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/raid1/www/Hosts/bankrupt/TCREUR_Public/021216.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, December 16, 2002, Vol. 3, No. 248 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Sues 3 Luxembourg Entities to Recoup Transfers * F R A N C E * ALCATEL: Launches up to EUR 819 Million of Redeemable Notes ALCATEL: Issues Fourth-Quarter Trading Update ARIANESPACE: Rocket Blows Off, Move Towards Recovery Falls VIVENDI UNIVERSAL: May Restructure Holding in EchoStar VIVENDI UNIVERSAL: Issues Announcement Regarding Investigation * G E R M A N Y * KIRCHMEDIA GMBH: Prevents Dresdner From Selling Stake SIAMANT COMPANIES: Files Insolvency Proceedings to German Court * I T A L Y * BANCA POPOLARE: Moody's Downgrades Financial Strength to C- CENARGO INTERNATIONAL: S&P Downgrades Rating on Liquidity Concern CIRIO: CEO Will Resign If Group Receives Bridge Loan - Source * N E T H E R L A N D S * BUHRMANN NV: To Continue Distribution in Six European Countries * P O L A N D * ELETRIM SA: Drafts Resolutions for Extraordinary General Meeting * U N I T E D K I N G D O M * BRITISH ENERGY: Committee Wants to Identify Bondholders BAE SYSTEMS: S&P Lowers Ratings Due to Contract-Related Issues BRITISH ENERGY: Registers GBP337 Million Losses in Results INDIGOVISION: Plans to Hand Back GBP11 Million to Shareholders ITV DIGITAL: Demands Customers to Return Set-Top Boxes MYTRAVEL GROUP: First Choice Withdraws Plan to Offer Bid TXU CORP: Fitch Ratings Downgrades TXU Corp & Subsidiaries ============= B E L G I U M ============= LERNOUT & HAUSPIE: Sues 3 Luxembourg Entities to Recoup Transfers ----------------------------------------------------------------- Trying to unwind another bad deal, Lernout & Hauspie Speech Products N.V. brings a suit against each of Flanders Language Valley CVA, Syllabus SA, and Mont Regaland Industries, SA of Luxembourg. L&H NV relates that within one day of its creation in September 1996, Dictation Consortium N.V. signed a $5,000,000 agreement with L&H to license and develop certain speech-to-text technology. Shortly after that, Dictation agreed to pay L&H $25,000,000 to develop software using the technology previously licensed to Dictation. The License Agreement gave L&H an "option" to buy back from Dictation the rights to the license of any software developed. In May 1998, before L&H developed any marketable product for Dictation, L&H purchased Dictation from the three Luxembourg Entities for US$43,300,000, including a one-time charge to write off Dictation's $21,500,000 debt to L&H related to in-process research and development. As of the Acquisition Date, Dictation was worth substantially less than the consideration paid by L&H, which included cash transfer and debt forgiveness. As a result, L&H's estate and creditors suffered a substantial loss. This transfer was also the subject of a Complaint for Injunctive Relief brought by the Securities & Exchange Commission against L&H in October 2002. Thus, L&H asks Judge Wizmur to order the avoidance of the transfers to the three Luxembourg Entities and award the estate judgment in the amount of the transfers, together with interest. (L&H/Dictaphone Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) =========== F R A N C E =========== ALCATEL: Launches up to EUR 819 Million of Redeemable Notes ----------------------------------------------------------- Following Board approval of yesterday, and to maintain a high degree of flexibility in the management of the company's assets while financing the 2003 restructuring program, Alcatel (Paris: CGEP.PA and NYSE: ALA) announced today an offering of notes mandatorily redeemable for Alcatel Class A new or existing shares for an amount between Euro 630 million and Euro 819 million. The notes will be offered to institutional investors outside the United States, Canada or Japan on 12 December 2002. A public offering to individuals in France will occur between 13 and 17 December 2002, such offer may be extended until the 20 December 2002 at the latest. The issue price of the notes will be Euro 5.34. The notes will be issued at par and will have a 3-year maturity from the settlement date of 23 December 2002. They will carry an annual interest rate of 7.917%. Alcatel will pre-pay on 2 January 2003 the full amount of interest payable from the settlement date to the maturity date, discounted to its net present value (about 20.43% of the issue price). The notes will be mandatorily redeemable for new or existing Alcatel A shares at the maturity date of 23 December 2005, or at anytime from 26 December 2002 at the noteholders' option. The number of shares to be delivered at maturity will be of one share per note. The redemption ratio will be reduced in case of request by noteholders for redemption before the maturity date. This operation may be a first move towards the improvement of the rating of Alcatel by the financial community. About Alcatel Alcatel designs, develops and builds innovative and competitive communications networks, enabling carriers, service providers and enterprises to deliver any type of content, such as voice, data and multimedia, to any type of consumer, anywhere in the world. Relying on its leading and comprehensive products and solutions portfolio, stretching from end-to-end optical infrastructures, fixed and mobile networks to broadband access, Alcatel's customers can focus on optimizing their service offerings and revenue streams. With sales of EURO 25 billion in 2001, Alcatel operates in more than 130 countries. This press release does not constitute or form part of an offer to sell or a solicitation of an offer to purchase or subscribe for securities in the United States or any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to or for the benefit of U.S. persons, absent registration or pursuant to an applicable exemption from the registration requirements of the Securities Act. No offering of securities is being made in the United States. ALCATEL: Issues Fourth-Quarter Trading Update --------------------------------------------- -- Sales up around 20% sequentially due to seasonal pattern -- Income from operations close to breakeven before reserves on inventories The Board of Directors of Alcatel (Paris: CGEP.PA and NYSE: ALA) met on Wednesday to review the current status of business trends and restructuring programs. Concerning the first point: Fourth quarter 2002 sales should grow by around 20% sequentially. This is in line with the usual seasonal pattern, although on the high side due to sustained sales in broadband equipment. As a result of the continuous reduction in fixed costs, the fourth quarter 2002 income from operations should be close to the quarterly breakeven point before any reserves on inventories. The preliminary evaluation of 2003 market prospects confirms the likelihood of a further deterioration from the 2002 levels. To safely absorb this deterioration, Alcatel expects, as announced, to record additional reserves in the fourth quarter, which should still leave a significant improvement versus the third quarter income from operations. Concerning the restructuring actions, the current plan, as already announced, was seen as well adapted to safely meet the objective of reaching breakeven in operating income in 2003 The financial situation was seen as continuing to be healthy as a result of the strict cash management. Alcatel is today confident that it should meet all its financial obligations. Fourth quarter and year-end results will be published on February 4, 2003. Further details will be provided at this time. About Alcatel Alcatel designs, develops and builds innovative and competitive communications networks, enabling carriers, service providers and enterprises to deliver any type of content, such as voice, data and multimedia, to any type of consumer, anywhere in the world. Relying on its leading and comprehensive products and solutions portfolio, stretching from end-to-end optical infrastructures, fixed and mobile networks to broadband access, Alcatel's customers can focus on optimizing their service offerings and revenue streams. With sales of EURO 25 billion in 2001, Alcatel operates in more than 130 countries. ARIANESPACE: Rocket Blows Off, Move Towards Recovery Falls ---------------------------------------------------------- Flight 157, launched by loss-making satellite-launching company Arianespace, exploded shortly after take-off from French Guyana. The item was the first Ariane 5 rocket capable of carrying two large satellites. It can carry a payload of 10 tons, up from its previous capacity of 6 tons. The explosion of the rocket, deemed as one of the biggest blows in the history of the European space program, is also considered as a big blow to the consortium's launch towards profitability. The company posted net losses of EUR193 in 2001, but hoped to report profit next year despite further losses for this year. The blast carried with it more than US$600 million of satellite equipment into the ocean, according to the Financial Times. It also contained Hot Bird 7 satellite, worth about US$250m, and a board Stentor, an experimental