/raid1/www/Hosts/bankrupt/TCREUR_Public/021018.mbx             T R O U B L E D   C O M P A N Y   R E P O R T E R

                             E U R O P E

                Friday, October 18, 2002, Vol. 3, No. 207


                              Headlines

* F R A N C E *

FRANCE TELECOM: Extends Global Agreement With Portal Software
VIVENDI UNIVERSAL: Vodafone Opens Bid for SFR With EUR12 BB Offer

* G E R M A N Y *

CENIT AG: Gets EUR1 MM Order From Volkswohl Bund Versicherungen
FAME AG: Sells U.K. Unit for 1 Pound to Free Itself of Debts

* I T A L Y *

FIAT SPA: GM Values Stakes Less Than 10% of Original Buy Price
FIAT SPA: General Motors Against State Control of Group

* P O L A N D *

NETIA HOLDINGS: Arbitration Court Junks Millennium's Claims

* S P A I N *

JAZZTEL PLC: Secures Loan Pending Nod on Re-capitalization Plan

* S W E D E N *

LM ERICSSON: Awarded MMS Contract by Iceland Telecom

* S W I T Z E R L A N D *

ABB LTD.: Investment Wiz Gives Up Stake to Focus on Ailing Biz

* U N I T E D   K I N G D O M *

ABBEY NATIONAL: Unit Exposed to Enron Sues Banks, Andersen
ABBEY NATIONAL: Signs Up Merrion Capital to Advice in Ireland
ARM HOLDINGS: To Trim Down Workforce by 10% Due to Bleak Outlook
ST IVES: Annual Pre-tax Profits Down Two-thirds; Ad Slump Blamed
TXU EUROPE: Mulls Reinstatement of Mothballed Coal-fired Plants
TXU EUROPE: AES Drax Fires Opening Salvo, Calls Firm 'Reckless'
TXU EUROPE: Ongoing Renegotiation Reason for Default on AES Due


===========
F R A N C E
===========


FRANCE TELECOM: Extends Global Agreement With Portal Software
-------------------------------------------------------------
Portal Software, Inc. (Nasdaq:PRSF) a leading provider of billing
and customer management software, today announced that France
Telecom SA, one of the world's leading telecommunications
providers, has expanded its comprehensive global agreement for
the use of Portal's convergent billing platform to support voice
and value-added services.

A number of France Telecom's wireline and wireless subsidiaries
have immediately taken advantage of the agreement with the
implementation of Infranet(R) Wireless at Orange SA, France
Telecom's mobile division, and billing for value-added services
at subsidiary Dutchtone N.V., a leading mobile service provider
in the Netherlands. Wanadoo, France Telecom's Internet division,
has continued to implement Infranet across its subsidiaries, most
recently at the newly acquired Freeserve plc, the UK's largest
Internet service provider, where Infranet replaced an existing
billing system from Amdocs.

The global agreement is another significant milestone in the
strategic relationship between France Telecom and Portal Software
that began in 1997, when Portal Software was selected as the
customer management and billing platform for Wanadoo France.
Portal Software now supports a significant number of core units
at France Telecom. Dutchtone, which represents Portal Software's
first announced Orange customer, has implemented Infranet
Wireless to support pre-and post-paid GPRS and content services.
France Telecom DvSI has deployed Infranet at Orange Slovakia and
Novis in Portugal -- in addition to established installations in
France and the Netherlands. Wanadoo Spain deployment is in
progress.

"Our relationship with France Telecom is one of Portal Software's
longest and most strategic. France Telecom has been a leader in
adopting the Infranet platform's extensive multi-service
capabilities for geographically and technologically diverse
subsidiaries," commented John Little, CEO and Founder, Portal
Software, Inc. "The new Professional Services agreement supports
full-lifecycle involvement with France Telecom and includes a
dedicated Portal professional services team that will enable
France Telecom to continue to leverage the power of the
convergent Infranet platform to foster innovation in all
subsidiaries for all services -- this is a significant
achievement in furthering Portal Software's goal of providing
exceptional value to the world's leading telecommunications
companies."

