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/raid1/www/Hosts/bankrupt/TCREUR_Public/030723.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, July 23, 2003, Vol. 4, No. 144 Headlines C Z E C H R E P U B L I C POSTOVNI BANKA: Minority Shareholders Sue Government F I N L A N D SANITEC INTERNATIONAL: Outlook Revised on Liquidity Concerns F R A N C E ALSTOM SA: U.K. Workers Decry Diversion of Contract to France ALSTOM SA: Nexans Denies Offer to Acquire Transmission Unit ALSTOM SA: Reports Weaker First Quarter Performance G E R M A N Y ADCON AG: Expects 2003 Sales to Fall Below Last Year's Level DEUTSCHE BAHN: Government Starts Shopping for Sale Advisor GERLING-KONZERN: S&P Retains 'BB+' Ratings on Watch Positive VIVANCO GRUPPE: To Close Losing Trappenkamp Unit by Year's End I R E L A N D ELAN CORPORATION: Pulls Plug on Spectral Joint Venture ELAN CORPORATION: Quadrant Acquires U.K.-based Delivery Business I T A L Y TELECOM ITALIA: Completes Sale of EUR355 Mln Assets to Lastra N E T H E R L A N D S ROYAL PHILIPS: Appoints New Management Committee Members P O L A N D NETIA HOLDINGS: Gets Full Control of Telko for just PLN1,000 S W I T Z E R L A N D ABB LTD.: Court Sets Hearing of Appeal on Asbestos Deal July 31 ABB LTD.: Regulator Approves Sale of Building Systems Business U N I T E D K I N G D O M ALTERIAN PLC: Q1 Sales Down, But Firm Sees Breakeven by 2004 AMEY PLC: Parent Promises EBITDA of More than GBP50 Mln by 2004 AWG PLC: Wins GBP400 Million New Contracts in First Quarter BALTIMORE TECHNOLOGIES: Sells Managed Services Operations BRITISH AIRWAYS: Flight Delays, Treatment Irk Passengers BRITISH AIRWAYS: Reconvenes Talks with Labor Unions CABLE & WIRELESS: Moody's Downgrades Unsecured Bonds to Ba3 EASYCAR: Owner Forced to Rehabilitate Loss-making Venture EUROTUNNEL PLC: Warns of Cash Shortage in Interim Results GLAXOSMITHKLINE PLC: CEO Under Pressure to Show Growth INTER-ALLIANCE: To List 750 Million New Ordinary Shares INVENSYS PLC: Completes Divestment of Baan to SSA Global JASMIN PLC: Interim FY Results Show Negative Operating Profit LE MERIDIEN: Works Overtime to Beat Rescue Deal Deadline LONDON CLUBS: To Hold Analyst Briefing on Results July 24 MYTRAVEL GROUP: Confident of Reaching Accord with Bondholders TRINITY MIRROR: To Cut Down Workforce to Streamline Operations TRINITY MIRROR: Jobs to go in Northern Ireland Restructuring WORLD TRAVEL: Gives Update Regarding Current Market Activities ********* =========================== C Z E C H R E P U B L I C =========================== POSTOVNI BANKA: Minority Shareholders Sue Government ---------------------------------------------------- The Czech Republic is facing a lawsuit from aggrieved minority shareholders of failed bank Investicni a Postovni Banka, according to online news agency Czech Happenings The report citing the chairman of the shareholders group, Jaroslav Sarafik, said the association wants to sue Czech authorities for the method of investigating criminal complaints against Czech bank, Ceskeho Svazu Orientacniho Behu, and finance ministry representatives in connection with the takeover of Investicni a Postovni Banka by Ceskeho Svazu Orientacniho Behu in June 2000. Mr. Sarafik said: "The criminal complaints we had filed were investigated in a way that seriously violated our right to a just trial." He added the Strasbourg court should find the approach of the Czech authorities unacceptable. The lawsuit, drafted by Investicni a Postovni Banka's minority shareholders, will be filed with the European Court of Human Rights in Strasbourg within a month. Investicni a Postovni Banka went bankrupt in June 2000 and was later sold to CSOB. The bankruptcy proceeding, however, remains pending up to now due to the so-called "Cayman assets," which have yet to be transferred to the state. Several court disputes attended the bank's collapse. These include the lawsuit filed by Saluka of the Nomura group seeking some CZK40 billion from the Czech Republic for damage it incurred owing to the violation of the agreement on investment protection. The Czech state has in turn sued Nomura for CZK263 billion, while Nomura and CSOB have sued each other for dozens of billions of crowns. ============= F I N L A N D ============= SANITEC INTERNATIONAL: Outlook Revised on Liquidity Concerns ------------------------------------------------------------ Standard & Poor's Ratings Services said it revised its outlook on Sanitec International S.A., the holding company of Finland-based Sanitec group (Sanitec), and Sanitec Oy, a subsidiary of Sanitec International, to negative from stable following lower-than-expected free cash flow generation in 2002 and the first quarter of 2003. At the same time, the 'BB-' long-term corporate credit ratings and all related debt ratings were affirmed. "Standard & Poor's is concerned that financial covenants, which apply to EUR535 million of bank facilities, might be breached in late 2003, as headroom is currently low, which could put pressure on liquidity," said Standard & Poor's credit analyst Eve Greb. "Nevertheless, debt maturities of EUR6 million in 2003 are likely to be manageable in the near term due to cost-reduction programs that have already been implemented," she added. Sanitec is the largest manufacturer of bathroom ceramics and bath and shower products in Europe. Free cash flow was unexpectedly negative over the 12 months to Dec. 31, 2002, at negative EUR24 million, despite reduced capital expenditures, following negative working-capital changes and a EUR24 million onetime refinancing charge. The ratio of net financial debt to EBITDA was 4.7x, which was unchanged compared with pro forma 2001, despite expectations of improvement in 2002. The lease-adjusted ratio of funds from operations to net financial debt was about 11% at year-end 2002, compared with pro forma 12% in 2001. Nevertheless, the group is expected to benefit from cost-reduction measures, which had already brought improved operating margins of 15.5% in the first quarter of 2003 compared with 13.7% in the same period of last year. "Sanitec's ratings could be lowered if credit measures do not improve over the next few months, and if Sanitec's markets weaken further," said Ms. Greb. "To remain at current rating levels, Standard & Poor's expects Sanitec to generate positive free cash flow in 2003, and thus to start deleveraging and improving credit measures. Standard & Poor's expects Sanitec to apply rigorous working capital management, and to dedicate all free cash flow to debt repayment. The ratings do not factor in any future acquisitions." =========== F R A N C E =========== ALSTOM SA: U.K. Workers Decry Diversion of Contract to France ------------------------------------------------------------- Workers at Alstom's Birmingham train making plant are "amazed and disgusted" for the loss of the GBP70.2 million contract to build 35 trams for Strasbourg, according to Birmingham Post. The job order went to Alstom's factory in La Rochelle in France, to the anger of the workers in U.K. whose jobs were threatened by the company's plan to downsize the former Metro-Cammell factory. They expected the government to intervene to help secure their jobs. Tom Keogh, regional officer for Amicus said: "For the last two years we have had a succession of politicians wringing their hands and telling us they would do everything to secure work for Wash-wood Heath." The crisis at Washwood Heath started after a GBP101 million- order for Jubilee Line trains for the London Tube was switched to continental plants. It was further aggravated when Alstom decided that Washwood Heath's current order for Virgin Pendolino trains would be the last. The Birmingham plant will see the last tilting train come out of its production site next summer. Washwood Heath workers, which numbered 1,600, plan to submit a petition of more than 10,000 signatures to Chancellor Gordon Brown in early September, according to Mr. Keogh. ALSTOM SA: Nexans Denies Offer to Acquire Transmission Unit ----------------------------------------------------------- Following an article in the French press last Friday, Nexans points out that it has not submitted an offer for the acquisition of the Transmission and Distribution activities of Alstom. Nexans has simply offered to the General Management of Alstom to pursue the discussions on the possible transaction conditions of this Division under financial conditions compatible with the structure of its balance sheet. Citing French business paper Les Echos, the Financial Times recently reported that Nexans offered a EUR1.05 billion (US$1.18 billion) for control of the division that specializes in equipment used to transport electricity between power plants and consumers. Alstom is disposing assets to offset an expected EUR1.3 billion loss in the year to March 2003. It recently secured credit lines of EUR1 billion to stave off a crisis in the short term, but it is reliant on the capital increase working. Earlier this year, it sold its turbines business to Siemens for EUR1 billion. It is said the disposal of the unit is a crucial part of the group's plan to reduce its debt load from EUR5 billion to between EUR2 billion and EUR2.5 billion by March 2005. About Nexans Nexans is the worldwide leader in the cable industry. The Group brings an extensive range of advanced copper and optical fiber cable solutions to the infrastructure, industry and building markets. Nexans cables and cabling systems can be found in every area of people's lives, from telecommunications and energy networks, to aeronautics, aerospace, automobile, railways, building, petrochemical, medical applications, etc. With an industrial presence in 28 countries and commercial activities in 65 countries, Nexans employs 17,150 people and had sales