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/raid1/www/Hosts/bankrupt/TCREUR_Public/021023.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 23, 2002, Vol. 3, No. 210 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Asks Extension to Gather Votes on Plan * F R A N C E * ALCATEL: Court Approves Proposed Settlement of Global Crossing PPR: Announces Large Over-Subscription of the Syndicated Loan * G E R M A N Y * DEUTSCHE TELEKOM: Schumacher Denies Interest in Chairmanship FAIRCHILD DORNIER: Wants Exclusive Period Stretched to Dec. 17 FAIRCHILD DORNIER: Wants Lease Decision Time Extended to Dec. 31 KIRCHMEDIA GMBH: Mediaset Back in the Bid for KirchMedia's Assets MOBILCOM AG: Launches E-Plus Rates for Level Heads MOBILCOM AG: Issues Statement on Current Situation MOBILCOM AG: E-Plus Eyes MobilCom's UMTS Operations * I T A L Y * FIAT SPA: Economy Minister Rules Out Possibility of Buying Shares TELECOM ITALIA: Consolidates Operations in Brazil * P O L A N D * BIG BANK: Increases Share Capital of BIG BG Brokerage House * S W E D E N * LM ERICSSON: To Participate in 3G Expansion With J-PHONE LM ERICSSON: Signs CDMA2000 1X Contracts With China Unicom LM ERICSSON: Rolls Out New BSNL GSM Mobile Network in Record Time * S W I T Z E R L A N D * ABB LTD: ABB Group Considers Options for CE, Spares ABB Ltd. ABB: Revises Earnings Outlook Due to Continued Market Weakness * U N I T E D K I N G D O M * BRITISH ENERGY: Enron Asks Court to Allow Settlement DYNEGY EUROPE: Parent to Exit Operations in Europe MYTRAVEL: Reviews Operations, Plans to Restate Accounts NTL INC.: Talks on Debt Facility to Delay Exit From Chapter 11 P&O PRINCESS: Franklin Resources Issues Notice of Dealing TXU EUROPE: Powergen Buys TXU's Retail Business for o1.37 Billion TXU EUROPE: S&P Cuts Long-Term Corporate Credit Rating to 'D' ============= B E L G I U M ============= LERNOUT & HAUSPIE: Asks Extension to Gather Votes on Plan --------------------------------------------------------- As the only Debtor remaining without a confirmed plan, Lernout & Hauspie Speech Products, NV, asks Judge Wizmur to extend once more its exclusive period to solicit acceptances of its plan through and including December 31, 2002. Luc A. Despins, Esq., Matthew S. Barr, Esq., and James C. Tecce, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York, and Robert J. Dehney, Esq., Gregory W. Werkheiser, Esq., and Donna L. Harris, Esq., at Morris Nichols Arsht & Tunnell, in Wilmington, Delaware, tell the Court that in light of the SEC complaint, this may be a more difficult undertaking than what is usually encountered in large Chapter 11 cases. Even before the SEC complaint was filed, the Motion for this extension was conditioned on L&H NV's agreement that the L&H Creditors' Committee can seek to terminate exclusivity at any time, and in that event L&H NV will bear the burden of proving that "cause" exists for exclusivity to continue. Mr. Werkheiser points out that these Chapter 11 cases nearly have completed their third and final phase. With the completion of the Dictaphone and Holdings cases, attention is now directed entirely toward L&H NV. Mr. Werkheiser notes that "significant progress" has been made with respect to L&H NV and the resolution of its case. Following extensive negotiations among the Curators, the L&H Creditors' Committee, and certain of L&H NV's prepetition lenders, L&H NV has modified the joint plan, transforming it into a Chapter 11 plan relating exclusively to claims against and equity interests in L&H NV. Only a few issues remain subject to final negotiation. Indeed, L&H NV anticipates resolving these matters shortly and intends to file the L&H NV Disclosure Statement and L&H NV Plan in October 2002. L&H NV, therefore, seeks an extension of the solicitation period in order to provide sufficient time to seek approval of the L&H NV Disclosure Statement, and thereafter, to solicit acceptances of the L&H NV Plan. The requested extension is narrowly tailored to afford L&H NV sufficient time to accomplish these objectives. Furthermore, the L&H NV Creditors' Committee has indicated that it does not oppose the requested extension. By application of Del.Bankr.LR 9006-2, the current deadline is automatically extended through the conclusion of the October 22, 2002 hearing. (L&H/Dictaphone Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) =========== F R A N C E =========== ALCATEL: Court Approves Proposed Settlement of Global Crossing -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approves Global Crossing Ltd., and its debtor-affiliates' proposed Agreement with Alcatel to settle claims disputes. The Settlement Agreement that provides: A. Global Crossing Parties: Global Crossing Ltd.; South America Crossing Ltd.; Global Crossing Ireland Ltd.; Global Crossing Network Center Ltd.; Mid-Atlantic Crossing Ltd.; Global Marine Systems Limited; and Pan American Crossing Ltd; B. Alcatel Parties: Alcatel; Alcatel Submarine Networks; and Alcatel Submarine Networks, Inc; C. Initial Payment by Global Crossing to Alcatel: $40,000,000 within 10 business days after the Court's order approving the Settlement Agreement becomes a final order; D. Emergence Payment: $20,000,000 on the effective date of the Plan of Reorganization; C. Termination Payment: $500,000 in connection with the mutual termination of the Operations and Maintenance Agreement dated October 15, 1999, between Alcatel Submarine and GC Network Center; D. Allowed General Unsecured Claim: The Alcatel Parties will jointly have a single allowed general unsecured claim not to exceed $30,000,000 against a Debtor to be designated by Alcatel; E. Title: To the extent not previously transferred, Alcatel will take all actions required under the applicable Alcatel Agreements to effectuate title transfer to the appropriate Global Crossing affiliate free and clear of liens, claims and encumbrances; F. Warranties: The term of all warranties provided by the Alcatel Parties will be: -- 1 year from the effective date of the Plan of Reorganization with respect to all Alcatel Agreements Other than the Project Development and Construction Contract dated July 30, 1999, between South America Crossing and Alcatel Submarine; and -- 2 years from May 30, 2002, with respect to the South America Crossing Agreement other than with respect to the Las Toninas Cable Landing Station in Argentina and all equipment located therein; -- with respect to the Landing Station, the earlier of: a. 2 years from the date on which Alcatel Submarine completes the repairs on the roof of the Landing Station, and b. the date on which the Bankruptcy Court will, upon 10 days prior written notice, have determined that the repair on the roof have been adequately completed; G. Global Crossing Release: On the date the Court approves the Settlement Agreement, the Debtors will release the Alcatel Parties from all claims relating to the Alcatel Agreements other than: -- claims arising under warranties contained in the Alcatel Agreements or applicable law, and -- the Debtors' claims against the Alcatel Parties relating to route and cable type selection and installation in connection with the Project Development and Construction Contract dated as of September 30, 1999, as amended, between Alcatel Submarine, Global Marine and GC Ireland; H. Alcatel Release: As of the Effective Date, the Alcatel Parties release the Debtors from all claims relating to the Alcatel Agreements other than claims of the Alcatel Parties against the Debtors relating to route and cable type selection and installation in connection with the Ireland-UK Agreement; and I. Assumption of Executory Contracts: The Debtors will assume these Alcatel