About France Telecom

France Telecom is one of the world's leading telecommunications
carriers, with over 91 million customers on the five continents
(220 countries and territories) and consolidated operating
revenues of 43 billion Euro for 2001. Through its major
international brands, including Orange, Wanadoo, Equant and
GlobeCast, France Telecom provides businesses, consumers and
other carriers with a complete portfolio of solutions that spans
local, long-distance and international telephony, wireless,
Internet, multimedia, data, broadcast and cable TV services.
France Telecom is the second-largest wireless operator and the
number three Internet access provider in Europe, and a world
leader in telecommunications solutions for multinational
corporations. France Telecom (NYSE:FTE) is listed on the Paris
and New York stock exchanges.

About Wanadoo

Wanadoo, a subsidiary of France Telecom, is one of Europe's
leading Internet and directories companies with 7,8 million
active subscribers, 20 million unique visitors per month and
650,000 advertisers. Wanadoo is a leading Internet media services
provider in France, the U.K. and Spain, and is also present in
the Netherlands and Belgium. Wanadoo is expanding its Internet
operations through, amongst others, high speed Internet access
with more than 850,000 cable and ADSL subscribers and through
online directories with 225,000 online advertisers amongst SMEs.
Wanadoo recorded EUR1.6 billion in revenues in 2001 and EUR918
million in the first half of 2002 and has approximately 7,000
employees in 6 countries. Wanadoo is listed on Euronext Paris
stock market. Further information on Wanadoo can be found on the
company's web site at: www.wanadoo.com.

About Portal Software

Portal Software develops product-based customer management and
billing solutions for communications and content service
providers. Portal's convergent platform enables service providers
to deliver voice, data, video, and content services with multiple
networks, payment models, pricing plans, and value chains.
Portal's unique approach is designed to provide its customers
superior return on innovation with maximum value and lower total
cost of ownership. Customers include Vodafone, AOL Time Warner,
Deutsche Telekom, TELUS, NTT, China Telecom, Reuters, Telstra,
China Mobile, Telenor Mobil, Vivendi, and France Telecom.

    CONTACT: Portal Software
             Corporate Media Contact:
             Amanda Klinger, 408/572-2985
             aklinger@portal.com
                or
             Portal Software
             Local Media Contacts:
             Jaki Bowden, EMEA, +44 1753 244228
             jbowden@portal.com
             Cindy Ho, Asia-Pacific, +852-2585-2200
             cindyho@portal.com


VIVENDI UNIVERSAL: Vodafone Opens Bid for SFR With EUR12 BB Offer
-----------------------------------------------------------------
The battle for control of SFR, France's second-largest mobile
operator, continues between British phone giant Vodafone and
struggling media and entertainment group Vivendi Universal.

According to the Financial Times, Vodafone reached a deal with BT
Group and SBC Communications on Wednesday for the transfer of
their shares in Cegetel to Vodafone for EUR6.3 billion.  Cegetel
controls SFR.

The report says the U.K. mobile phone group also made a EUR6.77
billion offer to Vivendi Universal for its 44% stake in Cegetel.
The non-binding offer to Vivendi closes on October 30.  Vodafone
currently holds a 20% direct holding in SFR and a 15% stake in
Cegetel, which in turn owns 80% of SFR.  BT has a 26% stake in
Cegetel, while SBC owns 15%.

Vivendi has the right to match the offer, as it owns "pre-
emption" rights, but when sought for comments, the French company
declined to say whether it will exercise its rights before the
November 10 deadline.

"All options are open, we could buy both or just one of the
stakes and take our ownership above 50%, or we could sell to
Vodafone," said a Vivendi spokesman.

Vodafone said any counter offer from Vivendi would need to be at
the same price it offered BT, but it said the French group would
have to pay a 13% premium to its offer for SBC's holding.

The Financial Times says Vivendi is understood to be studying a
two-step counter offer for the BT and SBC stakes, under which it
would make an upfront payment, with a second payment following
the deal.  It was thought to be exploring a number of structures
to provide a virtual guarantee for any subsequent payments made
to BT or SBC.

Should Vodafone succeed, it will win management control of
Cegetel as well as SFR, provided it gets both the SBC and BT
stakes, which would increase its economic ownership in Cegetel to
about 56%, the report says.