communications satellite developed by the French space agency and France's defense procurement agency, which is estimated to have cost more than US$385m. The accident is expected to halt the launch of Ariane 5 rockets indefinitely and to further damage the rocket's reputation, according to the report. Arianespace, a consortium struggling amidst fierce price competition and huge overcapacity in the space transport market, had hoped the project would allow it to launch at least two satellites with every rocket and to eliminate variants that increase the unit cost of the launchers. VIVENDI UNIVERSAL: May Restructure Holding in EchoStar ------------------------------------------------------ Vivendi Universal may restructure its 11% holding in EchoStar, paving the way for the disposal of the stock as part of the French conglomerate's EUR16 billion disposal program, says the Financial Times. US satellite TC company, EchoStar, had earlier proposed to merge the company with the satellite arm of General Motors, Hughes, but failed after regulatory concerns came in the way. The likely scenario would be for Vivendi to convert preference stock in EchoStart, which it acquired for US$1.5 billion last December, into ordinary shares in the TV company. The proposed merger deal limits the conversion of Vivendi's Class D preference stock into Class A common shares after the completion or termination of the contract. Bankers warn that Vivendi could lose so-called "contingent value rights" attached to the share in the restructuring. The rights are put in place to guarantee that Vivendi receive the same US$26 a share it paid for EchoStar. It also oblige the group to retain its holding for two-and-a-half years after the termination of the Hughes-EchoStar transaction. EchoStar's current share value is about US$21, which means Vivendi stand to incur significant loss on the disposal. But people familiar with the transaction holds that the restructuring would give Vivendi more flexibility to sell if the shares pick up. CONTACT: VIVENDI UNIVERSAL 42 avenue de Friedland 75380 Paris Cedex 08, France Phone: +33-1-71-71-10-00 Fax: +33-1-71-71-11-79 Home Page: http://www.vivendiuniversal.com VIVENDI UNIVERSAL: Issues Announcement Regarding Investigation -------------------------------------------------------------- Vivendi Universal (Paris Bourse: EX FP; NYSE:V) confirms that a team of investigators from the Finance Brigade of the Paris public prosecutor's office is carrying out inquiries at the company's head office, following the receipt of a letter rogatory from Judges Pireyre, Cros and Pons. This procedure follows the filing of a claim against an unnamed party in July 2002. The company emphasizes that it is a plaintiff claiming damages in these proceedings and that it intends to cooperate fully with investigations. Note: Police investigating the accounts published under former Vivendi Universal Chief Executive Jean-Marie Messier raided the company's headquarters in Paris. The investigation being carried out by the prosecutor's office is done at the prompting of shareholders who filed a lawsuit claiming the media company misled them. According to the prosecutor they are trying to find out if indeed Vivendi published ``false accounts to hide the true nature of its financial situation'' in 2000 and 2001. CONTACT: VIVENDI UNIVERSAL 42 avenue de Friedland 75380 Paris Cedex 08, France Phone: +33-1-71-71-10-00 Fax: +33-1-71-71-11-79 Home Page: http://www.vivendiuniversal.com ============= G E R M A N Y ============= KIRCHMEDIA GMBH: Prevents Dresdner From Selling Stake ----------------------------------------------------- KirchMedia and its investors are attempting to prevent Dresdner Bank from auctioning off a stake in a Spanish Television that was placed as collateral for the media rights firm's EUR460 million loan to Dresdner. Earlier, Dresdner Bank spokesman Tobias Bange confirmed that the bank plans to auction the stake December 20, with bids starting at EUR375 million. According to Sueddeutsche Zeitung, Dresdner lent the amount two years ago, against a stake in Telecinco, but Kirch says Dresdner's loan was actually made to its Taurus unit, and not to Kirch Media directly. Dresdner, which was purchased by Allianz AG for US$20 billion last year, accounts for the EUR972 million of Allianz's EUR2.5 billion third quarter loss. It is selling the businesses to prevent further losses. CONTACT: KirchMedia GmbH & CO. KGaA Communication & PR Phone: +49 (0)89 9956-2325 SIAMANT COMPANIES: Files Insolvency Proceedings to German Court --------------------------------------------------------------- Two Siamant companies applied insolvency proceedings to the German court after admitting they will not be able to improve business prospects, says ST Engineering which owns Siamant companies through unit ST Kinetics. The two companies are Siamant Verfahrensentwicklung im Bereich keramischer Werkstoffe Verwaltung GmbH & Co. KG and Siamant Verfahrensentwicklung im Bereich keramischer Werkstoffe Verwaltung GmbH. ST Kinetics owns a 54% stake in each company. Siamant develops and manufactures specialty engineering ceramics for military and non-military applications. ST Engineering said the move fits ST Kinetic's plan to review and rationalize existing businesses. CONTACT: 242424 Heinsbergerstr. 89 Zip 2424 Phone: 49-2452-906030 Fax: 49-2452-9060319 Contact: James Wong, Harald L. Homepage: http://siamant.ebigchina.com ========= I T A L Y ========= BANCA POPOLARE: Moody's Downgrades Financial Strength to C- ----------------------------------------------------------- Moody's Investors Service downgraded Banca Popolare di Lodi's financial strength rating to C- from C. It also downgraded the Italian bank's long-term deposit ratings to Baa1 from A3, while confirming its Prime-2 short-term rating. All ratings have stable outlook. The action follows the banks' announcement of a deal to acquire 69.6% stake in Banco di Chiavari from IntesaBCI for EUR405 million in cash, which under the Italian law requires Banca Popolare to launch a public offering for the bank's remaining shares with an additional cash pay-out of a maximum of EUR148.8 million. The downgrade also relates to Moody's warning in November that Banco Popolare's ratings (outlook negative) could be negatively affected by further material acquisitions that would complicate its uphill efforts to integrate its several prior acquisitions. The rating agency also noted that the cash nature of the acquisition weakens the bank's already modest capitalization. Moody's expects the bank's capitalization to remain constrained by substantial and increasing amount of goodwill and by an increasingly challenging market environment. Moody's, meanwhile, acknowledges the strategic rationale of the acquisition, as well as the relatively sound financial profile of Banco di Chiavari. Banco Popolare has consolidated total assets of EUR34.6 billion at the end of June 2002. CENARGO INTERNATIONAL: S&P Downgrades Rating on Liquidity Concern ----------------------------------------------------------------- Standard & Poor's Ratings Services downgraded Cenargo International PLC's credit rating from 'B-' to 'CCC' and senior secured debt rating on the company's US$175 million ship mortgages notes from 'B-' to 'CCC-'. The ratings were later withdrawn at the company's request. The ratings were also removed from CreditWatch, where they were placed in September, and assigned a negative outlook. Standard & Poor's credit analyst Andreas Kindahl explained, "The downgrade is a result of the uncertainty surrounding Cenargo's ability to meet its near-term financial obligations." The analyst added that the company was not able to furnish the rating agency timely and sufficient information for the evaluation of the sea ferry operator's current liquidity position. Cenargo also failed to provide update on its non-core asset disposals to address pressing liquidity concerns. S&P noted that the Irish company had US$8.5 million (GBP5.4 million) interest payment on December 15, 2002, and about US$2.4 million (US$1.5 million) in lease payments that matures in the same month. The rating agency warns that lack of timely information could negatively affect the company's relationship with its suppliers and creditors. And this could lead to further pressure on liquidity. CIRIO: CEO Will Resign If Group Receives Bridge Loan - Source ------------------------------------------------------------- A source has told Reuters that the embattled CEO of Italian food firm Cirio will resign if and when the group receives an ample bridge loan to help it overcome its financial crisis. It is noted that Cirio is seeking an urgent cash injection of some EUR50 million to keep it afloat after it was declared in default on more than EUR1 billion of bonds. However, banks want Cragnotti to leave before they disburse the money. The source, who is familiar with the situation, said Cragnotti had handed Cirio adviser Ubaldo Livolsi a written commitment to resign as soon as a bridge loan was secured. In an earlier report of the TCR-EUR, Cirio was implementing a restructuring plan and was mulling over divesting