Agreements, provided that no payments will be required in connection with the assumption: -- Project Development and Construction Contract dated as of June 2, 1998, as amended, among Alcatel Submarine and Mid- Atlantic Crossing; -- South America Crossing Agreement; -- Upgrade Contract dated as of October 16, 2001, as amended, between Alcatel Submarine and Pan American Crossing; and -- Ireland-UK Agreement. (Global Crossing Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) PPR: Announces Large Over-Subscription of the Syndicated Loan ------------------------------------------------------------- Pinault-Printemps-Redoute (EURONEXT PARIS: PP), the multi- specialist retailing, distribution and luxury goods group, yesterday announced that in order to strengthen its liquidity and to extend the average maturity of its financial resources, Pinault-Printemps-Redoute has launched mid-September a revolving syndicated credit of an initial amount of EUR 2 billion, 50% with a three-year maturity and 50% with a five-year maturity. The syndication process has just been completed and has enabled, thanks to an over subscription in excess of EUR 500 million, to increase the amount of the syndicated loan to EUR 2.5 billion. The transaction will be signed in the coming days. About PPR Pinault-Printemps-Redoute is a leading multi-specialist distribution group encompassing four divisions: Luxury Goods, Retail, Business-to-Business, and Credit and Financial Services. The Group is committed to organically growing its business, which includes leading brands Gucci, Yves Saint Laurent, Fnac, Conforama, Rexel, and Guilbert, among others. Pinault-Printemps- Redoute is a global company, operating in 60 countries across five continents and generating more than half of its sales outside of France. Pinault-Printemps-Redoute trades on the Euronext Paris under the symbol "PP" (12148). Note: PPR has been rumored to sell its profitable unit, Finaref, to cut EUR6 billion debt and restore confidence. CONTACT: PPR Investor Relations: David Newhouse Phone: +33 1 44 90 63 23; E-mail: dnewhouse@pprgroup.com or Alexandre de Brettes Phone: +33 1 44 90 61 49; E-mail: adebrettes@pprgroup.com Media Relations: Juliette Psaume Phone: +33 1 44 90 63 02; E-mail: jpsaume@pprgroup.com or Taylor Rafferty London: Tel: +44 20 7936 0400, New York: +1 212-889-4350; E-mail: ppr@taylor-rafferty.com ============= G E R M A N Y ============= DEUTSCHE TELEKOM: Schumacher Denies Interest in Chairmanship ------------------------------------------------------------ The chairman of Infineon Technologies AG, Ulrich Schumacher, denied he is interested in assuming the position left by former chairman, Ron Sommer, in Deutsche Telekom. Mr. Schumacher had expressed his intention to focus on Infineon, which is grooming to become one of the world's top four chipmaker by 2007, says AFX. Klaus Zumwinkel, head of Germany's post office who is thought to be the leading candidate for the position, had also denied interest in the post. Deutsche Telekom is also considering reducing the members of its management board from eight to seven. The changes in the board structure are also expected to takeplace in November or December after the new management board chairman is appointed. The company is due to present the results of a major strategic review to solve the EUR4 to 7 billion gap in its debt reduction plans. CONTACT: DEUTSCH TELECOM AG Friedrich-Ebert-Allee 140 53113 Bonn, Germany Phone: +49-228-181-0 Fax: +49-228-181-8872 FAIRCHILD DORNIER: Wants Exclusive Period Stretched to Dec. 17 -------------------------------------------------------------- Fairchild Dornier Corporation asks the U.S. Bankruptcy Court for the Eastern District of Virginia to extend their exclusive periods. The Debtor wants to stretch the time within which it has an exclusive right to propose a plan until December 17, 2002 and retain the exclusive right, until February 16, 2003, to solicit acceptances of that plan. The Debtor says that the extension is important to afford ample time to negotiate the terms of a plan and prepare an adequate disclosure statement to explain the plan. The Debtor relates that its bankruptcy case started with the filing of an involuntary Chapter 7 proceeding and was later converted to Chapter 11. Unlike a conventional Chapter 11 case, the Debtor did not have an opportunity to discuss the filing with its larger creditors or to otherwise prepare for the proceeding. Furthermore, a key component of the Debtor's liabilities is intercompany debt. The Debtor has not had sufficient time to gather the required information to make a determination as to the nature of these debts and to examine the possibility that cause may exist to subordinate these debts to those of the other unsecured creditors. Moreover, the Debtor has taken substantial steps toward reorganization. Specifically, FDC has rejected its lease with WGP Associates, and satisfied its significant administrative rent obligation, taken steps to reject burdensome contracts, and begun the investigation into equitable subordination of intercompany claims. Fairchild Dornier Corporation's involuntary chapter 7 case was converted to voluntary chapter 11 proceeding under the U.S. Bankruptcy Code on May 20, 2002. Dylan G. Trache, Esq., at Wiley Rein & Fielding LLP and Thomas P. Gorman at Tyler, Bartl, Gorman & Ramsdell, PLC represent the Debtor in its restructuring efforts. FAIRCHILD DORNIER: Wants Lease Decision Time Extended to Dec. 31 ---------------------------------------------------------------- Fairchild Dornier Corporation asks for more time from the U.S. Bankruptcy Court for the Eastern District of Virginia to assume, assume and assign, or reject unexpired leases of nonresidential real property leases until December 31, 2002. Fairchild currently owns a certificate issued under 14 CFR Section 135 that is required in order to operate a Charter Aircraft. The Debtor has contracted with Aspen Executive Air to sell the Part 135 Certificate. This sale requires approval from the Bankruptcy Court, the Department of Transportation and the Federal Aviation Administration. Pursuant to the proposed terms of the sale to AEA, approval from all three entities must occur on or before November 15, 2002. If the sale is approved, the Debtor will no longer have any need to continue performing its obligations under an Airport Lease and will promptly either reject or seek assumption and assignment of that Lease. Fairchild Dornier Corporation's involuntary chapter 7 case was converted to a voluntary chapter 11 proceeding under the U.S. Bankruptcy Code on May 20, 2002. Dylan G. Trache, Esq., at Wiley Rein & Fielding LLP and Thomas P. Gorman, Esq., at Tyler, Bartl, Gorman & Ramsdell, PLC represent the Debtor in its restructuring efforts. KIRCHMEDIA GMBH: Mediaset Back in the Bid for KirchMedia's Assets ----------------------------------------------------------------- Italian television group, Mediaset, which previously dropped in the bid for KirchMedia's assets, has re-joined the bidding in collaboration with a Franco-American group, French TF1 and US media tycoon Haim Saban. Mediaset Chairman Fedele Confalonieri in September said the cost of the assets was yet "too high" for his company to bid. He also said he was for the time being just observing what happens to the cost. The Italian firm's return to the competition came after KirchMedia extended the deadline for the offers. Mediaset, group owned by PM Silvio Berlusconi, previously singled out two of the four channels run by ProSienbenSat.1 as target. Mediaset's move is controversial, says Europemedia, because of the possibility for Germany's largest broadcaster to