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/raid1/www/Hosts/bankrupt/TCREUR_Public/030605.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, June 5, 2003, Vol. 4, No. 109 Headlines * D E N M A R K * MAERSK AIR: Launches New Concept in Service to Fortify Stance * F R A N C E * ALCATEL: Launches EUR1B Convertible Bond and Repurchase Program ALCATEL: Fitch Says Proposed Convertible Bond Positive News VENTIV HEALTH: French Subsidiaries Placed Into Receivership VIVENDI UNIVERSAL: Plans to Syndicate USD950 Million Term Loan * G E R M A N Y * BAYER AG: Settles Baycol Cases Ahead of Court Hearing This Month DAIMLERCHRYSLER AG: Updates on Financial Performance, Outlook DAIMLERCHRYSLER AG: Outlook Now Negative After Profits Warning MMO2: Completes Sale of Its Dutch Business for EUR25 Million SINNERSCHRADER: Weak Development Necessitates Plan Adjustment * N E T H E R L A N D S * HELIX CAPITAL: Fitch Downgrades Series 2001-9 and 2001-9a Notes KONINKLIJKE AHOLD: Divests Dutch Candy Store Chain Jamin * P O L A N D * NETIA HOLDINGS: Polish Depository Assimilates Netia's Shares NETIA HOLDINGS: EUR14.0 Million Deposit Turned Over to Netia * S P A I N * UNION FENOSA: 'BBB+/A-2' Ratings Affirmed; Outlook Stable * S W E D E N * SAS GROUP: To Cut Domestic and International Fares by 30% * S W I T Z E R L A N D * VON ROLL: Convinces Bondholders to Shift Bonds Into Shares * U N I T E D K I N G D O M * AES DRAX: Obtains Extension on Standstill Agreement From Lenders AES DRAX: Ratings Unaffected by Changes in Standstill Period ACCIDENT GROUP: Staff Considers Launching Legal Complaints AMULET GROUP: HBOS Withdrawal of Funding Triggered Collapse AORTECH INTERNATIONAL: Reports Sharp Widening of FY Pretax Loss AUSTIN REED: Issues Response to Speculation Regarding Offer AWG PLC: Panel Executive Gives Bream Deadline to Submit Offer BRITISH ENERGY: Reports Preliminary Results for 2002/2003 BRITISH ENERGY: Ratings Unaffected by Writedowns on Power Plants BRITISH ENERGY: Issues Net Output Summary for the Month of May CENARGO INTERNATIONAL: Former Staff Waits in Line to Grab Deal CORDIANT COMMUNICATIONS: Shareholder Wants to Change Management CORDIANT COMMUNICATIONS: WPP Confirms Conduct of Due Diligence INVENSYS PLC: Moody's Lowers Senior Unsecured Rating to Ba3 IZODIA PLC: Stomp Limited, Orb Rules Out Offer for Share Capital TEXON: To See an Exodus of Workers Losing Jobs This Week THUS GROUP: Decides to Drop Two-Year Payoffs for Top Executives UBH INTERNATIONAL: Some Staff Likely to Lose Jobs Permanently ============= D E N M A R K ============= MAERSK AIR: Launches New Concept in Service to Fortify Stance ------------------------------------------------------------- From 1 July passengers will be able to choose freely from among a number of quality menus on Maersk Air flights. As far as quality is concerned, the food will be very different from traditional in-flight food, and with free choice of menu we put the customer in the center. All the food comes in modern environmentally friendly packaging. There are four key elements to Maersk Air's new pioneer service concept: High quality food replaces traditional in-flight food Choice of several menus Online ordering of food New ticket categories Moreover, as the only airline in Europe, Maersk Air will offer its passengers the opportunity to order their food from home on the Internet. Children will also benefit from the new concept. From now on there will be a special children's menu that includes toys for the children. " With this new concept in service, we meet customer wishes by giving our customers a free choice from among various high quality menus. At the same time, as the only airline in Europe, we are able to offer our customers the opportunity to order the menu from home," says Keld Mosgaard Christensen, Head of Scheduled Services. Maersk Air is also introducing three new ticket categories and levels of service. "Plus" is a fully flexible, refundable ticket where passengers have access to lounges, extra baggage, free choice of various in- flight menus and much more. "Basic" is a ticket that cannot be changed or refunded after purchase. On "Basic" customers can choose to order their own menu but they have to pay for the food themselves. With this type of ticket, we would like to focus on price for the goal- oriented, price conscious traveller who does not need to change the ticket after purchase and does not always need a meal on board. In addition "Basic Flex" is being introduced as a fully flexible, refundable "Basic ticket". "We are expecting the new service concept to lead to increased customer satisfaction and for our position on the market to be strengthened. Logical ticket categories, good service and focus on price are precisely those features the modern traveller is seeking," states Keld Mosgaard Christensen, Head of Scheduled Services. ***** The Danish airline recently put in place measures to enhance competitiveness necessary for its survival. The carrier said it has decided to adjust Maersk Air's capacity in response to the hard pressed market for both scheduled and charter flights. The plan, however, means 40 pilots and 120 cabin crew would lost their jobs. CONTACT: MAERSK AIR Keld Mosgaard Christensen, Head of Scheduled Services Phone: +45 3231 4404 =========== F R A N C E =========== ALCATEL: Launches EUR1B Convertible Bond and Repurchase Program --------------------------------------------------------------- Following the Board of Director's decision on June 2d, 2003, Alcatel (CGEP:PA) announces a convertible bond issue into new or existing shares (OCEANE) for approximately Euro 1 billion which may be increased up to Euro 1.15 billion by exercise of an over- allotment option. The bonds will have a nominal value of Euro 16.18 which represents a 100% premium over the closing share price on Euronext Paris on June 2, 2003 and will carry a fixed annual interest of 4.75%. The bonds will be redeemed at par on January 1, 2013. The bonds can be converted into treasury stock. However, if they were fully converted into new shares, the maximum dilution will be limited to approximately 4.7%, with issuance of approximately 62 million shares which can be increased up to approximately 71 millions shares. This offering takes advantage of positive market conditions to further strengthen Alcatel's financial flexibility thanks to the significant lengthening of its debt maturity at a lower interest rate than the current average rate. The offering will initially be opened to qualified investors (outside the United States, Canada and Japan) only. Following the offer to qualified investors, a prospectus will be submitted to the visa of the COB in order to allow subscription by the public for a period of three business days. The proceeds of this issue will be used primarily to the partial repurchase of three Alcatel bonds maturing in 2004 and 2005. This buy-back will be open to qualified institutional investors. Price and amount of bought-back bonds will be fixed upon the orders booked at the end of the offering. In a second phase the individuals will be able to sell their bonds with the same conditions in a public offering. The total repurchase amount shall not exceed Euro 525 million with a 50% threshold applicable to each bond issue. During the public offering, the individuals will be allowed to bring their bonds at the same conditions as those determined for qualified investors. To this end, an information memorandum ("Note d'Information") shall be submitted to the visa of the COB. About Alcatel Alcatel provides end-to-end communications solutions, enabling carriers, service providers and enterprises to deliver contents to any type of user, anywhere in the world. Leveraging its long- term leadership in telecommunications networks equipment as well as its expertise in applications and network services, Alcatel enables its customers to focus on optimizing their service offerings and revenue streams. With sales of Euro 16.5 billion in 2002, Alcatel operates in more than 130 countries. Principal terms and conditions Issuer: ALCATEL (Premier Marche of Euronext Paris S.A. - Sicovam Code 13000) Expected total nominal value of the issue: EUR 1 billion which may be increased to EUR 1.15 billion if the over-allotment option is exercised by the Joint Lead Managers and Joint-Bookrunners. Number of Bonds to be issued: Between 61,804,697 and 71,075,401 (including upon exercise of over-allotment option). Nominal value per Bond: The nominal value is EUR 16.18, representing a premium of 100% over the closing price of an Alcatel share on June 2, 2003. Issue date and settlement date: June 12, 2003. Annual interest: 4.75 per cent. per annum, payable annually in arrears on January 1, of each year. The first payment will be made on January 1, 2004, and calculated pro rata temporis. Term of the Bonds: 9 years and 203 days from the expected settlement date. Redemption at maturity: Redemption in full on January 1, 2013. Annual gross yield to maturity: 4.75%. Conversion and/or exchange of the Bonds for new and/or existing shares of Alcatel: Bondholders may elect to receive shares, at any time from the settlement date until the seventh business day preceding the date set for redemption, at a conversion/exchange ratio of ONE share for ONE Bond, subject to adjustments in the event of certain financial transactions of the Company. Alcatel may, at its option, deliver new shares or existing shares or a combination thereof. Early redemption at the Company's option: The Company may redeem the Bonds: -- at any time, through purchase of Bonds by means of repurchases on or off-market or by public offer; -- from June 12, 2007 until December 31, 2012, subject to a minimum one month prior notice, at an early redemption price equal to the nominal value plus interest accrued between the last interest payment date preceding the early redemption date and the effective redemption date, if the product of (i) the then current conversion/exchange ratio and (ii) the arithmetic mean of the opening quoted price of an Alcatel share on the Premier March, of Euronext Paris S.A. calculated over a period of 20 consecutive stock exchange trading days during which the shares are listed as selected by the Company from the 40 consecutive stock exchange trading days immediately preceding the date of publication of a notice relating to such early redemption