/raid1/www/Hosts/bankrupt/TCREUR_Public/030204.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

                 Tuesday, February 4, 2003, Vol. 4, No. 24


                              Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Wants More Time to Challenge Claims

* F R A N C E *

ARIANESPACE: Posts Heavy Loss Last Year, to Increase Provisions
SUEZ: Potential Bidders for Norththrumbrian Water Named
VIVENDI UNIVERSAL: Cost of Selling U.S. Asset Lower Than Expected

* G E R M A N Y *

BAYER AG: Ends Negotiations on Joint Venture With Aventis
ISH: Control Goes to Consortium of Creditor Banks
W&W GROUP: Fitch Lowers Long-term Ratings to 'BBB+'

* I T A L Y *

CAPITALIA: Announces New Credit Management Appointments
TELECOM ITALIA: Plans to Sell Directory Operations

* L U X E M B O U R G *

GEMPLUS INTERNATIONAL: Warns of Widening Operating Loss

* N E T H E R L A N D S *

IFCO SYSTEMS: Moody's Withdraw All Ratings on Company
ROYAL PHILIPS: To Refocus TV Manufacturing in Europe

* P O L A N D *

BANK PRZEMYSLOWO: Moody's Confirms Baa1/P-2 Deposit Ratings
NETIA HOLDINGS: Registers Increase of Share Capital in Court

* U K R A I N E *

INDUSTRIALBANK: Fitch Upgrades Long-term Term Rating to 'CCC'

* U N I T E D   K I N G D O M *

ABBEY NATIONAL: To Post Significant Loss in Wholesale Banking  
BAE SYSTEMS: Capital Group to Oppose Re-election of Chairman
BAE SYSTEMS: EADS Gets 25 % of Astrium, Takes Control of Paradigm
BRITISH ENERGY: Advisers' Fees Reach Almost GBP100 Million
CABLE & WIRELESS: U.K. Firm Joins Class Action Suit
ENERGIS PLC: Hong Kong-based Firm Interested in Telecom Group  
JOS HOLDINGS: Shareholders Call for Voluntary Liquidation
JOS HOLDINGS: Notice of Temporary Suspension of Listing
ROYAL MAIL: May Post an Appeal Over Price Controls by Postcomm
ROYAL & SUNALLIANCE: Move Relating to Asbestos Case Criticized
THISTLE HOTELS: Bankers Hire Ernst & Young to Review Business


=============
B E L G I U M
=============


LERNOUT & HAUSPIE: Wants More Time to Challenge Claims
------------------------------------------------------
Reorganized Debtor Dictaphone Corporation asks Judge Wizmur to  
extend the deadline by which it must file all of its  
claim objections until March 29, 2003.

Dictaphone reports that approximately 2,500 proofs of claim were  
filed in its Chapter 11 case.  Dictaphone has implemented the  
claim reconciliation process by identifying particular  
categories of proofs of claim that may be targeted for  
disallowance and expungement.  In addition, to avoid possible  
double or improper recovery by claimants and to reduce the  
aggregate number and dollar amount of claims, to date,  
Dictaphone has filed 11 omnibus objections.

Dictaphone has allowed hundreds of claims and reached numerous
settlements with claimants.  By its own analysis, Dictaphone has
allowed, or will allow, approximately 1,100 claims, and has  
expunged, or had the claimant withdraw, or will do so,  
approximately 1,400 claims.

Dictaphone filed an amendment to its Schedules E and F to  
include or amend approximately 47 scheduled claims.  Claimants  
have 30 days to contest the scheduled claim by filing a proof of  
claim.  Accordingly, Dictaphone now seeks an order extending the  
deadline to file objections, if any, to these 47 claims to the  
extent that the claimants file proofs of claim. (L&H/Dictaphone  
Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service,  
Inc., 609/392-0900)


===========
F R A N C E
===========


ARIANESPACE: Posts Heavy Loss Last Year, to Increase Provisions
---------------------------------------------------------------
Chief operating officer Jean-Yves Le Gall said rocket company
Arianespace posted heavy operating losses last year, accruing to
between EUR50 million and EUR60 million.

Mr. Le Gall added that the private European company would have to
provide for the failure of the new Ariane-5ECA rocket that
exploded shortly before takeoff in December 2002.  The blast
destroyed a nearly half-a-billion investment.

"The failure of flight 157 forces us to raise the level of
provisions, initially fixed at EUR50 million, to cover loss
making launches in 2003," Le Gal told Les Echos.

He said Arianespace had sales of EUR1.3 billion last year, which
is up from EUR807 million in 2001.  The company has made 12
launches and has an additional 41 satellite launches on its order
books.  It has also acquired 11 of the 15 contracts offered by
the world satellite launch market.  

Regarding predictions that the company will see only two or three
contracts this year, Mr. Le Gall said he does not believe it.

"We are starting to see calls for orders, notably because several
satellite deployment failures in the last years have meant
replacements are needed," he said.

CONTACT:  ARIANESPACE
          Boulevard de l'Europe
          BP 177 91006 Evry-Courcouronnes CEDEX
          France
          Phone: +(33) 1 60 87 60 00
          Fax: +(33) 1 60 87 63 04
          Home Page: http://www.arianespace.com/
          Contact:
          Jean-Marie Luton, Chairman
          Jean-Yves Le Gall, Chief Executive Officer


SUEZ: Potential Bidders for Norththrumbrian Water Named
-------------------------------------------------------
French utility group Suez SA has received a string of proposals
from private-equity, financial and trade players for its U.K.
water company, Northrumbrian Water.

Valued at between EUR3 billion to EUR4 billion, the Durham-based
water distribution and treatment firm has more than 4 million
customers.

According to the Sunday Times, Candover, Royal Bank of Scotland
and WestLB have all registered an interest in acquiring the water
company, while Australian bank Maquarie is a keen investor in
companies with large regulated assets.

Other potential bid is also expected to come from Cheung Kong
Infrastructure, United Utilities PLC, and AWG PLC.

Rumors spread Thursday that Suez is selling its 97.5%-owned water
company.  Suez decline to comment on the sale, though it
confirmed its intention to sell assets as part of a debt- and
cost-reduction plan started last September.  

Suez plans to cut costs by EUR500 million this year, with a view
to further reducing its EUR28.2-billion debt to EUR100 million in
2004.

The Paris-based group 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


VIVENDI UNIVERSAL: Cost of Selling U.S. Asset Lower Than Expected
-----------------------------------------------------------------
The tax liability arising from the possible sale of American
assets Vivendi Universal bought from Diller is lower than the
previously estimated US$2 billion.

Upon recalculation, the French conglomerate found out that the
cost is only around US$400 million, says AFX.

It was believed last week that Vivendi Universal had initiated
actions aimed at minimizing tax liabilities arising from the
possible sell-off of assets such as Universal Studios and
Universal theme parks.

Interest in the group's possible plans for the asset sparked
after the Wall Street Journal reported Liberty Media, Metro-
Goldwyn-Mayer and the NBC division of GE were all potential
bidders.

The sell-off is understood to trim down Vivendi's current EUR17-
billion debt burden.  But it would also reduce the conglomerate's
business by leaving only the French pay-TV station Canal Plus and
France's second largest mobile phone firm.

CONTACT:  VIVENDI UNIVERSAL
          Headquarters
          42 Avenue de Friedland
          75380 Paris Cedex 08
          France
          Phone: +33 1 71 71 10 00
          Fax: +33 1 71 71 11 79
          Contact:
          Investor Relations
          E-mail: investor-relations@groupvu.com

          Daniel Scolan, Executive VP
          Investor Relations
          Phone: +33.1.71.71.12.33
          E-mail: daniel.scolan@groupvu.com
          Laurence DANIEL
          IR Director, Europe
          Phone: +33.1.71.71.12.33
          E-mail: laurence.daniel@groupvu.com
          Edouard LASSALLE
          Associate Director, Europe
          E-mail: edouard.lassalle@groupvu.com

          Vivendi Universal
          New York office
          375 Park Avenue
          New York, NY
          10152-0192
          USA
          Phone: +1 212 572 7000


=============
G E R M A N Y
=============


BAYER AG: Ends Negotiations on Joint Venture With Aventis
---------------------------------------------------------
Bayer and Aventis have agreed not to pursue their plans to create
a joint venture in the field of biological products. It had been
intended to combine the Biological Products Division of Bayer
HealthCare with the Aventis subsidiary Aventis Behring. Both
companies reviewed various possible forms of cooperation. A final
agreement on the terms of the transaction could not be reached.  
                       *****
Last month, Bayer reached a settlement agreement with a U.S.
court over a probe into rebates the German drug maker paid for
pharmaceutical products.

At that time, the final terms of the agreement remain to be
negotiated, it is already established that Bayer AG will take a
US$257.2 million provision.

"Bayer said its US subsidiary has been the subject of a joint
civil and criminal investigation into allegations it improperly
underpaid rebates, particularly under the Medicaid health
insurance program, between 1995 to 2000."

In November, Bayer was reported to be in taks about selling its
pharmaceuticals unit to GlaxosmithKline.

Bayer sought for a pharmaceuticals partner to keep the division
profitable after its best-selling Lipobay product, a cholesterol-
lowering agent, was linked to several deaths in 2001.


ISH: Control Goes to Consortium of Creditor Banks
-------------------------------------------------
A consortium of 38 creditor banks took over Ish, the insolvent TV
cable network operator that U.S. investment company Callahan
Associates auctioned off last week.

The consortium led by Deutsche Bank AG and Citigroup Inc. had
swapped about EUR900 million (US$973 million) of debt and paid an
additional EUR275 million under the buy-out deal.

According to an Ish spokeswoman, the consortium was the only
party who responded to the company's public offer announced in
mid-December.

Callahan's Denver-based Callahan Associates LLC bought a 55%
stake in Ish from Deutsche Telekom AG for about EUR2 billion in
2000.  The German operator ran into serious trouble the middle of
2002 after failing to generate enough cash to service the debt
used to pay for it.  Ish recorded revenues of just over EUR400
million in 2001.

Last year, Callahan NRW, the subsidiary that operates Ish,
applied for insolvency proceedings after closing 2001 with pre-
tax losses of EUR527 million on turnover of EUR388 million.

Ish's adviser is Linklaters Oppenhoff & Radler partner Georg
Maier-Reimer.  


W&W GROUP: Fitch Lowers Long-term Ratings to 'BBB+'
---------------------------------------------------
Fitch Ratings lowered the Long-term ratings of Wuestenrot Bank
(WB) and Wuestenrot Hypothekenbank (WuestenrotHyp) to 'BBB+' from
'A-' and affirmed the Short-term ratings at 'F2', removing them
from Rating Watch Negative. The Individual ratings of 'C' for WB
and 'D' for WuestenrotHyp and their '3' Support ratings are
affirmed.  In conjunction, the ratings of WuestenrotHyp's Public
Sector Pfandbriefe at 'AAA' and Mortgage Pfandbriefe at 'AA+'
were also affirmed. The Long-term rating Outlook for both banks
is Negative.

Wuestenrot und Wuerttembergische group (W&W) warned in December
it will have to report a net loss in the range of EUR70 million
for the second consecutive year.  The announcement prompted
Moody's to place the outlook on the group at Rating Watch
Negative.

Fitch says it has concluded that the fundamentals of the group
have weakened, as highlighted in capitalization in the non-life
insurance business and overall profitability.

The rating agency says, "In spite of various ongoing
restructuring measures, it will be difficult to turn around or
divest loss-making insurance subsidiaries and increase revenues
and capital in the current market environment, which is reflected
in the Negative Outlook."

Fitch warns that the creditworthiness of the banks could suffer
further if the group continues to weaken and the restructuring
process does not feed through into performance and capitalization
enhancements.

The group's subsidiaries include, Wuerttembergische
Lebensversicherung and Wuestenrot Bausparkasse, from which it
draws strength.  Fitch believes group support for the two small
banks will continue to be forthcoming.

WB and WuestenrotHyp's domestic home finance business caused high
loan loss provisions at the mortgage bank in 2002.  It suffered
from write-down on equity investments.

W&W group was formed in 1999 by the merger of the Wuestenrot
banking and Wuerttembergische insurance groups and distributes
residential mortgage financing and insurance products throughout
Germany.  It has EUR53.4 billion worth of assets at end-September
2002, 5.7 million customers and a well-known brand name.


=========
I T A L Y
=========


CAPITALIA: Announces New Credit Management Appointments
-------------------------------------------------------
Capitalia announces that a series of new appointments completes
the replacement of the key positions in the Credit Policy
Department of Capitalia headed by Mr. Alberto Giordano.

In Capitalia, Mr. Roberto Monza has been appointed head of credit
recovery, while Mr. Marcello Villa has taken responsibility for
credit restructuring. In Banca di Roma, responsibility for
Credits has been allocated by the Board of Directors to Mr. Paolo
Alberto De Angelis, coming from MCC, who will report to the Head
Office.

The Board of Directors of Banca di Roma has also approved the
plan for the partial splitting of the company, involving the
transfer of the corporate structures relating to information
services and back office work of the Banca di Roma, to a new
company now being established.
This operation is part of the process of optimisation of the
organisational structure of the Group, set out in the Business
Plan for 2002-2005, aimed at achieving the very highest standards
of efficiency, quality and economy of services.

On the assets and liabilities statement reference date (30
September 2002), the net book capital of the corporate division
subject to the split was EUR28.9 million.

As holder of the entire capital stock of Banca di Roma, Capitalia
will be allocated all the new shares of the newly-established
company, the share capital of which will be EUR10 million.


TELECOM ITALIA: Plans to Sell Directory Operations
--------------------------------------------------
Italy's largest phone monopoly, Telecom Italia, is planning to
sell Seat-Pagine Gialle SpA's directory business, according to
weekly Il Mondo.  The move is aimed at letting the company focus
on its Internet activities.

Telecom Italia also received government approval to sell the
information technology company Finsiel to Hewlett-Packard Co.,
says the report.  A deal between the parties is expected to be
reached soon.

Telecom Italia is divesting assets to reduce debt.  Last year, it
was able to raise EUR484 million from selling a stake in Telecom
Austria.

Chairman Marco Tronchetti Provera predicted the company's debt to
fall to EUR 18.3 billion last year from the EUR22 billion at the
end of 2001.

Telecom Italia shares fell fallen 21% in 2002, reducing the value
of the company to EUR50.2 billion.

CONTACT:  TELECOM ITALIA
          Corso d'Italia 41
          00198 Rome, Italy      
          Phone: +39-06-368-81
          Fax: +39-06-368-83388
          Home Page: http://www.telecomitalia.it
          Contact:
          Investor Relations:
          Phone: +39 06 36882119
                 +39 06 36883378
                 +39 06 36882634


===================
L U X E M B O U R G
===================


GEMPLUS INTERNATIONAL: Warns of Widening Operating Loss
-------------------------------------------------------
Gemplus International SA said it expects total revenues for the
fourth quarter ended December 31, 2002 to be EUR195.5 million as
compared to EUR205.6 million for the third quarter ended
September 30, 2002. Operating loss before restructuring charge
for the fourth quarter is expected to be approximately EUR16.6
million as compared to EUR6.5 million for the third quarter.

The company's balance sheet remains solid with EUR417 million in
cash at the end of the fourth quarter as compared to EUR401
million euros at the end of the third quarter.

For the fiscal year ended December 31, 2002, the company
therefore expects total revenues to be EUR787.4 million as
compared to EUR1,023.0 million for the previous year. Operating
loss before restructuring charge for the fiscal year is expected
to be approximately EUR 94.7 million as compared to EUR 125.2
million for the previous year. The latter included EUR 43.8
million of non-recurring charges relating to severance costs in
connection with changes in management and the loss of a
significant litigation matter.

The analysts consensus estimates as polled by JCF GROUP indicates
operating loss for the fiscal year ended December 31, 2002 of EUR
83.9 million on revenues of EUR 807.6 million. The underlying
analysts consensus estimates for the fourth quarter shows
therefore an operating loss of EUR 5.9 million on revenues of EUR
215.7 million.

The company's expected revenues for the fourth quarter reflect
the following elements:
- weak demand, particularly in Asia in telecoms and in financial
services and security across all regions,
- continuous price pressure, particularly in telecoms.

Gemplus plans to announce its fourth quarter and fiscal year 2002
results on February 12, 2003 before market opens.

About Gemplus

GEMPLUS: the world's leading provider of smart card solutions

Gemplus helps its clients offer an exceptional range of portable,
personalized solutions that bring security and convenience to
people's lives. These include mobile Internet access, inter-
operable banking facilities, e-commerce and a wealth of other
applications.

Gemplus is the only completely dedicated, truly global player in
the Smart Card industry, with the largest R&D team, unrivalled
experience, and an outstanding track record of technological
innovation.

In 2001, Gemplus was the worldwide smart card leader in both
revenues and total smart card shipments (source: Gartner-
Dataquest and Frost & Sullivan). Gemplus was also awarded Frost &
Sullivan's 2002 Market Value Award for its exceptional
performance.

Gemplus trades its shares on Euronext Paris S.A. First Market and
on the NASDAQ Stock Market as GEMP in the form of ADSs. Its
revenue in 2001 was EUR1 billion.

CONTACT:  GEMPLUS INTERNATIONAL
          Investor Relations
          Yves Guillaumot
          Phone: +41 22 544 50 65
          E-mail: yves.guillaumot@gemplus.com
          Fineo
          Anne Guimard
          Phone: +33 (0) 1 56 33 32 31
          E-mail: guimard@fineo.com


=====================
N E T H E R L A N D S
=====================


IFCO SYSTEMS: Moody's Withdraw All Ratings on Company
-----------------------------------------------------
Moody's says it withdrew all ratings of IFCO Systems N.V.
following the company's debt-to-equity swap.  The action affects
approximately EUR 327.0 million of debt securities.  

IFCO re-structured its debt following a payment default on its
10.625% senior subordinated notes on March 15, 2002.

Under the terms of the transaction, approximately 97.8465% of the
outstanding notes issued have been exchanged for new shares in
the company.

The remaining notes will be entitled to interest and principal
payments without being restricted by covenants following an
amendment to the indentures to the notes.

Moody's acknowledges the amendments of the company's senior
secured credit facilities, including changes in amount, maturity,
covenants, and pricing.  The amended facility will constitute a
new bank financing, which will be unrated by Moody's.

Headquartered in Amsterdam, IFCO, along with its US subsidiaries,
is a leading global provider of supply-chain support services,
with dominant positions in the round-trip container and pallet
services and pooling markets.


KLM ROYAL: Sells Its Low Cost Subsidiary Buzz To Ryanair
--------------------------------------------------------
KLM Royal Dutch Airlines on Friday announced that they have
signed an agreement for the sale of buzz, KLM Group's low cost
subsidiary, to Ryanair. KLM will sell its 100% shareholding in
buzz with a value to KLM of approximately EUR30 million.

By mutual agreement, buzz will be transferred once regulatory
authorities have approved the transaction. Parties are aiming for
this transfer to take place on or before April 1, 2003.

KLM's decision to sell buzz follows a strategic review of this
business in light of the increasing competition in the European
low cost arena over the last few months. As indicated in late
October 2002, buzz was aiming for rapid growth to maintain its'
position as the 3rd largest player in Europe in this market
segment. In order to finance the expansion, KLM has indicated
that it was considering partnership approaches from a number of
interested parties, which included the possibility of an outright
sale.

KLM believes that attaining satisfactory profitability for a
standalone buzz would have been difficult to achieve. The
emergence of a significant number of new entrants in the already
competitive low cost arena will continue to lead to increasing
price competition. In addition, the traditional network carriers,
in their response to changing consumer demands, have started to
focus on the low-cost customer as well by reforming their current
European product and pricing strategies. Against this background,
KLM's Board of Managing Directors has concluded that the plans of
buzz are best served with a link up with the Irish low cost
carrier Ryanair.

Following the study on low cost, KLM had already decided not to
integrate buzz with BASIQ AIR, the low cost label of Transavia
airlines. The KLM Group will therefore remain active in the low
cost - low fare market through leisure carrier Transavia airlines
which continues to increase its' focus on the activities under
the BASIQ AIR label. BASIQ AIR currently serves 13 European
destinations from Amsterdam Airport Schiphol and 2 of those from
Rotterdam Airport. BASIQ AIR sells her services with direct
booking through a call center and via www.basiqair.com. Apart
from the flights to BASIQ AIR destinations, Transavia will
continue to concentrate on other charter and scheduled flights
for the leisure market, using Schiphol as its home base.


ROYAL PHILIPS: To Refocus TV Manufacturing in Europe
----------------------------------------------------
Royal Philips Electronics announced plans to refocus its European
TV manufacturing activities, to be better positioned for the
upcoming challenges in the global TV market.

To strengthen its leading position in the fast growing Flat TV
market, Philips is considering the establishment of a European
configuration centre in Dreux, for the assembly of Flat TVs in
the existing Philips TV factory. At the same time, it is Philips'
intention to transfer part of the production of CRT TV sets to
the existing Philips factory in Szekesfehervar in Hungary. A
capacity adjustment in the Dreux TV operations is therefore
expected.

The plan will be worked out in more detail in the coming weeks in
Dreux, France, to analyse the consequences and the timing of
implementation of these changes, in close consultation with the
workers' representatives.

About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the
world's biggest electronics companies and Europe's largest, with
sales of EUR 32.3 billion in 2001. It is a global leader in color
television sets, lighting, electric shavers, medical diagnostic
imaging and patient monitoring, and one-chip TV products. Its
184,000 employees in more than 60 countries are active in the
areas of lighting, consumer electronics, domestic appliances,
components, semiconductors, and medical systems. Philips is
quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam
and other stock exchanges. News from Philips is located at
http://www.philips.com/newscenter

CONTACT:  ROYAL PHILIPS ELECTRONICS
          Nanda Huizing, Communications manager
          Philips Consumer Electronics Corporate Communications
          Phone: +31 40 2780074
          E-mail: nanda.huizing@philips.com


===========
P O L A N D
===========


BANK PRZEMYSLOWO: Moody's Confirms Baa1/P-2 Deposit Ratings
-----------------------------------------------------------
Moody's says it confirmed Krakow-based Bank Przemyslowo-Handlowy
PBK's Baa1/P-2 deposit ratings, which were placed on review in
November pending revision of Poland's foreign currency ceiling to
A2.  The bank's D financial strength rating remained unchanged.

According to Moody's, the bank's deposit ratings and outlook were
supported by its ownership by the HVB Group and reflected the
stable outlook assigned to HVB Group's deposit ratings (A3).

Przemyslowo-Handlowy PBK posted PAS consolidated 2001 assets of
PLN 46.1 billion (EUR 13.1 billion) and net profits down 37% to
PLN 352 million (EUR 100 million). At Q3-2002, BPH PBK's
cumulative consolidated net profits were down by 11% to PLN 127
million (EUR 33 million).


NETIA HOLDINGS: Registers Increase of Share Capital in Court
------------------------------------------------------------
Netia Holdings S.A., Poland's largest alternative provider of
fixed-line telecommunications services (in terms of value of
generated revenues), announced that on January 30, 2003 the
Regional Court in Warsaw registered the increase of Netia's share
capital resulting from the issuance of series H shares pursuant
to Resolution No. 3 of the Extraordinary General Meeting of
Shareholders, dated November 14, 2002. Currently, Netia's share
capital equals PLN 344,045,212 and is divided into 344,045,212
shares, PLN 1 par value per share.

The issuance of series H shares was one of the most important
steps in Netia's restructuring process. Netia's management will
promptly submit to the Warsaw Stock Exchange an application for
admission of series H shares to trading on the Warsaw Stock
Exchange. Series H shares will begin trading on the Warsaw Stock
Exchange separately from the currently listed ordinary shares
upon the review of Netia's application by the Warsaw Stock
Exchange.


=============
U K R A I N E
=============


INDUSTRIALBANK: Fitch Upgrades Long-term Term Rating to 'CCC'
------------------------------------------------------------
Fitch Ratings upgraded the Long-term rating of Zaporizhzhia-based
Industrialbank to 'CCC' from 'CCC-'.  The Outlook for the Long-
term rating is Stable. Fitch also affirmed the bank's short-term
rating at 'C', Individual Rating at 'D/E' and Support Rating at
'5T'.  

According to the international rating agency, the action for the
long-term rating "reflects the improved integrity of the balance
sheet and the reduction in the bank's risk profile following the
cessation of high-risk transactions in the promissory notes of
certain Ukrainian electricity companies."

It also considers the bank's reasonable profitability and
liquidity, and acceptable capital.

The only thing that constrains the bank's ratings is its small
size and high level of customer and industry concentration, the
rating agency says.  This is compounded by evidence of
deterioration in loan quality and the lack of diversification of
its revenue streams.

Fitch recognizes the bank's reasonably strong performance ratios
for 2001 and the nine months to end-3Q202, but it warns that
profitability is likely to be more difficult to sustain in the
longer-term.  The comment is made in the background of the bank's
limited franchise and growing competition on both sides of the
balance sheet, as well as a lack of alternative high-yielding
assets in Ukraine.

The rating agency also noted a worsening in the bank's loan
quality as evidenced by the rise in loan loss reserves/gross loan
ratio to more than threefold in 2001.

It also noted that customer balances are very concentrated,
forcing the bank to maintain a high level of liquid assets on its
balance sheet.

INB was established in 1990 as Bank Sodruzhestvo and re-
registered under its current name in 1996. It is ranked 33rd in
Ukraine in terms of assets.

At end-2001 it employed 225 staff. INB's largest shareholder is
West Reserve Insurance Company (West Reserve), a Ukrainian
company, which has a 35% stake. West Reserve also has a
significant shareholding in Zaporizhstal.


===========================
U N I T E D   K I N G D O M
===========================


ABBEY NATIONAL: To Post Significant Loss in Wholesale Banking  
-------------------------------------------------------------
Abbey National, the U.K.'s seventh-largest bank by market value,
is expected to announce losses amounting to GBP2 billion on
investments by its wholesale banking division this month.

Abbey warned of huge profit warning last June due to losses in
wholesale banking, after the division made a series of ill-judged
investments just as the stock market reached a peak.  In its
trading update in November, Abbey National also warned that
provisions, goodwill write-downs and changes in accounting for
embedded value in its life fund would lead to a full-year loss.

Although the bank pulled efforts to mitigate the loss by selling
the investments, it faces difficulties because of the continuing
weakness of stock markets.

Financial health of the wholesale banks is vital to the overall
recovery of Abbey National, which has been suffering in the
economic downturn and is trying to return to its roots as a
savings and lending organization.

Last year, management changes saw Luqman Arnold's, a former
president of UBS, appointed chief executive.  He replaced Ian
Harley, who was blamed for losses by its wholesale bank.  

CONTACT:  Thomas Coops
          Director of Corporate Affairs
          Phone: 020 7756 5536

          Christina Mills
          Head of Media Relations
          Phone: 020 7756 4212

          Jon Burgess
          Head of Investor Relations
          Phone: 020 7756 4182

          Matt Young
          Media Relations Manager
          Phone: 020 7756 4232


BAE SYSTEMS: Capital Group to Oppose Re-election of Chairman
------------------------------------------------------------
Capital Group of Companies, the U.S. investment fund that owns
11% of BAE's shares, is planning to vote against the re-election
of BAE Systems chairman Sir Richard Evans in May, the Sunday
Times says.

According to reports, Mr. Evans is increasingly being pressured
to resign after the company's profits warning in December, and
the admission on the cost overruns and delays on the GBP2.8
billion Nimrod and GBP2 billion Astute contracts with the British
Ministry of Defense.

In response, a BAE spokesman said Capital Group is well within
its rights to oppose the reappointment of Mr. Evans, and besides
Evans does not have to stand for re-appointment this year.

Only Sir Robin Biggam and Keith Brown, the former UK government
representative, face a shareholder vote for a place on the board
in May.

According to AFX, both the Sunday Telegraph and The Business
suggested the UK Ministry of Defense want Evans and other senior
executives to stand aside.

As for rumors that Mr. Evans may announce his resignation at the
company's full-year results on February 20, the spokesman says:
"It's all speculation."

CONTACT:  BAE SYSTEMS
          Airbus UK New Filton House
          Filton, Bristol BS99 7AR
          United Kingdom
          Phone: +44 (0) 117 969 3831

          BAE SYSTEMS Advanced Technology Centre
          PO Box 5, Filton, Bristol BS34 7QW, United Kingdom
          Phone: +44 (0) 117 936 6024
          Fax: +44 (0) 117 936 3733

          Contact:
          Investor Relations
          E-mail: investorrelations@baesystems.com


BAE SYSTEMS: EADS Gets 25 % of Astrium, Takes Control of Paradigm
-----------------------------------------------------------------
- EADS increases role as European space defense powerhouse
- Path cleared to full integration of EADS Space assets
- EADS confirms its strong commitment to the Skynet 5 program
- For BAE SYSTEMS, the disposal of Astrium marks the exit from
its non-core space sector

EADS, is acquiring BAE Systems 25% interest (27.5 % economic
share) in Astrium, Europe's leading space company. The
transaction, signed on 30 January 2003, will be implemented when
all regulatory clearances have been obtained.

Full control of Paradigm Secure Communications Ltd., formerly
held by BAE SYSTEMS and EADS, has been transferred to EADS.

Prior to completion of the transaction, EADS and BAE SYSTEMS will
each make a capital contribution into Astrium of EUR 84 million
(total EUR 168 million). The cash contribution will facilitate
the acceleration of EADS' strategy of increasing the overall
industrial and financial efficiency of the company.

EADS, which already owns 75 % of Astrium, will acquire BAE
SYSTEMS Astrium shares for EUR 84 million at completion. Taking
into account the cash contribution, BAE SYSTEMS interest will
effectively be transferred to EADS for no net cash consideration.
These terms reflect the current deterioration in the commercial
space sector and also EADS' continued intent to position Astrium
for a return to profitability in 2004 and leadership in any
future consolidation of the space industry under unified
management.

In July 2002, EADS and BAE SYSTEMS had announced their intention
for EADS to acquire the interest of BAE SYSTEMS in Astrium and
formed Paradigm Secure Communications to address service
provision for the proposed Skynet 5 military communications
satellite program for the UK MoD. Under the original terms,
completion of the sale of the Astrium interest was conditional on
completion of contracts with the UK MoD for the Skynet 5 program.
In the event of EADS not achieving financial close of the Skynet
5 contract, BAE SYSTEMS will pay EUR 55 million to EADS.

EADS continues to view the Skynet 5 program as being of strategic
importance to both its UK and space initiatives and is fully
committed to signing the Skynet 5 contract with the UK MoD as
soon as possible. BAE SYSTEMS will continue to support EADS in
securing the Skynet 5 contract.

For EADS, the acquisition is a key element in its effort to
restructure and integrate all its Space interests in the UK,
France, Germany and Spain. EADS will gain the strategic and
restructuring flexibility required by the current space market
conditions.

"The Space business is a key enabler of EADS' future growth in
the provision of large systems, it is at the core of our
offering," said Francois Auque, Member of the EADS Executive
Committee and Head of the Space Division. "It provides synergies
with our other core businesses and will generate new growth
opportunities in defense, for example network centric warfare,
secured telecom, and ballistic missile defense. The Space
business can also provide for new growth opportunities in the
commercial business, for example air traffic management and
navigation. Consolidating our ownership of Astrium will allow
EADS to strengthen its strategic positioning in a rapidly
changing market place", Auque said. "Taking the full ownership of
Paradigm will allow us to expand in military telecommunications
satellites services, which we have identified as a major area of
future growth", he added.

Jean-Louis Gergorin, Member of the EADS Executive Committee and
Head of Strategic Coordination, commented, "EADS is very much at
home in the UK. This simplification of Astrium's share ownership,
and our pursuit of the Skynet 5 program - which should be closed
in early 2003 -, underscore our commitment to our already strong
industrial presence, to our British Customer, the Ministry of
Defence, and to our 12,000 strong, highly-skilled UK workforce."

Stephen Henwood, BAE SYSTEMS Group Managing Director
International Programs, said "The disposal of Astrium marks the
exit of BAE SYSTEMS from the non-core space sector."

About BAE SYSTEMS
BAE SYSTEMS is a systems company, innovating for a safer world.
BAE SYSTEMS employs nearly 100,000 people including Joint
Ventures, and has annual sales of around o13 billion. The company
offers a global capability in air, sea, land and space with a
world-class prime contracting ability supported by a range of key
skills. BAE SYSTEMS designs, manufactures and supports military
aircraft, surface ships, submarines, space systems, radar,
avionics, communications, electronics, guided weapon systems and
a range of other defence products. BAE SYSTEMS is dedicated to
making the intelligent connections needed to deliver innovative
solutions.

About EADS:
EADS is a global aerospace and defense company, and is the
world's second largest in terms of revenues, having achieved EUR
30.8 billion in 2001. EADS maintains a workforce of more than
100,000 and is a market leader in defense technologies,
commercial aircraft, helicopters, space, military transport and
combat aircraft, as well as related services. Its family of
leading brands includes the commercial aircraft maker Airbus;
Eurocopter, the world's largest helicopter manufacturer; Astrium,
the space company and MBDA, the world's second largest missile
company. EADS is also the biggest partner in the Eurofighter
consortium and heads the A400M military transport aircraft
programme. EADS has more than 70 facilities in France, Germany,
Spain and the U.K. It is active in markets around the world,
including the U.S., Russia and Asia.

About Astrium:
Astrium focuses on its satellite business activities covering
civil and military telecommunications and Earth observation,
science and navigation programs, avionics and equipment.

CONTACT:  BAE SYSTEMS:
          Richard Coltart
         Phone: +44 (0) 1252 384 875

         For EADS:
         Rainer Ohler
         Phone: +49 (0) 89 607 34235
         Roland Sanguinetti
         Phone: +33 (0) 1 42 24 24 26
         Miguel Sanchez  
         Phone: +39 (0) 91 585 726 4  


BRITISH ENERGY: Advisers' Fees Reach Almost GBP100 Million
----------------------------------------------------------
Advisers' fees on the restructuring of British Energy are
approaching the GBP100 million mark, and they are expected to
rise further until the government's bailout is approved by the
middle of 2004.

City bankers and lawyers working on the restructuring of the
nuclear generator were understood to have been given "a blank
cheque" by the government says Times Online.  And the British
government has no idea what will the actual figures that would
come out of it since it had not requested estimates of fees over
the long term from any of the three investment banks and two City
law firms.

When Lord Oakeshott, the Liberal Democrat Treasury spokesman,
asked the Department of Trade and Industry about how much the
fees to the adviser would cost, the department said it had no
information on the matter.

According to the DTI minister, Lord Sainsbury, the estimates were
not requested due to the uncertainty of the duration and nature
of any restructuring.

Following collapse of power prices in the region as a result of
the liberalization of the wholesale power market, the British
government provided the group with GBP650 million emergency loan
to sustain operations while it negotiates with lenders and
shareholders.

The expiration of the funding in November has already been
extended to March this year.

British Energy is already effectively in the hands of the
Government, since the Department of Trade and Industry has the
final say in any decision on how to spend the state's GBP650
million loan to the company.

CONTACT:  BRITISH ENERGY PLC
          3 Redwood Crescent, Peel Park
          East Kilbride, Strathclyde G74 5PR,
          United Kingdom
          Phone: +44-135-526-2000
          Fax: +44-135-556-5656
          Home Page: http://www.british-energy.com
          Contact:
          Paul Heward, Investor Relations
          Phone: 01355 262201


CABLE & WIRELESS: U.K. Firm Joins Class Action Suit
---------------------------------------------------
U.K. law firm Class Law Solicitors and San Francisco-based
Milberg Weiss Bershad Hynes & Lerach have joined forces to launch
a class action suit on behalf of Cable & Wireless shareholders.

The legal action is aimed at seeking up to GBP1.8 billion in
damages from the telecom company, which failed to disclose a
GBP1.5 potential tax liability related to the sale of its One 2
One mobile phone division to Germany's Deutsche Telekom in 1999.

Under the terms of the transaction, Cable & Wireless agreed to
pay any U.K. tax liabilities that the German company might suffer
as a result of the deal.

According to Times Online, Milberg Weiss has signed on six
undisclosed U.S. institutional investors, and Class Law will next
week step up the search for support from U.K. shareholders.

Central to the firms' evidences is a disclosure in November that
Cable & Wireless would have to pay GBP700 million in cash to
break "previously undisclosed" property and operating leases.

But Cable & Wireless denied having misled investors.  According
to a spokesman, "There have been a number of claims by various
players and our reaction is always the same - Cable & Wireless is
aware of its responsibility to shareholders and will defend
itself vigorously in any action."

The suit is in addition to that prepared by Schiffrin & Barroway
on behalf of U.S. investors.

CONTACT:  Investor Relations
          Samantha Ashworth
          Phone: +44 (0)7957 804618
          Caroline Stewart
          Phone: +44(0) 207 315 6225
          Virginia Porter (US)
          Phone: +1 646 735 4211


ENERGIS PLC: Hong Kong-based Firm Interested in Telecom Group  
--------------------------------------------------------------
PCCW, the telecom group led by Richard Li, son of Asia's richest
man, is interested in buying collapsed U.K. group Energis as part
of a plan to diversify its business away from Hong Kong.

Invensys plc is a global leader in production technology and
energy management. The Group helps customers to improve their
performance and profitability using innovative services and
technologies and a deep understanding of their industries and
applications.

Invensys had divested non-core assets as part of its overall plan
to improve capital strength and increase strategic focus.

Last year, former chief executive Michael Grabiner was reported
to be plotting a bid for the company before the company collapsed
under more than GBP1 billion pounds of net debt.

CONTACT:  Marta Judge
          Energis
          Phone: +44 (0)20 7206 5800
          Mobile: 07800 021810
          E-mail: mjudge@energis.co.uk


JOS HOLDINGS: Shareholders Call for Voluntary Liquidation
---------------------------------------------------------
At the Second Extraordinary General Meeting of Jos Holdings plc
held January 31, 2003, shareholders duly approved the resolutions
put to the meeting. Accordingly, the company has been placed in
members' voluntary liquidation and Richard Setchim and Ian Oakley
Smith have been appointed as liquidators to the company.

In accordance with the reconstruction proposals, for each:

- Zero Dividend Preference Share in the company, Shareholders
will receive 2.575065 New Ordinary Shares in BPT or 249p in cash;

- Income Share in the company, Shareholders will receive 0.020812
New Ordinary Shares in BPT or 2.0125p in cash;

- Capital Share in the company, Shareholders will receive
2.277847 New Ordinary Shares in BPT or 220.26p in cash;

and any pro rata combination in accordance with their elections
(or deemed elections).

Applications have been made for admission to the Official List
and to trading on the London Stock Exchange of the 7,573,707 New
British Portfolio Shares issued.

It is expected that checks will be dispatched and CHAPs payments
will be made to Jos Shareholders who have elected (or who are
deemed to have elected) for the Cash Option on February 1, 2003
and by February 3, 2003 respectively. In respect of those Jos
Shareholders who have elected (or who are deemed to have elected)
to receive New Ordinary Shares in BPT, CREST accounts will be
credited on February 3, 2003. Certificates for New Ordinary
Shares are expected to be dispatched on February 5, 2003.

CONTACT:  Simon White
          Allianz Dresdner Asset Management (UK) Limited
          Phone: 020 7475 2700
          
          Angus Gordon Lennox
          Cazenove & Co. Ltd
          Phone: 020 7825 9880


JOS HOLDINGS: Notice of Temporary Suspension of Listing
-------------------------------------------------------
The Financial Services Authority temporarily suspends the
securities set out below from the Official List effective from
January 31, 2003 07:30 AM at the request of the company pending
shareholders approval of reorganization proposals.

Ordinary Shares of 10p each
with 'A' rights                   (3-254-495)(GB0032544958)
   fully paid

Ordinary Shares of 10p each
with 'B' rights                   (3-254-503)(GB0032545039)
   fully paid

Ordinary Shares of 10p each
with 'C' rights                  (3-254-514)(GB0032545146)
   fully paid

Ordinary Shares of 10p each
with 'D' rights                  (3-254-525)(GB0032545252)
   fully paid

Ordinary Shares of 10p each
with 'E' rights                  (3-254-536)(GB0032545369)
   fully paid

Ordinary Shares of 10p each
with 'F' rights                  (3-254-547)(GB0032545476)
   fully paid

CONTACT:  Listing Applications Team
          FSA
          Phone: 020 7943 0333


ROYAL MAIL: May Post an Appeal Over Price Controls by Postcomm
--------------------------------------------------------------
Struggling British courier Royal Mail will launch an appeal to
the Competition Commission over price controls on its services
drawn up by market regulator Postcomm.

Postcomm, chaired by Graham Corbett, originally wanted Royal Mail
to raise the price of a first-class stamp to 28p and second-class
to 20p. However, the 1p increases were conditional on Royal Mail
capping future price rises at 2.5 per cent below retail inflation
over three years.

But Royal Mail chairman Allan Leighton accused the regulator of
"giving with one hand and grabbing even more back with the
other".

Postcomm is expected to approve a 1p increase in the price of
first and second-class stamps, starting from April.

The Commission has reportedly refused to make some of the
compromises demanded by the Royal Mail.

These include the ability to "rebalance" prices by raising its
charges for some services while lowering others; proposals for a
subsequent price freeze on a "basket" of prices which the Royal
Mail said would have cost it GBP460 million; and price control
formula be renegotiated in the future should the business be
faced with extra costs, including a potential GBP330 million bill
to plug a pensions black hole.

Royal Mail, which is losing more than GBP1 million a day, is
expected to be given a month to respond and is unlikely to launch
the formal appeals process this week.

An industry executive was quoted, saying: "This is a close call
but on balance it will end up at the Competition Commission. The
regulator is giving some ground but not enough given the risk
element is so great."

Royal Mail warned Postcomm in December that it faces the threat
of huge extra costs including a pension fund payment, a GBP120
million bill to cover increases in National Insurance
contributions and GBP280 million in potential increases in
interest payments on Government loans.

Allan Leighton, the Royal Mail chairman, believes the heavy hand
of the regulator is threatening his three-year revival plan for
the struggling company.

CONTACT:  ROYAL MAIL GROUP PLC
          148 Old St.
          London EC1V 9HQ, United Kingdom
          Phone: +44-20-7250-2888
          Fax: +44-20-7250-2244
          Homepage: http://www.royalmailgroup.com
          Contacts: Neville Bain, Chairman
                    John Roberts, Chief Executive and Director


ROYAL & SUNALLIANCE: Move Relating to Asbestos Case Criticized
--------------------------------------------------------------
Criticism has hit Royal & SunAlliance as a result of suggestions
that it is trying to avoid being forced to pay millions of pounds
to former employees of asbestos manufacturing group Turner &
Newall.

According to the Daily Post, the insurer, as well as a Lloyd's of
London syndicate, asserted that a policy clause which excluded
cover for pneumoconiosis - known as asbestosis when caused by
asbestos - also excluded other asbestos-related lung and gut
diseases such as mesothelioma and cancer.

RSA provided employers' liability cover for T&N from October 1969
until March 1977. The Lloyd's syndicate insured the company from
April 1977 to April 1995.

Colin Edelman QC, representing the company's administrators as
well as the interests of the asbestos victims and their families,
told Mr. Justice Lawrence Collins of the High Court in London
that RSA's defense was "just ridiculous."

The judge is due to decide the strict legal effect of the
insurance policies following a three-week hearing that is still
ongoing.

It is understood that RSA's move could deprive payments to
thousands of victims formerly employed by Turner & Newall, now
under administration.

Last week, Royal & Sun Alliance Insurance Group says it 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 thirdquarter.

CONTACT:  Malcolm Gilbert, DL, Director Communications
          Phone: +44 (0)20 7569 6138


THISTLE HOTELS: Bankers Hire Ernst & Young to Review Business
-------------------------------------------------------------
Bankers of British hotel chain Thistle Hotels PLC, alarmed at the
group's precarious trading position and questioning over the
ability of the management to steer the company through a period
of uncertainty in the market, hired Ernst & Young to carry out a
review of the business.  

The Sunday Telegraph said such a review could lead to sweeping
management changes and disposals at the hotels group, which has
already sold more than half of its 56 hotels across the U.K. last
year to gain operating flexibility, amid the slump in the tourism
industry.

The company sold 31 regional and six London hotels to Gamma Four,
a subsidiary of venture capital firm Euro & U.K. Property,
leaving Thistle with only 16 hotels in the United Kingdom.

Bankers requested for the review despite Thistle's approximately
GBP320 million in the bank.

CONTACT:  THISTLE HOTELS
          Capital House
          25 Chapel Street
          London NW1 5JJ
          United Kingdom
          Phone: +44 (0)20 7895 2000
          Homepage: http://www.thistlehotels.com


                                   *************

          S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Trenton, NJ
USA, and Beard Group, Inc., Washington, DC USA. Kimberly
MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee
Gonzales, Editors.

Copyright 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
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Information contained herein is obtained from sources believed to
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The TCR Europe subscription rate is US$575 per half-year,
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