be part- owned by the PM of another country, says Europemedia. The report further says there are no formal laws against such a bid, and that with little time left for the acceptance of the offers, any bid involving German investors is likely to be favoured. MOBILCOM AG: Launches E-Plus Rates for Level Heads -------------------------------------------------- Action "50 Euros Start-up Credit" extended to end of 2002 Due to great demand, MobilCom has extended to the action "50 Euros Start-up Credit" through November and December. Every customer who decides to conclude a MobilCom E-Plus term contract by the end of the year will receive a start-up credit of Euro 50. But MobilCom is not limiting the start-up credit to its new MobilCom E-Plus contract customers; the loyalty of the company's existing customers will also be honoured with a start-up credit of Euro 50 - provided that they extend their existing contract or change over to one of the brand-new MobilCom E-Plus rates. MobilCom E-Plus Professional S, M and XL Transparency and flexibility are the convincing qualities of the new MobilCom E-Plus Professional rates. Starting with a minimum monthly base rate of Euro 10, mobile phone users can profit from the uniform minute prices around the clock to the same wireless network and landline network and to other wireless networks. City calls to the selected area code in the German landline network are charged at only Euro 0.05 per minute. The same price is valid for the Partner & Family numbers under which the professional mobile phone user can reach the five connections most frequently dialled in the German landline network (both options excluding special phone numbers and added-value services). Furthermore, the billing, in Professional XL for example, is done to the exact second. The call diversion to the national landline network and to other E-Plus numbers as well as all calls to your personal mailbox are free of charge. Minute Package for Business Callers The MobilCom E-Plus Time & More Business 240 is tailor-made for customers who must call frequently and regularly for business purposes. The customer profits from all of the advantages of the MobilCom Business Class - for a monthly base charge of only Euro 17.95. For Euro 36.00, the customer has a monthly communication package of 240 minutes for phone calls to the landline network and to all wireless networks anywhere in Germany. This is a per minute price of Euro 0.15 all day long (excluding special numbers and value-added services). Call diversions to the German landline network and within the network are free of charge. New Communications Packages - Time & More 20, 60 and 120 For everyone who uses a mobile phone regularly and knows exactly how much time is spent on the phone, the practical MobilCom E- Plus Time & More rates are the ideal choice. MobilCom has put together attractive communications packages for infrequent, normal and frequent callers. No matter which minute package the customer takes, the monthly basic charge is the same - only Euro 9.95. Monthly minute packages of 20, 60 and 120 minutes are available for only Euro 3.00, Euro 9.00 or Euro 18.00, respectively, for the customer to choose from. This corresponds to a per minute price of Euro 0.15 for phone calls to the national landline network and to all wireless networks around the clock (excluding special numbers and added-value services). Brand-new MobilCom E-Plus Private Rate The new MobilCom E-Plus Private rate makes you reachable at a small price. For the low monthly basic charge of Euro 4.95, plus a minimum of Euro 5.00 in calls, the mobile phone user profits from being able to place calls to the German landline network for only Euro 0.09 per minute, beginning at 6.00 pm (excluding special numbers and value-added services). Prices which in this category are otherwise available only at weekends. The weekend now begins at 6.00 pm every day. If the customer then decides to take the City, Partner & Family or SMS option (only Euro 2.50 monthly), he/she can make mobile calls for as low as Euro 0.06 per minute or send short messages within the network for Euro 0.09 per SMS. MOBILCOM AG: Issues Statement on Current Situation -------------------------------------------------- In response to the increasing speculation in the media concerning the status of the restructuring of MobilCom and the consequent effects on the share price, the company hereby declares: * MobilCom has drawn up a comprehensive restructuring plan for the continuation of service provider and landline network operations; the plan is now under review by a disinterested party. * Negotiations under the leadership of Dieter Vogel with all of the parties essential for the implementation of the concept have been in progress for several weeks. In particular, France T,l,com, banks, suppliers and labour representatives are involved in these negotiations. * The negotiations with all of the concerned parties are currently in a concrete phase. However, it is at this time not possible to make any binding statements concerning the final results of these negotiations due to circumstances on which preliminary agreements are dependent. * The conclusion of the individual negotiation rounds is planned for the end of October. A realistic overall picture of the chances for continuation of the company will not be possible until then. MOBILCOM AG: E-Plus Eyes MobilCom's UMTS Operations --------------------------------------------------- German mobile phone operator E-Plus is interested in taking MobilCom's UMTS network in exchange for service contract that the latter is unable to meet. The claims from the national roaming contract total some EUR 600 million, the Financial Times says. According to the report, the settlement between the parties is the main prerequisite to the payment of a EUR 400 million German government-backed rescue package for MobilCom, and is also crucial to the sale of the UMTS network. MobilCom's chief executive officer Thornsten Grenz had earlier planned to freeze its UMTS operations and cut 1,000 staff at the unit while keeping its 3G license until a buyer for the troubled company emerges. CONTACT: MOBILCOM AG Hollerstra e 126 D-24782 B�delsdorf, Germany Phone: +49-43-31-69-11-73 Fax: +49-43-31-69-28-88 Home Page: http://www.mobilcom.de ========= I T A L Y ========= FIAT SPA: Economy Minister Rules Out Possibility of Buying Shares ----------------------------------------------------------------- Deputy Economy Minister Mario Baldassarri dismisses the possibility that the government will buy a stake in the Fiat group, saying that it is committed to privatisation and market liberalisation process and not to nationalisations. Last week, the economy ministry also denied speculation that it could buy a stake in Fiat SpA. The center-right government of Italy is studying "market options" to help troubled carmaker Fiat, Financial Times said last week; but for the economy minister, helping Fiat "does not mean becoming shareholders or nationalising" the company, according to AFX. Fiat SpA chairman Paolo Fresco, meanwhile, did not rule out a direct stake investment, saying, "I don't see anything immoral or unethical if the government participates. I'm not asking it to, I have my own plan. But I have competitors like Renault and Volkswagen which have state participations". 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. CONTACT: FIAT SPA 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Toll Free: 800-804027 Home Page: http://www.fiatgroup.com/e-index.htm TELECOM ITALIA: Consolidates Operations in Brazil ------------------------------------------------- - TIM launches its complete GSM business line, and opens up 1,000 sales outlets in over 80 cities. - Marco de Benedetti: "Brazil is beginning to discover that it was worth waiting for TIM's GSM". - Giorgio della Seta highlights Brazil's role for the economy of Latin America and for TIM. - Marco de Lissicich announces various launch promotions, including GPRS and MMS free of charge until the end of the year. With the inauguration of 1,000 sales outlets in over 80 cities this Friday (October 18), this week TIM launches its full line of business products, plans and GSM services in Brazil, consolidating the start of the most important operation of the TIM Group outside Europe. Brazil is the most important port of call in the first Pan-South-American GSM Network, a strategic project of the TIM Group for the region. - Launching TIM's GSM service in Brazil is highly satisfying and constitutes a major realization for us. TIM is a world leader in mobile telephone services, and a pioneer in launching the MMS. Today, we are able to offer the Brazilian market our high technological level and quality of services, coupled with our experience with GSM and GPRS in Italy and the world. Brazil is beginning to discover that "it was worth the wait" for TIM's GSM - affirmed Marco de Benedetti, CEO of the TIM Group. TIM has been operating in Brazil since 1998 and today is the second largest cellphone group in the country, with nearly 5 million clients spread across 11 States, comprising three operators: TIM Sul, TIM Maxitel and TIM Nordeste. With the purchase of licenses for GSM services, TIM has become the sole authorized cellphone operator to provide services throughout the whole of Brazil, and also the sole operator working under the same brand in Brazil. To launch the GSM service, three new operators have been created (TIM Sao Paulo, TIM Centro Sul and TIM Rio Norte) also as the holding company, TIM Brasil S.A., which is the strategic coordinator for the group's cellphone companies in the country. TIM's GSM service was launched on September 22, with a basic business offer, in the cities of Sao Paulo, Rio de Janeiro and Bras�lia. This week, in conjunction with a full line of business services, TIM's GSM service is now available in over 80 cities in 7 States and the Federal District. - Brazil is a cellphone market with great potential. The regulatory agency, Anatel, forecasts that the number of subscribers will almost double by the year 2005, surpassing the 50 million subscriber mark. Brazil is a major economic force and has a fundamental role in the international plans of the TIM Group - affirmed Giorgio Della Seta, President of Telecom Italia for Latin America. The new GSM service offers the most extensive international roaming service available in Brazil, allowing TIM clients to talk in 173 countries. Additionally, among the launch promotions of the complete line of business services, TIM is saluting its new clients with GPRS and MMS free of charge up to December 31, 2002. - TIM has designed made-to-measure plans and promotions to meet the needs of all Brazilians who use cellphones. Our focus is the client: we want to supply the best technology and quality services in order to provide freedom, flexibility, convenience and many other advantages offered by GSM technology - concluded Marco de Lissicich, President of TIM Brasil. Note: While chairman Marco Tronchetti Provera said it has already achieved objectives for reducing debts, the company still has ongoing projects on the property front that is expected to help in their drive to trim down owings. =========== P O L A N D =========== BIG BANK: Increases Share Capital of BIG BG Brokerage House ----------------------------------------------------------- The Management Board of BIG Bank GDA�SKI S.A. informs that on October 21, 2002 it received a decision from the District Court in Warsaw - XIX Economic Department dated October 15, 2002 regarding the registration of the share capital increase of BIG BG S.A. Brokerage House - subsidiary of the Bank up to PLN 15 500 000, made by an issue of 100 000 bearer series C shares of nominal value of PLN 10 each. The Bank is in possession of 1 550 000 shares of BIG BG S.A. Brokerage House which constitutes 100% of the share capital. =========== S W E D E N =========== LM ERICSSON: To Participate in 3G Expansion With J-PHONE -------------------------------------------------------- Ericsson (NASDAQ:ERICY) secures additional 3G projects for J- PHONE's WCDMA network build-out in Japan. In support of J-PHONE's strategy to aggressively build-out nationwide 3G coverage, Ericsson will deploy its 3G macro base stations as well as its newly developed 3G micro base stations which are especially efficient for urban areas, hotspots and for example subways and in-building coverage. Ericsson's 3G system has been in operation since June 30 this year, when J-PHONE began its 3G trial service. "It was a natural for us to choose Ericsson, a long-term partner, as one of the vendors to smoothly facilitate our rapid and cost- efficient roll-out of 3G," said John Thompson, CTO of J-PHONE. "J-PHONE is part of the Vodafone Group, and with Ericsson as a strategic supplier to the Vodafone Group, we already have agreements, product plans and processes in place to run operations in a cost efficient way," added Thompson. "We are delighted to participate in J-PHONE's 3G rollout and look forward to help make the network a successful high-quality service network," said Morgan Bengtsson, President, Ericsson Japan. 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 J-PHONE J-Phone Co., Ltd. is a leading mobile operator in Japan and a member of the Vodafone Group, the world's largest mobile community. J-PHONE offers sophisticated mobile services including high quality voice telephony, "Sha-mail" (picture messaging), "Movie Sha-mail" (video messaging), J-SKY (Internet and e-mail access) and Java(TM) applications. The company has over 13 million customers, of which more than 85% are J-SKY subscribers. J-PHONE was awarded one of three licenses to operate 3G mobile services in Japan, and is currently at an advanced stage of deploying a 3G W-CDMA network. For more information, please visit www.j-phone.com 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, New York Kathy Egan pressrelations@ericsson.com Glenn Sapadin investor.relations@ericsson.com 212/685-4030 or Ericsson, Japan Kyoko Taka kyoko.taka@nrj.ericsson.se +81 3 4288 4574 LM ERICSSON: Signs CDMA2000 1X Contracts With China Unicom ---------------------------------------------------------- Ericsson (NASDAQ:ERICY) on Monday signed initial contracts with China Unicom valued at more than 150 milion USD. The contracts call for Ericsson to upgrade existing cdmaOne networks to CDMA2000 1X. "We are very excited to extend our long-standing relationship with China Unicom and support them in upgrading their nationwide CDMA network to CDMA2000," said CEO Kurt Hellstrom, Ericsson. In addition to upgrading existing sites to CDMA2000, the contracts also include expansion of Ericsson's original Phase one contracts with China Unicom. CDMA2000 deployment is scheduled to begin immediately in all provinces and all networks are expected to be commercial by the end of 2002. China Unicom already has commercial subscribers on Ericsson's CDMA2000 1X solution installed in the Sichuan province, with more than 10,000 paying subscribers on the network already. "We are happy to provide China Unicom with our cost-effective CDMA2000 solution and pleased to see commercial traffic on our network in Sichuan," said Ake Persson, president of Ericsson CDMA Systems. "Our CDMA2000 solution will provide China Unicom with a future proof solution with seamless migration to the next phases of CDMA2000 1xEV and beyond to All-IP." Nanjing Ericsson Panda Communications Company Ltd. (ENC), Ericsson's largest joint venture in China, will deliver Ericsson's leading CDMA2000 solution to China Unicom. The total solution contracts include: 800 MHz compact radio base stations (RBS); base station controllers (BSC); mobile switching centers (MSC); home location registers (HLR); and a full portfolio of services including network management, training, network rollout and technical support. 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 Ericsson CDMA Systems Ericsson's total CDMA2000 solution, which includes infrastructure, applications, devices, services and proven market expertise, is optimized for delivering advanced data solutions. Developed by the industry's premier CDMA experts, Ericsson's true 3G CDMA2000 solution offers operators unique performance and cost-saving advantages by leveraging the full strength of Ericsson's expertise in wireless, IP/datacom and Mobile Internet technologies. Ericsson's CDMA2000 solution, based on innovative product design, global platforms and open standards, provides the flexibility operators need to succeed in an always-evolving wireless market. About China Unicom China Unicom was established in July 1994 and listed on the Hong Kong and New York stock markets in June 2000. China Unicom is China's second largest mobile communication operator providing a full range of telecom services such as domestic and international long-distance call service, mobile phone and data/IP network communications. Presently it has branches and subsidiaries in the country's 30 provinces, autonomous regions and municipalities directly under the central government. With nearly 60 million mobile users, China Unicom is now the only fully licensed service provider in the country. cdmaOne is a trademark of the CDMA Development Group. CDMA2000 is a trademark of the Telecommunications Industry Association. CONTACT: Ericsson Inc. Communications Kathy Egan Phone: +1 212/685-4030 E-mail: pressrelations@ericsson.com or Investor Relations Glenn Sapadin Phone: +1 212/685-4030 E-mail: investor.relations@ericsson.com LM ERICSSON: Rolls Out New BSNL GSM Mobile Network in Record Time ----------------------------------------------------------------- BSNL, India's largest telecom company has launched its nation- wide cellular service to be run on the state-of-the-art Ericsson (NASDAQ:ERICY) technology. Ericsson won the prestigious contracts for BSNL's new GSM networks in India's North and East zones last year in intense competition. "BSNL's Cellular service will be truly a common man's mobile with affordable prices and service excellence being its hallmark," said Prithipal Singh, Chairman and Managing Director, BSNL. "CellOne cellular services from BSNL will cover about 850 towns and cities in semi urban and rural areas by December 25 this year." Ericsson is providing the mobile infrastructure and associated equipment and services for new mobile networks in northern and eastern India that include the key states of Uttar Pradesh, Punjab, Haryana, Rajasthan, Uttaranchal, Himachal Pradesh, West Bengal, Orissa, Bihar, Jharkhand, Assam and Andaman and Nicobar Islands. "The BSNL GSM contract has required project performance of the highest caliber," said Jan Campbell, Managing Director, Ericsson India Pvt Ltd. "We are proud to be associated with this project in the North and East zones." BSNL launched its nation-wide cellular service in ceremonies at which the first inaugural mobile phone call was made by India's honorable Prime Minister, Shri Atal Behari Vajpayee. 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 BSNL BSNL (Bharat Sanchar Nigam Ltd.) is a government of India enterprise and the dominant service provider of fixed line services through out India (except for Mumbai and New Delhi). BSNL has been given the license by the Government of India, for providing cellular services for the entire country (excluding Mumbai & New Delhi). As on date, BSNL has over 34 million fixed line subscribers. It has grown its subscriber base by over 5 million in the last one year. Its vision is to be a high tech customer oriented company with emphasis on value addition and to provide seamless country wide mobile services. About Ericsson India Ericsson India has been offering a complete spectrum of solutions to the Indian telecom industry for close to 100 years and contributed to its growth and development. Ericsson has played a key role in spreading the cellular revolution in India. With 27 out of the 54 existing GSM networks supplied by Ericsson in India, the company today has a market share of more than 40 per cent. With the national launch of BSNL, Ericsson will be the supplier to 37 of 71 GSM networks in India, further strengthening its market leadership position. Today, Ericsson's digital switching systems handle over 75% of the international calls made through VSNL gateway. Ericsson has also installed over 1.3 million fixed lines in India besides supplying telecom infrastructure equipment in the area of switching and transmission to BSNL, MTNL, Defence and Indian Railways. CONTACT: Ericsson Inc. Kathy Egan Phone: 212/685-4030 E-mail: pressrelations@ericsson.com Investor Relations: Glenn Sapadin Phone: 212/685-4030 E-mail: investor.relations@ericsson.com ===================== S W I T Z E R L A N D ===================== ABB LTD: ABB Group Considers Options for CE, Spares ABB Ltd. ------------------------------------------------------------ The ABB Group announced on Monday it is likely that the expected asbestos-related costs of its U.S. subsidiary Combustion Engineering, Inc. (CE) now exceed the value of CE's assets, if CE's historical settlement policies are continued into the future. The book value of CE's assets as of September 30, 2002 is US$812 million. CE and the ABB Group are considering various options for resolving the asbestos liability, including the possible reorganization of CE under Chapter 11 of the U.S. Bankruptcy code. It is ABB's position that CE's asbestos-related liability can only be asserted against CE. Some claimants have named other entities in connection with claims against CE, including ABB Inc. and ABB Ltd., but there has been no adjudication that any other entity within the ABB Group has liability for claims against CE. ABB acquired CE in 1990. Historically, asbestos containing insulation materials were used to insulate CE boilers. CE has paid out US$865 million to claimants from 1990 to end 2001. Many factors will affect the ultimate cost of resolving CE's liability, and it is not possible now to determine the magnitude of those costs. Because the ultimate cost of resolution is uncertain, the current reserve is not being increased, but it no longer represents an estimate of the expected cost to CE of continuing to resolve current and future claims under its historical settlement policy. ABB: Revises Earnings Outlook Due to Continued Market Weakness -------------------------------------------------------------- Confirms net debt reduction target of US$ 1.5 billion by year-end ABB said today it is revising its 2002 earnings outlook downward as a result of lingering market weakness and slower than expected benefits from its cost reduction program. At the same time, ABB confirmed its target of reducing net debt by US$ 1.5 billion by year-end, down from the level of US$ 4.1 billion at the end of 2001. "The early signs of economic recovery that we saw in the first half of the year have not materialized," said ABB chairman and CEO J�rgen Dormann. "Visibility during the months of July and August was low, and