amount of SEK 15,000,000. The convertible debentures
shall, if subscribed for and fully converted into shares in the
company, increase the company's share capital by no more than SEK
1,923,075 through issue of no more than 384,615 new ordinary
shares, each share with a nominal value of SEK 5 each (after a
reverse split 100:1).
Stena Adactum AB has, with deviation from the shareholders'
preferential rights, the right to subscribe for the convertible
debentures. The convertible debentures shall be issued at a rate
corresponding to 100 per cent of the nominal value of the
convertible loan, i. e. SEK 15,000 000. Subscription for the
convertible debentures shall take place no later than 9 January
2003.
The loan carries annual interest equivalent to seven (7) percent.
The loan matures on 30 December 2007 except to the extent of
prior conversion. Conversion into new ordinary shares can take
place during the period as from 1 March 2003 up to and including
30 November 2007. The conversion price is SEK 39.
I. Issue of new ordinary shares with deviation from the
preferential right of shareholders
The board of directors proposes that the general meeting resolves
to increase the share capital of the company by no more than SEK
19,230,770 by issuing no more than 3,846,154 new ordinary shares,
each share of a nominal value of SEK 5 (after a reverse stock
split 1:100). Vattenfall AB has, with deviation from the
shareholders' preferential rights, the right to subscribe for no
more than 3,846,154 new shares. Subscription for the new shares
shall be made on a subscription list as from 2 January 2003 and
up to and including 15 January 2003. Payment for the new shares
shall be made when subscribing for the new shares, however no
later than 15 January 2003. The new shares shall be issued at SEK
26 per share.
The board of directors proposes that the board of directors, the
managing director or the one who the board of directors appoints
shall be authorised to make those minor adjustments in the
resolution that may be necessary in connection with registration
with the Swedish Patent and Registration Office.
The reason to deviation from the preferential rights of the
shareholders (items E, H, and I above) is that the board of
directors desires to secure the capital requirements of the
company. The terms and conditions for the issuances have been
established through negotiations.
The resolution according to each of items in A to I above is
conditional on (i) that the general meeting resolves on all the
other issuances under this item 10 pursuant to proposals of the
board of directors and (ii) that the final sanction of the
composition (homologatie), case no 02.059-S by Rechtbank te
Amsterdam regarding the subsidiary Song Networks N.V., has gained
legal force no later than prior to expiration of the subscription
periods set out above.
At the time for submitting this proposal, each share has a
nominal value of SEK 0.05. Due to the proposed amendment of the
articles of association, a reverse stock split in the ratio 100:1
is proposed, where the new nominal value per share is proposed to
be SEK 5. If the proposed amendment to the articles of
association is not resolved or implemented in time to implement
this issuance, the number of shares etc. stated in the resolution
shall be re-calculated to correspond to the current nominal value
per share.
The board of directors' proposed resolution to amend previously
adopted option conditions (item 11)
The board of directors purposes that the general meeting resolves
to amend previous resolved option conditions so that it is clear
from the option conditions that option rights entitle to
subscription of new ordinary shares of the company.
The amendment is caused of and conditional upon that the general
meeting resolves to amend the articles of association in item 8 A
above (introduction of a new class of shares; preference shares).
Resolutions by the general meeting under items 8 and 10, are
valid only if adopted by shareholders holding two-thirds of the
votes cast as well as two-third of all shares present or
represented at the general meeting.
The board of directors' complete proposals for resolutions
regarding items 8, 10, 11 and documentation pursuant to item 9
will be available at the company from 4 November 2002 and will be
dispatched to shareholders requesting such information and
stating their address.
Stockholm October 2002
The Board of Directors
Song Networks Holding AB (publ)
About Song Networks, formerly Tele1 Europe, (Stockholmsb"rsen:
SONW) Song Networks is a data and telecommunications operator
with activities in Sweden, Finland, Norway and Denmark. The
Company's business concept is to offer the best broadband
solution for data communication, internet and voice to businesses
in the Nordic region. This means that Song Networks supplies
communication solutions that are attractively customized for each
corporate customer. Song Networks is currently the only pan
Nordic operator investing in local access networks with broadband
capacity. The Company has built local access networks in the
largest cities in the Nordic region. The access networks, which
are linked by a long-distance network is one of the fastest data
and internet super-highways in Europe, with an initial capacity
for customers of up to one gigabit. The Company was founded in
1995 in Sweden and has approximately 1,000 employees. The head
office is located in Stockholm and there are an additional 34
offices located in the Nordic region. For further information,
please visit our website at www.songnetworks.net
===========
P O L A N D
===========
ELEKTRIM: To Settle PTC Dispute With Vivendi and Deutsche Telekom
-----------------------------------------------------------------
Elektrim CEO Wojciech Janczyk will invite Vivendi Universal and
Deutsche Telekom for summit talks to settle the question of
ownership over mobile phone operator Polska Telefonia Cyfrowa,
Warsaw Business Journal says.
A 1996 agreement between Elektrim and Telekom, founders of PTC,
provides that in the case of Elektrim's bankruptcy, Telekom could
buy the former's stake at book value. But a deal made when
Elektrim partnered with Vivendi transferred almost all of
Elektrim's PCT shares into the Vivendi partnership.
Recently after the Warsaw District Court denied the application
filed by Polish conglomerate Elektrim SA to postpone the
bankruptcy hearing scheduled on October 7, Deutsche Telekom acted
rapidly to ask the Warsaw court whether Elektrim could be
declared "financially impaired." The German company wanted to
know whether it could buy Elektrim's stake in the disputed mobile
phone operator Polska Telefonia
Cyfrowa SA.
According to Warsaw Business Journal, the German operator has
three separate claims against Elektrim. It contests Elektrim's
purchase of a majority stake in PTC, alleging its first right of
refusal to buy the stake was overlooked. The company also holds
that Elektrim's transfer of its PTC stake to the Vivendi-ET joint
venture violated the terms of original agreement. Lastly,
Deutsche Telekom contests that Elektrim is in a state of
"economic impairment"--a status that would allow it to buy the
PTC stake at a sharp discount.