A source close to Vivendi, however, told the Financial Times that
the French group would still retain majority of the seats on
Cegetel's nine-man board by virtue of the voting rights currently
held by subsidiary Transtel.

According to the Financial Times, France is the only important
European mobile market where Vodafone does not have a controlling
stake in its mobile operations.  With just three operators, the
country is one of the least competitive in Europe.

Vodafone said the acquisitions would enhance its earnings per
share, excluding goodwill amortization and exceptional items, in
the first full year of ownership, before potential synergies.

Sir Christopher Gent, Vodafone's chief executive, said: "We
believe that SFR's natural home is within the Vodafone group,
where it can fully benefit from being part of the leading global
mobile operator."   

Investors remain nervous, though, about the possibility of
Vodafone overpaying in the deal. "We would not be happy with them
paying more than GBP8 billion even if on the synergy side it
fills a hole in their European strategy," one large shareholder
told the Financial Times in an interview.

For Vivendi the attraction in increasing its stake in Cegetel is
the ability of consolidating the strong free cash flows generated
by SFR on its balance sheet, the Financial Times says.  In the
last financial year, SFR generated operating free cash flow of
close to EUR1 billion on earnings before interest, tax,
depreciation and amortization of almost EUR2 billion.  In the 12
months to the end of December this year, EBITDA is expected to
exceed EUR2 billion, the paper says.


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


CENIT AG: Gets EUR1 MM Order From Volkswohl Bund Versicherungen
---------------------------------------------------------------
With an order over EUR1 million the e-business unit of CENIT AG
Systemhaus is fully in charge of the implementation of a
mailbasket solution, developed by Phoenix Technologies Inc.

This IT project also includes a document management system of
FileNET, which is totally process orientated. One year ago the
contract was placed with one of CENIT's biggest market
competitor. But CENIT could benefit from a shake-out in the
document management market in Germany. Due to the insolvency of
one of our competitors, VOLKSWOHL BUND renewed the invitation for
tender of a contract.

More than 300 employees of VOLKSWOHLBUND are going to work with
this solution that will increase the service quality and optimize
the response time for customers and employees.

VOLKSWOHL BUND Insurance Company, Dortmund, has a total income
contributions of EUR553 million.

For more information:

CENIT AG Systemhaus
Fabian Rau
Investor Relations/Public Relations
Industriestr. 52-54
D-70565 Stuttgart
Tel.  +49 7 11 / 7825-3185
Fax  +49 7 11 / 7825-4185
E-Mail: f.rau@cenit.de


FAME AG: Sells U.K. Unit for 1 Pound to Free Itself of Debts
------------------------------------------------------------
Film & Music Entertainment AG informed the Frankfurt Stock
Exchange early this week that a German unit has applied for
insolvency.  The revelation came along with the announcement that
it had sold its U.K. business for 1 pound.

The company did not reveal identity of the buyer who took home
its Film and Music Entertainment Ltd.  It only bared that the
sale relieved FAME from obligations worth 600,000 euros
($589,000).


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


FIAT SPA: GM Values Stakes Less Than 10% of Original Buy Price
--------------------------------------------------------------
The situation in Fiat Auto, a unit of Italian industrial group
Fiat SpA, suffered another serious blow Tuesday when General
Motors wrote down its 20% stake in the company to $220 million,
far below the $2.4 billion value when it acquired the stake two-
and-a-half years ago.

The write-down follows last week's announcement by Fiat SpA, the
biggest employer in Italy, that it will layoff some 8,000 workers
-- almost all of them from Fiat Auto.  In May, the company carved
up a restructuring plan, but low sales over the summer did little
to change the situation at the losing car division.  

Banks were scheduled to meet Wednesday with Giulio Tremonti,
finance minister, in Rome to discuss their willingness to further
help Fiat Auto. Among the plans under government consideration is
a requirement that the banks swap Fiat debt for equity in Fiat
Auto.

The report says there's little chance banks would agree to a debt
for equity swap, as they are hell-bent on reducing exposure to
Fiat.  Two large lenders, Capitalia and IntesaBCI, have low
capital ratios that would be worsened in the event of a swap,
says the paper.

Nevertheless, Italy's central bank, which is closely monitoring
the crisis because of the potential impact on the creditor banks,
indicated it would support some form of government intervention
so long as it was not a bailout, the Financial Times says.

