/raid1/www/Hosts/bankrupt/TCREUR_Public/030226.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, February 26, 2003, Vol. 4, No. 40
Headlines
* C Z E C H R E P U B L I C *
UNION BANKA: Two Banks Offer New Accounts to Clients
* F R A N C E *
AIR LIB: Easyjet Wants to Take Slots Held in Orly Airport
METALEUROP NORD: Employees Hold Protest Over Closure in Paris
* G E R M A N Y *
BERTELSMANN AG: Faces Lawsuit in Relation to Napster Team Up
DEUTSCHE TELEKOM: Puts Telecash Up for Sale - Report
EM.TV & MERCHANDISING: Saban Interested in Buying Minority Stake
* I R E L A N D *
ELAN CORP: Publishes Circular, Sets Date for Special Meeting
* I T A L Y *
FIAT SPA: Stevens Confirms Sell-off Plans for Insurance Arm
FIAT SPA: Gnutti Partners With Unipol in Bid for Insurance Arm
LAZIO: Decides to Slash Nominal Value of Shares on Loss
* N E T H E R L A N D S *
KONINKLIJKE AHOLD: To Post Reduced Earnings on Overstatements
KONINKLIJKE AHOLD: Fitch Downgrades Rating to 'BBB-/F3'
KONINKLIJKE AHOLD: Moody's Reviews Ratings for Possible Downgrade
KONINKLIJKE AHOLD: Lease Pass Through Trusts Ratings Lowered
KONINKLIJKE AHOLD: Corporate Credit Ratings Lowered to 'BB+/B'
ORANGE: Disposal of Dutchtone and Orange Denmark Looms
ROYAL PHILIPS: Fitch Affirms Rating, Changes Outlook to Stable
* R U S S I A *
OAO GAZPROM: US$1.75 Billion Notes Assigned 'B+' Rating
* S W I T Z E R L A N D *
CREDIT SUISSE: Winterthur Streamlines Its Management Structures
CREDIT SUISSE: Has Net Loss of CHF950 MM in Fourth Quarter
ZURICH FINANCIAL: Expected to Announce Further Job Cuts
* U N I T E D K I N G D O M *
ABBEY NATIONAL: Receives Offer for Train-Leasing Division
ABERDEEN ASSET: Completes Disposal of Retail Fund Management
AQUILA INC.: Fitch Downgrades Senior Unsecured Rating to 'B+'
AVON ENERGY: Fitch Downgrades Avon Energy Partners Holding
CORUS GROUP: Dutch Division Objects to Sale of Aluminum Asset
MARCONI PLC: Court Approves Return of Capital From Ultramast
MOTHERCARE PLC: Baugur's Stake Building Is Now at 1.5MM Mark
MOTHERCARE PLC: Baugur's Stake Reaches 1.5MM Mark
PIZZAEXPRESS PLC: Says Talks With Bidders Going Positively
ROYAL & SUNALLIANCE: Pension Fund Liabilities Fears Drain Value
===========================
C Z E C H R E P U B L I C
============================
UNION BANKA: Two Banks Offer New Accounts to Clients
----------------------------------------------------
Zivnobanka and GE Capital Bank offered new accounts to Union
Banka clients after the Ostrava-based bank suspended payments and
restricted the use of its credit cards on Friday, Prague Business
Journal reports.
Union Banka has about 100 branches, around 250,000 clients and
deposits of more than CZK 20 billion, approximately CZK1 billion
less than the amount held at the start of the previous year.
Other banks criticized the move on what appeared as the luring of
disgruntled clients with special offers, while their deposits are
being suspended in another bank.
The Czech National Bank launched on Friday proceedings to revoke
Union Banka's banking license, remaining on its stand not to bail
the bank out.
CNB Governor Zdenek Tuma described the plan for UB restructuring,
submitted by UB new owner, Italian Invesmart, as unrealistic.
The stance is understood to signal impending bankruptcy for the
bank that has a total of 250,000 clients.
If the bank files for bankruptcy, clients will be entitled to 90%
of their deposit, up to CZK 790,000, the report says. Some 100
UB clients have more than CZK 1 mln in their accounts.
===========
F R A N C E
===========
AIR LIB: Easyjet Wants to Take Slots Held in Orly Airport
---------------------------------------------------------
Easyjet PLC again announced its intention to acquire some of the
45,000 take-off and landing slots held by bankrupt Air Lib at
France's Orly airport.
Earlier, both Groupe Air France and Easyjet said in separate
statements that they could take Air Lib's slots if its financial
woes force it to declare bankruptcy.
An Easyjet spokesman specifically said at the time that: "If Air
Lib files for bankruptcy, its slots will be given back to the
organization which controls the slots. We would then be
candidates for taking up a certain number."
TCR-EU reported last week that a French commercial court ordered
the liquidation of the number two French airline after being
grounded for failure to renew its operating license.
The Creteil commercial court discounted the other option of
placing the company under administration.
The works council of Air Lib is scheduled to meet to establish a
precise breakdown of costs and to appoint an advisory company,
which will take charge of employee reclassification.
Unions are concerned about the establishment of the
reclassification body, despite knowledge that national carrier
Air France is willing to take on 1,000 of the redundant
employees.
Air Lib chairman Jean-Charles Corbet, meanwhile, has said he will
do everything in his power to halt the liquidation process.
CONTACT: AIR LIB
42 Rue F. Forest
Imm. Le Sommet
97122 Jarry-Baie Mahault
Phone: +590-(0)5.90.32.56.00
Fax: +590-(0)5.90.26.64.02
Home Page: http://www.air-liberte.fr/
METALEUROP NORD: Employees Hold Protest Over Closure in Paris
-------------------------------------------------------------
Employees in the Noyelles-Godault factory of Metaleurop Nord, a
company which went into receivership last month, demonstrated
outside the Paris offices of the group's parent company,
Metaleurop SA.
The protesters, almost 700 of the closed plant's 800 employees,
demanded that Metaleurop SA be held responsible for the failure
of the site and that French authorities take the necessary steps
to ensure that the facility continues to operate.
The group then invaded the former headquarters of Swiss
commodities trader Glencore, which is Metaleurop's leading
shareholder. Windows were smashed and equipment left by Glencore
when they recently moved out were damaged in the process.
Reports indicate that Glencore has responsibilities in relation
to the closure of the Metaleurop Nord.
The Bethune County Court placed Metaleurop Nord under compulsory
administration after parent Metaleurop SA announced it would not
re-inject fresh capital into the subsidiary.
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.
Metaleurop SA decided to shutdown the facility after abandoning
costly restructuring plans for the plant.
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
=============
G E R M A N Y
=============
BERTELSMANN AG: Faces Lawsuit in Relation to Napster Team Up
------------------------------------------------------------
Bertelsmann faces legal suits for allegedly playing a part in
pirating songs from music publishers by funding now-defunct
Napster, allowing millions of fans to swap songs for free.
Publishers, including Frank Music and Peer International, as well
as songwriters, including Jeery Leiber and Mike Stoller who
popularized hits such as "Hound Dog", lodged a complaint against
the German media firm last week in a Manhattan federal court.
The plaintiffs are seeking "statutory damages in an amount not
less than US$17 billion".
Bertelsmann, which owns one of the world's top five music
companies BMG invested more than US$100 million on the Web site
with the aim of launching a legitimate subscription version of
the service.
But the plans were aborted when Napster filed for Chapter 11
bankruptcy protection, and a U.S. court ruled the German group
could not buy the assets due to objections from Napster's
creditors.
The assets instead went to CD-burning software maker Roxio, which
did not assume any of Napster's pending liabilities.
According to Reuters, the lawsuit is also seeking class action
status to include members of Harry Fox Agency, the rights
organization that represents most US music publishers whose songs
were swapped on Napster.
But Bertelsmann, which is currently selling its science and
business publishing unit in order to lower debt, is also one of
27,000 music publishers represented by the Fox, which means it is
also one of the plaintiffs in a class action suit.
The German firm could opt out of any class member under the law,
but it would call risk of separate lawsuits by its own
songwriters, according to one lawyer familiar with the matter.
A Bertelsmann spokesperson in Germany declined to comment or
confirm the report. An attorney for the music publishers also
declined to comment beyond the court documents.
CONTACT: BERTELSMANN AG
Carl-Bertelsmann-Strasse 270
D-33311 GÂtersloh, Germany
Phone: +49-5241-80-0
Fax: +49-5241-80-9662
Homepage: http://www.bertelsmann.de
Contacts: Gunter Thielen, Chief Executive Officer
Siegfried Luther, Chief Financial Officer
DEUTSCHE TELEKOM: Puts Telecash Up for Sale - Report
----------------------------------------------------
Deutsche Telekom is reportedly selling Telecash as part of its
move to restructure the unit's parent, T-Systems, which was
formed after Deutsche Telekom took control of Debis Systemhaus, a
joint venture with DaimlerChrsyler.
T-Systems is victim to the slowdown in IT spending and sluggish
progress in the integration of its different parts.
According to Handelsblatt, U.S. company First Data has offered
between EUR109 million and EUR113 million for Telecash, a leader
in the German electronic credit card payment service.
The report says proceeds from the sale would be used to help
Deutsche Telekom reduce its EUR64 billion debt to EUR50 billion
(US$52 billion).
Deutsche Telekom declined to comment, according to the report.
The German company is orchestrating an international expansion
for T-Systems. It wants the subsidiary's overseas business to
compete with global rivals such as CSC and EDS. But the effort
encountered a glitch after talks with a prospective partner, Car
Gemini Ernst & Young, failed last month.
CONTACT: DEUTSCHE TELEKOM AG
53113 Bonn, Germany
Phone: +49-228-181-0
Fax: +49-228-181-8872
Home Page: http://www.telekom.de
Contact:
Hans-Dietrich Winkhaus, Chairman Supervisory Board
EM.TV & MERCHANDISING: Saban Interested in Buying Minority Stake
----------------------------------------------------------------
Haim Saban, the U.S. kid entertainment specialist, is interested
in acquiring a minority stake in German children's entertainment
group EM.TV & Merchandising AG, a company spokesman said
according to Daily Deal.
The declaration confirms the statement of EM.TV chief executive,
Werner Klatten, two weeks ago that the investor is interested in
the 24.8% stake he holds. Mr. Klatten reiterated he is not
planning to divest the EUR31.5 million (US$33.8 million)
holdings.
Saban's bid is understood as part of a plan to gain a foothold in
Europe's largest market. It is known that the billionaire is
also bidding for the core activities of bankrupt Munich media
group Kirch Media GmbH.
The Los-Angeles based investor is also launching a bid for
EM.TV's Jim Henson Co., owner of the creator of Muppets. He is
bidding against Dean Valentine, and Europlay Capital Advisors,
with which EM.TV is negotiating the sell of a 49.9% stake.
At its peak, EM.TV was valued at EUR17 billion. But after its
troubles surfaced its market capitalization is just under EUR130
million. The company's founders, brothers Florian and Thomas
Haffa, are on trial in Munich for deceiving investors and
presiding over one of the Neuer Markt's collapses.
=============
I R E L A N D
=============
ELAN CORP: Publishes Circular, Sets Date for Special Meeting
------------------------------------------------------------
Elan Corporation, plc announced the publication of a circular to
shareholders in connection with the proposed divestment of
certain commercial rights to Sonata(TM) (zaleplon) and
Skelaxin(TM) (metaxalone) and certain associated assets to King
Pharmaceuticals, Inc. (NYSE: KG), details of which were announced
on January 30, 2003.
The Circular seeks shareholder approval for the proposed
divestment and additionally seeks shareholder approval for a
proposed disapplication of pre-emption rights in relation to
certain of the ordinary share capital of Elan at a special
shareholders meeting. The Extraordinary General Meeting will be
held at 10.30 a.m. on March 18, 2003 at The Davenport Hotel,
Merrion Square, Dublin 2, Ireland.
Due to the classification of the proposed divestment under the
Listing Rules of the Irish Stock Exchange and the Listing Rules
of the UK Listing Authority, the completion of this transaction is
conditional on the receipt of approval of a majority of
shareholders voting at the EGM. The Circular, which is being
posted today to holders of Ordinary Shares and to holders of
American Depositary Shares, provides further details on the
divestment, explains why the Elan Board of Directors believes
that the divestment is in the best interests of Elan and its
shareholders as a whole and seeks the approval of Elan's
shareholders to an ordinary resolution to be proposed for
consideration at the EGM.
In addition to the ordinary resolution to seek shareholder
approval for the divestment, Elan will also seek the approval of
its shareholders to a special resolution to disapply pre-emption
rights over certain of its ordinary shares, in order to ensure
that the Directors have flexibility to address the company's
obligations. The special resolution proposes that the Directors
be authorized to disapply pre-emption rights up to a maximum of
EUR 6,000,000 in nominal value of Ordinary Shares (120,000,000
Ordinary Shares), representing 34.24% of the existing issued
share capital of the company. The two resolutions are not
conditional on one another.
In compliance with their respective Listing Rules, a copy of the
Circular has been submitted to the Irish Stock Exchange and the
UK Listing Authority, and will be available for inspection at the
following locations:
1. Company Announcements Office
Irish Stock Exchange
28 Anglesea Street
Dublin 2
Ireland
Tel: + 353 1 6174200
2. Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
United Kingdom
Tel: + 44 20 7676 1000.
*T
The Circular and Notice of the EGM will also be available on
Elan's website at http://www.elan.com
Elan is focused on the discovery, development, manufacturing,
selling and marketing of novel therapeutic products in neurology,
pain management and autoimmune diseases. Elan shares trade on the
New York, London and Dublin Stock Exchanges.
=========
I T A L Y
=========
FIAT SPA: Stevens Confirms Sell-off Plans for Insurance Arm
-----------------------------------------------------------
After numerous reports and comments by company officials, Fiat
SpA vice-chairman Grande Stevens confirmed that Toro
Assicurazioni SpA together with its 6.658% stake in Capitalia
SpA, is up for sale.
Stevens was quoted in a report saying, "Toro is for sale" and
added, "I think yes" when asked if this includes Toro's stake in
Capitalia.
Earlier, TCR-EU reported that this profitable unit of Fiat is
being sold for up to EUR2.5 billion (GBP1.67 billion) to help the
troubled industrial group shore up diminishing finances.
Toro Chairman Gabriele Galateri confirmed the possibility of the
sell-off at the time, as Fiat made no mention of it in a meeting
with banks, where it disclosed that asset sales were going ahead
as planned.
It is known that Fiat is on its planned EUR2.5 billion capital
increase aimed at reviving loss making unit Fiat Auto, which had
an operating loss of less than EUR200 million (US$213 million) in
the fourth quarter.
Capitalia SpA's investment banking unit MCC SpA is advising Fiat
on the Toro sale, while Lazard is advising on the sale of Fiat
Avio, which is expected to bring in about GBP1.5 billion in fresh
funds for Fiat.
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
FIAT SPA: Gnutti Partners With Unipol in Bid for Insurance Arm
--------------------------------------------------------------
Italian financier Emilio Gnutti has teamed up with Italian
insurer, Unipol Assicurazioni SpA, in its plans to acquire Fiat
SpA's insurance arm, Daily Deal cited a source saying.
The partnership with Italy's fourth largest insurer was done
through Mr. Gnutti's holding company Hopa SpA, the report says.
The two is believed to bid an estimated EUR2 billion (US$2.1
billion) for Toro Assicurazioni SpA, which is being sold for up
to EUR2.5 billion (GBP1.67 billion), according to Times Online.
Proceeds of the sale are understood to help the troubled
industrial group shore up Fiat's diminishing finances.
But analysts say the purchase price may only be EUR2 billion, or
below the EUR2.5 billion value of the insurer when Fiat bought
minority shareholding in the company in 2000.
Both declined to comment on the price or the possibility that
they might invite other bidders in the partnership. It is
possible that Hopa would discuss the bid at a board meeting
Tuesday.
Mr. Gnutti is also interested in bidding for Fiat Auto, Fiat's
loss-making unit, though he is expected to prefer acquiring Toro
over the auto division.
Other possible Toro bidders include, French mutual insurer
Groupama, Riunione Adriatica di Sicurta.
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
UNIPOL ASSICURAZIONI
Agenzia di Venezia
S.Marco, 916 calle dei fabbri
30124 Venezia
Phone: +39-041-5285810
+39-041-2410709
LAZIO: Decides to Slash Nominal Value of Shares on Loss
-------------------------------------------------------
The board of Italian soccer club Lazio has decided to cut its
capital by EUR79.1 million (US$71 million) to EUR2.6 million
after it run up losses of EUR194.6 million through January.
Lazio said in a statement it would lower nominal value of shares
to EUR0.02 each from EUR0.52 each, dashing the hopes of fans,
many of them shareholders, who had believed the bankruptcy of
Lazio's main shareholder, crisis-hit food group Cirio, would lead
to a generous takeover offer.
It is known that Italian corporate law requires a company that
loses more than a third of its capital to formally restate its
worth and then call a shareholders' meeting to approve a
recapitalization. Lazio, to this effect, has already said it is
planning a EUR110 million capital increase.
Cirio put up Lazio for sale after the former defaulted on its
bonds. It struggled to stay viable during the crisis, paying
team salaries only intermittently and letting several star
players go.
The club remained relatively strong despite its troubles and
briefly led the country's top league last November. Its shares
deflated only slowly even as the extent of the financial problems
of Lazio, Cirio and Cirio's owner, Sergio Cragnotti, became
better known.
Lazio said its 2002 net loss widened to EUR47.2 million from
EUR7.2 million in 2001, adding that its total debt stood at EUR90
million, up from EUR80.7 million at the end of June.
Furthermore the team said it was moving to take advantage of a
controversial law aimed at helping Italy's financially distressed
soccer teams by giving them more time to write down the value of
star players.
CONTACT: CIRIO
Phone: ++39 06 4145700
Fax: ++39 06 4145729
Home Page: http://www.cirio.it
=====================
N E T H E R L A N D S
=====================
KONINKLIJKE AHOLD: To Post Reduced Earnings on Overstatements
-------------------------------------------------------------
Financial statements for 2000, 2001 and interim results 2002 to
be restated
CEO and CFO to resign
EUR 3.1 billion new funding commitments obtained to support
liquidity position
Enhanced focus on debt reduction
Overview
Ahold announces that net earnings and earnings per share under
Dutch GAAP and U.S. GAAP will be significantly lower than
previously indicated for the year ended 29 December 2002. This is
due primarily to overstatements of income related to promotional
allowance programs at U.S. Foodservice which are still being
investigated. Based on information obtained to date, the company
believes that operating earnings for fiscal year 2001 and
expected operating earnings for fiscal year 2002 have been
overstated by an amount that the company believes may exceed US $
500 mln, with the majority of such amount occurring in the
expected operating earnings for fiscal year 2002. The
overstatements of the income discovered to date will require the
restatement of Ahold's financial statements for fiscal year 2001
and the first three quarters of fiscal year 2002.
In addition, the company announces that ICA Ahold, Jeronimo
Martins Retail and Disco Ahold International Holdings will be
proportionally consolidated under Dutch GAAP and US GAAP,
commencing with fiscal year 2002. The company will also restate
its historical financial statements so as to proportionally
consolidate under Dutch GAAP and US GAAP ICA Ahold, Jeronimo
Martins Retail, and Disco Ahold International Holdings. In
addition, the historical financial statements will be restated to
proportionally consolidate Bompreco and Paiz Ahold for the
periods during which they were 50% owned by the company.
The company also announces that it has been investigating,
through forensic accountants, the legality of certain
transactions and the accounting treatment thereof at its
Argentine subsidiary Disco. Because the investigation is ongoing,
Ahold cannot currently quantify the full financial impact of
these matters.
The Supervisory Board of Ahold announces that, in view of the
above, Ahold President and Chief Executive Officer, Cees van der
Hoeven, and Chief Financial Officer, Michael Meurs, will resign.
They will stay on for an appropriate period of time in order to
effect an orderly transition of affairs. The Chairman of the
Supervisory Board, Henny de Ruiter, has been designated to be
responsible for the daily supervision of the conduct of the
Executive Board and the business affairs of the company. Mr. De
Ruiter currently is a member of the Supervisory Board of N.V.
Koninklijke Nederlandsche Petroleum Maatschappij. In addition, he
is a member of the Supervisory Boards of Aegon N.V., Beers N.V.,
Heineken N.V., Unilever N.V. and Wolters Kluwer N.V.
As a consequence of the matters referred to above and, in
particular, the need to complete related investigations, the
company has deferred the announcement of its full year results
scheduled for 5th March. Ahold's auditors have also informed
Ahold that they are suspending the fiscal year 2002 audit pending
completion of these investigations.
Ahold has obtained EUR 3.1 billion commitments from a syndicate
of banks, including a EUR 2.65 bn credit facility and a EUR 450
mln backup facility.
ADDITIONAL INFORMATION
U.S. Foodservice overstatements
Recently, during the fiscal year 2002 year-end audit for U.S.
Foodservice, significant accounting irregularities were
discovered in the recognition of income including prepayment
amounts related to U.S. Foodservice's promotional allowance
programs. Based on information obtained to date, the company
believes that operating earnings for 2001 and expected operating
earnings for fiscal year 2002 have been overstated by an amount
that the company believes may exceed US $ 500 mln, with the
majority of such an amount occurring in the expected earnings for
fiscal year 2002. Ahold's operating earnings will be impacted by
the same amount.
The overstatements discovered to date will cause a restatement of
the financial statements under Dutch GAAP and U.S. GAAP for
fiscal year 2001 and for the first three quarters of fiscal year
2002. As a result of the complex nature of the promotional
allowance programs, extensive work is continuing as part of the
ongoing investigation to determine the exact amount of the
overstatement for each accounting period. These irregularities do
not affect net sales reported for U.S. Foodservice.
As noted above, a complete investigation ordered by the Audit
Committee of Ahold's Supervisory Board is continuing by outside
legal counsel and independent forensic accountants. Pending the
conclusion of this investigation, certain senior executives of
the U.S. Foodservice purchasing and marketing management team
have been suspended.
Proportionate Consolidation
Ahold has determined that ICA Ahold, Jeronimo Martins Retail and
Disco Ahold International Holdings will be proportionally
consolidated under Dutch GAAP and US GAAP, commencing from fiscal
year 2002. The company will also restate its historical financial
statements so as to proportionally consolidate under Dutch GAAP
and US GAAP ICA Ahold, Jeronimo Martins Retail and Disco Ahold
International Holdings. In addition, the historical financial
statements will be restated to proportionally consolidate
Bompreco and Paiz Ahold for the periods during which they were
50% owned by the company. Under proportional consolidation, Ahold
will consolidate its proportional share of each entity in its
financial statements. Previously, the full results of these
entities had been consolidated in Ahold's results with the
minority share in earnings and equity then deducted, during the
relevant periods. The decision to proportionally consolidate was
made on the basis of information that had not previously been
made available to the company's auditors.
There is no impact of these deconsolidations on Ahold's net
income, earnings per share and shareholders' equity under Dutch
GAAP. The impact under U.S. GAAP is currently being reviewed.
Disco
Ahold further announced that it has been investigating, through
forensic accountants, the legality of certain transactions and
the accounting treatment thereof at its Argentine subsidiary
Disco. The investigation to date has uncovered certain
transactions that are questionable. Ahold is in the process of
determining what actions it will take in response to these
preliminary findings. Until the investigation is complete, the
full financial impact of these findings cannot be determined. The
company is reviewing the appropriate changes to be made at Disco
including management changes but no final decisions have been
made on those issues yet.
Liquidity
Given the nature of the issues the company is announcing and the
consequent potential future impact on compliance with certain
financial covenants in existing credit facilities, Ahold has
obtained EUR 3.1 billion commitments from a syndicate of banks,
including a EUR 2.65 billion credit facility and a EUR 450 mln
backup facility to support the securitization programs referred
to below. The facility is designed to replace the existing $2
billion credit facility, under which US $ 550 mln has been drawn,
as well as to provide Ahold additional lines of liquidity.
The facility is comprised of secured and unsecured tranches.
Ahold will pay a credit spread over EURIBOR that will depend on
Ahold's credit rating during the tenure of the facility. The
facility will have a term of 364 days and will contain a
financial covenant that the interest coverage ratio will not be
lower than 2.5. The facility is subject to customary conditions
precedent. For the unsecured tranche, certain additional
conditions precedent will apply, including the delivery of
audited 2002 financial statements of certain subsidiaries by May
31, 2003 and of Ahold by June 30, 2003.
In addition, the banks under U.S. Foodservice's and Alliant's
receivables securitization programs that were due to expire on
February 27 and 28, 2003, have agreed to extend the programs for
an additional 60 days.
The backup facility and the credit facility will provide adequate
funds for amounts coming due in 2003 under the securitization
programs if they are not further extended.
Cashflow and debt reduction
The three-year plan announced in November 2002 designed to
substantially increase free cashflow and significantly reduce
debt continues to be pursued. Capital expenditures are under
severe scrutiny. A very strong effort will be made to keep
working capital days unchanged, despite additional challenges
arising from recent events. Cost reduction programs have been
implemented throughout the company. The divestment of non-core
businesses and consistently under-performing core businesses is
proceeding according to plan. The scope of this divestment
program will be expanded in order to strengthen core businesses
in stable and profitable markets.
After a thorough review of all the consequences of recent events,
Ahold will announce specific targets for debt reduction.
Control and compliance
Last year Ahold launched a company-wide initiative to strengthen
controls and compliance. In view of recent events, this program
will be stepped up to ensure that the highest possible standards
of controls, compliance, disclosures and codes of professional
conduct apply throughout all Ahold group companies. Ahold's
business principles, policy guidelines and codes of professional
conduct will be strictly enforced.
Revised outlook
Prior to the discovery of the overstatements of U.S. Foodservice
operating earnings, Ahold's fiscal year 2002 earnings were within
the guidance given by the company on November 19, 2002 of an
earnings per share decline of 6-8% excluding goodwill
amortization, exceptional charges and currency impacts. As a
consequence of primarily the U.S. Foodservice overstatement,
Ahold's 2002 net earnings and earnings per share under Dutch GAAP
and U.S. GAAP will be significantly lower than previously
expected.
KONINKLIJKE AHOLD: Fitch Downgrades Rating to 'BBB-/F3'
-------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded
the Senior Unsecured and Short-term ratings of Koninklijke Ahold
N.V., the Netherlands based international food retailer, to 'BBB-
' (BBB minus) from 'BBB+' and to 'F3' from 'F2', respectively.
The ratings have been placed on Rating Watch Negative.
The ratings change reflects this morning's announcement regarding
earnings overstatement at U.S. Foodservice, management changes
and further potential difficulties at its Argentine business,
Disco. It also acknowledges the mixed operating performance in
Ahold's primary market, the U.S. supermarket sector, and the
continued weak financial performance it has experienced in its
Latin American operations. U.S. operations accounted for 59% of
sales and 63% of operating profit in FY01. Fitch highlighted in
September 2002 when assigning the previous ratings and Negative
Outlook that Ahold's ratings, due to the weak financial profile,
were conditional upon sustained positive performance in its core
markets.
Ahold's announcement covered a number of points. Following the
year-end audit by the external auditors, the company estimates
that operating earnings for FY01 and expected FY02 earnings have
been overstated by potentially over USD500 million, mainly from
U.S. Foodservice. Investigations are also underway as to both
accounting treatment and specific transactions booked by Ahold's
Argentine operation, Disco. Furthermore CEO Cees van der Hoeven,
and CFO Michael Meurs will resign. Ahold also announced that it
has obtained EUR3.1 billion of commitments from banks to maintain
its liquidity. Under the new facilities, some EUR1.35bn will be
secured over unspecified assets of the company. Finally, the
group announced that certain operations will be proportionally
rather than fully consolidated in the future. These are ICA
Ahold, Jeronimo Martins Retail and Disco Ahold International
Holdings.
The overstatement of operating earnings is primarily based upon
inflated receivables figures linked to promotional allowance
programmes at U.S. Foodservice. The financial impact of the
overstatement is considerable. The overstatement would indicate
that management control has been weak while basic profitability
within U.S. Foodservice is questionable. Management as a whole
has had its credibility challenged over the last year following a
number of profit warnings. Today's announcement left little
alternative but for the CEO and CFO to resign. Fitch awaits
further clarification from the company as to the potential impact
of its current investigations into the accounting and
transactions issues of its Argentine operations, Disco Ahold. U.S.
Foodservice is but one business within the group. Food retail,
and especially U.S. food retail, remains the core area of
operations. Recent figures demonstrate that US food retail has
suffered to some extent from both increased competition and the
general weakness in U.S. consumer demand. Like-for-like sales grew
0.6% in Q302 (compared to 2.1% growth for Q202). Heavy
competition, which has been in evidence in the group's South
Eastern format, BI-LO, has now increased throughout the brand
portfolio. Ahold continues to benefit from the stability of its
Dutch operations as well as the positive contribution of the
Swedish business, ICA Ahold AB.
As Fitch stated in September 2002, the lease adjusted Net
Debt/EBITDAR ratio for Ahold has weakened in recent years from
3.6x in FY98 to 4.0x in FY01. Similarly, the adjusted interest
cover ratio (EBITDAR/Interest + Rent) has also shown
deterioration from 3.2x to 2.4x over the same period. Following
today's announcement, Fitch would expect these ratios to continue
to deteriorate while Ahold becomes more exposed to weakening
consumer demand, has to contend with management loss, and will
see its costs of funding increased.
Given the continued uncertainty over the amount of the operating
earnings overstatement, the implications of the review at Disco
Ahold, the extent of secured assets pledged, and the management
vacuum, the Rating Watch Negative will be resolved once Fitch has
met with Ahold's management.
KONINKLIJKE AHOLD: Moody's Reviews Ratings for Possible Downgrade
-----------------------------------------------------------------
Moody's Investors Service placed the Baa3 senior unsecured long
term ratings of Koninklijke Ahold N.V. on review for possible
downgrade. The action also applies to the company's guaranteed
entities and its Ba1 rated subordinated debt issues.
The rating agency places the ratings on review after Ahold
disclosed material overstatement of its operating earnings from
its US foodservice business, the resignation of its CEO and CFO,
and the uncertainty that follows from these events.
Ahold said overstatement of the operating earnings from its US
foodservice business that may exceed the cumulative amount of USD
500 million for the financial years 2001 and 2002.
Moody's indicated to look into the potential subordination of
bondholders as a result of the announcement that the new
liquidity facility includes a secured tranche.
It says that the subordination increase the risk of rating
migration, and warns that Ahold's ratings may be lowered by more
than one notch.
The review will further deal on the impact of the restatement on
Ahold's operating cash-flow and debt-repayment capacity, the
impact of the company's announced investigation into the legality
of certain transactions and the accounting treatment thereof at
its Argentine subsidiary Disco S.A., as well as the impact of the
change in consolidation treatment of the ICA Ahold and Jeronimo
Martin's joint ventures.
KONINKLIJKE AHOLD: Lease Pass Through Trusts Ratings Lowered
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A-1 and A-2 pass-through certificates issued by Ahold Lease
2001-A Pass Through Trusts to 'BB+' from 'BBB+'. Concurrently,
the ratings are placed on CreditWatch with negative implications.
The rating actions reflect the lowering of Ahold Koninklijke
N.V.'s (Ahold) corporate credit rating on Feb. 24, 2003, at which
time it was placed on CreditWatch negative. The ratings on Ahold
Lease 2001-A Pass Through Trusts are dependent on Ahold's
corporate credit rating, which guarantees leases that serve as
the source of payment on the rated securities. The leases, which
are "bondable" triple-net, are on 46 properties, which include
supermarkets and other retail stores, office buildings,
warehouses, and distribution centers in 13 states.
KONINKLIJKE AHOLD: Corporate Credit Ratings Lowered to 'BB+/B'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit ratings on Netherlands-based food retailer and food-
service distributor Ahold Koninklijke N.V. (Ahold) to 'BB+/B'
from 'BBB/A-2'. In addition, Standard & Poor's placed its long-
term ratings on Ahold on CreditWatch with negative implications.
"The rating actions reflect Ahold's weaker financial profile and
uncertainties with respect to its liquidity position, following
the group's announcement today that it will restate its financial
accounts for 2002 and previous years," said Standard & Poor's
credit analyst and director, Hugues de la Presle. "Ahold also
announced that its chief executive and chief financial officer
are to leave the group."
The group's actions follow:
-- Accounting irregularities at its U.S. food-service
distribution arm, pertaining primarily to supplier rebates, which
have resulted in an overstatement of earnings before interest,
taxes, and amortization (EBITA) of about $500 million,
essentially in 2002 but also in 2001. By comparison, the reported
EBITA of Ahold's U.S. food-service operations in the first nine
months of 2002 were $587 million. Ahold has also unearthed
accounting irregularities in its Argentinean subsidiary Disco,
which it is not yet in a position to quantify.
-- The change of method of consolidation to proportional
consolidation from full consolidation for the group's joint
ventures, especially ICA Ahold in Scandinavia and Jeronimo
Martins in Portugal. Combined on a fully consolidated basis,
these two companies accounted for slightly less than 40% of
European sales.
"As a result of these earnings overstatements, Ahold's expected
2002 debt measures, which were already modest for the previous
ratings, will be significantly weaker and, therefore, no longer
commensurate with an investment-grade rating," said Mr. de la
Presle.
In addition, although Ahold has obtained a 364-day €3.1 billion
($3.3 billion) facility from a syndicate of banks, with an EBITA-
to-interest coverage covenant of 2.5x, its liquidity position
remains at risk until the full extent of the restatement of its
accounts is clarified. In any case, Ahold's leeway under the
covenant mentioned above is likely to remain tight. The new
facility is destined to replace the existing $2 billion bank
facility, under which $550 million is currently drawn, as well as
the securitization program, under which approximately $850
million is currently outstanding, if they are not renewed. As
this new bank facility is to be partly secured, Ahold's bonds are
likely to be notched down to reflect contractual subordination.
"To resolve the CreditWatch status, we will primarily focus on
the extent of the accounting restatements, on their effect on
Ahold's liquidity position, and on the new management's strategy,
especially with respect to debt reduction and divestments," added
Mr. de la Presle.
ORANGE: Disposal of Dutchtone and Orange Denmark Looms
------------------------------------------------------
The recent resignation of Orange deputy chief executive Graham
Howe, which will take effect later this year, meant that an
influential obstacle has been removed in the disposal of the
company's loss-making assets in Denmark and the Netherlands,
according to Telecom.paper.
Howe is one of the mobile operator's co-founders and was a
supporter of Orange presence in as many countries as possible.
Parent company France Telecom, however, is reportedly eager to
divest Orange Denmark and Dutchtone since these units are loss
making and have a weak position in their respective markets.
An Orange spokesman described the prospect of disposals as
"absolute speculation," while analysts close to France Telecom
viewed such deals as increasingly likely.
It is known that Dutchtone has already started the rebranding
campaign to become Orange Netherlands on March 31.
The French-based mobile phone operator cancelled its 3G Project
in Sweden last year, owing to difficult marker conditions and the
pressures of owning third generation mobile phone licenses in the
country.
ROYAL PHILIPS: Fitch Affirms Rating, Changes Outlook to Stable
--------------------------------------------------------------
Fitch Ratings, the international ratings agency, has affirmed the
'BBB+' Senior Unsecured and 'F2' Short term ratings of Royal
Philips Electronics NV but changed the rating Outlook to Stable
from Positive.
The ratings remain supported by the historical strength of
Philips' balance sheet, its diverse product range, wide
geographic sales spread, leadership position in a number of core
businesses, strong brand name and R&D track record. Positive
rating factors are somewhat offset by the cyclicality inherent in
Philips' businesses portfolio, exposure to highly competitive
markets, and higher than historical debt levels.
Fitch's decision to change the rating Outlook to Stable from
Positive reflects the agency's concern that it might take the
company longer than anticipated to significantly improve
operating margins in a sustainable manner and to fully restore
its financial profile. In addition, the operating environment is
likely to remain tough in 2003 and the timing of a true recovery
in Philips' technology segments is still uncertain. The agency
also takes into account risks related to the impact of further
potential restructuring charges and of turmoil in the financial
markets on the value of the group's shareholdings and on pension
liabilities.
Following a solid performance in 2000, Philips faced a very
different environment in 2001 and 2002, with the slowing global
economy and reduced levels of consumer confidence impacting sales
and earnings. Sales in 2002 were down 1.6%, with ongoing pricing
pressures and unfavourable currency effects outweighing volume
and consolidation driven growth. A reported cumulative loss of
EUR3.2 billion in 2002, compared to a loss of EUR2.5bn in 2001,
was particularly impacted by restructuring and impairment
charges. Adjusted for special items, consolidated net income from
operations was EUR460 million, up from minus EUR160m in the prior
year. Fitch notes that in 2002 all divisions and regions improved
their operating performance. However, despite strong earnings in
relatively stable divisions - including Lighting, Domestic
Appliance & Personal Care and Medical Systems - the cyclical
Semiconductor, Components and Consumer Electronics businesses
continued to hold back results.
Following several years of rising debt, mainly acquisition
driven, Philips reduced debt levels in 2002 ahead of Fitch's
expectations: FYE02 net debt was EUR5.251bn, compared to
EUR6.976bn at FYE01. This reflects management's focus on
strengthening the balance sheet, helped by improved working
capital management, cash flow generation and the outsourcing of
lower value manufacturing to third party businesses in low-cost
regions. A EUR1bn cost reduction program by FYE03 appears to be
on track, supporting an improvement in the ratio of Net
Debt/EBITDA to some 2x in 2002 from 6x in 2001. Despite the
reduction in debt levels, the ratio of Net Debt/Capitalization
remained flat at 27% due to a EUR5.3bn reduction in equity,
related to a combination of losses, negative currency translation
effects, write-downs on securities and adjustments for pension
liabilities.
Royal Philips Electronics of the Netherlands is one of the
world's biggest electronics companies and Europe's largest, with
sales of EUR31.8bn in 2002. It is a global leader in products
such as colour television sets, lighting, electric shavers and
one-chip TV products. It is active in the areas of lighting,
consumer electronics, domestic appliances, components,
semiconductors, and medical systems.
===========
R U S S I A
===========
OAO GAZPROM: US$1.75 Billion Notes Assigned 'B+' Rating
-------------------------------------------------------
Standard & Poor's Ratings Services said today that it assigned
its 'B+' rating to the $1.75 billion senior unsecured 10-year
loan participation notes to be issued on a fiduciary basis by
Morgan Stanley & Co. International Ltd. for the sole purpose of
financing a loan with matching terms and conditions to Russia-
based OAO Gazprom (Gazprom), the world's largest gas company.
The debt rating mirrors Standard & Poor's corporate credit rating
on Gazprom (B+/Positive/--), which takes into account the
company's role as the owner and operator of essentially all
exploration, production, processing, transportation, and export
assets in Russia's natural-gas sector, as well as its privileged
position as a supplier to the large and growing Western European
market.
"The rating on Gazprom remains constrained by the continuation of
a strongly adverse domestic pricing regime, as well as by the
company's high financial leverage, high short-term debt,
dependency on Ukraine for access to export markets, and expected
major capital-expenditure requirements to maintain production and
the export-pipeline infrastructure," said Eric Tanguy, a Standard
& Poor's credit analyst.
The proceeds from the bonds will be used to fund part of
Gazprom's significant capital-expenditure program.
=====================
S W I T Z E R L A N D
=====================
CREDIT SUISSE: Winterthur Streamlines Its Management Structures
---------------------------------------------------------------
Winterthur, a subsidiary of Credit Suisse Group, is realigning
its organizational structure. The Insurance and Life & Pensions
divisions will be brought together under a joint management
structure within Winterthur Group, headed by CEO Leonhard
Fischer, and will have a single Executive Board. The streamlining
of these central management structures is aimed at achieving a
significant increase in efficiency and will entail a reduction of
approximately 350 jobs at the Winterthur head office. The new
organizational framework and the measures already initiated will
provide Winterthur with a solid basis from which to increase its
profitability and strengthen its position in the insurance
market.
As a result of the new organizational structure, the two
Winterthur units – Insurance (property and liability business)
and Life & Pensions (life insurance and retirement provision) –
will be combined within Germany, Italy, Spain and Belgium. In
Switzerland, however, life and non-life insurance will continue
to be managed separately due to the substantial size of both of
these units. They will work together very closely and
increasingly exploit their synergies. In the U.K., these two units
will also remain separate because their business models are very
different and synergies are minimal.
In the wake of the reorganization, the head offices of the two
units will be brought together in Winterthur. The reorganization
of the head office in Winterthur is expected to entail a
reduction of approximately 350 jobs, including some redundancies.
A series of measures to accompany the reduction in jobs has been
formulated in conjunction with Credit Suisse Group's staff
council in Switzerland. In addition, Winterthur Group's asset
management unit will be integrated in the new organization.
Financial results will continue to be reported separately. Markus
Dennler, the current CEO of Winterthur Life & Pensions, will take
on new responsibilities within Credit Suisse Group, and Manfred
Broska, the current CEO of Winterthur Insurance, will retire.
Winterthur is committed to significantly improving its
efficiency. "Ambitious cost management, operational excellence
and qualitative growth are therefore our priorities," stated
Leonhard Fischer with regard to the company's strategic
orientation. Programs already initiated in order to improve
efficiency will continue and will be integrated in the new
organization. The management of all Swiss and foreign Market
Units has been charged with the task of launching additional
initiatives to boost productivity. Duplications in support
functions both in Switzerland and in companies outside
Switzerland will be reduced. The cost savings which are realized
will have a substantial impact on Winterthur Group's
administration costs.
The aim is to concentrate on those markets in which the
Winterthur Group operates profitably, or in which it can achieve
profitability in a foreseeable period of time. Winterthur aims to
have a business model targeting sustainable profitability for
each of its markets. In markets where this is not possible, the
respective companies will be sold.
Oswald J. Grübel, Co-CEO of Credit Suisse Group and CEO of Credit
Suisse Financial Services, stated: "We are facing a fundamental
change in the insurance sector, as companies must henceforth be
profitable despite much lower investment income. With the timely
implementation of the new organizational structure as well as the
measures already initiated, Winterthur has created an excellent
basis from which to operate in a more competitive market
environment."
Leonhard Fischer, CEO of Winterthur Group, said: "Thanks to its
excellent employees and its strong brand, Winterthur has — in the
longer term — all the prerequisites to achieve a leading position
in the insurance business in terms of profitability, productivity
and quality."
CREDIT SUISSE: Has Net Loss of CHF950 MM in Fourth Quarter
----------------------------------------------------------
Credit Suisse Group on Tuesday announced a net loss of CHF 950
million for the fourth quarter and a net loss of CHF 3.3 billion
for the full year 2002, in line with the Group's preliminary
outlook announced on January 21, 2003. Fourth quarter 2002
results were influenced by the continuing financial market
weakness, a number of exceptional items and a change in
accounting principles to allow for the recognition of deferred
tax assets. Winterthur's results recovered in the fourth quarter
2002. Private Banking reported CHF 18.7 billion in net new assets
for the full year 2002. Credit Suisse First Boston continued to
achieve significant cost reductions, while maintaining strong
market positions in its key businesses. Credit Suisse Group is
entering 2003 with a stronger balance sheet and an improved
capital base. The Group's Board of Directors will propose a
dividend of CHF 0.10 per share to the Annual General Meeting on
April 25, 2003.
Oswald J. Grubel, Co-CEO of Credit Suisse Group and Chief
Executive Officer of Credit Suisse Financial Services, stated,
"We have made significant progress in implementing key measures
announced in the third quarter to restore the Group's core
earnings strength. At Credit Suisse Financial Services, we
continued to realign the European initiative to focus on private
banking clients, thus generating considerable savings in terms of
infrastructure, IT and personnel expenses. At Winterthur, results
recovered due to a satisfactory operating performance and the
positive impact of a change in accounting principles, and we are
actively pursuing initiatives to reduce costs and withdraw from
markets and businesses with unsatisfactory results in order to
position us for a return to profitability in 2003."
John J. Mack, Co-CEO of Credit Suisse Group and Chief Executive
Officer of Credit Suisse First Boston, said, "At Credit Suisse
First Boston, we continued progress on cost reduction efforts in
the fourth quarter, achieving a 14% decrease in operating
expenses compared to the previous quarter and, at the same time,
improved our global market rankings for 2002 in key businesses.
In the fourth quarter, we also initiated a further cost reduction
program to reduce annual operating expenses by an additional USD
500 million and accelerated the disposal of legacy asset
portfolios that were hindering our financial performance and
flexibility. In addition, we made substantial progress in
resolving key regulatory issues facing Credit Suisse First
Boston. As we move forward in 2003, we remain intensively focused
on returning to profitability."
Fourth Quarter 2002 Group Results
Credit Suisse Group's results for the fourth quarter of 2002 were
influenced by the continuing financial market weakness, a number
of exceptional items and a change in accounting principles to
allow for the recognition of deferred tax assets. For the
quarter, the Group reported a net loss of CHF 950 million,
compared with a net loss of CHF 2.1 billion in the third quarter
2002 and a net loss of CHF 830 million in the fourth quarter of
2001. The Group's operating income stood at CHF 6.4 billion in
the fourth quarter 2002, up 13% on the previous quarter but down
22% on the fourth quarter of 2001. Including restructuring
charges presented as exceptional items at the business units, the
Group's operating expenses decreased 5% versus the third quarter
to CHF 5.1 billion, and were down 26% on the fourth quarter 2001.
Full Year 2002 Group Results
For the full year 2002, the Group reported a net loss of CHF 3.3
billion, compared with a net profit of CHF 1.6 billion for the
previous year. The Group's operating income stood at CHF 28.0
billion for 2002, down 28% on the previous year. The Group's full
year operating expenses declined 22% versus 2001 to CHF 23.5
billion, primarily as a result of job reductions, a significant
decrease in bonuses and the sale of non-core businesses. Earnings
per share for 2002 amounted to a loss of CHF 2.78 versus a profit
of CHF 1.33 for 2001, and the Group's return on equity was -
10.0%, versus 4.1% in 2001.
Exceptional Items and Recognition of Deferred Tax Assets On Net
Operating Losses in the Fourth Quarter 2002
Exceptional items recorded in the fourth quarter at Credit Suisse
First Boston included a pre-tax charge of USD 450 million (CHF
702 million) for private litigation involving research analyst
independence, certain IPO allocation practices, Enron and other
related litigation; a pre-tax charge of USD 150 million (CHF 234
million) for the agreement in principle with various US
regulators involving research analyst independence and the
allocation of IPO shares to executive officers; an after-tax loss
of USD 250 million (CHF 390 million) in connection with the sale
of Pershing; and a pre-tax restructuring charge of USD 204
million (CHF 319 million) in connection with its USD 500 million
cost reduction program. At Credit Suisse Financial Services,
exceptional items of CHF 73 million were recorded in the fourth
quarter in connection with the focusing of the European
initiative on private banking clients. Exceptional items for the
Group in the fourth quarter 2002 totaled CHF 1.5 billion before
tax and CHF 1.3 billion after tax.
The previously announced change in the Group's accounting
principles to allow for the recognition of deferred tax assets
with respect to net operating losses, which is reflected in the
fourth quarter, resulted in a positive cumulative effect for the
Group of CHF 520 million from prior years and CHF 1.3 billion for
the financial year 2002.
Business Unit Results
The Credit Suisse Financial Services business unit reported a net
profit of CHF 705 million in the fourth quarter and a net loss of
CHF 165 million for the full year 2002. This compared with a net
loss of CHF 1.2 billion in the third quarter 2002 and a net
profit of CHF 3.6 billion for 2001. Fourth quarter net profit
benefited from the recognition of deferred tax assets on net
operating losses as a result of the change in accounting
principles in the amount of CHF 472 million for the financial
year 2002, as well as the cumulative effect of CHF 266 million
from prior years, primarily at Winterthur. Credit Suisse
Financial Services reported a 54% increase in operating income to
CHF 3.5 billion versus the third quarter, reflecting a CHF 1.2
billion increase in operating income in the insurance business
and stable operating income in banking. Fourth quarter operating
expenses remained stable quarter-on-quarter and year-on-year
despite expansion in certain markets.
Private Banking reported a segment profit (net operating profit
before the above-mentioned exceptional items, the cumulative
effect of a change in accounting principles and minority
interests) of CHF 339 million in the fourth quarter 2002, up 12%
versus the third quarter. Operating income rose 3% quarter-on-
quarter but remained below the average of the previous quarters
due to investor inactivity and a reduced asset base. Fourth
quarter operating expenses increased 2% quarter-on-quarter, due
mainly to project costs. For the full year 2002, Private Banking
reported a segment profit of CHF 1.8 billion, down 23% versus the
previous year.
Corporate & Retail Banking posted a segment profit (net operating
profit before the cumulative effect of a change in accounting
principles and minority interests) of CHF 46 million in the
fourth quarter 2002, down 55% compared to the third quarter.
Operating income declined 7% quarter-on-quarter, due, in
particular, to a decrease in transaction-related commission
income. Fourth quarter operating expenses rose 8% versus the
third quarter, mainly as a result of project costs. For the full
year 2002, Corporate & Retail Banking recorded a 19% increase in
its segment profit, to CHF 363 million, versus 2001. The
cost/income ratio was 68.7% in 2002, compared with 71.1% in 2001.
Life & Pensions recorded a segment profit (net operating profit
before the cumulative effect of a change in accounting principles
and minority interests) of CHF 93 million in the fourth quarter
and a segment loss of CHF 1.4 billion for the full year 2002.
Fourth quarter investment income was up 8% to CHF 333 million
versus the previous quarter. The full year loss reflects a CHF
3.3 billion decline in investment income, with an impact on the
segment result of CHF 1.6 billion compared with the previous
year. Life & Pensions reported a 9% increase in gross premiums
written. Adjusted for acquisitions, divestitures and exchange
rate impacts, premiums rose 10%. Operating expenses, comprising
acquisition and non-deferrable costs, were up CHF 311 million
year-on-year. This increase reflected the strong premium growth
and additional DAC (deferred acquisition costs) and PVFP (present
value of future profits) writedowns of CHF 292 million due to a
change in the long-term assumptions regarding investment income.
Excluding these writedowns, the expense ratio for 2002 was 9.9%,
down from 10.9% in the prior year. Including these writedowns,
the expense ratio for 2002 was 11.5%.
Insurance reported a segment profit (net operating profit before
the cumulative effect of a change in accounting principles and
minority interests) of CHF 6 million in the fourth quarter and a
segment loss of CHF 992 million for the full year 2002. Fourth
quarter investment income amounted to CHF 59 million. The full
year loss reflects a CHF 2.2 billion decline in investment
income, with an impact on the segment result of CHF 1.7 billion
compared to 2001. For the full year 2002, net premiums earned
rose 5% versus 2001. Adjusted for acquisitions, divestitures and
exchange rate impacts, the segment reported a 9% increase in net
premiums earned. The combined ratio improved by 2.2 percentage
points, to 103.4%, compared with 2001.
As announced by Winterthur today, the Insurance and Life &
Pensions units will be brought together under a joint management
structure, effective March 1, 2003. The combination of the head
offices in Winterthur is expected to result in a reduction of
approximately 350 jobs. Programs to increase efficiency will also
be initiated in the countries in which Winterthur operates. The
financial results of the two units will continue to be reported
as separate segments.
In addition, given the continuing financial markets weakness and
global uncertainty, Credit Suisse Financial Services has decided
to implement a plan designed to further reduce costs in its
banking business by approximately CHF 300 million, including a
reduction of approximately 900 jobs. A series of measures to
accompany the reduction in jobs has been formulated in
conjunction with Credit Suisse Group's staff council in
Switzerland.
The Credit Suisse First Boston business unit reported a net loss
of USD 811 million (CHF 1.3 billion) for the fourth quarter and a
net loss of USD 1.2 billion (CHF 1.9 billion) for the full year
2002, including after-tax exceptional items of USD 813 million
(CHF 1.3 billion) described above. This compares to a net loss of
USD 425 million (CHF 679 million) in the previous quarter and a
net loss of USD 821 million (CHF 1.4 billion) for the full year
2001. The fourth quarter net result benefited from the
recognition of deferred tax assets on net operating losses as a
result of a change in accounting principles in the amount of USD
556 million (CHF 868 million) for the financial year 2002, as
well as a positive cumulative effect of USD 162 million (CHF 254
million) from prior years. Fourth quarter operating income was
down 11% on the previous quarter in US dollar terms, primarily
due to reduced revenues in the Institutional Securities segment.
The business unit reduced operating expenses in the fourth
quarter by 14% in US dollar terms versus the third quarter 2002,
as part of continued efforts to adapt the business unit's cost
structure to the current environment.
The Institutional Securities segment reported a decrease in
operating income of 12% quarter-on-quarter, reflecting declines
in the Fixed Income and Equity businesses. The segment reduced
operating expenses in the fourth quarter 2002 by 16% compared
with the third quarter, primarily through reductions in incentive
compensation. For the full year 2002, the segment's operating
income declined 23% and operating expenses fell 24% versus the
previous year. In 2002, the Institutional Securities segment
succeeded in maintaining or improving its market rankings. The
Fixed Income business ranked number one in high yield and asset-
backed new issuances and improved its overall global debt
issuance position to second. The Equity division ranked fourth in
global equity new issuances in 2002, tied for first place in
global equity research, ranked first in pan-European and Latin
American research and second in non-Japan Asia research.
Furthermore, in investment banking, Credit Suisse First Boston
ranked third in terms of US dollar volume of announced M&A
transactions for 2002.
Operating income in the CSFB Financial Services segment decreased
3% quarter-on-quarter. Fourth quarter 2002 operating expenses
declined 4% compared to the third quarter, reflecting the impact
of a number of cost reduction initiatives. In January 2003,
Credit Suisse First Boston announced an agreement to sell its
Pershing unit, as outlined below. For the full year 2002,
operating income decreased 13% and operating expenses were down
15% compared to 2001.
Capital Base
Credit Suisse Group's consolidated BIS tier 1 ratio stood at 9.7%
as of December 31, 2002, up from 9.0% at the end of the third
quarter of 2002. This increase was attributable to the issuance
by the Group of Mandatory Convertible Securities in the amount of
CHF 1.25 billion in December 2002, as well as to a reduction in
risk-weighted assets and the currency translation effect of the
lower US dollar versus the Swiss franc. The Mandatory Convertible
Securities issue qualifies as equity capital and, accordingly, as
tier 1 capital under BIS rules. The BIS tier 1 ratio for the
Group's banking business stood at 10.0% as of December 31, 2002,
up from 9.4% at the end of the third quarter. Winterthur's
solvency margin (calculated in line with the EU directive)
increased to 167% as of December 31, 2002, compared with 155% as
of September 30, 2002.
The sale of Pershing to The Bank of New York, expected to close
in the first half of 2003 subject to certain regulatory and other
conditions, will increase the regulatory capital of Credit Suisse
First Boston and Credit Suisse Group through the elimination of
USD 500 million (CHF 695 million) of goodwill and a USD 1.6
billion (CHF 2.2 billion) reduction in risk-weighted assets.
Furthermore, the sale will result in the elimination of USD 900
million (CHF 1.3 billion) of acquired intangible assets before
tax, or USD 585 million (CHF 813 million) after tax.
Net New Assets
In the fourth quarter 2002, Credit Suisse Financial Services
reported a net asset outflow of CHF 0.6 billion, with net inflows
of CHF 0.5 billion at Private Banking and CHF 0.2 billion at
Corporate & Retail Banking offset by a net outflow of CHF 1.3
billion from Life & Pensions. At Private Banking, net new assets
declined versus the third quarter due mainly to the impact of
increased attention surrounding Credit Suisse Group's financial
performance in the course of 2002. Credit Suisse First Boston
reported a net asset outflow of CHF 6.0 billion in the fourth
quarter, as a CHF 2.7 billion net inflow of private client assets
was offset by a net outflow of CHF 8.7 billion from Credit Suisse
Asset Management related primarily to performance issues. For
Credit Suisse Group, an overall net asset outflow of CHF 6.6
billion was recorded in the fourth quarter, versus a net outflow
of CHF 13.7 billion in the third quarter 2002.
For the full year 2002, the Group reported a net asset outflow of
CHF 2.6 billion, with CHF 18.9 billion in net new assets at
Credit Suisse Financial Services - related primarily to Private
Banking - offset by outflows of CHF 21.5 billion from Credit
Suisse First Boston. The Group's total assets under management
stood at CHF 1,195.3 billion as of December 31, 2002,
corresponding to a decline of 2.2% versus September 30, 2002, and
a decrease of 16.4% versus December 31, 2001.
Valuation Adjustments, Provisions and Losses
Fourth quarter valuation adjustments, provisions and losses
include a charge of CHF 778 million relating to an adjustment in
the method of estimating inherent losses related to lending
activities. This previously announced adjustment was considered
necessary to better reflect in the loan provision the continued
deterioration of the credit markets. The impact on the income
statement of this charge, after tax, was offset by a release from
the reserve for general banking risks, which was recorded as
extraordinary income. Excluding the provision for inherent loan
losses, credit provisions were CHF 637 million in the fourth
quarter 2002, down 22% versus the third quarter, and were CHF 2.3
billion for the full year 2002, up 34% versus 2001, reflecting
the deterioration in the credit environment globally. Overall,
total valuation adjustments, provisions and losses were CHF 2.4
billion in the fourth quarter, reflecting the provision for
inherent loan losses, US legal provisions, and increased
valuation adjustments and losses.
Dividend Proposal
The Group's Board of Directors has decided to propose a dividend
of CHF 0.10 per share to the Annual General Meeting on April 25,
2003. This compares to a par value reduction of CHF 2 per share
for the financial year 2001. If approved by the Annual General
Meeting on April 25, 2003, this dividend will be paid out on May
2, 2003.
Termination of Share Buyback Program
Credit Suisse Group is terminating the share buyback program
launched in March 2001, under which it purchased the equivalent
of 15,330,000 shares with a par value of CHF 1 each. The value of
the shares repurchased was CHF 1.1 billion, and the Group's share
capital was reduced by this amount. The second trading line for
shares on virt-x will be closed with immediate effect.
Advisory Board
Credit Suisse Group will streamline its Swiss and International
Advisory Boards to create a single Advisory Board that will
concentrate on the Group's main activities in Switzerland and
Europe, with a special focus on Credit Suisse Financial Services.
The new Advisory Board will comprise approximately 20 members,
effective as of 2003.
Outlook
Credit Suisse Group remains cautious in its outlook for 2003
given the continued challenging market environment and global
uncertainty. The Group continues to expect that the measures
taken during 2002, as well as those being implemented in 2003,
will restore its profitability in 2003. Additionally, the Group
is entering 2003 with a stronger balance sheet and an improved
capital base.
Credit Suisse Group
Credit Suisse Group is a leading global financial services
company headquartered in Zurich. The business unit Credit Suisse
Financial Services provides private clients and small and medium-
sized companies with Private Banking and financial advisory
services, banking products, and Pension and Insurance solutions
from Winterthur. The business unit Credit Suisse First Boston, an
Investment Bank, serves global institutional, corporate,
government and individual clients in its role as a financial
intermediary. Credit Suisse Group's registered shares (CSGN) are
listed in Switzerland and Frankfurt, and in the form of American
Depositary Shares (CSR) in New York. The Group employs around
78,000 staff worldwide. As of December 31, 2002, it reported
assets under management of CHF 1,195.3 billion.
CONTACT: CREDIT SUISSE GROUP
Investor Relations Telephone
Phone: +41 1 333 4570
ZURICH FINANCIAL: Expected to Announce Further Job Cuts
-------------------------------------------------------
Zurich Financial Services is likely to announce further job cuts
when it gives its full year outlook during the presentation of
its full year results on Thursday.
The job cuts in addition to the 400 lay offs already made at
Zurich Switzerland are possible according to magazine Cash.
The insurer posted first half net loss of US$2 billion. It said
it plans to return to profit by the end of 2003 during the
presentation of the first half results.
In September, Zurich Financial Services unloaded its U.K.-based
venture capital firm--a move seen to indicate that the insurer is
living up to its new strategy of focusing on core business.
The insurer recently signed a definitive agreement Wednesday
under which, subject to regulatory approval, Deutsche Bank
(Switzerland) Ltd. will acquire all of the shares of Rud, Blass +
Cie AG, Bankgeschaft (Rud Blass).
CONTACT: ZURICH FINANCIAL
Mythenquai 2
P.O. Box
8022 Zurich
Switzerland
Contact: Media and Public Relations
Phone: +41 (0)1 625 21 00
Fax: +41 (0)1 625 26 41
Home Page: http://www.zurich.com
===========================
U N I T E D K I N G D O M
===========================
ABBEY NATIONAL: Receives Offer for Train-Leasing Division
---------------------------------------------------------
Abbey National, which is currently disposing non-core parts to
concentrate on retail financial services, has received offers for
Porterbrook, the first asset it planned to put on the block.
According to the Financial Times, the business has attracted
interest from banks including Barclays, West LB and Bank of
Canada, as well as Japanese and Australian banks, so that unnamed
railway insiders say it may now struggle to get a comparable
price.
Abbey National purchased Porterbrook from Stagecoach for GBP773
million in 2000. The company has a rolling stock fleet of 4,000
vehicles, serving train operators such as Gatwick Express, South
West Trains and Chiltern Railways. It competes with Angel
Trains, owned by Royal Bank of Scotland, and HSBC Rail being its
main competitors.
Abbey National's share price has lost as much as 48 percent of
its value last year.
CONTACTS: Thomas Coops
(Director of Corporate Communications)
Phone: 020 7756 5536
Jon Burgess
(Head of Investor Relations)
Phone: 020 7756 4182
E-mail: investor@abbeynational.co.uk
ABERDEEN ASSET: Completes Disposal of Retail Fund Management
------------------------------------------------------------
Aberdeen Asset Management PLC is pleased to announce that the
Company has completed the disposal of the retail fund management
rights by its subsidiary, Aberdeen Unit Trust Managers Limited,
to New Star Asset Management Group Limited. At completion, the
value of retail assets transferring to New Star was GBP1.74
billion at which level a cash consideration of GBP86.76 million
is payable to Aberdeen.
*****
Aberdeen is currently strengthening a mixed investment
performance and the Aberdeen brand that suffered on the issue of
the split-capital investment trust debacle.
As of September 30, the bank had debt of about GBP136 million,
and net debt of GBP240 million--GBP100 million of which are
convertible bond issue.
Aside from borrowings, Aberdeen has a bill of up to GBP40 million
after promising last summer to refund in full up to 7000
investors who had lost nearly half their money in its Progressive
Growth Unit Trust.
CONTACT: ABERDEEN ASSET MANAGEMENT
Martin Gilbert
Phone: 020 7463 6000
Gavin Anderson & Company
Neil Bennett
Lindsey Harrison
Phone: 020 7554 1400
JPMorgan
Terry Eccles
Phone: 020 7742 4000
AQUILA INC.: Fitch Downgrades Senior Unsecured Rating to 'B+'
-------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured rating of
Aquila, Inc. (ILA) to 'B+' from 'BB' and the short-term rating of
'B' has been withdrawn. The obligations of Aquila Asia Pacific
(ILA Asia Pacific) and Aquila Canada Finance (ILA Canada
Finance), guaranteed by ILA, have also been downgraded to 'B+'
from 'BB' by Fitch. Approximately $3 billion of debt has been
affected. The rating actions reflect ILA's limited financial
flexibility, tighter than expected liquidity position, and weak
cash flow from non-regulated operations, as well as an increase
in execution risks surrounding the renegotiation of existing bank
facilities. The ratings of ILA, ILA Asia Pacific and ILA Canada
Finance remain on Rating Watch Negative, pending resolution of
bank group negotiations and a review of an updated business plan.
A full description of the rating changes is detailed below.
ILA's liquidity position and cash flows are weaker than
previously anticipated. Due to weak spark spreads available in
the power market, net revenues from power facilities under
tolling arrangements are inadequate to fully cover the cash
capacity payment obligations that total approximately $118
million in 2003. Fitch expects the combination of high gas prices
and low electricity spot prices to persist over the next several
months. Secondly, when ILA was downgraded below investment grade,
a $130 million accounts receivable facility was wound down. This
facility was not replaced by a new $80 million receivables
facility prior to year-end 2002, as anticipated. Finally, ILA has
made slower than expected progress in selling of Avon Energy
Partners Holding (AEPH, senior unsecured debt rated 'BB-, Rating
Watch Evolving by Fitch) the U.K. operations, and has rejected
bids for the sale of these assets as inadequate.
ILA has until April 12, 2003 to reach an agreement for additional
covenant relief with lenders to its $650 million revolving credit
facilities. On April 12, an existing waiver of the minimum
interest coverage covenant under these facilities will expire.
ILA previously reported that it expects to remain out of
compliance with this covenant through Dec. 31, 2003. If ILA is
unable to negotiate necessary relief, the lenders could declare
borrowings immediately due and payable, which would trigger
cross-defaults to ILA's other debt as well as to guaranteed
obligations, including certain synthetic leases and the ILA
Canada Finance bank facility. While Fitch does not currently
anticipate that lenders would vote to accelerate, Fitch expects
the bank lenders will require security in exchange for relief.
ILA is seeking regulatory approvals to pledge regulated utility
assets to the banks from certain state commissions that require
such approval. ILA withdrew its application to pledge regulated
assets located in Colorado after the Colorado State Public
Utilities Commission requested detailed information on the nature
of the pledge. The largest percentage of ILA's regulated assets,
about 50%, is located in Missouri, where the request remains
under consideration. Furthermore, the Federal Energy Regulatory
Commission's (FERC) order on Feb. 20, 2003 (regarding Westar
Energy's financing request), imposes new rules on debt
authorization that may further complicate the pledge of utility
assets in states that do not regulate this directly. Should ILA
be unable to obtain regulatory approvals to the degree necessary
to adequately secure the banks with U.S. utility assets, ILA could
offer creditors the pledge of its equity in Canadian and
Australian utilities.
The company estimates the current book value of Australian and
Canadian assets to be approximately $900 million, relative to
outstanding debt at September 30, 2002 of around $730 million.
ILA's future bank facility needs are expected to be lower than
the current $650 million facility amount due to asset sales and
the exit from power trading. Although the need to renegotiate the
bank facilities has been previously disclosed, attendant
execution risks have increased with the approach of the deadline
and the increase in regulatory obstacles.
Ratings downgraded, on Rating Watch Negative
Aquila
--Senior unsecured debt to 'B+' from 'BB';
--Short-term debt withdrawn.
Aquila Canada Finance (formerly UtiliCorp Canada Finance)
--Senior unsecured debt to 'B+' from 'BB'.
Aquila Asia Pacific (formerly UtiliCorp Asia Pacific)
--Senior unsecured to 'B+' from 'BB'.
ILA, formerly UtiliCorp, provides network distribution of
electricity and gas in the U.S., Canada, Australia and the UK. It
also is in the wholesale power generating business in North
America and is in the process of winding down its wholesale
energy trading activities.
AVON ENERGY: Fitch Downgrades Avon Energy Partners Holding
----------------------------------------------------------
Fitch Ratings, the international rating agency, has lowered the
senior unsecured and short-term ratings of Avon Energy Partners
Holding (AEPH) to 'BB-' and 'B', respectively. The ratings remain
on Rating Watch Evolving. AEPH is the ultimate group holding
company of Midlands Electricity plc (ME) and Aquila Power
Networks (APN). The ratings of ME and APN remain unchanged at
'BBB-/F3' and 'BBB+/F2' respectively. These ratings also remain
on Rating Watch Evolving.
The rating action reflects the impaired ability of AEPH to
service its debt obligations within the group given the cash
transfer restrictions imposed by Ofgem upon APN, the regulated
entity, (which will now apply also to ordinary dividends) and the
highly speculative nature of cash flow dividends from other
unregulated businesses. The sale process is now in the sixth
month of negotiation and, although Fitch understands that there
might be at least one offer which would cover the total
outstanding debt within the group, additional liquidity pressure
on the U.S. parent Aquila Inc. (downgraded today to 'B+',
remaining on Rating Watch Negative, see separate press release
available on the Fitch Ratings web site at
'www.fitchratings.com') might precipitate a conclusion of the
sale process under which the interests of AEPH bondholders -
facing greatest subordination relative to the operational assets
of APN - would be at increased risk.
In August 2002 Fitch put Avon Energy, Midlands & Aquila Power
ratings on Rating Watch Evolving following the announcement by
Aquila Inc. that it would dispose of its 79% share in Avon Energy
Partners Holding, the U.K. holding company for Midlands Electricity
plc (ME), which in turn owns U.K. electricity distributor Aquila
Power Networks (APN). The Rating Watch Evolving was predicated
upon the lack of visibility on both capital structure of the
group and the credit profile of a future buyer.
In November 2002, majority parent Aquila Inc. was downgraded to
'BB', and remained on Rating Watch Negative. This would have
typically reflected negatively on forecast liquidity within the
Avon group (i.e. the implication that pressure would grow upon
Aquila's investments to upstream liquidity to the U.S. parent)
and therefore strongly influenced the rating of AEPH. At the
time, however, the risk of liquidity pressure was mitigated by a
number of factors: the assets disposal was at an advanced stage
of negotiation and due to be finalised by the end of 2002 and the
estimated market value of the assets was sufficient to ensure
assumption of or repayment of outstanding debt within the Avon
group. Of comfort to creditors of APN was the fact that virtually
all of the group's available liquidity was at the regulated
entity level.
In January 2003 changes surrounding the regulatory intervention
did not result in a re-rating since Fitch considered that debt
servicing at subordinated levels within the Group was achievable
going forward based on up-streamed cash flows arising from inter-
company loans interest and principal repayments, and systematic
purchases of tax losses, as agreed with Ofgem. Together with cash
flow available at the intermediate holding company ME from
associated and ancillary businesses, cash dividends would have
provided for cash in excess of the coupon due on both the ME and
AEPH debt, even in the absence of dividends from APN, pending
conclusion of a sale.
RECENT DEVELOPMENTS
The sale of Avon has not, however, closed as anticipated, and the
pool of European buyers interested in the asset base continues to
shrink. As highlighted by Fitch in its special report dated 10
January 2003, delays in the sale process may be due, among other
things, to the possibility that the prices bid were not
consistent with Aquila's requirement for a cash equity return
(i.e. a bid price which would return to Aquila an element of cash
in addition to the assumption of Avon group debt). When Aquila
bought its 79.9% of Avon in May 2002 from FirstEnergy Corp.
(rated 'BBB' by Fitch) the price was partially paid in cash and
the balance with a US$114m seller's note (now $95m) guaranteed by
Aquila Inc. The latter amortises over six annual instalments, but
would become payable in full upon the occurrence of a sale. It
now seems clear that, in the context of Avon group consolidated
net debt of GBP1.18bn, which excludes the seller's note payable
to FirstEnergy, the offer currently on the table will not be
sufficient to satisfy both shareholders and bondholders within
the Avon group. While this may imply less pressure upon Aquila to
dispose of AEPH, and thus crystallise a liquidity issue at the
parent level, pressure on cash flows downstream from AEPH make a
swift conclusion of the disposal an imperative for bondholders of
AEPH. Additionally, under the (unlikely) scenario where a
disposal were to be arranged even where a disposal price in
excess of GBP1.18bn cannot be achieved, subordinated bondholders
at Avon are exposed to a greater risk of default, and also a
materially lower recovery rate than other parts of the Avon
group. The Rating Watch Evolving reflects the uncertainty
surrounding the outcome of the currently proposed sale -
acquisition by a higher-rated entity combined with the paydown of
existing debt may result in stabilization of ratings or a rating
upgrade for member companies within the Avon group; conversely,
failure to complete an acquisition, or acquisition by a lower-
rated entity may result in stabilization of ratings or in a
lowering of ratings.
CONTACT: Fitch Ratings
Francesca Fraulo, +44 20 7417 4337
Isaac Xenitides, +44 20 7417 4300, London
Richard Hunter, 212/908-0294, New York
Karen Anderson, 312/368-3165, Chicago
Sharon Bonelli, 212/908-0581, New York
Media Relations:
James Jockle, 212/908-0547, New York
CORUS GROUP: Dutch Division Objects to Sale of Aluminum Asset
-------------------------------------------------------------
The works council of Corus' Dutch division reiterated its
objection to the sale of the steelmaker's aluminum operation by
saying that "The sale of a profitable division of Nederland BV
(the Dutch division) without sufficient guarantees . . . is and
will remain totally unacceptable."
The council is asking for guarantees about the future of the
Dutch operations. It is against the sell-off on grounds that it
only tackles Corus' "extremely worrying financial position".
While the council cannot block the sale alone, it can nonetheless
put pressure on the supervisory board of Corus' Dutch operation,
which has the power to block the disposal, according to Times
Online. The Dutch supervisory board, which is made up of both
company and union representatives, has the power to ratify any
divestment.
The U.K. directors, which had been advised by the council about its
worries on the profitability of U.K. division, have yet to be told
when there will be a Dutch management board decision on the sell-
off.
Corus has not made a profit four years after it was created from
the merger of British Steel and Hoogovens. It is hoping that by
divesting the aluminum division to French group Pechiney, it will
be able to revive the business.
The steel maker is beset by steep losses and pressures from
bankers with which it is renegotiating a GBP1.2 billion
syndicated loan that constitutes half of its borrowings.
CONTACT: CORUS GROUP
Corporate Relations
Phone: +44 (0) 20 7717 4502/4505
Corus Investor Relations
Phone: +44 (0) 20 7717 4503/4504
Credit Suisse First Boston
Stuart Upcraft/Hugh Richards
Phone: +44 (0) 20 7888 8888
MARCONI PLC: Court Approves Return of Capital From Ultramast
------------------------------------------------------------
Marconi plc announced that, following approval from the High
Court, Marconi Corporation plc has completed a return of capital
from Ultramast. The transaction gives Marconi cash proceeds of
GBP41 million and settles all outstanding litigation with RT
Group relating to the Ultramast joint venture. As a result, RT
Group has assumed full control of all of Ultramast.
About Marconi plc
Marconi plc is a global telecommunications equipment and
solutions company headquartered in London. The company's core
business is the provision of innovative and reliable optical
networks, broadband routing and switching and broadband access
technologies and services. The company's customer base includes
many of the world's largest telecommunications operators.
The company is listed on the London Stock Exchange under the
symbol MONI. Additional information about Marconi can be found
at
http://www.marconi.com
*****
Early in January, Marconi plc reached agreement with RT Group plc
(in members' voluntary liquidation), and its subsidiary RT Group
Telecom Services Limited, on a return of capital from Ultramast,
the joint venture set up in December 2000. Subject to completion
of the reduction of capital, the agreement provides for both
companies to waive all outstanding litigation relating to the
joint venture. RT Group will also assume full control of all of
Ultramast.
Upon completion of the reduction of capital, which is expected in
February 2003, Marconi should receive approximately GBP45 million
in cash, of which approximately GBP20 million was paid into court
pending the outcome of a lawsuit between the parties in August
2002. The agreement proposes that approximately GBP8 million cash
will remain in Ultramast to finance ongoing operations following
completion of the reduction of capital.
CONTACT: David Beck/Joe Kelly, Public Relations
Phone: +44 (0) 207 306 1771
+44 (0) 207 603 1490
E-mail: joe.kelly@marconi.com
Heather Green, Investor Relations
Phone: +44 (0) 207 306 1735
E-mail: heather.green@marconi.com
MOTHERCARE PLC: Baugur's Stake Reaches 1.5MM Mark
-------------------------------------------------
Icelandic retailer Baugur now holds a 2% stake in Mothercare
after buying more than 1.5 million shares at a price of more than
GBP1.3 million for the past three weeks.
In the light of record low trading, Baugur's stake-building is
seen as a precursor to a bid for the troubled retailer, which
issued three profit warnings last year and is now subject of
acquisition offers from several bidders.
Baugur chief executive, Jon Asgeir Johannesson, is believed
to be particularly attracted by the strength of the Mothercare brand
and its international franchise business, according to the
Telegraph.
The report of Baugur's interest in Mothercare came just as Chief
Executive Ben Gordon is set to announce the outcome of a wide-
ranging review of the business aimed at finding solution to
company's warehousing problems.
Mr. Gordon hired Colin Astbury, former logistics director of
Laura Ashley, to help him bring order to the business.
CONTACT: MOTHERCARE PLC
Ben Gordon, Chief Executive
Phone: 020 7404 5959 (Tues.only)
Mark McMenemy, Finance Director
Phone: 01923 206 187
Brunswick Group Limited
Susan Gilchrist
Philippa Power
Phone: 020 7404 5959
PIZZAEXPRESS PLC: Says Talks With Bidders Going Positively
----------------------------------------------------------
Struggling restaurant chain PizzaExpress Plc is playing positive
tunes regarding its ongoing takeover talks with interested
buyers.
"Talks are progressing well. Hopefully we will be in the position
to make an announcement in the near future," a company
spokeswoman said.
The group is engaged in a management buyout negotiation with
chief executive David Page, and in a separate discussion with two
other interested parties. The latter included co-founder Luke
Johnson and another unnamed venture capitalist.
According to AFX, Mr. Page said, PAI Management, the private
equity division of France's BNP Paribas, is backing his bid. Mr.
Page declined to comment about the value of his offer. As for
suggestions that his approach is at the GBP250 million mark or
350 p per share, he said: "they're just speculation."
The company declined to discuss the details of the approaches,
while a company spokeswoman refused to say outright that a deal
could be reached anytime this week, putting in uncertainty a
report of The Times newspaper that the auction could be closed
this week.
"These things could (potentially) linger on," the spokesperson
said.
The unsourced report says most analysts predict Mr. Page winning
the auction.
The six months to December 31, 2002 saw continued disappointing
trading in our core PizzaExpress restaurants especially in
central London and within the M25.
CONTACT: PIZZAEXPRESS PLC
1 Union Business Park
Florence Way
Uxbridge
UB8 2LS
Contacts: Nigel Colne, Chairman
David Page, Chief Executive
Paul Campbell, Group Finance Director
Phone: 01895 618618
Sue Pemberton, Citigate Dewe Rogerson
Phone: 020 7638 9571
ROYAL & SUNALLIANCE: Pension Fund Liabilities Fears Drain Value
---------------------------------------------------------------
Fears about Royal & SunAlliance's pension fund liabilities and
its ability to execute its disposal program are taking a toll
on the company's shares.
The shares went down to its lowest stock market level in 20
years, closing 5p lower at 84.5p, which means Royal & Sun has now
lost more than 80% of its stock market value since its peak five
years ago.
Morgan Stanley recently pegged the insurance company's pension
fund liabilities at GBP1.2 billion based on the assumption that
the insurer has not made any changes to its scheme. Royal &
SunAlliance countered that the FRS17 was just a "snapshot" of its
pension fund at a particular time.
Further aggravating the tension is a study by Credit Suisse First
Boston saying in the past two years Britain's 100 biggest
companies have shifted from a GBP80 billion surplus in their
pension schemes to a GBP77 billion deficit.
It is known that rating agencies had also expressed worries about
pension costs in companies, including J Sainsbury, Rolls-Royce
and BAE Systems.
CONTACT: ROYAL & SUNALLIANCE UK
Media relations team:
Jay Aitken
Phone: 0151 239 3151
Janine Goodison
Phone: 0151 239 4012
Andrew Bayley
Phone: 0151 224 4593
Customer Helpline: 0845 6060251
*************
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.
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