its soccer team Lazio, as well as its key stakes in Brazilian cleaning products and food company, Bombril, and Singapore-based Del Monte Pacific Ltd. The Italian food group was also reported to have plans of overhauling its debt and refocusing on its core food business. Cirio has net debt of EUR691.5 million at the end of September. The company's nine-month EBITDA is EUR60.8 million. CONTACT: CIRIO Phone: ++39 06 4145700 Fax: ++39 06 4145729 Home Page: http://www.cirio.it ===================== N E T H E R L A N D S ===================== BUHRMANN NV: To Continue Distribution in Six European Countries --------------------------------------------------------------- Buhrmann N.V. and Heidelberger Druckmaschinen A.G. have reached an agreement on the continuation of Buhrmann's distribution rights in six European countries. The new contract takes effect as of 1 July 2003 and applies for five years. The agreement was reached well ahead of the scheduled renewal of the current distribution contract, which confirms the mutual appreciation for the long-lasting and successful partnership of the two companies. Heidelberger Druckmaschinen is the world's leading producer of graphic equipment. With about 25,500 employees in over 170 countries the company manufactures sheetfed and web offset presses, prepress units, and post-press equipment for folding and binding applications. Also it develops and manufactures black- and-white as well as color digital printing presses. It has a total of 23 sites in Germany, the U.S., Mexico, France, the U.K. and the Netherlands. The companies forming Buhrmann's Graphic Systems Division distribute Heidelberg equipment in the Netherlands, Belgium, Luxembourg, Italy, Spain and Greece. The first successful partnership with Heidelberg has started over 75 years ago with Plantin in Belgium. Plantin is also active in Luxembourg. The operating companies in the Graphic Systems Division - which further includes Tetterode in the Netherlands, Macchingraf in Italy, Hartmann in Spain, and BTI Hellas in Greece - have consistently succeeded in maintaining their excellent reputation as Heidelberg distributors. In 2001 the Graphic Systems Division generated sales to the amount of EUR 565 million with 1,176 employees. =========== P O L A N D =========== ELETRIM SA: Drafts Resolutions for Extraordinary General Meeting ---------------------------------------------------------------- The Management Board of Elektrim S.A. announces the draft resolutions which it is going to present at the Company's Extraordinary Meeting of Shareholders on 20 December 2002: RESOLUTION No 1: regarding appointment of the Chairman of the Extraordinary Shareholders Meeting Extraordinary Shareholders Meeting resolved to appoint Mr ..............for the Chairman of the Extraordinary Shareholders Meeting of the Company. RESOLUTION No 2: regarding the acknowledgement of the fulfillment of the duties Barbara Lundberg, Member of the Management Board of the Company was entrusted with in the period from January 1, 2001 through May 25, 2002. It shall be hereby acknowledged that Barbara Lundberg, Member of the Management Board of the Company fulfilled the duties she was entrusted with in the period from January 1, 2001 through May 25, 2002. RESOLUTION No 3: regarding the acknowledgement of the fulfillment of the duties Waldemar Siwak, Member of the Management Board of the Company was entrusted with in the period from May 25, through December 31, 2001. It shall be hereby acknowledged that Waldemar Siwak, Member of the Management Board of the Company fulfilled the duties he was entrusted with in the period from May 25, through December 31, 2001. RESOLUTION No 4: regarding the acknowledgement of the fulfillment of the duties Jacek Walczykowski, Member of the Management Board of the Company was entrusted with in the period from January 1, 2001 through December 31, 2001. It shall be hereby acknowledged that Jacek Walczykowski, Member of the Management Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through December 31, 2001. RESOLUTION No 5: regarding the acknowledgement of the fulfillment of the duties Jan Kolodziejczak, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through March 27, 2001. It shall be hereby acknowledged that Jan Kolodziejczak, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through March 27, 2001. RESOLUTION No 6:regarding the acknowledgement of the fulfillment of the duties Krzysztof Szwarc, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through March 27, 2001. It shall be hereby acknowledged that Krzysztof Szwarc, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through March 27, 2001. RESOLUTION No 7: regarding the acknowledgement of the fulfillment of the duties Marc Boudier, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through May 14, 2001. It shall be hereby acknowledged that Marc Boudier, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through May 14, 2001. RESOLUTION No 8: regarding the acknowledgement of the fulfillment of the duties Yaron Bruckner, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through May 14, 2001. It shall be hereby acknowledged that Yaron Bruckner, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through May 14, 2001. RESOLUTION No 9: regarding the acknowledgement of the fulfillment of the duties Jose Manuel Entrecanales, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through May 14, 2001. It shall be hereby acknowledged that Jose Manuel Entrecanales, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through May 14, 2001. RESOLUTION No 10: regarding the acknowledgement of the fulfillment of the duties Ludwik Klinkosz, Member of the Supervisory Board of the Company was entrusted with in the period from January 1, 2001 through December 31, 2001. It shall be hereby acknowledged that Ludwik Klinkosz, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from January 1, 2001 through December 31, 2001. RESOLUTION No 11: regarding the acknowledgement of the fulfillment of the duties Michel Picot, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Michel Picot, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 12: regarding the acknowledgement of the fulfillment of the duties Jerzy Tobolewski, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Jerzy Tobolewski, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 13: regarding the acknowledgement of the fulfillment of the duties Andrzej Horoszczak, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Andrzej Horoszczak, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 14: regarding the acknowledgement of the fulfillment of the duties Dariusz Jacek Krawiec, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Dariusz Jacek Krawiec, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 15: regarding the acknowledgement of the fulfillment of the duties Aleksander Kotlowski, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Aleksander Kotlowski, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 16: regarding the acknowledgement of the fulfillment of the duties Jan Rynkiewicz, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Jan Rynkiewicz, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 17: regarding the acknowledgement of the fulfillment of the duties Dominique Gibert, Member of the Supervisory Board of the Company was entrusted with in the period from May 14, 2001 to December 31, 2001. It shall be hereby acknowledged that Dominique Gibert, Member of the Supervisory Board of the Company fulfilled the duties he was entrusted with in the period from May 14, 2001 to December 31, 2001. RESOLUTION No 18: regarding bringing a lawsuit against former members of the management boards of the Company with claims for redress of damage caused in the course of management 1. It is hereby resolved to authorise the Management Board of the Company to take any and all steps necessary to determine in each detail, if and in which range the former members of the management boards of the Company caused Company damage in the course of management. 2.If damage is an effect of acts made by the former members of the management boards of the Company or by their help, the present Management Board is obligated to take any necessary law acts, including lawsuits, aiming to redress of damage. RESOLUTION No 19: regarding establishing of member's number of the Supervisory Board The Extraordinary Shareholders Meeting hereby resolved to establish the number of members of Supervisory Members on ?.. persons. RESOLUTION of group No 1 of the shareholders of ELEKTRIM S.A. Acting according to Art. 385 5 to the provisions of Art. 385 3 Commercial companies code, as an effect of voting in group No 1, ??. is appointed as member of the Supervisory Board. RESOLUTION No 20: regarding establishing of remuneration of the Supervisory Board members The amount of monthly salaries of the Supervisory Board members is: - for the Chairman of the Supervisory Board ????????? , - for the Vice Chairman of the Supervisory Board ??????? , - for a member of the Supervisory Board ??????????.. . The salaries shall be paid effective from ?. . RESOLUTION No 21: regarding the increase of the Company's share capital by the amount of PLN 4,200,000 through issuance of 4,200,000 ordinary bearer shares with the nominal value of PLN 1 one share with the exemption of pre-emption rights of the Company's present shareholders. 