Other alternatives being considered for Fiat include a proposal
discussed last Sunday during a meeting with Italian Prime
Minister Silvio Berlusconi.  According to one account gathered by
the Financial Times, the proposal put forward was for the
government to help Fiat in exchange for certain commitments from
the Agnellis, the group's controlling family.  These would
include a new financial investment in Fiat and the divestment by
the Agnellis of some of their other business holdings.


FIAT SPA: General Motors Against State Control of Group
-------------------------------------------------------
World No.1 carmaker General Motors Corp. said a change of control
in Fiat SpA or its unit Fiat Auto would end its commitment to a
possible buyout of the car-making arm, beginning 2004.

GM's Chief Financial Officer John Devine was quoted recently by
Reuters during a conference call saying: "If there's a change in
control of Fiat SpA then the put is automatically eliminated."

Mr. Devine's statement was in response to speculations that the
government is mulling taking a stake in the country's biggest
employer.  The Economy Ministry has dismissed the rumors as
"groundless."   It did not say, though, whether the government
could invest in the company's auto arm, the news agency said.

Prime Minister Silvio Berlusconi has pledged a "strategic
strengthening" of the car sector following a slump to a record
low in Fiat's domestic market share and outrage from within his
own ruling alliance at planned plant closures and thousands of
layoffs.

There are reports that the government and some creditor banks,
led by Sanpaolo IMI (SPI.MI), IntesaBCI (BIN.MI) and Capitalia,
could pump cash into Fiat or its car arm.

Mr. Devine clarified that General Motors is not involved in any
restructuring talks.  But he said that Fiat badly needed to come
up with new products to revive its fortunes.

Meanwhile, some analysts are wary of the rumored state
intervention.

"The most negative factor is a possibility of the government
intervention to save the group," said Graziano Toli, head of
equity trading at Simcasse brokerage, told Reuters in an
interview. "The market wants other solutions, certainly not a
government stake in the company."


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


NETIA HOLDINGS: Arbitration Court Junks Millennium's Claims
-----------------------------------------------------------
Netia Holdings S.A. (WSE:NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), announced Wednesday that on October
15, 2002 it received a ruling of the Polish Chamber of Commerce
Arbitration Court dated October 1, 2002, regarding the case
between the Company and Millennium Communications S.A. and Newman
Finance Corporation in connection with the Share Subscription
Agreement dated August 8, 2000.

The Arbitration Court dismissed Millennium and Newman's direct
claims against the Company for: (i) declaration of the Share
Subscription Agreement void and ineffective and (ii) payment of
PLN 11,500,000 by the Company. The Arbitration Court also
dismissed the Company's counter-claim for damages in the amount
of PLN8,500,000.

The Company's management board intends to petition the proper
court of law to set aside the Ruling, claiming, among other
things, material breaches of material law and arbitration
procedures by the Arbitration Court.

A separate action by the Company against Millennium for the
repayment of a loan in the amount of PLN11,500,000 is still
pending before the District Court in Warsaw.


    CONTACT: Netia
             IR
             Anna Kuchnio, +48-22-330-2061
             or
             Media
             Jolanta Ciesielska, +48-22-330-2407
             or
             Taylor Rafferty, London
             Alexandra Jones, +44-(0)20-7936-0400
             or
             Taylor Rafferty, New York
             Jeff Zelkowitz, 212/889-4350


=========
S P A I N
=========


JAZZTEL PLC: Secures Loan Pending Nod on Re-capitalization Plan
---------------------------------------------------------------
Jazztel Plc, the struggling Spanish telecom player cooking up a
bond swap to improve its condition, announced recently that it
has signed an agreement in principle with creditor banks to allow
it to draw up to EUR54.5 million of its initial EUR195 million
syndicated loan facility.
      
The company told AFX News that it has agreed with the banking
syndicate to cancel the remainder of the original loan.  The
company said the credit line will include two tranches, the first
for EUR30 million, which the company has already used to finance
the operations of its Jazz Telecom SA unit.
      
The remaining EUR24.5 million will be used to guarantee "certain
obligations" made by Jazztel's Banda 26 unit related to its LMDS
license, awarded in March 2000.
      
