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/raid1/www/Hosts/bankrupt/TCREUR_Public/030130.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 Thursday, January 30, 2003, Vol. 4, No. 21 Headlines * F R A N C E * FRANCE TELECOM: Refuses to Comment on Financing Deal METALEUROP NORD: Awaits Bethune County Court Decision SCOR: S&P Corrects EUR233.45 Million Bond Rating SUEZ SA: Offers U.K. Water Business for Sale - Sources THIERRY MUGLER: Fashion House to Close Later This Year VIVENDI UNIVERSAL: Potential Evidence Found for Legal Action * G E R M A N Y * AXEL SPRINGER: In Talks With Bertelsmann Regarding Acquisition DEUTSCHE TELEKOM: Sells Cable TV Business in Six Regions HVB GROUP: Plans Further Acquisitions in Mid and Eastern Europe MOBILCOM AG: Secures Rescue Deal With Shareholders * I T A L Y * FIAT SPA: Creditor Banks Believe Auto Unit Can Be Re-launched * L U X E M B O U R G * MILLICOM INTERNATIONAL: To Hold Extraordinary Meeting February * P O L A N D * NETIA HOLDINGS: Gets Nod to Re-List on Nasdaq SmallCap Market * S P A I N * AUNA TELECOMUNICACIONES: Implements Restructuring Program S W E D E N SKANDIA: Guarantee Liability for American Skandia S W I T Z E R L A N D ASCOM: Decides Further Measures for Cost Reduction SAIRGROUP: Court Extends Debt Restructuring Moratorium SAIRLINES: Court Extends Debt Restructuring Moratorium SWISSAIR: Sabena Liquidator Plans to Launch Legal Action SWISSAIR: Court Extends Debt Restructuring Moratorium * U N I T E D K I N G D O M * ABERDEEN ASSET: Fishwick Still Holds Position in Trusts BRITANNIC PLC: Solvency Fears in Sector Sent Shares Down CABLE & WIRELESS: The Pomerantz Firm Charges Securities Fraud ELIZA TINSLEY: To Close Loss-making Plant in Chesterfield GASKELL PLC: To Dispose Tile Division, Kidderminster Property IS SOLUTIONS: To Close Loss-making Subsidiary in the U.S. PURPLE SOFTWARE: Games Manufacturer Goes Into Liquidation REGUS PLC: FSA Probes Indigo in Relation to Share Dealing ROYAL & SUNALLIANCE: Confident of Asbestos-Related Provision TADPOLE TECHNOLOGY: Posts Loss of GBP6.6 MM Before Goodwill TEXTSTYLE WORLD: Close to Selling Stores to Edinburgh Woollen =========== F R A N C E =========== FRANCE TELECOM: Refuses to Comment on Financing Deal ---------------------------------------------------- France Telecom declined to comment on reports that it has secured a new 3-year EUR5-billion syndicated loan from 16 banks. The company allegedly obtained the funding at an interest rate of just over 4%. A company spokesman responded to the issue, however, saying, "The process is still underway, we have no comment to make." Earlier, France Telecom, which is seeking the loan to refinance a EUR5 billion one-year facility that matures on February 14, was reported to be leading the financing talks The debt-laden company was believed to be banking on the renewed confidence of its finances, and was using the recent improvements to its balance sheet and the lure of future lucrative mandates as a bargaining tool in talks with lending banks. The article noted that the company initially approached a small group of banks for a loan of EUR1 billion each. But as the number of lenders increased to 20, this would naturally lower the commitment to about EUR250 million each. France Telecom has been in talks with a large group of banks for several days, and it is likely to secure favorable terms, the Financial Times said. CONTACT: FRANCE TELECOM 6, Place d'Alleray 75505 Paris Cedex 15, France Phone: +33-1-44-44-22-22 Fax: +33-1-44-44-95-95 Homepage: http://www.francetelecom.fr Contacts: Thierry Breton, Chairman Michel Combes, Executive Committee, Finance METALEUROP NORD: Awaits Bethune County Court Decision ----------------------------------------------------- The future of Metaleurop Nord, the French subsidiary of European metals group Metaleurop SA, is still uncertain as the Bethune county court is still making its decision whether to place the non-ferrous metals company in receivership or liquidate it. Although a certain Gilles Lemire has been noted to have approached the company's management on behalf of investors, the CGT union has responded to this announcement by saying that, unfortunately, Mr Lemire is a completely unknown quantity. There is still hope, however, among management and employees of Metaleurop Nord that its zinc recycling activities can be saved. Parent company Metaleurop SA decided to shutdown the facility after abandoning restructuring plans for the plant. Metaleurop Nord chief executive Gilbert-Alain Ferrer had planned to file voluntary liquidation for the company after announcing its inability to meet payments before filing for bankruptcy and applied for declaration of payment suspension. The company has been producing lead and zinc for over a century now and the site at Noyelles-Godault is by far the most polluted in the country, including an area of 45 square- kilometers heavily contaminated by heavy metals. Cleanup of the site is estimated to cost around EUR150 million. CONTACT: METALEUROP Maxime ARNAUD Phone: +33 1 42 99 47 73 Mobile: + 33 6 74 93 21 83 Fax: + 33 1 40 75 09 63 E-mail: maxime.arnaud@metaleurop.fr SCOR: S&P Corrects EUR233.45 Million Bond Rating ------------------------------------------------ Standard & Poor's Ratings Services revised its debt rating on SCOR's EUR233.45 million convertible bond due Jan. 1, 2005, to 'A-' senior unsecured from 'BBB' subordinated debt. This action corrects the rating initially assigned on Aug. 19, 1999, as a result of Standard & Poor's reclassification of the debt as senior unsecured from subordinated. All other ratings on SCOR are unaffected by this rating action. SCOR provides treaty (groups of risks) and facultative (individual risks) reinsurance through offices worldwide, each of which specializes in the needs of a specific industry segment and the local language. In the US, SCOR operates under the General Security and Commercial Risk monikers. The company reinsures property & casualty, life, accident, and health insurance lines. Subsidiary Commercial Risk Partners provide specialty coverage for lines such as credit, surety, and political risk. SUEZ SA: Offers U.K. Water Business for Sale - Sources ------------------------------------------------------ Paris-based Suez SA is selling its 97.5%-owned U.K. water company, Northumbrian Water Ltd., according to unnamed sources. The Durham-based water distribution and treatment firm, which has more than 4 million customers, is valued at between EUR3 billion to EUR4 billion (US$4.3 billion), says newspaper Le Figaro. The French utility group declined to give further details of the sell-off but the sources say it has approached several banks, including Germany's Westdeutsche Landesbank. Le Figaro also said that Westdeutsche Landesbank, and Royal Bank of Scotland and other companies and investment firms have already examined the deal. The two banks declined to comment, says The Daily Deal, but both are believed to be interested in the sale of a British water company. Royal Bank of Scotland is understood to be looking at such acquisitions after bidding unsuccessfully for Wessex Water Ltd., and being known in its involvement in the financing of other water deals. While Suez declined to comment on the sale of Northumbrian Water, it confirmed, however, its intention to sell assets as part of a debt- and cost-reduction plan started last September. Suez targets to cut cost by EUR500 million this year, and a further EUR100 million in 2004. The group's debt, which stood at EUR28.2 billion as of the end of June, was reduced to EUR1 billion on the way to a target of cutting it by one-third. Suez has reportedly hired Morgan Stanley to advise it on the sale of Northumbrian Water. CONTACT: SUEZ SA Home Page: http://www.suez.com Financial analysts, Frederic Michelland Phone: +331-40-06-66-35 in Belgium: Guy Dellicour Phone: +322-507-02-77 MORGAN STANLEY 1585 Broadway New York, NY 10036 Phone: 212-761-4000 Fax: 212-761-0086 Home Page: http://www.morganstanley.com THIERRY MUGLER: Fashion House to Close Later This Year ------------------------------------------------------ The management of the house of Thierry Mugler plans to close the company later this year in light of financial problems in the company, which have became insurmountable. Thierry Mugler President Perrine Houdoux said, "There have been big and constant losses since 1997." According to him, the outline of the plan to close the whole firm was begun January 16 and will be finalized after February 26, when directors will meet with employee representatives. He indicated to abide by laws and conventions in France regarding closures and elimination of jobs. Mr. Mugler, was in New York and wasn't immediately available for comment, the report says. Pankaj Chandarana, an investor-relations official at cosmetics firm Clarins, a majority shareholder in Mugler, said the company has never provided specific financial figures for Thierry Mugler. VIVENDI UNIVERSAL: Potential Evidence Found for Legal Action ------------------------------------------------------------ Potential grounds for legal action against Vivendi were discovered at the company's headquarters during police raids in December, Dow Jones reports, citing a person who has seen the documents. According to the report, Vivendi Universal may have wrongly concealed "liquidity crisis" of between EUR5 billion to EUR7 billion. Additionally, former Chief Executive Jean-Marie Messier may have ordered a EUR6 billion share buyback with the apparent aim "to support the share price." The memo containing the information was written after Jean-Rene Fourtou took the position occupied by Mr. Messier who was ousted after embarking on an acquisition spree that left the company with a mountain of debts. Efforts seeking to obtain comment from Mr. Messier were unsuccessful, Dow Jones says. An official at Vivendi's press office also declined to comment. According to the report, a standout among the documents is a 12- page memo that seeks to question whether outsiders could have grounds to sue the company. The source cites the content of the memo that says, "two communiques dated June 18 and June 25, 2002 may well have concealed to the public, the real state of the company's debt." The memo also expresses concern about a EUR6 billion in possible purchases by Vivendi of its own shares. It is thought that Mr. Messier ordered the move during the end of 2001 and early 2002. It asks: "Could one consider that buying at EUR100 what one knows to be only valued at EUR80 constitutes misuse of company funds?" Other informations that Vivendi may have knowingly concealed relate to major deals relating to USA Networks Inc., and Vinci SA, the source said. The memo raises a question about the use of stock options in undertaking the US$10.3 billion acquisition through off balance sheet operation, which others might perceive as concealment. On the sale of over 5 million shares in road builder Vinci, the memo says: "These shares may have already been sold in February 2002 and these commitments may have been recorded off balance sheet." The memo does not imply wrongdoings in the part of both Vinci and USA Networks, the source clarified. ============= G E R M A N Y ============= AXEL SPRINGER: In Talks With Bertelsmann Regarding Acquisition -------------------------------------------------------------- German-based company Bertelsmann, Europe's largest media group, is currently in talks with Axel Springer regarding the acquisition