/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/021211.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, December 11, 2002, Vol. 3, No. 245 Headlines * B E L G I U M * L&H: Seeks Okay to Enter Into Underwriting Deal With Scansoft * F I N L A N D * SONERA CORP: Telia Announces Completion of Exchange Offer SONERA CORP: Completes Exchange Offer for Shares and Warrants SONERA CORP: Exchange Offer Reduces State's Holding to Zero SONERA CORP: TeliaSonera's ADSs Begin Trading on NASDAQ * F R A N C E * FRANCE TELECOM: Moody's Confirms Long-term Debt Ratings FRANCE TELECOM: Close to Obtaining Deal for Casema NATEXIS BANQUES: Warns of Heavy Losses on Equity Products RHODIA SA: Moody's Places Rating on Review for Possible Downgrade RHODIA SA: Issues Comments on Rating Action From Moody's VIVENDI UNIVERSAL: In Dispute With USAi Over Dividend Obligation * G E R M A N Y * COMMERZBANK AG: Standard & Poor's Affirms Ratings of Commerzbank HVB GROUP: S&P Downgrades Rating, Assigns Negative Outlook * I R E L A N D * ELAN CORPORATION: Completes Avinza License Restructuring * I T A L Y * BLU SPA: Shareholders Approve Incorporation Into TIM FIAT: Rejects Rumors of Resignations in the Company * S W I T Z E R L A N D * CREDIT SUISSE: Fitch Upgrades CSFB Mortgage Certificates * U N I T E D K I N G D O M * ARC INTERNATIONAL: Announces US$78M Stock Repurchase Program CABLE & WIRELESS: S&P Maintains Rating Outlook at CreditWatch CABLE & WIRELESS: Moody's Refuse to Take Further Action EQUITABLE LIFE: Rejects Call to Unitize With-profit Life Fund STOLT-NIELSEN To Register Loss in Full-Year Earnings STOLT-NIELSEN: Richard Fisher Resigns From Board ============= B E L G I U M ============= L&H: Seeks Okay to Enter Into Underwriting Deal With Scansoft ------------------------------------------------------------- Lernout & Hauspie Speech Products N.V. and L&H Holdings USA, Inc., seek the Court's authority to enter into an Underwriting Agreement among ScanSoft, Inc., Thomas Weisel Partners LLC, L&H NV, and L&H Holdings, and a Custody Agreement in connection with the sale of the ScanSoft Stock currently held by L&H NV and L&H Holdings. The sale will take place through an underwritten ScanSoft management-led public offering. The ScanSoft stock received by L&H NV and Holdings as part of the sale of their interests in the Speech and Language Technologies Business was not registered under federal securities law. As part of its plan of liquidation, Holdings sought to distribute the ScanSoft stock to holders of administrative expense claims and general unsecured claims under the exemption from registration set out in the Bankruptcy Code. To that end, in July 2002, Holdings brought a motion seeking authority to pay administrative claims with ScanSoft Stock to aid in the consummation of its First Amended Plan of Liquidation. Although this Motion met with opposition from, among others, ScanSoft, a settlement was reached on the terms announced at the hearing and later reflected in the Order confirming Holdings' Plan in August 2002. The Agreements for which L&H and Holdings now seek approval are necessary to consummate the transactions contemplated by the ScanSoft Settlement. More specifically, the Agreements are necessary to effectuate the public offering of the ScanSoft stock. The Debtors advise the Court that the parties are still finalizing the terms of the Agreements. The Debtors promise that final copies of the Agreements will be filed before the hearing on this motion. Under the Bankruptcy Code, the Court has expansive equitable powers to fashion any order or decree that is in the interests of preserving or protecting the value of the debtors' estates. The Debtors argue that entry into the Agreements is necessary to consummate the transactions contemplated by the ScanSoft Settlement. The terms of that settlement include an obligation by ScanSoft to, as soon as practicable, initiate a management- led public offering of the remaining ScanSoft Stock. The Agreements for which the Debtors seek Judge Wizmur's approval and authorization are described as "customary to underwritten public offerings of securities". The Underwriting Agreement represents the underwriters' commitment to purchase the ScanSoft Stock from the Debtors and specifies the public offering price and settlement or closing date. The Custody Agreement provides that the ScanSoft Stock will be held by a third party custodian -- e.g., ScanSoft's transfer agent -- until delivery to the underwriters. The custodian will hold the ScanSoft Stock until the closing of the sale under the public offering in accordance with the terms of the Underwriting Agreement. The ScanSoft Stock will not be released until the shares are purchased in accordance with the Underwriting Agreement and L&H NV and Holdings receive consideration for the ScanSoft Stock. Accordingly, the Agreements will aid in effectuating the ScanSoft Settlement and enable the parties to consummate the transactions contemplated by that settlement. In particular, ScanSoft is required to use all commercially reasonable efforts to offer all of the remaining ScanSoft Stock -- other than the ScanSoft Stock repurchased by ScanSoft for $7,000,000 earlier -- in a management-led offering, and is to grant an additional 300,000 shares of ScanSoft common stock to Holdings and L&H NV, and accelerate certain amounts due to the Debtors under the APA. However, in accordance with the settlement, the Debtors' rights to distribute the ScanSoft Stock directly to their creditors are reserved. (L&H/Dictaphone Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) ============= F I N L A N D ============= SONERA CORP: Telia Announces Completion of Exchange Offer --------------------------------------------------------- Telia AB (SSE:TLSN, formerly TLIA) announces the completion of the exchange offer for