in 2002 of euros 4.3 billion. Nexans is listed on the Paris stock exchange. CONTACT: NEXANS Investor Relations Michel Gedeon Phone: +33 (0) 1 56 69 85 31 E-mail: michel.gedeon@nexans.com ALSTOM SA G. Tourvieille/M. Dowd Phone: +33 1 47 55 23 15 E-mail: internet.press@chq.alstom.com Investor relations E. Rocolle-Teyssier Phone: +33 1 47 55 25 78 E-mail: investor.relations@chq.alstom.com ALSTOM SA: Reports Weaker First Quarter Performance --------------------------------------------------- This latest update on first quarter performance was released earlier this week. The highlights are: (a) Orders received down 22% on a comparable basis, on record first quarter of fiscal year 2002/03, but marked recovery (+17%) from final quarter of fiscal year 2002/03 (b) Sales down 9% on a comparable basis on first quarter of fiscal year 2002/03 (in EUR million) FY02/03 FY 2003/04 % Variation FY02/03 Q1 Q4 vs. vs. Q1 Q2 Q3 Q4 Q1 Q1 FY03/04 Orders Received Actual figures 5,675 4,863 4,953 3,632 4,035 -29% 11% Orders Received Comparable fig. 5,173 4,450 4,597 3,457 4,035 -22% 17% Sales Actual fig. 5,269 5,499 5,132 5,451 4,341 -18% -20% Sales Comparable fig. 4,762 5,054 4,804 5,249 4,341 -9% -17% Commenting on the first quarter's Orders and Sales announced this morning Patrick Kron, Chairman and Chief Executive Officer of ALSTOM, stated: As we signaled at our Annual General Meeting earlier this month, order intake in the first quarter was down on the very high level achieved in the comparable period of fiscal year 2002/03, but we are encouraged by the improvement compared with the final quarter of last year. In particular, Power orders show a strong recovery from the depressed level of the preceding months. The decrease in sales reflects, as expected, the lower order intake of last year." To See Figures: http://bankrupt.com/misc/Alstom_Report.pdf Orders and sales, as reported, were impacted during the first three months of fiscal year 2003/04 by currency translation effects, particularly versus the US dollar (impact of approximately 5% on orders and 6% on sales), and by the disposal of our small industrial gas turbine business, on April 30, 2003. Comparable figures below adjust the figures for these impacts. Both reported and comparable figures include for the first time orders and sales for the three new Power Sectors established in 2003. Orders Received FY 2002/03 FY 2003/04 % Variation Comparable figures FY02/02 Q1 Q4 vs vs FY03/04 Q1 Q1 (in EUR million) Q1 Q2 Q3 Q4 Q1 Orders Power Turbo-Systems 940 363 387 57 514 -45% 802% Power Environment 629 719 488 608 476 -24% -22% Power Service 849 706 708 479 814 -4% 70% T&D 975 902 684 931 922 -5% -1% Transport 1,555 1,570 1,818 1,148 884 -43% -23% Marine 19 6 110 28 105 453% 275% Corporate and others * 206 184 402 206 320 55% 55% Total Group 5,173 4,450 4,597 3,457 4,035 -22% 17% * Including Medium-sized gas turbines and industrial steam turbines not already transferred to Siemens Orders received: -22% Trading conditions continued to be difficult in the first three months of fiscal year 2003/04, with a weak global economy and tightening financial markets. On a comparable basis, the order intake for the quarter declined by 22% compared with the high level registered during Q1 2002/03. However, it shows a marked improvement on Q4 2002/03, increasing by 17% (from EUR3,457 million to EUR4,035 million) on a comparable basis, primarily due to higher orders in Power Service and Power Turbo-Systems. The backlog, at around EUR30 billion, is equivalent to 20 months of sales. Sales FY 2002/03 FY 2003/04 % Variation Comparable figures FY02/02 Q1 Q4 vs vs FY03/04 Q1 Q1 (in EUR million) Q1 Q2 Q3 Q4 Q1 Power Turbo-Systems 1,160 1,107 669 744 584 -50% -22% Power Environment 626 683 708 879 624 0% -29% Power Service 643 583 702 563 705 10% 25% T&D 745 876 890 893 747 0% -16% Transport 1,043 1,191 1,240 1,436 1,060 2% -26% Marine 343 382 341 502 441 29% -12% Corporate and others* 202 232 254 232 180 -11% -22% Total Group 4,762 5,054 4,804 5,249 4,341 -9% -17% * Including Medium-sized gas turbines and industrial steam turbines not already transferred to Siemens Sales: -9% Sales for the quarter, on a comparable basis, show a decline of 9% on Q1 2002/03. This reflects a stable performance in Transport, T&D and Power Environment, strong sales in Power Service and Marine and a decline in Power Turbo-Systems sales reflecting the low order intake of last year. Geographic Breakdown Reported Figures (Unaudited) In EUR million Actual Orders Received Actual Sales Q1 Q1 Q1 Q1 FY2002/03 FY2003/04 change FY2002/03 FY2003/04 change Europe 2,860 1,957 -32% 1,918 2,036 6% North America 1,202 648 -46% 1,390 721 -48% Latin America 324 147 -54% 398 277 -30% Africa/Middle East 413 707 71% 550 303 -45% Asia/Pacific 876 576 -34% 1,013 1,003 -1% Total 5,675 4,035 -29% 5,269 4,341 -18% In Q1 2003/04, the geographic breakdown of orders received was broadly equivalent to that in Q1 2002/03. Europe remains the most important market. On an actual basis, orders decreased in this region by 32%, driven by Power Turbo-Systems and Transport. Americas decreased in all Sectors but Power Service due to currency translation effects and difficult market conditions. Africa/Middle East improved significantly, notably in Power Turbo-Systems with a major order recorded in Bahrain, and in T&D. Asia/Pacific decreased by 34% driven by Transport, Power Service and Power Turbo-Systems. This decrease was partly offset by an improvement of Power Environment in this region. Sector Reviews Power Turbo-Systems The main order received in Q1 2003/04 is a turnkey extension of a gas power plant in Bahrain. On a comparable basis, this quarter was below the exceptional high level of Q1 2002/03, when several gas turnkey and steam contracts were booked, but it was much higher than Q4 2002/03 when no major orders were registered. The level of sales in Q1 2003/04 reflects the lower order volumes over the last few years. Power Environment The main orders received in Q1 2003/04 are contracts for heat recovery in Germany and for utility boiler in China. Compared to Q1 2002/03, the decrease in orders was due to the postponement of several projects in Environmental Control and a slowdown in Hydro, partly offset by a good performance in Heat Recovery systems. The sales registered in Q1 2003/04 remain stable versus the same period last year. Power Service Major orders booked in Q1 2003/04 include two long-term gas turbine maintenance contracts in the US and in Brazil. Orders remain stable versus Q1 2002/03 and show a marked recovery as compared to Q4 2002/03, which was generally slow in all regions. The sales increase in Q1 2003/04 versus both Q1 and Q4 2002/03 reflects a good performance in US boiler service and gas turbine service. Transmission & Distribution (T&D) The level of orders received in Q1 2003/04 remained globally stable versus Q1 2002/03. The booking of an HVDC project between Sweden and Denmark marked this quarter. Globally, the Transmission market continues to be sound and a number of orders have been registered in the African/Middle-Eastern market. This offset continuous difficult market conditions in Western Europe, notably in Distribution products. On a comparable basis, Q1 2003/04 sales were in line with Q1 2002/03 but below Q4 2002/03. The decline versus Q4 reflects a low order intake in the second half of last year and a generally slower first quarter in T&D. Transport The main orders received in Q1 2003/04 were Lausanne metro infrastructure, CORADIA "Minuetto" trains for Trenitalia in Italy and metro cars for the Jubilee Line to London Underground. While the level of orders during this quarter was unusually low, several contracts have been secured but not yet booked, e.g. Grenoble Tram and Barcelona Metro. 2002/03 orders included a high level of booking in North America (EUR1Bn) where we expect orders for the current year to be very limited. Excluding North America, we expect the 2003/04 order intake to be of the same magnitude as last year's. Q1 2003/04 sales are in line with the same period last year. Marine Q1 2003/04 orders included a ferry for Seafrance. Sales reflected the delivery of the frigate 'Hassan II' for the Royal Moroccan Navy, the 1,000-cabin cruise-ship 'Island Princess' for P&O Princess (Carnival group) and the 550- cabin cruise-ship 'Crystal Serenity' for the Japanese Shipping Group NYK during the first quarter. Outlook We expect the 2003/04 orders and sales to be down around 5% versus last year on a comparable basis. CONTACT: ALSTOM SA Emmanuelle Chatelain, Investor relations Phone: +33 1 47 55 25 78) E-mail: investor.relations@chq.alstom.com Homepage: http://www.alstom.com ============= G E R M A N Y ============= ADCON AG: Expects 2003 Sales to Fall Below Last Year's Level ------------------------------------------------------------ The Executive Board of Adcon Telemetry AG/Klosterneuburg, which publicly trades at Frankfurt Stock Exchange, said Monday it anticipates a sales stabilization at approximately EUR8 million for the current fiscal year, based on the ongoing restructuring process. This drop in sales is due to the deconsolidation of the Dutch subsidiary, a reassessment of the current product portfolio as well as the clear focus on key accounts. The intended bridge over finance via a convertible bond as well as the capital measures the Board is going to suggest to the general meeting on August 7, 2003, shall furthermore secure Adcons financial and balance sheet recapitalization. DEUTSCHE BAHN: Government Starts Shopping for Sale Advisor ---------------------------------------------------------- The German government has started looking for an advisor for the sale of its biggest remaining corporate asset -- national railroad operator, Deutsche Bahn. Authorities have invited investment banks to a pre-IPO presentation referred to as "accelerated [privatization] process," bankers said, according to the Financial Times. It will reveal the winner in autumn ahead of a possible flotation in 2005, which could involve 20% of Deutsche Bahn's equity. The group would remain an integrated rail operator that manages both track and trains. The sell-off has already attracted about 10 investment banks, including Morgan Stanley and Deutsche Bank. The plan to privatize Deutsche Bahn is widely expected to occur in 2005 and 2006, but the introduction of a controversial new pricing strategy is seen as likely to delay a sell-off. Impending losses and the firing of two top executives at the operator is also likely to negatively affect the process. The number of passengers on long-haul routes is down 13%, and Deutsche Bahn is still expected to absorb a loss exceeding EUR200 million this year. Meanwhile, the finance ministry denies the invitation has any link to the move of Chancellor Gerhard Schroder to borrow an extra EUR5 billion (US$5.6 billion) and rely on privatization revenues and subsidy cuts to pay for tax breaks unveiled last month. "This invitation is in no way connected to current developments," said one official. "There is no political background to this process." GERLING-KONZERN: S&P Retains 'BB+' Ratings on Watch Positive ------------------------------------------------------------ Standard & Poor's Ratings Services commented on the CreditWatch status of Germany-based non-life insurer Gerling-Konzern Allgemeine Versicherungs-AG. The 'BB+' long-term counterparty credit and insurer financial strength ratings on Gerling-Konzern Allgemeine Versicherungs-AG remain on CreditWatch with positive implications. The ratings were initially placed on CreditWatch with developing implications on Oct. 29, 2002, and the implications were revised to positive on July 11, 2003. "Standard & Poor's understands that a group of investors, including seven large industrial groups, have signed letters of intent to participate in an equity capital increase for Gerling-Konzern Allgemeine Versicherungs-AG," said Standard & Poor's credit analyst Rob Jones. Commitments received as at July 18, 2003, totaled EUR75.5 million, although the majority of these commitments were not legally binding at this date. Additional commitments to achieve a total capital increase of up to EUR150.0 million are being sought from 20 other parties who have expressed interest. The remaining commitments are unlikely to become legally binding before the end of July. "Standard & Poor's expects to raise the ratings on Gerling-Konzern Allgemeine Versicherungs-AG to 'BBB-' once commitments in excess of EUR60.0 million become legally binding; such rating action will reflect the improvement in GKA's capitalization," said Mr. Jones. The ratings would remain on CreditWatch with positive implications, reflecting the possibility for a further upgrade if Gerling-Konzern Allgemeine Versicherungs-AG succeeds in raising the full EUR150.0 million sought and provided that the sale of the Gerling group's reinsurance operation, Gerling-Konzern Globale Ruckversicherungs-AG (BB/Negative/--), has been completed. The sale of Gerling-Konzern Globale Ruckversicherungs-AG will allow the Gerling group to deconsolidate GKG from its balance sheet and thereby meet regulatory group solvency requirements. VIVANCO GRUPPE: To Close Losing Trappenkamp Unit by Year's End -------------------------------------------------------------- As part of the systematic implementation of the restructuring concept drawn up for Vivanco Gruppe AG in collaboration with the consultancy Roland Berger, the Management Board and the Supervisory Board have decided to close, with effect from December 31, 2003, the operation at the Trappenkamp location, whose results contributed significantly to the Group's losses in the 2001 and 2002 financial years. In line with the strategic re-orientation of Vivanco, all production will be transferred to sub-suppliers in the Far East and the Vivanco subsidiary in France. All of the functions, such as logistics, which have until now been performed at Trappenkamp will be concentrated at the headquarters in Ahrensburg. Vivanco expects from this measure considerable and lasting cost savings, further synergetic effects as well as a strengthening of the main location at Ahrensburg. However, in the short term, Vivanco anticipates a once-off charge on the Group result for the financial year 2003. ============= I R E L A N D ============= ELAN CORPORATION: Pulls Plug on Spectral Joint Venture ------------------------------------------------------ Spectral Diagnostics Inc. (TSX: SDI) has reached an agreement with Elan Corporation, plc (NYSE:ELN) and its affiliates to terminate their joint venture relationship established in August 1998, as well as the termination of all related agreements. This joint venture was formed to develop and commercialize sepsis assays and successfully developed and secured 510(k) marketing approval from the FDA for the Endotoxin Activity Assay, which identifies patients at risk for developing severe sepsis on admission to the intensive care unit. The termination of the joint venture is a result of Elan's restructuring efforts and desire to focus on its core businesses in neurology, pain and autoimmune diseases. Under the terms of the termination agreements, Spectral will own all rights to the EAA and any subsequent sepsis assays which may be developed, including all related intellectual property and marketing rights. Spectral has agreed to make a payment of Cdn.$1.2 million in cash to Elan, to be paid by September 17, 2003. If Spectral does not make such a payment to Elan within this period, Spectral has agreed to issue 750,100 shares of Spectral to Elan, subject to regulatory approval. In addition, Spectral has agreed to pay Elan a certain percentage on future revenues that may be realized by Spectral from the commercialization of the EAA, up to a maximum of U.S.$10 million. In addition, the development loan of U.S.$3 million and accrued interest, to Sepsis Inc. will be extinguished upon the payment of the cash or the issuance of the shares, as applicable. "Spectral's relationship with Elan has been very positive and the parties successfully collaborated in the joint venture to develop and obtain 510(k) marketing clearance from the FDA to commercialize the EAA. This agreement with Elan enables Spectral to begin its commercialization strategy for the EAA in a manner that brings significant return on effort and money invested into the development of this unique assay." said Dr. Paul M. Walker, President and CEO of Spectral, "The EAA fits well into Spectral's strategic plan, which includes cost efficient manufacturing and specific distribution agreements to maximize the competitive advantages of its products." Spectral is a developer of innovative technologies for comprehensive disease management. Spectral provides accurate and timely information to clinicians enabling the early initiation of appropriate and targeted therapy. Current products are rapid format tests measuring markers of myocardial infarction (Cardiac STATus(R) test). New products include rapid diagnostics for sepsis (the Endotoxin Activity Assay). Spectral Diagnostics Inc. manufactures the EAA and Cardiac STATus(R) products. Spectral's common shares are listed on the Toronto Stock Exchange: SDI. Elan is focused on the discovery, development, manufacturing, sale and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. As reported in Troubled Company Reporter's June 30, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Elan Corp. PLC to 'CCC' from 'B-'. Standard & Poor's also lowered all of its other ratings on Elan, a specialty pharmaceutical company, and its affiliates, and the ratings have been placed on CreditWatch with negative implications. ELAN CORPORATION: Quadrant Acquires U.K.-based Delivery Business ---------------------------------------------------------------- Quadrant Technologies Limited has announced the acquisition from Elan Corporation, plc of its Nottingham, U.K.-based drug delivery business, Elan Drug Delivery Limited. Quadrant Technologies Limited has recently been formed by the existing management team of EDD-UK and is financed by a group of external investors led by Michael Fitzgerald. The Board of Directors consists of Michael Fitzgerald Non-Executive Chairman, Raj Uppal Chief Executive Officer, Terence Chadwick Senior Vice President R&D and Duncan Fitzwilliams Non-Executive Director. EDD-UK acquired Quadrant Healthcare plc in 2000 and has continued to develop the Quadrant formulation and stabilization technologies with a particular emphasis on pulmonary drug delivery. Over the last two and half years the U.K. based company has also been responsible for the development of a novel dry powder inhaler device and associated drug packaging technology owned by Elan. EDD-UK has licensed its formulation technologies to several major companies including Glaxo SmithKline, Baxter Healthcare, Becton Dickinson and Hayashibara. In addition, EDD-UK has a joint venture with MicroDose Technologies, Inc, (Princeton, N.J.) which is focused on the development of an inhaled insulin product for the non-invasive treatment of diabetes. In a separate transaction Quadrant Technologies Limited acquired certain intellectual property, including a substantial patent portfolio, from Elan relating to the novel dry powder inhaler and associated drug packaging systems it has been developing on behalf of Elan. EDD-UK will change its name to Quadrant Drug Delivery Limited with immediate effect. Quadrant Drug Delivery Limited will continue to be based in Nottingham (U.K.) and will offer its formulation and stabilization expertise to the pharmaceutical industry. It will also seek to create value from its substantial portfolio of intellectual property. Quadrant Technologies Limited has been advised in connection with this transaction by Nash Fitzwilliams Ltd, Ashurst Morris Crisp and Tenon Group. Mr. Uppal said: "It gives me great pleasure to announce this acquisition, given my involvement with Quadrant since 1996. I am looking forward to working with the team at Quadrant to continue the development of the exciting portfolio of products and technologies, which have benefited from substantial investment over the last few years. We have all the elements in place to build a business of significant value and are also well placed to seek out new opportunities. I am delighted with the support Quadrant Technologies Limited has received from its advisers. Through their connections and expertise in the healthcare sector, Nash Fitzwilliams has enabled Quadrant Technologies Limited to raise substantial finance in a difficult market in order to fund the acquisition and to provide the initial working capital requirements." ========= I T A L Y ========= TELECOM ITALIA: Completes Sale of EUR355 Mln Assets to Lastra ------------------------------------------------------------- Telecom Italia announces the closing of the sale of some of Telecom Italia Group's real estate assets to Lastra Holding B.V., a company within the Five Mounts Properties Group. As announced on June 20, 2003, the value of the transaction is equal to approximately EUR355 million and will allow the Telecom Italia Group to reduce its consolidated financial debt by the same amount. ===================== N E T H E R L A N D S ===================== ROYAL PHILIPS: Appoints New Management Committee Members -------------------------------------------------------- Royal Philips Electronics announced recently it has added four new top executives to the company's Group Management Committee, effective August 1, 2003. Rudy Provoost, currently heading Philips Consumer Electronics in Europe, and Frans van Houten, presently General Manager of Global Business Creation at Philips Consumer Electronics, join the Group Management Committee. Also joining the Group Management Committee are Johan van Splunter, Chief Executive Officer of Philips Domestic Appliances and Personal Care, and Daniel Hartert, Philips' Chief Information Officer. Mr. Provoost and Mr. van Houten take up two newly formed positions within Philips Consumer Electronics, reflecting a realignment of the product division's business activities to further strengthen Philips' time to market and global execution in consumer electronics. Mr. Provoost becomes Chief Executive Officer of Philips Consumer Electronics Global Sales and Services, with global responsibility for all sales activities, e-business, customer care and customer relationship management. In addition Mr Provoost will be charged with improving and developing international key account management for retail activities across Philips, in close cooperation with other product divisions. Mr. van Houten becomes Chief Executive Officer of Philips Consumer Electronics Business Groups, which oversees the Business Creation, Industry, Marketing, Research & Development, and Strategy functions. Gerard Kleisterlee, President & CEO of Royal Philips Electronics, commented: "Together with the recent appointment of Barabara Kux as a GMC member and our new Chief Procurement Officer these appointments serve to reshape the top management structure of our company: a strong and balanced Group Management Committee which will be able to lead across traditional boundaries in our ongoing transformation into one Philips." =========== P O L A N D =========== NETIA HOLDINGS: Gets Full Control of Telko for just PLN1,000 ------------------------------------------------------------ Netia Holdings S.A. (NET), Poland's largest alternative provider of fixed-line telecommunications services, announced that in connection with the on-going process of internal consolidation of the Netia group companies, on July 21, 2003, Netia bought from Mr. Aleksander Szwarc 20 shares, PLN50 par value per share, of Telko Sp. z o.o. with its seat in Warsaw, constituting 25% of Telko's share capital and representing 12.66% of the voting powers at Telko's general meeting of shareholders. The total value of the transaction equals PLN1,000. Netia financed the transaction from its own capital. Following this transaction, Netia owns 80 shares of Telko constituting 100% of Telko's share capital and representing 100% of the voting power at Telko's general meeting of shareholders. Telko does not conduct any telecommunications activities. CONTACT: NETIA HOLDINGS Investor Relations Anna Kuchnio Phone: +48-22-330-2061 ===================== S W I T Z E R L A N D ===================== ABB LTD.: Court Sets Hearing of Appeal on Asbestos Deal July 31 --------------------------------------------------------------- The hearing for appeals on the bankruptcy court order approving the US$1.2 billion settlement of asbestos personal injury claims by the U.S. unit of ABB Ltd. has been scheduled on July 31. The U.S. District Judge Alfred M. Wolin will hear challenges to the ruling of U.S. Bankruptcy Judge Judith Fitzgerald recommending confirmation of the Chapter 11 reorganization plan of Combustion Engineering Inc. on that date, according to Dow Jones Newswires. The bankruptcy court approved a plan to cap potentially ruinous claims this month, allowing a 10-day appeal window that expires on Monday. A further four-day period was available to produce evidence in support of any appeal. Judge Fitzgerald recommended that Judge Wolin also approve the deal, under which a trust, funded by both Combustion Engineering and ABB, will be set up to pay claims. More than 100,000 asbestos-related lawsuits against the unit are pending. Combustion Engineering filed a prepackaged Chapter 11 bankruptcy petition February 17 with the U.S. Bankruptcy Court in Wilmington, Delaware, to resolve asbestos-related personal injury claims against it. ABB LTD.: Regulator Approves Sale of Building Systems Business -------------------------------------------------------------- On July 4, 2003 YIT Corporation signed an agreement whereby it purchased from ABB the company's Building Systems operations, which offer technical building systems, property and industrial services in Finland, Sweden, Norway, Denmark, the Baltic states and Russia. The approval of the competition authorities was required before the deal could take effect. On July 18, 2003, the Finnish Competition Authority announced that it has approved the acquisition of the Building Systems operations in Finland. "The acquisition neither establishes nor strengthens a dominant market position, which significantly would restrict the competition on the Finnish market or a substantial part thereof," the Competition Authority stated in its decision. YIT CORPORATION Veikko Myllyperkio Vice President, Corporate Communications Contact: YIT CORPORATION Veikko Myllyperkio Phone: +358 20 433 2297 E-mail: veikko.myllyperkio@yit.fi =========================== U N I T E D K I N G D O M =========================== ALTERIAN PLC: Q1 Sales Down, But Firm Sees Breakeven by 2004 ------------------------------------------------------------ Alterian Plc provided this quarterly update in accordance with listing rules: As set out in the preliminary statement for the year ending March 31, 2003 Alterian is now operating on the basis of annual rather than quarterly targets. This approach reflects the completion of the company's initial development phase and the growing success of Alterian's strategy to develop longer-term contracts delivering structural revenue over a number of years. This strategy will reduce the company's reliance on one-off software license sales, improve the predictability of the Company's earnings and underpin growth. The impact in the current year is expected to result in a further increased weighting of the company's income towards the second half as the initial revenue from these contracts falls into this period. Market conditions for closure of software license sales continue to be difficult however demand for Alterian's technology continues to grow and our pipeline is substantially larger than at the end of March 2003. Sales for the first quarter at GBP801,000 were lower than the same period last year (2002: GBP1,063,000) due to the change in emphasis of the business as discussed above. Operating costs at GBP2,144,000 are lower than the same period last year (2002: GBP2,923,000), resulting in a reduced loss before tax of GBP1,294,000 (2002: GBP1,757,000). Positive cash flow of GBP131,000 was achieved in the quarter (2002: cash outflow of GBP2,327,000), reflecting collection of fourth quarter sales, which included significant seasonal contract renewals. Cash and short-term investments at June 30, 2003 were GBP14.7 million (June 30, 2002: GBP18.6 million). Developments during the quarter During the quarter, the Company made progress in a number of key areas. In April, Alterian was pleased to announce the first major OEM product release incorporating Alterian technology. Experian, a leading global provider of business solutions, has integrated Alterian technology into its Strategy Management Generation 3 global decision support tool and has begun rolling this product out to existing and new customers in over 50 countries. The Alterian technology provides a data mart, which is used to deliver analytics, strategy simulation and strategic business reporting, including, for instance, Capital Adequacy (Basel II). Alterian receives a royalty for each installation. A new agreement was signed in June with infoUSA, the leading North American provider of data and database services, which has been an Alterian partner for over a year. The agreement has a minimum term of four years, with increasing quarterly minimum payments totaling US$3.5 million over this initial period. New product development initiatives continue on track, and two new products are expected to be released during the second quarter. Outlook The company's target, based on the anticipated commencement of royalties from Alterian's longer term contracts, is to break even in earnings and cash flow in the year to March 31, 2004. These revenues should contribute to the second half of the year, which will also benefit from the increasing value of recurring revenue from contract renewals. The Board is confident that progress is being made in line with the company's strategic objectives, in particular that significant future structural revenues are being built which will put Alterian in a strong long-term position. To view financials: http://bankrupt.com/misc/ALTERIAN_PLC.htm CONTACT: ALTERIAN PLC Phone: 0117 970 3200 David Eldridge, Chief Executive Officer David Cutler, Finance Director Weber Shandwick Square Mile Phone: 0207 067 0700 Kirsty Raper / Becky Haywood E-mail: bhaywood@webershandwick.com AMEY PLC: Parent Promises EBITDA of More than GBP50 Mln by 2004 --------------------------------------------------------------- The owner of engineering group Amey plc expects the U.K. company to report EBITDA of over GBP50 million in the full-year 2004, according to AFX. Grupo Ferrovial, which owns 95% of Amey, said the figure is on revenue of over GBP900 million, and includes Amey's 33% stake in newly acquired Tube Lines holdings. The Spanish construction firm took over the troubled operations of Amey in April through a tender offer of GBP81 million. Amey was previously hit by a change in accounting for contract bidding costs that turned the group's underlying profit of GBP55 million in 2001 into a GBP18.3 million loss. Ferrovial plans to divest the U.K. group's non-core assets and businesses, and lay-off workers. AWG PLC: Wins GBP400 Million New Contracts in First Quarter ----------------------------------------------------------- AWG Plc announces that its infrastructure management business has won contracts with a combined turnover value in excess of GBP450 million in the three months to June 30, 2003. Approximately 50% of the revenue is expected to be generated within the first 12 months, with the balance spread over two to five years. New contracts, or renewal of existing contracts, were won by the three infrastructure management divisions: Utility Services, Government Services and Project Management Services. The largest single contract is in the Government Services division for Birmingham City Council, following the acquisition in March 2003 of the repair and maintenance contracts for housing and property in the city. The GBP250 million contract is expected to generate GBP50 million per annum over the five-years to 2008. Elsewhere, Utility Services successfully renewed a three- year, GBP9 million per annum contract in the water sector. Project Management Services' gains include a two-year, GBP38 million per annum contract to construct 7.2 km. of new road and associated structures in Scotland. ***** 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 the break-up of 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 GBP100 million, analysts said. CONTACT: AWG PLC Mike Keohane Group Director Human Resources & Communications Phone: 01480 323 000 Susan Ellis / Rachel Taylor Weber Shandwick Square Mile Phone: 020 7067 0700 BALTIMORE TECHNOLOGIES: Sells Managed Services Operations --------------------------------------------------------- Baltimore Technologies plc (London: BLM) announced that it has entered into a conditional agreement with beTRUSTed to sell its U.S.-based managed services operations for a total consideration of approximately GBP1.1 million (US$1.75 million) in cash.* Bijan Khezri, Chief Executive Officer of Baltimore Technologies plc, commented: "Economies of scale will drive consolidation of the managed security services market. For Baltimore, the managed security offering has been more of a product distribution channel rather than an end in itself. Therefore, Baltimore can best exploit the commercial potential of our authentication products through partnering with a dedicated managed security services company. During the past four years we have developed a strong relationship with beTRUSTed as one of our TrustedWorld Partners. I am pleased to see our customers transferring to an organization that is not only entirely dedicated to managed security, but has an outstanding track record in supporting Baltimore's products. This transaction will allow Baltimore to continue making the development, support and maintenance of our authentication business a priority." John Garvey, Chief Executive Officer of beTRUSTed, noted: "We are delighted to acquire the business and to develop broader relationships with certain of Baltimore's world-class, financial services clients, who will benefit from our Baltimore product and service expertise, industry skills and strong global presence. We look forward to working with Baltimore to make the transition smooth for Baltimore's clients. This move is another step in our plan to become the leading global provider of security and trust services." Rationale for the divestment Baltimore announced on July 10, 2003 that despite the closing of the offer period for the sale of the whole business, negotiations regarding the disposal of certain managed service related offerings would continue. Baltimore believes that it can best exploit the commercial potential of its authentication products through partnering with a dedicated managed security services company, rather than owning its own managed services business and it will help to maintain the focus on the high - end finance and government authentication business. Financial effect of the disposal The company intends to use the cash proceeds of the disposal of approximately GBP1.1 million (US$1.75 million), payable at completion, for general corporate purposes. Baltimore expects that the disposal will complete by the end of August 2003. Information on Managed Services The Managed services business provides customers with a platform which can be implemented quickly to issue digital certificates from a secure hosting facility based in Needham Heights Massachusetts, at a significantly reduced cost, compared to the cost to the customer of building its own secure facility. Financial Information Based on unaudited management information for the twelve-month period ended December 31, 2002, the US managed services business generated revenues of approximately GBP0.9 million (US$1.5 million) and a loss before interest and tax of approximately GBP1.2 million (US$1.96 million). As at December 31, 2002, the net liabilities of the U.S. hosting business were approximately GBP0.3 million (US$0.5 million). *Based on an exchange rate as at July 21, 2003 of GBP0.6302 = US $1. About Baltimore Technologies Baltimore Technologies' products, professional services and solutions solve the fundamental security needs of e-business. Baltimore's e-security technology gives companies the necessary tools to verify the identity of who they are doing business with and securely manage which resources and information users can access on open networks. Many of the world's leading organizations use Baltimore's e-security technology to conduct business more efficiently and cost effectively over the Internet and wireless networks. Baltimore's products and services are sold directly and through its worldwide partner network, Baltimore TrustedWorld. Baltimore Technologies is a public company, principally trading on the London Stock Exchange (BLM). For more information on Baltimore Technologies please visit http://www.baltimore.com About beTRUSTed beTRUSTed is the premier global provider of security and trust services to the world's leading organizations and government agencies. Through its managed security services, beTRUSTed offers clients a comprehensive package of leading security products coupled with unrivalled expertise to help reduce costs, increase revenue and comply with government and industry regulations. CONTACT: SMITHFIELD FINANCIAL Andrew Hey Phone: 020 7903 0676 Will Swan Phone: 020 7903 0647 BRITISH AIRWAYS: Flight Delays, Treatment Irk Passengers -------------------------------------------------------- Crowds of angry long-haul passengers thronged at Heathrow's Terminal 4 Monday, as British Airways held urgent discussions with staff in an attempt to prevent further wildcat strikes after the airport was plunged into chaos weekend. According to the Financial Times, the weary travelers were frustrated at being held outside the terminal building for hours before being allowed to check in for flights. Although no flights were cancelled that day, British Airways had a large backlog of passengers from the more than 500 flights cancelled from Friday to Sunday. Further reports say some passengers were critical of the airline over their treatment, despite the efforts British Airways extended to accommodate them. Passengers who had to stay in a hotel were given GBP100 compensation and those who decided not to travel because of the disruption were given full refunds. The unofficial strikes were held over the introduction of an automated clocking system for staff coming in and out of work. A 3% pay increase agreed from last January, but not yet introduced, also contributed, the Financial Times indicated. The news agency further noted that the weekend's industrial disruption was the worst suffered by the airline since a damaging three-day strike by cabin crew in 1997. It cost the airline tens of millions of pounds of lost revenues. Chris Avery, aviation analyst at JP Morgan, said the unofficial walkouts were "a reminder that in the transport sector a relatively small number of people can bring a company to a standstill". Meanwhile, aviation consultant Chris Tarry said: "The whole British Airways operations system seems to be creaking at the seams. It is going to take some time to regain customer goodwill and some will be lost forever." BRITISH AIRWAYS: Reconvenes Talks with Labor Unions --------------------------------------------------- British Airways met with representatives from Amicus MSF, Transport and General Workers Union and GMB Monday. Talks were continuing, and both sides agreed to reconvene talks at 10.30 a.m., Tuesday, July 22. As a result, British Airways agreed to put back the introduction of Automated Time Recording by 24 hours until noon on Wednesday, July 23 to allow for discussions to continue Tuesday. Last Friday, Amicus, which represents 20,000 civil aviation staff, formally asked British Airways to withdraw proposals to change working conditions for check in staff, which has resulted in the unofficial walk out at Heathrow Terminals 1, Terminal 3 and Terminal 4. The union assures the staff will return to work if British Airways agrees not to implement new swipe card proposals on Tuesday. CABLE & WIRELESS: Moody's Downgrades Unsecured Bonds to Ba3 ----------------------------------------------------------- Moody's downgraded the ratings of Cable & Wireless plc's senior unsecured bonds to Ba3 from Ba1 on mounting worries regarding its restructuring. Moody's also assigned a Ba3 rating to the company's new GBP258 million in senior convertible notes due 2010. The outlook for all ratings is negative. Affected ratings include: (a) Cable & Wireless International Finance B.V.: GBP200 million 8.625% god Eurobonds due 2019 to Ba3 from Ba1 (b) Cable & Wireless Plc: Senior implied rating to Ba3 from Ba1 GBP200 million 8.75 % Eurobonds due 2012 to Ba3 from Ba1 US$400 million 6.5% Eurobonds due 2003 to Ba3 from Ba1 GBP258 million convertible notes due 2010 assigned a Ba3 rating. The rating agency expresses worries on potential restructuring costs under the firm's plans to fully exit the U.S. global business. It also warns of increased execution risks, as the company would have to lay off workers and exit lease contracts while maintaining service levels for multi-national customer. It also noted a sizeable FRS 17 pension deficit (GBP578 million at March 31, 2003 -- GBP 494mn in the U.K.), which could potentially result "in a steady increase in pension costs, going forward." EASYCAR: Owner Forced to Rehabilitate Loss-making Venture --------------------------------------------------------- Stelios Haji-Ioannou, founder of the EasyJet airline, has put up plans to stem the drain on its EasyCar car rental business by following the business model of rival Ryanair, according to the Financial Times. The report cited Mr. Haji-Ioannou saying: "EasyCar should try to be the absolute lowest cost producer in the car rental business, so I think it aspires to be closer to Ryanair than EasyJet." At such, it is expected to do like Ryanair in maintaining the no-frills model of using secondary airport rather than to more costly mainstream airports like EasyJet does. It will also use car clubs, which will enable customers to rent cars without visiting an EasyCar office, to save further. Mr. Haji-Ioannou also confirmed plans for the flotation of EasyCar has been put on hold from next year until 2005 "at the earliest." He is left managing the business alone after Stephen Jackson, EasyCar's finance director, and Andrew Fitzmaurice, the chief executive, left the company. EasyCar now only employs 60 in the U.K. out of the 150 it originally has. The venture is not thought to need a capital injection the report said. Mr Haji-Ioannou is also reviewing EasyCar's sites in France, Spain and Switzerland with a view to franchising them. EUROTUNNEL PLC: Warns of Cash Shortage in Interim Results --------------------------------------------------------- Highlights of Interim Results to June 30, 2002: (a) Operating revenue down 7% due to lower shuttle yields (b) 4% growth in car carryings with two-point market share gain (c) 3% growth in trucks with two-point market share gain (d) Operating costs held flat (e) Underlying loss stable (f) GBP90 million debt reduction (g) Progress on rail freight development projects Richard Shirrefs, Chief Executive, said: "During the first half of 2003 average yields, and hence revenue, were down on last year reflecting weak market conditions and strong competition. Despite flat or declining markets we achieved volume growth in both our truck and passenger businesses, with increased market shares. Our service quality reached even higher levels. We held our costs flat and reduced our debt by a further GBP90 million during the first half." "We are working hard to build a position from which to grow our revenues in the medium term. Our application for a rail operator's license is proceeding satisfactorily, and we are in active discussions about providing new cross-Channel rail freight solutions." Charles Mackay, Chairman, said: "Our first half results reflect the current depressed demand and consequent pricing pressures which are affecting the travel and freight transport sectors as a whole. These challenging market conditions now look set to continue in the second half. "As a result of the continuation of these difficult market conditions, we are now unlikely to achieve the full year revenues needed to cover our interest charges from cashflow. However, as market conditions improve our shuttle revenue growth should pick up again as in the past." To View Full Report And Financials: http://bankrupt.com/misc/EUROTUNNEL.htm GLAXOSMITHKLINE PLC: CEO Under Pressure to Show Growth ------------------------------------------------------ Investors are challenging GlaxoSmithKline Chief Executive Officer Jean-Pierre Garnier to revive earnings growth at the drug maker to justify a possible raise in his pay, according to Bloomberg. Second-quarter profit at Europe's largest company is expected unchanged from a year earlier at GBP1.3 billion (US$2.1 billion). ``He needs more products and that's been the case for a couple years,'' the report cited Peter Cartwright, an analyst with Williams de Broe, who holds rates the shares ``buy'' and owns some. ``Basically, there is no big growth,'' he said. In May, shareholders rejected the proposal to increase Mr. Garnier's long-term incentive package and to pay him US$28 million in severance pay if he lost his job. GlaxoSmithKline put the plan on hold while it reviews its executive policy. Investors were also demanding to see the details of promised results when Glaxo Wellcome Plc merged with SmithKline Beecham Plc in 2000. The combination was aimed at helping streamline operations and increase the number of new medicines. INTER-ALLIANCE: To List 750 Million New Ordinary Shares ------------------------------------------------------- Introduction and Summary The Board announced Friday that it proposes to raise GBP15 million (before expenses) by way of a placing of 750,000,000 New Ordinary Shares at a price of 2p per New Ordinary Share. The Placing is conditional, inter alia, upon the company obtaining approval from its Shareholders to increase its authorized share capital, to dis-apply statutory pre-emption rights and to grant the Board authority to allot the New Ordinary Shares. The Placing, which has been arranged and underwritten by Evolution Beeson Gregory pursuant to the terms of the Placing Agreement, is also conditional upon Admission. Under the Placing, Keith Carby has conditionally committed to subscribe for 6,250,000 New Ordinary Shares raising GBP125,000; and, Vincent Isaacs, Philip Lockyer and Steven Hartley have conditionally committed to subscribe for 5,000,000, 3,750,000 and 2,500,000 New Ordinary Shares, respectively, raising a total of GBP225,000. The remaining New Ordinary Shares will be placed with institutional investors or failing this, Evolution Beeson Gregory has undertaken to subscribe for such shares under the terms of the Placing Agreement. Background to and reasons for the Placing On June 30, 2003, the company announced that whilst there had been an upturn in business levels during April, which had been sustained during May and June, the company was not trading at the level that the Directors had originally anticipated. This has resulted in cash receipts being approximately GBP4 million less than the Directors had budgeted. In addition to this, a number of unforeseen significant extra costs relating to the restructuring of the Group have been settled during the second quarter of the year and the actions that the Directors have taken to reduce the cost base are only now feeding through fully to a reduced run rate for the business. The consequence of this is that the proceeds of the placing conducted in March of this year are not sufficient to enable the Group to reach a stage where it is cashflow positive. The Group therefore needs to raise further funds in order to reach this stage. Notwithstanding that it is extremely disappointing for the company to find itself in this situation, the Directors consider that considerable progress has been made over the last three months. Save for the integration of HST, the Group has now been operating as a single entity since the start of the year and the gross margin is gradually increasing. The new structure has allowed many of the new initiatives outlined in the circular to shareholders in March 2003 to be implemented on a Group wide basis. Most importantly, as a result of the cessation of the Limited Company Structure, the Directors can now exert a far greater influence over the cost base of the company and are able to budget the costs of the business with far greater accuracy. The full benefit of many of the cost cutting measures that have been implemented have not yet been reflected in the operating cashflow of the business. Cash overheads have already been reduced from over GBP34 million per annum and are currently in the order of GBP26 million per annum but measures already taken with further planned cost cutting measures should reduce this to approximately GBP21 million per annum by the end of this year. Since the appointment of Steven Hartley additional measures have also been implemented to monitor the cost base of the Company and to report progress to the Board. The Directors are determined to reduce costs to a level appropriate for the current turnover level of the Group. The Directors believe that, in a difficult market for investment business, many of the Group's RIs have transacted a larger proportion of non-regulated business than before. As set out in the circular dated March 18, 2003, the Group has not previously provided a channel for non-regulated business and consequently has not been able to benefit from the activities of its RIs in this sector. In May, 95 RIs started to conduct non-regulated business and the Directors have been encouraged by the progress made to date. Although this additional business line has only been available to the Group's RIs GBP3,230 per RI and the Directors are therefore confident that the turnover of the Group in the second half of the year will benefit from capturing more of this business. The Directors have explored and actively pursued a variety of strategic alternatives to address the immediate and future funding requirements of the Group. However due to the time constraints, the Directors have concluded that the proposed cash placing is the most certain option and is therefore in the best interests of the Company and Shareholders as a whole. The Placing Price represents a discount of approximately 46.7% to the closing middle market price of 3.75p per Existing Ordinary Share on July 17, 2003 (the last practicable date prior to the announcement of the Placing). The Directors do not believe that the Placing would have been possible at a price of more than 2p per New Ordinary Share. Use of Proceeds The net proceeds of the Placing of approximately GBP14 million will be used to satisfy the general working capital requirements of the Group. Specifically, the Directors estimate that approximately GBP5 million will be required to fund ongoing losses, GBP3 million will be required to fund further cost cutting measures and some staff retention policies and the balance will be required to provide the headroom that the Directors consider appropriate for regulatory purposes and any increase in the working capital that may be required by the Group. Current Trading and Prospects Although market conditions for the Group remain extremely challenging there have been some tentative signs of recovery. However the Directors do not expect to see any significant growth in turnover during the second half of the year and are budgeting for the contribution from the regulated business to remain flat. It is expected that the non-regulated business will continue to grow and provide some turnover growth as more RIs become authorized to transact non-regulated business on behalf of the Group. Whilst the Directors expect the Group to continue to incur losses throughout the second half of the year they are encouraged by the results of the cost cutting measures and the upturn in turnover from the non-regulated business. The Directors are confident that with the funds raised from the Placing the Group is now in a position to become cashflow positive during the first half of 2004 without recourse to further funding. Details of the Placing As stated, the Company proposes to raise GBP15 million (before expenses) through the issue of the New Ordinary Shares at the Placing Price, which represents a discount of approximately 46.7% to the closing middle market price of 3.75p per Existing Share on July 17, 2003, the last practicable date prior to the announcement of the Placing. Evolution Beeson Gregory has fully underwritten the Placing and has conditionally agreed to place the New Ordinary Shares or failing which to subscribe itself for any remaining New Ordinary Shares. The Placing is conditional, inter alia, on the passing of the Resolutions at the EGM and Admission becoming effective by no later than August 31, 2003. Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that such Admission will occur on August 12, 2003. New Ordinary Shares The New Ordinary Shares will, when issued, rank pari passu in all respects with the Existing Shares including the right to dividends and other distributions declared following Admission. Share Options As set out in the circular dated March 18, 2003, the Board has implemented remuneration policies which provide an appropriate motivational framework and align the interests of RIs, executive directors and key employees with the performance of the business and the interests of Shareholders. The RIs and employees are the Group's key assets and the Board intends to put further proposals to shareholders in the near future regarding their retention and ongoing interest in the performance of the business. Section 142 of the Act Section 142 of the Act provides that, where the net assets of a public company are half or less than its called up share capital, the directors of the company shall convene an extraordinary meeting of the company for the purpose of considering whether, and if so what, steps should be taken to deal with the situation. On the basis of the Company's audited balance sheet as at December 31, 2002 approved by the Board on June 18, 2003, it is clear that the net assets of the company are less than half of its called up share capital. On receipt of the proceeds from the Placing by the company, this will still be the case and, accordingly, the Directors are currently considering what steps, if any, should be taken by the company to deal with the situation. Extraordinary General Meeting As set out above the Placing remains conditional on the passing of the Resolutions. It is expected that the EGM Notice and explanatory circular will be dispatched to Shareholders Friday convening the EGM for August 11, 2003 at the offices of Tite & Lewis, Alder Castle, 10 Noble Street, London EC2B 7TL. Copies of the explanatory circular will be available, free of charge for a period of one month during normal business hours from the offices of the Company at Tuition House, 27-37 St. George's Road, London, SW19 4DS for a period of 4 weeks following publication CONTACT: Keith Carby Phone: 01793 441790 Steve Hartley Phone: 020 8971 4402 Charles Ansdell Phone: 020 8971 4408 Tim Worlledge Phone: 020 7488 4040 Evolution Beeson Gregory INVENSYS PLC: Completes Divestment of Baan to SSA Global -------------------------------------------------------- Invensys plc announces that it has completed the sale of its Baan business to SSA Global Technologies, Inc., a leading provider of enterprise solutions for process manufacturing, discrete manufacturing, consumer services and public companies worldwide and which is jointly owned by Cerberus Capital Management, L.P. and General Atlantic Partners, LLC, for the previously agreed cash consideration of US$135 million. The sale proceeds will be used by Invensys to continue to reduce its level of indebtedness. Rick Haythornthwaite, CEO of Invensys said: "With the completion of the sale of Baan, we have made a good start to our disposal program which will result in a sharper-focused, financially-stronger Invensys." About Invensys plc Invensys is a global leader in production technology. The group helps customers improve productivity, performance and profitability using innovative services and technologies and a deep understanding of their industries and applications. Invensys Production Management works closely with customers to increase performance of production assets, maximize return on investment in production and data management technologies and remove cost and cash from the supply chain. The division includes APV, Avantis, Eurotherm, Foxboro, IMServ, SimSci-Esscor, Triconex, M&I and Wonderware. These businesses address process and batch industries -- including oil and gas, chemicals, power and utilities, food and beverage, pharmaceuticals and personal health care products, metals and mining -- plus the discrete and hybrid manufacturing sectors. Invensys Rail Systems is a global leader in the design, manufacture, supply, installation, commissioning and maintenance of safety-related rail signaling and control systems as well as a complete range of rail signaling and communications products. The business includes Westinghouse Rail Systems Limited, Dimetronic Signals, Safetran Systems, Burco Services, Westinghouse Signals Australia and Foxboro Transportation. Westinghouse Rail Systems Limited was recently awarded a contract valued at more than GBP850 million (US$1.3 billion) for the renewal of signaling on the London Underground. Invensys also currently serves other market sectors through its Development Division. The businesses in this division are: Appliance Controls, APV Baker, Baan, Climate Controls, Hansen Transmissions, Lambda, Metering Systems, Powerware and Teccor. Invensys is actively seeking to develop these businesses through equity partners or new owners. Invensys operates in more than 60 countries, with its headquarters in London. For more information, visit http://www.invensys.com CONTACT: INVENSYS PLC Duncan Bonfield Phone: +44 (0) 20 7821 3529 Brunswick Ben Brewerton/Sophie Fitton Phone: +44 (0) 20 7404 5959 JASMIN PLC: Interim FY Results Show Negative Operating Profit ------------------------------------------------------------- Jasmin plc has announced its audited results for the year ended March 31, 2003. Fully listed and a member of techMARK, Jasmin is based in Nottingham. Its activities include the design and production of a range of IT-based and manufactured products for the transport, defense and security markets. Highlights: (a) Turnover: GBP5.8 million (2002:GBP7.1 million) (b) Operating Profit: -GBP0.6 million (2002:GBP1 million) (c) Profit Before Tax: -GBP0.9 million (2002:GBP0.7 million) (d) Basic Earnings per Share -20.22p(2002: 16.75p) (e) Gearing of 102% (Note 9) (2002: 78%) (f) No dividend payment for the year to March 31, 2003 (2002: 2p) (g) Forward order book of GBP16 million (2002:GBP17 million) Roger Plant, Chairman of Jasmin plc, commented: "The last financial year was challenging but I believe we are now addressing the issues within our control and are putting the problems behind us." To View Full Report And Financials: http://bankrupt.com/misc/JASMIN_PLC.htm CONTACT: JASMIN PLC Roger Plant, Chairman Phone: 0115 9165165 BELL POTTINGER FINANCIAL Billy Clegg / Robin Tozer Phone: 0207 861 3232 LE MERIDIEN: Works Overtime to Beat Rescue Deal Deadline -------------------------------------------------------- Le Meridien's banks were still working on the rescue plan for the troubled hotel chain on the evening before the Tuesday deadline thought to be set for the crucial deal. The bankers were looking into the proposed GBP150 million injection of new equity put together by financier Guy Hands, according to The Guardian. The plan provides for Saudi billionaire Prince Al-Waleed putting up GBP120 million of cash, and Mr. Hands GBP30 million. It would prevent its owners and bankers from having to write-off any of their losses as the plan includes a program of swapping part of their GBP800 million loan for a 10% stake in the business. It is understood that an initial offer from Prince al-Waleed and Hands' private equity arm, Terra Firma, was rejected by the banks late on Friday, but the proposal seemed to have gained favor over the weekend when a rival offer from U.S. investment bank Lehman Brothers appeared to run into difficulty, according to the report. Le Meridien owes Royal Bank of Scotland at least GBP16 million in rent. Its bankers are led by Merrill Lynch and CIBC. LONDON CLUBS: To Hold Analyst Briefing on Results July 24 --------------------------------------------------------- London Clubs International will be announcing preliminary results for the year to end March 31, 2003 on Thursday, July 24, 2003. There will be an analyst briefing at 09.30 a.m. on this day at 4th floor, College Hill Associates, 78 Cannon Street, London, EC4N 6HH. ***** London Clubs proposed two months ago to dispose its Palm Beach casino for GBP36.25 million, sell and leaseback of 50 St. Jame's clubs, and form a joint venture with Celebrity Gaming Limited to effect an overall net debt reduction of GBP60 million. MYTRAVEL GROUP: Confident of Reaching Accord with Bondholders ------------------------------------------------------------- MyTravel Group plc has noted the recent press speculation and confirms that its negotiations with an ad hoc committee of holders of its Convertible Bonds are continuing. Although terms have not yet been agreed, the Board is confident that ultimately a satisfactory resolution will be achieved. The terms currently under discussion involve: (a) the extension of the maturity of the Bonds by three years to January 2007 (b) the issue to Bondholders of shares and warrants to subscribe up to 128.6 million ordinary shares (representing approximately 26% of the existing issued share capital and approximately 21% of the enlarged issued share capital) in return for conversion of the same nominal amount of Bonds (i.e., converting 10p nominal of Bonds into one new ordinary share). (c) a possible increase in the rate of interest payable on the Bonds. (d) a 'success fee' broadly equivalent to the success fee payable to the banks and other creditors (the Override Banks) which are party to the Override Agreement announced by the Company on June 6 May 2003. This would be based on a percentage of the increase in the market capitalization of the company (above GBP40 million) at the date the Bonds are redeemed or refinanced. The maximum percentage would be 2.5%, capped at GBP11 million. (d) certain other improvements in the non-financial terms of the Bonds. The terms of any proposal formally put to Bondholders for their approval, which will need to be acceptable to the Override Banks, may differ from those outlined above. Obtaining the approval of Bondholders to the terms of a proposal which is acceptable to the Override Banks will mean that the company will have extended the maturity of its existing financing to at least 2006, which is designed to give management the opportunity to implement their plans for a turnaround of the Group. However, the Group still faces significant challenges which must be overcome before this turnaround can be achieved. When the terms of the proposal to be made to Bondholders have been finalized the company will make a further and more detailed announcement. CONTACT: BRUNSWICK Fiona Antcliffe Phone: 0207 404 5959 Sophie Fitton TRINITY MIRROR: To Cut Down Workforce to Streamline Operations -------------------------------------------------------------- Trinity Mirror will announce at the end month plans to axe hundred of jobs as part of the restructuring of its advertising, administrative and distribution operations, according to the Financial Times. The shake-up which follows a strategic review of the business by Sly Bailey, Trinity Mirror's new chief executive, is aimed at simplifying newspaper distribution contracts, advertising sales and marketing efforts of the newspaper publishing group. The decision to streamline the operation comes after Ms. Bailey's decision to keep the group's national titles, led by the Daily Mirror and some 260 regional titles. Only the regional titles in Northern Ireland have been identified for disposal. The report quoted one person familiar with the plans saying: "We've identified that Trinity is quite difficult to do business with because the company is bureaucratic and needs to be freed up." To address circulation pressure and volatile advertising in its national titles Trinity Mirror plans to change its supply chain arrangements as some distribution contracts expire in mid-2004. It might result to a potential distribution deal with magazine distributor Marketforce, with which it is currently having discussions. Trinity Mirror, which is due to present its results on July 31, is embarking on a GBP32 million cost-reduction drive expected to deliver another GBP10 million of savings by year-end. TRINITY MIRROR: Jobs to go in Northern Ireland Restructuring ------------------------------------------------------------ Newspaper publishing group Trinity Mirror is expected to clarify plans for its Northern Ireland titles as it unveils plans to axe hundreds of jobs under a restructuring plan, according to the Financial Times. The publisher evaluated the possibility of selling the title last month in a bid to turn the firm around and revive sales in both national and regional newspapers. Some of the newspapers has reportedly received interest from rival media groups including Johnston Press, Scottish Radio Holdings, Gannett. The Cork Examiner might also bid for the Protestant Belfast Newsletter and the Derry Journal group. Industrial analysts value the titles between GBP30 million and GBP40 million. Trinity Mirror declined to comment. The group said last month advertising conditions have remained volatile during the last six months. Group advertising revenues for the 26-week period are expected to be flat year on year, with a 0.6% increase in the first quarter offset by a 0.4% decline in the second quarter. WORLD TRAVEL: Gives Update Regarding Current Market Activities -------------------------------------------------------------- The London Stock Exchange suspended the shares of World Travel on July 1, pending the publication of the annual accounts for the year ended December 31, 2002. The company has for some time been reviewing the options available to it given the cash constraints under which the Group has been operating. On July 16, 2003 the Group announced the disposal by its 45% owned associate International Travel Agents Link Limited of the URLs Deckchair.com and LeishureHunt.com for a cash consideration of GBP150,000 which was utilized for that company's working capital requirements. The Board now announces that the company has also disposed of its remaining 50% interest in the URL flights.com for a cash consideration of US$200,000 (approximately GBP120,000) which was applied in reduction of the Company's liability to its secured creditor. The company and its subsidiaries have now exited the travel business, and come to terms with the company's creditors. The Board is now exploring the possibility of acquiring a business in a different sector. This process is still at an early stage but it is expected that additional capital will need to be raised to conclude such an acquisition and to settle the company's liabilities. The Board expects to publish the results for the year ended December 31, 2002 once a firm decision to proceed with such an acquisition has been taken. A further announcement will be made in due course. ********* 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. 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. 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