Jazztel said the final agreement is pending share and bondholders
approval of its re-capitalization plan, involving the planned
swap of bonds with a face value of EUR668 million for EUR458
million new shares and EUR75 million of convertible bonds.

At least 75% of the bond and shareholders must approve the plan
to be binding.  It also needs approval by legal and regulatory
authorities.
      
In a separate statement, Jazztel said that an "ample majority" of
its shareholders have agreed to the planned debt-for-equity swap.  
Holders of the company's high-yielding bonds are expected to vote
on the re-capitalization proposal end-October, AFX News says.


===========
S W E D E N
===========


LM ERICSSON: Awarded MMS Contract by Iceland Telecom
----------------------------------------------------
Ericsson (NASDAQ:ERICY) has been selected by Iceland Telecom
(Landssiminn) to supply its end-to-end MMS Solution.

Ericsson will supply a total MMS solution, including core
infrastructure, MMS Center, mobile data gateways and a range of
support services to Iceland Telecom. The contract also includes
service and integration of key elements in the existing mobile
network of the Icelandic operator. Iceland Telecom will launch
its MMS services at the beginning of 2003.

"We chose Ericsson as our vendor because of its strong position
on the MMS market, both technically and commercially. We have
always had a very good co-operation with Ericsson and by choosing
Ericsson's MMS solution we will save costs in our competitive
networks," says Heidrun Jonsdottir, head of Iceland Telecom
public relations.

"This agreement underlines Ericsson's ability to drive the MMS
market and the trust shown in our end-to-end MMS solution. We are
pleased to contribute with Iceland Telecom to the development of
MMS on the technologically advanced Icelandic market," says Ib
Byder, President at Ericsson Denmark.

The implementation of Ericsson's end-to-end solution will
encourage traffic in Iceland Telecom's GPRS networks and enable
the arrival of new, advanced services on the Icelandic market.

Ericsson is a forerunner in MMS. Ericsson has supplied more than
90 test systems. It has now secured 36 orders to supply
commercial MMS systems to over 50% of subscribers worldwide.

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.

About Iceland Telecom

Since its foundation in 1906, Iceland Telecom has become one of
the largest companies in Iceland and makes use of all the latest
innovations in the world of telecommunications to establish and
maintain a complete telephone network and service around Iceland.
The aim is to provide Icelandic customers with the best service
possible. Iceland Telecom is the largest telecommunications
company in Iceland with a 70% market share in the GSM-market.


=====================
S W I T Z E R L A N D
=====================


ABB LTD.: Investment Wiz Gives Up Stake to Focus on Ailing Biz
--------------------------------------------------------------
Billionaire Martin Ebner, the man who used to be considered the
Swiss equivalent of renowned American investor Warren Buffet, has
resigned from the board of ABB Ltd.

His departure, however, was welcomed by many market investors who
helped the company's stocks edged 16% higher to 4.84 Swiss francs
on Tuesday.  Industry observers say the positive market reaction
marks an end to the "golden days when Mr. Ebner could do no
wrong."

Believed to be behind ABB's $1 billion share buyback in the
second half of last year -- a move that is partially blamed for
the company's current balance-sheet problems -- Mr. Ebner's
departure is expected to afford ABB Chief Executive Juergen
Dormann some autonomy in guiding the company through its current
difficulties.

The Wall Street Journal Europe says that since Mr. Dormann took
over, ABB has restored investor confidence by selling off non-
core assets as part of its effort to halve its debt to $2.6
billion by year-end.     

Investor sentiment toward the company improved further last week
after U.S. investment company Putnam Investment Management Inc.
disclosed that it holds a 5.01% stake in ABB, corresponding to
60.15 million shares, the paper said.

It is not clear who will assume Mr. Ebner's 9.7% stake in the
company.  Thomas Schmidt, a spokesman for ABB, Europe's biggest
industrial-engineering company, said it was up to Mr. Ebner to
decide what he wanted to do with his shares.  

"This is for the shareholder to decide, not ABB," he said. Mr.
Ebner, through his privately held BZ Group, is ABB's biggest
single shareholder, the report says.
      
Kurt Schiltknecht, a spokesman for BZ Group, said Mr. Ebner had
decided to leave in order to concentrate on BZ Group and his
departure had nothing to do with his stake in ABB.


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


ABBEY NATIONAL: Unit Exposed to Enron Sues Banks, Andersen
----------------------------------------------------------
A unit of ailing mortgage lender Abbey National Plc recently
filed in New York a securities-fraud suit against seven
investment banks, including J.P. Morgan Chase & Co., Credit
Suisse Group and Deutsche Bank AG.

Abbey National Treasury Services Plc accused banks, along with
Enron's former auditor, Arthur Andersen, of "intentionally or
recklessly" misrepresenting the energy-trading firm's precarious
financial condition in order to secure Enron's banking, auditing
or consulting businesses.

The suit seeks to recover from the defendants the total amount of
principal it lost with respect to its purchase of the notes, plus
interest, according to the court filing.

Abbey National seeks to recover from the defendants the total
amount of principal it lost with respect to its purchase of about
$100 million (101.3 million euros) in notes linked to the
performance of Enron Corp.

The other defendants in the case are Arthur Andersen's umbrella
organization, Andersen Worldwide SC; Bank of America Corp.,
Canadian Imperial Bank of Commerce, Dresdner Bank AG and ABN Amro
Bank NV.

Representatives of J.P. Morgan Chase and Credit Suisse refused to
comment on the suit when Dow Jones Newswires sought their side.  
The case is lodged in the U.S. District Court in Manhattan.

Bank of Ireland is currently negotiating a takeover of parent
company Abbey National.


ABBEY NATIONAL: Signs Up Merrion Capital to Advice in Ireland
-------------------------------------------------------------
Dublin-based stockbroker and corporate finance firm Merrion
Capital has been commissioned by Abbey National Plc to advice the
mortgage lender in Ireland, Bloomberg reported Wednesday.

"We've hired them to find out market information that people
based in Dublin are better placed to get than people who don't
have experience of that market," said Abbey National spokesman
Matthew Young.

Merrion Capital was the same adviser hired by Madison Dearborn
Partners Inc. when the latter acquired Jefferson Smurfit Group
Plc for EUR3.8 billion ($3.73 billion) recently.

Merrion employees own 70 percent of the company with the rest
held by New York investment bank Allen & Co.  

Abbey National Plc recently received a 10.3 billion-pound ($16
billion) takeover approach from the Bank of Ireland, the
country's second-largest lender.


ARM HOLDINGS: To Trim Down Workforce by 10% Due to Bleak Outlook
----------------------------------------------------------------
Mobile phone semiconductor designer ARM Holdings is going to lay
off 10% of its workforce, contrary to its earlier promise not to
send anybody packing.

The Cambridge-based company announced on Tuesday that it will cut
around 80 jobs by year's end, at a cost of about GBP2 million, in
an effort to wipe out GBP5 million a year off its cost base.  The
company had earlier insisted there would be no redundancies,
after imposing a hiring freeze.

Suggesting that an upturn is still way off, the company said
revenues were likely to be "flattish" for the "foreseeable
future" after customers dramatically reined in their spending.

"We are taking a cautious view of the revenue outlook in the
short to medium term," the company said, adding the timing of
closing new license deals remained "unpredictable."

The company said pre-tax profits for the third quarter to
September 30 is only GBP8 million compared with the GBP12.9
million profit recorded in the same three-month period a year
before.

ARM, whose chip technology is used in mobile phones and other
devices, had previously enjoyed 18 consecutive quarters of
growth, the Independent says.  Revenues in the third quarter, it
said were GBP33.3 million, a 23 percent drop from the second
quarter and an 11 percent drop from the same quarter a year ago.

The company, however, reiterated that its long-term growth
indicators remained "healthy."

"Even though the length and severity of the current semiconductor
industry downturn has now impacted ARM's financial results, we
are confident that [our] business model remains resilient," CEO
Warren East told the Independent in an interview.


ST IVES: Annual Pre-tax Profits Down Two-thirds; Ad Slump Blamed
----------------------------------------------------------------
Printing group, St Ives, bared recently a two-thirds plunge in
pre-tax profits in the year to August 2 and warned that there is
"no sign" of an upturn any time soon.