shares and warrants in Sonera Corporation (HEX:SRA, NASDAQ:SNRA). Telia AB has changed its name to TeliaSonera AB. Telia shares and warrants issued in connection with the merger have been delivered. Trading in the TeliaSonera shares and warrants of series 2002/2005:A will commence today on the Stockholm Exchange, Helsinki Exchanges and NASDAQ under the following ticker symbols and ISIN/CUSIP codes: -------------- ------------ ----------------- ------------------- TeliaSonera TeliaSonera ADS TeliaSonera warrant share (repr. 5 shares) 2002/2005:A -------------- ------------ ----------------- ------------------- Ticker symbols -------------- ------------ ----------------- ------------------- Stockholm Exchange TLSN -------------- ------------ ----------------- ------------------- Helsinki Exchange TLS1V TLS1VEW102 -------------- ------------ ----------------- ------------------- NASDAQ TLSN -------------- ------------ ----------------- ------------------- -------------- ------------ ----------------- ------------------- ISIN/CUSIP code -------------- ------------ ----------------- ------------------- Stockholm Exchange SE0000667925 -------------- ------------ ----------------- ------------------- Helsinki Exchanges SE0000667925 SE0001016221 ------------- ------------ ----------------- ------------------- NASDAQ 87960M106 ------------- ------------ ----------------- ------------------- CONTACT: SONERA CORPORATION Jyrki Karasvirta, Vice President, Corporate Communications Phone: +358 2040 60537 E-mail: jyrki.karasvirta@sonera.com or In the United States: Mr. Steve Fleischer, Vice President, Investor Relations, Phone: +973-448-4616 E-mail: steve.fleischer@sonera.com SONERA CORP: Completes Exchange Offer for Shares and Warrants ------------------------------------------------------------- Telia AB (SSE:TLSN, formerly TLIA) has announced the completion of the exchange offer for shares and warrants in Sonera Corporation (HEX:SRA, NASDAQ:SNRA). Following the completion of the exchange offer, Telia changes name to TeliaSonera and TeliaSonera's holding of shares in Sonera corresponds to approx. 95% of the share capital and votes in Sonera (fully diluted). Consequently, TeliaSonera is under the statutory obligation to offer to purchase all outstanding shares, including shares represented by American Depository Shares, and warrants in Sonera pursuant to Chapter 6, Section 6 of the Finnish Securities Markets Act in a so called mandatory redemption offer. Mandatory redemption offer In the mandatory redemption offer, TeliaSonera will offer to purchase all outstanding shares, including ADSs, and warrants in Sonera for consideration in the form of TeliaSonera securities, in accordance with the same exchange ratios as applied in the exchange offer, or alternatively, for consideration in cash. Securities offer alternative TeliaSonera will offer: - For each Sonera share 1.51440 TeliaSonera shares - For each Sonera ADS 0.30288 TeliaSonera ADSs. Each Sonera ADS represents one Sonera share and each TeliaSonera ADS represents five TeliaSonera shares - For each Sonera warrant of a certain series issued pursuant to Sonera's 1999 and 2000 stock option programs one TeliaSonera warrant of a corresponding series. Each TeliaSonera warrant entitles the holder to subscribe for 1.5 TeliaSonera shares. Cash offer alternative Holders of Sonera shares and warrants participating in the mandatory redemption offer may choose to receive as payment for Sonera securities tendered, consideration in cash according to the prices set forth below, instead of securities under the above mentioned terms. For each Sonera share/ADS tendered 5.00 euro per share/ADS For each Sonera warrant 1999A tendered 0.96 euro per warrant For each Sonera warrant 1999B tendered 0.23 euro per warrant For each Sonera warrant 2000A1 tendered 0.02 euro per warrant For each Sonera warrant 2000B1 tendered 0.02 euro per warrant For each Sonera warrant 2000C1 tendered 0.02 euro per warrant For each Sonera warrant 2000A2 tendered 0.34 euro per warrant For each Sonera warrant 2000B2 tendered 0.34 euro per warrant For each Sonera warrant 2000C2 tendered 0.34 euro per warrant For each Sonera warrant 2000A3 tendered 1.11 euro per warrant For each Sonera warrant 2000B3 tendered 1.11 euro per warrant For each Sonera warrant 2000C3 tendered 1.11 euro per warrant For each Sonera warrant 2000A4 tendered 1.66 euro per warrant For each Sonera warrant 2000B4 tendered 1.66 euro per warrant For each Sonera warrant 2000C4 tendered 1.66 euro per warrant CONTACT: Sonera Corporation Jyrki Karasvirta, Vice President, Corporate Communications Phone: +358 2040 60537 E-mail: jyrki.karasvirta@sonera.com or In the United States: Mr. Steve Fleischer, Vice President, Investor Relations, Phone: +973-448-4616 E-mail: steve.fleischer@sonera.com SONERA CORP: Exchange Offer Reduces State's Holding to Zero ----------------------------------------------------------- Sonera Corporation has received the following notification according to Chapter 2, Section 9 of the Securities Market Act on a change in shareholding. TeliaSonera AB has transferred the TeliaSonera shares and warrants offered in the exchange offer in October-November 2002 to the book-entry accounts of holders of Sonera shares (including ADSs) and warrant. As a result of the completion of the exchange offer, the Finnish State's shareholding in Sonera Corporation fell from 52.8% to 0%. At the same time, Sonera Corporation became a 94.9% owned subsidiary of TeliaSonera AB. Following the receipt of the TeliaSonera shares by the Finnish State (as consideration for its Sonera Corporation shares), the Finnish State's holding in TeliaSonera AB increased to 19.0%. The Finnish State has not previously owned shares in TeliaSonera AB. Trading in the Sonera not tendered shares and 1999A warrants on the Helsinki Exchanges will