exceeds 125 per cent. of such early redemption price of the Bonds; -- at any time, at the early redemption price as defined above plus the accrued interest from the last interest payment date preceding the early redemption until the effective redemption date, if less than 10% of Bonds originally issued remain outstanding. Early redemption in the event of default: The Bonds will be redeemable in accordance with the conditions set out in the prospectus. Subscription period: The offer to qualified institutional investors will take place on June 3, 2003. The offer to the public should be open when the final terms of the offer are fixed and upon delivery of the visa by the COB on the prospectus, i.e. from June 4, 2003 to and including June 6, 2003. Listing of the Bonds: For indicative purposes only, expected to be June 12, 2003. Applicable Law: French Law. The placement of the Bonds is carried out by: -- Credit Suisse First Boston SG Corporate & Investment Banking -- Joint Lead Managers and Joint Bookrunners ALCATEL: Fitch Says Proposed Convertible Bond Positive News ----------------------------------------------------------- Fitch Ratings, the international rating agency, says that the proposed convertible issue of between EUR1 billion and EUR1.15 billion announced today by Alcatel is a positive development for the company. Fitch's comments follow Alcatel's announcement that it is to issue between EUR1bn and E1.15bn in convertible bonds at EUR16.18, representing a 100% premium to the closing share price on June 2, 2003, at a coupon of 4.75% maturing in January 2011. Proceeds of the bonds will be used primarily to partially repurchase the three outstanding bond issues maturing in 2004 and 2005. Alcatel's decision to take advantage of the current popularity of the convertible market among investors, and to retire some of its relatively near-term debt is viewed by the agency as a constructive balance sheet development for Alcatel. The announcement follows the company's EUR645 million mandatory convertible issue in December 2002. The two deals highlight Alcatel's willingness and capacity to access capital markets (both debt and hybrid equity) despite the difficult trading conditions the company continues to face in its end markets. While noting that bondholders' will be able to convert the proposed issue into Alcatel shares, the issue will clearly be treated by Fitch as a debt instrument for the purposes of balance sheet ratios/computations. (The December 2002 mandatory convertible issue is treated largely as equity by the agency because of the mandatory nature of the convertible and its relatively short dated maturity). Successful completion of the issue will nonetheless term out some of the approaching maturities and reduce associated financing costs given the lower coupon payable on the convertible issue (relative to the issues which are being repurchased). With Alcatel limiting the amount of proceeds to be spent on retirement of the bonds identified for repurchase to EUR525m, refinancing risk remains however in relation to these maturities which aggregate c. EUR1.8bn in par value). Fitch's senior unsecured rating of 'BB-' (BB Minus)(Outlook Negative) for Alcatel continues to reflect the refinancing risk associated with these and other longer dated issues, the continued deterioration of the company's trading environment, and the ongoing costs of restructuring taking place at the company. The agency nonetheless recognizes the achievements the company has made in restructuring so far, its effective management of working capital and cashflow, and its currently strong liquidity position. Liquidity stood at EUR7.6bn at Q1 2003, including cash balances of EUR6.2bn and available bank facilities of EUR1.4bn. While the Negative Outlook for the rating reflects the ongoing absence of visibility in trading conditions and uncertainty over the timing and degree to which demand will fall before conditions stabilize, the positive steps taken in relation to those factors within the company's control, added to recent capital market activity, confirm Alcatel's commitment to positioning both operations and balance sheet fundamentals effectively. The rating was initiated by Fitch as a service to users of its ratings and is based on public information. CONTACT: FITCH RATINGS Stuart Reid, London Phone: +44 (0)20 7417 4323 Sophie Coutaux, Paris Phone: +33 (0)1 44 29 91 74 VENTIV HEALTH: French Subsidiaries Placed Into Receivership ----------------------------------------------------------- Ventiv Health, Inc. (Nasdaq: VTIV), a leading provider of comprehensive sales and marketing solutions to the pharmaceutical and life sciences industries, announced that its French subsidiaries have been placed in receivership. The local management team will work jointly with the receiver to minimize job losses resulting from this action. Ventiv's French subsidiaries have been reflected as held for sale in discontinued operations since June 2002. Ventiv does not expect to recover the approximately $1 million of net assets it carries for its French subsidiaries. VIVENDI UNIVERSAL: Plans to Syndicate USD950 Million Term Loan -------------------------------------------------------------- Vivendi Universal reportedly launched a term loan into syndication last week in order to meet obligations for the US$1.62 billion bridge loan of its entertainment subsidiary, Vivendi Univeral Entertainment. According to a person familiar with the transaction, the media conglomerate offered US$950 million term loan via J.P. Morgan, Bank of America and Barclays. The loan is expected to pay an interest of 350 basis points over the London Interbank Offered Rate. The proposed $950 million senior secured term loan maturing in 2008 was rated 'BB+' by Standard & Poor's on Friday. The rating agency said the loan amount may be increased to $1,450 million, but a source told Dow Jones the group has not yet decided on increasing the loan. Standard & Poor's credit analyst Guy Deslondes in a statement said the loan was placed one notch higher than Vivendi Universal Entertainment's corporate credit rating, which is at double-B, because "the asset collateral is sufficient for lenders to reasonably expect full recovery in a default scenario." ============= G E R M A N Y ============= BAYER AG: Settles Baycol Cases Ahead of Court Hearing This Month ---------------------------------------------------------------- Bayer AG has once again settled lawsuits filed against it for damages arising from its cholesterol-lowering drug, which was voluntarily withdrawn from the market in the summer of 2001. According to company spokeswoman Annette Josten, lawsuits against Lipobay/Baycol that were scheduled to go to court on June 16 in Texas, and on June 6 in Minneapolis, have been withdrawn. The next Baycol court cases are now scheduled for early July in Oregon and Mississippi, she said. Chief financial officer Klaus Kuehn said last month that the company was able to settle a total of 785 cases out of court for US$240 million. The settlements include 27 cases of death. He added that the total number of lawsuits is now 8,800. Around 8,00 cases are currently pending. Bayer is also facing separate suits from shareholders in the U.S. due to damages from recent declines in the company's share price caused by Baycol. DAIMLERCHRYSLER AG: Updates on Financial Performance, Outlook ----------------------------------------------------------- Following a Board of Management meeting in Stuttgart, DaimlerChrysler is issuing additional guidance to the capital markets as to its likely financial performance in the second quarter and for the year as a whole. With DaimlerChrysler's first quarter results, the Group announced that the Chrysler Group would find it difficult to achieve the operating profit target of $2 billion for 2003. DaimlerChrysler's analysis of the developments in the North American market, in particular further incentive increases, indicates that Chrysler will likely record an operating loss of around EUR1 billion in the second quarter. In addition to lower revenues from ongoing sales this result is primarily attributable to a revaluation of dealer stocks and residual values. The Chrysler Group has already initiated actions and partially implemented substantial additional cost savings and would expect to report a slightly positive operating profit (before restructuring expenses) for the year as a whole. Elsewhere the Group continues to perform in line with original planning expectations even though the economic situation remains very difficult. DaimlerChrysler would thus continue to expect that for the full-year 2003, Mercedes Car Group will match its strong results for 2002 in terms of unit sales, revenues and earnings. At Commercial Vehicles DaimlerChrysler remains of the view that earnings will be better than in 2002. At Services DaimlerChrysler also expects higher operating results than in 2002. Despite the anticipated performance of the Chrysler Group DaimlerChrysler will endeavor to achieve an operating profit from ongoing businesses of about EUR5 billion at a Group level. The Group has elected not to proceed with the previously announced issuance of the DaimlerChrysler North America Holding Corporation five-year global notes, but intends to return to the debt capital markets in due course. DaimlerChrysler maintains over EUR30 billion in cash and readily saleable finance receivables. CONTACT: DAIMLERCHRYSLER Elizabeth Wade Phone: +49/711-17-92197 Fax: +49/711-17-95235 E-mail: mail: Elizabeth.Wade@DaimlerChrysler.com Bjorn Scheib Phone: +49/711-17-95256 Fax: +49/711-17-94109 E-mail: Bjoern.Scheib@DaimlerChrysler.com Timothy S. Krause Phone: +1/248-512-2923 Fax: +1/248-512-2912 E-mail: tsk@DaimlerChrysler.com DAIMLERCHRYSLER AG: Outlook Now Negative After Profits Warning -------------------------------------------------------------- Standard & Poor's said it has affirmed its 'BBB+' ratings on DaimlerChrysler AG and related entities, but revised the rating outlook to negative from stable. The outlook revision follows the company's announcement that its Chrysler group is now expected to incur a staggering operating loss of approximately EUR1 billion in the quarter ended June 30, 2003, and will be only slightly profitable for the full year 2003 (before restructuring expenses). Total debt outstanding was pproximately EUR86 billion at March 31, 2003. The consolidated group's operating profit should be satisfactory for the full year 2003 (management's current guidance being for operating profit of EUR5 billion), reflecting the continuing strong contributions of its Mercedes car group, and results have improved at its commercial vehicle and financial services units, but Standard & Poor's is concerned that problems at Chrysler could once again escalate to the point of severely depressing overall financial performance, as they did in 2000 and 2001. Chrysler is suffering from intense price competition in the North American automotive industry, to which it has recently proven to be especially vulnerable, notwithstanding the progress it has made in improving its cost position and the quality of its product offerings. DaimlerChrysler's ratings could be lowered within the next few quarters unless management pursues additional restructuring actions that will eventually put Chrysler on a sounder competitive footing. Chrysler's competitive position had seemingly improved, but is once again problematic. Chrysler incurred a massive operating loss of EUR5.2 billion in 2001 (including a EUR3.0 billion restructuring charge). Chrysler's operating profits bounced back to EUR609 million (including one-time items) in 2002, well ahead of its initial break-even target. In the face of cyclical weakening of demand and intense pricing pressures, however, Chrysler has been unable to sustain this improvement. Although Chrysler will be launching a number of new products in coming years, it is highly uncertain whether these will be successful enough to enable the company to stabilize its market position. MMO2: Completes Sale of Its Dutch Business for EUR25 Million ----------------------------------------------------------- mmO2 plc announced the completion of the sale of O2 (Netherlands) BV, its wholly owned Dutch subsidiary, to Greenfield Capital Partners, an independent private equity and corporate finance group with existing interests in the fixed telecom sector, for EUR25 million in cash. The sale recently received clearance from the NMa, the Dutch competition authority. Following completion of the sale of O2 Netherlands, mmO2 has 100% ownership of mobile network operators in three countries - the U.K., Germany and Ireland - as well as a leading mobile internet portal business. All of these businesses are branded as O2. Additionally, the company has operations on the Isle of Man (Manx Telecom) and owns O2 Airwave - an advanced, digital emergency communications service. mmO2 was the first company in the world to launch and rollout a commercial GPRS (or 2.5G) network and has secured third generation mobile telephony ('3G') licences in the U.K., Ireland and Germany. mmO2 has approximately 18.2 million customers and some 11,750 employees and reported revenues for the year ended 31 March 2003 of GBP4.874 billion. Data represented 19.4% of total service revenues in the quarter ending 31 March 2003. ***** In the year to 31 March 2002, O2 Netherlands had a turnover of GBP200 million, with an EBITDA loss of GBP51 million and an operating loss before goodwill and exceptional items of GBP119 million. In April, mmo2, which recently reported loss before tax of GBP(10,203) million due to exceptional charges of GBP(9,664) million, said the sale proceeds will be used to fund the operations of the ongoing core businesses of the Group. CONTACT: MMO2 Home Page: http://www.mmo2.com Simon Gordon, Relations Manager E-mail: simon.gordon@o2.com Phone: +44 (0)771 007 0698 SINNERSCHRADER: Weak Development Necessitates Plan Adjustment ------------------------------------------------------------- The turnover of the SinnerSchrader Group is continuing to decline. Based on the preliminary figures, the company achieved a turnover of around EUR 3.1 million in the third quarter of 2002/2003 (1 March - 31 May 2003), once again around 4% less than in the preceding quarter. Turnover in the first nine months of the current business year is therefore close to EUR 10 million. This corresponds to a fall of around 16% from the comparative period of the prior year. Against a background of further deteriorating general economic conditions and unabated intensive competition, orders received in the third quarter also remained significantly below expectations. This means that based on present information a further fall in turnover can be assumed for the fourth quarter. The goal of stable turnover - in relation to the prior year - of EUR 14.5 million for the 2002/2003 business year can therefore no longer be achieved. Turnover for the current business year is anticipated to be in the neighborhood of EUR 12.5 million. Although the cost savings in relation to the prior year are better than planned, they compensate for the decline in turnover only to a small extent. For the third quarter, an operating loss (EBITA) comparable to the two prior quarters (EUR -0.1 to -0.2 million) is anticipated. Depending on the extent of the further decline in turnover, the EBITA in the fourth quarter will be still well below this amount. The first measures for adjusting costs to the again lower level of turnover are already being implemented; further steps to introduce greater flexibility into the cost structure are presently being planned. The measures will not begin to show their full positive effect until next business year. With a constantly high cash reserve of EUR 25.8 million at the end of May, the economic stability of the company remains assured. The final figures for the first nine months and the third quarter of 2002/2003 will be published on 15 July 2003. Issuer's information/explanatory remarks concerning this ad-hoc- announcement: SinnerSchrader will show an anticipated decline in turnover in the 2002/2003 business year (1 September 2002 to 31 August 2003) of over 10 per cent in comparison to the prior year. The repeated decline in turnover and the accompanying failure to achieve operative profitability are largely the result of the continuing price pressure on the e-business services market. Although overall utilization of employees at SinnerSchrader in the third quarter showed an increase over the prior quarter, per capita turnover fell because the prices for consultancy and software development are under continued pressure. In fact, the actual daily rates for software developers fell by approx. 15 per cent within the last twelve months. Price pressure is particularly noticeable in new customer business. To gain new orders in the e-business segment, many service providers are even prepared to work below their profitability levels. This is true not only for niche suppliers, but also for large IT consulting firms and computer system businesses. In addition, internal IT departments have become fierce competitors for project work from their companies. The effects will be most evident in the fourth quarter of 2002/2003. Orders with a total project volume of around EUR 1 million were lost to other service providers in the third quarter. We are convinced that pure e-business specialists such as SinnerSchrader will continue to have very good chances on the market. Our customers benefit from our inherent expertise from many projects, which leads to shorter development times, lower overall costs and high-quality results. Over and beyond that, SinnerSchrader is constantly developing innovative services. These include the recently introduced "User Centric Design". With this development method, user acceptance of e-business applications can be assessed already in the conception phase. In the coming quarters, SinnerSchrader will concentrate on the systematic development of its existing customer base. Among the customers we have been supporting over many years are companies such as Deutsche Bank, Europcar, O2, Tchibo and TUI. We are also further developing promising cooperative partnerships with important producers of Internet standard software. Through these measures, SinnerSchrader hopes for a stabilisation of turnover development even in continuing difficult economic conditions. Along with the introduction of additional cost saving measures, the company believes it can achieve a return to operative profitability. CONTACT: SINNERSCHRADER AKTIENGESELLSCHAFT Julia Kretschmann, Head of Investor Relations Phone: +49.40.39 88 55-150 Fax: +49.40.39 88 55-100 E-mail: ir@sinnerschrader.com ===================== N E T H E R L A N D S ===================== HELIX CAPITAL: Fitch Downgrades Series 2001-9 and 2001-9a Notes --------------------------------------------------------------- Fitch Ratings, the international rating agency, has downgraded HELIX Capital (Netherlands) B.V. Series 2001-9a notes to 'A+' from 'AA' and Series 2001-9's notes to 'C' from 'CC'. The issuer, Helix Capital (Netherlands) B.V., is a special purpose vehicle incorporated with limited liability under the laws of the Netherlands. Through a credit default swap Helix Capital provides protection to Bank of America, N.A. on a EUR1.120 billion reference portfolio containing 170 reference entities. The rating action followed the credit events of British Energy and Solutia, as well as the continuing deterioration in the credit quality of the reference portfolio. The portfolio contains 26 names Fitch currently views as sub-investment grade compared to 21 in December 2002. Originally sized at EUR1.155 billion, the reference pool has been reduced in size following five bankruptcy credit events to date on the following reference entities: Teleglobe Inc., WorldCom, Marconi, British Energy and Solutia. It currently has a weighted- average credit quality equivalent to a 'BBB' rating, using Fitch Ratings rating factors. The weighted-average Fitch Factor for the portfolio has increased to16.66 from 14.56 in December 2002. Initially, series 2001-9a and 2001-9 benefited from credit enhancement of 8.53% and 2.03% respectively. These levels have fallen to 6.47% and 0.0% awaiting final valuations on British Energy and Solutia. The agency will closely monitor any changes to the existing portfolio and will take further action as required. KONINKLIJKE AHOLD: Divests Dutch Candy Store Chain Jamin -------------------------------------------------------- Ahold announced the divestment of its Dutch candy store chain Jamin Winkelbedrijf B.V. Through a management buy-out, Jamin's current executive team will continue to run the company as an independent entity. The transaction sum was not disclosed. The trade unions were recently informed and are expected to give a positive answer with respect to the transaction shortly. The works council of Jamin has given its positive advice. The transaction is expected to close in the second quarter of 2003. The transaction includes all five Jamin chain stores and their inventory, stock and debtors. The 137 franchise stores will also continue to conduct their business with Jamin. All 60 associates currently working for Jamin will continue to work for the company. It will also be business as usual at Jamin's head office in the southern Netherlands as well as at the distribution center. Customers will not notice a significant change, as the company will continue to operate under the same brand name and offer its current range of quality confectionery - some 300 popular pick and mix candy items, ice cream and chocolate delicacies. Jamin has been part of Ahold's Dutch store portfolio since 1993. The planned divestment of the subsidiary is part of Ahold's strategic plan to restructure its portfolio to focus on core activities and to concentrate on its mature and most stable markets. Ahold believes Jamin will grow stronger within an environment specialized in quality confectionery. CONTACT: ROYAL AHOLD N.V. P.O. Box 3050 1500 HB Zaandam Netherlands Phone: +31 (0)75 659 57 20 Fax: +31 (0)75 659 83 02 Homepage: http://www.ahold.com =========== P O L A N D =========== NETIA HOLDINGS: Polish Depository Assimilates Netia's Shares ------------------------------------------------------------ Netia Holdings S.A. (WSE: NET, NET2), Poland's largest alternative provider of fixed-line telecommunications services, today announced that the management board of the Polish National Depository for Securities decided to assimilate on June 6, 2003, Netia's shares indicated by a code No. PLNETIA00071 (series J and H shares) with Netia's shares indicated by a code No. PLNETIA00014 (series A through G shares). The assimilated shares will be assigned a code No. PLNETIA00014. Staring June 6, 2003, all Netia's ordinary shares will be traded on the Warsaw Stock Exchange under the name "NETIA " and the symbol "NET". NETIA HOLDINGS: EUR14.0 Million Deposit Turned Over to Netia ------------------------------------------------------------ Netia Holdings S.A. (WSE: NET, NET2), Poland's largest alternative provider of fixed-line telecommunications services, announced that in accordance with a decision of the U.S. Bankruptcy Court for the Southern District of New York, the U.S. Bank N.A. has turned over to Netia EUR 14.0 million deposit. The deposited amount was to be turned over to Netia immediately following the completion of the final step of Netia's restructuring, which required the issuance of warrants to pre- restructuring shareholders of Netia. The warrants were made available to those shareholders on May 16, 2003. ========= S P A I N ========= UNION FENOSA: 'BBB+/A-2' Ratings Affirmed; Outlook Stable --------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BBB+' long-term corporate credit and debt ratings and its 'A-2' short- term credit rating on Spain-based electricity utility Union Fenosa S.A. (Fenosa). At the same time, Standard & Poor's affirmed its 'BBB+' senior unsecured debt rating on fully guaranteed subsidiary Union Fenosa Finance B.V. The outlook is stable. The ratings on Fenosa reflect the group's good business profile as a vertically integrated utility in one of the EU's fastest- growing electricity markets. They also reflect the stable cash flows provided by the group's core domestic electricity operations, and the measures undertaken by management over the past eight months to strengthen the group's capital structure. These factors are offset by the weak financial profile that has resulted from Fenosa's aggressive capital expenditure plans, its continued involvement in telecommunications operations, and its increased exposure to more volatile and high-risk countries, particularly the Republic of Colombia (local currency BBB/Negative/A-3; foreign currency BB/Negative/B) and Mexico (local currency A-/Stable/A-2; foreign currency BBB-/Stable/A-3). In addition, in the short term, Fenosa will have to overcome challenges associated with the divestment of its noncore assets. About 64% of the group's EBITDA comes from its electricity operations in Spain. Within three to five years, however, this percentage is expected to fall as the company completes several gas and international electricity projects. These will account for about 40% of the group's EBITDA, which will have a negative impact on the business profile of the group. The group has revised its business strategy to focus on consolidation of its gas and electricity energy businesses and on strengthening its financial structure. Initiatives include selling about EUR2 billion of assets, mostly in 2003, and entering into joint ventures with others such as Italian gas company ENI SpA (AA/Stable/A-1+). At the same time, the group has embarked on several projects, most of which it expects to complete by 2003-2004, and it is committed to about EUR3.2 billion of capital expenditure and investment by 2007. All of Fenosa's pension liabilities have been externalized. "The stable outlook reflects Standard & Poor's expectation that the new business strategy and actions taken by the company will offset the weak financial profile," said Standard & Poor's credit analyst Ana Nogales. The agreement with ENI is expected to reduce substantially the execution risk associated with the development of Fenosa's gas strategy, while all the company's projects, domestic and international, are progressing as planned. The outlook also reflects the expectation that the group will achieve its debt target of less than EUR6.5 billion in 2003, partly based on the successful implementation of its divestment plan. Standard & Poor's will closely monitor the progress of divestment and investments, and developments in international and telecoms operations. =========== S W E D E N =========== SAS GROUP: To Cut Domestic and International Fares by 30% --------------------------------------------------------- Scandinavian Airlines revealed plans to cut fares over the next few years as part of an effort to compete with the airline industry's new cut-rate carriers. Aftenposten said SAS--which has been reeling from losses at the same time that its relatively high fares virtually priced it out of the market--will now cut its fares by over 30%. Involved are fares on domestic runs between Oslo and Bergen, Trondheim, Stavanger and Tromsoe and international routes to such cities as Paris, London, Copenhagen and Amsterdam. The troubled airline also will likely cut its newly reopened route between Oslo and Newark, from November 1, the report says. SAS chief Soeren Belin says fares will be lowered to match the 30% drop in fares among competing airlines. He said SAS would gladly become a low-cost carrier, but not a low-service carrier. It is known that SAS already faces stiff competition from new carriers such as Norwegian Air and Sterling. Ryanair also has been offering low fares on foreign routes from Sandefjord, two hours south of Oslo, while British carrier EasyJet is expected to enter the Norwegian market as well. The airline has tried to slash costs, trim fares and advertise its full-service amenities to no avail. It is still losing customers to cut-rate carriers. Competition over the Atlantic is too tough, Belin said, and he's not confident SAS would manage to fill the new Airbus 330 needed to replace today's Boeing 767 on the route. However, SAS is in the process of developing its low-fare "Snowflake" carrier within Norway. A final decision on it has been postponed though. ===================== S W I T Z E R L A N D ===================== VON ROLL: Convinces Bondholders to Shift Bonds Into Shares ---------------------------------------------------------- -- Balance Sheet Restructuring - Response from Dr. M. Werder, elected at the Bondholders' Meeting to represent the Bonds - Von Roll searching for Bondholders The Von Roll Group associates the response from Dr. M. Werder, elected at the Bondholders' Meeting to represent the Bonds, with the hope that further undecided bondholders will now take action towards converting their bonds into shares. Von Roll needs every single vote. It is true that 65% of the required two-thirds majority of the bond loan have already promised to sign in favor of the conversion. However, consent from the holders of the loan capital to the value of CHF 20 million is still required to reach the target. According to the provisions of Article 1172 of the Swiss Code of Obligations, the Company has two months, that is until the 5th of July 2003, in which to obtain consent from a sufficient number of bondholders. Von Roll is confident that further promises will be received within the next few days and that those who have not responded either through their bank or through Von Roll will yet notify their decision. Von Roll thanks Dr. Michael Werder and J"rg Zimmermann, BDO Visura for their information presented at today's press meeting and the clear analysis of the Von Roll Group restructuring scheme. Their assessment makes it obvious that the proposed solution offers bondholders a fair chance for the future. By giving their consent, the bondholders will decide on the Company's continued existence and also whether they want to participate in the future success of the restructured Von Roll and in this way make their financial involvement profitable over the mid-term. The conversion procedure is simple. The bondholders only need to give their name to Von Roll who will send them full instructions and a Proxy Form, which should be forwarded to the proxy. They must request their bank to issue a deposit certificate provided with a blocking note. Both documents will be forwarded to Dr. Felix Klaus, Zurich, an independent proxy. After notarial attestation, he will arrange, jointly with the depository bank, for the bonds to be transferred to a second trading line of the SWX Exchange, specially opened for this purpose. After this transfer, the bonds can again be traded in the normal way on this second trading line which is only open for bonds for which consent has been given. Bonds on this line will be converted into shares automatically after completion of the restructuring process. Von Roll keeps a Hotline No. 01 204 30 63 open to deal with any questions which you may still have on this subject. CONTACT: VON ROLL Dr. Thomas Bogli, Investor Relations Phone: +41 1 20430 63 Fax: +41 1 204 30 64 =========================== U N I T E D K I N G D O M =========================== AES DRAX: Obtains Extension on Standstill Agreement From Lenders ---------------------------------------------------------------- Lenders of AES Drax, Britain's biggest power station, agreed to extend by one month a standstill agreement with the unit of U.S. power company AES Corp. In a U.S. Securities and Exchange filing, AES said the lenders gave it until June 30 to work out a debt restructuring. AES Drax was forced to negotiate the six-month standstill deal after losing its most lucrative sales contract. The collapse of TXU last year, which bought 60% of Drax's output at prices significantly above current market levels, nearly brought down the company as well. The Times says Drax owes a consortium of 53 banks about GBP800 million and GBP400 million in bonds. Last year creditors agreed not to force the company into administration if Drax discussed restructuring plans. The standstill expires at the end of this month. An option for Drax, according to the paper, is a debt-for-equity swap. AES is thought to be keen to retain a small equity stake in Drax in the swap, which would be worth about GBP1 billion. The banks are thought to favor holding on to Drax in the hope that they can sell the plant when the wholesale electricity market recovers. To See Full Securities and Exchange Filing: http://bankrupt.com/misc/SEC_filing.htm AES DRAX: Ratings Unaffected by Changes in Standstill Period ------------------------------------------------------------ Standard & Poor's Ratings Services said that the 'D' ratings on AES Drax Energy Ltd., AES Drax Holdings Ltd., and InPower Ltd. (collectively Drax) will not be affected by the agreement reached between AES Drax Holdings and the bank steering committee and the ad hoc senior bondholder committee to extend the standstill period by one month to June 30, 2003. The agreement concerns the principles regarding the restructuring of Drax's GBP1.3 billion ($2.1 billion) total senior debt. Assuming that the standstill period is extended beyond June 30, 2003, Drax expects to pay interest due and payable on the senior debt on June 30, 2003; the finance covenants prevent it from paying any debt service on the subordinated notes. The ratings on Drax's debt were lowered to 'D' on Dec. 16, 2002, for the senior debt and on Feb. 28, 2003, for the subordinated notes. The Drax power plant, the largest in the U.K., continues to operate as a merchant plant in a wholesale power market that has yet to show signs of price recovery. ACCIDENT GROUP: Staff Considers Launching Legal Complaints ---------------------------------------------------------- Employees from the "no-win, no-fee" personal injury company Accident Group recently met at the Renaissance Hotel in Manchester to discuss taking legal action against the firm, The Telegraph reports. The workers have had their pay claims for the month referred to the DTI, the report says. The possible legal action stands to add pressure to the firm's parent, Amulet Group, which is currently facing a separate inquiry regarding its collapse and trading practices. A Labour MP recently wrote to the Department of Trade and Industry demanding an inquiry into the group. In his letter to Trade Secretary Patricia Hewitt, Graham Stringer claimed: "If you walk down Market Street in Manchester you are likely to be accosted by this company and asked if you have had an accident recently and can they help you." The MP for Blackley in Manchester said: "I am writing to ask if you will carry out an investigation into the operation of the Accident Group and that you consider bringing in a code of conduct for this new and worrying sector." The DTI refused to say whether it would start an investigation, or whether one was under way, The Telegraph reported. The Accident Group helped customers receive compensation for injuries suffered in accidents by putting them in touch with solicitors. Its system works such that customers take out an insurance policy to avoid paying the court costs if they lose the case, but if they win, the money will be claimed back from the losing parties' insurers. AMULET GROUP: HBOS Withdrawal of Funding Triggered Collapse ----------------------------------------------------------- A scrutiny of the books of personal injury firm Accident Group revealed that its parent, Amulet Group, collapsed because HBOS withdrew financing when it discovered the true state of the UK firm's books. According to the Financial Times, the revelation raises questions over Accident's business model and contradicts Amulet's claim last week that it called in administrators because of the "failure" of an unnamed banking partner. The report said HBOS, through its Bank of Scotland subsidiary, agreed to provide Accident's clients with the GBP1,300 needed to fund a personal injury claim. About GBP600 of the sum funded an insurance premium that would pay costs in the event of the client losing the case, while the remainder of the money was administered by Accident. This seemed to be an amenable deal, to which HBOS talked to Accident to take its relationship further. Exploratory discussions were said to have taken place until a review of Accident Group's books revealed the true state of the group's finances. It is believed that HBOS immediately pulled out from the extension talks and the existing funding agreement, leaving Accident without the means to fund the business or to pay staff wages. It was then that Amulet called in PricewaterhouseCoopers, effectively putting the company under administration, which resulted in the loss of 2,400 jobs. However, PricewaterhouseCoopers did not mention the role of HBOS when it placed the Manchester-based group in administration last week. The administrators were also unavailable for comment, the report said. They also declined to comment on reports suggesting that Accident had been operating at a loss since the middle of last year. The Department of Trade and Industry declined to say whether the latest revelation would prompt an investigation into Amulet, as well. Separately, Bradford and Bingley said it was not interested in buying First Active. The administrators put up the personal finance provider owned by Amulet for sale along with the rest of the assets of the business on Friday. AORTECH INTERNATIONAL: Reports Sharp Widening of FY Pretax Loss --------------------------------------------------------------- Chairman's Statement Introduction The year to 31 March 2003 has clearly been extremely traumatic for the company. Faced with low profitability in our core markets for heart valves, a significant set back in our Tri-leaflet heart valve development project and with little sign of revenue growth in the truCCOMS Continuous Cardiac Output Monitoring System, it was clear that a major change in strategy was required. The Board decided to significantly reduce the company's cash burn in order to survive beyond the early months of 2003. Financials As previously reported, in the year to 31 March 2002 the company made a loss of GBP12.9m and consumed GBP16.0m of cash. In the six months through to 30 September 2002 the company's losses continued at about the same rate with the half-year results showing a loss of approximately GBP7.6m and a cash reduction of GBP7.6m. Both numbers, however, reflected one-off rationalization costs of GBP1.2 m and GBP0.5 m of cost associated with the aborted Becton Dickinson acquisition, previously reported. This further decline left the company, at the end of September, with a cash balance of GBP9.0m For the year to 31 March 2003 the loss before exceptional items and the provision for the impairment of goodwill was GBP11.9m with a negative cash flow of GBP9.7m and remaining cash reserves of GBP6.9m. However, in view of the significant changes to the business that were undertaken during the second half of the year, this has led to a number of major write-offs and rationalization costs. These included losses incurred on the disposal of commercial heart valve operations and the termination of truCCOMS activity, restructuring costs and, notably, the write down of our investment in the biomaterials business. After all exceptional costs were accounted for, the loss on ordinary activities before interest was GBP39.7m and the total loss for the year was GBP39.4m. Business Activities When I joined the Board in November 2002, I found that Bill Strachan, the newly appointed CEO, and his management team, had already reviewed the activities of the company in some depth, had identified the size and causes of the problems and started to implement an action plan to correct them. At the heart of these problems was the fact that the company was divided into four 'divisions' each with its own management structure, all absorbing cash, with little or no synergy between them. It had also become apparent that it would take significant time and cash before the company could begin to trade profitably. The Board did not have the luxury of either of these key resources and therefore continued with the action plan as a matter of urgency. I would like to review the action plans for each of these business activities in turn to explain our decisions: Mechanical and Tissue Heart Valves In the earlier part of the year sales were extremely disappointing and significant losses continued to accumulate. The company had less than 1% of the world market, lacked critical mass, had a good product, but it was not measurably better than the competition. Furthermore, it did not have adequate margins to support the sales and marketing effort in all but a few countries. Manufacturing costs for tissue valves were too high due to low volumes, limited economies of scale and high raw material costs. Attempts were made to divest the business to one of the major competitors but without success. In January 2003 Koehler Chemie GmbH of Germany acquired the business for GBP2.7m. The sale price was below asset value, however in view of the losses and the lack of interest among the more likely buyers, the Board considered this a realistic outcome, which also protected jobs in Leeds. truCCOMS As stated in the interim report, the performance characteristics of the product had restricted its use to the relatively small off pump open-heart surgery market. Consequently, sales were low and the business showed no prospect of reaching break-even in the foreseeable future. Much of the company's strategy had been predicated on a rapid uptake in truCCOMS usage by intensive care physicians, but there were both operational and manufacturing problems with the product, and significantly, it had failed to sell in the key US market. It was concluded that a major and very costly redevelopment programme would have to be implemented before the product could be sold into the very much larger critical care market. The company clearly could not afford this redevelopment and therefore the Board decided that every attempt should be made to divest the business. Over twenty companies were contacted but little interest was generated. Most saw the need for a major redevelopment and were reluctant to take on the product. The business was closed down at the end of March 2003, although the company continues to try to sell the intellectual property. Tri-Leaflet Valve As reported in May 2002, the product failed to perform satisfactorily during its initial regulatory testing programme. The problems were identified and related to the valve design and manufacturing processes, which the company was confident that it could overcome. However, the costs of doing this were significant and would have further depleted the company's very limited cash resources. Additionally, the costs of the full clinical trials that would have to follow the initial programme were far too large for the company to assume and discussions over the past 18 months had not identified a commercial partner. The Board decided that it would be financially irresponsible to proceed with a new regulatory testing programme without first having the support of a commercial partner. The number of major companies in this market with sufficient resources to fund a development project of this magnitude is limited. However, they were all contacted and detailed meetings were held with those who expressed an interest. Unfortunately, none were prepared to assist in the funding of this project. This was partly due to a general view that the market had changed since the project had started, questioning the need for a polymer valve now that longevity of tissue valves had increased to 15 - 17 years. At the end of March 2003, the Board reached a decision to discontinue research and development for the tri-leaflet valve. Nevertheless, new intellectual property has been filed to cover the improvements that have been made to valve design and discussions will continue with interested parties to exploit this technology. Elast-Eon Material This small biomaterials business based in Australia is also absorbing cash although, for the moment, at a level that the company can sustain. During the third quarter of the financial year, an initiative was undertaken to exploit the value of Elast-Eon outside of cardiovascular applications. Elast-Eon is the proprietary silicone/polyurethane material which was a strategic acquisition made by AorTech in 2000, motivated by the polymer heart valve project. This new AorTech Biomaterials initiative included investment in operational facilities in anticipation of the start of routine production of the polymer, the development of a business model and associated revenue generating activities. The material has now been investigated by some of the major companies in the medical device/implant industry and has been judged to have unique properties with strong intellectual property. It has good potential particularly in the implant sector where this unique and patented mixture of polyurethane and silicone gives bio-stability, biocompatibility and mechanical strength and fatigue resistance. After a detailed strategic review the Board decided that this should form the basis of the new Aortech business and work has already started on developing a customer base. Company Outlook The Board continues to believe that there are considerable opportunities for the company in the specialist biomaterials market, particularly for implants where material specifications are challenging and added value can be high. However, we are investigating additional avenues to improve shareholder value and to utilise the cash reserves in the most appropriate manner. In order to give maximum flexibility in the future, the company intends to put a resolution to the forthcoming Annual General Meeting to provide for a capital reconstruction which would be subject to court confirmation. A new business plan has been developed which shows our first cautious steps with what is effectively a new 'start up' business. Importantly, we can afford to fund this activity during its early stages and cash demands will not be excessive. Our vision for the future business is to develop an innovative biomaterials business in conjunction with strategic partners. It is our plan to develop and license applications for novel polymers using Elast-Eon and its derivatives and to use this emerging biomaterials business as a vehicle to generate additional growth through licensing-in new materials and appropriate product mergers and/or acquisitions. There are a number of exclusive and non-exclusive licenses being negotiated for applications in cardiovascular surgery, orthopaedics, plastics surgery, cardiac rhythm management, coronary and peripheral stents and central venous access ports and catheters. We are encouraged by the reception of this novel material in the medical device marketplace. It is not intended that the company should remain just a materials supplier, but should move up the value chain by developing new applications utilising our new materials and with this application work funded by our commercial partners. At some point in the future, the company may move into the manufacture of proprietary components and/or products. In this way I believe that we have an opportunity to generate shareholder value. It is certainly not without risk but the Board believes that it is a realistic option. Board Changes Reflecting the new focus of the company Bill Strachan will step down as CEO on 30 June 2003. I would like to thank Bill for his very considerable efforts in leading the restructuring of the business. I am delighted to report that Bill has agreed to become a non- executive director of the company with effect from 1 July 2003. On 1 July 2003 Frank Maguire will become the CEO and will join the Board. Frank has been with the company since July 2002 and has considerable skills and expertise in biomaterials together with a significant knowledge of the industry, the major players and their requirements. In Conclusion As I said in my opening paragraph, this has been a traumatic year for the company. Many of the changes have been dramatic and the cuts have been deeply wounding. We have witnessed a company that employed 250 people at its peak, be reduced to its current 15 employees. I believe that most employees have reacted to these changes with understanding and for this I thank them. The changes had to be made to try to ensure the very survival of the company. It is now the Directors and the remaining employees' responsibility to re-build shareholder value. Laurie Rostron, Chairman To see financials: http://bankrupt.com/misc/AORTECH_INTERNATIONAL.htm CONTACT: AORTECH INTERNATIONAL PLC Phone: 01698 746 699 Bill Strachan, Chief Executive College Hill Phone: 020 7457 2020 Nicholas Nelson Clare Warren AUSTIN REED: Issues Response to Speculation Regarding Offer ----------------------------------------------------------- The Board of Austin Reed has noted the recent press speculation regarding a possible offer for the Company from interests including Resurge plc and Rowland Capital Limited. The Board received an initial preliminary offer proposal from the Rowland Family on 25 April 2003, which was rejected by the Board, as announced on 8 May 2003. The Board now confirms that it received a revised preliminary offer proposal for the Company from the Rowland Family late on 2 June 2003. This revised preliminary offer proposal is substantially similar to the initial preliminary offer proposal in that it is highly conditional and subject, inter alia, to the completion of extensive due diligence and the obtaining of financing before any offer could be made. The Board and its advisers have reviewed the Rowland Family's revised offer proposal and have informed the Rowland Family that it does not wish to enter into discussions with it. The Board confirms that it is not in discussions with any party that may lead to an offer being made for the Company. ***** Austin Reed has enjoyed popularity among 20th century celebrities until business began to slow down, leading to full-year pre-tax profits that were down from GB8.95 million to a lowly GBP7.52 million in line with forecasts. Shareholders were anxious even more to find a buyer for the retailer after Austin Reed admitted that sales in the 16 weeks from the end of January had plunged 9%. CONTACT: AUSTIN REED Richard Constant Gavin Anderson Phone: 020 7554 1400 AWG PLC: Panel Executive Gives Bream Deadline to Submit Offer ------------------------------------------------------------- Following recent representations made by Citigroup Global Markets Limited and Dresdner Kleinwort Wasserstein, advisers to AWG, the Panel Executive has been considering the application of Rule 35.1(b) of the Code to the approach by Bream to AWG. Following discussions with the parties' advisers, the Panel Executive has ruled that Bream must, by 12 noon on Wednesday, 18 June 2003, either announce an offer for AWG under Rule 2.5 of the Code or announce that it will not proceed with an offer for AWG. No extension to this deadline will be granted, except with the consent of the Panel Executive. In the event that Bream announces that it will not proceed with an offer for AWG, thereafter Bream, WestLB, Francis Gugen, Gordon Morrison, Neil McDougall and any person acting in concert with them will, except with the consent of the Panel Executive, be bound by the restrictions contained in Rule 2.8 of the Code for six months from the date of such announcement. Each of the parties