/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/021227.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, December 27, 2002, Vol. 3, No. 255 Headlines * F R A N C E * BUFFALO GRILL: Authorities Find No Link to 'Mad Cow' Deaths COMDISCO FRANCE: Sold to Econocom Group for US$70 Million NEXANS SA: 'BBB' Rating Under Review With Negative Implication * G E R M A N Y * BAYER AG: Agrees to $257.5 Million Settlement of U.S. Case DRESDNER BANK: Cuts Another 345 Jobs in Latin America EM.TV MERCHANDISING: To Sell 49.9% Stake in Jim Henson Company * I T A L Y * FIAT SPA: Erstwhile Italian Star Now Relegated to Junk Status TELECOM ITALIA: Completes Merger of Blu SpA Into Its Operations * N E T H E R L A N D S * ASML HOLDING: Moody's Cuts Ratings to Reflect Market Condition * N O R W A Y * P4 RADIO: Shares Dive 77% After Gov't Revoked License * P O L A N D * NETIA HOLDINGS: Extends Validity of Polish Prospectus NETIA HOLDINGS: Closes Subscription of Series H Shares * P O R T U G A L * SEGUROS E PENSOES: Still on Credit Watch Despite Ownership Change * R U S S I A * IMPEX BANK: Long-term Counterparty Rating Raised to 'CCC' TNK INTERNATIONAL: Decision Over Slavneft to Be Revealed Soon * S W E D E N * GENERAL MOTORS: May Face Resistance in Saab Restructuring * S W I T Z E R L A N D * GRETAG IMAGING: To File for Liquidation of Ailing Units Soon SWISS LIFE: Appoints Bruno Gehrig as New Chairman * U N I T E D K I N G D O M * AMP BANKING: Sells Credit Card Portfolio to American Express AVON ENERGY: Moody's Cuts Rating on Belief Firm Lacks Debt Cover AVON ENERGY: Credit Grade Slips One Notch on S&P Ratings Board BRITISH ENERGY: Net Value Dips to Crisis Level BRITISH ENERGY: Plans to Dispose of Bruce Power and Huron Wind BRITISH ENERGY: To Hold Extraordinary General Meeting January 14 COMPASS GROUP: Moody's Unimpressed With Asset Disposals FTV GROUP: To Change Business Plan as Cash Slips to GBP600,000 =========== F R A N C E =========== BUFFALO GRILL: Authorities Find No Link to 'Mad Cow' Deaths ----------------------------------------------------------- Buffalo Grill, the French steakhouse chain accused of violating the ban on British beef in 1996, was cleared Monday by the commerce ministry from possible involvement in the death of four individuals, the Wall Street Journal said. The ministry, however, chastised the firm for claiming that it had never imported British beef since it began operating in 1980. According to Junior Commerce Minister Renaud Dutriel, tests carried out by French authorities have shown that "in 1995, 17% of beef purchases came from suppliers in the United Kingdom." He said prosecutors issued a warning about the false claim in 1997. Buffalo Grill put up ads outside its restaurants during the height of the mad cow scare claiming it had never served British Beef. Buffalo Grill repeated the claim in a statement issued Saturday. Mr. Dutreil, however, said authorities had no evidence to support allegations that Buffalo Grill violated an embargo on British beef imposed in 1996 to prevent the spread of mad cow disease. Four top officials of Buffalo Grill and its distributor, Districoupe, have been placed under judicial investigation - one step short of charges - on suspicion of importing British beef from 1996-2000 in violation of the ban. Buffalo Grill Chairman Francois Picart, who is among those placed under investigation, said the accusations stem from "personal vengeance" and that prosecutors have no proof against the restaurant. Mr. Picart and his brother Christian, the Buffalo Grill president, were investigated last week on possible charges of involuntary homicide, endangering people's lives and fraud. At least four people have died in France from the human variant of Creutzfeldt-Jakob Disease, a fatal brain-wasting disease thought to be linked to the consumption of contaminated beef. The probe has found that two French victims had eaten at Buffalo Grill, although there is no evidence that they were sickened by its meat. The company denies breaking the ban and has threatened to file a defamation suit against two employees who appeared on TV in connection with the case and others, the paper said. COMDISCO FRANCE: Sold to Econocom Group for US$70 Million --------------------------------------------------------- Comdisco Holding Company, Inc. announced Monday that it had received all necessary regulatory approvals and has completed the sale of its French leasing operations, Comdisco France S.A. and Promodata SNC, to Belgium-based computer services provider Econocom Group for approximately $70 million. Comdisco previously announced the sale to Econocom on October 18, 2002. The Company also announced that it will make an optional partial redemption of $100 million principal amount of its 11% Subordinated Secured Notes due 2005. The outstanding principal amount of the Subordinated Secured Notes prior to this redemption is $385 million. Comdisco previously redeemed $65 million and $200 million principal amount of the 11% Subordinated Secured Notes on November 14, 2002 and December 23, 2002 respectively. The $100 million of Subordinated Secured Notes will be redeemed at a price equal to 100% of their principal amount plus accrued and unpaid interest to the redemption date. The partial redemption will occur on January 9, 2003. Wells Fargo Bank will serve as the paying agent for this redemption. A notice of the redemption containing information required by the terms of the indenture governing the Subordinated Secured Notes will be mailed to holders. This notice will contain details of the place and manner of surrender in order for holders to receive the partial redemption payment. CONTACT: Comdisco Mary Moster, 847/518-5147 mcmoster@comdisco.com or Paying Agent: Wells Fargo Bank, 800/344-5128 NEXANS SA: 'BBB' Rating Under Review With Negative Implication -------------------------------------------------------------- A sharp deterioration in the underlying trading performance of Nexans S.A. compelled Standard & Poor's to put Monday under CreditWatch with negative implication the 'BBB' long-term corporate credit rating of the France-based cable manufacturer. "The CreditWatch placement reflects the ongoing challenging industry conditions in the telecommunications and industrial markets, which have substantially reduced Nexans' profitability in 2002," said Standard & Poor's credit analyst Leigh Bailey. "Standard & Poor's expects that the poor conditions in these segments will continue in the medium term." The rating agency said it will review the company's "sharp deterioration in underlying trading performance and, given the importance of the group's financial profile in mitigating operating risk, the extent of its financial leverage." "In this context, Standard & Poor's will look at Nexans' main financial liabilities, which, at June 30, 2002, included EUR322 million ($332 million) of gross debt and EUR260 million of accrued pension and retirement obligations," S&P said. Standard & Poor's expects to complete its review in January 2003. For more information, contact: Leigh Bailey (London) Tel: (44) 20-7826-3780 e-mail: leigh_bailey@standardandpoors.com Bob Ukiah (London) Tel: (44) 20-7826-3617 e-mail: bob_ukiah@standardandpoors.com ============= G E R M A N Y ============= BAYER AG: Agrees to $257.5 Million Settlement of U.S. Case ---------------------------------------------------------- Bayer AG has reached a settlement with a US court over a probe into rebates the German drug maker paid for pharmaceutical products, the Wall Street Journal reported Friday. Though the final terms of the agreement remain to be negotiated, it is already established that Bayer AG will take a US$257.2 million provision. The report indicates, "Bayer said its US subsidiary has been the subject of a joint civil and criminal investigation into allegations it improperly underpaid rebates, particularly under the Medicaid health insurance program, between 1995 to 2000." It further reported that Bayer reached an agreement in principle on the terms of the settlement with the US attorney's office for the District of Massachusetts. In January 2001, Bayer paid $14 million to settle allegations it underpaid rebates and also caused doctors and other health-care providers to submit inflated reimbursement claims to Medicaid. CONTACT: BAYER AG Werk Leverkusen 51368 Leverkusen, Germany Phone: +49-214-30-58992 Fax: +49-214-307-1985 Homepage: http://www.bayer-ag.de DRESDNER BANK: Cuts Another 345 Jobs in Latin America ----------------------------------------------------- Dresdner Bank, which is a unit of the troubled Allianz AG, will cut 345 more jobs in Latin America as part of the restructuring program it is implementing, the Wall Street Journal reported on Friday. Dresdner's restructuring program aims to pull out of business in Latin America that is exclusively local, focusing its operations on supporting global customers outside Latin America in the Corporate