continue for the time being until the conditions for delisting of Sonera shares and 1999A warrants have been met. Sonera ADSs not tendered during the exchange offer were de-listed from the NASDAQ National Market as of the end of trading on December 6, 2002. Sonera Corporation (HEX: SRA, NASDAQ: SNRA) is a leading provider of mobile and advanced telecommunications services. Sonera is growing as an operator, as well as a provider of transaction and content services in Finland and in selected international markets. The company also offers advanced data solutions to businesses, and fixed network voice services in Finland and neighbouring markets. In 2001, Sonera's revenues totaled EUR 2.2 billion, and profit before extraordinary items and taxes was EUR 0.45 billion. Sonera employs about 7,400 people. http://www.sonera.com CONTACT: SONERA CORPORATION Jyrki Karasvirta, Vice President, Corporate Communications Phone: +358 2040 60537 E-mail: jyrki.karasvirta@sonera.com In the United States: Mr. Steve Fleischer, Vice President, Investor Relations, Phone: +973-448-4616 E-mail: steve.fleischer@sonera.com SONERA CORP: TeliaSonera's ADSs Begin Trading on NASDAQ ------------------------------------------------------- Citibank Depositary Receipt Services announced that TeliaSonera's American Depositary Shares (ADSs) began trading on the NASDAQ National Market under the symbol TLSN (CUSIP number 87960 M 106). TeliaSonera is the new name of the company formed by the recent merger between telecommunications leaders Telia of Sweden and Sonera of Finland. Each TeliaSonera ADS represents five ordinary shares that trade on the Stockholm Stock Exchange. "TeliaSonera is a leading telecommunications firm in the Nordic and Baltic regions and we look forward to supporting the company as it capitalizes on the business opportunities created by the recent merger," said Kurt Schneiber, Global Managing Director of Citibank Depositary Receipt Services, which acts as depositary for TeliaSonera. "We will work aggressively with the team at TeliaSonera to broaden its base of U.S. and global shareholders." Prior to the merger, Telia was recognized as the market leader in a number of areas, including mobile communications, broadband Internet services and IP-based network services. Likewise, Sonera was viewed as the leading provider of mobile communications services and one of the leading providers off domestic, local and long distance and international fixed line voice and data services. For more information on Citibank ADR programs, as well as industry trends and developments, please visit www.citibank.com/adr Citibank Depositary Receipt Services leads the market in bringing quality issuers to the U.S. market and promoting American Depositary Receipts as an effective capital markets tool. Citibank began offering ADRs in 1928 and today is the market leader, widely recognized for delivering high quality, highly liquid programs to its customers. Citibank Depositary Receipt Services is a part of Citibank Global Securities Services, which serves global issuers, investors and intermediaries through the world's largest and most acclaimed proprietary network spanning 50 countries. It currently provides securities services to more than 2,500 customers worldwide and has more than US$5 trillion in assets under custody. Citibank is the industry's premier custodian of cross-border assets, top ranked global clearer and recognized leader in depositary receipt services and agency and trust services. Citigroup (NYSE: C), the preeminent global financial services company with some 200 million customer accounts in more than 100 countries, provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Major brand names under Citigroup's trademark red umbrella include Citibank, CitiFinancial, Primerica, Salomon Smith Barney, Banamex, and Travelers Life and Annuity. Additional information may be found at: www.citigroup.com. CONTACT: Citibank Kevin Heine New York Phone: + 212-657-9634 or Robert White London Phone: + 44-207-500-5196 or Shirley Lam Hong Kong Phone: + 852-2868-8986 =========== F R A N C E =========== FRANCE TELECOM: Moody's Confirms Long-term Debt Ratings ------------------------------------------------------- Moody's confirmed France Telecom's Baa3 long-term debt and Prime- 3 short-term ratings. The confirmation of the Baa3 long-term ratings relates to: convertible global bonds, Euro MTNs, Eurobonds, Floating Rate Euro MTNs, Floating Rate French Franc Bonds, French Bonds, Swiss Franc Bonds, its issuer rating and bank loan rating. The action follows France Telecom's announcement of a EUR9 billion facility, which Moody's believes could help the company repay debt that matures during the next 12 months. The rating agency also retained the stable outlook assigned on the rating in September. The outlook reflects the agency's belief that the company would significantly reduce its highly leveraged position via an equity issue, which Moody's also expects to gain support from the French government, its majority shareholder. The current rating action leads the rating agency to expect significant debt reduction from equity issuance in the next 12 months; continued access to the EUR 9 billion facility; execution of the EUR 15 billion cost reduction program; and timely refinancing of existing debt facilities. The EUR15 billion cost reduction program is part of FT's new business plan of saving cost over the next 3 years, which Moody's deemed as challenging. The rating agency noted that France Telecom has around EUR50 billion (including bank facilities) of debt maturities between now and the end of 2005. It expects the company to take further action to cover maturities in 2003. FRANCE TELECOM: Close to Obtaining Deal for Casema -------------------------------------------------- France Telecom is close to striking a transaction