we now see that September has not delivered the expected recovery. As a result, we a re lowering our outlook for earnings." Dormann added that the company had anticipated stronger markets would lift earnings in the second half of the year. This would have offset the impact of write-downs in some large Oil, Gas and Petrochemicals projects, losses in Building Systems, investment write-downs in New Ventures and cost overruns in Utilities. "Given the uncertainty surrounding the strength and timing of an economic recovery, we will not give an updated earnings outlook at this time," said Dormann. "What is clear is that the cost base of the company is still too high given the weak market conditions. We are speeding up our efforts to cut costs and further streamline the organization in line with our core businesses of power and automation technologies." The company said its medium-term targets were under review. As previously announced, the company will release its third- quarter results on October 24, 2002. =========================== U N I T E D K I N G D O M =========================== BRITISH ENERGY: Enron Asks Court to Allow Settlement ---------------------------------------------------- On April 1, 1996, Enron Capital & Trade Resources International Corp. entered into a financially settled electricity derivative contract with British Energy Generation Limited formerly known as Nuclear Electric Limited, a wholly owned subsidiary of British Energy Plc. On June 19, 1998, ECTRIC assigned all rights and obligations of the Contract to Enron Capital & Trade Europe Financial LLC -- a wholly owned non-debtor subsidiary of ECTRIC - - under a Novation Agreement. Under the terms of the Contract as novated, British Energy and ECTEF are to make payments to each other calculated by reference to a specific pricing index based on a specific market for the trading of electricity in England and Wales or, in the absence of an index, on a mutually agreed basis -- the Difference Payments. The specific pricing index no longer exists, and the parties have been unable to agree upon an alternative pricing index. According to Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, ECTEF assigned its rights to any Difference Payments under the Novated Contract on June 26, 1998 to Enron Cash Company No. 6 LLC in return for a $56,200,000 cash payment. Also on that date, CashCo 6, pursuant to a Sale Agreement, transferred an asset equal to the Difference Payments to the Contractual Asset Securitization Holding Trust VI in return for a $56,200,000 cash payment from the Cash 6 Trust. In turn, the Cash 6 Trust paid ECTRIC a purchase price to enter into four monthly-settled financial swap agreements with State Street and Trust Company of Connecticut, National Association, including a commodity swap, PPI swap, currency swap and interest swap to eliminate cash flow volatility. To fund the purchase of the Contractual Asset from CashCo 6 and to purchase the Swaps, the Cash 6 Trust issued $56,200,000 in notes to Barclays. ECTRIC is the servicer of the Contract and Barclays acts as the administrative agent. The Difference Payments service the debt incurred by issuing the Notes. Mr. Sosland reports that since the Petition Date, ECTRIC has conducted a review of its operations and has decided to enter into a Settlement Agreement with British Energy regarding the termination of the Contract. Accordingly, ECTRIC sought and obtained the Court's authority for: (a) ECTRIC's execution by and delivery of settlement agreement and related agreements by British Energy in satisfaction of all the parties' obligations under the Swap Agreement; and (b) execution by, and delivery of, a letter agreement by ECTRIC and ECTEF with CashCo 6, Barclays and State Street. Settlement Agreement Under the Settlement Agreement, British Energy agrees with ECTRIC and ECTEF that British Energy will immediately make a Final Termination Payment of GBP51,500,000, subject to certain adjustments. Upon British Energy's payment of the Final Termination Payment, the Parties agree that: (i) each of the Parties, (ii) British Energy Plc, in respect of the guarantee dated April 12, 1996 it executed for British Energy's obligations under the Novated Contract and in respect to the second guarantee dated July 9, 1998, and (iii) Enron, in respect of the guarantee dated April 1, 1996 in favor of British Energy to cover ECTRIC's obligations under the Novated Contract, will each be released from all of its respective and continuing obligations, if any, under the Agreement together with the intent that, effective from Completion, the Agreements will cease to be of any further force and effect. Mr. Sosland points out that the Settlement Agreement will realize the maximum value available under the Contract since the continued performance of the Contract by the various parties is being jeopardized by the lack of a mutually agreeable reference index by which to calculate the Difference Payments. Letter Agreement ECTRIC, ECTEF, CashCo 6, Barclays and State Street have negotiated a Letter Agreement, specifying certain terms and condition: -- that must be satisfied before ECTRIC and ECTEF will execute and deliver the Settlement Agreement; and -- which will govern certain related matters after the execution and delivery of the Settlement Agreement. The Letter Agreement establishes an understanding between the parties regarding the treatment of the funds received from British Energy pursuant to the Settlement Agreement. Moreover, Mr. Sosland adds, the Letter Agreement will clarify matters related to the Settlement Agreement, including, among other things: (i) required approvals of the Settlement Agreement and the Letter Agreement; (ii) obtaining the required consents and agreements; (iii) providing for the termination of the Swaps and setting forth the terms and provisions related thereto; (iv) obtaining Barclay's representations that it is the absolute owner of the Note, as defined in the Sale Agreement; (v) providing for the necessary escrow procedures relating to funds credited to the Completion Funds Account; and (vi) setting the terms and provisions relating to the Completion Funds Account. Pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, Mr. Sosland contends that the Debtors' entry into the Agreements is beneficial to the Debtors because: (a) all issues under the Contracts will be resolved without any litigation, saving ECTRIC additional and unnecessary expense; (b) it realizes the value of ECTRIC's assets; (c) it eliminates or avoids associated price risks, hedging costs, operational risks and any rejection damages British Energy could claim in connection with a forced rejection of the Contracts; and (d) it saves substantial administrative expenses and preserves the assets of ECTRIC's estate. (Enron Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1) are trading at 12 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 for real-time bond pricing. DYNEGY EUROPE: Parent to Exit Operations in Europe -------------------------------------------------- Dynegy Inc., (NYSE:DYN) is implementing a restructuring plan designed to improve operational efficiencies and performance across its lines of business. In a marked shift, Dynegy will adopt a decentralized business structure consisting of a streamlined corporate center and operating units in power generation, natural gas liquids, regulated energy delivery and communications. The company also announced it will exit the marketing and trading business in the United States, Canada and Europe. In connection with this exit, President and Chief Operating Officer and Dynegy board member Steve Bergstrom has decided to