of the latter's publishing unit Ullstein Heyne List. Without citing sources, the Financial Times Deutschland said it understands concrete sale prices have already been named between the two companies. A Springer spokesperson was also quoted as saying, "Bertelsmann has advised us of its interest to buy." Springer's book publisher could be worth EUR100 million at most. There is no confirmation, however, what sort of premium Bertelsmann is prepared to pay, nor if Springer is in fact considering sale of the publishing unit. DEUTSCHE TELEKOM: Sells Cable TV Business in Six Regions -------------------------------------------------------- Deutsche Telekom has sold its remaining six regional cable TV networks. The purchase contract was signed today with an investor consortium made up of Apax Partners, Goldman Sachs Capital Partners and Providence Equity. The price for the deal is EUR 1.725 billion in cash. The transaction is expected complete by the end of March 2003. The sale is subject to various conditions, including approval from the EU competition authority and financing. The transaction includes Deutsche Telekom's remaining cable operations in the regions of Hamburg/Schleswig- Holstein/Mecklenburg-Western Pomerania, Lower Saxony/Bremen, Berlin/Brandenburg, Saxony/Saxony-Anhalt/Thuringia, Rhineland- Palatinate/Saarland and Bavaria, as well as the relevant central operations. At the same time it was agreed with the investors that the purchase price will increase up to a further EUR 375 million depending on the value of the cable business in the future. The number of staff employed in the companies included in the deal totals approximately 2,500. They will be taken over by the new owner as soon as the transaction is completed. HVB GROUP: Plans Further Acquisitions in Mid and Eastern Europe --------------------------------------------------------------- HVB Group board member Gerhard Rampa says the group has the necessary funds to finance further acquisitions in mid- and eastern Europe despite the bank's current financial difficulties. Mr. Rampa is reported in Boersen-Zeitung and Handelsblatt saying they are on watch for opportunities, but are ruling out banks in need of major restructuring. The drive for further acquisition is part of the bank's aim to increase its total assets in eastern Europe to EUR40 billion by 2005 from the current EUR25 billion, the report says. He said the bank might team up with Ergo, Muenchener Rueckversicherung's primary insurance unit in which HVB holds a 25% stake. Moody's Investors Service recently downgraded downgraded HVB's financial strength rating to C- from B-, and its senior unsecured deposit and debt ratings were lowered to A3 from A1. The rating agency says, "These rating actions reflect Moody's belief that HVB's fundamentals remain structurally affected by the group's persistently weak recurring profitability..." MOBILCOM AG: Secures Rescue Deal With Shareholders -------------------------------------------------- MobilCom AG was finally able to secure a rescue deal from France Telecom, the company which holds a 28.5% stake in the ailing German telecom group, and Helmut Thoma, the trustee holding the 42.4% stake that founder Gerhard Schmid holds with his wife. Shareholders agreed to the deal, which calls for France Telecom to assume and forgive EUR7.1 billion (US$7.7 billion) of MobilCom debt and pay for winding down MobilCom's third-generation mobile telephony investment plan. The amount is secured with the promise that MobilCom and Mr. Schmid will no longer demand that France Telecom keep its promise of funding the investment. At Monday's meeting held to approve the transaction agreed in November, MobilCom Chief Executive Thorsten Grenz said he expected to avoid a full-year operating loss this year if the rescue deal was approved. Mr. Grenz considers the deal a "key condition to avoid insolvency and the complete loss of shareholders' equity,'' calling it "a chance for a second life." The plan engineered by former ThyssenKrupp executive Dieter Vogel and supported by the government is still subject to the approval of France Telecom's shareholders. Jean-Louis Vinciguerra, France Telecom's former chief financial officer, says he expects the French company's shareholders to approve the deal next month. According to Reuters, if the plan succeeds, "MobilCom would limit itself to selling mobile telephone services to its 4.9 million customers by piggy-backing on big operators' networks." MobilCom is now selling the brand new 3G network and the license it no longer needs after the agreement was put in place. ========= I T A L Y ========= FIAT SPA: Creditor Banks Believe Auto Unit Can Be Re-launched ------------------------------------------------------------- The chief of Banca Intesa, one of Fiat's main creditor banks, believes Fiat SpA's car unit Fiat Auto SpA can be re-launched and will not have to be sold to General Motors Corp. Corrado Passera told daily Il Corriere della Sera, "There is no reason why Fiat (Auto) can't do it," adding that "if the company makes the grade it will no longer be inevitable to exercise the put (option)." Fiat holds the option to sell the remaining 80% of Fiat Auto to General Motors. He also believes it is for the good of Fiat to get rid of the car business whose losses are weighing down the entire group. He also believes in separating the car business and recapitalizing it with EUR5 billion. He proposes that the separated company be the one to facilitate the transaction with General Motors, which holds the remaining 20% of the unit. As for the position left by honorary Fiat chairman Giovanni Agnelli, who recently died, he said it is difficult to fill but "but the right choices to continue the work underway have already been made." CONTACT: FIAT SPA 250 Via Nizza 10126 Turin, Italy Phone: +39-011-686-1111 Fax: +39-011-686-3798 Toll Free: 800-804027 Home Page: http://www.fiatgroup.com/e-index.htm Contact: Giovanni Maggiora, Vice President - Investor Relations Phone: +39-011-686-3290 Fax: +39-011-686-3796 E-mail: Investor.relations@geva.flatgroup.com =================== L U X E M B O U R G =================== MILLICOM INTERNATIONAL: To Hold Extraordinary Meeting February -------------------------------------------------------------- Millicom International Cellular S.A on Wednesday gives notice that an extraordinary general meeting of shareholders of MILLICOM INTERNATIONAL CELLULAR S.A. will be held at the registered office of the Company in Bertrange, Grand-Duchy of Luxembourg, on February 17, 2003 at 11.00 a.m. to consider and vote on the following agenda: (i) To ratify the cooptation of Mr John Vigo Carlund as a Director of the Company. (ii) To receive a Report from the Board of Directors concerning the proposal to effect a reverse stock split of the issued shares of the Company and to renew for a further period of five years the permission and authority given by the Articles of Association to the Board of Directors to increase the issued share capital within the limits of the Company's authorized share capital. (iii) To approve a reverse stock split of the issued shares of the Company by exchanging three existing shares of a par value of US$2 each into one new share with a par value of US$6.- and consequently to exchange all of 71,124,729 shares with a par value of US$2 each against 23,708,243 new shares with a par value of US$6, the issued share capital of US$ 142,249,458 remaining unaffected and to grant all necessary powers to the Board of Directors to implement such exchange. (iv) In case the shareholders approve the reverse stock split, to set the authorized share capital at US$199,999,800 represented by 33,333,300 shares with a par value of US$6 each and to renew for a period of five years the permission and authority given by the Articles of Association to the Board of Directors to increase the issued share capital within the limits of the Company's authorized share capital being the restated authorized share capital of US$199,999,800 represented by 33,333,300 shares with a par value of USD 6 each for a period of five years as provided by the Articles of Association of the Company and more in particular to permit the issue by the Board of Directors of new shares by means of conversion of any existing or newly issued convertible debt instruments or securities into new shares and by adapting the Articles of Association of the Company accordingly. Alternatively, to renew for a period of five years the permission and authority given by the Articles of Association to the Board of Directors to increase the issued share capital within the current limits of the Company's authorized share capital namely to increase the share capital up to USD 200,000,000 represented by 100,000,000 shares with a par value of USD 2 each for a period of five years as provided by the Articles of Association of the Company and more in particular to permit the issue by the Board of Directors of new shares by means of conversion of any existing or newly issued convertible debt instruments or securities into new shares and by adapting the Articles of Association of the Company accordingly. All shareholders on record are entitled to attend and vote at the meeting. In order to participate at the extraordinary general meeting shareholders are invited to register their intention to so do by mail to Mrs Veronique Mathieu, Millicom International Cellular SA, 75, route de Longwy, L-8080 Bertrange, Tel: + 352 27 759 287, Fax: + 352 27 759 359 no later than Thursday, February 13, 2003 at 5:00 p.m. Proxy forms for shareholders unable to attend the meeting in person are available upon request during normal office hours at the registered office of the Company and from the New York Registrar of the Company. Proxy forms duly completed should be sent to the registered office of the Company to arrive no later than February 13, 2003 at 5:00 p.m. CONTACTS: MILLICOM INTERNATIONAL CELLULAR S.A., Luxembourg Home Page: http://www.millicom.com Marc Beuls, President and Chief Executive Officer Phone: +352 27 759 101 Jim Millstein Phone: +1 212 632 6000 Lazard, New York Peter Warner Phone: +44 20 7588 2721 Daniel Bordessa Cyrus Kapadia Lazard, London Andrew Best Phone: +44 20 7321 5022 Shared Value Ltd, London =========== P O L A N D =========== NETIA HOLDINGS: Gets Nod to Re-List on Nasdaq SmallCap Market ------------------------------------------------------------- Netia Holdings S.A. (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, announced that following Netia's appeal, the Nasdaq Listing and Hearing Review Council reversed an earlier decision of the Nasdaq Listing Qualifications Panel, dated October 14, 2002, to de-list Netia's American Depositary Shares from The Nasdaq National Market. The Listing Council's decision was based on positive events occurring after the de-listing decision. The Listing Council instructed the Panel to re-list Netia's ADSs on The Nasdaq SmallCap Market upon completion of a review of Netia's application. Netia's Management Board has decided to file such application, which will be subject to the approval of the Nasdaq Listing Qualifications Department. Wojciech Madalski, Netia's President and Chief Executive Officer commented: "We welcome Nasdaq's favorable decision regarding the earlier de-listing of Netia's ADSs. Netia demonstrates continued progress as Poland's largest alternative telecommunications company. We are growing our services focused on business customers in Poland's twelve largest cities. Netia's capital restructuring provides a solid financial basis for the company's future. We believe that Nasdaq's decision reflects these positive developments, and we look forward to the commencement of trading on the Nasdaq SmallCap Market following the review of our application by the Nasdaq Listing Qualifications Department." Avi Hochman, Netia's Chief Financial Officer, added: "The financial restructuring of Netia has reached its final stage following the issuance of the new notes and series H shares. We are awaiting registration of series H shares by the Polish courts in order to begin trading on the Warsaw Stock Exchange. Commencement of public trading of series H shares and possible re-listing on Nasdaq will improve Netia's global liquidity." Netia Holdings SA's 13.500% bonds due 2009 (NETH09NLN2) are trading at about 17 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09NLN2 for real-time bond pricing. ========= S P A I N ========= AUNA TELECOMUNICACIONES: Implements Restructuring Program --------------------------------------------------------- Troubled Spanish telecommunications holding company Auna Telecomunicaciones has initiated a major restructuring program, which includes divesting assets, implementing a redundancy plan for its employees, and changing its management structure. Auna has sold off its Internet activities and has begun liquidation of its audiovisual operations. It had also merged its fixed telephony operator Retevision with the Aunacable cable operators. EresMas, the online portal of Auna was sold for EUR255 million last year to Wanadoo, the French Internet service provider, while Auna's digital terrestrial television, Quiero TV, stopped broadcasting last year and is now in liquidation. Meanwhile, management has appointed Joan David Grima as new chief executive and has welcomed Santander Central Hispano, Spain's largest bank, as a major shareholder. Employees of Auna have accepted the redundancy scheme presented by management, which includes paying the 750 affected staff a compensation of 45 days per year at the company plus a one-off payment of EUR5,000 for those with more than six year of service. On a positive note, the Spanish telecommunications holding company expects to break even this year attributed to cost cutting efforts, anticipating a reduction of its investment by almost a third this year and register EBITDA of at least EUR1 million. Auna is the largest competitor of Telefonica in the fixed, mobile and cable television branches. =========== S W E D E N =========== SKANDIA: Guarantee Liability for American Skandia ------------------------------------------------- In reference to the article in Dagens Industri about Skandia's guarantee liability in connection with the sale of American Skandia, Skandia would like to make the following comments. The sales agreement for American Skandia contains various guarantee commitments which are customary for a transaction of this type. In the press release on 20 December 2002 announcing Prudential's acquisition of American Skandia, reference was made to the standard representations and warranties included in the agreement. As regards procedures in a court of law, the duration of the guarantee commitment is four years. The maximum guarantee amount is limited to USD 1 billion. In other words, the significance of Dagens Industri's article is that the commitment is limited in terms of time and amount. Since unlimited guarantee commitments do occur in the US, the issued guarantees can be considered to be relatively favourable for Skandia. It also deserves mention that to date American Skandia has not been involved in any processes whose outcome would have entailed any guarantee claims. The company is currently party to a class action suit. In Skandia's opinion this is clearly without merit. CONTACT: Harry Vos, Head of Investor Relations Phone: +46-8-788 3643 ===================== S W I T Z E R L A N D ===================== ASCOM: Decides Further Measures for Cost Reduction -------------------------------------------------- For the year 2002 Ascom expects a Group loss of between CHF 260 million and CHF 290 million (previous year CHF 396 million). As of 31.12.2002, the Group's net debts were reduced to around CHF 300 million (previous year CHF 631 million). The profitability of the Wireless Solutions, Security Solutions and Network Integration Divisions developed positively during 2002. In order to stem the massive outflow of funds in the unprofitable areas, the Executive Board has decided in addition to the measures already announced and initiated to make further cuts of some 500 jobs throughout the Group, 250 of these in Switzerland. The Powerline Communications unit will be reduced to a technology company as part of these measures. The cut back from today's point of view of some 250 jobs in Switzerland will primarily affect the production area in Bodenweid/BE, Transport Revenue in G�mligen/BE and Powerline Communications in M"genwil/AG and will be implemented by the end of 2003. The social partners have been informed. A redundancy plan exists for the affected employees in Switzerland. Due to the continuing poor market situation in the telecommunications branch, the delay in the mass roll out of Powerline by the energy supply companies and the continuing losses of the start-up resulting from this, Ascom has decided to reduce Powerline to a technology company. Sales, industrialisation and the manufacture of Powerline will in future be done under licence. During the course of 2003 Ascom will reduce staff abroad. Viewed from today's standpoint, a reduction of 250 jobs is also planned. The corresponding steps will be initiated in compliance with local laws in the countries affected and will be communicated in good time. The definitive and audited figures of the annual financial statements 2002 will be announced at the annual press conference on 26 March 2003. About Ascom Ascom is an international service provider for integrated voice and data communications, network-based security solutions and networked revenue collection systems for public and private transport operators. The Network Integration, Security Solutions, Transport Revenue and Wireless Solutions Divisions plan, build, maintain and operate tailor-made, comprehensive solutions along the complete value-added chain - with a service-oriented portfolio and proven technology know-how. Ascom is active worldwide in markets with a high growth potential. The Ascom registered shares (ASCN) are quoted on the SWX Swiss Exchange in Zurich. CONTACT: ASCOM MANAGEMENT AG Stephan Howeg, Head of Corporate Communications & Investor Relations Belpstrasse 37 CH-3000 Berne 14 Phone: +41 31 999 43 44 Fax: +41 31 999 21 17 E-mail: media@ascom.com Home Page: http://www.ascom.com SAIRGROUP: Court Extends Debt Restructuring Moratorium ------------------------------------------------------ The debt restructuring judge of the Zurich district court ruled on December 19, 2002 that the definitive debt restructuring moratorium granted on December 3, 2001 until June 5, 2002 and extended on June 3, 2002 until December 5, 2002 in favor of SAIRGROUP, Hirschengraben 84, 8001 Zurich, shall be extended for another two months, i.e. until February 5, 2003. Karl Wuthrich, Attorney-at-Law at Wenger Plattner, Goldbach- Center Seestrasse 39, 8700 Kusnacht-Zurich, and Dr. Roger Giroud, Attorney-at-Law at Giroud Anderes Maag & Partner, Seefeldstrasse 116, 8034 Zurich, remain SAIRGROUP' Administrators. SAIRLINES: Court Extends Debt Restructuring Moratorium ------------------------------------------------------ The debt restructuring judge of the Zurich district court ruled on December 19, 2002 that the definitive debt restructuring moratorium granted on December 3, 2001 until June 5, 2002 and extended on June 3, 2002 until December 5, 2002 in favor of SAirLines, Hirschengraben 84, 8001 Zurich, shall be extended for another two months, i.e. until February 5, 2003. Karl Wuthrich, Attorney-at-Law at Wenger Plattner, Goldbach- Center Seestrasse 39, 8700 Kusnacht-Zurich, and Dr. Roger Giroud, Attorney-at-Law at Giroud Anderes Maag & Partner, Seefeldstrasse 116, 8034 Zurich, remain SAirlines' Administrators. SWISSAIR: Sabena Liquidator Plans to Launch Legal Action -------------------------------------------------------- Swissair may have to face legal action from Sabena Belgian World Airlines liquidator Christian Van Buggenhout following the release of the study on Swissair's collapse. According to AFX, the liquidator is planning to launch further court action against Swissair, Swissair Group and other affiliated companies that had control over Sabena, including two Swiss banks. Mr. Van Buggenhout promised to study Ernst & Young's report, which claims that Swissair knowingly bypassed European law when it took effective control of several airlines, including Sabena. According to the report, Swissair controlled the airline although it only had a minority stake in the company. Under the rules of the EU non-EU companies are permitted to hold only 49.9% of the other airlines' capital. Mr. Van Buggenhout said Swissair should have consolidated Sabena's results. This should be for the Swissair to properly inform Sabena's shareholder and the Belgian state of its financial standing. The liquidator, who is reportedly claiming EUR2.4 billion on the case said, he will be looking for proofs that the strategy was deliberate. He said there is no decision yet, but adding that they'll go ahead with the court proceedings "once we have a complete dossier." The case is expected to drag along Credit Suisse Group and Union des Banques Suisses, entities that had members on Swissair Group's board. SWISSAIR: Court Extends Debt Restructuring Moratorium ------------------------------------------------------ The debt restructuring judge of the Bulach district court ruled on December 10, 2002 that the definitive debt restructuring moratorium granted on December 4, 2001 until June 5, 2002 and extended on June 3, 2002 until December 5, 2002 in favor of Swissair Schweizerische Luftverkehr-Aktiengesellschaft, Balz Zimmermann-Strasse, 8302 Kloten, shall be extended for another four months, i.e. until April 4, 2003. Karl Wuthrich, Attorney-at-Law at Wenger Plattner, Goldbach- Center Seestrasse 39, 8700 Kusnacht-Zurich, and Dr. Roger Giroud, Attorney-at-Law at Giroud Anderes Maag & Partner, Seefeldstrasse 116, 8034 Zurich, remain the Administrators of Swissair Schweizerische Luftverkehr-Aktiengesellschaft. Creditors will be informed later on about the date and location of the meeting of creditors as well as the possibility to inspect the Administrator's records. =========================== U N I T E D K I N G D O M =========================== ABERDEEN ASSET: Fishwick Still Holds Position in Trusts ------------------------------------------------------- Aberdeen Asset Management's former director has not yet cut all of its ties with the company as it is still on the board of four of the troubled firm's investment trusts, according to The Scotsman. Mr. Chris Fishwick resigned after the scandal on Aberdeen's split capital trust emerged, but despite his promise of leaving the company, he is still holding his post in Aberdeen's Technology & Income Trust, Smaller Companies Trust, European Growth & Income Trust and one of the Real Estate Opportunities Investment Trusts, the report says. What makes the issue more controversial is the salary being paid to the director who promised to cut his ties with the firm at a cost of GBP1.9 million. The combined annual salaries of more than GBP33,000 previously charged to Aberdeen Asset Management are now being paid directly to Mr. Fishwick. According to the report, Fishwick received no salary from the Smaller Companies Trust last year, but the most recent reports of Aberdeen show that each of the other three trusts paid at least GBP10,000. Mr. Fishwick is understood to step down from his post in each trust once replacements have been found, and these decisions are up to the trusts' respective board of directors, say an Aberdeen spokeswoman. BRITANNIC PLC: Solvency Fears in Sector Sent Shares Down -------------------------------------------------------- Solvency fears in the insurance sector heightened concerns over Britannic Group's capital strength, sending its shares down as much as 17% Tuesday. Shares closed down 13% at 115p. The company saw several large sells in its shares after Goldman Sachs issued negative tunes for the group. "There were two big sells of Britannic shares in one go yesterday, of 250,000 and 50,000," said one analyst. "There is no reason for anyone to buy these shares and the price will continue to drift. Hedge funds will plunder the opportunity." Hedge funds are known for short-selling, a scheme which allows them to profit from a fall in the company's share price. The group, which issued profits warning this month and has suspended its dividend, is also being negatively affected by the make-up of its shareholders, The Independent observes. Britannic's shareholders include income investment funds that invest in companies to get dividend payments. Since Britannic has already warned it would skip dividend this year, it is expected that many of these will be forced to exit the company. These include HSBC and Invesco, the report says. Despite assurance from the group that they would not fall from FTSE beyond 3,300, most analysts believe Britannic is also as much affected by the crisis in the industry as other firms. CABLE & WIRELESS: The Pomerantz Firm Charges Securities Fraud ---------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com)has filed a class action in the United States District Court for the Eastern District of Virginia, case number 03 CV 108A, against Cable & Wireless PLC and the Company's Chief Executive Officer and a member of its Board of Directors on behalf of investors who purchased the securities of CWP during the period between 1999 and December 6, 2002, inclusive. The Complaint alleges that CWP, a global telecommunications business with customers in 80 countries, including the United States, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading statements touting CWP's cash-rich position, numerous all cash acquisitions of companies, and the benefits of its August 6, 1999 sale of its 50% ownership stake in One 2 One, a mobile telecommunications operator, to Deutsche Telekom. Defendants, however, failed to disclose a critical contractual term relating to its disposition of One 2 One, which obligated the Company to set aside 1.5 billion Pounds or $2.4 billion in cash once the Company's long- term debt rating fell below a certain threshold. Specifically, the contract contained an indemnification clause that would obligate CWP to cover any potential tax liabilities arising out of the sale. Contained in that indemnification was a trigger mechanism whereby any future downgrade of CWP long-term debt rating below a predetermined level would activate the 1.5 billion Pounds obligation on behalf of CWP. On December 6, 2002, CWP shocked the market when it announced that a downgrade by Moody's Investment Service ("Moody's") on its long-term debt rating had triggered its obligation to escrow 1.5 billion Pounds in cash. It was only on December 6, 2002, that the Company disclosed its 1.5 billion pounds contingent liability. As a result of the disclosure, the stock price of CWP fell $1.57 from $3.90 to a closing price of $2.33, a single-day drop of 40%. If you purchased the securities of CWP during the Class Period, you have until February 24, 2003 to ask the Court to appoint you as lead plaintiff for the Class. In order to serve as lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, or if you would like to discuss this action or have any questions, please contact Andrew G. Tolan, Esq. of the Pomerantz firm at 888-476-6529 (or (888) 4- POMLAW), toll free, or at agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged to include their mailing address and telephone number. The Pomerantz firm, which has offices in New York and Chicago, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. CONTACT: POMERANTZ HAUDEK BLOCK GROSSMAN & GROSS LLP Andrew G. Tolan, Esq. Phone: (888) 476-6529, (888) 4-POMLAW E-mail: agtolan@pomlaw.com ELIZA TINSLEY: To Close Loss-making Plant in Chesterfield --------------------------------------------------------- Statement By The Chairman, Michael Borlenghi As I outlined in my interim statement to shareholders, the Group has focused on the objectives of balancing production between plants and economic regions aimed at maximizing profitability and generating positive cashflow. These processes have involved, amongst other things, the transferring of sourcing and manufacturing of the Consumer Products Division to lower cost economies and the acquisition of Off-Highway plants in North America and Italy, which have been and will continue to be developed and grown to give the Group an improved balance between Euro, Dollar and Sterling economies. With these actions successfully achieved the Group has decided to further reduce its exposure to the high cost of manufacturing in the U.K., particularly given the increasing volatility of world markets and the further recent weakening in demand from the Off- Highway Division's customer base. To this end the Board will, subject to the normal regulatory employment procedures, close its loss-making plant in Chesterfield and transfer some of its production to other Group plants in the U.K. and Italy. It is currently envisaged that this closure process will be completed by May 2003 and will involve the loss of some 160 jobs in Chesterfield. It will however create a number of employment opportunities at the Group's other plants in the U.K. and Italy. Closure costs are calculated to be some GBP2.8 million of which only GBP1.3 million is expected to be in cash, the balance being asset write-offs. The freehold Chesterfield property has a book value of GBP1.5 million and will be sold in due course. The eventual sale of this property together with significant reductions in working capital that will arise as a result of the closure will make the planned action cash positive overall. Once completed, this process will have achieved: (i) a balance of capacity within economic regions more closely aligned to anticipated future demand of the Group's customers; (ii) a marked reduction in the Group's cost base; (iii) the elimination of a plant that has made significant losses in the recent past; (iv) a reduction in the Group's borrowings. The Board believes that the consequence of this action will be a major positive impact on the Group and its future cashflow and earnings. It equally demonstrates the Board's determination to improve shareholder value. CONTACT: ELIZA TINSLEY Andrew Hall, Chief Executive Phone: 01384 263123 Mobile: 07831 255511 Fiona Tooley Citigate Dewe Rogerson Phone: 0121 455 8370 Mobile: 07785 703523 GASKELL PLC: To Dispose Tile Division, Kidderminster Property ------------------------------------------------------------- Summary (i) Proposed Disposal of Gaskell's Tile Division for initial cash consideration of GBP17m (plus up to o1m deferred) to Low & Bonar PLC (ii) Proposed Disposal of the Kidderminster Property for GBP 3.1m (iii) The proceeds should strengthen significantly the financial position of the Continuing Group by eliminating net debt and should provide funds and flexibility to invest in opportunities for growth (iv) The proposed Disposals should allow Gaskell to restructure its cost base, address its loss-making subsidiary, Tomkinsons, and fund the Group's pension schemes on a continuing basis (v) Warehousing and distribution agreement signed with Stoddard International plc will serve to improve performance (vi) The Continuing Group will consist of Gaskell Carpets, a supplier and distributor of contract and retail Axminster and tufted carpets and Gaskell Textiles, a manufacturer and distributor of felt underlays and non-woven floorcovering products (vii) The Board has now come to the conclusion that both of these Disposals are essential in order to ensure a future for the Group 'Conditions in the floorcoverings industry remain difficult. Nevertheless with a smaller, more focused Continuing Group, receiving closer management attention and strategic direction following the removal of distractions relating to the restructuring process, Gaskell's continuing operations should be in a position to exploit the opportunities in this industry such as the potential to supply new markets and renew capital expenditure, allowing the trading prospects of the Group to meet the Directors' expectations.' Alan Chamberlain, Chairman ATTACHMENT (I) Proposed Disposal Of Both The Gaskell Tile Division And The Kidderminster Property Gaskell announces that it has conditionally entered into an agreement and other arrangements to sell the Gaskell Tile Division to Low & Bonar for a cash consideration of GBP17m plus a deferred element of up to o1m dependent upon the level of the audited operating profits (as adjusted) for the year to 31 December 2002 for the Gaskell Tile Division. Low & Bonar is an international group, which manufactures and supplies a wide range of products in the specialist materials and plastics markets. In addition, Gaskell further announces today that it has conditionally agreed to sell the Kidderminster Property for a cash consideration of GBP 3.1m to Lescren Holdings Limited. Gaskell also announces that Gordon Donald has resigned from the Board in view of his position as Managing Director of the Gaskell Tile Division. In view of their size, the proposed Disposals of both the Gaskell Tile Division and the Kidderminster Property are conditional upon the approval of Shareholders. The proposed disposal of the Gaskell Tile Division is also conditional, in view of its size, upon the approval of shareholders of Low & Bonar. There is no interconditionality between the proposed Disposals. (II) Background To And Reasons For The Disposals As Shareholders will be aware, the Board has, over the past year, been exploring a wide range of restructuring options in order to secure the long term future of Gaskell and to protect and maximise value for Shareholders. To secure these objectives, Gaskell took a number of actions in 2002 to improve the Group's financial position. Those included cost reduction programmes, the sale of surplus plant and machinery, the sale of Crucial Trading on May 31, 2002, the sale of Rhoden Mill on August 6, 2002 and the sale of Mid-Wales Yarns Limited on August 19, 2002. Further, the Board has recently started consultation with the workforce at Tomkinsons in order to decide that company's future. In addition, the distribution agreement reached with Stoddard, set out below, will also serve to improve the Group's performance. These actions have hitherto mainly affected the non-core operations of the Group. Notwithstanding the actions that have been taken, the Directors have had to recognise fundamental issues that face Gaskell itself as well as the industry in which Gaskell operates. The principal issues are as follows: (i) Gaskell's high level of debt is forecast to increase significantly in the first quarter of 2003; (ii) There is no commitment from the Group's bankers that further facilities will be available after January 2003; (iii) Gaskell's likely inability to raise debt from other sources; (iv) Poor investor sentiment towards smaller companies and Gaskell's poor trading results over the last two to three years makes an equity issue extremely difficult; (v) The tough trading environment in the floorcoverings market continues as evidenced by the closure of several businesses in the sector; (vi) Gaskell has significant Group pension scheme funding deficits; and (vii) Gaskell has no ability to invest in the growth businesses of the Group due to the unsustainably high levels of debt. Of these, the most critical issue facing Gaskell is the high level of debt within the Group, which is now unsustainable since Gaskell is in breach of its banking covenants. The Directors have concluded that Gaskell must make the proposed Disposals in order to generate sufficient working capital for its funding requirements. Total bank borrowings as at 31 December 2002 amounted to GBP 10.5m. Further, the Group's borrowings are forecast to rise during the first quarter of 2003, due to normal seasonal reductions in activity levels and further costs associated with the restructuring of the Group's loss making subsidiaries and other deferred liabilities. The Group's bankers have deferred an GBP 850,000 medium term loan repayment due on 31 December 2002 until January 31, 2003. However as indicated in the trading statement issued on 23 December 2002, the bank's agreement to provide further facilities beyond January 2003, including a further deferral of the medium term loan repayment, sufficient to meet Gaskell's requirements, is dependent upon the proposed Disposals outlined herein which, in the Directors' opinion, represent the most appropriate way to address the Group's financial difficulties. The possibility of raising debt from other sources has been investigated but the Directors believe that it is extremely unlikely that the Group will be able to raise sufficient debt in time to resolve these issues. In the Interim Statement issued on September 18, 2002 the Chairman indicated that, in order to address these issues, Gaskell was considering a wider restructuring than had previously been anticipated. The Board has now come to the conclusion that Gaskell must sell its core tile division, as well as the Kidderminster Property and that both of these Disposals are essential in order to ensure a future for the Group. The proposed Disposals outlined herein should: (i) Strengthen significantly the financial position of the Continuing Group by eliminating net debt; (ii) Provide Gaskell with the funds and flexibility to invest in opportunities for growth in the Continuing Group; (iii) Allow Gaskell to restructure its cost base resulting in significant annual overhead savings; (iv) Allow the Group to address its loss making subsidiary, Tomkinsons; (v) Allow the Group to fund its pension schemes on a continuing basis; and (vi) Provide Gaskell with the best option for maximising Shareholder value. An extensive marketing exercise has been undertaken to sell both the Gaskell Tile Division and the Kidderminster Property, with the aim of securing best value for Shareholders. In the Board's opinion, both Low & Bonar's offer for the Gaskell Tile Division and Lescren Holdings Limited's offer for the Kidderminster Property reflect good value for both of these assets. (III) Information On The Gaskell Tile Division The Gaskell Tile Division comprises Gaskell's contract and commercial carpet tile sales and manufacturing operations. The three business units that make up the Gaskell Tile Division are described below: Bamber Carpets - A manufacturer of high performance carpet tiles and tufted carpet cloths for use primarily in commercial markets, based in Bamber Bridge, Preston. Products are sold to other members of the Group and also to external customers and distributors. Modulus Flooring Systems - A distributor and seller of carpet tiles to contract and commercial customers, based in Kingston, London. The majority of products are sourced from within the Gaskell Tile Division. Gaskell Carpet Tiles - A distributor and seller of carpet tiles to contract and commercial customers, based in Clayton-le-Moors, Lancashire. The company has no manufacturing of its own, but sources and distributes products both from within the Gaskell Tile Division and from external suppliers. In the year ended 31 December 2001, the Gaskell Tile Division generated turnover of GBP 28.6m and operating profit before central costs of GBP 4.0m. At that date the Gaskell Tile Division's net assets were GBP 9.5m. (IV) Information On The Kidderminster Property The Kidderminster Property comprises a single site developed with a complex of industrial buildings of varying ages currently occupied by Tomkinsons. Following the reduction in activities at Tomkinsons, the sale of crucial Trading and the recent consolidation of the Gaskell wool rich operations with those of Gaskell Carpets, the Board concluded that a sale of the Kidderminster Property should be investigated. Consequently, Matthews & Goodman, a firm of national property advisers, was instructed to market the property, through which the offer from Lescren Holdings Limited was developed. The Directors consider that a consideration of o3.1m reflects the value of the property to the Group. There is a possibility of a further payment if Lescren Holdings Limited (having obtained planning permission) develop the Kidderminster Property for any non-industrial use or dispose of the property with the benefit of such planning. A Valuation Report on the property by Matthews & Goodman has been prepared and is available for inspection. In addition, in relation to the Kidderminster Property, Gaskell has signed an agreement with Stoddard to combine the warehousing and distribution functions of the two companies under the remaining operations of Tomkinsons. In order to do this, Gaskell will lease-back approximately 113,000 sq. ft. of the Kidderminster Property comprising the modern warehousing element and a modern stores unit. The value of this lease has been taken into account in the Valuation Report produced by Matthews & Goodman. This agreement, together with the consultation process referred to above, should enable Gaskell to reduce costs and restructure Tomkinsons to the extent that is appropriate for the reduced activity levels that are now planned for that business. (V) Summary Of The Proposed Disposals Gaskell Tile Division Pursuant to the Tile Disposal Agreement and Arrangements entered into on 27 January 2003, Gaskell will conditionally dispose of the Gaskell Tile Division, for an initial consideration (before costs) of o17m payable in cash at completion and deferred consideration of up to o1m contingent upon the level of the audited operating profits (as adjusted) achieved in the year to 31 December 2002 by the Gaskell Tile Division, to Low & Bonar. Gordon Donald has resigned from the Board in view of his position as Managing Director of the Gaskell Tile Division. Gordon Donald will remain as Managing Director of the Gaskell Tile Division and will join Low & Bonar. Gordon Donald has played no part in the negotiations with Low & Bonar other than to assist in the normal course of due diligence. Kidderminster Property Pursuant to the Property Disposal entered into on 27 January 2003, Tomkinsons has conditionally agreed to dispose of the Kidderminster Property for an aggregate consideration of GBP 3.1m to Lescren Holdings Limited. Additional consideration will become payable by Lescren Holdings Limited if it develops the Kidderminster Property for non-industrial use or if it disposes of the property with the benefit of planning permission within seven years from completion. In such circumstances the amount payable to Tomkinsons will be 50% of the mount by which the sale proceeds or redeveloped market value exceeds GBP 3.1m (less certain costs of Lescren Holdings Limited). The Disposal Agreements and Arrangements are conditional upon the proposed Disposals being approved by Shareholders at an Extraordinary General Meeting. (V) Summary Of The Continuing Group The business units which will form the basis for the Continuing Group, following the approval of the proposed Disposals, are described below: Gaskell Carpets - A designer, supplier and distributor of contract and retail Axminster and tufted carpets primarily to the leisure and healthcare sectors, and also to selected commercial markets. The business also now includes the recently transferred operations of the Gaskell wool rich brand. Gaskell Textiles - A manufacturer and distributor of felt underlays and non-woven floorcovering products. The business also provides fibrebonded carpets and tiles and non-woven textile materials for a diverse range of applications. Tomkinsons - Subject to the outcome of the consultation process recently started at the company, Tomkinsons will be restructured to reflect the new warehousing and distribution agreement reached with Stoddard and a reduced level of manufacturing activity. (VII) Use Of Proceeds The proceeds from the proposed Disposals, net of associated costs, total approximately GBP 20m and will be used as to GBP 10.5m to eliminate Gaskell's net borrowings, approximately GBP 2m to fund the further restructuring of the Group and GBP 4m for working capital requirements during 2003 and particularly in the first quarter of the year. The amount applied to fund the further restructuring will be used to complete the reduction of the cost base at Tomkinsons and to reduce the head office and other administrative operations. Once this is completed, your Board hopes to renew capital investment in Gaskell Carpets and Gaskell Textiles, in order to return these businesses to profitability. The proceeds will also be applied to fund the Group's pension schemes on a continuing basis. (VII) Current Trading And Prospects At the time of the Group's Interim Statement announced on 18 September 2002, the Chairman said that the first quarter of 2002 had been particularly problematic, following a decline in both retail and contract orders towards the end of the previous year, and also that the Group incurred operating losses in the first half of 2002. In the period from 1 July 2002 these problems were, to some extent, reversed due to the exit from certain loss making activities and an upturn in performance in the Gaskell Tile Division. However, trading levels in both the Continuing Group and the Gaskell Tile Division are still below historical levels and are not of a level sufficient to resolve the Group's problems. Further, the Group's report and accounts for the year to 31 December 2002 are likely to reflect further impairment provisions and additional restructuring costs incurred in the second half of the year. Following the completion of the proposed Disposals outlined herein Gaskell, although smaller, should have the resources to invest in Gaskell Textiles and Gaskell Carpets, as well as enabling the Group to tackle the ongoing losses at Tomkinsons. Further action will be taken to reduce the Group's cost structure to the extent that it is more appropriate for a small public company. Conditions in the floorcoverings industry remain difficult. Nevertheless with a smaller, more focused Continuing Group, receiving closer management attention and strategic direction following the removal of distractions relating to the restructuring process, Gaskell's continuing operations should be in a position to exploit the opportunities in this industry such as the potential to supply new markets and renew capital expenditure, allowing the trading prospects of the Group to meet the Directors' expectations. The Directors are of the opinion that following the proposed Disposals, taking into account bank and other facilities available to the Continuing Group, the Continuing Group has sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this document. Shareholders should be aware that both of the proposed Disposals will need to be approved for Gaskell to have sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this document. Both of the proposed Disposals are required to be approved so that Gaskell is able to meet its funding requirements. The Group's bankers have not indicated that any additional funding will be available and the Board believes that both of the proposed Disposals are essential to address this need. In the event that either or both of the proposed Disposals is not approved, Gaskell will not have sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this document. In that event, the Directors would need to urgently reassess their plans and attempt to develop revised proposals immediately which could include an equity issue to a strategic investor, a refinancing of the whole Group with an alternative bank or further asset disposals to provide Gaskell with working capital sufficient for its needs. There can be no assurance that the Company would secure any such funding and, from discussions so far, it is believed to be extremely unlikely that the Company will be able to do so. In such circumstances the Group's bankers have indicated that they would seek to appoint a firm of accountants immediately to review the options available to them, one of which may be to begin insolvency procedures. (IX) Extraordinary General Meeting The proposed Disposals are conditional upon the approval of Shareholders. An Extraordinary General Meeting of the Company will be held at The Dunkenhalgh Hotel, Blackburn Road, Clayton- le-Moors, Accrington, Lancashire, BB5 5JP at 10.00 a.m. on 14 February 2003, at which resolutions will be proposed to approve each of the Disposals. (X) Voting Intentions Shareholders who hold 25.1 per cent of the issued share capital of Gaskell have given irrevocable undertakings to vote in favour of the resolutions at the Extraordinary General Meeting. CONTACT: GASKELL PLC Alan Chamberlain, Chairman Gerry Wheeler, Chief Executive Richard Hopkin, Group Finance Director Phone: 01254 236222 Alan Cooke, Account Manager Citigate Dewe Rogerson Phone: 0121 455 8370 Mobile: 07767 771 533 IS SOLUTIONS: To Close Loss-making Subsidiary in the U.S. --------------------------------------------------------- The Company announced at the time of its interim results in September 2002 that its U.S. subsidiary, IS Solutions Inc., had suffered a very severe turndown due to the project based nature of its business and continuing major difficulties in its U.S. market. The Board continued to carefully monitor its progress during the second half, which remained difficult, and concluded that it is unlikely that there will be any significant improvement in trading in the medium term. As the headcount had already been significantly reduced to four it has been decided, following the year-end, to close IS Solutions Inc. with immediate effect. The total costs of the closure, estimated at no more than US$130,000, will be taken as a charge in the results for the year ended 31 December 2002, which are expected to be announced in March 2003. As IS Solutions Inc. was loss making its closure is expected to have a positive effect on the Group prospects for 2003. Proquote Limited It was announced today that Proquote Limited, an aggregator and distributor of real time equity and market data, in which the Group has a minority shareholding through AXL Performance Solutions Limited, had received a conditional offer for the acquisition of its issued share capital from London Stock Exchange plc. This values the Group's shareholding at up to o880,000 (against a book cost of o25,000) of which o480,000 will be received in cash, upon the offer becoming unconditional, with the balance payable upon the achievement by Proqoute Limited of certain levels of annualised revenue over the next two years. The board is delighted with the strategic step forward for Proquote Limited and anticipates increasing revenue from this customer. In view of the value of the holding, the Group will be required (under the Listing Rules) to obtain shareholder approval for the disposal and it is expected that a circular will be despatched in due course. Undertakings to vote in favour of the resolution to dispose of the shares have already been obtained from shareholders holding, in aggregate, over 50 per cent. of the issued ordinary share capital of the Company. To the extent that London Stock Exchange plc is in a position to apply the provisions of Sections 428 to 430F of the Companies Act 1985 (as amended) prior to the posting of the circular to shareholders, the Group will allow the shares to be compulsorily acquired and will not be required, under the Listing Rules to issue a circular. Trading Results for the year ended 31 December 2002 The second half of the year reflected the benefit of the cost cutting exercise previously implemented. Whilst the fourth quarter of the year saw an increase, in the U.K., in the number of requests for quotations across services and projects it continued to prove difficult to turn these into a meaningful increase in order level. Nevertheless the Group produced an operating profit in the fourth quarter. Trading, prior to the closure costs of IS Solutions Inc. and the bad debt of o220,000 for a U.S. client announced at the time of the interim results, will be broadly in line with the Board's expectations. The Company remains cash generative with cash at the year-end of over o1 million (o758,000 at 31 December 2001). Outlook It is too early to give an indication for the current year although the encouraging signs that emerged during late 2002 continue and, whilst visibility remains poor, the Board views the current year with cautious confidence. PURPLE SOFTWARE: Games Manufacturer Goes Into Liquidation --------------------------------------------------------- London-based insolvency practitioners Middleton Partners have been tapped to wind up the affairs of mobile games software manufacturer Purple Software. The liquidators called for a creditors' meeting on February 7 to decide upon a creditor's voluntary winding up, called under Section 98 of the 1986 Insolvency Act. There are speculations that there will be an asset sale for Purple's technology and games portfolio, and an MBO team may be prepping a bid for the assets. In February 2002, The Register reported that Purple Software secured EUR1.5m in its "final round of funding", from two existing VCs: Questor and New Media Spark. The report said the fact that only Questor is active during that time could spell difficulty in raising the new funds. Purple Software Limited is one of Europe's leading independent software designers for the emergent wireless device industry. It develops board games for mobile phones. Its portfolio includes: backgammon, card games, checkers, chess, Go, snooker, pool and darts. It numbers DoCoMo, the world's second biggest mobile phone company, as a customer. CONTACT: PURPLE SOFTWARE LIMITED Gunnar Lars,n, Head of Product Management Phone: +44 20 7255 9202 E-mail: gunnar.larsen@purplesoft.com REGUS PLC: FSA Probes Indigo in Relation to Share Dealing --------------------------------------------------------- The Financial Services Authority confirmed in an unusual move that it is launching a formal investigation into Indigo LLC and its managing partner, Robert Bonnier, in relation to their dealings in Regus shares. The City watchdog is examining whether Indigo deliberately made false or misleading statements about its holdings in business center group Regus. The panel, which began an informal inquiry two weeks ago, concluded that Regus sold shares without first obtaining the Panel's permission, and it also did not warn the market 24 hours in advance. The FSA is expected to scrutinize Indigo's statements that it is building a stake in Regus when actually almost the entire stake-- which at one point Indigo claimed to have reached 15.1%--was held via contracts for difference. This derivative instrument does not grant the holder voting rights, nor are they entitlements to ultimately receive shares. They are not also required to be disclosed, except during takeovers. Indigo's announcement sparked interest in Regus shares on January 7. After that, Indigo announced it had reduced its stake to 12.79%. ROYAL & SUNALLIANCE: Confident of Asbestos-Related Provision ------------------------------------------------------------ Royal & Sun Alliance Insurance Group is confident it will be able to meet growing claims for asbestos-related compensation, for which it has allotted a further GBP250 million during the third quarter. A Royal & Sun spokesman said, "We have said that we felt the additional provisions would take us into the range of reasonable estimates." The company's provision for costs of asbestos and environmental payouts totals GBP 1 billion net of tax. The spokesman's declaration is in response to comments made by Standard & Poor's, which suggested that RSA and a number of other insurers may have bolstered their reserves even further. In its operational and financial review in December the company said the U.S. strengthening includes GBP 225m in respect of asbestos and environmental provisions. During the period, A.M. Best Co. affirmed the A- financial strength rating, and the "bbb" and "bbb-" ratings of its subordinated debt and preferred stock of the group. The firm says the ratings reflect the current and prospective maintenance of a very good consolidated risk-adjusted capital base supported by the planned divestment of several operations, as well as improving operating performance in ongoing businesses and the group's excellent business position in its key markets. But these are offset by factors including the potential for further asbestos and environmental (A&E) reserve deterioration in the United States Royal & Sun Alliance Insurance Group Plc, headquartered in London, England, had total assets of GBP66.7 billion at the end of June 2002. CONTACT: Malcolm Gilbert, DL, Director Communications Phone: +44 (0)20 7569 6138 TADPOLE TECHNOLOGY: Posts Loss of GBP6.6 MM Before Goodwill ----------------------------------------------------------- Preliminary Results For The Year Ended 30 September, 2002 Highlights of the Year: (i) Tadpole sells Hardware Division, becomes a focused Web software developer and enabler (ii) Software business grew 24%, margins improved 50% (iii) Loss of GBP6.6 million (2001 - GBP 7.2 million) before goodwill amortisation and currency exchange ahead of market expectations (iv) Cartesia subsidiary strengthened its strategic business alliance with ESRI, won multi-million pound ESRI-based project with U.K. mapping agency Ordnance Survey to help build and maintain the digital face of Britain (v) Endeavors Technology subsidiary wins early contracts, including Mitsubishi Motors of America; introduces new on-demand applications distribution solution, develops new solution for secure interoperability of popular instant messaging (IM) platforms used in the enterprise (vi) Outlook - Group has sufficient financing facilities to support current business plan and strategy, Cartesia expected to be profitable by end of current year, Endeavors intellectual property remains a strong foundation on which to develop the Group's business Bernard Hulme, group chief executive of Tadpole Technology plc, comments: 'The past two years has seen Tadpole invest strongly in developing its software capability. We believe that the quality, value add and early return on investment that these innovative products can now bring to customers enables the Group to look for notable progress in fiscal 2003.' CHAIRMAN'S STATEMENT Introduction This year's Annual Report marks the evolution of the Group into a focused web software developer and enabler. The sale of the hardware division, announced on 7 October 2002 and concluded on 23 December 2002, completes an important phase of the Board's strategy to transform the Group's business activities from hardware to software. Our challenge now is to deliver a return on the software investments. Trading performance The trading results for the year ended 30 September 2002, together with prior year comparatives, disclose separately the performance of the 'continuing operations' (Cartesia and Endeavors) and the 'discontinued operations' (Tadpole hardware). Turnover in the hardware division declined 36% to GBP14.9 million. Prior year revenues included GBP8 million low margin contract with a large customer. Operating loss before goodwill amortisation and foreign exchange remained stable at GBP0.5 million. The goodwill of GBP3.8 million includes an impairment of GBP2.9 million in connection with the disposal of the hardware division after the year end. Turnover in the software businesses, principally Cartesia, increased 22% from GBP1.5 million to GBP1.8 million, while operating loss before goodwill amortization and foreign exchange reduced from GBP6.7 million to GBP6.1 million. Endeavors continued its R & D investment phase throughout the year, with expenditure focused on product and market development. Highlights of the year for Cartesia have been its growing partnership with ESRI, the world's leading developer of core geographic information systems, and new contract wins with Consumers Energy in the USA and Ordnance Survey in the U.K. The overall operating loss before goodwill amortization and foreign exchange reduced to GBP6.6million from GBP7.2 million, within the guidance given in the trading update issued on 7 October 2002. Net cash outflow from operating activities was almost halved to o4.2 million from GBP8.0 million last year, mainly due to the successful management of working capital in the hardware division. Financing At the AGM on 28 February 2002, shareholders approved a proposed equity line of credit of up to o10 million with GEM Global Yield Fund Limited. The Company has since drawn down GBP3.5 million against this facility. In October 2002, the Company entered into a supplemental agreement, which provided that up to GBP2 million of the GBP10 million line of credit would be made available for a period of six months up to 30 April 2003, regardless of daily trading volumes. Under a further agreement in January 2003, this period has been extended to 30 June 2003. The Company expects to make further draw-downs against the facility to fund the continuing development of the software businesses, particularly Endeavors. Board Following the successful completion of the sale of the hardware business, Graham Brown, who served as president of the business unit has resigned as a director with effect from today. Outlook Following the disposal of the hardware business, the Group now comprises two enterprise software businesses, Cartesia and Endeavors, which are at different stages of their life cycles. After more than three years of investment, Cartesia is beginning to show strong growth. Revenues for the current financial year are expected to be substantially higher than in 2002, particularly in the second half, underpinned by a significant contract backlog, including Ordnance Survey. Cartesia is expected to achieve a profitable run-rate by the second half of the financial year. 2003 will be a pivotal year for Endeavors as the business moves its focus from R& D to sales and marketing. With the core R & D investment phase now concluded, product development expenditure will continue at a lower level with a consequent reduction in cash burn. The development of partnerships that can provide channels to market will now be critical to success. The directors believe that the markets addressed by Endeavors' software products are very large. The risks in this business remain high, but are commensurate with the potential rewards that success in the target markets will bring. Although the Group is expecting to incur an operating loss in the financial year ending 30 September 2003, the directors remain confident that the Group has sufficient financing facilities in place to support the current business plan and strategy. David Lee 28 January 2003 CHIEF EXECUTIVE REVIEW Business review During fiscal 2002, the Group had three operating divisions- Endeavors Technology, Tadpole Cartesia and the Tadpole Hardware Division. During the early part of fiscal 2003 the hardware division was sold in order that the Group could focus resources exclusively on its enterprise software businesses. Cartesia Cartesia is the field systems software business focused on the needs of water, gas and electric utilities and field mapping agencies. The year was one of considerable progress particularly with regards to the partnership with ESRI, the world's leading developer of core geographic information systems (GIS) technology. Notable new orders won included a field information system for Britain's mapping agency, Ordnance Survey and one of the largest ESRI-based field information solutions, from Consumers Energy of Michigan, USA. The Ordnance Survey project represents the largest software project in Tadpole's history and was won in partnership with ESRI. Development of the multi-million pound system, which will maintain the digital face of Britain, commenced in the Autumn of 2002 and will continue beyond fiscal 2003. Cartesia is the prime contractor for the development and deployment, which will be built around its ESRI ArcGIS-based field mapping and Endeavors Technology's Magi software products. The first seamlessly extends corporate data into the field, the second will provide mobile workforces with an intelligent and secure 2-way web communication platform to share and interact on files and data in both disconnected and real time modes. Ed Parsons, Ordnance Survey's chief technology officer commented on the award last July as follows 'Ordnance Survey's next generation data capture system is possibly the most advanced and sophisticated large scale mapping project ever undertaken by any national mapping organization anywhere in the world. Tadpole's ESRI-based mapping and Magi collaboration technologies will enable Ordnance Survey to deliver our planned program of continuous improvement to the OS MasterMap, ensuring that we keep ahead of the growing demand for more intelligent data with greater accuracy and accessibility'. Consumers Energy, the principal subsidiary of CMS Energy Corporation (annual revenues $15 billion, assets $16 billion), awarded a large field deployment contract to Cartesia to extend the reach of GIS in the field. The deployment puts quality task and spatial data into the hands of over 1,800 field engineers. Max A. Rogers, field graphics project manager at Consumers Energy stated earlier in 2002,'Critical factors in selecting Tadpole's mobile GIS solution are its ability to handle our existing data formats efficiently, and that it protects Consumers Energy's current and forward investments in ESRI technology' Other highlights have included progress in partnerships with major ESRI developer, Miner and Miner, at Alliant Energy of Wisconsin, USA. The project is the first to be completed by the two companies with a major utility since announcing a strategic alliance in early 2002. In summary, after more than three years of investment, the Cartesia business is recording strong growth. It has now won major projects which underpin its future growth and its integration with Endeavor's Magi technology, further strengthens its competitive appeal. Endeavors Technology Endeavors Technology Inc was acquired by Tadpole in March 2000 and represented a breed of web enablement software technology known as 'peer to peer'. Peer to peer software was identified as an emerging technology with high potential by analysts such as Gartner, Aberdeen and IDC, as well as by major technology investor magazines, such as Red Herring. It has gained considerable market presence through Napster which, at its peak, had more than 20 million users of its PC to PC music sharing service. During the period between mid 2000 and early 2002, Endeavors invested in designing commercial product for file sharing and collaboration in order to compete in a market with predicted high growth. Initiatives to sell the collaboration product met with some success during 2002 and included Mitsubishi Motor Sales of America and Ordnance Survey in the U.K. Nevertheless, progress reflected the overall slowdown in the purchase of new enterprise software applications during 2001/02 and continued deferrals in new IT investments which have enabled legacy collaboration solutions to be retained whilst the investment climate remains problematic. During 2002, Endeavors took steps to address revenue growth by increasing its focus on adding value to existing solutions in order to facilitate greater compliance, security and early return on investment. Firstly, the acquisition of the intellectual property of Omnishift enabled Endeavors to add Magi Applications Express, a means of managing and sharing applications in a highly efficient way. An early customer, Autodesk, has already used the product to manage Autocad 2002 trials for several thousand users. Secondly, the enterprise instant messaging market in the USA has been growing rapidly and urgent steps are being taken by many organisations to get it under control. There are many parallels between this phenomenon and that of email a decade ago. By securing public instant messaging and enabling different versions to talk directly to each other, Magi effectively gives back control to IT departments who need to ensure that messages are secured and audit-tracked for compliance both inside and outside corporate security boundaries. Magi Secure IM addresses an enterprise market opportunity, which has doubled in size between July 2001 and September 2002 (source: Osterman Research). Much of the work to develop this solution was undertaken in late 2002 and the sales force is now actively engaged in marketing this to enterprises and network operators. Thirdly, the combination of Magi with document management technologies and web conferencing products provides integrators and resellers addressing these markets with opportunities to increase their revenues. Once again, Endeavors has chosen to focus on adding value in existing