with The Carlyle Group and Providence Equity Partners for the sale of its Dutch cable business, Casema, says The Deal. The resource person, however, warns that the US$700 milion deal is not yet in place, and the exclusive talk could still fall apart. France Telecom had earlier agreed to the sale of the cable operator to Liberty Media Corp for US$751 million. But the sale fell off after Dutch regulators expressed concern on the effect of the transaction on competition. As Liberty Media already controls cable company United Pan-Europe Communciations, its acquisition of Casema would have given it 60% of the Dutch cable market, the regulators said. Casema is the third largest cable operator in The Netherlands with 1.5 million homes passed by its cable network. Providence and Carlyle is considered ideal buyers for the business since both have no cable systems in Europe, the report says. France Telecom is selling assets to trim down EUR70 billion of borrowings. CONTACT: FRANCE TELECOM 6, Place d'Alleray 75505 Paris Cedex 15, France Phone: +33-1-44-44-22-22 Fax: +33-1-44-44-95-95 Home Page: http://www.francetelecom.fr NATEXIS BANQUES: Warns of Heavy Losses on Equity Products --------------------------------------------------------- The Natexis Banques Populaires Capital Markets business will report significant losses on structured equity products trading in the second half. The market conditions that have prevailed since the summer are affecting the valuation of the positions held by Natexis Banques Populaires. Most banks operating on the structured equity products market are experiencing similar problems. The difficulties are exacerbated by the inability of certain valuation models to successfully manage the current extreme volatility. Certain anomalies in the data fed into the models have also been detected. The internal investigations launched by the Bank have advanced swiftly in recent days and the main corrective action has been taken. The provisions or losses resulting from adjustments to the valuation of all short and medium-term positions will carve a large slice out of the Capital Markets business's net banking income for the second half of the year, which is currently expected to be in the region of EUR15 to EUR30 million. The bottom line impact will be determined following completion of the investigations. However, Natexis Banques Populaires' net income for the second half of the year will be significantly below the EUR90 million reported in the first half. Natexis Banques Populaires is 75%-owned by the Banque Populaire Group and is the Group's financing, investment and service bank. In 2001, the Banque Populaire Group reported net income of EUR777 million. At December 31, 2001, the Group had regulatory capital of EUR13.2 billion, including Tier One capital of EUR10 billion. At that date, its Tier One ratio stood at 8%. CONTACT: NATEXIS BANQUES Financial Communications Pierre Jacob Phone: 33-1-40-39-65-27 E-mail: pierre.jacob@nxbp.fr Alain Hermann Phone: 33-1-40-39-69-29 E-mail: alain.hermann@nxbp.fr Cecilia Matissart Phone: 33-1-40-39-66-28 E-mail: cecilia.matissart@nxbp.fr RHODIA SA: Moody's Places Rating on Review for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the senior unsecured Baa3/Prime- 3 debt ratings for Rhodia S.A. on review for possible downgrade to reflect concerns about weaker-than-expected debt protection measures for 2002. The action also predicts downward-revised expectations for 2003-4 combined with lower valuations from disposals than previously anticipated. Debt security ratings affected are EUR1.8 billion MTN Program along with EUR800 million in debt securities under the program. Moody's indicated to consider in the rating review the management's announced completion of its targeted EUR500 million disposal program. The rating agency will assess the impact on cash generation and debt protection measures following these disposals. It expects to complete the review within the next six to eight weeks. The rating agency wants to focus its review on: expectations for the Fine Organics business, any potential further divestitures that might be expected to improve the group's through-the-cycle adjusted leverage metrics, and the extent to which restructuring measures taken in 2000-2002 are likely to benefit cashflow generation in 2003. Moody's believes that the group's liquidity position is adequate. It, however, expects the diversified intermediates and specialty chemicals group to generate only modest levels of free cashflow generation. It also sees Rhodia to rely substantively on bank facilities with financial covenants to meet short-term financial obligations. The rating agency indicated to go into further discussions with Rhodia's management on the likely evolution and material changes to the group's liquidity position into 2003 to 2004. RHODIA SA: Issues Comments on Rating Action From Moody's -------------------------------------------------------- At the beginning of 2002, Rhodia committed to three financial targets: a divestment program leading to a minimum 500 million euros in debt reduction, a positive free cash flow and an improvement in profitability. The Group considers that, in a still difficult period, the commitment on net debt reduction has been successfully fulfilled through the divestiture, at fair market multiples, of a number of non-core businesses that no longer fit the Group's strategy of cross-fertilizing its technologies and offering high value-added solutions to its customers. The continued difficult economic environment, however, has permitted Rhodia to only stabilize its margins for 2002, preventing the Group from an upturn in profitability. Under the current circumstances, Moody's has decided to put Rhodia's rating of Baa3 under review. "While Moody's recognises positively management's achievements in