1. The Company's share capital is increased by the amount of PLN 4,200,000 (say: four million two hundred thousand) through issuance of 4,200,000 (say: four million two hundred thousand) ordinary bearer shares of VII issue with the nominal value of PLN 1 one share. 2. The shares of VII issue will be entitled to dividend as of 1 January 2002. 3. The issue price of shares of VII issue will be determined by the Company's Supervisory Board which shall follow standard rules applied to determine the share price for such programs. 4. Shares of VII issue will be offered to the underwriter who will subsequently sell the shares to the members of the Management Board and Supervisory Board and other key employees of the Company on terms determined by the Statutes of Management Stock Option Program adopted by a committee appointed to prepare and implement the stock option program for the Company's boards and in the underwriting agreement. 5. Authorisation is granted to the Company's Supervisory Board to: a) determine the number of shares of VII issue to be vested to the Management and Supervisory Boards members and other key employees of the Company and enter into respective agreements with those persons; b) determine the terms of the issue of the shares to be offered to the underwriter in execution of the Statutes of Management Stock Option Program in matters not covered by this resolution, in particular to determine the issue price of the shares to be offered to the underwriter for subsequent sale to the Eligible Persons, c) adopt By-laws of the Statutes of Management Stock Option Program, where the maximum amount of the shares to be distributed to the Members of the Supervisory Board shall not exceed 1.200.00 (say: one million two hundred thousand), sale price shall not be lower than the price of the Company's shares established on 2 December 2002 during the closing of the trading of the shares of the Company at the Warsaw Stock Exchange, and the right to acquire the shares of the VII issue shall expire on 31 December 2005, d) select the underwriter for the purposes of the Statutes of Management Stock Option Program, e) take any and all steps necessary to effect the Statutes of Management Stock Option Program. 6. The Management Board is hereby authorized to determine specific terms of the issue of shares of VII issue in matters not reserved to be the powers of other bodies, in particular to: a) determine the terms, method and procedure for payment for the shares of the VII issue, b) determine the dates of opening and closing of the subscription for the shares of the VII issue, c) enter into the agreements with entities allowed to carry on subscription and determine the locations and terms of subscribing for the shares of the VII issue , d) determine the terms of allotment of shares of the VII issue and to decide on the allotment of shares of the VII issue, e)enter into the underwriting agreement, f) determine the list of Management Board and Supervisory Board members and other key employees of the Company and the number of shares to be vested to them in accordance with the provisions of the Statutes of Management Stock Option Program. g) take any and all steps necessary to effect this resolution, in particular to register the capital increase in the Registry Court and file requests to admit shares of the VII issue to public trading and trading on the Warsaw Stock Exchange. 7. The present Shareholders' pre-emptive right to new shares is hereby exempted with respect to the shares of the VII issue. 8. This resolution revokes the provisions of Resolution No 9 of General Shareholders Meeting resolved on 28th June 2002. RESOLUTION No 22: regarding amendments to 10 of Company Statutes. 10 of the Company Statutes receives the following new wording: "Resolutions of the Supervisory Board shall be passed by a majority of votes." RESOLUTION No 23: regarding amendments to 13 section 2 of Company Statutes. 13 section 2 of the Company Statutes receives the following new wording: "Chairman and Vice Chairman of the Supervisory Board shall be appointed by the Supervisory Board." RESOLUTION No 24: regarding amendments to 5 of Company Statutes. 5 section 1 of the Company Statutes receives the following new wording: "The Company's share capital is PLN 87,970,297 (say: eighty seven million nine hundred seventy thousand two hundred and ninety seven) and is divided into 87,970,297 (say: eighty seven million nine hundred seventy thousand two hundred and ninety seven) bearer shares with a nominal value of PLN 1 (say one) per share." RESOLUTION No 25: regarding amendments to 16 of Company Statutes In 16 of the Company Statute section 8 is added with the following wording: "8. giving a permission to buy or sell by one action or by two or more actions with one party to a legal relation, in a period shorter than 12 mouths, assets or to contract an obligation which value is bigger than 1.000.000,- USD =========================== U N I T E D K I N G D O M =========================== BRITISH ENERGY: Committee Wants to Identify Bondholders ------------------------------------------------------- Following the announcement of British Energy plc's restructuring proposals on 28 November 2002 please note that an Ad Hoc Bondholders' Committee has been formed to examine the terms of the restructuring of British Energy. The Committee has appointed Cadwalader, Wickersham & Taft and Close Brothers Corporate Finance as its respective legal and financial advisers. The Committee wishes to identify all holders of the Bonds listed below: Year Coupon Rate % 2003 5.949 2006 6.007 2016 6.202 If you hold any of the above Bonds of British Energy, please contact the Committee's legal or financial advisers, without delay. CONTACT: Andrew Wilkinson of Cadwalader, Wickersham & Taft Phone: (+ 44 (0) 207 170 8740, E-mail: andrew.wilkinson@cwt-uk.com) Martin Gudgeon of Close Brothers Corporate Finance Phone: (+ 44 (0) 207 655 3171, E-mail: martin.gudgeon@cbcf.com). Paul Heward Phone: 01355 262201 (British Energy, Investor Relations) BAE SYSTEMS: S&P Lowers Ratings Due to Contract-Related Issues -------------------------------------------------------------- Standard & Poor's Ratings Services downgraded its short-term corporate credit and commercial paper ratings on BAE Systems PLC to 'A-2' from 'A-1', following the company's announcement of delays and cost overruns in its contracts. Except for the defense firms' 'A-2' commercial paper rating, all other ratings of the British company, including the 'A-' long-term corporate credit rating, are placed on CreditWatch with negative implications. The defense company had earlier advised regarding the issues facing its Astute submarine and Nimrod aircraft contracts which are worth US$7 billion. BAE Systems is motioning to modify the contracts with Britain's Ministry of Defense. BAE Systems is a major global supplier of military aircraft, defense electronics, military and commercial avionics and aerostructures, submarines and surface combatants for the Royal Navy, and support services and information technology. According to the rating agency, "Although the impact on earnings and cash flow will not be known for several months, the previously anticipated strengthening of currently subpar operating performance has clearly been delayed." Consequently, the CreditWatch status on long-term ratings will be resolved by at least a revision on the outlook to negative from stable. Standard & Poor's also explained that the previous 'A-1' short- term rating, which was an exception to Standard & Poor's criteria ('A-' long-term rating typically corresponds to 'A-2' short-term rating), would no longer be valid. The CreditWatch on the 'A-' long-term rating, meanwhile, will be resolved depending on "expected financial consequences of the Astute and Nimrod problems, prospects for the firm's other businesses, and the resulting credit profile." BRITISH ENERGY: Registers GBP337 Million Losses in Results ---------------------------------------------------------- Restructuring Context Having reviewed the longer-term prospects for the business, the Board announced on 5th September 2002 that the Company had initiated discussions with the U.K. Government with a view to seeking immediate financial support and to enable a longer term restructuring to take place. On 9th September 2002, the Government granted the Company a credit facility of up to GBP410m to provide working capital and trading collateral for the Company's immediate requirements and to stabilise its trading position in the UK and North America. On 26th September 2002, the Government agreed to a revised facility for an amount up to o650m. Since that time, the Board has been working closely with its advisors to try to secure a solvent restructuring of the Company. On 28th November 2002, the Government confirmed its intention subject to certain terms and conditions to support the Company's proposals for restructuring intended to achieve the long-term financial viability of the British Energy Group. However, given the magnitude of the financial problems facing the Company, the proposed restructuring will require certain significant creditors to compromise their claims and is expected to lead to a very significant dilution of the interests of existing shareholders. The Government also agreed, again subject to certain terms and conditions, to extend the credit facility until 9th March 2003 in order to provide financial stability and security whilst British Energy seeks the support of these significant creditors. The Board believes that the proposed restructuring offers the best available opportunity to achieve the long-term financial viability of the British Energy Group. However, the proposed restructuring requires the Company to reach, prior to 14th February 2003, formal standstill agreement with a large number of creditors with respect to diverse financial interests, as well as a successful disposal of British Energy's interests in Bruce Power (completion to take place by 14th February 2003) and AmerGen (sale to be agreed by 30th June 2003) and approvals from numerous bodies including the European Commission. If such agreements cannot be reached, the required approvals are not forthcoming within the timescales envisaged, the assumptions underlying the restructuring proposal are not fulfilled or the conditions to the restructuring are not satisfied or waived, the Company may be unable to meet its financial obligations as they fall due. Therefore the Company may have to take appropriate insolvency proceedings, in which case the distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities and there is unlikely to be any return to shareholders. Set against this background, British Energy has a common interest with the Government in maintaining safety and security of electricity supply. Note that the results that follow should be read in the context of the Company's announcement of 28th November 2002, a copy of which is attached herewith. KEY POINTS FOR 6 MONTHS TO 30th SEPTEMBER 2002 - Loss before tax of GBPP337m (GBP124m pre exceptional items) primarily due to exceptional items, lower output (principally in the UK) and lower UK electricity prices. - Exceptional items totaling GBP213m (net) relating to the write down of the decommissioning fund and shares held in employee trusts, provision for onerous electricity contracts and restructuring costs off-set by a credit in respect of cash amounts previously received under the Nuclear Energy Agreement (NEA). - UK nuclear output down to 30.33 TWh following unplanned outages at Torness and Dungeness B. As a result, the UK nuclear output target for 2002/03 was reduced from 67 TWh to 63 +/- 1TWh. - UK nuclear unit operating costs of 1.85 p/kWh compared with 1.74p/kWh last year due to lower output more than off-setting lower costs. - UK achieved price of 2.02p/kWh compared to 2.08p/kWh last year primarily due to the increase in volume of Direct Sales largely off-setting the 8% fall in station gate prices to 1.73p/kWh. - The revised NEA negotiated with Scottish Power and Scottish and Southern Energy has received regulatory approval. - Operating contribution from AmerGen and Bruce of o81m (post minorities). - Discussions progressing regarding sales of AmerGen and Bruce - No interim dividend. OVERVIEW Key financials, including exceptional items, are shown below: 6 months ended 6 months ended Year ended 30 Sep 2002 30 Sep 2001 31 Mar 2002 GBPm GBPm GBPm Turnover 909 929 2,049 Operating (loss)/ profit (38) 70 (281) Loss before tax (337) (15) (493) 'Business performance' figures excluding exceptional items are shown below: 6 months ended 6 months ended Year ended 30 Sep 2002 30 Sep 2001 31 Mar 2002 GBPm GBPm GBPm Turnover 868 929 2,049 Operating (loss)/profit (26) 72 231 (Loss)/profit before tax (124) (17) 42 Net operating cashflow (71) 63 155 Net debt (966) (880) (859) UK nuclear unit cost (p/kWh) 1.85 1.74 1.67 STATEMENT BY ADRIAN MONTAGUE, CHAIRMAN I take up the position of Chairman at a bleak point in our Company's fortunes. The combination of high fixed costs for our nuclear stations and low power prices, coupled with our lack of tied retail outlets and a high level of unscheduled outages, has inflicted terrible damage on our Company. These factors lay behind the Board's decision to seek Government assistance on 5th September, and the discussions with Government since then which culminated in the restructuring proposals announced on 28th November, the date on which I replaced Robin Jeffrey as your Chairman. I would like to thank him for his commitment and contribution to the Company over the recent years. The restructuring proposals agreed with the Government offer our Company the opportunity to start on the long path to recovery. It will involve considerable sacrifice on the part of the Company's major creditors and shareholders. However these creditors have yet to agree to participate in the restructuring scheme and - if they do not, or if the restructuring cannot proceed for some other reason -the Company is likely to have to seek the protection of administration. The nextfew months will be decisive. If the restructuring proceeds, it will involve a long period of retrenchment. Our future efforts are likely to be focused on the UK business while we look to dispose of our successful investments in North America. Negotiations are already underway to achieve this. The value of our domestic generating plant will have to be reviewed, almost certainly downwards. Continued efforts will be required to sustain and enhance nuclear safety performance while at the same time achieving operating efficiencies. We will also look to achieve savings reflecting the refocusing of the business on UK operations. Much of the upside in recovery will go to build up funds to meet nuclear liabilities. However, as a result of the Government's agreement to underwrite these liabilities, the Company's exposure to these costs will be limited to a more manageable level. Nonetheless, your Board hopes, in time, that the Company will re- emerge as the U.K.'s least cost major generator, able to compete effectively with vertically integrated producers and offering the greenhouse gas-free energy that society is coming to value increasingly. The immediate future is uncertain, but there is no diminution in the dedication, enthusiasm and capability of British Energy's staff, whose commitment to the Company and to the case for nuclear energy has never wavered. During these troubling times they are to be commended for continuing to ensure that our plants operate with safety as our number one priority, as well as helping to maintain security of supply. In the current circumstances, the Board has decided that no dividend will be payable for the period. STATEMENT BY KEITH LOUGH, FINANCE DIRECTOR Background British Energy had for some while been seeking to renegotiate its fuel contracts with BNFL to try and significantly reduce its fixed cost base. BNFL delivered, on 3rd September 2002, its final proposal to British Energy, but the terms that they offered fell short of those which British Energy required. Having reviewed the longer-term prospects of the group, the Board concluded that it should not drawdown on existing undrawn loan facilities and decided that there was no alternative but to seek Government support. On 5th September 2002, British Energy announced that it had initiated discussions with Government with a view to seeking immediate financial support and to enable a longer term restructuring to take place. On 9th September the Government announced that it would grant the Company a facility of up to GBP410m to provide working capital and to allow the Company to stabilize its trading position in the UK and North America. The original maturity date of 27th September for the facility was subsequently extended to 29th November and increased to an amount up to GBP650m. The Government notified its initial financial support and its extension of the facility to the European Commission on 9th and 27th September. On 27th November, the European Commission granted approval of this aid. An Extraordinary General Meeting was held on 4th November 2002 at which shareholders approved an ordinary resolution of the Company to increase the group's borrowing limit, as set out in the Company's Articles of Association, to GBP1.6 billion. On 22nd November, Greenpeace were granted leave to commence proceedings for a judicial review of the rescue aid inherent in the facility. On 28th November, the Government announced that it would support the restructuring proposed by the Company subject to various approvals and conditions and that it would extend the credit facility until 9th March 2003. If the necessary agreements cannot be reached, the required approvals are not forthcoming within the timescales envisaged, the assumptions underlying the restructuring proposal are not fulfilled or the conditions to the restructuring are not satisfied or waived, the Company may be unable to meet its financial obligations as they fall due. Therefore the Company may have to take appropriate insolvency proceedings, in which case the distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities and there is unlikely to be any return to shareholders. The results that follow therefore need to be viewed against this background. First Half Performance Output was lower than expected due to unplanned outages at Torness and Dungeness B. This led to a revision in the UK nuclear output target to 63 +/- 1 TWh as announced in August and increased cost per unit for the period of 1.85p/kWh. Our North American plants have performed well with both Bruce Power and AmerGen (our joint venture with Exelon) providing positive contributions but Bruce Power's performance was affected by planned outages during the period. There were a number of pre-tax exceptional items in this period: 1. write down of GBP103m of the decommissioning fund as a result of general equity market conditions 2. write down of GBP98m of British Energy shares held in employee trusts reflecting deterioration of the long term prospects of the Company and subsequent fall in the share price 3. provision of GBP46m for onerous long term electricity contracts reflecting continued low market prices 4. provision of GBP7m for restructuring costs and 5. credit of GBP41m in respect of cash amounts previously received under the NEA. Outlook In line with the Company's statement of 28th November, during the period to 9th March 2003 the Board will be working closely in conjunction with its advisors to implement a successful restructuring of the Company within the principles accepted by the Government. Discussions are continuing regarding the sale of our North American assets, being AmerGen and Bruce Power. We announced in September that we were considering the possible sale of AmerGen. Progress has been made towards the sale. Under the restructuring proposals, the sale of AmerGen must be agreed by 30 June 2003. Following these disposals, British Energy will be a merchant generator in the U.K. market with 9600 MW of nuclear plant and 2000MW of coal-fired plant at Eggborough. Output will continue to be sold directly to industrial and commercial companies in the wholesale power market or under arrangements with energy supply companies. The Board intends to reduce the Group's exposure to wholesale electricity prices in the U.K. The revised cntracts, which have been agreed in principle with BNFL, will provide a partial hedge against market prices in respect of approximately 40% of British Energy's total electricity output (including Eggborough and Sizewell). In addition, the Board intends to implement a trading strategy which will seek to enter into short and medium-term power-sale contracts with market counterparties and with industrial and commercial customers, to hedge the majority of its remaining output. Whilst we are targeting annual output from the nuclear fleet of approximately 69 TWh (82 per cent. load factor), the Board considers that a prudent judgement of the normal level of output from these plants on an annual basis should be 67 TWh (80 per cent. load factor). As a result of the restructured BNFL contracts, cash operating costs (including maintenance capital expenditure and overheads (including corporate overheads)) in the nuclear operations are expected to be approximately 1.45p/kWh (in 2002/3 prices) assuming output of 67 TWh and at electricity prices of 1.6p/kWh (in 2002/3 prices). Taking account of the requirements of the restructured business, and its refocus on UK operations, the Board will review the corporate overheads and take action as required to ensure an efficient and cost effective business. Current Trading Market conditions remain extremely challenging and have adversely impacted both ourselves and other players as has been well publicised recently. The Company released its output statement for November on 4th December. This showed that the UK nuclear plants remain on track to achieve the revised target of 63 +/- 1 TWh by 31st March 2003 and that AmerGen's and Bruce Power's output remain in line with plan. In November, it was announced that both OFGEM and the European Commission had approved the renegotiation of the NEA with Scottish Power and Scottish and Southern Energy. GROUP FINANCIAL SUMMARY This summary is based on 'business performance' figures which exclude exceptional items (as described in note 1 to the accounts). Turnover Turnover was o868m as compared with o929m for the same period last year. This is primarily due to a combination of falling prices in the UK and an increased number of outages both in the UK and North America. Operating profit Operating profit was o98m lower than for the same period last year. The main reasons for this are set out in the table below: UK Bruce AmerGen Group GBPm GBPm GBPm GBPm Electricity prices (including UK supply costs) (42) 27 (15) Output (see note) (49) (28) (77) Other operating cost changes (6) (10) (4) (20) Foreign exchange rates (2) (2) Other movements 11 5 16 Change in operating profit (86) (8) (4) (98) Note: output includes an estimate of the pro-rata effect of Bruce ownership being only 4 1/2 months to September 2001. Financing charges and Amounts written off investments As at 30th September 2002 the market value of the decommissioning fund (GBP332m) was lower than the value (o435m) that would have been derived from revalorizing the cost of the investment. As a result, an exceptional charge of GBP103m has been recognised to restate the decommissioning fund receivable to market value. Of this GBP103m, GBP82m represents the write-off of previous revalorisation and has been treated as an exceptional financing charge. The balance of GBP21m has been included in 'Amounts written off investments' in the profit and loss account. Other exceptional items - Onerous trading contracts The Group has certain pre-NETA contracts which are excluded from the wholesale and direct supply portfolios. As a result of the terms inherent in these contracts and the Directors' view of future market prices the contracts are considered to be onerous and a provision has been made to reflect the future discounted losses that are expected under the terms of these contracts. An exceptional charge of GBP46m has been made in the period to make further provision for these long-term contracts. - Own shares held The market value of shares held by employee trusts at 30th September 2002 was GBP5m compared to a book value of GBP103m. As the long term prospects of the Company have deteriorated significantly, the Directors consider it appropriate to recognise a permanent diminution in the value of the shares held in employee trusts. As a result, an exceptional charge of GBP98m has been recognised within 'Amounts written off investments' in the profit and loss account. - Restructuring costs A charge of GBP7m has been made in respect of costs incurred on advisory and other costs associated with restructuring the Company's activities. - Nuclear Energy Agreement The Company has agreed revised terms for the electricity supply agreement with Scottish Power and Scottish and Southern Energy. Under the terms of the agreement, which has now had regulatory approval, the Company is in a position to release a balance of GBP41m in respect of cash previously received. Taxation Taxation has been calculated on the loss for the six months to 30th September 2002 to take account of an allocation of net permanently disallowable items and the higher rate of tax payable on U.S. and Canadian taxable profits, and includes the share of discount unwinding on deferred tax applicable to the period. Economic value of U.K. generation fixed assets and stocks In light of the current uncertainty surrounding the operations and prospects of the Company, the Directors have significant doubt as to whether the assumptions and estimates used to determine the carrying values of the Company's U.K. generation fixed assets and stocks are now the most appropriate. However, the Directors do not believe that reasonable assumptions and estimates can be made for these items given the current uncertainty regarding the Company's financial position and as such have presented the U.K. generation fixed assets and stocks in the interim accounts on a basis consistent with that used in the preparation of British Energy plc group financial statements for the year ended 31st March 2002. The balance sheet drawn up at 30th September 2002 includes U.K. generation fixed assets with a net book value of GBP4,441m and stocks with a net book value of GBP491m. Statement of capital While preparing the interim accounts, the Board concluded that the net assets of British Energy plc have fallen to less than half of its called-up share capital. In these circumstances we are required by Section 142 of the Companies Act 1985 to convene an extraordinary general meeting for the purposes of considering whether any, and if so what, steps should be taken to deal with the situation. We will shortly be issuing a circular to shareholders on this matter. Auditors' review report The auditors' review report refers to the uncertainties regarding the carrying value of assets and the discussions