and Correspondent banking unit, as well as the Private Banking International unit. The Wall Street also said there had been speculations at the beginning of the year that Dresdner, which reported a loss in the third quarter, would pull out of Latin America completely. Dresdner, however, denied rumors in a press release stating that the bank will remain anchored in the region, as it is a special institute of the Dresdner Bank unit. Moreover, Dresdner Bank reported on Friday it has sold its Dr. Luebke GmbH real-estate unit to the unit's managers, Morten Hahn and Ulrich Jacke. The unit's 160 employees will eventually have the opportunity to buy stakes in the management buyout, reports said. CONTACT: DRESDNER BANK AG J〉gen-Ponto-Platz 1 60301 Frankfurt, Germany Phone: +49-692--630 Fax: +49-692-63-4831 Homepage: http://www.dresdner-bank.de EM.TV MERCHANDISING: To Sell 49.9% Stake in Jim Henson Company -------------------------------------------------------------- EM.TV and Merchandising AG announces that, following a successful sales process, and negotiations with individual bidders during the past week, it has completed a letter of intent with a U.S. investment group for the partial sale of its U.S. subsidiary, The Jim Henson Company, Inc. The proposed agreement foresees a sale of 49.9 percent of JHC to an investment group led by Dean Valentine, together with Europlay Capital Advisors. The parties expect to complete the sale during January 2003. Dean Valentine was previously CEO of the United Paramount Network (UPN). As the former President of Disney/Touchstone Network Television & Animation, Valentine has extensive experience in the production and marketing of children's and family programming. At Disney, he oversaw the creation of the hit series "Home Improvement," "Ellen," and "Boy Meets World." He is responsible for the creation of Disney/ABC's One Saturday Morning block of children's programming, including the hit show "Recess." Valentine established Disney's hugely successful direct to video animation business, which included sequels to the "Lion King," "Lady and the Tramp," "Pocahontas" as well as a number of award winning "Winnie the Pooh" productions. The Valentine management team includes Mort Marcus, formerly Chairman, Miramax Television and Video, a subsidiary of The Walt Disney Company and Nick Van Dyk, former Executive Vice President and Chief Strategic Officer of Artisan Entertainment. Valentine will be in charge of the operations of JHC. Valentine commented, "Henson is one of the great global brands in the entertainment world. We are committed to continuing the legacy of creativity, humor and humanity that marked everything Jim Henson touched. At the same time we feel there is enormous potential for growth, not merely from Kermit and the Muppets, but from the expansion of the Henson brand into all areas of family entertainment." Europlay Capital Advisors is a private investor and advisory firm specializing in media and entertainment companies. The firm is a recognized leader in cross-border media transactions, and in the interactive entertainment business. Europlay is led by Chairman Mark Dyne and Managing Director Pamela Colburn. Dyne said, "We are very excited to be working with such a talented management group, which when combined with the Jim Henson Company, will create a powerful force in the field of family entertainment." This partial sale is intended to permit EM.TV to pay the remaining amount due under the so-called "Junior Loan," which financed EM.TV's 50% acquisition of its interest in the Junior TV Joint Venture, and, most importantly, to create a partnership bringing the powerful industry expertise and experience of the Valentine/Europlay team to build upon the tremendous brand equity and creative talents of the Jim Henson Company. EM.TV will continue to be able to consolidate the financial results of its 50.1% interest in JHC. Werner E. Klatten, EM.TV's Chairman, said: "We are very pleased about our new partnership with the team led by Dean Valentine and Europlay Capital Advisors. Through this proposed agreement we will be able to achieve a number of goals. It allows us to significantly reduce our outstanding liabilities by paying the last amounts due on the Junior Loan. We will remain as the majority owner of The Jim Henson Company and will continue to have an important presence in the US market and to participate in the positive developments of our JHC subsidiary. EM.TV will continue to undertake international distribution on behalf of Jim Henson productions." EM.TV acquired 100 percent of Jim Henson, the owner of the world- renowned Muppets characters, in 2000. In recent months, JHC has had a number of significant successes with its productions, particularly "It's a Very Muppet Christmas Movie," which aired on NBC in November, reaching over 11 million viewers in the United States and winning its time slot in virtually every key demographic. CONTACT: Frank Elsner Kommunikation fur Unternehmen GmbH Phone: +49 - 5404 - 91 92 0 Fax: +49 - 5404 - 91 92 29 Mail: info@elsner-kommunikation.de ========= I T A L Y ========= FIAT SPA: Erstwhile Italian Star Now Relegated to Junk Status ------------------------------------------------------------- Moody's Investors Service lowered Italian industrial conglomerate, Fiat SpA, to junk status Monday, reflecting the group's fall from grace this year, the Financial Times said. "Fiat is Europe's latest 'fallen angel' bringing to an end a year which saw a record number of investment grade companies reduced to junk status. It follows Alcatel, Ericsson, Vivendi Universal and ABB - all of which fell into non-investment grade," the paper said. The rating cut, which brought the group's credit grade to Ba1 from Baa3, affected about US$15 billion of debt, the paper added. Moody's said the company is suffering from weak operating performance and high debt level. The agency said further downgrades are likely. The Financial Times said Fiat is protesting the downgrade, claiming that the cut is "surprising and unjustified." Fiat also said in a statement that it would handle the situation after the downgrade "without particular problems." "Although the downgrade is a blow to the company's reputation, it will have little immediate effect on Fiat, since it was already effectively frozen out of debt markets by the low value put on its bonds by the market," the Financial Time said. The ratings cut comes after the company had just raised US$1.16 billion ($1.19bn) through the surprise sale of its 5 percent stake in General Motors. Moody's, however, said Fiat would need to sell its 80 percent stake in Fiat Auto, the car-making division, to avoid further downgrades. Already the company has put up for sale or sold many of its profitable businesses while Fiat Auto has prompted government and union outrage by sending home a fifth of its Italian workforce. The car-making division lost EUR1.1 billion in the first nine months of the year, and most analysts forecast further substantial losses next year. TELECOM ITALIA: Completes Merger of Blu SpA Into Its Operations --------------------------------------------------------------- TIM (Telecom Italia Group) gives notice that the deed whereby Blu SpA was merged into TIM SpA by incorporation, stipulated on December 18, 2002 has been registered Monday with the Register of Companies of the High Court of Turin. Therefore, pursuant to article 2504 bis of the Civil Code the foregoing merger enters into effect as of Monday. ===================== N E T H E R L A N D S ===================== ASML HOLDING: Moody's Cuts Ratings to Reflect Market Condition -------------------------------------------------------------- Moody's Investors Service lowered several ratings of ASML Holding N.V. Tuesday, citing weak market conditions and uncertainties as to when an upturn could be expected. Approximately $1.1 billion in debt securities were affected by the downgrade, which affected these ratings: - Senior implied rating lowered from Ba3 to B1 - Unsecured issuer rating lowered from B1 to B2 - $520.0 million in 4.25% convertible subordinated notes due 2004 lowered from B2 to B3 - $575.0 million in 5.75% convertible subordinated notes due 2006 lowered from B2 to B3 Moody's believes the new ratings reflect the continued weak market conditions for equipment suppliers to the semi-conductor industry, which in turn has continued to put pressure on profitability and cash flows. "From a cash flow perspective, the ratings downgrade reflects the expectation that there should be no material improvements in market conditions or unit shipment figures in 2003," Moody's said. Moody's, however, regarded the company's extensive restructuring efforts as a wise move. According to the rating agency, the company aims to close its Track division and dispose of its Thermal division, both of which have incurred significant losses over recent quarters. "The closure of the Track division is expected to require cash severance costs of approximately EUR12 million relating to 300 employees. ASML is currently in discussions with potential acquirers regarding the Thermal business; however, timing of the sale and potential costs associated with the transaction remain highly uncertain. "Another EUR10 million in cash costs is expected to be incurred in relation to redundancies of 700 staff in the lithography business in 2003. EUR80 million in lithography tools inventory (mainly i-line steppers) is also to be written down as part of the re-structuring," Moody's said. To perk up the company's cash flow, Moody's expect the group to implement "internal cost control measures" (including paring down R&D expenses, SG&A costs, and capital expenditures), and importantly, from working capital management. Overall, Moody's expects the company to continue to benefit from adequate liquidity by virtue of the its strong cash balances (last reported figures are EUR602.8 million as of June 30, 2002), which remain more than adequate to service interest costs of EUR 63.0 million per annum going forward. "The stable outlook reflects ASML's continued leading technology position as a photolithography equipment manufacturer, its impressive market share in key regions (including approximately 50.0% market share in the US), as well as the critical nature of the equipment provided by the company in the semi-conductor industry. While the overall operating environment remains unfavorable, the stable outlook also factors the company's strong cash balances, as well as substantial scope for internal cash flow improvement," Moody's said. ASML Holding N.V., headquartered in Veldhoven, The Netherlands, develops, manufactures, markets and services advanced photolithography projection systems, including wafer steppers and step-and-scan systems. For more information, contact: Eric de Bodard Managing Director European Corporate Finance Moody's Investors Service Ltd. (London) Tel: 44 20 7772 5454 Karl Pettersen AVP - Analyst European Corporate Finance Moody's Investors Service Ltd. (London) Tel: 44 20 7772 5454 =========== N O R W A Y =========== P4 RADIO: Shares Dive 77% After Gov't Revoked License ----------------------------------------------------- Investors dropped their shares of P4 Radio Hele Norge on Monday after the government awarded its broadcasting license to a rival, the Financial Times reported recently. The move by the government shocked many, including stock market analysts and station executives, who have regarded the license renewal as a mere formality. The commercial radio station had held the license for the last nine years. Shares of the company plunged more than 77% on news of the transfer. According to http://business.com,the Group operates a countrywide radio station financed by advertisements. The station's program profile includes music, news and commentary covering politics, community life, culture and entertainment. The Group is also involved in commercial development and value enhancement services for fixed and mobile Internet services and production of radio commercials. The Group's aim is to become a Nordic media player, with radio as its prime focus. Advertising accounted for 96% of 2000 revenues and sales, 4%. CONTACTS: 2626 Lillehammer 2626 NORWAY Tel: +47 612 48 444 +47 612 48 445 Web site: http://www.p4.no/ =========== P O L A N D =========== NETIA HOLDINGS: Extends Validity of Polish Prospectus ----------------------------------------------------- Netia Holdings S.A., Poland's largest alternative provider of fixed-line telecommunications services (in terms of value of generated revenues), announced Monday that it has extended the validity of its Polish prospectus, published on December 2, 2002, until April 30, 2003. This extension is necessary under Polish law in connection with the proposed issuances in early 2003 of series I and series II warrants, which authorize their holders to subscribe for series J shares (subscription warrants), and series III warrants, which authorize their holders to subscribe for series K shares. The issuances of series I, series II and series III warrants constitute the next phase of Netia's ongoing restructuring and are aimed at facilitating the issuance of shares representing 15% of Netia's share capital post restructuring (series J shares) to holders of record of Netia's shares on the end of the day preceding the day of subscription for Series H shares and implementation of the stock option plan (series K shares). NETIA HOLDINGS: Closes Subscription of Series H Shares ------------------------------------------------------ Netia Holdings S.A., Poland's largest alternative provider of fixed-line telecommunications services (in terms of value of generated revenues), announced Monday that the subscription for series H shares and issuance of EUR50 million Senior Secured Notes due 2008 were successfully completed. There included 312,626,040 series H shares allocated out of a total of 317,682,740 series H shares offered to Netia's creditors in accordance with the agreed terms of Netia's restructuring. The price of the series H shares was PLN 1.0826241 per share. In addition, Netia Holdings B.V., Netia's Dutch subsidiary issued EUR 49,482,000 of its 10% Senior Secured Notes due 2008 in exchange for the existing notes of Netia Holdings B.V. and Netia Holdings II B.V. in accordance with the agreed terms of the restructuring and the composition plans for each of Netia's Dutch subsidiaries. Wojciech Madalski, President and CEO of Netia, commented: "The issuance of series H shares and new notes constitute the most important final milestones in the implementation of the Restructuring Agreement reached with our creditors in March 2002. I am glad that we have concluded these phases of the restructuring successfully. Over 98% of entitled creditors took the opportunity to swap their liabilities into series H shares and will acquire the shares representing over 91% of Netia's share capital following this issuance. Currently the listing of series H shares on the Warsaw Stock Exchange is subject to the required registration by the court of the capital increase and an approval by the Warsaw Stock Exchange." =============== P O R T U G A L =============== SEGUROS E PENSOES: Still on Credit Watch Despite Ownership Change ---------------------------------------------------------------- Standard & Poor's has kept on credit watch the 'BBB+' long-term counterparty credit and insurer financial strength ratings of Seguros e Pensoes (SeP), citing continued uncertainties surrounding the group's future capitalization. In a press statement Monday, S&P said the 'BB+' long-term counterparty credit rating on SeP's holding company, Seguros e Pensoes GERE S.G.P.S. S.A., also remains on CreditWatch with negative implications. Both ratings were placed on CreditWatch on October 18, 2002. "The ratings are based on the SeP subgroup's stand-alone characteristics of weak capitalization (which is, however, expected to improve somewhat following a forthcoming capital increase of about EUR115 million) and marginal operating performance, offset by an extremely strong domestic business position," S&P said. "The ratings on SeP also take into account some financial support from its new owner, Banco Comercial Portugu^s, S.A. (BCP; A- /Negative/A-2), following the effective completion of BCP's reacquisition of SeP from the Netherlands-based Eureko insurance group (Eureko; main entities are rated A+/Watch Neg/--). As a consequence of this transaction, Standard & Poor's has ceased to attribute support to SeP from Eureko," the rating agency said. "Although Standard & Poor's views the amount of the announced capital injection positively, it nevertheless expects future support to be limited, particularly in view of BCP's publicly announced intentions to seek a partner for SeP," said Standard & Poor's credit analyst Peter McClean. The company conducts its insurance business in Portugal. For more information, contact: Peter McClean (London) Tel: (44) 20-7847 7075 e-mail: peter_mcclean@standardandpoors.com David Laxton (London) Tel: (44) 20-7847-7079 e-mail: david_laxton@standardandpoors.com Tatiana Grineva (London) Tel: (44) 20-7847-7061 e-mail: tatiana_grineva@standardandpoors.com David Anthony (London) Tel: (44) 20-7847-7010 E-mail: david_anthony@standardandpoors.com =========== R U S S I A =========== IMPEX BANK: Long-term Counter Party Rating Raised to 'CCC' --------------------------------------------------------- Impex Bank, one of Russia's 30 largest banks, was upgraded Monday to 'CCC' from 'CCC-' by Standard and Poor's, which noted the bank's improved revenue structure. The ratings upgrade covered the bank's long-term counter party credit rating. S&P also affirmed the bank's 'C' short-term counter party credit rating and assigned it a stable outlook. "The ratings upgrade reflects Impex's progress in building its market position and diversifying funding sources. Impex remains highly vulnerable nonetheless to the economic environment owing to its significant related party risk concentrations and weak profitability," said Standard & Poor's credit analyst Irina Penkina. "The revenue structure is now more balanced between net interest and fee income, although gains from securities revaluations remain significant. The bank has a high level of asset risk owing to lending concentration and significant exposure to related entities. Although the bank has a low non-performing loan level, problem loans are growing and provisioning levels are relatively thin. High exposure to related parties raises concerns about the bank's capital adequacy," S&P said. "The future direction of the ratings on Impex will be driven by its ability to achieve adequate profitability and substantially reduce exposure to Metalloinvest group companies," said Ms. Penkina. According to S&P, owners of Metalloinvest have a poor record. Impex shares some owners with Rossiysky Kredit Bank, one of the largest Russian banks to fail in 1998. For more information, contact: Irina Penkina (Moscow) Tel: (7) 095-787-4564 e-mail: irina_penkina@standardandpoors.com John Gibling (London) Tel: (44) 20-7847-7209 e-mail: john_gibling@standardandpoors.com TNK INTERNATIONAL: Decision Over Slavneft to Be Revealed Soon ------------------------------------------------------------- The division of Slavneft between Russian oil group Sibneft and smaller rival TNK will soon be finalized, according to Sibneft senior executive Alexander Korzik in an interview with the Financial Times. Mr. Korzik said the Sibneft prefers to absorb Slavneft and issue new shares in the enlarged company to TNK, along with a board seat. The two companies acquired the government's 74.5% holding in Russia's seventh-largest oil group during a controversial privatization auction last week. Through Invest-Oil, a special- purpose company they jointly control, the two oil players placed a bid of US$1.86 billion, just a fraction above the minimum US$1.7 billion price for an asset that some analysts had valued as high as US$3 billion. Mr. Korzik told the Financial Times that the companies may still opt to split Slavneft's assets 50-50. These include oil production, a refinery and gas stations. Following the acquisition, Moody's placed under review the ratings assigned to TNK International and Tyumen Oil (TNK). The rating agency says its review will assess "the impact of the additional debt on TNK International and Sibneft, how quickly the companies may recover their financial stability under different oil price scenarios, the potential positive impact of the synergies and efficiency measures which the companies can drive through Slavneft's operations, and the quality of the cash flow streams to be derived from the acquisition." "While the companies jointly have the resources to undertake an acquisition of this magnitude, it will considerably leverage the balance sheets of both TNK International and Sibneft. In addition Slavneft's own existing debt of around US$600 million and any future debt will be senior to the two issuers' rated debt," Moody's noted. "There are a number of uncertainties including the exact terms of the acquisition between the two parties and the acquirors' medium term strategies in respect to the new joint venture. The review will also need to encompass Slavneft's investment needs, financial policies and dividend plan," Moody's said. Under review are the Ba2 senior implied rating of TNK International, the Ba2 local currency issuer ratings of Tyumen Oil (TNK) and Siberian Oil Company (Sibneft), the Ba3 foreign currency rating of TNK and Ba3 loan participation note ratings of both Sibneft and TNK (guaranteed by TNK International). Registered in the British Virgin Islands, TNK International Ltd. is the holding company of the TNK group. Its principal subsidiary is JSC Tyumen Oil Company (TNK), headquartered in Moscow. OAO Siberian Oil Company (Sibneft) is also headquartered in Moscow. TNK and Sibneft are two of Russia's leading vertically integrated oil companies, TNK being the fourth largest and Sibneft the fifth-largest on the basis of oil and gas production. =========== S W E D E N =========== GENERAL MOTORS: May Face Resistance in Saab Restructuring --------------------------------------------------------- General Motors Corporation could face another battle to push through layoffs at its ailing Saab Automobile unit in Sweden. This comes a year after unions forced GM to scale back a restructuring of its main European operations, the Wall Street Journal said Tuesday. The report says a total of 1,300 jobs would be eliminated at Saab, 17% of the unit's work force, in an effort to stanch losses of several hundred million dollars a year. Saab spokesman Christer Nilsson said the planned job reductions would "probably end in some forced layoffs. We can't achieve that number through attrition alone." This contradicts the statement of Klaus Franz, chairman of the Opel workers council and of a committee of GM's European workers, that under terms of last year's restructuring agreement at GM's main European unit, Adam Opel AG, the planned Saab job cuts must be done through early retirement and voluntary departures, not layoff. "In last year's Opel restructuring, GM originally aimed to close at least one of the unit's eight automobile plants and shed close to 10,000 workers. In the end, Opel kept all eight plants and agreed to no forced layoffs. Some 2,000 jobs are being eliminated through attrition and early retiremen," the report says. Although the agreement covering the Opel restructuring covers Saab as well and was signed by Saab's top union and human- resources officials, Saab labor groups and management plan to begin discussing the outline of a restructuring plan in January and hope to have an agreement by March. Job reductions are slated to take effect by the fall of 2003. The Journal further reports that Saab has been a problem for GM since it bought into the Swedish carmaker 12 years ago. The company suffers from a narrow product line and has trouble drawing customers from the two top premium brands, Bayerische Motoren Werke AG and DaimlerChrysler AG's Mercedes-Benz division. GM's efforts to restructure Saab underline the pressures weighing on the big American car maker, where US profit margins are being squeezed by intense competition from foreign and domestic rivals, and last year's European result falls well short if the company's goal. "The trouble is, GM has been trying to revive Saab for a few years now. Up to now, they haven't really succeeded," said Michael Raab, an automotive analyst at Sal. Oppenheim & Cie. in Frankfurt. "They will definitely have to succeed with this turnaround." ===================== S W I T Z E R L A N D ===================== GRETAG IMAGING: To File for Liquidation of Ailing Units Soon ------------------------------------------------------------ The Board of Directors and the Executive Committee of Gretag Imaging Holding AG have found during in-depth analysis and preparation for the planned restructuring of the Gretag Imaging Group that the over-indebtedness after implementation was inevitable. The Board of Directors of Gretag Imaging Holding AG has therefore decided to present its over-indebtedness to the Courts. At the beginning of December, the Board of Directors and the Executive Committee of Gretag Imaging Holding AG announced a drastic restructuring and downsizing plan for the Gretag Imaging Group. Shareholders had been asked to decide upon the financial restructuring at the extraordinary general assembly, which was called for December 23, 2002. A capital cut of 90% was planned followed by an increase in capital in 2 stages. Messers Eduard Brunner and Hans-Rudolf Zulliger intended to subscribe to CHF15 million worth of shares, subject to certain conditions. Urgently needed liquidity would have been made available to the Gretag Group by these means. The Board of Directors used the time up until the extraordinary general assembly for intensive negotiations with its creditors. Although the room to maneuver within the negotiations was extremely tight, they managed to obtain verbal agreements from both the Italian Banks and Kodak to partially waiver their claims. In order for the claims to be waived, the rest of the outstanding debts had to be paid in the short term, thus increasing the corresponding demand on liquidity. The Board of Directors, under new leadership, along with the Management, also analyzed the various options available to put concrete plans into action. The liquidation respectively the re- development of the subsidiaries, particularly Gretag Imaging Trading AG proved to be unavoidable, in order to restore the balance sheet of Gretag Imaging Holding AG. In view of the complex financial and legal integration within the Group, the Board of Directors were unable to find a practicable