realising its full targeted Euro 500 million in divestitures by the end of 2002, we remain concerned by the valuations achieved on these sales and the magnitude of through-the-cycle cashflows that will be lost as a result of these divestitures," Moody's states in its release. Rhodia regards this as reinforcement of its continued efforts to restructure its portfolio and improve its financial structure. The Group foresees benefits in particular from further divestitures of non-core activities, on structurally lowering its break-even point and on stricter control of capital expenditures. Rhodia is one of the world's leading manufacturers of specialty chemicals. Providing a wide range of innovative products and services to the automotive, health care, food, cosmetics, apparel, new technology and environmental markets, Rhodia offers its customers tailor-made solutions based on the cross- fertilization of technologies, people and expertise. Rhodia subscribes to the principles of Sustainable Development communicating its commitments and performance openly with stakeholders. Rhodia generated net sales of ?7.2 billion in 2001 and employs 27,000 people worldwide. Rhodia is listed on the Paris and New York stock exchanges. CONTACTS: Investor Relations Marie-Christine Aulagnon Phone: +33 1 55 38 43 01 Fabrizio Olivares Phone: +33 1 55 38 41 26 VIVENDI UNIVERSAL: In Dispute With USAi Over Dividend Obligation ---------------------------------------------------------------- Vivendi Universal and USA Interactive are in disagreement regarding a US$620 million dividend obligation that arose from the French group's US$10.8 billion takeover of USA Networks. The deal entered upon by the parties last year provided that Vivendi issue US$2.5 billion of preferred interest shares with a 5% annual interest to USAi, the cable TV and e-commerce company which owns 5.4% of Vivendi Universal Entertainment. However, in a filing to the SEC by USAi, the cable TV business, USA Networks said, "Vivendi has advised USA that it does not believe that VUE is obligated under the partnership agreement to make these payments in respect of taxable income allocated to USA and its affiliates with respect to the preferred return." According to the Financial Times, Vivendi earlier agreed to pay dividends to its VUE partners based on the joint venture's annual taxable income. The report also noted that the first annual dividend payment to USAi is not yet due since the joint venture is not yet 12 months old. Despite the disagreement, both Vivendi and USA Interactive said there is no major disagreement between the parties over the future of VUE. ============= G E R M A N Y ============= COMMERZBANK AG: Standard & Poor's Affirms Ratings of Commerzbank ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed Commerzbank's and its related entities' counterparty credit and certificate of deposit ratings at 'A-/A-2'. The rating agency also affirmed its 'BBB+' long-term and 'A-2' short-term counterparty credit and senior unsecured debt ratings on Hypothekenbank in Essen AG. The outlook for all the ratings is negative. Hypo Essen's Offentliche Pfandbriefe was also affirmed at 'AAA'. Standard & Poor's credit analyst, Stefan Best, said the action reflects S&P's confidence in Commerzbank's sound credit risk, asset liability management, and commitment to achieve modest operating profits in 2003. Yet, S&P does not expect a quick recovery for the bank. "...it [Commerzbank] remains concerned that in a prolonged economic downturn Commerzbank's initiatives might not yet be sufficient to avoid further deterioration in its business and risk profile," said Mr. Best. The action also considered the sound and diversified funding base provided by the bank's domestic franchise among private and corporate customers. The rating agency said the primary negative rating factors are the bank's weak profitability, its modest capitalization, and its strained financial flexibility as a result of declining stock markets in 2002. As S&P predicts continued a challenging environment for 2003, it doubts Commerzbank's ability to increase revenues and to stabilize provisioning needs, says Mr. Best. CONTACT: COMMERZBANK AG Kaiserplatz 60261 Frankfurt, Germany Phone: +49-69-136-20 Fax: +49-69-28-53-89 Home Page: http://www.commerzbank.com HVB GROUP: S&P Downgrades Rating, Assigns Negative Outlook ---------------------------------------------------------- Standard & Poor's lowered the long- and short-term counterpary credit and certificate deposit ratings on Bayerische Hypo- und Vereinsbank AG to 'A-/A-2' from 'A/A-1'. The ratings were removed from CreditWatch and are now assigned a negative outlook. The 'AAA' ratings on Offentliche Pfandbriefe issued by HVB and the 'AA+' ratings on BA's guaranteed obligations were meanwhile affirmed. According to Standard & Poor's credit analyst Stefan Best, "The downgrade reflects HVB's deteriorated asset quality, weakening profitability levels, modest capital strength, and the reduced level of unrealized gains of HVB's investment portfolio, following the decline of share prices." S&P recognizes HVB's efforts to cut cost, improve capitalization, and streamline the group. But it remained concerned that continued economic downturn could weaken the bank's business and risk profile, says Mr. Best. Continued challenging operating environment for German banks in the coming year raises S&P's concern that HVB will be able to reverse downward trend in revenues in 2002, and reduce provisioning needs. ============= I R E L A N D ============= ELAN CORPORATION: Completes Avinza License Restructuring -------------------------------------------------------- Elan Corporation, plc (NYSE: ELN) announced that the amendment to the terms of its development, license and supply agreement with Ligand Pharmaceuticals, Inc. regarding Avinza(TM) (morphine