regarding the Company's proposals for restructuring. PERFORMANCE BY BUSINESS UK Generation The focus of U.K. Generation continues to be safe, reliable generation and meeting our customers' needs. In view of the prospects for low electricity prices pertaining for the foreseeable future, the value of both our nuclear and coal generation plant will have to be reviewed and almost certainly downwards. Nuclear Output for the period was 30.33 TWh as compared with 32.70 TWh last year primarily due to the unplanned outages on both units at Torness following fatigue cracking within the gas circulators. Both units at Torness have been repaired and are now fully operational. Nuclear unit operating costs for the period rose by 0.11 p/kWh to 1.85p/kWh compared to the same period last year due to lower output more than off-setting lower costs. Five statutory outages were completed in the period and the fleet is on track to meet the revised target of 63 +/- 1 TWh announced in August. The large investment in a new enterprise wide Work Management System has been successfully implemented at Hinkley, Heyshams 1 & 2 and Sizewell with the target date for implementation at seven stations by Spring 2003. Once fully enabled, the system and associated standardised processes will enhance plant maintenance and lead to an improved reliability. Fossil British Energy's coal plant at Eggborough has also suffered from the reduction in wholesale electricity prices and the narrowing in the differential between winter and summer prices. As expected, output at Eggborough, a mid-merit coal-fired plant, was lower at 1.37 TWh as compared with the same period last year (3.05 TWh) due to planned outages, lower prices and the continuing programme to install flue gas desulphurisation (FGD) equipment in two units. The FGD project is proceeding in accordance with the committed programme. Site construction activities are now well underway and the plant is on target for hand over in September 2004 as planned. Project costs remain in line with the original predictions. Trading Achieved price at the National Balancing Point remained similar to last year at 2.02p/kWh (2.08p/kWh last year) but this was mainly due to the increased turnover within the Direct Sales Business. At the Station Gate, prices fell by 8% to 1.73p/kWh. Overall market prices have fluctuated over the year and have been approximately 10/15% lower on average than the same period last year. British Energy's achieved price for the full year is expected to be just less than 10% below last year. Our Direct Sales Business supplied 10.1 TWh in the first half representing an increase of 19%. It continues to provide a quality service having won its 14th successive customer satisfaction award. In July we announced that we had re-negotiated the NEA with our counterparties Scottish Power and Scottish and Southern Energy. This has now received approval from OFGEM and the European Commission. The NEA was agreed in 1990 and was due to expire in 2005. The revised agreement will continue until the introduction of the British Electricity Transmission and Trading Arrangements or 1st April 2006, whichever occurs first. Beyond that date, the counterparties have an option for follow-on contracts up to 2011 at reduced volumes. AmerGen We announced in early September that we and our joint venture partner, Exelon, were considering the possible sale of AmerGen. This decision was made prior to British Energy's approach to the Government for financial assistance. It was taken because of the difficulties in growing the AmerGen business further, due to increased competition and higher prices for nuclear assets and the fact that both parties' strategies had evolved since the joint venture was formed in 1997. Under the restructuring proposals, the sale of AmerGen must be agreed by 30th June 2003. AmerGen's operating profit before tax contribution for the period was GBP45m. All three plants, Clinton, Oyster Creek and TMI - unit 1, performed well over the period. Output was 9.67 TWh as compared with 9.59 TWh for the same period last year and the average overall load factor was 89%. Clinton successfully completed a refuelling outage during which the steam turbine was replaced and modifications were made to the plant to enable an increase in power output of 65MW and extending the period between outages to 24 months. Bruce Power In November we announced that we had entered into discussions with a view to selling all, or part of, our stake in Bruce Power. The contribution from Bruce in the period was o36m, being operating profit before tax, post minorities. Bruce B continues to deliver good operating performance with output over the period at 10.62 TWh. The load factor was 77% (down from 93% a year ago) reflecting the higher number of planned outages. Planned maintenance work on one reactor, which began in March 2002, was completed in August. The re-start of two units of Bruce A is planned by early summer 2003 and the first regulatory hearing is scheduled for today. The Ontario electricity market was opened to competition on 1st May 2002 at both the wholesale and retail levels. Following a summer of record demand for electricity that resulted in a shortage of supply and higher than anticipated retail prices, the Ontario government has stated its intent to protect consumers by introducing legislated price controls at the retail level. Regarding the potential sales of both AmerGen and Bruce, the proceeds are likely to reflect the current market in North America for merchant generating plant and also any changes in the regulatory framework, particularly for Bruce in Ontario. UK ENERGY REVIEW The Government Energy Review process launched in Spring 2002 involved a number of activities aimed at reaching a wide cross- section of stakeholders. The Consultation document focussed on eight key issues with security of supply, climate change and nuclear energy prominent. British Energy's submission addressed all the questions posed by the Consultation document and, in particular, highlighted the environmental and security of supply benefits of nuclear power. A White Paper is due to be published in early 2003. NEW YORK STOCK EXCHANGE COMPLIANCE The Directors have been notified by the New York Stock Exchange (NYSE) that British Energy does not currently comply with the NYSE's continued listing criteria relating to the minimum share price. The NYSE requires that the average closing price of a security not be less than $1.00 over a 30-day consecutive trading period. Under NYSE rules, once notified of its failure to meet the minimum share price criteria, a company must bring its share price and average share price over the preceding 30 trading days back above $1.00 within six months of receipt of the notification or following its next shareholders' general meeting if approval from its shareholders is necessary to give effect to any such change. We are currently in discussions with the NYSE with respect to this issue and are reviewing the options available to the Company. To see British Energy's Financial Statements: http://bankrupt.com/misc/BritishEnergy.pdf CONTACT: Investor Relations Paul Heward Phone: 01355 262201 INDIGOVISION: Plans to Hand Back GBP11 Million to Shareholders -------------------------------------------------------------- Technology firm IndigoVision would like to give back GBP11 million to shareholders, although a good offer for a takeover may yet persuade the company to reconsider. Bridgewell Securities analyst Richard Lucas said: "There's clearly been quite a bit of shareholder pressure to release some of the cash. This should help defend themselves against a takeover." The GBP11 million equates to about 16 p per share. The struggling Edinburg technology is currently a takeover target after being hit by the slump in the technology stock. The group, valued at GBP15 million, is still peddling its technology that allows video clips to be sent over the Internet. IndigoVision had earlier negotiated with a third party believed to be AIM-listed Acquisitor. But talks collapsed, and now the company is again engaged in discussions with other bidders, says The Scotsman. IndigoVision launched a business review and resolved to scale back the number of new products it manufactures to concentrate on increasing sales of its core VideoBridge technology. Finance director Alice Patrick said, "As a result of the business review we're confident that we can return to profitability and still have this cash surplus which we can return to shareholders." Indigovision slashed costs by 25% in the first quarter, and narrowed pre-tax losses to GBP1.6 million from GBP2.1 million in the first three months of its last fiscal year. The company is also aiming to limit cash consumption to GBP300 per month by the end of the financial year from the current level of GBP530 per month. ITV DIGITAL: Demands Customers to Return Set-Top Boxes ------------------------------------------------------ Accountants Grant Thornton ordered ITV Digital's more than 1 million customers to "stump up" GBP40 or return their set-top box, or else face debt collection agencies, says The Scotsman. As part of the plan, a free phone number has been set up for the company's customers to arrange uplifts of the boxes. The move is seen as the liquidator's last attempt to save some cash from the company, which collapsed under a GBP1.24 debt load in April. A spokesman for joint liquidators Malcolm Shierson and Martin Ellis said: "As the liquidators, we have a legal responsibility to the creditors to maximize the value of the company's assets. And we already have a string of potential buyers interested in buying the boxes from us." The spokesman added that according to their calculation the move is still cost effective despite expenses that the collection process would entail. The joint liquidators said that under the contract the subscribers merely borrows the units and are required to pay GBP200 if they wanted to keep the item on cancellation of the contract. The report says that parties interested in buying the boxes from the liquidators would refurbish them then sell them on to high street retailers across Britain. The article also noted that demand for the new GBP100 set-to boxes is high in comparison with supply, with many High Streets retailers offering refurbished ones at around GBP90. MYTRAVEL GROUP: First Choice Withdraws Plan to Offer Bid -------------------------------------------------------- Tour operator First Choice abandoned plans to offer a takeover bid for troubled MyTravel group after posting a sharp fall in annual profits to GBP72.5 million in the year to end-October 2002. Chief Executive Peter Long said of the opportunity to bid for the tour operator: "We are not interested - that's a red herring." He added that MyTravel does not fit in with First Choice's strategy of developing its specialist travel businesses, such as sailing, trekking and golfing. MyTravel, formerly Airtours, is planning to sell non-core businesses after issuing profit warnings due to the slump in holiday bookings and a series of financing gap. The businesses being contemplated for sale are thought to include Panorama, Bridge and Direct Holidays, which was bought for GBP81 million in 1998. According to previous TCR-EU report, online travel company Ebookers disclosed it had approached British holiday firm, MyTravel, about buying some brands from the troubled company. John Boyle, the former owner of DirectHolidays, had also shown interest in buying back his firm from the holiday group. 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 TXU CORP: Fitch Ratings Downgrades TXU Corp & Subsidiaries ---------------------------------------------------------- Fitch Ratings downgrades TXU Corp.'s (TXU) senior notes to 'BBB- ', preference stock 'BB+', and commercial paper to 'F3' from 'BBB', 'BBB-', and 'F2', respectively. Also downgraded were the outstanding ratings on TXU US Holdings (US Holdings), Oncor Electric Delivery Co. (Oncor), TXU Energy Co. LLC (TXU Energy), TXU Gas Co. (TXU Gas), Pinnacle One Partners, L.P. (Pinnacle One), TXU Australia Holdings (Partnership) Limited Partnership (TXUA) and TXU Electricity Limited as outlined below. The Rating Outlook of all the companies listed above has been revised to Stable from Negative. The downgrade of the parent, TXU, takes into account TXU's already high leverage and the increased debt burden resulting from recent borrowings under new financing arrangements and existing credit facilities to maintain liquidity for potential collateral calls or accelerated repayment of debt associated with Pinnacle One Partners, and the related increase in interest expense. Fitch expects that TXU will have to maintain large cash reserves for an extended period as a precaution against potential collateral calls or accelerated maturities, pushing up the cost of capital and potentially delaying a needed reduction in debt leverage. The Stable Outlook for TXU and the maintenance of investment grade ratings recognize the existence of sufficient liquidity to meet expected refinancing and potential collateral requirements, after the painful but necessary decision to terminate support for TXU Europe, resulting in the ailing subsidiary going into administration. The Stable Outlook for TXU also factors in Fitch's view that TXU Corp. will not have a material liability for TXU Europe obligations. The single-notch downgrades of the ratings of TXU Energy, Oncor, TXU Gas, TXU Australia, and TXU Electricity Limited reflect the lower parent company rating, consistent with Fitch's policy on the relationship of subsidiary ratings to those of the parent. The ratings of TXU Gas, TXU Australia, and TXU Electricity Limited, all lowered to 'BBB-', previously depended upon the premise that the subsidiaries would receive continuing parental support from TXU Corp. While Fitch believes that support will continue, the ratings are now at levels consistent with the companies' individual credit profiles. The two-notch downgrade of U.S. Holdings, an intermediate holding company that is parent to Oncor and TXU Energy, brings this rating to the same level as its parent at 'BBB-'. That approach is consistent with Fitch's view that US Holdings is a conduit through which the cash flows of the US subsidiaries pass on their way upstream to the parent company. TXU Energy's senior unsecured debt rating, lowered to 'BBB' from 'BBB+', incorporates Fitch's view that currently high margins earned by retail power suppliers in Texas are likely to moderate over time if price competition becomes more prevalent in that market, though this is not an immediate concern. Ample liquidity has been put in place to meet and exceed all anticipated needs of the parent and US affiliates. Management estimates that collateral for contractual counterparties would be on the order of $635 million if TXU Energy were downgraded by any one or two rating agencies to below investment grade and $905 million in the event of such action by all three rating agencies. A substantial portion of the collateral relates to non-trading obligations, including leases and long-term power contracts that are not sensitive to commodity price risk. Downgrade of TXU Corp. to below investment grade by any one agency to the equivalent of 'BB' or lower would occasion a put of $810 million of notes of Pinnacle One Partners. TXU Corp. and its US affiliates have estimated combined cash and available liquidity to meet these needs of approximately $1.9 billion after allowing for the amount needed to fund maturing commercial paper through Dec. 31. This provides a cushion of $200 million in excess of the maximum level of collateral calls, potential redemption of Pinnacle One notes, and Oncor's maturing obligations in the next year of approximately $700 million, Fitch anticipates that Oncor's current maturities as well as the $125 million maturing debt of TXU Gas will be refunded. TXU Energy has maturing obligations of $73 million that can be funded from operating cash flow, and also faces remarketing of pollution control revenue bonds of $505 million. Parent debt of $323 million will mature in 2003, in line with funds available from internal sources and expected tax refunds. TXU management forecasts indicate that additional liquidity, derived from operating cash flow and tax rebates, will be sufficient to cover maturities in 2003, in the event that refunding or remarketing is not possible for any units other than Oncor. Factors that could result in higher future ratings for TXU Corp. and its affiliates are: the TXU group's ability to reduce consolidated debt and leverage measures during 2003-2004; sustained improvement in operating performance of TXU Gas and TXU Australia; and stable operating performance and margins continuing at TXU Energy despite the constrained credit and business environment. Ratings could be lowered from the current level in the event of substantial, unanticipated erosion in TXU Energy's margins, possibly as a result of more aggressive price competition evolving in the retail supply market, or unexpected liability for material obligations of TXU Europe. Rating Changes: TXU -- Senior notes downgraded to 'BBB-' from 'BBB'; -- Preference stock to 'BB+' from 'BBB-'; -- Commercial paper to 'F3' from 'F2'. U.S Holdings -- Senior unsecured debt downgraded to 'BBB-' from 'BBB+'; -- Preferred stock downgraded to 'BBB-' from 'BBB+'. Oncor -- First mortgage bonds downgraded to 'BBB+' from 'A-' -- Debentures downgraded to 'BBB' from 'BBB+'; -- Commercial paper affirmed at 'F2'. TXU Energy -- Senior unsecured bonds to 'BBB' from 'BBB+'. -- Commercial paper to 'F3' from 'F2' TXU Gas Co. -- Senior notes downgraded to 'BBB-' from 'BBB'. TXU Australia Holdings (Partnership) Limited Partnership -- Senior unsecured debt downgraded to 'BBB-' from 'BBB'. TXU Electricity Limited (formerly Eastern Energy Limited) -- Bonds downgraded to 'BBB-' from 'BBB'. Pinnacle One Partners, L.P. -- Senior secured notes downgraded to 'BB+' from 'BBB-'. CONTACT: Fitch Ratings Karl Pfeil, III, Phone: 212/908-0516 (New York) Ellen Lapson Phone: 212/908-0504 (New York) Carolyn Martin Phone: +61 7 3222 8611 (Brisbane) ************* 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. 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