resign and withdraw his name as a candidate for chief executive officer. "The objective of the restructuring is to maximize the potential and profitability of our existing operating divisions by requiring each business unit to develop its own strategy while being responsible for its performance and delivering value to our stakeholders," said Dan Dienstbier, chairman and interim chief executive officer of Dynegy Inc. "This new structure allows our divisions to leverage their unique strengths in operations, customer relationships and leadership, while the corporate center will be responsible for enabling, monitoring and measuring success and administering the appropriate financial and regulatory controls," he added. "In his many years of service, Steve Bergstrom provided outstanding leadership and made immeasurable contributions to our company and the industry," said Dienstbier. "His vision and knowledge were driving forces in the development of the marketing and trading business and the creation of an asset-backed energy delivery network that has served our customers reliably over the past 17 years." Steve Bergstrom said, "I fully support the steps leadership is taking to address current market conditions and position the company for the future. The new organizational direction is the right course for Dynegy to take to maximize value to all stakeholders and to capitalize on its talent pool and excellence in operational performance." The restructuring is the result of a detailed assessment of the company's corporate functions and business units. Concurrent with the company's ongoing capital and liquidity plan, Dynegy's leadership conducted a thorough review of its corporate strategy, the financial performance of each operating division and its organizational structure and staffing. The company's operating divisions are Dynegy Generation, Dynegy Midstream Services, Illinois Power and Dynegy Global Communications. Each division chief executive officer will report to Dynegy's new chief executive officer, whom the company expects to name within the next few weeks. The business units are as follows: -- Dynegy Generation owns and operates approximately 17,500 gross megawatts of domestic and international generating capacity. Alec Dreyer, president of the company's generation business since 2000, will serve as chief executive officer of this unit. Dynegy Generation will continue to focus on optimizing the company's owned and controlled generation assets and on the production and delivery of wholesale power. -- Dynegy Midstream Services (DMS) ranks as one of North America's largest natural gas liquids marketers. Steve Furbacher, president of DMS since 1996, will serve as chief executive officer. DMS will continue to pursue business opportunities in areas related to its North American midstream liquids processing and marketing business and global natural gas liquids marketing and transportation operations. -- Dynegy's regulated utility, Illinois Power (IP), continues its focus on safe, reliable delivery of electricity and natural gas to its 650,000 customers across a 15,000-square-mile area of Illinois. Larry Altenbaumer, IP's president since 1999, will serve as chief executive officer of this unit. -- The company's communications division, Dynegy Global Communications, owns and operates a 16,000-route-mile, optically switched mesh network reaching 44 U.S. cities. Dynegy continues to pursue opportunities intended to reduce its financial exposure in this business. DGC continues operations to meet current customer commitments and obligations. Ken Snyder, DGC's current president, will serve as chief executive officer. Dynegy's corporate center will provide governance, policy, reporting and control support to the operating divisions. Corporate center leadership includes: Dan Dienstbier, chairman and interim chief executive officer; Ken Randolph, executive vice president and general counsel; Hugh Tarpley, executive vice president, corporate development; Mike Mott, senior vice president and chief accounting officer; and Louis Dorey, executive vice president, finance. Blake Young has been named executive vice president, technology and administration. Formerly president of Global Technology, Young will add internal audit, risk management, corporate communications, human resources and corporate shared services to his functional areas of responsibility. Dynegy intends to exit the marketing and trading business over the next several months. The company will make appropriate arrangements with respect to its longer-term contractual obligations, including retaining personnel and risk management capabilities and continuing capacity to support its customer commitments. Matt Schatzman, currently president of commercial operations, will manage the exit in the United States and Canada and Mike Flinn, currently president of Dynegy Europe, will manage the exit in Europe. The decision to exit this business is expected to reduce the company's collateral requirements and overall corporate expenses. As a result of its organizational restructuring and exit from marketing and trading, the company will undergo a significant work force reduction. The exact timing, areas affected and number of employees impacted will be announced in the near future. Dynegy Inc., owns operating divisions engaged in power generation, natural gas liquids, regulated energy delivery and communications. Through these business units, the company serves customers by delivering value-added solutions to meet their energy and communications needs. Dynegy Holdings Inc.'s 8.75% bonds due 2012 (DYN12USR1), DebtTraders reports, are trading at 26 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for real-time bond pricing. MYTRAVEL: Reviews Operations, Plans to Restate Accounts ------------------------------------------------------- MyTravel, the tour operator which issued three profit warnings in five months, is believed to be considering restating its accounts for the previous years. It is reviewing its financial processes and commercial activities, says a report from the Financial Times. The company is seen to abandon the conservative accounting principle blamed as the cause of the profit warning and the loss of more than 60% of the group's market capitalization. Some GBP232 million were wiped out when the company's share price collapsed by 47p to 28.5p. MyTravel said the warning, its second in as many weeks, was caused by a combination of accounting errors and dismal trading in September. It warned it would have to allot between GBP15 million (USD23.2 million) and GBP30 million for "accounting adjustments". The tour operator is also foreseen to face difficult months ahead after banks postpone plans to renew its revolving credit facility. MyTravel, though, maintains it has enough cash to last until the current facility expires in March; and that customers have nothing to worry about its financial problems. Ventrue capital groups are believed to have made offers for some of MyTravel's operations, including TSI, its US holidays business. CONTACT: MYTRAVEL GROUP PLC Parkway One, Parkway Business Centre, 300 Princess Rd. Manchester M14 7QU, United Kingdom Phone: +44-1-61 23-20-066 Fax: +44-1-61 23-26-524 Home Page: http://www.airtours.com NTL INC.: Talks on Debt Facility to Delay Exit From Chapter 11 -------------------------------------------------------------- Renegotiations for NTL Inc.'s USD500-million debt facility may delay the company's emergence from Chapter 11 bankruptcy until next month, people close to the company told the Financial Times. On May 2, 2002, NTL announced that the Company, a steering committee of its lending