sulfate extended-release) capsules, previously announced on November 12, 2002, has become effective. As per the terms of the amended agreement, Ligand has made a cash payment of US$100 million to Elan. The proceeds from the amended agreement will form part of Elan's targeted proceeds as outlined in its recovery plan. Elan's cash position will in future periods be dependent on a number of factors, including its asset divestiture program, its balance sheet restructuring, its debt service requirements and its future operating cash flow. In addition to the actions and objectives previously outlined with respect to Elan's recovery plan, Elan may in the future seek to raise additional capital, restructure or refinance its outstanding indebtedness, repurchase its equity securities or its outstanding debt, including its Liquid Yield Option Notes, in the open market or pursuant to privately negotiated transactions, or take a combination of such steps or other steps to increase or manage its liquidity and capital resources. Any such refinancings or repurchases may be material. Elan is focused on the discovery, development, manufacturing, selling and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. CONTACT: ELAN CORPORATION, PLC Investors: (U.S.) Jack Howarth Phone: 212/407-5740 or 800/252-3526 Investors: (Europe) Emer Reynolds Phone: 353-1-709-4000 or 00800 28352600 Sunny Uberoi Phone: 212/994-8206 or 800/252-3526 ========= I T A L Y ========= BLU SPA: Shareholders Approve Incorporation Into TIM ---------------------------------------------------- The Extraordinary Shareholders' Meeting of BLU S.p.A., held in Rome under the chairmanship of Marco De Benedetti, approved the merger project to incorporate the company into Telecom Italia Mobile S.p.A., the owner of 100% of Blu's shares, as of October 7, 2002 date on which the acquisition was completed. As TIM is the only shareholder of the company to be incorporated, no exchange of shares has taken place and all the shares comprising the entire share capital of BLU S.p.A. will be cancelled, without any increase in the share capital of the incorporating company. It is TIM's intention as the controlling shareholding, as declared today during the Shareholders' Meeting, to complete the merger by December 31, 2002. Note: In an August issue of TCR-Europe, it was reported that assets of the troubled mobile phone operator were finally broken up among rivals, resulting in the shut down of the company. Telecom Italia Mobile said it offered at least EUR18 million (GBP11 million) for Blu's shares and some of its assets. FIAT: Rejects Rumors of Resignations in the Company --------------------------------------------------- Fiat denied rumors that Chairman Paolo Fresco and Chief Executive Gabriele Galateri are resigning from the troubled industrial group. However, Financial Times reports that several people close to the industrial group said a replacement for Mr. Fresco has been sought to appease irate government figures and thousands of workers laid off this week. The report noted that Mr. Fresco has been facing increasing criticism over the past six months as Fiat struggles to reverse its losses. The carmaker has already dismissed 5,600 workers out of the 8,100 employees it plans to lay-off and to serve retirement offers as part of its restructuring. As part of the plan, it also hopes to sell Fiat Auto, the group's car division expected to make a net loss this year of EUR2 billion, to US-based General Motors, despite resistance from the Italian government. The report says the government fears that a sale to GM could cost the country thousands more jobs at suppliers who would be replaced by GM suppliers. 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 ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: Fitch Upgrades CSFB Mortgage Certificates -------------------------------------------------------- CSFB Commercial Mortgage Securities Corp.'s mortgage pass-through certificates, series 2001-FL1, US$18.1 million class B is upgraded to 'AAA' from 'AA'. In addition Fitch upgraded the following classes: the US$19.2 million class C to 'AA' from 'A', the US$15.4 million class D to 'A+' from 'BBB', the US$7.5 million class E to 'A-' from 'BBB-', the US$7.4 million class F to 'BBB-' from 'BB+', the US$11.1 million class G to 'BB+' from 'BB' and the US$5.6 million class H to 'BB' from 'BB-'. Fitch also affirmed the US$91.6 million class A, interest-only classes A-X and A-Y at 'AAA', the US$13.9 million class J at 'B' and the US$4.6 million class K at 'B-'. The class L and M certificates are not rated by Fitch. The rating affirmations follow Fitch's review of the transaction, which closed in January 2001. The upgrades are a result of increases in credit enhancement caused by maturities and subsequent payoffs of the underlying loans. As of the November 2002 distribution date, the pool's aggregate principal balance has been reduced by approximately 47%, from US$402.4 million at closing to US$213.0 million. No loans have been delinquent since closing. Seventeen loans have paid off since closing, including the largest loan in the transaction (400 Madison Avenue), representing 13% of the pool. The transaction is structured in a modified pro-rata format where principle is paid pro-rata once certain credit enhancement triggers have been met. As of the November 2002 distribution date the transaction is paying pro-rata interest and principal but will revert to sequential pay once the certificates have paid down to 37% of the original certificate balance. The certificates are currently collateralized by 20 floating-rate mortgage loans, consisting primarily of multifamily (58% by balance), hotel (19%), office (17%), and retail (5%) properties, with significant concentrations in Texas (63%), Virginia (11%), Maryland (5%) and Massachusetts (5%). Midland Loan Services, the master servicer, collected year-end 2001 property operating statements for 100% of the pool balance. The 2001 weighted average net cash flow for these loans has dropped 7.8% from issuance to US$2.3 million from US$2.5 million (for the same loans) at closing. Fitch will continue to monitor this transaction, as surveillance is ongoing. CONTACT: Fitch Ratings Noel Cain Phone: 312/368-3134 (Chicago) Lauren Cerda Phone: 312/606-2317 (Chicago) Matt Burkhard Phone: 212/908-0540 (Media Relations/New York) =========================== U N I T E D K I N G D O M =========================== ARC INTERNATIONAL: Announces US$78M Stock Repurchase Program ------------------------------------------------------------ ARC International (LSE:ARK), a world leader in configurable System-on-Chip (SoC) platform technologies, today announced its Board of Directors has authorized a stock repurchase program valued at approximately US$78 million. This stock repurchase requires shareholder and other necessary approvals and is intended complete in the first half of 2003. "Given our prospects for growth and profitability, the Board feels ARC's stock continues to represent an attractive long-term investment," said Mike Gulett, ARC's president and CEO. "ARC's strong balance sheet allows us to both fund our business plan and complete this purchase of ARC's shares; $78 million represents just under half of our cash balance reported at the end of September." The timing of the repurchase and the exact number of shares of common stock to be purchased will depend upon various factors, including market conditions. As of September 30, 2002, the company had 298 million shares of common stock outstanding. About ARC ARC International is an industry-leading developer of embedded user-customizable, high-performance 32-bit RISC/DSP processor cores, with integrated development tools, peripherals, RTOS and software. These integrated products and solutions are a result of the acquisitions of MetaWare, VAutomation and Precise Software Technologies. ARC's integrated intellectual property solutions assist customers in rapidly developing next generation wireless, networking and consumer electronics products, reducing time to market, reducing their cost, reducing the number of IP suppliers and reducing their risk for system-on-chip products. Products based on ARC's technology include digital still cameras, set-top boxes, and network processors. ARC International employs 200 people in research and development, sales, and marketing offices across North America, Europe and Israel. Full details of the company's locations and other information are on the company's web site, http://www.ARC.com. ARC International is listed on the London Stock Exchange as ARC International plc. Note: ARC International PLC has appointed WestLB Panmure Ltd. as joint corporate broker and financial adviser to review the loss-making company's capital structure. For six months, the company's major shareholders have been trying to return most of the company's GBP108 million cash reserve. Arc International, which has a stock market value of o76 million, has lost more than GBP12 million since January. CONTACT: ARC INTERNATIONAL Monica Johnson Phone: 408/437-3470 E-mail: monica.johnson@arc.com or Buckmaster-Wilson & Assoc. Donna Wilson Phone: 510/413-4994 x 101 E-mail: donna@bwapr.com CABLE & WIRELESS: S&P Maintains Rating Outlook at CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings maintained its 'BBB+' long-term and 'A2' short-term corporate credit ratings on Cable & Wireless Plc at CreditWatch with negative implications, where they were placed on November 14, reports AFX. According to the rating agency, the action follows the company's posting of results that reflect continued weak performance at its loss-making unit, C&W Global. It also follows the unveiling of Cable & Wireless' restructuring plan that is feared to take additional cash costs of up to US$1.3 billion. C&W had also disclosed that it provided Deutsche Telekom with an indemnity in the event of the Inland Revenue assessing tax liabilities against the companies sold by C&W to DT in 1999 (including One2One). As a result, a "rating trigger" clause in the tax indemnity agreement became operative. In consequence, Cable & Wireless will either have to find a guarantee for GBP1.5 billion or place EUR1.5 billion into escrow. S&P credit analyst Simon Redmond said that the rating agency will relate the effect of the disclosure on C&W's liquidity and evaluate the risk (particularly to the outcome of the Inland Revenue's assessment) that a liability is realized in relation to the indemnity. S&P indicated to resolve the company's CreditWatch status depending on the results of the restructuring for the company's business risk profile and future cash flow. It will also review the sustainability of cash generation at C&W Regional and the projected capital structure and liquidity. The company has to post gross cash of more than GBP1.5 to escape a low investment-grade rating. At S&P's expectation that gross cash could fall below GBP1.5, the long-term rating on the company is likely to fall below 'BBB-' in the context of the company's existing business mix, the analyst said. CABLE & WIRELESS: Moody's Refuse to Take Further Action ------------------------------------------------------- Moody's says it would not take further rating action related to the information released about the rating trigger that was activated following Moody's downgrade of Cable & Wireless's debt ratings last week. The ratings trigger--which was made operative by Moody's lowering of the company's debt ratings from Baa2/Prime-2 to Ba1/Non-Prime- -is contained in a tax indemnity that formed part of the agreement put in place at the time of the disposal to Deutsche Telekom of C&W's 50% interest in