markets rather than attempting to create new ones. In summary, 2002 proved to be a difficult year for new software companies. As a result, Endeavors has adapted its core technology to focus upon those issues which need addressing in the shorter term by enterprises and their channels. Endeavors intellectual property remains a strong foundation on which to develop the Group's business. We are diligently tracking progress and plan to gear ongoing investment in line with market progress. I wish to thank our employees for their tireless efforts in building our software business during a challenging year and look forward to 2003 being a year of notable progress. Tadpole Hardware Division The Division builds and markets specialised UNIX(R) platforms and solutions for computer intensive environments and its main products and revenue streams continue to be the Sun Sparc/Solaris laptop computers and rack-mounted servers. Whilst the market slow down made trading more challenging during 2002, the Hardware Division took the opportunity to further strengthen its position by forging ahead with several new partnerships and alliances, including those with BCCI (storage virtualisation), Kirchman Corp. (bank in a box) and Nexor Ltd (messaging and directory services). The Hardware Division also entered into a business pact with Sun Federal and the potential for this business was strengthened when it was awarded Sun reseller status in California. Research and development in the Hardware Division focused on new technology based around TCP/IP (Transmission Control Protocol/Internet Protocol) offload engines, which enable higher data transfer speeds at lower costs. The conventional method of input from and output to IP Networks can use more than 70 per cent. of a CPU's (Central Processing Unit) processing time and therefore impedes its performance to a considerable extent. This new technology known as TOE (TCP/IP offload engine) moves much of the processing to other boards within a server CPU and dramatically improves the performance of the system. Whilst 2002 plans for the Hardware Division were not met due to the well publicised drop in capital expenditure undertaken by corporations and the subsequent fall in customer orders, considerable efforts were made by the Board and the management of the division to control costs through re-structuring and resource realignment. This, together with investment by the Hardware Division in new technologies, positioned this division for any potential upturn in the market. The Group's board has previously stated that it wishes to focus all new investment on the Software Division. Since it became clear that the new hardware technology would require further new investment it sought to ensure that the Hardware Division received this new investment from third parties, whilst the Group has the opportunity to participate in future value-enhancing events in the Hardware Division. The sale of the Hardware Division, which was completed in December 2002, is to a buyer who intends to commit the necessary funding to research and development. The structure of the Sale will enable Shareholders to benefit from the longer term potential of the Hardware Division (without the Company having to commit resources to it) through the Group's option over 19.5 per cent of the share capital of the Purchaser. We wish to thank all employees in the former Tadpole Hardware Division for their unstinting efforts and wish them well in their future roles as members of Tadpole Computer Inc. Bernard Hulme 28 January 2003 FINANCE DIRECTOR'S REVIEW Results for 2002 We are pleased to report that the disposal of the Hardware business that we announced just after the year end was completed on 23 December. The disposal significantly impacts our results. The overall loss for the year of GBP10.9million (2001 - GBP7.8million) includes an impairment charge on the goodwill of the hardware division of GBP2.9million. The Groups total operating loss before amortisation and foreign exchange loss improved over last year to GBP6.6million (2001 - GBP7.2million) and the Groups cash outflow from operating activities for the year reduced to GBP4.2million (2001 - GBP8.0million). The results of the Group have been split between continuing and discontinued operations. The majority of the Group's revenue from continuing operations of GBP1.8million (2001 - GBP1.5million) was generated from Cartesia's software and services. Gross Margin improved to 49.6% (2001 - 2%) with a better mix of software and services, which will continue for the future. All of the businesses within the Group, charge research and development to the profit and loss account as incurred. The Research and development costs from continuing operations increased by 11% to GBP2.8million (2001 - 2.5million). The Group also continued to focus on sales and marketing in the software divisions with the costs increasing by 9% to GBP2.9million (2001 - GBP2.7million). The Group has also maintained control over administration costs from continuing operations and they have reduced by 14% to GBP1.3million (2001 - GBP1.5million). The discontinued operations of the Group consisted of the Hardware Division, which manufactures and sells portable Unix workstations and servers. The revenue fell by 36% to GBP14.9million (2001 - GBP23.1million). The revenue in FY2001 included a large customer contract at lower margins. The revenue in the year also benefited from a greater mix of portable Unix workstations, which had a positive impact on gross margins The gross margin percentage improved to 36% (2001 - 25%) and the overall gross margin only declined to GBP5.4million (2001 - GBP5.6million). The operating expense before amortisation and impairment of goodwill and exchange loss fell during the year to o5.9million (2001 - GBP6.2million), only research and Development costs increased to GBP1.7million (2001 - GBP1.4million). The sale of the hardware business after the year-end resulted in an impairment charge to goodwill of GBP2.9million. The Group had a foreign exchange loss in the year of GBP 668,000 (2001 - GBP69,000), which arose as a result of translating the intercompany debts with which we fund US operations. The net cash outflow from operating activities has significantly improved in the year to GBP4.2million (2001 - GBP8.0million). The total operating loss before depreciation, amortisation and impairment and exchange reduced to GBP6.1million (2001 - GBP6.8million) and the Group focused on reducing the working capital tied up in the hardware division prior to its disposal. Overall the cash in-flow (2001 - out-flow) from working capital accounts was GBP1.9million (2001 - GBP(1.2million)). Financing During the year the Company put in place an Equity Line of Credit for GBP10 million which expires at the end of January 2004. During the year the Group raised GBP2.9million (GBP2.6 net of expenses) under this facility. Subsequent to the year the Company also raised GBP0.6million in November net of expenses. The Company has a net available to draw down on this agreement of GBP6.5million. Furthermore the supplemental agreement of October 2002, which waived the conditions on the share volume and floor price, for o2million has been rolled forward to June 2003. Financial Instruments The Group's financial instruments comprise finance lease and hire purchase commitments, cash, liquid resources and various items such as trade debtors and trade creditors that arise directly from its operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken, other than placing funds on money market deposit. The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies have remained unchanged since the beginning of the year. Interest rate risk The Group has placed surplus funds on money market deposits of up to three months maturity. Interest received for the year amounted to GBP94,000 compared to total interest paid of GBP55,000 (2001 - GBP309,000 interest received, GBP77,000 interest paid). The Group does not hedge against its interest rate risk as the Board consider the costs of such an activity would outweigh the potential benefits, given the Group's current level of interest- bearing instruments. Liquidity risk The careful management of the financial instruments, noted above, controls liquidity. The Board closely monitors the liquidity of the Group through the review of monthly management accounts and working capital forecasts. When appropriate the Board has taken action to secure additional funding in order to reduce liquidity risk. Foreign currency risk Where possible the Group hedges external currency exposure by transacting revenues and costs in the same currency. The Group has overseas subsidiaries including TTI and Endeavors whose transactions are denominated almost exclusively in U.S. dollars. The operations of TTI are funded by positive operating cash, whilst those of Endeavors are funded by loans from the parent company. The remainder of the Group is based in the U.K., and revenues and costs are almost exclusively transacted in sterling. The Group has intercompany debts in U.S. dollars and sterling. These balances can give rise to non-cash exhange movements on consolidation. Going concern After making enquiries the directors believe that the Company and the Group have adequate financial resources to continue in operation for the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the financial results. Keith Bigsby To see the company's Financial Results: http://bankrupt.com/misc/TadpoleTechnology.htm CONTACT: TADPOLE TECHNOLOGY PLC Bernard Hulme Phone: 0207 987 4888 Mike Brennan Evolution Beeson Gregory Phone: 0207 488 4040 Hugh Paterson, Patcom Media Phone: Tel 0207 987 4888 TEXTSTYLE WORLD: Close to Selling Stores to Edinburgh Woollen ------------------------------------------------------------- News has been circulating that knitwear retail chain Edinburgh Woollen Mills is set to buy the collapsed soft furnishings business Textstyle World in a deal valued between GBP7 million and GBP9 million. Industry sources say that EWM is hoping to buy all of the 28 stores in Scotland, two from south of the border, and an additional 14 stores in Ireland. Company administrator Kroll Buchler Phillips, however, is still trying to persuade EWM to buy the chains in Ireland, delaying announcement of the deal. The deal, which is expected to be announced in the next three days, could mark a turnaround for EWM, which has been bought and sold twice in the past 18 months, since the company's secession from listed Grampian Holdings in August 2001. It is also believed to be a boost for most of the 800 Texstyle employees at the company's 63 out-of-town stores whose jobs have been on the line since the company's collapse. Some will lose their jobs though, given that the 19 remaining stores in England and Wales are still up for bid. Meanwhile, Textstyle's administrator, Andrew Pepper, said there has been no deal signed yet and he was still in talks with between three and five possible buyers. Declining to confirm whether EWM was one of the potential buyers, he said: "We are in talks with a number of people and we hope to have some news later in the week." Reports say one of the other bidders for Textstyle is Glasgow- based Internacionale, a retail chain that owns the Au Naturale soft furnishings business. ************* 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 2003. 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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