Debt-laden Vivendi, on the other hand, has been peddling its PCT
interest for months. The ruling in favor of Telekom is predicted
to surely get in the way of a potential deal of the stake.
Elektrim, meanwhile, waits on the decision of the sale of both
ET, which owns 51% of PTC, and PTC itself in order to pay
convertible bondholders EUR453 million by December 15.
=============================
S L O V A K R E P U B L I C
=============================
SLOVAK BANKS: Changes Outlook From Stable to Positive
-----------------------------------------------------
Moody's Investors Service changed the outlook on the Ba1 long-
term deposit ratings of Slovenska Sporitelna, Vseobecna Uverova
Banka and UniBanka from stable to positive.
The change of outlook follows the change of Slovakia's ceiling
for foreign currency deposits outlook from stable to positive.
According to the rating agency, the action reflects the
expectation of support from their respective West European-bank
parents Erste Bank (rated A1/P-1/C+), Intesa BCI (rated A1/P-1/B-
) and UniCredito Italiano (rated Aa3/P-1/B on review for possible
upgrade).
Moody's, meanwhile, maintained the financial strength ratings of
Slovenska Sporitelna at D- with positive outlook, Vseobecna
Uverova Banka at E+ with positive outlook and UniBanka at D.
Slovenska Sporitelna and Vseobecna Uverova Banka had consolidated
total assets of respectively SKK 203 billion (EUR4.8 billion) and
SKK 178 billion (EUR 4.2 billion) at June -end 2002. UniBanka,
on the otherhand, had total assets of SKK 29 billion (EUR691
million) at end 2001.
===========
S W E D E N
===========
LM ERICSSON: Signs Second Contract With Chinese TCL Mobile
----------------------------------------------------------
Ericsson (NASDAQ: ERICY) has signed a second contract for
supplying 2.5G (GPRS) mobile handset platforms to TCL Mobile
Communication Ltd, China's biggest domestic mobile handset
supplier.
The first contract between the two parties was signed as recently
as July. Under the terms of the agreements, TCL Mobile
Communication will fully utilize Ericsson Mobile Platforms'
state-of-the-art mobile platforms in its handset product
development and production.
"The extension of our cooperation with Ericsson Mobile Platforms
will enable TCL Mobile to bring the latest technology to the
market quickly to further increase the value of our offering to
Chinese consumers," says Dr. Wan Mingjian, CEO of TCL Mobile.
"Combined with our strength in design, manufacturing and sales
and marketing, this will reinforce our leading position in the
Chinese market."
"China has not only become the largest mobile phone market world-
wide but also one of the most advanced thanks to the early
adoption of GPRS and multimedia functionality," adds Jan Pantzar,
Vice President Sales & Marketing, Ericsson Mobile Platforms. "We
are pleased to be able to expand our cooperation with TCL Mobile
to include platforms that will allow TCL Mobile to launch
products on the market with superior functionality for multimedia
messaging (MMS)."
The deal is further evidence of the ongoing transformation of the
mobile phone industry, where previously a handful of companies
would supply the complete products to their customers. Today's
market trend is that a large number of vendors will build
consumer products using crucial solutions supplied by a small
number of specialized companies. This brings opportunities for
Chinese companies to compete with large international mobile
vendors
Under the agreement, TCL Mobile Communication is developing
value-added 2.5G GPRS phones based on Ericsson's core mobile
handset technology. Ericsson holds the world's largest portfolio
of 2.5G and 3G Intellectual Property Rights. Part of this
portfolio is now being offered to the market through Ericsson
Mobile Platforms, thereby positioning Ericsson as a leading
supplier of the core handset technology.
Ericsson is shaping the future of Mobile and Broadband Internet
communication through its continuous technology leadership.
Providing innovative solutions in more than 140 countries,
Ericsson is helping to create the most powerful communication
companies in the world.
Read more at www.ericsson.com/press.
About TCL Mobile Communication Co., Ltd.
TCL Mobile Communication Co., Ltd. is a member of TCL
communication industrial group, which belongs to one of the
largest producers of electronic devices in China---TCL
Corporation. TCL Mobile is a hi-tech joint venture committed to
R&D, manufacturing and sales of mobile terminal products. Since
the Company was set up in March 1999, it has always aimed to
"create an internationalized mobile communication enterprise".
After over three year's rapid growth, the Company is now the
strongest local mobile handset supplier in China.
Please read more at: http://www.tclmobile.com.
About Ericsson Mobile Platforms
Ericsson made an early strategic decision to accelerate the
wireless industry. On September 1, 2001, Ericsson Mobile
Platforms was formed as a fully operational company to offer its
complete 2.5G and 3G platform solutions to all manufacturers of
mobile phones and wireless information devices on the open
market. Ericsson Mobile Platforms offers one of the fastest
routes for manufacturers to launch new GPRS or 3G products with
limited R&D and resources, allowing them to focus on areas of
product differentiation, including applications, industrial
design, distribution and branding.
Note:
Ericsson is currently planning to cut jobs as part of the
company's plan to have annual breakeven costs of SEK 120 billion
(EUR12.87 billion) in 2003.
Earlier, Ericsson made a prediction that the telecom equipment
environment will remain "uncertain with few signs of stabilizing
in the near term."
CONTACT: Ericsson Inc.
Communications:
Kathy Egan, 212/685-4030
Email: Pressrelations@ericsson.com
or
Investor Relations
Glenn Sapadin, 212/685-4030
Email: Investor.relations@ericsson.com
LM ERICSSON: To Release Third-Quarter Report October 18, 2002
-------------------------------------------------------------
Ericsson's financial report will be released at approximately
7:30 a.m. Central European Time (CET) on October 18, 2002.
Ericsson will have a press conference that will begin at 9.00
a.m. CET at Ericsson, Telefonv"gen 30, Stockholm. Ericsson's CEO
Kurt Hellstr"m will comment on the results and answer questions.
A live audio webcast of the press conference will be available on
the Internet at http://www.ericsson.com/investorsand
http://www.ericsson.com/press.
Ericsson's CEO Kurt Hellstr"m and CFO Sten Fornell will also
comment on the results and answer questions during a conference
call for the financial community and media at 3:00 p.m. CET (2:00
p.m. UK time, 9:00 a.m. Eastern Time U.S. and 10:00 p.m. local
time Japan).
Please call in at least 15 minutes before the conference call
begins and stay on the line. In light of the usual high number of
callers, it might take some time before you get connected.
To view slides on the Internet during the call, visit
http://www.ericsson.com/investorsor
http://www.ericsson.com/press.
CALL-IN NUMBERS FOR THE CONFERENCE CALL ARE:
European call-in numbers:
+44 14 5256 0299
U.S. and International call-in numbers:
+1 706 643 0382
REPLAY:
A replay of the conference call will be available approximately
two hours after the completion of the conference call until 12:00
midnight CET October 21.
European replay numbers:
+44 14 5255 0000
Participants will need to enter the conference ID number
6089062#.
U.S. and International replay numbers:
+1 706 645 9291
Participants will need to enter the conference ID number 6089062.
An on-demand webcast of the conference call with visual support
will become available on the Internet at
http://www.ericsson.com/investorsand
http://www.ericsson.com/pressduring the day.
Ericsson is shaping the future of Mobile and Broadband Internet
communications through its continuous technology leadership.
Providing innovative solutions in more than 140 countries,
Ericsson is helping to create the most powerful communication
companies in the world.
Read more at http://www.ericsson.com/press
CONTACT:
Media
Britt Evertsson, Press Officer
Ericsson Corporate Communications (Sweden)
Phone: +46 8 719 9730
E-mail: britt.evertsson@lme.ericsson.se
Investors
Gunilla Brunnberg B"rtas, Investor Relations Officer
Ericsson Corporate Communications (Sweden)
Phone: +46 8 719 3800
E-mail: gunilla.brunnberg.bortas@lme.ericsson.se
Sandra Hetzler, Investor Relations Program Manager
Ericsson Inc. (US)
Phone: +1 212 685 4030
E-mail: sandra.hetzler@am1.ericsson.se
===========================
U N I T E D K I N G D O M
===========================
ABERDEEN ASSET: Split Capital Trust Director Resigns
----------------------------------------------------
Split Capital Trust director Chris Fishwick, who is in charge of
19 split capital trusts and a member of 10 of its trust
companies, is leaving Aberdeen Asset Management, says the
Financial Times.
Mr. Fishwick, whose resignation is effective immediately, is
among the frontrunners of the split capital sector currently
under investigation in relation to the so-called "magic circle"
of trusts investing in each other.
The company's highest-paid director will receive a year's salary
when he leaves in December. The pay-out is expected to total at
least GBP350,000 says the report.
Mr. Fishwick is among the six directors whose bonuses were held
over from last year as a result of the deep plunge of the
company's shares following the receivership of Aberdeen's split
capital trusts.
CONTACT: ABERDEEN ASSET MANAGEMENT PLC
1 Albyn Place
Aberdeen, Grampian AB10 1YG
United Kingdom
Phone: +44-1224-631-999
Fax: +44-1224-647-010
Home Page: http://www.aberdeen-asset.com
ABERDEEN ASSET: Global Income Fund Announces Monthly Distribution
-----------------------------------------------------------------
Aberdeen Global Income Fund, Inc. (NYSE: FCO), a closed-end bond
fund, announced today that it will pay a monthly distribution of
US 6 cents per share on November 8, 2002 to all shareholders of
record as of October 31, 2002 (ex-dividend date of October 29,
2002).
The Board's policy is to provide investors with a stable monthly
distribution out of current income, supplemented by realized
capital gains and, to the extent necessary, paid-in capital. It
is the Board's intention that the monthly distribution of US 6
cents per share be maintained for 12 months, having begun with
the February 8, 2002 distribution payment. This policy is subject
to regular review at the Board's quarterly meetings. The next
review is scheduled to take place in December 2002.
For the 12 months to September 30, 2002, the Fund has paid total
distributions amounting to US 76 cents per share.
The Fund is subject to U.S. corporate, tax and securities laws.
Under U.S. tax accounting rules, the amount of distributable
income for each fiscal period depends on the actual exchange
rates during the entire year between the U.S. dollar and the
currencies in which Fund assets are denominated and on the
aggregate gains and losses realized by the Fund during the entire
year. Therefore the exact amount of distributable income for each
fiscal year can only be determined as of the end of the Fund's
fiscal year, October 31. However, under the U.S. Investment
Company Act of 1940, the Fund is required to indicate the source
of each distribution to shareholders.
The Fund estimates that distributions for the fiscal year
commencing November 1, 2001, including the distribution paid on
October 11, 2002, are comprised of 2% net investment income and
98% return of paid-in capital. This estimated distribution
composition may vary from month to month because it may be
materially impacted by future realized gains and losses on
securities and fluctuations in the value of the currencies in
which Fund assets are denominated.
The amount attributed as a return of capital reflects, in part,
the realization of currency losses in the Fund's Australian bond
portfolio as a result of positioning the Fund's investments more
towards global debt securities. Fund assets are marked to market,
therefore the realization of such currency losses does not impact
the Fund's net asset value. However these losses do offset
distributable income, therefore increasing the return of capital
component of the distribution.
The Investment Manager anticipates further increases in the level
of investment in global fixed income securities, which may result
in the realization of additional currency losses. The Investment
Manager believes that the Fund will benefit from the increased
global exposure. Likewise, the Investment Manager anticipates
that the higher yields currently available in certain global
markets, may better position the Fund to reduce and potentially
eliminate the return of capital component of the Fund's monthly
distribution. There can be no assurance, however, that the
Investment Manager's expectations will be met.