solution which could be implemented in the short time available and in accordance with the law. In the end, the problem of over-indebtedness, along with the demands on short-term liquidity proved to be insurmountable. A worsening business outlook, requested extensive adjustments of the value of interests in subsidiaries, inventory and liabilities between Group companies. This, together with the fact of only verbal agreements for the release of loans, has made it impossible to present a balance sheet of Gretag Imaging Holding AG on the date of the extraordinary general assembly, which fulfils the requirement of a positive equity value after the reduction of the nominal share value and the increase in capital. As a consequence the Board of Directors of Gretag Imaging Holding AG has decided that it is no longer possible to justify continuing doing business as a Group of Companies. It will therefore present the over-indebtedness to the district courts at the earliest possible opportunity. A solution is being sought to save those parts within the company, in particular Gretag Imaging AG, which could continue to operate. Therefore it is not possible to vote upon the resolutions as given in the extraordinary general assembly. The Board of Directors will inform the shareholders present of the situation. In Switzerland, 400 employees along with around 600 employees in other countries will be affected by these measures. The Board of Directors deeply regrets that they have had to announce this decision so shortly before Christmas. The means to pay the December salaries had been made available. CONTACT: Reto Welte, CFO Phone: +41 1 842 22 42 Fax: +41 1 842 23 00 E-Mail: reto.welte@gretag.com SWISS LIFE: Appoints Bruno Gehrig as New Chairman ------------------------------------------------- Struggling insurer Swiss Life recently rounded out its management reshuffle by appointing respected national banker Bruno Gehrig as its new chairman, the Wall Street Journal reported Monday. Pending shareholder approval, Swiss Life announced that 58-year old Gehrig, currently vice-president of the Swiss National Bank, would take the place of long-standing Chairman Andres Leuenberger on May 27, 2003. Swiss Life replaced most of its upper management following a media exposure that the insurer's former executives enriched themselves through a secretive investment fund. Most of the managers who participated in the fund were fired. Leuenberger, who was not involved in the fund, suffered a great blow to his reputation as investors blamed him for neglecting corporate duties, the report says. He commented on the insurer's move saying, "Gehrig's nomination represents another important step in the implementation of the strategic goals approved by the Board of Directors in the summer of 2002." Insurance analyst Heinrich-Horst Wiemer further commented that the appointment shows Swiss Life's situation is improving, "otherwise they wouldn't have been able to convince Gehrig to join the board." Gehrig came to prominence when he was appointed to SNB's board in 1996 and his performance at the bank won him countrywide respect. Earlier reports about Swiss Life focused on the involvment of many executive board members in the secretive investment fund that among others enriched its former Chief Executive, Roland Chlapowski, who was replaced in October by Rolf Doerig. Swiss Life also attracted harsh investor criticism in autumn after the company had to restate its figures twice in less than a month, almost crippling a badly needed CHF1 billion capital increase. Since many of the executives were forced to leave the company, Swiss Life appointed several people into its executive board, including Martin Senn from Credit Suisse Group (CSR), Paul Mueller from insurer Helvetia Patria (Z.HEP) and Reto Himmel from UBS Warburg. An analyst told the Journal that the new appointments should help Swiss Life win back investors' trust. "Swiss Life, however, faces a tough restructuring program in the coming months," he said. The unprofitable company aims to improve its margins sharply over the next two years and has earmarked several big asset sales. But analyst warn that the current weak economy may prolong the insurer's revamp, the report disclosed. CONTACT: Web site: http://www.swisslife.com =========================== U N I T E D K I N G D O M =========================== AMP BANKING: Sells Credit Card Portfolio to American Express ------------------------------------------------------------ AMP Banking has entered into an agreement to sell its credit card portfolio in Australia and New Zealand to American Express for about AU$236 million. This amounts to about AU$30 million above book value. The sale is expected to be completed on 31 December 2002 and the final purchase price will be based on total gross accounts receivable at that date. AMP Banking has about 162,000 credit cards on issue. There will be no immediate changes to the terms and conditions on these cards. "We agree working closely with American Express to ensure that out customers will not be inconvenienced in any way by the change in ownership," Mr Craig Meller, Managing Director of AMP Banking, said. "Given that we are currently running the portfolio on an American Express system, we don't anticipate any problems in the handover." AMP will continue to offer credit cards in Australia under an exclusive co-branding distribution agreement with American Express. The sale of the credit card portfolio is part of a major restructuring of AMP Banking announced on 14 November, to enable it to focus on core retail banking products in Australia and release about AUD500 million in capital by the end of 2003. "We are moving as quickly as we can to implement our restructuring plans, while managing the needs of both our customers and our employees," Mr Meller said. "Ultimately, we are building a more streamlined, profitable banking operation focused on Australian retail deposits and mortgages." A structured sale process is currently underway for AMP Banking's property finance business in Australia and New Zealand and the UK and New Zealand mortgage businesses. Contact: Mark O'Brien Phone: 61 2 9257 7053 AVON ENERGY: Moody's Cuts Rating on Belief Firm Lacks Debt Cover ---------------------------------------------------------------- Moody's Investors Service decided Monday to lower the ratings of Avon Energy Partners Holdings (AEPH) to B2 from Baa3 and assigned it a negative outlook, citing the firm's lack of debt coverage. Moody's believes the cashflow from the regulated Aquila Networks business alone "may not be sufficient to fully cover AEPH's financial obligations over the long term, with remaining group cash flows emanating from significantly less stable sources such as dividends from power plant investments in Turkey and Pakistan." Along with AEPH's rating, Moody's also lowered the issuer rating of Aquila Power Networks plc and the guaranteed debt rating of Midlands Electricity plc to Baa3 from Baa2. The outlook of these ratings is also negative. Avon Energy Partners Holding is the parent company of Midlands Electricity plc, whose principal operating subsidiary is the fourth largest electricity distribution network in England & Wales, with total connected customers of 2.3 million. In addition to its regulated monopoly network business, AEPH has three remaining investments in independent power generation projects in the U.K., Turkey and Pakistan. Moody's says full financial support from parents Aquila Inc. (Ba2) and FirstEnergy Corp (Baa2) could not be relied on at this point. In addition, there is a small margin of error for AEPH, which is set to undergo another regulatory price review for the period from April 1, 2005. The rating agency says this review "introduces a risk that, reduced operating cash flows at Aquila Networks may also constrain the cash flow distribution capacity of Aquila Networks to AEPH." "[Based] on the obligations imposed upon the company's directors under the Aquila Network license as well as the undertaking given by its owners as ultimate controllers, the single most important concern for management is to avoid any breach of the license of the regulated entity. "As a result, in the event that deterioration or credit concerns were to develop impacting Aquila Networks, intra-group dividend restrictions could be imposed that would impair AEPH's ability to service its debt. There also is a risk that executive orders by the U.K. electricity Regulator OFGEM, as part of the regulatory ring-fencing, could restrict cash distributions from Aquila Networks," Moody's said. According to the ratings firm, the group has confirmed that AEPH is the subject of the currently ongoing process whereby its owners Aquila Inc (79.9%) and FirstEnergy Corp. (20.1%) have solicited expressions of interest for the company. "As highlighted by Moody's previously, the current group debt of around GBP1.2 billion is in excess of the regulatory asset value of the networks business of around GBP950 million. Moody's is therefore concerned that, whether or not AEPH is sold, AEPH bondholders are significantly exposed. However, the company's management was not able to provide any comfort from either its current owners, in the case that AEPH was not sold, or the prospective future owners, with respect to the AEPH debt," Moody's said. "The outlook on the debt ratings of AEPH will remain negative as Moody's will seek to gain an understanding of the strategic and economic intentions of the company and its current or future owners with respect to AEPH, and its implications for bondholders of this entity," the rating agency said. For more information, contact: David G. Staples Senior Vice President European Corporates Moody's Investors Service Ltd. (London) Tel: 44 20 7772 5454 Ralf Wimmershoff Vice President - Senior Analyst European Corporates Moody's Investors Service Ltd. (London) Tel: 44 20 7772 5454 AVON ENERGY: Credit Grade Slips One Notch on S&P Ratings Board -------------------------------------------------------------- Standard & Poor's lowered Tuesday its long-term corporate credit ratings on Avon Energy Partners Holdings, a day after rival rating firm Moody's did so. The U.K.-based electricity holding company's long-term grade is now rated 'BB', down from 'BBB', the same rating assigned to the firm's senior unsecured debt ratings. Aside from AEPH, S&P also lowered its long-term corporate credit and debt ratings on Avon Energy's U.K. subsidiaries, Midlands Electricity PLC (Midlands) and Aquila Networks PLC (formerly GPU Power Networks (UK) PLC), to 'BBB-' from 'BBB', and its short- term ratings on Aquila Networks to 'A-3' from 'A-2'. All affected ratings remain on CreditWatch but the implications have been revised to negative from developing. "The rating change follows the delay in the proposed sale of the U.K. Avon Energy assets by its U.S. shareholders and Standard & Poor's view that the weak credit quality of the major shareholder in the U.K. operations, Aquila Inc (BB/Negative/--), can increase interference risk through upstreaming of cash from its U.K. investments," S&P said. "Aquila's intention to sell its U.K. operations has not been realized, and in the meantime the credit quality of those operations remains subject to the current shareholders' financial policy," said Standard & Poor's Infrastructure Finance credit analyst Daniela Katsiamakis. "Although Standard & Poor's believes that the regulator will endeavor to satisfy debtholders at Aquila Networks and that debtholders at Midlands should also benefit from regulated cash flow, there is no similar degree of protection for debtholders at Avon Energy. Moreover, it is probable that the regulator will restrict cash flows to Avon Energy, causing heightened risk of default," she said. "The CreditWatch on Avon Energy reflects the uncertainty of both serviceability and recovery for its debtholders, and the uncertainty of shareholders' intentions to address the credit issues and sell their interest in the company. At the Midlands level, the CreditWatch reflects the potential for its corporate credit ratings to be equalized with those of Avon Energy," S&P said, adding that "[it] will maintain separate ratings until it further reviews the relationship between the companies to determine whether an ongoing rating distinction is valid." Completion of the sale process has been delayed and a date is yet to be confirmed. Standard & Poor's intends to resolve the CreditWatch in the coming weeks, following discussions with the companies and their shareholders and the regulator. Avon Energy is jointly owned by Aquila (79.9%) and FirstEnergy Corp. (20.1%; BBB/Negative/--) and its issued debt amounts to about GBP870 million ($1.4 billion). Midlands and Aquila Networks are wholly owned by Avon Energy and have issued debt totaling less than GBP500 million. For more information, contact: Paul Lund (London) Tel: (44) 20-7826-3715 e-mail: paul_lund@standardandpoors.com Daniela Katsiamakis (London) Tel: (44) 20-7826-3519 e-mail: daniela_katsiamakis@standardandpoors.com BRITISH ENERGY: Net Value Dips to Crisis Level ---------------------------------------------- British Energy is going to hold an extraordinary meeting on January 14, as the company's net assets have fallen to an alarming level, the Telegraph said yesterday. According to the paper, net assets stand at GBP140 million, well beneath half the called up share capital of GBP277 million and a staggering fall from GBP1.3 billion just a year ago. "This is a technical action that the company's accounts have triggered," a spokesman told the Telegraph. "Nothing will happen at the meeting. There will be no chance to vote or anything of that sort." The dramatic drop in the company's asset value, the paper says, comes after a series of write-downs on British Energy's power stations, compounded by the generator's rising debt. Last month, the government lent the company GBP650 million to spare it from insolvency. British Energy, which produces almost a quarter of the country's power, has seen its share price tumble from a high of 749p in 1999 to 5.5p on two days ago, destroying more than GBP5 billion of shareholder value. At the present price the company is worth less than GBP35 million, the paper said. Meanwhile bondholders and banks, who have appointed Close Brothers to advise them on whether to push the company into administration, are unlikely to retrieve more than a quarter of their investment. British Energy owes banks, bondholders and trading partners roughly GBP1.2 billion. Bondholders have been meeting advisers, and a decision on whether to push for administration is expected early next year. A clause allowing British Energy to be renationalized will be included in the restructuring legislation, which should also arrive in January. British Energy is already effectively in the hands of the Government, since the Department of Trade and Industry has the final say in any decision on how to spend the state's o650m loan to the company, the paper said. BRITISH ENERGY: Plans to Dispose of Bruce Power and Huron Wind -------------------------------------------------------------- The Board of British Energy announced Monday that British Energy and certain of its subsidiaries have entered into binding Heads of Agreement to dispose of British Energy's entire 82.4% interest in Bruce Power Limited Partnership as follows: 79.8% to a consortium made up of Cameco Corporation, BPC Generation Infrastructure Trust and TransCanada PipeLines Limited (together, the Consortium); and 2.6% to the Power Workers' Union Trust No. 1 and The Society of Energy Professionals Trust (the Society) (together the Unions). The Consortium will also acquire British Energy's 85% interest in Bruce Power Inc. (BPI), the general partner of Bruce Power. In addition, the Consortium will acquire the 50% interest that British Energy holds in Huron Wind Limited Partnership through its subsidiary British Energy Canada Investments Inc. The disposal of British Energy's interest in Bruce Power, BPI and Huron Wind will be effected through the sale of British Energy (Canada) Ltd (BECL). Cameco already holds a 15% interest in Bruce Power and BPI through its subsidiary Cameco Bruce Holdings Inc. and the Unions together hold a 2.6% interest in Bruce Power. The Consortium members will each own a 31.6% interest in Bruce Power and a 16.7% interest in Huron Wind as a result of the disposal. PWU will own a 4% interest in Bruce Power and the Society will own a 1.2% interest in Bruce Power as a result of the disposal. BPI will be entirely owned by the Consortium as a result of the disposal. British Energy's decision to sell BECL is a key element in the proposed restructuring announced on 28 November 2002. British Energy expects to receive a maximum aggregate consideration of CAD770m, subject to various contingencies and potential adjustments. Of this aggregate consideration, British Energy will receive CAD630m in cash at closing subject, inter alia, to the pre-closing adjustments in respect of material adverse change and early termination of trading contracts, which are described below. In addition, British Energy expects to receive up to: - CAD100m, contingent on the restart of the two Bruce A units as set out below; plus - CAD20m, which will be retained for two months following closing against a potential adjustment in respect of any pension fund deficit; plus - CAD20m, which will be retained to cover any successful claims in respect of customary representations and warranties until any claims raised against British Energy or certain of its subsidiaries within two years from the date of closing are resolved. In addition, CAD80m will be retained to cover the estimated outstanding tax liabilities of BECL and its subsidiaries. Any balance of the retained sums not applied to cover the outstanding tax liabilities of BECL and its subsidiaries, pension fund deficit or any successful claim for breach of representations and warranties will be paid to British Energy at the end of the relevant period for retention subject to confirmation from the Consortium, based upon written input from their auditors, actuaries, tax or legal advisors to the extent necessary, and in consultation with Ontario Power Generation, Inc. ("OPG"), that such a release is appropriate. In the event that sums due in respect of outstanding tax liabilities, any pension fund deficit or claims under the representations and warranties exceeds the amount held back for that purpose, British Energy would be required to pay the amount of such excess to the Consortium. The purchase price is subject to adjustment pre-closing if an event, change or development in or affecting the business of Bruce Power which is materially adverse to such business or, inter alia, the prospects or operation of the Bruce facility (a "MAC") occurs prior to closing. In the event of a MAC with a value of more than C$20m, there will be an adjustment to the purchase consideration calculated by reference to the impact on the value of the interest in Bruce Power acquired by the Consortium on a net present value basis. For a MAC with a value of up to C$350m, the sole remedy for the Consortium shall be an adjustment to the purchase price. If a MAC with a value of more than C$350m occurs, the parties will not be obliged to complete the proposed transaction. In addition, the purchase price may be adjusted pre-closing in the event that contracts for the sale of electricity or the hedging of electricity prices (the "Trading Contracts") are terminated early prior to closing. The principal events of default under the Trading Contracts that could give rise to early termination are non-payment or insolvency of either party to the agreement or their guarantor. In the majority of Trading Contracts, the insolvency of British Energy would be an event of default, which could lead to early termination. The purchase price will be reduced dollar for dollar if there is a net loss to Bruce Power from the termination of a Trading Contract, and increased dollar for dollar if there is a net gain. The amount of such net loss or net gain shall be calculated at closing taking into account any replacement contracts entered into by Bruce Power and any payments made in connection with letters of credit associated with the relevant Trading Contract. A net loss resulting from the early termination of a Trading Contract will not constitute a MAC. Of the CAD100m receivable by British Energy contingent on the restart of two of the Bruce A units, CAD50m will be released to British Energy provided the first unit is restarted by 15 June 2003 and an additional CAD50m will be released to British Energy if the second unit is restarted by 1 August 2003. Delays in the restart of each unit would result in the payments reducing by 10% per month. Any amounts forfeited by British Energy under this arrangement would be paid to the Provincial Government of Ontario (the "Province"). In addition to the consideration referred to above, the Consortium will pay CAD100m to British Energy at closing to fund a one-off estimation allowance and restructuring fee of CAD100m to the Province in consideration of the Province consenting to the transaction. Subject to adjustment, therefore, the total consideration payable by the Consortium is expected to be CAD950m. Closing of the proposed transaction is subject to a number of conditions precedent including, inter alia, receipt of certain confirmations from the Canadian Nuclear Safety Commission ("CNSC"), receipt of favorable Canadian tax rulings, consent of the Province to the proposed transaction, Canadian Competition Act clearance and the approval of British Energy's shareholders. The Secretary of State for Trade and Industry (the "DTI") has consented to the proposed sale under the DTI credit facility (the "Facility") entered into on 26 September 2002 and amended on 28 November 2002, and the Province has agreed in principle to give its consent. The Unions have consented to the transaction under the Bruce Power limited partnership agreement in consideration of Bruce Power Investments Inc, a subsidiary of British Energy, forgiving loans of approximately CAD14.6m made to the Unions to allow them to acquire their initial 2.6% interest in Bruce Power and fund subsequent capital calls, and the transfer to the Unions of an additional 2.6% interest in Bruce Power immediately prior to closing. As detailed above, the parties will not be obliged to complete the transaction if a MAC with an aggregate value of greater than CAD350m occurs. In addition, the Consortium may elect not to close the transaction if certain senior employees of Bruce Power leave the employment of Bruce Power or announce their intention to do so prior to closing and it is a further condition of closing that certain senior employees enter into employment agreements with Bruce Power for at least five years subject to death, disability, normal retirement arrangements and dismissal for cause. The DTI has agreed to provide certain credit support to Bruce Power under the Facility in the period prior to closing, which it is anticipated will occur prior to 14 February 2003 in accordance with the restructuring proposal announced on 28 November 2002. If closing has not occurred by 14 February 2003 the parties are not obliged to complete the proposed transaction. At closing, the Consortium will assume responsibility for all of British Energy's obligations as credit support provider and/or guarantor under Bruce Power's existing Trading Contracts. The Consortium will also take over British Energy's financial assurance obligations to Bruce Power in respect of the CNSC license at closing. In addition, the Consortium will assume responsibility for the CAD175m guarantee granted by British Energy to OPG under the lease of the Bruce facility and pay the CAD225m of deferred rent payments due by Bruce Power to OPG at closing. British Energy will have no further obligation to OPG in respect of deferred rent payments. The proceeds of the transaction will initially be paid into an account approved by and charged in favor of the DTI as security for British Energy's obligations to the DTI and are expected to be used to repay the sums made available to British Energy under the Facility. The disposal will considerably reduce the cash and collateral requirements of British Energy going forward under the Facility. A break fee of CAD15m will be payable by British Energy in the event that the transaction is not completed as a result of the Board accepting an unsolicited offer for its entire interest in Bruce Power. The break fee shall also be payable if the Board fails to recommend the transaction or varies its recommendation to the shareholders and the shareholders do not approve the transaction and, if as a result of failure to gain shareholder approval an insolvency official is appointed, the insolvency official does not affirm and agree to be bound by the heads of agreement within five days of his or her appointment. The parties have agreed to work expeditiously and in good faith to negotiate, settle and execute a definitive agreement embodying the foregoing and further provisions in terms satisfactory to the parties acting reasonably. The net book value of the net assets (after adjustment for minorities and financing and taking into account the nature of the lease of the Bruce facility under U.K. GAAP) which are the subject of the proposed transaction was CAD96m as at 31st March 2002. The profits (pre-tax and post-minorities) attributable to the net assets, which are the subject of the proposed transaction were CAD74m for the 10ｫ month period from 12 May 2001 to 31 March 2002. British Energy's decision to sell BECL is a key element in the proposed restructuring intended to achieve the long-term financial viability of the British Energy group. As previously announced, the DTI has confirmed its intention to support the proposed restructuring and has agreed to extend the Facility until 9 March 2003 in order to provide financial stability and security while British Energy seeks the support of certain significant creditors. The Board believes that the restructuring of the group offers the best available opportunity to achieve the long-term financial viability of the British Energy Group. However, the proposed restructuring requires British Energy to reach formal 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 and AmerGen Energy Company, LLC. If the transaction is not completed, such agreements with creditors cannot be reached, the required approvals for the restructuring are not forthcoming, the assumptions underlying the restructuring proposal are not fulfilled or the conditions to the Facility or restructuring are not satisfied or waived within the timescales envisaged, British Energy may be unable to meet its financial obligations as they fall due and therefore, British Energy may have to take appropriate insolvency proceedings, in which case the distributions to unsecured creditors may represent only a small fraction of their unsecured liabilities and there is unlikely to be any return to shareholders. Bruce Power is a subsidiary undertaking of British Energy, which operates the Bruce Power nuclear facility. The facility is located in a 2,300-acre site which houses two power stations, plus supporting infrastructure, a training center, maintenance facility, emergency power facilities and a visitors' center. The facility is situated on the shores of Lake Huron between the towns of Kincardine and Saugeen Shores. Bruce Power leases eight reactors at the site. The four operating reactors in Bruce B have a generating capacity of around 3,200 MW. The four reactors in Bruce A were removed from service between 1995 and 1998. Subject to CNSC approval, Unit 4 of Bruce A is expected to return to service in April 2003 followed by Unit 3 of Bruce A before next summer's period of peak demand. The environmental assessment hearing, which is a necessary requirement of the Bruce A restart was held on December 12th 2002. The CNSC staff recommended that the Commission accept the report presented to them and allow the Bruce A restart to progress to the licensing stage. Further hearings for additional steps in the restart process are scheduled for 16 January 2003 and 26 to 27 February 2003. Huron Wind is a limited partnership between British Energy and OPG which owns a wind farm comprising five 1.8 MW wind turbines with a capacity of 9.0MW. Each party owns a 50% interest in Huron Wind and will share the power output equally. The Huron Wind site, which is located adjacent to the Bruce Power Visitors Centre, commenced commercial operation in mid-November 2002. Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest producer of uranium and the largest supplier of combined uranium and conversion services. Cameco's uranium products are used to generate clean electricity in nuclear power plants around the world including Ontario, where the company has an interest in Bruce Power. The company also mines gold and explores for uranium and gold in North America, Australia and Asia. Cameco's shares trade under the symbol CCO on the Toronto stock exchange and CCJ on the New York stock exchange. TransCanada is a leading North American energy company. It is focused on natural gas transmission and power services. The company's network of approximately 38,000 kilometres of pipeline transports the majority of western Canada's natural gas production to the fastest growing markets in Canada and the United States. With today's announcement, TransCanada owns or has interests in, controls, manages or is constructing facilities for approximately 4,150 megawatts of power, an amount of power that can meet the needs of about four million average households. The company's common shares trade under the symbol TRP on the Toronto and New York stock exchanges. BPC Generation Infrastructure Trust, based in Toronto, Ontario, is established by Ontario Municipal Employees Retirement Board ("OMERS"), one of Canada's largest pension funds with CAD34bn in assets under management. OMERS, which was established in 1962, has grown into one of the most competitive and cost-effective pension plans in Canada, providing guaranteed retirement security, competitive benefits and efficient service to 312,000 members and close to 1,000 employers across Ontario. Cameco and TransCanada will be making announcements on the Toronto and New York stock exchanges concurrent with this release. CONTACT: Paul Heward (British Energy, Investor Relations) Phone: +44 1355 262 201 Andrew Dowler (Financial Dynamics, Media) Phone: +44 20 7831 3113 BRITISH ENERGY: To Hold Extraordinary General Meeting January 14 ---------------------------------------------------------------- British Energy plc announced Tuesday that it is calling an Extraordinary General Meeting of its Shareholders to be held on Tuesday, January 14, 2003. The sole purpose of the EGM is to consider in accordance with Section 142 of the Companies Act 1985 whether any, and if so what, steps should be taken to deal with the fact that the net assets of the Company are less than half of its called-up share capital. This follows the announcement of the Company's Interim Results on December 12, 2002. The timing requirements of Section 142 means that this meeting must be held before the proposed restructuring can be agreed to by the Company's creditors. Consequently, the EGM will not be able to consider a definitive proposal for the restructuring and is being held in order to comply with the requirements of the Companies Act. A circular, together with a notice of the EGM and a copy of the Company's Interim Results for the 6-month period from 1 April to 30 September 2002, has been posted to Shareholders Tuesday. A copy of this notice may be viewed through this link http://bankrupt.com/misc/british_energy.pdf The EGM will be held at 11.00 am on Tuesday, January 14, 2003 at the Murrayfield Stadium Conference Centre, Edinburgh, EH12 5PJ. CONTACT: Andrew Dowler (Financial Dynamics) Phone: 0207 269 7140 Paul Heward (Investor Relations) Phone: 01355 262201 COMPASS GROUP: Moody's Unimpressed With Asset Disposals ------------------------------------------------------- The sale by Compass Group Plc of its Travelodge and Little Chef road-side businesses has triggered a ratings action from Moody's Investors Service, which changed the outlook of the firm's Baa1 long-term senior unsecured debt rating to negative from stable. According to Moody's, the change in outlook "reflects the agency's opinion that the anticipated improvements in Compass's financial profile may not be sufficient to achieve credit metrics commensurate with the rating category over the intermediate term. The rating action factors in the impact of the proposed return of capital to shareholders and the one-off event-linked nature of the share buy back program." The company plans to return to shareholders GBP300 million of the GBP712 million that Permira, the venture capital house, will pay for the two units. Shareholders will get the money through a share buyback program that the company will implement shortly. Although Moody's recognizes the strategic rationale behind the move, it nevertheless opined that the sale of the two high margin units "is not expected to yield any operating or financial benefits to the group." "Improvements in the operating fundamentals of the group will be dependent upon the capacity to drive out cost savings from better buying together with acquisition/merger related cost savings," Moody's said. Headquartered in Chertsey in the U.K., Compass Group PLC is the world's largest foodservice and vending company with sales of GBP10.6 billion for the year ended September 2002. For more information, contact: Eric de Bodard Managing Director Corporate Finance Group Moody's Investors Service (London) Andrew B. Canwell Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service (London) FTV GROUP: To Change Business Plan as Cash Slips to GBP600,000 -------------------------------------------------------------- Tony Vickers, chairman of advertising company FTV Group, played the 'killjoy' on Christmas Eve by reporting full-year losses of GBP6.9 million, roughly 13 times the company's market capitalization, the Telegraph said. Mr. Vickers admitted that the company had not made "significant progress" on the projections it released in March. The chairman also said "that the second half will produce improved results." This forecast contradicts his comments of Tuesday, however, when Mr. Vickers said: "It is likely that the company's future activities will be significantly different from those in which it previously engaged." FTV's principal business, providing screen advertising at service station petrol pumps, was forced into liquidation in October amid a depressed advertising market, the Telegraph said. The group's results, although relating to the 12 months ending June 30, include an exceptional loss of GBP3.83 million for the closure of the failed subsidiary. Turnover rose from GBP253,000 to GBP329,000, but the company was unable to obtain the funding needed to carry out its strategy, Mr. Vickers told the Telegraph. Cash, which amounted to GBP1.92 million at the year-end in June, had now dwindled to GBP600,000. FTV listed on Aim in September 2000, with grand plans for a rollout of its forecourt advertising to 1,000 sites, followed by further expansion into Continental Europe. The company, which predicted it would reach break-even by June 2002, raised GBP10 million in its float. Shares, issued at 73p, closed unchanged at 0.97p last Tuesday. ************* 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. 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