In an interview with the Independent, Chairman Miles Emery said
it remains "very difficult to say" when trading would improve.  
He adds: "One can draw solace that things don't seem to be
getting any worse."

Pre-tax profits only reached GBP24.3 million, well below the
GBP60.5 million last time around.  This includes GBP9.5 million
of exceptional items relating to the restructuring program that
saw nearly 700 staff lose their jobs and a printwork in Leeds
closed down.

If there's any consolation for the group, says Mr. Emery, it's
the book division's increased market share caused by the collapse
of a competitor.  

The company blamed heavily the overcapacity in the industry as
well as the slump in advertising.   St Ives prints books,
magazines and corporate literature.  

Group turnover fell to GBP467 million from GBP498 million. Its
shares rose 6.5p to 305p.


TXU EUROPE: Mulls Reinstatement of Mothballed Coal-fired Plants
---------------------------------------------------------------
The possibility that it might collapse soon, absent intervention
from its U.S.-based parent, has forced TXU Europe to consider re-
commissioning its 522-megawatt of mothballed generation to ensure
electricity supply to its 5.25 million domestic and business
customers.

According to Reuters, Britain's biggest trader of wholesale gas
and electricity has two coal-fired units that could be entered
into service anew - a 333-megawatt unit at the Drakelow plant in
the Midlands and a 189-megawatt unit at the High Marnham station
in Nottinghamshire.

On Monday, Dallas-based mother company TXU Corp. cut its dividend
by 80 percent and distanced itself from its cash-strapped
European unit, which is struggling due to low UK power prices.
      
The company early this week defaulted on a monthly bill owed to
AES Corp.


TXU EUROPE: AES Drax Fires Opening Salvo, Calls Firm 'Reckless'
---------------------------------------------------------------
The failure of TXU Europe to pay last Monday a GBP20 million
monthly bill to AES Drax has kicked off a "word war" between the
two companies, says the Telegraph.

AES Drax manager Garry Levesley called the default a "reckless
behavior," which had "the potential to seriously endanger
security of supply to areas of the United Kingdom."

TXU Europe is contracted to buy 60% of Drax's 4,000-megawatt
output at a price substantially higher than the current market
value.  The two sides have been renegotiating the deal for the
past few months in order to reduce the price TXU pays.  On
Monday, TXU Europe withheld payment to Drax, claiming it was not
due because it was the subject of negotiations.

Sought for its reaction to Mr. Levesley's pronouncements, the
company told the Telegraph: "[the comments were] regrettable and
seriously misleading."

The company said it is currently in talks with a number of
suppliers to bring down the price it pays for the electricity it
retails to its 5.5 million UK customers. "Most are progressing
reasonably," said TXU.

A source familiar with the situation between TXU and AES Drax
told the Telegraph: "TXU have been talking with Drax for months
and only now does the penny seem to have dropped about the
situation they are both in.  Drax is trying to play hardball with
TXU, and have come out fighting."

Analysts believe that without the TXU contract, AES Drax will be
forced into insolvency.  Both TXU and the regulator moved to
reassure customers that their electricity supply is "fully
secure."


TXU EUROPE: Ongoing Renegotiation Reason for Default on AES Due
---------------------------------------------------------------
TXU Issued this press statement to clarify the current status of
renegotiations and why it withheld payment on a monthly bill owed
to AES Drax.

"TXU Europe wishes to correct the misstatements by AES Drax
recently.  TXU Europe has been engaged in discussions with a
number of counterparties over renegotiations of long-term power
contracts. Most are progressing reasonably.

"Current payments are included in these renegotiations. TXU
Europe has not stated that it has no intention to pay.
Wednesday's erroneous statements by AES Drax are regrettable and
seriously misleading.

"TXU Europe continues to work with very closely with Ofgem to
ensure customer supplies remain stable and secure whilst its
business is restructured or sold. National supply of energy is
controlled by National Grid and is fully secure."

For further information contact:

Christian Judge
TXU
Tel: 01473 55 3403

Nick Lakin
TXU
Tel: 01473 55 4840

                                    ***********

        S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Trenton, NJ
USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam,
Larri-Nil Veloso, Ma. Cristina Canson and Jean Claire Dy, Editors.

Copyright 2002.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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