banks and an unofficial committee of its public bondholders had reached an agreement in principle on implementing a reorganization plan. In September, a New York bankruptcy court agreed to a plan that would tender control of NTL to bondholders, which hold USD10.9 billion-claim to the company. UK's biggest cable-television company needs the facility to finance working capital when it comes out of creditor protection, the report says. NTL, which offers a wide range of communications services to homes and business customers throughout the United Kingdom, Ireland, Switzerland, France, Germany and Sweden, accumulated a GBP12 billion debt pile during a huge acquisition spree in the 90s. P&O PRINCESS: Franklin Resources Issues Notice of Dealing --------------------------------------------------------- Date of dealing: October 18, 2002 Dealing in (name of Company): P&O Princess Cruises Plc Class of securities: Ordinary Amount sold: 51,623 Price per unit: 4.4533 Resultant total of the same class owned or controlled: 26,740,213 Percentage of class: 3.8584% Party making the disclosure: Franklin Resources Inc. Name of fund management organisation dealing for discretionary client(s): Franklin Resources Inc. And Its Affiliates Reason for disclosure: Ownership or control of 1% or more of the class of relevant securities dealt in Name of signatory: Laura Seidman Telephone: 954-527-7413 TXU EUROPE: Powergen Buys TXU's Retail Business for o1.37 Billion ----------------------------------------------------------------- Powergen on Monday announced the acquisition of TXU's retail business and three coal-fired power stations for o1.37 billion. TXU's 5.5 million electricity and gas customers1 will make Powergen one of the market leaders in energy retailing, and a powerful force in the competitive UK energy market. The acquisition provides a strong presence across the UK, in residential, SME and larger industrial and commercial customer segments. Increased scale will enable increased efficiency and improved services to our customers. The transaction also improves the balance of Powergen's portfolio between generation output and customer demand, protecting the business from fluctuations in wholesale prices. Powergen will additionally acquire 3 coal-fired plants and the Citigen CHP scheme. This additional generation capacity will help ensure that the immediate needs of TXU customers can be met. The deal does not include TXU's continental European businesses, its trading operation or its portfolio of contractual obligations. Paul Golby, Powergen UK's Chief Executive, said: "This is a transforming deal for Powergen. Today we become the UK's largest electricity supplier and number two in the highly competitive retail energy sector, with 6 million electricity and 2.4 million gas customer accounts(1). This is a good day for all our customers and employees. "Powergen has acted swiftly to safeguard the interests of TXU customers and they can be assured that they do not need to do anything, they will continue to receive electricity and gas without interruption. Powergen has one of the best records in the industry for customer service. "Our immediate priority is to stabilise the TXU retail business and to work to remove any staff uncertainty as soon as possible. We have a good record in managing change during previous acquisitions and look forward to talking to staff and their trade union representatives in the near future." Commenting on the sale and ongoing operations, Paul Marsh, TXU's Chief Operating Officer - Europe, said: "This transaction is good for all involved. Our people who move to Powergen will have a first class employer with full protected pension rights, our customers will continue to enjoy security of supply with extraordinary customer service and our creditors will benefit from the good value achieved through the sale. "With the proceeds of the sale and the continued support of creditors, we believe we are well placed to restructure the remainder of the UK and European operations to promote its future viability. It has been a hectic time since the events that led to a credit rating downgrade but we have made great progress in stabilising the business. There is much more to do but we are moving solidly towards our goal." Approval from the European Commission (EC) is required for this transaction. However, in view of TXU's situation, the EC has granted a derogation, which allows the transaction to proceed prior to completion of the approval process. Under the terms of this deal around 1900 TXU employees, the majority of whom are based in Ipswich, have transferred to Powergen, a division of E.ON AG. The acquisition, which Powergen expects to be earnings enhancing in the first full year, is a cash transaction, which has been funded through existing credit facilities. Morgan Stanley is advising Powergen in connection with this transaction. Powergen has also received financial advice from UBS Warburg. Notes: 1 - Figures from Datamonitor, August 2002 Assets included in the transaction: The acquisition includes: Drakelow C, a 999MW power station near Burton-on-Trent; High Marnham, a 945 MW station in Nottinghamshire; Ironbridge, a 970 MW station in Shropshire; and the Citigen City of London CHP scheme. Datamonitor statistics August 2002 The Powergen figures are combined Powergen and TXU figures. They do not include 300,000 Powergen telecoms customers or Powergen & TXU industrial & commercial customers. Fuel and customer type Company Customer numbers Ranking Domestic electric Powergen 5,477,000 1st British Gas 5,110,000 2nd SME electric Powergen 559,000 1st British Gas 387,000 2nd Total electric Powergen 6,036,000 1st British Gas 5,497,000 2nd Domestic gas Powergen 2,298,000 2nd British Gas12,781,000 1st SME gas Powergen 72,000 2nd British Gas 105,000 1st Total gas Powergen 2,370,000 2nd British Gas12,886,000 1st Total energy Powergen 8,406,000 2nd British Gas18,382,000 1st TXU EUROPE: S&P Cuts Long-Term Corporate Credit Rating to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered the long-term corporate credit ratings on TXU Europe Ltd. and its subsidiary The Energy Group Ltd. to 'D' from double-'C'. The debt ratings on the two affected bonds were also lowered to 'D' from double-'C'. At the same time, the ratings were removed from CreditWatch with negative implications. The action follows The Energy Group's failure to pay interest due on its USD200 million bonds maturing 2017 and the US$300 million bonds maturing 2027. TXU Europe, which guaranteed the bonds, is at a high risk of being placed in administration in the short term, the rating agency warns. While S&P acknowledges the company's move towards renegotiating contracts, it predicts the likelihood that the company would break-up and sell its business in the very short term. The TXU subsidiary is one of the largest electricity and natural gas retailers in the U.K., with some 4.4 million power customers and 1.3 million gas customers. Its U.K. retail brand is TXU Energi. TXU Europe owns and operates power stations in the U.K. with a combined generating capacity of about 3,000 MW. The company also has interests in German distribution and supply businesses that serve about 650,000 customers, and it is involved in energy trading throughout Europe. CONTACT: TXU Europe Limited The Adelphi, 1-11 John Adams St. London WC2N 6HT, United Kingdom Phone: +44-20-7879-8081 Fax: +44-20-7879-8082 Home Page: http://www.txu-europe.com ************* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso and Ma. Cristina Canson. Copyright 2002. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. 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