In January 2003, a Form 1099 DIV will be sent to shareholders,
which will state the amount and composition of distributions and
provide information with respect to their appropriate tax
treatment. Qualifying U.S. taxpayers are generally entitled to a
foreign withholding tax credit on distributions received.
Shareholders will be informed as to the exact amount of the tax
credit shortly after the end of the tax year.
The Fund is managed by Aberdeen Asset Managers (C.I.) Limited and
advised by Aberdeen Asset Management Limited. The Fund's shares
trade on the New York Stock Exchange under the symbol "FCO".
QUALITY OF PORTFOLIO: As of September 30, 2002 approximately
80.1% of the Fund's assets were invested in securities rated
"AAA/AA" by Standard & Poor's Corporation or "Aaa/Aa" by Moody's
Investors Service Inc. or, if unrated, judged by the Investment
Manager to be of equivalent quality.
CONTACT: Aberdeen Asset Management Investor Relations
Phone: 1-800-522-5465,
E-mail: InvestorRelations@aberdeen-asset.com
Home Page: http://www.aberdeen-asset.com
ABERDEEN ASSET: Asia-Pacific Income Fund Announces Distribution
---------------------------------------------------------------
Aberdeen Asia-Pacific Income Fund, Inc. (Amex: FAX; PSE), a
closed-end bond fund, announced today that it will pay a monthly
distribution of US 3.5 cents per share on November 8, 2002 to all
shareholders of record as of October 31, 2002 (ex-dividend date
October 29, 2002).
The Board's policy is to provide investors with a stable monthly
distribution out of current income, supplemented by realized
capital gains and, to the extent necessary, paid-in capital. It
is the Board's intention that the monthly distribution of US 3.5
cents per share be maintained for 12 months, having begun with
the February 8, 2002 distribution payment. This policy is subject
to regular review at the Board's quarterly meetings. The next
review is scheduled to take place in December 2002.
For the 12 months to September 30, 2002 the Fund has paid total
distributions amounting to US 46 cents per share.
The Fund is subject to U.S. corporate, tax and securities laws.
Under U.S. tax accounting rules, the amount of distributable
income for each fiscal period depends on the actual exchange
rates during the entire year between the U.S. dollar and the
currencies in which Fund assets are denominated and on the
aggregate gains and losses realized by the Fund during the entire
year. Therefore, the exact amount of distributable income for
each fiscal year can only be determined as of the end of the
Fund's fiscal year, October 31. However, under the U.S.
Investment Company Act of 1940, the Fund is required to indicate
the source of each distribution to shareholders.
The Fund estimates that distributions for the fiscal year
commencing November 1, 2001, including the distribution paid on
October 11, 2002, are comprised of 24% net investment income and
76% return of paid-in capital. This estimated distribution
composition may vary from month to month because it may be
materially impacted by future realized gains and losses on
securities and fluctuations in the value of the currencies in
which Fund assets are denominated.
The amount attributed as a return of capital reflects, in part,
the realization of currency losses in the Fund's Australian bond
portfolio as a result of re-positioning the Fund's investments
more toward Asia. Fund assets are marked to market, therefore the
realization of such currency losses does not impact the Fund's
net asset value. However these losses do offset distributable
income, therefore increasing the return of capital component of
the distribution.
The Investment Manager anticipates further increases in the level
of investment in Asian fixed income securities, which may result
in the realization of additional currency losses. The Investment
Manager believes that the Fund will benefit from the increased
exposure to Asia. Likewise, the Investment Manager anticipates
that the higher yields currently available in that region may
better position the Fund to reduce, and potentially eliminate,
the return of capital component of the Fund's monthly
distributions. There can be no assurance, however, that the
Investment Manager's expectations will be met.
In January 2003, a Form 1099 DIV will be sent to shareholders,
which will state the amount and composition of distributions and
provide information with respect to their appropriate tax
treatment. Qualifying U.S. taxpayers are generally entitled to a
foreign withholding tax credit on distributions received.
Shareholders will be informed as to the exact amount of the tax
credit shortly after the end of the tax year.
The Fund participates in the buy-back program that was approved
by the Fund's Board of Directors in March 2001. Details are
provided in the Fund's quarterly reports.
The Fund is managed by Aberdeen Asset Managers (C.I.) Limited and
advised by Aberdeen Asset Management Limited. The Fund's shares
trade on the American Stock Exchange and the Pacific Stock
Exchange under the symbol "FAX".
QUALITY OF PORTFOLIO: As of September 30, 2002 approximately
57.5% of the Fund's assets were invested in securities rated
"AAA/AA" by Standard & Poor's Corporation or "Aaa/Aa" by Moody's
Investors Service Inc. or, if unrated, judged by the Investment
Manager to be of equivalent quality.
CONTACT: Aberdeen Asset Management, Investor Relations
Phone: +1-800-522-5465,
E-mail: InvestorRelations@aberdeen-asset.com
Home Page: http://www.aberdeen-asset.com
HP BULMER: Calls Turnaround Specialist for Help
-----------------------------------------------
Cider maker HP Bulmer, which kicked finance director Alan
Flockhart after discovering accounting errors in its books, has
called in a turnaround specialist to help it manage its finances.
According to the Financial Times, the board has appointed John
Darlington, a director of the Society of Turnaround
Professionals, to help with the accounts after the departure of
Mr. Flockhart.
He will assist Colin Brown, the non-executive director who is
acting as chief executive following the departure of Mike Hughes
on September 11.
The shares of the company which called its fifth profits warning
in nine months fell another 69 p to close at 126-1/ 2p - more
than 300p below the 12-month high.
The company predicts GBP14.5 million ($22.5m) of exceptional
charges to be taken in the year to April 2003. The board expects
a o4.7m write-off of capitalised investment in new product
development and a further write-off of up to o22m for goodwill
associated with acquisitions in the US.
HP Bulmer's level of exceptional charges translates to a market
capitalization of GBP67 million and debts of GBP110 million. The
figures are thought to put the company in breach of most of its
banking covenants. On Monday the board held talks with its
lenders, led by Royal Bank of Scotland, the report says.
The company confirmed it will delay paying final dividend for
last year, and is not expecting to pay dividend this year either.
The report also suggested a possibility that the board may
consider sellling overseas operations to rebase the business.
Deloitte & Touche estimated the accounting errors discovered
earlier at GBP3.8 million. These are discounts promised to
retailers, and are thought to have run since 1999.
MOTHERCARE PLC: Provides Trading Update for First Half
------------------------------------------------------
As indicated on 15th July, Mothercare is today providing a
trading update for the first half of the year, comprising the 28
weeks to 12th October 2002, which is as follows:
14 weeks to 14 weeks to 28 weeks to
12th July 2002 12th Oct 2002 12th Oct 2002
(percentage change over comparable period last year)
UK store like-for-like -3.1% -1.2% - 2.1%
sales
Group Sales -2.7% +4.1% +0.7%
In line with the 15th July statement, Clothing continued to
under-perform through the Summer but stocks were largely cleared
through the sale with the remnants moving to five clearance
stores. The autumn clothing ranges were not helped by the warm
weather in September, but are now selling well. As anticipated,
Home, Travel and Toys have shown good increases recently against
weak comparatives.
The International and Direct businesses have both performed well,
and in the 28 weeks to 12th October have increased sales year-on-
year by 28.9% and 10.2% respectively.
The performance of International, which is a lower margin
business, combined with clearing the UK summer lines will result
in margins being lower than last year, but in line with our
expectations.
Mothercare's primary focus in the distribution centres has been
to ensure the volume and service requirements of the business are
met, including the stock build for peak trading. Whilst these
objectives are being achieved, the costs are not yet coming down
as anticipated. Mothercare continue to work to reduce these costs
as a matter of urgency, whilst protecting service levels.
Full financial results for the interim period will be announced
on 21st
November 2002.
Mothercare is pleased to announce that Ben Gordon joins the
business as Chief Executive on 2nd December 2002.
Mark McMenemy, Finance Director and Acting CEO said 'The first
half has been disappointing in both sales and profit. However, as
expected we are now seeing positive sales in each division as we
enter the second half'.
CONTACT: Mothercare plc
Mark McMenemy
Phone: 01923 206187
Brunswick Group Ltd.
Philippa Power/Chi Lo
Phone: 020 7404 5959
PACE MICRO: Awards GBP2000 to Its D3 'Dealer of the Year'
---------------------------------------------------------
Pace's Digital Dealers of Distinction programme (d3), which
supports UK independent retailers in understanding and selling
digital TV technology, has awarded Chantry TV in Towbridge
Wiltshire its d3 'Dealer of the Year' title. This prestigious
award recognises the superior quality of Chantry TV's Pace in-
store promotions and initiatives and the expert product training
and technical knowledge of its sales staff.
D3 Programme Manager, Fiona Leslie presented the winning dealer
with o2000 which Chantry TV plan to use for local newspaper and
radio advertising.
Keith Vining first established Chantry TV in 1963, specialising
in renting electrical goods to people within the local area.
There are now almost fifty people working at Chantry TV, spread
over seven different sites throughout Wiltshire, Somerset, Dorset
and Bristol, making it well-known in the South West.
"Independent dealers have played a key role in making digital TV
a success in the UK and this award is just one way of recognising
their important contribution," explained Fiona Leslie, Pace's d3
Programme Manager.
"Our password-protected website, specifically designed for UK
dealers is our main communication link with the trade and keeps
members updated on new developments in the digital TV industry,
market trends and product developments. It also includes Pace
news, industry news, details of Pace distributors and hotlinks to
other relevant industry sites.
" As well as the 'Dealer of the Year' competition, we also hold a
variety of other competitions to reward dealers. Recently, Peter
Tyson from Peter Tysons in Carlisle won a luxury weekend for two
people in Barcelona by entering the Pace Digital TV Adapter
(DTVA) point-of-sale display competition. Also Simon Wilson from
Suffolk Aerials in Lowestoft recently won a Ferrari driving day
in a prize draw.
"D3 is successful because it is specifically tailored for the
needs of UK dealers. Pace has a dedicated Sales and Marketing
team to support dealers, which has enabled us to forge strong
relationships and keep constantly up to date with their needs and
requirements. Competitions such as 'Dealer of the Year'
incentivise retailers to sell our products with the opportunity
to win fantastic prizes for their hard work."
Note:
The recent resignation of Malcolm Miller, the chief executive of
Pace Micro Technology is seen as another blow to the company,
which has been hit by the collapse of ITV digital, NTL's
bankruptcy proceedings and a new deal with BSkyB.
PEARL ASSURANCE: Parent's Business Review Clouds Future
-------------------------------------------------------
The outlook of British life insurer Pearl is clouded after AMP,
its Australian parent, reviewed UK businesses and slashed five of
its most senior executives in London. The Australian group
admitted that it had abandoned hopes of becoming a main player in
the UK market, Times Online says.
The firm's capital base was badly affected by falling global
equity prices, and AMP has provided as much as GBP500 million to
prop Pearl's balance sheet.
Andrew Mohl, the firm's new executive, foresees that the review
could result in the disposal of a number of divisions, and cuts
in Pearl's 1,000 workforce.
Among the changes in the company's management structure are the
departures of Tom Fraser, managing director of UK financial
services; Tim Wade, managing director of international strategy
and development; Warwick Foster, chief information officer; Peter
Noble, general counsel; and Andrew Jones, general manager of
human resources. Marc de Cure, the former finance director,
meanwhile, will return to AMP as general manager of strategy and
development.
Also included in the restructuring are the creation of two new UK
divisions: the "mature businesses", mainly closed life funds such
as Pearl and NPI, and "contemporary businesses", such as Towry
Law, a financial adviser, and Virgin.
P&O PRINCESS: Franklin Resources Discloses Dealings
---------------------------------------------------
Date of dealing: October 11, 2002
Dealing in: P&O Princess Cruises Plc
Class of securities: Ordinary
Amount sold: 591,793
Price per unit: 4.3046
Resultant total of the same class owned or controlled:
27,591,836
Percentage of class: 3.9813%
Party making the disclosure: Franklin Resources Inc.
Name of purchaser/vendor: Franklin Resources, Inc. And its
Affiliates
Reason for Disclosure: Rule 8.3 (i.e. disclosure because of
ownership or control of 1% or more of the class of relevant
securities dealt
Print name of signatory: Laura R. Seidman
Telephone: 954-527-7413
TXU EUROPE: Fitch Lowers Senior Unsecured Rating to 'CCC'
---------------------------------------------------------
The ratings of TXU Corp. are affirmed at 'BBB'/'F2', by Fitch
Ratings. The Rating Outlook has been revised to Negative from
Stable. Additionally, the ratings for TXU Australia Holdings
(Partnership) Limited Partnership ('TXUA') and TXU Electricity
Limited (formerly Eastern Energy Limited) are affirmed, and the
Rating Outlook revised to Negative from Stable. Earlier today,
Fitch lowered the senior unsecured rating of TXU Europe Ltd.
('TXE') today to 'CCC' from 'BB' and short-term rating to 'C'
from 'B'. The ratings of TXE, which also apply to certain
obligations guaranteed by TXU Europe Ltd., were placed on Rating
Watch Negative.
These rating actions follow the announcement that TXU Corp. is
now offering for sale 'all or portions of (TXE's) business,' and
that equity injections from TXU Corp. to TXE to effect
contractual restructuring and debt reduction, which previously
had been expected to total up to USD700 million, will now be kept
to 'minimal levels'.
TXU Europe Ltd.
This severely reduced monetary commitment to TXE is material not
only relative to the previously anticipated financial profile,
but also because of the greater likelihood of immediate cash
claims arising from a variety of rating triggers. In particular,
the retraction of significant parent support increases the
likelihood of further downgrades by other rating agencies, which
in turn are likely to activate further credit-related liquidity
triggers. In Fitch's view, it is highly unlikely that TXE would
be able to finance the costs associated with these liquidity
triggers in a timely fashion on a stand-alone basis.
The most proximate concerns remain commercial triggers currently
expected to total c.GBP110m and the possibility of a Put Event
certification on the c.GBP275m 2030 sterling bonds. A further
credit rating-related trigger in the US$500m of bonds maturing in
2017 and 2027 could potentially oblige repayment at the next
interest coupon date, which, having taken account of the
notification period, would fall in April 2003. Further commercial
triggers may put pressure on liquidity before this date.
Experience with other confidence-sensitive energy marketing and
trading operations has shown that delays in resolving the credit
issues at TXE could see further deterioration in operating cash
flow, and, depending on the outcome of existing credit triggers,
greater liquidity problems in the near-term.
TXU Corp. has stated that 'TXE is offering for sale all or
portions of its business.' A sale of part or whole of the
business is unlikely to complete within the timeframe required to
address the liquidity triggers, which are now under pressure.
Assuming purchase by a higher rated entity, there is, however, a
reasonable likelihood, though not a certainty, that the TXU
Europe Ltd. senior unsecured rating could be raised. The level of
any improved rating would depend upon the level of support
offered by the acquiring entity, and the speed with which such
support could be provided.
Fitch notes that there are a number of criteria upon which parent
and subsidiary rating relationships are judged, primarily
centering on the strategic, functional and financial integration
of the new subsidiary, including the level of cash injected to
recapitalize a target company, the further refinancing of
outstanding debt from intercompany funds, the presence of inter-
company guarantees and the presence or absence of a centralized
treasury function for future funding. In addition, TXE has a
reasonably complex legal ownership structure, with capital
markets debt issued at a number of separate levels (though
financial debt is typically guaranteed by TXU Europe Ltd.), and
Fitch would monitor for the degree to which all issuing entities
form part of a sale. As a further challenge, as liquidity
problems mount at TXE, the structural preference of trade
creditors at trading subsidiary entities will become an
increasingly important issue for unsecured creditors holding debt
obligations which have been guaranteed by UK parent TXU Europe
Ltd. Further, Fitch regards the achievement of a price that would
permit assumption of TXE's existing debt (i.e. effectively a
minimum price of c.GBP2.5bn) as challenging in the current
markets.
Similarly, if an acquisition is not concluded in a timely
fashion, it is also reasonable to assume that the ratings of TXE
will fall further. This will reflect both the starkly diminished
likelihood of further support from TXU Corp., and the weak stand-
alone credit profile of TXE.
TXU Corp. and other subsidiaries
The Rating Outlook of TXU Corp. (and by extension, the Rating
Outlook for TXU US Holdings (US Holdings, rated 'BBB+'), Oncor
Electric Delivery Co. (Oncor, First Mortgage Bonds rated 'A-'),
TXU Energy Co. LLC (TXU Energy, rated 'BBB+'), and TXU Gas Co.
(TXU Gas, rated 'BBB'), as well as TXUA (rated 'BBB') and TXU
Electricity Limited (rated 'BBB') in Australia) has been revised
to Negative from Stable. This is against a background of positive
steps taken to address the current challenges facing the company,
but a negative refinancing environment for US utilities in
general. TXU Corp. has announced its decision to reduce dividend
payouts by 80% until further notice, reduce development capital
expenditure across the group and, most importantly, effectively
withdraw support of TXE. While these are all regarded as
significant positive steps, despite these measures, and robust
domestic operations, access to the bank and capital markets for
the US parent may become subject to the 'credit crunch' affecting
a number of investment-grade rated utilities in the US. Fitch has
already noted that the current environment can constrain the
ability of even robust utilities rated 'BBB' to refinance
existing obligations. Cash balances of US$2.6bn in the US
operations at this time assist in mitigating the risks of this
environment for TXU, as does the fact that the majority of near-
term maturities come due within the regulated businesses. Fitch
also notes again that the potential disposal of TXE from the
group would have no negative cash flow implications for TXU Corp.
in the near- or medium-term, relative to the agency's prior
forecasts, as no cash flow dividend income from TXE to TXU Corp.
had been assumed.
Fitch will be releasing a credit update on TXE in due course.
CONTACT: Fitch Ratings
Gracie Ebadan-Bola, +44 20 7417 4308 (London)
Isaac Xenitides, +44 20 7417 4300 (London)
Richard Hunter, 212/908-0294 (New York)
Karl Pfeil, III, 212/908-0516 (New York)
Media Relations: James Jockle, 212/908-0547 (New York)
TXU EUROPE: Parent Takes Dramatic Actions to Protect Credit
-----------------------------------------------------------
TXU (NYSE: TXU) announced that it took dramatic action today to
ensure that TXU Corp.'s credit and liquidity position remains
strong.
In order to meet the new requirements of the rating agencies for
investment grade credit, TXU's Board of Directors declared a
quarterly dividend of $0.125 per share of common stock. This
represents an 80 percent reduction from the previous quarterly
dividend of $0.60 per share. The dividend will be paid on January
2, 2003 to shareholders of record on December 6, 2002. The
indicated annual dividend is now $0.50 per share of common stock.
Erle Nye, Chairman and Chief Executive, said, "Today's actions
are the direct result of rating agencies' concerns as to the
company's liquidity and credit situation. Today's financial
markets and concerns of the rating agencies have forced us to
take this dramatic action."
"The Board's decision to reduce the dividend was not taken
lightly. The events of the past few days persuaded the Board that
the dividend reduction was prudent. We recognize the importance
of the dividend to our shareholders and sincerely regret having
to take this action. However, our primary responsibility to the
shareholder is to maintain the financial strength and flexibility
of the company. The common stock dividend policy will be reviewed
on an ongoing basis. The dividend will be increased when there is
unquestioned confidence in the company's liquidity and credit
combined with access to the capital markets on reasonable terms."
In addition to reducing the dividend, TXU has taken the following
actions to protect credit.
-- TXU has successfully negotiated an amendment to the parent
company's $500 million bank facility that eliminated foreign
subsidiaries from its cross default provision.
-- TXU is negotiating final terms on an additional credit
facility of up to $1 billion at its Oncor subsidiary to
facilitate meeting its upcoming maturities.
-- Contrary to previous plans, the company will limit any
necessary equity contributions to its European operations to
minimal levels.
-- The company's developmental capital expenditures
throughout all regions will be significantly reduced.
Mike McNally, Chief Financial Officer, said, "The company's cash
flows and earnings remain strong and stable in our Texas and
Australia operations, which are performing very well. In light of
limited attractive investment opportunities, developmental
capital expenditures will be reduced significantly. Cash retained
from expenditure reductions and the reduced dividend, which
totals approximately $850 to $950 million per year, will be
available for debt reduction."
Regarding European operations, recent actions by credit rating
agencies will impact the company's ability to compete in the
European markets and accordingly may impact earnings from that
segment. TXU Europe will continue to aggressively address
existing plans to reduce costs, restructure purchase power
agreements and otherwise improve and maintain the business as an
ongoing operation. TXU Europe, in parallel, is also offering for
sale all or portions of its business. The extent of any possible
impairment (write off) of the company's investment in Europe as a
result of these activities cannot be known prior to their
conclusion. The company does not expect an impairment, if any, to
affect its ability to meet TXU Corp.'s bank facility covenants.
TXU provides electric and natural gas services, merchant energy
trading, energy marketing, energy delivery, telecommunications,
and energy-related services. With $41 billion in assets, TXU is
one of the most influential energy companies in the world. TXU is
a leading energy retailer in the US and one of the largest in the
world. TXU owns or controls extensive competitive generation
around the world, and is a leading portfolio manager and trader
globally. TXU, which sells over 330 million megawatt hours of
electricity and 2.8 trillion cubic feet of natural gas annually,
serves over 11 million customers worldwide, primarily in the US,
Europe and Australia. Visit http://www.txu.comfor more
information about TXU.
This release contains forward-looking statements, which are
subject to various risks and uncertainties. Discussion of factors
that could cause actual results to differ materially from
management's current projections, forecasts, estimates and
expectations is contained in the company's SEC filings. In
addition to the factors set forth in the company's SEC filings,
other factors which could affect the forward looking statements
contained in this press release include, among others, prevailing
government policies on environmental, tax or accounting matters,
regulatory and rating agency actions, weather conditions,
unanticipated population growth or decline and changes in market
demand and demographic patterns, changing competition for
customers including the deregulation of the U.S. electric utility
industry and the entry of new competitors, pricing and
transportation of crude oil, natural gas and other commodities,
financial and capital market conditions, unanticipated changes in
operating expenses and capital expenditures, legal and
administrative proceedings and settlements, inability of the
various counter-parties to meet their obligations with respect to
financial instruments, and changes in technology used and
services offered by TXU Corp.
CONTACT: Media - Carol Peters
Phone: +1-214-812-5924
E-mail: cpeters@txu.com, or
Joan Hunter
Phone: +1-214-812-4071
E-mail: jhunter@txu.com
Investors - David Anderson
Phone: +1-214-812-4641
E-mail: danderson@txu.com
or
Brad Jones
Phone: +1-214-812-8405
E-mail: bjones@txu.com
or
Tim Hogan
Phone: +1-214-812-2756
or
E-mail: thogan@txu.com
or
Shareholder Services
Phone: +1-214-812-8100
1-800-828-0812,
TXU EUROPE: Downgrades Rating After Parent Withdraws Injection
--------------------------------------------------------------
Moody's Investors Service has downgraded the senior unsecured
debt ratings of TXU Europe Ltd to Caa2 from Baa3, the debt
ratings of the Energy Group Overseas B.V to Caa2 from Baa3, the
issuer rating of TXU Europe Group plc to B3 from Baa3, and the
preferred stock issued by TXU Europe Capital 1 to Caa3 from Ba2.
The rating agency also assigned a new senior implied rating of B3
to TXU Europe Limited.
The ratings were left on review for further downgrade pending
further developments on the company's debt-servicing ability.
The action was prompted by the cancellation of the announced
US$700 million equity injection of Texas-based parent, TXU Corp,
into its European subsidiaries.
As a result of the downgrade, rating triggers were activated
leading to severe liquidity problems, which Moody's expects the
energy company to shore up.
Moody's recognizes TXU Europe's effort in minimizing actual call
on its liquidity, and reducing cost of purchased power. It also
expects the company to negotiate extension on the deadline of
payments on short-term obligations to prevent the company from
going into administration.
The rating agency warns under administration the value of the
company's ssets is unlikely to fully cover its liabilities,
including the trading liabilities.
TXU Europe Ltd recorded sales of about GBP 8.7 billion in 2001.
TXU EUROPE: S&P Cuts Rating 4 Days After CreditWatch Placement
--------------------------------------------------------------
The deterioration of TXU Europe's creditworthiness has spilled
over to its U.S. parent TXU Corp. as well as Australian
subsidiaries, forcing Standard & Poor's to downgrade Monday
several ratings it had previously given the group.
TXU Corp., the U.S.-based power utility and its U.S. and
Australian subsidiaries were pulled down to "BBB-" from "BBB+".
TXU Europe Ltd. and its European subsidiaries, on the other hand,
suffered a downgrade from "BBB-" to "B+". The outlook on TXU
Corp. and its U.S. and Australian subsidiaries remains negative,
and the ratings on TXU Europe remain on CreditWatch with negative
implications, where they were placed on October 10, 2002.
"The short-term 'A-3' corporate credit ratings on U.K.-based
subsidiary The Energy Group Ltd. have been withdrawn. The
commercial paper rating on the U.S. and Australian subsidiaries
is affirmed at 'A-2'," a Standard & Poor's press statement says.
"The rating action on TXU Corp. follows a material deterioration
in the company's credit quality in 2002, due primarily to weak
performance in the U.K. business, which has never provided any
dividends to the parent," said Anthony Flintoff, director at
Standard & Poor's. "The weakness in TXU Corp.'s European
operations has applied added pressure to its financial profile,
which has been very weak for the triple-'B'-plus rating in the
past few years," added Mr. Flintoff.
The rating agency says even if TXU Corp. will reduce debt by
using cash flow and converting existing securities to common
stock, as well as by securitizing $1.3 billion of regulatory
assets and converting additional debt to equity, the company's
outlook will remain negative until it successfully executes
short-term steps to stabilize the financial profile at the "BBB"
level.
"At present, the "BBB" corporate credit rating derives support
from TXU Corp.'s strong liquidity position. About $2 billion of
annual funds from operations cover annual mandatory capital
expenditures of $600 million-$700 million, leaving a significant
amount of cash available for other uses, including debt
reduction. Short-term liquidity requirements are met by $2.4
billion of bank credit at TXU U.S. Holdings Co, a $138 million
liquidity facility at TXU Australia Holdings (Partnership) L.P.
(TXU Australia), and a $500 million facility at TXU Corp. The
cross-default to TXU Europe on the $500 million facility has been
removed," S&P said.
The rating agency, meanwhile, explained that the rating action on
TXU Europe follows the earlier downgrade on October 10, 2002.
The rating action on TXU Europe is a direct result of the actions
taken by TXU Corp. in recent days to protect its own
creditworthiness.
"Management has stated that it will not, as it previously
anticipated, infuse additional equity into TXU Europe. The lack
of this equity infusion of up to $700 million, combined with the
contingent liquidity requirements triggered by the noninvestment-
grade rating, makes TXU Europe's liquidity position extremely
tenuous," S&P noted.
S&P says TXU Europe has cash reserves of about GBP200 million
($312 million), an undrawn bank facility of GBP300 million, and
no debt maturities within the next three years.
"The noninvestment-grade rating, however, makes drawing on the
bank facility unlikely, and TXU Europe is now required to post
collateral for trading counterparties currently estimated at
GBP110 million and, possibly, collateral for energy distribution
and transmission purposes of about GBP75 million. Several other
debt and trading instruments also have rating triggers, although
it remains to be seen whether these will be exercised and how TXU
Europe will deal with them," the rating agency noted.
"The negative CreditWatch status reflects the immediate liquidity
concerns at TXU Europe. If the position deteriorates further, a
negative rating action is likely in the short term," said Mr.
Flintoff. "There is the potential, however, for the liquidity
pressures to be partially or temporarily alleviated as the banks,
bondholders, and energy contract counterparties consider their
options and incentives."
The situation with TXU Europe's liquidity and counterparty
dealings is evolving rapidly and further announcements can be
expected in the near future, S&P said.
"The ratings on TXU Australia and its wholly owned subsidiary,
TXU Electricity Ltd., remain closely aligned to those of TXU
Corp.," the press statement said. "The strength of the
underlying creditworthiness of TXU Australia and the ongoing
willingness of TXU Corp. to support its Australian subsidiaries
mean that it is appropriate to equate the ratings."
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S U B S C R I P T I O N I N F O R M A T I O N
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Copyright 2002. All rights reserved. ISSN 1529-2754.
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