has accepted this ruling. ***** AWG chief executive Chris Mellor stepped down from his post in March following 24 years of service:--a move understood by analysts to clear the way for an agreement to be reached between the AWG board and WestLB, which made an unwelcome takeover approach for the company. With him the board would have had difficulty recommending the break up the business. Mr. Mellor was behind the GBP263 million purchase of Morrison construction group in 2000, an investment that has produced losses and write-downs of about GBP100m, analysts said. BRITISH ENERGY: Reports Preliminary Results for 2002/2003 --------------------------------------------------------- The following summary of key points must be viewed in the context of the Company's proposed restructuring, which is outlined in the enclosed Chairman's Statement. -- Loss before tax of GBP(4,292)m, after exceptionals of GBP(4,162)m, compared with a loss of GBP(493)m in 2001/2. Loss before exceptionals and tax of GBP(130)m compared with a profit of GBP42m in 2001/2. -- Exceptionals principally represent write-downs in generation plant, being GBP(3,587)m for nuclear assets and a further GBP(151)m write-down in the value of Eggborough. There were also write-downs of decommissioning funds and shares in employee trusts as well as provisions for slow moving stocks, interest rate swaps, onerous electricity contracts and restructuring costs. -- In view of the Company's financial condition, no dividend is proposed. The Board does not expect to declare or propose any dividend on the ordinary or A shares prior to the completion of the restructuring. -- U.K. business incurred a business performance loss before tax of GBP(274)m, including group interest charges, (total loss after exceptionals was GBP (4,353)m) compared with a business performance loss before tax of GBP(41)m in 2001 /2 (total loss after exceptionals was GBP(576m)), owing to UK output being reduced by 5.2TWh and a further decline in UK power prices. -- Total business performance contribution of GBP144m (pre-minorities) from our North American activities (total contribution after exceptionals was GBP61m), compared with a business performance (and total) contribution of GBP83m (pre- minorities) in 2001/2, including Bruce Power contribution of GBP97m (pre-minorities) for the 101/2 month period up to the date of its disposal in February. -- Cash consideration of C$627m (GBP250m) (excluding C$51m in respect of capital payments made by British Energy to Bruce Power at closing) received up to the year end for the disposal of our interest in Bruce Power out of a maximum of C$770m. A further C$20m (GBP8m) was received after the year end in respect of cash held in an escrow account in respect of a potential pension fund adjustment. -- The U.K. Government's White Paper emphasised the importance of environmental factors and combating climate change in future energy policy, and made it clear that the Government intends to 'keep the door open' for nuclear power, and will review the prospects for nuclear power in four years' time. -- Adrian Montague was appointed Chairman with effect from 28 November 2002. Mike Alexander was appointed Chief Executive Officer with effect from 1 March 2003. -- Under the revised Nuclear Energy Agreement, which received regulatory approval in November 2002, prices received for output from our Scottish stations will be linked to the England and Wales power prices until the earlier of 2006 or the implementation of BETTA. British Energy released GBP41m as exceptional income in respect of the adjustments to the long-term contract. -- Under FRS 17, there was a deficit of GBP352m in respect of the Company's pension funds at 31 March 2003. The next actuarial valuation to assess funding and contribution levels is due to take place as at 31 March 2004. The Company is keeping pensions issues under close review. -- In relation to the proposed restructuring, since the year end, revised contracts with BNFL for front-end and back-end AGR fuel services have been signed, giving effect to the non-binding heads of terms agreed with BNFL on 28 November 2002. These agreements are conditional upon the successful completion of the restructuring. We also sold the majority of our uranics stock to BNFL for GBP50m. -- On 14 February 2003, we announced the completion of our disposal of our interest in Bruce Power and that we had reached binding standstill agreements and non-binding agreement to the restructuring proposals with certain of our significant creditors and BNFL. Also in February we announced a major electricity supply contract for 38TWh over four years. -- On 7 March 2003, the Government submitted the restructuring plan to the European Commission for its approval under State Aid rules, and also extended its credit facility to British Energy at a reduced amount of GBP200m up to September 2004 or the time at which restructuring is completed, whichever is the sooner. -- The formal standstill agreements with significant creditors and BNFL, and the amendments to the bonds agreed in March 2003, have meant that principal amounts due under the bonds and the Eggborough finance agreements were not repaid and termination payments under certain onerous contracts have not been made. This has allowed the Company to build up its cash reserves. -- Significant progress has been made but the proposed restructuring remains subject to a large number of significant uncertainties. If, for any reason, British Energy is unable to implement the restructuring, it may be unable to meet its financial obligations as they fall due, in which case it may have to take appropriate insolvency proceedings. If British Energy were to commence insolvency proceedings, distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities, and it is highly unlikely that there would be any return to shareholders. Even if the restructuring is completed, the return, if any, for shareholders will represent a very significant dilution of their existing interests. -- Looking to the future, nuclear safety remains our number one priority. We must maintain high standards of safety while ensuring that we deliver reliable output and reduce our exposure to fluctuations in UK power prices. To See Financial Statements: http://bankrupt.com/misc/British_Energy_Financials.htm CONTACT: BRITISH ENERGY Investor Relations Paul Heward Phone: 01355 262201 BRITISH ENERGY: Ratings Unaffected by Writedowns on Power Plants ----------------------------------------------------------- Standard & Poor's Ratings Services said that the 'SD' corporate credit rating on British Energy PLC, and the 'D' ratings on its senior unsecured debt are unaffected by the company's GBP3.6 billion ($5.9 billion) write-down of eight nuclear power stations and one coal-fired station. The debt ratings were lowered to 'D' owing to the standstill agreement entered into by creditors on Feb. 18, 2003, and the fact that principal on the GBP110 million 2003 bonds was not repaid when it became due. British Energy is being restructured and bondholders are only expected to receive a small proportion of the principal. If restructuring is not successful, however, British Energy could be put into administration. The write-down of the nuclear stations leaves them valued at only GBP639 million, reflecting the poor outlook for power prices, their lack of operational flexibility, and the potential for long outages in the event of a failure. The write-down of the Eggborough coal-fired plant by a further GBP151 million reflects further falls in U.K. wholesale prices and the high marginal cost of coal-fired generation. BRITISH ENERGY: Issues Net Output Summary for the Month of May -------------------------------------------------------------- A summary of net output from all of British Energy's power stations in May is given in the table below, together with comparative data for the previous financial year: 2002/03 May Year to Date Load Output Load Output Factor (TWh) Factor (TWh) (%) UK - Nuclear 4.74 67 10.45 75 UK - Coal 0.29 20 0.59 21 USA - AmerGEn 1.5 86 2.6 74 (50% owned) 2003/04 May Year to Date Load Output Load Output Factor (TWh) Factor (TWh) (%) UK - Nuclear 5.97 84 11.49 82 UK - Coal 0.36 25 0.74 26 USA - AmerGen 1.74 98 3.47 97 (50% owned) OVERVIEW The output figures for both the UK and AmerGen nuclear plant remain in line with plan. UK - Nuclear Planned Outages -- A statutory outage was completed at Dungeness B and another started at Hartlepool. -- Low load refuelling was carried out on two reactors each at Hinkley Point B and Hunterston B and one reactor each at Torness and Heysham 2. Unplanned Outages -- There was an unplanned outage at Sizewell B. Eggborough -- A maintenance outage continues on one unit at Eggborough. USA -- An unplanned outage occurred at Oyster Creek CONTACTS: BRITISH ENERGY Paul Heward, Investor Relations Phone: 01355 262 201 CENARGO INTERNATIONAL: Former Staff Waits in Line to Grab Deal -------------------------------------------------------------- A group of former employees of Cenargo believes there is a chance they could grab operations of Cenargo International at Teesside if the preferred bidder for the assets decides to drop out. Ken Burroughs, former managing director of Cenargo World, at Eaglescliffe, said: "It is my understanding that should the current preferred bidder withdraw then our bid would succeed." He believes his group was short-listed to one of two for final consideration by the administrators of parent group Cenargo International to take over the site, according to the Evening Gazette. The Eaglescliffe site is in itself subject to offers from five interested buyers. The facility employs 200 people, with about 400 employed by tenants. According to Shagan Dubey, of administrators Ernst & Young, talks with an exclusive party regarding the Eaglescliffe site is in their final stage this week. The decision on this matter, which is due June 6, has still to go through the necessary legal and financial processes. Cenargo filed for Chapter 11 bankruptcy in the United States last January after failing to meet a GBP5.3 million payment on a GBP110 million junk bond issue. The depot in Tees Valley is considered the company's largest in the U.K. and is approved as an inland clearance depot. It boasts of the latest container handling and storage systems, technology and equipment and provides Customs & Excise bonded warehousing. CORDIANT COMMUNICATIONS: Shareholder Wants to Change Management --------------------------------------------------------------- A leading investor in Cordiant Communications is moving to shake up the advertising group's management and clear the way for a capital restructuring. According to the Financial Times, Active Value, the fund manager holding 14.1% of Cordiant, wants to request a shareholders' meeting to decide on the matter. The firm is understood to be seeking to install Wheatly, former chief executive of Jazz FM, as executive chairman, and Stephen Davidson, former chief executive of Telewest and now a a banker at WestLB, as finance director. In the meeting, shareholders would be convinced into removing the existing board, including chief executive David Hearn. Cordiant had no comment on Tuesday night. The investor also indicated it is willing to contribute up to GBP15 million (US$25 million) of a proposed GBP30 million to GBP40 million equity injection. The restructuring would require some concessions by Cordiant's lenders, who are owed GBP250 million ($407 million). Active Value's move is understood to complicate the negotiations aimed at providing a viable solution to the troubled company. Cordiant is likely to exhaust all its current refinancing arrangement by July 15, at which date it should have completed its promised disposals in order to meet terms with banks. CORDIANT COMMUNICATIONS: WPP Confirms Conduct of Due Diligence -------------------------------------------------------------- WPP Group, one of the world's largest advertising firm, confirmed it is conducting detailed due diligence to determine whether WPP should make an offer for Cordiant Communications Group plc. Sir Martin Sorrell, WPP's chief executive, is particularly interested in Cordiant's Cordiant's Asian operations, as well as Healthworld, its health-marketing business, and promotions group 141. His offer is understood to include taking on an amount of Cordiant's debt. According to the Telegraph, sources close to the company suggest a deal could be announced as early as this week. Cordiant Communications ran into trouble after losing the Allied Domecq account to a rival. Recently, another large client, B&Q, the Kingfisher-owned DIY chain, is also reportedly making contingency plans. The company stands to exhaust all its current refinancing arrangement by July 15, at which date it should have completed its promised disposals, including PR firm Financial Dynamics, agency network Scholz & Friends, and Australian business George Patterson Bates, in order to meet terms with bankers. CONTACT: CORDIANT COMMUNICATIONS Feona McEwan, WPP Phone: 44-20 7408 2204 INVENSYS PLC: Moody's Lowers Senior Unsecured Rating to Ba3 ----------------------------------------------------------- Moody's Investors Service lowered the senior unsecured rating of Invensys plc to Ba3 from Ba1 after the company announced a revised strategy, which will narrow down its business focus into Production Management only. The rating agency also assigned a Ba3 senior implied rating to Invensys plc. The outlook is negative. The strategy requires substantial business disposals with proceeds to be used to debt reduction and funding of additional pension scheme liabilities and certain additional off-balance sheet liabilities. As such, Moody's warns that in case of failure to push through with the program within the "appropriate timescale and at sufficient multiples to meet its obligations, the ratings of Invensys are likely to fall as the horizon for maturing debt instruments draws closer." The company has commitments to repay or refinance three core debt instruments with total facility limits of approximately GBP 2.35 billion in the near term. The negative outlook of the rating considers the uncertain timing and amount of disposal proceeds, and the transitional risks associated with transformation of the business into a narrowly focused PM business. IZODIA PLC: Stomp Limited, Orb Rules Out Offer for Share Capital ---------------------------------------------------------------- Announcement of intention not to make an offer under rule 2.8 of the Takeover Code Stomp Limited and the Orb group no longer have any interest in the share capital of Izodia plc and do not intend to make an offer for any of the share capital of Izodia plc. The directors of Stomp Limited and Orb arl, the parent company of Stomp Limited, accept responsibility for the information contained in this announcement and, to the best of their knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained in this announcement is in accordance with the facts and it does not omit anything likely to affect the import of such information. ***** Izodia is filing a suit against Orb in Jersey to try to discover how some GBP33 million funds disappeared from its accounts last year. The funds are believed to have gone to Lynch Talbot, an investment company that has common shareholders with Orb. CONTACT: STOMP LIMITED Diane Waterton, Company Secretary Phone: 01534 838 900 TEXON: To See an Exodus of Workers Losing Jobs This Week -------------------------------------------------------- Up to 110 East Cleveland workers at Texon U.K.'s Skelton plant stand to lose jobs this week when the company issues assessments for its staff. "If you're over the mark you stay, if you're under you get the tap on the shoulder and you're out," the Evening Gazette cited Dick Flannery, TGW branch secretary at the plant, which makes materials for the shoe industry, as saying. "But no-one knows what criteria has been used on these assessments," he said. No one was available from the company for comment, according to the report. Mr. Flannery also pointed out that the company paid no heed about the workforce, which according to him did not receive its expected annual pay rise in April. He added that because of the introduction of a new shift system and the loss of productivity bonus, workers have lost up to GBP130 a month. He also expressed skepticism on whether the company could still be rescued by the consultancy team brought for the purpose when "all these people have gone." The plant plans to continue to operate with a staff of 100. Some work done at Skelton has gone to China, and "there is talk of more going that way," he said. "The company is trying to assess whether or not it is feasible to continue with Skelton or would it be better off sending all of its work to China," he added. Latest figures available for the UK arm of the company showed GBP8.3 million gross profits for the third quarter of last year. Net debt as at September 30, 2002, was GBP113.8 million. THUS GROUP: Decides to Drop Two-Year Payoffs for Top Executives --------------------------------------------------------------- The loss-making Scottish telecoms carrier, which recently signed an agreement with its banks to reduce loan facility, has reportedly dropped a clause entitling top executives to a two- year payoff on a takeover. U.K. news agency The Telegraph said Thus Group plc's annual report reveals that chief executive Bill Allan, finance director John Maguire and chief operating officer Philip Male have agreed to the change in principle starting April 2004. According to Mr. Allan, they believe the market is "very volatile" and that it is better "to keep things as they are for now for the retention of a very good management team who've done a very god job." A majority shareholder welcomed the changes, although it questioned the company's motives. He pointed out that institutions have been telling companies they are unhappy with two-year contracts. "Suddenly, now they are changing their spots because they don't want embarrassing protests," he added. Meanwhile, the news agency said Mr. Allan's pay fell from GBP447,233 to GBP303,354 the year to March 2003 because Thus failed to hit revenue targets. He received 1.88 million performance shares tied to certain conditions. The previous year, in which the shares fell 70pc, he received a GBP178,500 bonus. Thus resized its loan facility from GBP90 million down to GBP60 million to provide the company with more sufficient headroom above its forecast peak drawdown on the facility of less than GBP50 million, while enabling it to avoid unnecessary commitment fees on the unrequired portion of the facility. CONTACT: THUS GROUP PLC John Maguire, Chief Financial Officer Phone: 020 7763 3156 Ian Hood, Director of Corporate Communications Phone: 07786 171959 Kathryn Rhinds, Investor Relations Manager Phone: 07974 160013 UBH INTERNATIONAL: Some Staff Likely to Lose Jobs Permanently ------------------------------------------------------------- Permanent job cuts appeared likely inevitable in Burscough industrial tank maker UBH International as the company tightens its cost-cutting measures in a bid to survive. UBH International in Orrell Lane laid off employees for two weeks early this month to cut cost. The workers are now back at work, but there are still plans to shed up to 18 people out of its 120 strong-workforce, some of whom had helped rescue the company from collapse three years ago. The global supplier of specialist transport tank containers almost went bust had not 90 staff paid GBP5,000 each to keep the company open. The Baxi Partnership, a trust-owned investment company for employee ownership, provided it GBP1 million last October in exchange for a 50% stake in the company. Recently, it signed intention to help the company by placing GBP1 million in new orders. David Erdal, director of the Baxi Partnership, said it would be sad if employees who had invested money lost their jobs but said that it was a reality of business. He added: "The fact that workers have a stake in the business does not change the laws of economics - its first task is still to make sure it is successful." "The same thing has happened elsewhere in manufacturing - it is a fact of life." UBH, which blamed the uncertainty in the marketplace due partly to the war with Iraq, said it is currently negotiating with trade unions regarding its plan. CONTACT: UBH INTERNATIONAL LTD Orrell Lane Burscough Lancashire L40 0SL United Kingdom For General Enquiries Phone: 00 44 (0)1704 898500 Fax: 00 44 (0)1704 898518 E-mail: esmith@ubh.co.uk ************* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. 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