One2One. The downgrade below Baa3 forces Cable & Wireless to either procure a guarantee in the sum of GBP1.5 billion from an "A" rated bank or place the sum of GBP1.5 billion into escrow. The rating agency said it need not undertake further rating action since it has reviewed the information available on the GBP1.5 billion rating trigger. Moody's says it is presently not aware of any other material cost, liability or contingent liability that C&W has not made public. Cable & Wireless serves 70 countries through its two main operating divisions, Cable & Wireless Global and Cable & Wireless Regional. EQUITABLE LIFE: Rejects Call to Unitize With-profit Life Fund ------------------------------------------------------------- U.K. life assurer, Equitable Life, dismissed an analyst's call to unitize its mutual's GBP14.5 billion (US$22.8 billion) with- profits life fund-- a move which according to the Financial, Times could let policyholders share directly in the performance of Equitable's investments, without the "smoothing" of returns. The assurer warned last month that 50,000 pensioners holding with-profit annuities would have their payments cut by up to 30% as the company experiences sharp deterioration in its financial position. At the same time, the group admitted it is in danger of falling below the 4% minimum margin that life assurers need to hold under the rules of the Financial Services Authority. The insurer also warned it might not be able to pay back the GBP346 million it owes bondholders, but that it remains solvent to be able to pay policyholders Ned Cazalet, an independent insurer analyst who made the call said: "The conversion of with-profits contracts into unit-linked policies, if achievable at reasonable cost, would appear to have the merit of providing policyholders with day-to- day visibility of their true financial position - and thereby, improved peace of mind. It would also enable greater investment freedom and investment choice at the same time as freeing up some of the regulatory capital required to be held." Equitable countered: "The impracticalities of the proposal as outlined outweigh the benefits that he puts forward." The firm assured that they had considered the option before deciding to enter a compromise deal over guaranteed annuity liabilities. STOLT-NIELSEN To Register Loss in Full-Year Earnings ---------------------------------------------------- Stolt-Nielsen S.A. (Nasdaq: SNSA; Oslo Stock Exchange: SNI) announced that in light of the announcement of lowered earnings guidance by its 63%-owned publicly-traded subsidiary, Stolt Offshore S.A. (Nasdaq: SOSA; Oslo Stock Exchange: STO), it is now anticipated that the 2002 full-year earnings for Stolt-Nielsen S.A., after restructuring charges, will be a loss in the range US$10 million to US$15 million or US$0.18 to US$0.27 per share. Stolt Offshore's lowered earnings guidance is primarily due to provisions being taken for additional losses on certain major EPIC projects, the impairment of a joint venture investment and the final settlement of a legal dispute. The fourth quarter results in the Stolt-Nielsen Transportation Group Ltd. (SNTG) developed as anticipated with SNTG's fourth quarter results appearing to be on par with the third quarter. For Stolt Sea Farm Holdings plc (SSF), pricing developments have been somewhat disappointing in the fourth quarter. Stolt-Nielsen S.A. is one of the world's leading providers of transportation services for bulk liquid chemicals, edible oils, acids, and other specialty liquids. The Company, through its parcel tanker, tank container, terminal, rail and barge services, provides integrated transportation for its customers. The Company also owns 63 percent of Stolt Offshore S.A., which is a leading offshore contractor to the oil and gas industry. Stolt Offshore specializes in providing technologically sophisticated offshore and subsea engineering, flowline and pipeline lay, construction, inspection, and maintenance services. Stolt Sea Farm, wholly- owned by the Company, produces and markets high quality Atlantic salmon, salmon trout, turbot, halibut, sturgeon, caviar, bluefin tuna, and tilapia. CONTACT: Stolt-Nielsen S.A. USA Richard M. Lemanski Phone: 1 203 625 3604 E-mail: rlemanski@stolt.com or Stolt-Nielsen S.A. UK Valerie Lyon Phone: 44 20 7611 8904 E-mail: vlyon@stolt.com STOLT-NIELSEN: Richard Fisher Resigns From Board ------------------------------------------------ Stolt-Nielsen S.A. (Nasdaq:SNSA) (Oslo Stock Exchange:SNI) announced that Richard Fisher has resigned from the Company's Board of Directors for personal reasons effective immediately. The Board of Directors has commenced a search for a replacement. Stolt-Nielsen S.A. is one of the world's leading providers of transportation services for bulk liquid chemicals, edible oils, acids and other specialty liquids. The Company, through its parcel tanker, tank container, terminal, rail and barge services, provides integrated transportation for its customers. Stolt- Nielsen S.A. also owns 63 percent of Stolt Offshore S.A. (Nasdaq:SOSA) (Oslo Stock Exchange:STO), which is a leading offshore contractor to the oil and gas industry. Stolt Offshore specializes in providing technologically sophisticated offshore and subsea engineering, flowline and pipeline lay, construction, inspection and maintenance services. Stolt Sea Farm, wholly owned by Stolt-Nielsen S.A., produces and markets high-quality Atlantic salmon, salmon trout, turbot, halibut, sturgeon, caviar, bluefin tuna and tilapia. CONTACT: STOLT-NIELSEN S.A. Richard M. Lemanski Phone: 203/625-3604 E-mail: rlemanski@stolt.com or Valerie Lyon Phone: 44 20 7611 8904 E-mail: vlyon@stolt.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, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2002. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *