/raid1/www/Hosts/bankrupt/TCREUR_Public/030307.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, March 7, 2003, Vol. 4, No. 47
Headlines
* C Z E C H R E P U B L I C *
UNION BANKA: Asked to Submit Stand on Administrative Proceedings
UNION BANKA: Stands to Lose License for Trading in Securities
* F R A N C E *
FRANCE TELECOM: Posts Net Loss of EUR20.7 Billion for 2002
* G E R M A N Y *
CHRISTIE & CO: Businesses in Germany and France for Sale
DEGUSSA AG: Net Profit Dropped by 64% to EUR227 Million
DEGUSSA AG: Supervisory Board Undergoes Restructuring
ROLLS-ROYCE: Profit Before Tax Fell 46% to GBP255 Million
* I T A L Y *
FIAT SPA: Long-Term Rating at 'BB+', Short-Term Rating Lowered
FIAT AUTO: Embarks on Cost-Cutting Measures to Break-even
FIAT AUTO: To Hit the Road With Three New Models This Year
FIAT SPA: Controlling Family Clears Ownership Structure
FIAT SPA: Expresses Confidence of Returning to Investment Grade
FIAT SPA: De Agostini Indicates Interest in Insurance Arm
* N E T H E R L A N D S *
KONINKLIJKE AHOLD: Obtains New Credit Facility From Banks
KONINKLIJKE AHOLD: Investigators Issue Subpoena for Documents
KONINKLIJKE AHOLD: French Retailer Interested in Buying Asset
LEISURE TRAVEL: In Administration, Business Up For Sale
VERSATEL TELECOM: Achieves Positive EBITDA for FY2002
VERSATEL TELECOM: Clears Issue Concerning Disagreement With KPN
* N O R W A Y *
MOXY TRUCKS: York Place Rescues Group From Bankruptcy
* U N I T E D K I N G D O M *
BRAMPTON MANOR: In Receivership, Business Is Up for Sale
BRITISH ENERGY: Issues Output Statement for February
CMN LIMITED: Administrators Offer Business for Sale
MARCONI PLC: Successfully Completed Sale of Two Non-core Assets
NEMESIS TOILETRIES: Administrators Offer Business for Sale
NOSKAB GROUP: In Receivership, Business Is Up for Sale
ROYAL & SUNALLIANCE: Ratings of Puerto Rican Unit Down to 'BBB'
SONY ERICSSON: Assures Market of Promising Future Ahead
THISTLE HOTELS: CreditWatch Status on CMBS Deal on Developing
===========================
C Z E C H R E P U B L I C
============================
UNION BANKA: Asked to Submit Stand on Administrative Proceedings
----------------------------------------------------------------
Union Banka has until March 10 to complete documents on its
stance on administrative proceedings and to submit a rescue plan,
CNB spokeswoman Alice Frisaufova said.
The central bank, which ordered the schedule, also asked the
Finance Ministry to submit its stance on the rescue plan by March
12 based on the law on the administrative proceedings and on the
law on banks.
It also asked UB to consider whether to disclose its rescue plan,
as the law prohibits CNB from publishing it, according to Ms.
Frisaufova.
Union Banka, which had closed its branches 10 days ago, submitted
a rescue plan that aims to gradually resume the bank's operation.
But it failed to put measures to prevent a run on the banks once
it reopens.
The board of directors had decided to activate the internal
system of the bank, resuming all activities except serving
customers. Since the closure of the bank's branches clients have
no access to a total of CZK 17 billion deposited in their
accounts.
The management is still hoping that the bank will be rescued.
UB CEO Roman Mentlik said: "The bank is at this moment actively
searching for a commercial solution and is not waiting for state
assistance with an outstretched hand."
According to a report in Czech Happenings, "If CNB were to deal
with UB's situation today, it would allegedly have no reason to
launch administrative proceedings on the revocation of the
banking licence..."
Sources close to UB claim that the bank's cash now stands at
around CZK2.5 billion.
UNION BANKA: Stands to Lose License for Trading in Securities
-------------------------------------------------------------
The license for trading in securities of Ostrava-based Union
Banka may be revoked after the Securities Commission (KCP)
launched administrative proceedings with the struggling bank.
Czech National Bank earlier withdrew its banking license.
According to KCP, an injunction ordering the bank to stop
providing investment services and handling client assets has also
been issued.
It is known that KCP is apprehensive about UB's financial
situation, as well as suspected it of an interruption of activity
without securing the meeting of obligations to clients.
The injunction cannot be appealed, reports say.
"KCP will inform the public about the outcome of the
administrative proceedings as soon as a valid decision is
issued," KCP spokeswoman Radka Prochazkova said.
Meanwhile, the start of the administrative proceedings aiming to
revoke UB's permit for trading was confirmed by the bank itself,
adding that it has countered the case by filing a remonstrance
against it.
UB spokesman Josef Rericha said: "The result of the proceedings
is directly intertwined with the assessing of the revitalization
plan of the Czech National Bank."
Union Banka closed down its branches earlier due to insufficient
liquidity, with CNB threatening to revoke its license.
Its trouble stemmed from an unmanageable expansion when it took
over struggling financial houses in mid-1990.
===========
F R A N C E
===========
FRANCE TELECOM: Posts Net Loss of EUR20.7 Billion for 2002
----------------------------------------------------------
Positive momentum at work within the company: acceleration in
operating income and operating free cash flow in the second half
of 2002
France Telecom regains control over its future
- with the implementation of the TOP program
- by securing financial visibility through the end of 2004
- Operating income up 30.9 percent outpacing growth in EBITDA
(21.1 percent) and revenues (8.4 percent)
- Operating free cash flow increases 76.8 percent
- Net loss (after minority interests) reflects exceptional
provisions and amortization
- Outlook for 2003: in excess of 3 billion euros in free cash
flow to repay debt
Key figures at December 31, 2002
- Consolidated revenues: 46.6 billion euros, up 8.4 percent
- EBITDA: 14.9 billion euros, up 21.1 percent
- Operating income: 6.8 billion euros, up 30.9 percent
- Net income before tax, amortization and exceptional provisions:
2.2 billion euros
- Goodwill amortization and exceptional provisions: 18.3 billion
euros
- Net loss after minority interests: (20.7) billion euros
- Net debt: 68.0 billion euros
- Interest expense: 4.0 billion euros
- Investments in tangible and intangible assets: 7.4 billion
euros
- Operating free cash flow: 7.5 billion euros
- Free cash flow (1.1) billion euros
- Net cash position: 10.9 billion euros
- Total number of customers worldwide: 111.7 million
In 2002, France Telecom's operating income increased rapidly
(30.9% on a historical basis) underlining the company's strong
momentum. The Group increased the number of its clients to 111.7
million at December 31, 2002. It consolidated its positions in
the growth businesses of wireless, Internet and international,
and demonstrated its strong resilience in the face of competition
in mature activities such as fixed-line telephony.
Since arriving in October 2002, France Telecom's new management
team under Chairman and CEO Thierry Breton has set out to:
- implement a new, more focused and rational organization with
the aim of improving operational performance; and
- ensure that the company meets its financial commitments through
2003 and beyond.
=============
G E R M A N Y
=============
CHRISTIE & CO: Businesses in Germany and France for Sale
--------------------------------------------------------
Berlin
4 Star Hotel, Kurfurstendamm
- 70 guestrooms.
- Close to main railway station.
- High quality furnishing.
- Restaurant and hotel bar.
- Good turnover and occupancy.
- Next to famous shopping mile (Kurfurstendamm).
- EUR29,400 per month EXC EXTRAS and VAT LEASEHOLD
Frankfurt Office Ref 90/FT1246
French Riviera
3 Star Hotel, Nice
- Well situated in the heart of Nice.
- 57 en suite letting bedrooms.
- Fully fitted bar (40).
- External swimming pool with garden.
- Fitness room.
- Owner's accommodation of circa 100 m2.
- EUR6,900,000 Freehold
Paris Office Ref 86/FT1299
French Riviera
3 Star Hotel/Restaurant, Nice
- Well located in the heart of Nice, 58 en suite letting
bedrooms.
- Fully renovated restaurant(60). Fully fitted bar (25).
- Terrace with garden, Possible extension.
- EUR 4,300,000 Leasehold
Paris Office Ref 86/FT1304
CONTACT: CHRISTIE & CO INTERNATIONAL OFFICES
Phone: +44 (0) 20 7227 0747 (London)
+49 (0) 69 90 74 57-0 (Frankfurt)
+33 (0) 1 53 96 72 72 (Paris)
+34 93 343 61 61 (Barcelona)
Homepage: http://www.christie.com
or
Christie & Co Head Office
50 Victoria Street
London SW1H 0NW
Phone: +44 (0) 20 7227 0700
Fax: +44 (0) 20 7227 0701
E-mail: enquiries@christie.com
DEGUSSA AG: Net Profit Dropped by 64% to EUR227 Million
-------------------------------------------------------
- Operating result held up well - core
business in line with prior year
- Unchanged dividend of EUR 1.10 per share
- Outlook for core business in 2003:
improvement in sales, EBIT and operating result
"Degussa aims to sharpen is profile even further and expand its
edge in specialty chemicals. In fiscal 2002 we did well despite
the difficult business conditions, especially in our core
operations," reported Prof. Utz-Hellmuth Felcht, Chairman of the
Board of Management of Degussa AG, at Tuesday's Annual Results
Press Conference in Dusseldorf, Germany.
The core operations lifted sales 1 percent to EUR 11.0 billion in
2002 (2001: EUR 10.8 billion). Overall, sales slipped 1 percent
from EUR 11.9 billion to EUR11.8 billion. EBIT (earnings before
interest and taxes) declined 5 percent year-on-year from EUR 988
million to EUR 936 million, but the EBIT reported by the core
operations only slipped 3 percent to EUR 953 million (2001: EUR
980 million). The operating result (EBIT after deduction of
interest) came to EUR 655 million, only just below the year-back
level of EUR 658 million. Similarly, the operating result of the
core businesses was only marginally lower than in the previous
year at EUR 692 million (2001: EUR 697 million).
As a result of high one-off expenses and a negative earnings
contribution from the discontinued operations, group net income
was EUR 227 million, down substantially from EUR 627 million in
2001. Earnings per share were EUR 1.10 in 2002 compared with EUR
3.05 in 2001. An unchanged dividend of EUR 1.10 per share will be
proposed at the Annual Shareholders' Meeting on May 9, 2003.
Degussa's CFO, Heinz-Joachim Wagner, was satisfied with the
Group's main financial ratios in 2002: shareholders' equity was
EUR 5.7 billion at year-end, giving an equity ratio of 37 percent
(2001: 33 percent). Net financial debt was reduced to EUR 2.4
billion, down from EUR 3.1 billion in 2001. Wagner: "Degussa has
a very balanced financial structure."
In Degussa's view, global economic trends in 2003 are very
uncertain, making them very difficult to predict. Prof. Felcht:
"Our strategy of focusing our core business on robust operations
with low cyclical exposure and stepping up our restructuring
drive in response to the challenging economic conditions paid off
in 2002. Systematic continuation of this strategy in 2003 should
underpin our operating performance. We are therefore confident
that our core operations will develop well this year, despite all
the uncertain factors. Sales of our core operations should rise
to around EUR 11.5 billion and we anticipate an improvement in
both EBIT and the operating result."
Key data on fiscal 2002
2002 20011) Change
Sales EUR 11,765 million EUR 11,862 million - 1%
EBITDA margin 14.8 % 15.7 % - 0.9
EBIT EUR 936 million EUR 988 million - 5 %
ROCE 8.5 % 9.3% - 0.8
Operating result EUR 655 million EUR 658 million +/- 0 %
Net income EUR 227 million EUR 627 million - 64 %
Earnings per share EUR 1.10 EUR 3.05 - 64 %
Dividend per share EUR 1.10 EUR 1.10 +/- 0
Equity ratio 37.4% 32.9 % + 4.5
Net financial debt EUR 2,422 million EUR 3,075 million - 21 %
Capex on PP&E EUR 961 million EUR 1,130 million - 15 %
Employees (at year-end) 47,623 53,378 - 11 %
1) Prior-year earnings figures adjusted for amortization of
goodwill to improve comparabilit
Degussa at a Glance (in EURmio.)
Q4 2002 2001 +/- %
Sales 2,865 2,621 9
thereof:
Health & Nutrition 282 293 -4
Construction Chemicals 427 421 1
Fine- & Industrial Chemicals 610 543 12
Performance Chemicals 321 331 -3
Coatings & Advanced Fillers 500 500 0
Specialty Polymers 309 269 15
Total divisions 2,449 2,357 4
Services 214 221 -3
Corporate 12 8
Total core businesses 2,675 2,586 3
Non-core businesses 190 35
EBITDA 393 430 -9
EBIT 196 196 0
thereof:
Health & Nutrition 28 47 -40
Construction Chemicals 43 43 0
Fine- & Industrial Chemicals 48 48 0
Performance Chemicals 26 49 -47
Coatings & Advanced Fillers 76 64 19
Specialty Polymers 49 33 48
Total divisions 270 284 -5
Services -2 16
Corporate -60 -89
Total core businesses 208 211 -1
Non-core businesses -12 -15
EBIT 196 196 0
Net interest result -27 -15
Interest on pension provisions-38 -34
Operating result 131 147 -11
Non-operating result 11 88
Income before income taxes 142 235 -40
Income taxes 62 -151
Minority interest 1 -1
Net income before disc. operations 205 83 147
Earning discontinued operations -11 271
Income taxes discontinued operations -45 -58
Group net income 149 296 -50
Earnings per share (in Euro) 0.72 1.44 -50
Investments in PP&E (core business) 303 400 -24
Employees (as of December 31) 47,623 53,378 -11
Q1 - 4 2002 2001 +/- %
Sales 11,765 11,862 -1
thererof:
Health & Nutrition 1,179 1,186 -1
Construction Chemicals 1,819 1,741 4
Fine- & Industrial Chemicals 2,347 2,116 11
Performance Chemicals 1,358 1,407 -3
Coatings & Advanced Fillers 2,126 2,277 -7
Specialty Polymers 1,308 1,264 3
Total divisions 10,137 9,991 1
Services 782 815 -4
Corporate 39 29
Total core businesses 10,958 10,835 1
Non-core businesses 807 1,027
EBITDA 1,747 1,858 -6
EBIT 936 988 -5
thereof:
Health & Nutrition 123 150 -18
Construction Chemicals 192 195 -2
Fine- & Industrial Chemicals 181 201 -10
Performance Chemicals 164 137 20
Coatings & Advanced Fillers 327 304 8
Specialty Polymers 184 180 2
Total divisions 1,171 1,167 0
Services 49 31
Corporate -267 -218
Total core businesses 953 980 -3
Non-core businesses -17 8
EBIT 936 988 -5
Net interest result -132 -190
Interest on pension provisions-149 -140
Operating result 655 658 0
Non-operating result -275 -83
Income before income taxes 380 575 -34
Income taxes -37 -38
Minority interest -4 -1
Net income before disc. operations 339 536 -37
Earning discontinued operations-51 191
Income taxes discontinued operations -61 -100
Group net income 227 627 -64
Earnings per share (in Euro) 1.10 3.05 -64
Investments in PP&E (core business) 934 1,082 -14
Employees (as of December 31) 47,623 53,378 -11
Degussa is a multinational corporation consistently aligned to
highly profitable specialty chemistry. With sales of 11.8 billion
Euro and a workforce of some 48.000, it is Germany's third-
largest chemical company and the world market leader in specialty
chemicals. In fiscal 2002, the corporation generated operating
profits (EBIT) of more than 900 million Euro. Degussa's core
strength lies in highly-effective system solutions that are
tailored to the requirements of its customers in over 100
countries throughout the world. Degussa's activities are led by
the vision "Everybody benefits from a Degussa product - every day
and everywhere".
CONTACT: DUGUSSA AG
PO Box 30 20 43
40402 Dusseldorf
Germany
Email: info@degussa.com
Contact: Corporate Communications
Hannelore Gantzer
Spokeswoman
Phone: +49-211-65 041-368
DEGUSSA AG: Supervisory Board Undergoes Restructuring
-----------------------------------------------------
New members have been appointed to the Supervisory Board of
Degussa AG, Dusseldorf, Germany. These are Karl Starzacher,
Management Board Chairman of RAG Aktiengesellschaft, as well as
the Members of the RAG Board of Management Ulrich Weber and Dr.
Peter Sch"rner. The following gentlemen, whom Degussa thanks for
their valuable services, have resigned from the Degussa
Supervisory Board: Klaus M. Patig, Member of the Management Board
of Commerzbank AG; Dr. Andreas Georgi, Member of the Management
Board of Dresdner Bank AG, and Dr. Guiseppe Vita, Chairman of the
Supervisory Board of Schering AG.
At a meeting of the Degussa Supervisory Board, Karl Starzacher
took over the post of Chairman of the Degussa Suvervisory Board
from Prof. Wilhelm Simson, Management Board Chairman of E.ON AG.
Prof. Simson had become Supervisory Board Chairman at Degussa in
February 2001, and will continue to remain on its Board. As
Degussa Management Board Chairman Prof. Utz-Hellmuth Felcht
states, "My sincere thanks go to Prof. Simson for his full
support of the new Degussa over the past two years."
Degussa is a multinational corporation consistently aligned to
highly profitable specialty chemistry. With sales of 11.8 billion
Euro and a workforce of some 48.000, it is Germany's third-
largest chemical company and the world market leader in specialty
chemicals. In fiscal 2002, the corporation generated operating
profits (EBIT) of more than 900 million Euro. Degussa's core
strength lies in highly-effective system solutions that are
tailored to the requirements of its customers in over 100
countries throughout the world. Degussa's activities are led by
the vision "Everybody benefits from a Degussa product - every day
and everywhere".
CONTACT: DEGUSSA AG
PO Box 30 20 43
40402 Dusseldorf
Germany
Email: info@degussa.com
Contact:
Corporate Communications
Hannelore Gantzer
Spokeswoman
Phone: +49-211-65 041-368
ROLLS-ROYCE: Profit Before Tax Fell 46% to GBP255 Million
---------------------------------------------------------
Results in line with guidance
"Against a background of challenging market conditions we have
delivered profit and cash flow in line with the guidance provided
on October 19 2001. With the help of our workforce we have
successfully implemented the restructuring program announced at
that time and have achieved a strong operational performance with
significant improvements in working capital management.
"This performance, together with our record year-end order book
and growing aftermarket revenues, confirms our business model and
our ability to manage uncertainty and deliver shareholder value.
"We are consulting with our employees with the objective of
limiting the financial impact of the current pension fund deficit
within the guidance we provided last August. Subject to the
continuing uncertainty caused by the situation over Iraq, we are
reiterating our guidance for profit growth in 2003, with positive
cash flow."
Sir John Rose, Chief Executive, Rolls-Royce plc
Highlights are:
Profit and cash in line with guidance
Underlying profit before tax GBP255 million*
Average net debt GBP1,090 million
Year-end net debt GBP595 million
Dividend maintained
Record year-end order book
Order intake of GBP8.7 billion
Record year-end order book of GBP16.2 billion
Strong aftermarket services
Aftermarket services at GBP2.5 billion represent 44 per cent of
total revenues
Long-term service agreements worth GBP 2bn announced
*before exceptional and non-trading items (see note 3)
Overview
Results for the year ended December 31 2002 were in line with the
guidance provided in October 2001, reflecting the balanced nature
of the company's business and the swift action taken to mitigate
the downturn in the civil aerospace market. Underlying profit
before tax was GBP255 million, a fall of 46 per cent, which
resulted primarily from the predicted difficult conditions in the
civil aerospace market.
Aftermarket service revenues in 2002 were in line with the
company's expectations and, at GBP 2.5 billion (2001 GBP 2.4
billion), accounted for 44 per cent of total revenues.
Aftermarket sales, including joint venture businesses, exceeded
GBP 3 billion.
Encouragingly, order intake at GBP 8.7 billion remained strong
during 2002. The firm order book was GBP 16.2 billion (2001 GBP
14.4 billion) at the year-end, with a further GBP 0.9 billion
business announced. Aftermarket service revenues accounted for 33
per cent of the order book, including long-term service
agreements, which accounted for 21 per cent.
Net debt was GBP 595 million, reflecting a cash outflow of o94
million after expenditure of GBP 167 million on restructuring and
after purchasing six aircraft for GBP 133 million in connection
with sales financing activities. Average net debt was GBP 1,090
million (2001 GBP 990 million).
Business model
Rolls-Royce invests in technology and capability that can be
exploited in each of its four global markets to create a
competitive range of products and services. The broad business
portfolio has reduced the company's dependence on any one sector
and has helped mitigate the impact of the current decline in the
civil aerospace market.
The success of the company's products is demonstrated by the
gains in market share over recent years. Rolls-Royce now has an
installed base of 54,000 gas turbine engines in service across
all its businesses. The investments in product, capability and
knowledge-based infrastructure to gain this market position have
created high barriers to entry. Successful implementation of the
company's service strategy has enabled it to increase its
aftermarket revenues by 60 per cent (including joint ventures)
over the last five years.
Most of the engines in service will have operational lives of 25
years or more, generating an assured aftermarket demand for the
provision of spare parts and services. The installed base of
engines, therefore, represents an annuity for the business and
provides visibility as to future activity levels.
Rolls-Royce is now a global business; 52 per cent of research and
technology is conducted outside the UK; 63 per cent of purchases
are international; and 40 per cent of manpower is based outside
the UK, representing 40 nationalities in 48 countries.
Improving operational performance
Since October 2001, the business has been resized to balance load
and capacity. Despite the major changes in load and mix and the
consequent rescheduling, significant improvements have been
achieved in delivery performance, manufacturing lead-time,
working capital management and operating cost. The successful
implementation of SAP in 2001 has provided a very effective tool
for managing changes in demand.
As a result of improvement initiatives manufacturing inventory
was reduced by 19 per cent and average lead time was reduced.
Working capital was effectively controlled in 2002, reducing as a
proportion of sales from 10.5 per cent to 6.8 per cent. A supply
chain restructuring initiative has been launched and pilots have
been successfully completed, confirming that further inventory
reduction is achievable.
The company has implemented the restructuring program announced
in 2001 without industrial disruption. The company achieved a net
headcount reduction of 4,900 during 2002 with a further 900
employees due to leave in the early part of 2003 as part of this
program. The company is on target to achieve annual cost savings
of o250 million from this program. The headcount is expected to
be reduced to around 35,000 by the year-end, with further
restructuring charges of approximately GBP 50 million in 2003.
During this difficult period, the company's employees have
continued to demonstrate strong teamwork, commitment and
innovation.
Prospects
The company's business strategy and market position have enabled
it to manage the uncertainties of the short term and secure long
term growth which will deliver shareholder value. Over the next
decade the emphasis of investment will change. The company will
continue to focus expenditure on technology acquisition and in
support of new product development and in-service improvements.
However, the pace of new product development will slow,
particularly in civil aerospace where fewer new aircraft are now
being developed. While continuing to develop new products that
deliver value, the emphasis will be on unit cost reduction,
development of derivatives, improvement of in-service operation
and the creation of capabilities which increase the scope and
value of the company's service activities.M
Rolls-Royce is in a sound financial position. At the year-end,
gearing stood at 29 per cent and total committed borrowing
facilities amounted to GBP 2.6 billion, following successful
refinancing of approximately GBP 1.0 billion during the year.
After repaying maturing borrowings, and assuming they are not
renewed, total committed facilities at the end of 2003 will be
approximately GBP 2.5 billion and total facilities at the end of
2004 will be approximately GBP 1.9 billion. Net debt peaked at
GBP 1,390m in 2002. The company's foreign exchange hedging policy
minimises the impact of fluctuations in exchange rates. Total US
dollar cover currently amounts to five years' net US dollar
income. The company's risk management systems proved to be robust
and a prudent approach has been taken in the area of provisions
and charges.
Since October 2001, two additional factors have increasingly
influenced the company's assumptions about future performance:
firstly, the uncertainties associated with the situation over
Iraq and, secondly, the impact of depressed financial markets and
actuarial assumptions on the funding requirements for the
company's pension funds. All reasonable actions are being taken
to mitigate the impact of both.
The company's priority for 2003 is to manage these uncertainties,
building on its effective response to the events of September 11
2001 and continuing its rationalization activities with
particular focus on quality, unit cost reduction and supply chain
restructuring.
At December 31 2002, after taking account of deferred taxation,
the FRS 17 deficit in the Rolls-Royce UK pension funds was
approximately GBP 1.1 billion. The next formal actuarial review
of the major fund is due to commence on March 31 2003 and is
expected to be completed before the year-end. This scheme was
closed to new entrants in January 1999. While the company intends
to continue to provide a defined benefit scheme, it has commenced
consultations with employees over a number of mitigating actions
in connection with the provision of pension benefits. The
objective of these actions is to contain the additional funding
costs within the guidance provided last August (See note 6).
Subject to the continuing uncertainty caused by the situation
over Iraq, the company is reiterating its guidance for profit
growth in 2003, with positive cash flow.
CONTACT: ROLLS-ROYCE INTERNATIONAL LIMITED
Jagerstr.59,
D-10117 Berlin
Phone: 0207 222 9020
Home Page:www.rolls-royce.com
Phone: (+49) 30 2094 2501
Fax: (+49) 30 2094 2508
E-mail: regional.office.berlin@rolls-royce.com
Home Page: http://www.rolls-royce.de
Contact:
Peter Barnes-Wallis Colin Duncan
Director of Financial Communications
Director of Corporate Communications
=========
I T A L Y
=========
FIAT SPA: Long-Term Rating at 'BB+', Short-Term Rating Lowered
--------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday it assigned its
'BB+' long-term corporate credit rating to Italy-based industrial
group Fiat SpA. The outlook is negative.
At the same time, Standard & Poor's lowered its short-term
corporate credit rating on Fiat and its CP ratings on the
guaranteed CP programs of Fiat's related entities to 'B' from 'A-
3'. The short-term and CP ratings were also removed from
CreditWatch, where they had been placed on Nov. 1, 2002.
"The long-term rating on Fiat reflects its participation in
industry segments that are cyclical and in the midst of rapid
consolidation, as well as the group's weak cash flow generation
prospects and its aggressive financial leverage," said Standard &
Poor's credit analyst and director Virginie Casin.
The lowering of the short-term and CP ratings on Fiat follow
announcements made by the group on Feb. 28, 2003, that it is to
sell two relatively well-performing businesses. Through the
imminent sale of these businesses, Fiat will reduce its ongoing
earnings and cash flow generating ability. Moreover, the planned
conversion to equity of ?3 billion ($3.3 billion) of intragroup
loans to its problem-plagued auto unit, Fiat Auto Holding B.V.
(Fiat Auto), puts in further doubt Fiat's ultimate ability to
receive value for its investment in Fiat Auto.
"Standard & Poor's does not believe Fiat's credit measures will
return to levels appropriate for an investment-grade rating in
the foreseeable future," said Ms. Casin.
This would remain the case even if Fiat exercises its right to
put its remaining ownership stake in Fiat Auto to General Motors
Corp. (GM;
BBB/Stable/A-2), if a possible ?2 billion capital infusion into
Fiat Auto from GM or some other external party materializes by
August
2004--forestalling exercise of the put, or if some other means
are found to divest the auto unit.
The group's total reported debt amounted to ?29.6 billion at Dec.
31,
2002, and is expected to decline by ?6.7 billion in the first
quarter of 2003 after the deconsolidation of Fidis, the financial
services arm of Fiat Auto.
"The negative outlook reflects the possibility of a further
downgrade should the negative free operating cash flow at Fiat
Auto exceed its impending capital infusion, or should Fiat's
performance otherwise lag management's publicly stated targets,"
added Ms. Casin.
FIAT AUTO: Embarks on Cost-Cutting Measures to Break-even
---------------------------------------------------------
Fiat plans to cut the cost of producing its Fiat and Lancia cars
by 3.5% and improve their reliability in order to save between
EUR300 million to EUR400 million this year.
Gianni Coda, head of the Fiat, Lancia and light commercial
vehicles division of Fiat Auto, added that the company would also
reduce the cost of repairing vehicles under warranty by 20%, or
EUR80 million.
Fiat Auto is expecting Lancia to make a profit by 2006, although
many analysts suggest this should be closed. Unit sales of
Lancia, Alfa Romeo and Fiat marques fell about 11% last year as
the models became outdated.
To carry out the plan, a "quality CEO" has been appointed for
each product, with authority to stop the production lines if
necessary to fix problems, Mr. Coda said.
A savings of EUR1 billion is also expected this year due to the
cutting of one in five of the auto operations' workers last
autumn.
In addition to its efforts to save cost in order to return to
break-even this year, Fiat Auto is also asking US company General
Motors, a 20% shareholder, to help shoulder the EUR2 billion of
its EUR5 billion recapitalization of the auto operations.
It is planning to fund the remaining EUR3 billion by selling its
insurance arm, Toro Assicurazioni, and aerospace arm, Fiat Avio.
A rights issue is expected to help with a further EUR2 billion or
more.
FIAT AUTO: To Hit the Road With Three New Models This Year
----------------------------------------------------------
Fiat Auto is launching its rebound in the market through the
introduction of three new auto models, which it hoped would make
up 35% of its unit sales next year.
"The new cars show we aren't dead. We're here and we're coming
back with fun and excitement,'' one of the company's top
executives told Reuters. Fiat SpA's auto unit lost EUR1.3
billion at the operating level in 2002.
Cianni Coda, who is in charge of the Fiat and Lancia brands, said
that Fiat is looking forward to selling 400,000 of the new cars
in 2004, up from about 125,000 expected this year.
He was speaking at the Geneva car show where the company is
launching the compact Fiat Gingo to replace Panda and the
Seicento; Fiat Idea, its offering on the mini-MPV market; and the
small city car Ypsilon under the Lancia marque. The models
Gingo, nicknamed "Little Devil", and Ypsilon will be launched
across Europe in September. The Idea will be released in
October.
Low sales for last year made Fiat hit a record loss of EUR4.26
billion. Unit sales of its Lancia, Alfa Romeo and Fiat marques
fell about 11%, pushing Fiat Auto's revenue 9.4% lower to
EUR22.15 billion.
Fiat is planning to launch 20 new models within three years, and
is investing EUR2.5 billion a year until 2005 to achieve the
goal.
Mr. Coda is expecting to sell 40,000 Ypsilons, and 70,000 Gingos,
once they're released, and 15,000 of Fiat Idea by 2003. Fiat has
not yet priced the models.
Next year, Coda saw Idea sales rising to between 100,000 and
120,000 units, with Gingo sales of 180,000 to 200,000 cars and
80,000 to 100,000 Ypsilons.
Mr. Coda also expressed his belief that Fiat need not change its
sales targets even if war broke out in Iraq as they are already
conservative.
Fiat Auto is aiming to grab 30% of its key Italian market this
year with a Western European market share forecast of between 8.2
and 8.8%, compared to 8.2 percent in 2002.
FIAT SPA: Controlling Family Clears Ownership Structure
-------------------------------------------------------
The Agneilli family on Monday groomed its holding company Ifil to
make it more attractive to investors as the company it controls
moves to raise cash for troubled Fiat Auto.
It concentrated its direct holdings in Fiat SpA in one holding
company, Ifil, by consolidating the ownership that was split
between Ifil and IFI, another holding company that in turn
controls Ifil. IFI owns 18% of Fiat, while Ifil holds 12%. The
move does not alter the Agnelli family's hold on Fiat.
"There was 18% here, 12% there, and everyone was wondering who
was calling the shots. Now that's clear," said David John
Winteler, director general of Ifil.
IFI will also relinquish a controlling stake in football club
Juventus to Ifil, as well as trade its 1% stake worth around
EUR930 million in the bank Sanpaolo IMI for new shares.
"This brings benefits to the re-launch of Fiat, but our primary
aim is to make Ifil a stronger shareholder with a stronger
financial profile and clearer capital structure. We will finally
be a fully independent company in terms of sharing ownership of
assets," Mr. Winteler said.
Ifil shares currently trade at around a 50% discount to net asset
value.
Ifil will allow shareholders to convert non-voting savings shares
into ordinary stock--a chance institutional investors had looked
forward to.
IFI will be a financial holding company, but will continue to
split with Ifil the ownership of Exor, another holding company.
Giovanni Agnelli, which controls the holding, also approved a
EUR250 million (US$270 million) capital increase that will be
leveraged when Fiat seeks a EUR2billion capital increase in the
coming months, according to the Financial Times.
Schroder Salomon Smith Barney advised IFI, while Merrill Lynch
advised Ifil.
FIAT SPA: Expresses Confidence of Returning to Investment Grade
---------------------------------------------------------------
Industrial group Fiat SpA moved to reassure that Standard &
Poor's downgrade of its short-term corporate credit rating to
junk would not affect its credit lines. Standard & Poor's lowered
the rating to 'B' from 'A-3'.
In a statement, Fiat expressed its confidence that the rating
agency will "see [it] fit to improve" the rating "in a relatively
short time," after its current restructuring plan and asset sales
program hitch it to its goal of significantly improving its
economic and financial position.
The company gave the assurance despite warnings from Standard &
Poor's credit analyst and director Virginie Casin that "Standard
& Poor's does not believe Fiat's credit measures will return to
levels appropriate for an investment-grade rating in the
foreseeable future."
The downgrade was widely expected, according to bond and equity
traders.
Fiat's euro-denominated bonds due in 2010 and 2011 fell two
percentage points after the downgrade to trade at 86%-88% of face
value. The company's shares fell EUR0.13, or 2.0%, to close at
EUR6.73, underperforming the market.
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: De Agostini Indicates Interest in Insurance Arm
---------------------------------------------------------
Multimedia international publishing company, De Agostini, is
interested in Fiat Auto's insurance arm, Toro Assicurazioni.
"We (would) have no financial problems should we decide to carry
out an industrial investment," said De Agostini Chief Executive
Antonio Belloni.
Fiat is offering Toro together with its avionics unit, Fiat Avio,
to raise cash needed to recapitalize its loss-making auto unit,
Fiat Auto. The company has put an estimated EUR2 billion to
EUR2.5-billion price tag on the unit, according to Dow Jones.
"We think that the (insurance) sector can generate a great amount
of cash flow and we traditionally have had a good experience in
the retail business," Mr. Belloni.
Belloni, who is also Lottomatica's chairman, added that
Lottomatica's 30,000 sales points could offer room for synergies
with Toro's insurance business.
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
DE AGOSTINI SPA
Via G. Da Verrazano, 15
28100 NOVARA
Phone: 39 321 4241
Fax 39 321 424305
Home Page: http://www.deagostini.it
=====================
N E T H E R L A N D S
=====================
KONINKLIJKE AHOLD: Obtains New Credit Facility From Banks
---------------------------------------------------------
Ahold announced that it has entered into a revolving credit
facility with ABN AMRO, Goldman Sachs, ING, JP Morgan and
Rabobank. The facility provides for aggregate borrowings of EUR
2.65 bln. In addition, the company said banks remain committed to
provide and additional EUR 450 million backup facility to support
existing US$ 850 million securitization programs described below.
Ahold had announced on February 24, 2003, the EUR 3.1 bln
commitment of the financial institutions and banks to provide the
new credit facility as well as the backup facility.
Henny de Ruiter, Chairman of Ahold's Supervisory Board, commented
that "Entering into this new credit facility is an important step
in stabilizing Ahold's financial condition and demonstrates our
continued access to significant liquidity. We are extremely
pleased by the vote of confidence shown by the lender group, as
well at the ongoing support shown by Ahold's existing suppliers.
While no one can predict the future, we are encouraged by the
lenders' conclusion to move forward and we remain optimistic
about the company's prospects. With this new credit facility in
place, the company can now turn its attention to the development
of longer term solutions to the problems that have arisen from
Ahold's recently disclosed accounting issues."
Mr. De Ruiter further emphasized "Ahold has great businesses -
like Stop & Shop and Albert Heijn - with solid market positions,
significant assets, strong cash flow, loyal customers and
dedicated staff. We are continuing to focus on serving our
customers - wherever they may be - to the best of our abilities."
The credit facility, which has a term of 364 days from February
24, 2003, provides for two tranches of borrowings. Under one
tranche, a total of US$ 1.285 bln and EUR 600 mln is available
immediately. The second tranche of US$ 915 mln will be available
following the satisfaction of various conditions, including the
delivery to the lenders of audited fiscal year 2002 financial
statements of Stop & Shop Supermarkets Company and Albert Heijn
B.V. by May 31, 2003 and of audited fiscal year 2002 consolidated
financial statements of Ahold by June 30, 2003, which currently
also must be delivered for the first tranche to remain available.
Amounts owing under the facility are guaranteed by Ahold and
certain of its other subsidiaries. In addition, the borrowings
under the first tranche are secured by a pledge of the shares of
stock of Ahold's significant Dutch and American retail
subsidiaries. Ahold anticipates that the new facility will be
used to repay certain outstanding indebtness and for general
working capital purposes. Ahold has been able to negotiate in the
new credit facility a quarterly interest coverage ratio of 2.25.
As previously disclosed, the banks under U.S. Foodservice's
receivable securitization programs have agreed to extend the
programs until the last week of April 2003. The back up facility
is expected to provide additional support for the securitization
programs if needed. It would be available subject to completion
of definitive documentation and satisfaction of the customary
conditions.
As previously announced, Ahold's auditors have informed Ahold
they have suspended work on Ahold's fiscal year 2002 audit
pending completion of the investigations into the accounting
irregularities found at U.S. Foodservice and the circumstances
surrounding the failure to provide to the auditors certain
information relevant to the decision to consolidate ICA Ahold and
various other current or former Ahold joint ventures. These
investigations are proceeding and Ahold is working diligently to
complete the investigations and to take such other actions as may
be required to resume the audit.
Investigations have been commenced by the U.S. Department of
Justice and the U.S. Securities and Exchange Commission into the
matters announced by Ahold on February 24, 2003. Ahold had
previously brought these matters to the attention of these
regulatory authorities and is fully cooperating with these
investigations.
In connection with entering into the new credit facility and to
further strengthen Ahold's finances, Ahold has determined that it
will not pay the final dividend on its common shares in respect
of fiscal year 2002.
KONINKLIJKE AHOLD: Investigators Issue Subpoena for Documents
-------------------------------------------------------------
A federal grand jury asked for internal Ahold documents going
years back after investigations detected that Ahold might be
using aggressive accounting treatments as early as 2000.
The jury issued a subpoena for documents going back to January 1
1999, or two years before the company said it had evidence of
accounting irregularities.
According to the Financial Times, the wide range of internal
documents being asked in relation to the inquiry of the US
Department of Justice include those relating to promotional
allowances at US Foodservice, Ahold's food distribution
subsidiary, Ahold's financial statements, audits, financial
projections and budgeting, board meetings, personnel issues and
the resignation of its two top executives, Cees van der Hoeven
and Michael Meurs.
The investigators further asked for documents related to three
overseas joint ventures ICA Ahold, Jeronimo Martins and Disco.
According to the report, U.S. Foodservice had told employees in
memo to retain all documents.
The article also cited a separate report from the Center for
Financial Research and Analysis supporting the findings that
Ahold was using aggressive accounting treatments in 2000.
Although the treatments were not necessarily illegal, it served
to puff up reported earnings, the report said.
KONINKLIJKE AHOLD: French Retailer Interested in Buying Asset
-------------------------------------------------------------
French retailer Carrefour is interested in acquiring parts of
Ahold, the Dutch retailer whose U.S. subsidiary had been recently
involved in accounting irregularity.
According to Carrefour chief executive Daniel Bernard, "We are
not candidates to acquire Ahold, but if portions of the company
were up for sale we would look at them with our investment
criteria in mind." The world's second-biggest retailer is looking
currently expaning its presence this year despite gloomy economic
outlook.
But traders deemed it not very wise for Ahold to sell any of its
profitable units.
Shares in the company, which traded at around EUR30 earlier in
the year, lost 70% of its value after the retailer revealed it
had overstated profits at its key US Foodservice arm by at least
US$500 million since 2001.
It was afterwards forced to hold dividends for its common shares
for 2002.
Giant, Bi-Lo and Stop & Shop are all part of Ahold's US grocery
business.
LEISURE TRAVEL: In Administration, Business Up For Sale
-------------------------------------------------------
- Niche Leisure Travel Business - Dominant Player in fastest
growing Sector in travel.
- Established business, Direct-Sell, large Repeat Client base,
high margin, low risk, existing profit base.
- Next 12 months GBP50-GBP60 million t/o & material pre-tax
- This year (ending) up to GBP30 million t/o, profitable
- Large call center & conventional (text/publication) trade.
Huge additional growth from substantial new Internet capability,
Multiple specialist web-site.
- Growth to GBP2-300 million within 3 years
- Senior management to remain
CONTACT: MR. J CALTON
Overseas Travel Brokers
Adelaide House, Hall Road
Panfield Essex
CM7 5 AW
E-mail: jcalton@otb1.fsbusiness.co.uk
Fax: (UK-44) 01376 349023
Or
LEISURE TRAVEL
Ophelialaan 110
1431 HM Aalsmeer
Phone: 0297 342661
Fax: 0297 344 133
E-mail: aalsmeer@atp.nl
VERSATEL TELECOM: Achieves Positive EBITDA for FY2002
-----------------------------------------------------
Financial Highlights:
- FY2002 gross billings increased by 18 percent to Eur 324
million from FY2001 gross billings of Eur 274 million. 4Q02 gross
billings increased to Eur 91 million or by 14 percent compared to
3Q02 gross billings of Eur 81 million and by 24 percent compared
to 4Q01 gross billings of Eur 73 million.
- FY2002 revenues increased by 15 percent to Eur 294 million from
FY2001 revenues of Eur 256 million. 4Q02 revenues increased to
Eur 83 million or by 14 percent from 3Q02 revenues of Eur 73
million and 27 percent compared to 4Q01 revenues of Eur 66
million.
- On-net revenues for the FY2002 increased by 26 percent to Eur
199 million from FY2001 on-net revenues of Eur 158 million. On-
net revenues were Eur 58 million for 4Q02 compared to Eur 51
million for 3Q02 and Eur 41 million for 4Q01.
- Gross margin as a percentage of gross billings was 46 percent
for FY2002 compared to 37 percent in FY2001. Gross margin as a
percentage of gross billings for 4Q02 was 48 percent compared to
47 percent for 3Q02 and 40 percent in 4Q01.
- Adjusted EBITDA for FY2002 was positive Eur 18 million compared
to a loss of Eur 64 million in FY2001. Adjusted EBITDA in 4Q02
increased to positive Eur 13 million from positive Eur 6 million
in 3Q02 and a loss of Eur 9 million in 4Q01.
- At December 31, 2002, Versatel had approximately Eur 191
million in cash on its balance sheet. * DSL and other on-net
copper business and residential lines increased by 26,793 during
4Q02 for a total of 111,467 at December 31, 2002.
Other:
- On October 9, 2002, Versatel completed its financial
restructuring by paying approximately Eur 343 million in cash and
issuing approximately 365 million new ordinary shares to its
former bondholders in consideration for eliminating all of its
outstanding high yield and convertible debt.
- In 4Q02, Versatel added over 15,000 Zon DSL customers following
the official launch of its residential DSL offering.
- In 2002, Versatel announced several significant customer wins
including FloraHolland, Makro, GELSEN-Net, Univ,, CWI, Simac ICT
and Bakkersland BV.
- Versatel changed its reported financials to Dutch GAAP from US
GAAP beginning with its full year 2002 results.
Recent Events:
Recently, Versatel signed a long-term contract with Fortis for
the provision of data communication services by connecting 400
Fortis locations and their local networks (LAN's) by means of
Versatel's MPLS IP-VPN solution.
Versatel Telecom International N.V., today reported fourth
quarter and year end 2002 financial and operating results.
For the year ended December 31, 2002 gross billings were Eur
324.1 million, up 18.1 percent compared to FY2001 gross billings
of Eur 274.4 million. For 4Q02 gross billings were Eur 91.4
million (Eur 89.8 million on a recurring basis excluding Eur 1.6
million of prior period revenue that was deferred due to
collection risk, but which has now been paid) compared to Eur
80.5 million in 3Q02 and Eur 73.5 million in 4Q01. Revenues for
the year ended December 31, 2002 were Eur 294.4 million, up 15.1
percent compared to revenues of Eur 255.7 million for FY2001.
Revenues for 4Q02 were Eur 83.4 million (Eur 81.8 million on a
recurring basis excluding Eur 1.6 million of prior period
revenue) compared to revenues of Eur 73.1 million in 3Q02 and
revenues of Eur 65.9 million in 4Q01.
In total, on-net revenues for Versatel were Eur 199.3 million in
FY2002 compared to Eur 157.8 million in FY2001. For 4Q02, on-net
revenues were Eur 57.9 million compared to Eur 51.0 million in
the 3Q02 and Eur 40.5 million in 4Q01. The growth in on-net
revenues continues to reflect the increased provisioning of on-
net fiber, DSL and ISDN based products as well as the migration
of existing off-net customers to on-net services. Additionally,
the growth in on-net revenues in 2002 is a result of the
successful launch of new products including IP-VPN based services
for the business market and our bundled voice and data offering
over DSL technology.
For the year ended December 31, 2002, gross margin as a
percentage of gross billings was 45.8 percent compared to 36.9
percent in FY2001. Versatel's gross margin as a percentage of
gross billings in 4Q02 was 47.5 percent (46.6 percent on a
recurring basis, excluding the impact of Eur 1.6 million of prior
period revenue) compared to 47.1 percent in 3Q02 and 39.6 percent
in 4Q01. The slight decrease in recurring gross margin from the
previous quarter was due to the normalization of lower margin
voice traffic levels following the holiday period in 3Q02.
Raj Raithatha, Chief Executive Officer, commented: "I am pleased
to announce a successful year for Versatel with continued
operational and financial improvements. Amid a less than ideal
trading environment and a time consuming financial restructuring
process, we have managed to grow our revenues in excess of 18%
compared to 2001. This growth continues to be driven by the
execution of our regional on-net strategy. In addition, we are
beginning to benefit from our service quality as one third of all
new business is from existing customers. With our dense local
assets in our core markets, we will continue to prove we can
compete successfully with the incumbent operators by providing
innovative telecommunications services backed by high quality
service level agreements for our customers."
Selling, general and administrative expenses before non-cash
stock based compensation and other non-recurring expenses (SG&A)
for the year ended December 31, 2002 were Eur 130.7 million
compared to FY2001 SG&A expenses of Eur 165.6 million. SG&A for
4Q02 was Eur 30.2 million (Eur 31.4 million excluding the release
of an over accrual of Eur 0.7 million primarily related to
marketing around our financial restructuring and a release of Eur
0.5 million of bad debt provisions given the improvement in the
quality of our customer base) compared to Eur 31.8 million in
3Q02 and Eur 38.5 million in 4Q01. Although SG&A remained flat
over the quarter, we believe our improved financial and operating
position will allow us to further invest in sales growth in the
future which will see SG&A levels rise from 4Q02 levels.
During 4Q02, Versatel recognized a non-recurring expense of Eur
2.7 million related to idle building space. In addition, during
2002, Versatel recognized a charge of Eur 5.8 million for
professional fees related to its financial restructuring. These
fees were incurred in connection with Versatel's Securities and
Exchange Commission (SEC) registered exchange offer on Form F-4,
which was withdrawn in 2002. As a result, under Dutch Generally
Acceptable Accounting Principles (Dutch GAAP), this is treated as
an expense that flows through the income statement instead of
equity.
For the year ended December 31, 2002, Versatel's adjusted
earnings before interest, tax, depreciation and amortization,
stock based compensation, tax penalties, claim settlements,
restructuring expenses, idle building space and bond professional
fees (adjusted EBITDA) was positive Eur 17.6 million compared to
a loss of Eur 64.3 million for the year ended December 31, 2001.
Versatel's 4Q02 adjusted EBITDA was positive Eur 13.3 million
(Eur 10.5 million on a recurring basis excluding Eur 1.6 million
of prior period revenue and Eur 1.2 million for the release of
over accruals, each described above) compared to positive Eur 6.1
million in 3Q02 and a loss of Eur 9.4 million in 4Q01. Versatel's
definition of adjusted EBITDA has been altered in Q402 to include
the one-time charges related to idle building space and bond
professional fees.
Mark Lazar, Chief Financial Officer, commented: "I am pleased to
announce an adjusted EBITDA improvement of Eur 81.9 million from
2001 to 2002. Additionally, during the fourth quarter, recurring
adjusted EBITDA growth was Eur 4.4 million compared to 3Q02. We
believe that this substantial improvement is quite an
accomplishment, considering it was achieved in a year when the
general state of the alternative telecoms industry suffered
greatly and we operated with the added uncertainty surrounding
our now completed financial restructuring."
For the year ended December 31, 2002, Versatel's result before
interest, tax, depreciation and amortization (EBITDA) was
positive Eur 18.8 million compared to a loss of Eur 78.8 million
for the year ended December 31, 2001. Versatel's 4Q02 EBITDA was
positive Eur 10.6 million compared to positive Eur 8.8 million in
3Q02 and a loss of Eur 13.2 million in 4Q01.
The recent and continuing negative market sentiment and
valuations for telecommunications assets during 2002 has created
an extraordinary impairment for the carrying value of some of
Versatel's fixed assets in The Netherlands, Belgium and Germany.
During 4Q02, after a case by case analysis of Versatel's asset
ledger, Versatel recognized an impairment charge related to its
fixed assets of Eur 260.2 million, or approximately 30 percent of
its pre-impairment fixed asset base. The majority of the assets
that were impaired related to fiber/duct overbuild in The
Netherlands and Belgium as a result of the recent improvements in
copper-based technologies that have lessened the need for large
amounts of excess duct capacity on Versatel's backbone network.
In addition, Versatel impaired underused equipment and systems
and capitalized interest related to its now eliminated high yield
and convertible debt. Along with asset impairments, Versatel also
accelerated the depreciation period for some assets to bring them
in line with their current useful life. Accordingly, the
rationalization of Versatel's asset base will lead to lower
future depreciation charges.
Excluding the writedown of goodwill in 2Q02 and the extraordinary
impairment of fixed assets, Versatel's net loss for the year
ended December 31, 2002 improved to Eur 216.5 million compared to
the net loss of Eur 373.2 million for the year ending December
31, 2001. Including the extraordinary impairment of fixed assets
and writedown of goodwill in 2Q02, Versatel's net loss for the
year ended December 31, 2002 was Eur 694.6 million. The net loss
in 4Q02 was Eur 22.1 million (Eur282.3 million including a Eur
260.2 million impairment of fixed assets) compared to a loss of
Eur 72.2 million (this loss was revised from Eur 133.1 million
previously recognized under United States Generally Accepted
Accounting Principles (US GAAP) due to differences between Dutch
GAAP and US GAAP treatment for the financial restructuring) in
3Q02 and a loss of Eur 104.4 million in 4Q01.
Versatel's capital expenditures for 4Q02 and FY2002 were Eur 19.8
million and Eur 69.4 million, respectively. In total, Versatel's
free cash inflows for 4Q02 were Eur 6.7 million compared to a
cash inflow of Eur 2.6 million in 3Q02 and a cash outflow of Eur
83.1 million in 4Q01.
As of December 31, 2002, Versatel had Eur 191.0 million in cash,
cash equivalents and marketable securities on its balance sheet.
As of December 31, 2002, Versatel had a positive equity position
of Eur 509.5 million primarily related to a one-time movement
from debt to equity on its balance sheet resulting from the
completion of its financial restructuring. Versatel has included
a deferred tax liability of Eur 133.9 million in respect of the
portion of this movement from debt to equity that exceeds our
current net operating losses. Versatel does not expect to pay
cash taxes for FY2002 as we are able to take temporary fiscal
losses.
Versatel believes that its organic business plan is fully funded
without a need for third party financing. Given its significant
cash balance and funding position, Versatel believes it has cash
over-funding that will allow it to explore potential growth
opportunities through the acquisition of customer bases,
distressed assets or going concerns in its core markets of The
Netherlands, Belgium and Germany.
Mr. Lazar commented: "For the second consecutive quarter, without
a cash inflow from external financing, Versatel's cash balance
has increased excluding the one time payment made to our former
bondholders in respect of our financial restructuring. I believe
we are one of the few operators in the alternative telecoms space
that is debt free, with a fully funded business plan and a
healthy cash balance. This provides us with the opportunity to
look at potential acquisitions in our core markets and accelerate
investments in the organic growth of our business. The next step
for Versatel is to be free cash flow positive on a recurring
basis, which we expect to attain in the first quarter of 2004."
Accounting Developments
Versatel is a Dutch company, with operations in The Netherlands,
Belgium and Germany, and believes it is not necessary to have a
dual listing in the United States and on Euronext Amsterdam.
Therefore, with its delisting from The Nasdaq Stock Market on
June 27, 2002 and the recent cancellation of its American
Depositary Share (ADS) program and American Depositary Share
Warrant (ADS Warrants) program, Versatel has decided to change
its reported financials to Dutch Generally Accepted Accounting
Principles (Dutch GAAP) as of FY2002. Additionally, Versatel has
reconsidered the use of US GAAP for reporting purposes given the
cost involved with using reporting principles that differ from
its statutory principles.
To date, there have been no material differences between
Versatel's Dutch GAAP and US GAAP accounts with the exception of
the treatment of its financial restructuring and stock based
compensation. Versatel does not intend to change any of its
critical accounting policies under Dutch GAAP. Versatel also
believes that it is currently below the threshold for SEC
reporting requirements. After the cancellation of its ADS and ADS
Warrant programs, Versatel will determine whether it does fall
below this threshold. If Versatel determines that it does fall
below the threshold, then it currently intends to file for de-
registration of its ordinary shares with the SEC. If Versatel
determines that it does not fall below the threshold, Versatel
will continue to be required to file an annual report with US
GAAP reconciliation with the SEC.
As a matter of prudence, Versatel voluntarily decided to change
its accounting policy for non-monetary transactions based on new
guidance given by the SEC to the telecommunications industry in
August 2002. The change in policy would treat all legitimate non-
monetary transactions as if they were a swap of productive use
assets. As previously disclosed, Versatel entered into non-
monetary transactions in 2001 with unaffiliated third parties
whereby it sold assets held for sale in exchange for
international transmission capacity for use in the operation of
its network. In 2001, these non-monetary transactions resulted in
the recognition of approximately Eur 23.0 million in revenue and
a gain of Eur 18.7 million. As a result of this change in
accounting policy, 2001 net losses would have been increased by
Eur 18.7 million. Under Dutch GAAP this effect is not reflected
in the 2001 comparable figures but recorded in 2002 as a movement
in equity.
2003 Financial Guidance:
- Versatel expects gross billings for 2003 to increase to between
Eur 350 million and Eur 360 million.
- Versatel expects revenues for 2003 to increase to between Eur
325 million and Eur 335 million.
- Versatel expects gross margin, as a percentage of gross
billings, for 2003 to be between 47 and 50 percent. Versatel also
expects gross margin, as a percentage of revenues, for 2003 to be
between 51 and 54 percent.
- Versatel expects positive adjusted EBITDA for 2003 to be
between Eur 40 and Eur 50 million.
- Versatel expects capital expenditures in 2003 of between Eur 50
million and Eur 75 million.
Gross Billings:
The activities of Versatel's subsidiary, Komtel, include certain
premium dial-in services. For these services, Versatel collects
per minute fees from Deutsche Telekom and then passes a portion
of these fees on to a local content provider. As of April 1,
2001, Versatel reports these fees on a net basis, whereby
reported revenues only include that portion of the fees from
Deutsche Telekom that are not passed on to a local content
provider. Until March 31, 2001, Versatel accounted for these
services on a gross basis and recognized as revenue all fee
amounts received because Versatel determined that it was not
materially different than if reported on a net basis and there
was no impact on operating loss, loss before income taxes and net
loss (after taxes).
We believe gross billings are an important indicator of the
volume of these premium dial-in services and assist comparability
to prior periods. Accordingly, this earnings release discusses
the level of gross billings for all periods presented and the
costs relating to gross billings, which includes the costs passed
on to local content providers. References herein to gross
billings include all our revenues, plus fee amounts passed on to
local content providers for the premium dial-in services offered
by Komtel.
VERSATEL TELECOM: Clears Issue Concerning Disagreement With KPN
----------------------------------------------------------------
Versatel Nederland B.V. announces that it is has a disagreement
with KPN about invoices for services where tariffs are fixed by
OPTA. KPN has seized the bank accounts of Versatel Nederland B.V.
Versatel has taken adequate measures to ensure that payments of
our daily operating expenses are not affected in any way.
This afternoon [Tuesday], an article with incorrect information
appeared in Het Parool (in the news paper as well as on the
website). This article incorrectly suggested that the majority of
services provided by KPN to Versatel were halted and that this
could lead to possible delays or outages in the services provided
by Versatel and ZON. This information is incorrect on the grounds
that the Dutch Telecommunication Act prohibits the disruption in
services due to a dispute over invoices between KPN and Versatel.
This article in the mean time has been removed from the website
of Het Parool.
The disagreement over invoices deals primarily with the crediting
of invoices sent to Versatel where the amounts owing by us must
be reduced after they were evaluated on cost-orientation by the
OPTA. For instance the electricity rates charged to Versatel by
KPN have been reduced by 99%, the rental rates reduced with 80%
and in addition to that surcharges that KPN is charging us have
been deemed unfounded by OPTA. So far, KPN is refusing to execute
these OPTA rulings.
Since Versatel has a similar amount of outstanding claims against
KPN, Versatel could easily for the same reasons seize the bank
accounts of KPN. However, first Versatel would like to try to
reach an agreement with KPN, but this does not take away the fact
that Versatel is highly disappointed in the way KPN handles this.
The court has been requested to grant a forty-day period in order
to try to resolve this
in an amicable way.
This request has been accepted by the court.
Versatel Telecom International N.V. (Euronext: VRSA). Versatel,
based in Amsterdam, is a competitive communications network
operator and a leading alternative to the former monopoly
telecommunications carriers in its target market of the Benelux
and northwest Germany. Founded in October 1995, the Company holds
full telecommunication licenses in The Netherlands, Belgium and
Germany and has over 79,000 business customers and over 1,200
employees. Versatel operates a facilities-based local access
broadband network that uses the latest network technologies to
provide business customers with high bandwidth voice, data and
Internet services. Versatel is a publicly traded company on
Euronext Amsterdam under the symbol "VRSA".
CONTACT: VERSATEL TELECOM
AJ Sauer, Investor Relations & Corporate Finance
Manager
Phone: +31-20-750-1231
E-mail: aj.sauer@Versatel.nl
Phone: +31-20-750-1322
Anoeska van Leeuwen, Director Corporate Communications
Phone: +31-20-750-1322
E-mail: anoeska.vanleeuwen@Versatel.nl
===========
N O R W A Y
===========
MOXY TRUCKS: York Place Rescues Group From Bankruptcy
-----------------------------------------------------
British group York Place Ltd. of Leeds rescued Norway's Moxy
Trucks AS from bankruptcy after the dump truck maker was shut
down last month due to the oppressing value of the krone.
Although terms of the deal were not immediately available,
bankruptcy administrator Per Overboe said about 150 of Moxy's
employees will be rehired by the British investor group when
operations resume.
Brian Thomson, considered as one of Moxy Truck's biggest
customers, is a key investor of York Place.
Moxy Trucks closed its doors in February when strong Norwegian
currency spelled out trouble for the group which has offices at
Fraena and has ranked as the biggest firm in the Molde area.
TCR-EU reported that Moxy's pre-tax loss for the year ending
December 31, 2002 landed at NOK23.7 million (USD3.375 million),
and its operating loss at NOK9.5 million (USD1.352 million).
The reported added that Spilka Group of Aalesund took over 51% of
the shares in Moxy Trucks from the state lastyear and was
preparing to take over the remaining 49% for just NOK 1 each.
The state wasn't willing to pump in more capital. A total of 230
employees were thrown out of work by the company's latest move.
"We didn't have a chance," union leader Harry Nerland said.
CONTACT: MOXY TRUCKS AS
N-6440 Einesvf gen
NORWAY
Phone: +47 71 258550
Fax: +47 71 258550
Homepage: http://www.moxytrucks.com/
===========================
U N I T E D K I N G D O M
===========================
BRAMPTON MANOR: In Receivership, Business Is Up for Sale
--------------------------------------------------------
Brampton Manor (Leisure) Limited operates a private members'
health club and gymnasium, with bar and restaurant facilities.
- 2,500 members
- Annual turnover cGBP600k
- Located 4 miles from Chesterfield town center
- Grade II listed freehold property within 1.85 hectares of
secluded grounds
- Includes tennis courts and indoor swimming pool
CONTACT: GRANT THORNTON
St. John's Centre
110 Albion Street, Leeds
LS2 8LA
Phone: 0113 245 5514
Fax: 0113 246 0828
Homepage: http://www.grant-thornton.co.uk
Or
BRAMPTON MANOR HEALTH & FITNESS CLUB
Old Road, Brampton, Chesterfield
Derbyshire S40 1HX
Phone: 01246 277760 Fax: 01246 206889
E-mail: funday@dircon.co.uk
BRITISH ENERGY: Issues Output Statement for February
----------------------------------------------------
FEBRUARY OUTPUT STATEMENT
A summary of net output from all of British Energy's power
stations in February 2003 is given in the table below, together
with comparative data for the previous financial year:
2001/02
February Year to Date
Load
Output Load Output Factor
(TWh) Factor (TWh) (%)
UK Nuclear 5.7 89 62.1 81
UK Other 0.6 43 6.4 41
Bruce Power *0.8 79 17.9 85
(82.42% owned)
Amergen 1.6 100 16.9 87.8
(50% owned)
2002/03
February Year to Date
Load
Output Load Output Factor
(TWh) Factor (TWh) (%)
UK Nuclear 5.8 90 58.2 76
UK Other 0.5 41 5.2 34
Bruce Power* 1.1 100 19.3 79
(82.42% owned)
Amergen 1.7 100 18.3 94.5
(50% owned)
NOTES:
* Bruce Power
2001/02: The figures cover the period from Financial Close on 12
May 2001 up to 14 February 2002.
2002/03: The figures cover the period from 1 April 2002 to 14
February 2003.
** AmerGen
Total capacity was increased following the upgrading in Clinton's
capacity in spring 2002 to 1017 Mwe and the upgrading in TMI unit
1 capacity to 840 Mwe in autumn 2001 following a turbine
replacement.
OVERVIEW
The UK nuclear plants remain on track to achieve the revised
output target, announced in August 2002, of
63 TWh (plus or minus 1 TWh) by March 31, 2003.
The output figure for AmerGen remained in line with the plan up
until the month end.
On February 14, 2003, British Energy completed the disposal of
its interests in Bruce Power. All 4 of Bruce 'B' Units operated
at their Maximum Continuous Rating with a 0% forced outage rate
through February up to the date of completion.
PLANNED OUTAGES
UK Nuclear
- A statutory outage was started at Dungeness B.
- Off-load refuelling was carried out on one reactor at Heysham
1.
- Low load refuelling was carried out on one reactor each at
Hinkley Point B, Hunterston B and Torness.
UNPLANNED OUTAGES
UK Nuclear
- There were a number of minor unplanned outages at several
stations in the period.
AmerGen
- AmerGen - Oyster Creek - Operated at reduced load due to severe
weather conditions.
CONTACTS: Paul Heward
Phone: 01355 262 201
(Investor Relations)
CMN LIMITED: Administrators Offer Business for Sale
---------------------------------------------------
Offers are invited by the Joint Administrators AD Rosler & GN
Ratcliffe for the business and assets of CMN (London) Limited T/A
Sydney Bell - Lockers & Cabinets.
Designers and Manufacturers of an extensive range of lockers and
cabinets for use in industrial, commercial, educational and
public amenity areas.
- Annual turnover of approximately GBP1 million
- Blue Chip customer list
- Skilled local workforce
- Fully equipped premises
- Based in Hayes, Middlesex
CONTACT: ANDREW ROSLER
Tarlton House
112a - 116 Chorley New Road
Bolton
BL1 4DH
Phone: 01204 845700
or
CMN (LONDON) LIMITED
Enterprise House
133 Blyth Road
Hayes
Middlesex
UB3 1DD
United Kingdom
Phone: 020 8573 1985
Fax: 020 8569 2741
MARCONI PLC: Successfully Completed Sale of Two Non-core Assets
---------------------------------------------------------------
Company sells TETRA and Online subsidiaries in separate
transactions
Marconi plc (MONI) on Wednesday announced that it has completed
the disposal of two businesses from its Capital portfolio. The
company sold OTE SpA (its Private Mobile Networks division, also
known as TETRA) to Finmeccanica SpA (Milan: SIFI) for Euro 3
million (GBP2 million) in cash, Euro7 million (GBP4.8 million) in
assumed financial debt, and Euro12 million (GBP8.2 million) in
assumed OTE debt to suppliers. Finmeccanica has also agreed to
release approximately Euro 4 million (GBP2.5 million) to Marconi
from escrow relating to the August 2002 sale of Marconi's
Strategic Communications business.
The OTE business unit is headquartered in Florence and employs
over 500 people worldwide. The business provides secure and
reliable turnkey mobile radio networks for police and
governmental bodies, fire authorities, health and other emergency
services, as well as transportation companies and public
utilities.
The business unit has three sites in Italy, one in the UK in
Chelmsford and one in Moscow.
In a separate transaction, the company has completed the sale of
Marconi Online to Coca Cola Amatil (N.Z.) Limited for NZ$2.95
million (over o1 million). The business unit employs fewer than
50 people who will transfer employment to Coca Cola Amatil.
Marconi Online was established as a start up in April 2000 and
specializes in the development of intelligent vending products
and services that enable the remote monitoring of vending
machines across fixed line and mobile networks.
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.
CONTACT: MARCONI PLC
David Beck
Public Relations
Phone: +44 (0) 207 306 1771
E-mail: joe.kelly@marconi.com
Joe Kelly Heather Green
Investor Relations
Phone: +44 (0) 207 306 1735
+44 (0) 207 603 1490
E-mail: heather.green@marconi.com
NEMESIS TOILETRIES: Administrators Offer Business for Sale
----------------------------------------------------------
The Joint Administrators, S.R. Thomas and P.S. Dunn offer for
sale the business and assets of the above company.
- Supplier of bathroom/shower products, lotions, shampoos,
perfumes, pot pourri, gift sets and sundry toiletries
- Annual Turnover circa GBP11 million (unaudited)
- Business Established 1749
- Blue chip customer base
- Leasehold premises in Peterborough
- 100 skilled and experienced employees
CONTACT: CAMEROON GUNN
Phone: 0207 935 5566
Fax: 020 7935 3512
E-mail: Cameron.gunn@tennongroup.com
or
POTTER & MOORE
Trading Division of Nemesis Toiletries Ltd.
1210 Lincoln Rd., Werrington
Peterborough, Cambridgeshire
UK. PE4 6ND
Phone: 017 3329 1000
Fax: 017 3328 1025
E-mail: rogerroberts.nemesis@virgin.net
Homepage: http://www.smithnat.com
NOSKAB GROUP: In Receivership, Business Is Up for Sale
------------------------------------------------------
The Joint Receivers, JC Reid and WK Dawson, offer for sale the
business and assets of the Company:
- Cable Distribution and project management business primarily
oil, gas and energy sectors
- Leasehold premises based in Aberdeen and Milton Keynes
- Overseas operations in Rptterdam, Stavanger, Huoston, Singapore
and Perth
- Blue Chip customer base
- Turnover of GBP33 million for year ended March 31, 2002 and
GBP29 million for 10 months ended January 31, 2003
*****
Noskab started trading in 1982 as North Sea Cables Ltd based in
Aberdeen, Scotland, UK where the Group headquarters remain at
present.
Within 10 years the organisation had developed from a purely
distribution business servicing the North Sea Offshore market and
had established itself as a major cable management company in
Europe meeting clients project & operational/maintenance
requirements from bases in Norway- Stavanger, the Netherlands -
Rotterdam and the UK with a product range covering both UK and
International offshore and onshore specifications.
CONTACT: DELOITTE & TOUCHE
Saltire Court
20 Castle Terrace
Edinburgh EH1 0BR
Phone: 0131 535 7426
Fax: 0131 535 7777
Contact: John Reid
James Stephen
or
NOSKAB GROUP PLC
Badentoy Crescent
Portlethen
Aberdeen
AB12 4NH
United Kingdom
Phone: +44 (122) 478 6000
Fax: +44 (122) 478 6020
E-mail: info@noskab.com
ROYAL & SUNALLIANCE: Ratings of Puerto Rican Unit Down to 'BBB'
---------------------------------------------------------------
Standard & Poor's Ratings Services said Tuesday that it lowered
its counterparty credit and financial strength ratings on Royal &
Sun Alliance Insurance (Puerto Rico) Inc. (RSA Puerto Rico) to
'BBB' from 'A-' because of concerns regarding the current
position of RSA Puerto Rico's parent, Royal & Sun Alliance
Insurance PLC, which make it difficult to evaluate any operation
outside the parent's home market.
Standard & Poor's also said that the outlook on RSA Puerto Rico
is stable.
"The revised ratings on RSA Puerto Rico reflect its stand-alone
business position and take into account its business-
concentration risk, the increasingly difficult competitive
conditions in its core Puerto Rican market, and its modest
absolute size in certain product lines relative to competitors,"
said Standard & Poor's credit analyst Polina Chernyak. "The
ratings also reflect RSA Puerto Rico's reliance on its parent,
which had served as a reinsurer and provided additional credit
enhancement."
The company's business position is good and is supported by a
good brand name, strong business relationships, and solid ranking
in its local markets. Endorsements by AARP and the National
Teacher's Association, along with marketing programs of both
local and multinational banks in Puerto Rico, fortify the
company's standing.
SONY ERICSSON: Assures Market of Promising Future Ahead
-------------------------------------------------------
Sony Ericsson president Katsumi Ihara confirmed that the
integration of the company's owners is now complete, and the
management is already preparing to launch the company's first
handset based on CDMA in the US market.
The assurance is deemed needed after the handset maker showed
poor performance in its first full year of operations last year,
according to the Financial Times.
Its market share did not even hit 6% in 2002, compared with a 7
to 10% target, the report noted. The fallout forced Swedish and
Japanese owners Ericsson and Sony to invest extra cash into the
joint venture.
Mr. Ihara blamed the company's failure to make profits as planned
to problems integrating teams from Sony and Ericsson, market
share losses in China, and strong competition in the US.
But he assured now that market share in China is climbing on the
back of sales of its low-end T100 phone and its upmarket colour
screen T68.
"We cannot accept the fact that Sony Ericsson can continue to
lose money. We need to turn around the business," Mr. Ihara said.
To suggest that turnaround is already in progress, Mr. Ihara
referred to a good market reception of the early trials of its
recently launched handsets such as its P800 phone.
While expecting the venture to be profitable "on a full year
basis" this year, he took back ambitions to overtake rivals such
as Nokia in becoming the global handset leader by 2006.
He also revealed that Sony Ericsson is looking to trim costs by
moving more handset production to China and cutting operational
expenses.
Mr. Ihara's words seemed to suggest that Swedish partner Ericsson
is indeed living up to its suggestions last August that the group
could stop funding the joint venture if there was no evidence of
a turnaround, according to the report.
CONTACT: SONY ERICSSON MOBILE COMMUNICATIONS
Corporate Headquaters
Sony Ericsson House
202 Hammersmith Road
London W6 7DN
Phone: +44 (0)208 762 58 00
Fax: +44 (0)208 762 58 87
THISTLE HOTELS: CreditWatch Status on CMBS Deal on Developing
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised the
CreditWatch implications on its credit ratings on the class C to
E notes issued by HOTELoC PLC to developing from negative
following an ongoing review of the CreditWatch status.
The class A and B notes were removed from CreditWatch where they
had been placed on Feb. 19, 2003. At the same time the ratings
were affirmed (see list below).
On July 11, 2002, the closing date, HOTEloC PLC acquired a loan
from Morgan Stanley Dean Witter Bank Ltd. together with the
beneficial interest in a security trust created over the benefit
of the covenants, mortgages, security interests, and charges. The
aggregate principal amount of the loan is GBP531,189,624.
The purpose of the loan was to provide the property owner in the
transaction with finance to purchase the hotel portfolio from
certain associated companies (formerly subsidiaries of Thistle
Hotels PLC).
As at April 1, 2002, the aggregate open market value of the
hotels as determined by HVS International and DTZ Debenham Tie
Leung Ltd., the external valuers of the hotels, was GBP788.4
million. On this basis the LTV ratio of the loan is approximately
67.38%. Standard & Poor's underwritten value was GBP748.0 million
representing an LTV ratio of 71.00%.
On Feb. 19, 2003, the ratings on HOTELoC's notes were placed on
CreditWatch with negative implications following the Feb. 19,
2003 publication of a notice to the holders of HOTEloC's notes on
the Irish stock exchange website, http://www.ise.ie
This notice detailed, among other things, the ultimate equity
owner's recent decision to exit the hotel business, including
through a sale of the equity in HOTEloC, and also detailed how a
review by Ernst & Young LLP identified certain funds that may
have been incorrectly transferred to and from a bank account
within the HOTEloC securitization structure. Standard & Poor's
understands that the final quantum is yet to be confirmed but has
been advised that on the information currently available this
should not exceed o11 million.
Standard & Poor's will be reviewing an investor report to be
released in the next few days detailing the performance of the
transaction's underlying portfolio to the financial period ending
Dec. 29, 2002.
Standard & Poor's considers that although performance may be
below that of 2001, the portfolio is expected to remain in line
with Standard & Poor's EBITDA base case assumptions and should
continue to operate broadly in line with expectations. However,
challenging micro and macro factors continue to affect the hotel
sector.
Standard & Poor's is also holding discussions with Morgan Stanley
Mortgage Servicing Ltd., in its role as servicer and security
trustee, with a view to resolving the CreditWatch status on the
notes. These discussions are seeking to establish the exact
nature and extent of any funds that may have been incorrectly
transferred and the resultant effect on the transaction. Further
information is expected to be received over the coming weeks. At
this stage, however, Standard & Poor's has been advised that the
current events have not resulted in a default of the payments
required under the credit facility and all required payments on
the notes to date have been made in full. Further, the equity
interest in the hotels is expected to be sold over the coming
months.
Standard & Poor's considers that on the information currently
available and on the basis of the current performance of the
hotels a loss will not result to the noteholders. Furthermore,
even if a sale of the equity does not occur in the near term and
a receiver is ultimately appointed and security is enforced,
Standard & Poor's does not expect a loss to arise to noteholders
having regard to the underlying net asset value of the portfolio.
Therefore, the CreditWatch status on the class C to E notes has
been revised to developing from negative and the class A and B
notes have been removed from CreditWatch. The transaction will
continue to be closely monitored, with particular regard to:
-- Ongoing performance reports;
-- The potential forthcoming sale of the equity; and
-- The completion of the servicer review of the current events.
The Feb. 19, 2003 media release, as well as previous reports on
the HOTELoC transaction, can be found on RatingsDirect, Standard
& Poor's Web-based credit analysis system, at
http://www.ratingsdirect.com
RATINGS LIST
HOTELoC PLC
GBP514 Million Commercial Mortgage-Backed Floating-Rate Notes and
$26.557
Million Mortgage-Backed Floating-Rate Notes
Rating
To From
CreditWatch Implications Revised to Developing From Negative
C A/Watch Dev A/Watch Neg
D BBB/Watch Dev BBB/Watch Neg
E1 BB/Watch Dev BB/Watch Neg
E2 BB/Watch Dev BB/Watch Neg
E3 BB/Watch Dev BB/Watch Neg
Ratings Removed From CreditWatch and Affirmed
A AAA AAA/Watch Neg
B AAA AAA/Watch Neg
*************
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Trenton, NJ
USA, and Beard Group, Inc., Washington, DC USA. Kimberly
MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee
Gonzales, Editors.
Copyright 2003. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$575 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *