/raid1/www/Hosts/bankrupt/TCREUR_Public/030813.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, August 13, 2003, Vol. 4, No. 159
Headlines
C Z E C H R E P U B L I C
VACLAV FISCHER: Core Units Amass More than CZK1 Billion Debt
F R A N C E
ALCATEL: Outlook Changed to Stable on Positive Q2 Results
ALSTOM SA: U.S. SEC Opens Formal Probe on U.S. Unit
ALSTOM SA: To Turn U.K. Operation into Service Business
ALSTOM SA: U.K. Govt Urged to Intervene in Plan to Fire 5,000
ALSTOM SA: Royal Caribbean Files Case Over Defective Products
A NOVO: Committee Brings in Navigant as Forensic Accountants
G E R M A N Y
DEUTSCHE TELEKOM: Erases EUR2 Billion from Debt Ledger
DEUTSCHE TELECOM: Holds on to 24% Stake in Globe Telecom
ENERGIE BADEN-WURTTEMBERG: Not Selling Hungarian Subsidiaries
MANNHEIMER AG: Forms Partnership with Continentale Holding
MG TECHNOLOGIES: Q2 Sales, Earnings Report Down Year-on-year
MWG BIOTECH: Achieves EBITDA Breakeven in Second Quarter
PROSIEBENSAT.1 MEDIA: Saban Capital Acquires Voting Control
PROSIEBENSAT.1 MEDIA: Saban Tenders Offer for Outstanding Shares
PROSIEBENSAT.1 MEDIA: New Owner Dispels Fears on Future Plans
SALAMANDER AG: Parent Gives Nod to Acquisition by Garant
TFG VENTURE: Records First Operating Profit in Two Years
T-ONLINE INTERNATIONAL: 1st-half Operating Results, Revenues Up
I T A L Y
LAZIO SPA: Ricucci, Ligresti Take Part in Capital Increase
P O L A N D
ELEKTROWNIA TUROW: Energy Reform Renders Debt Status Uncertain
UPC POLSKA: Court to Hear Disclosure Statement September 16
S W E D E N
LM ERICSSON: 'BB' Corporate, Unsecured Debt Rating Affirmed
SCANDINAVIAN AIRLINES: Reports Group Interim Report for 1H
S W I T Z E R L A N D
SWISS INTERNATIONAL: Restructuring on Right Track, Says Board
SWISS INTERNATIONAL: Gets Invitation to Join OneWorld Alliance
SWISS RE: Obtains Catastrophe Protection via Arbor Program
ZURICH FINANCIAL: To Wind Down Parts of Zurich Capital Markets
U N I T E D K I N G D O M
CHUBB PLC: UTC Now Owns More than 90% of Shares
EDINBURGH FUND: Board to Press for Amendment to Borrowing Power
EDINBURGH FUND: Head of U.K. Equity Team Resigns
JOHNSON SERVICE: Disposes Connacht Court to National Linen
IMPERIAL CONSOLIDATED: Defaults on JPY12 Bln Payout in Japan
INTER-ALLIANCE GROUP: Resolutions to Issue New Shares Passed
MANAGEMENT CONSULTING: Sees Promising Prospect Despite 1H Loss
MORGAN CRUCIBLE: Applies for Listing on London Bourse
ROYAL MAIL: Chairman Forecasts GBP100 Million FY2003 Profit
SHERWOOD GROUP: Studies Future of Loss-making Lace Operations
TELEWEST COMMUNICATIONS: Hopes NTL Will Revive Merger Talks
*********
===========================
C Z E C H R E P U B L I C
===========================
VACLAV FISCHER: Core Units Amass More than CZK1 Billion Debt
------------------------------------------------------------
Vaclav Fischer's companies, namely CK Fischer a.s., Fischer s.r.o., and
Fischer Air could have accumulated more than CZK1 billion in debt, Czech
Happenings said, citing weekly Euro.
According to the report, the lease contract of Vaclav Fischer on two Boeing
aircraft is probably the root cause of the group's problems. To pay for the
US$300,000 monthly lease on each of the aircraft, Fischer Air charges its
sister travel agency Fischer Air at least CZK500 more for air tickets
compared to other carriers.
Fischer Air was able to pay half of the price of the two aircraft, and it
still owes CZK500 million (US$17 million), according to well-informed
sources. It also has a loan worth CZK100 million from Dresdner Bank, and
some debts from insurer Allianz. Allianz cancelled Fischer Air's aircraft
liability insurance, and the latter has to secure a new contract if it
intends to continue its flight after the current contract expires.
Fischer Air also owes external dealers commission, which, according to the
report, usually amounts to some 10% of the price of a tour, and totals some
CZK60 million annually. According to Euro, the debt could now be CZK30
million.
Vaclav Fischer owes over CZK400 million to Komercni Banka, its largest
creditor. It owes Czech Airports Authority and Czech Airlines some CZK50
million each, according to reports.
===========
F R A N C E
===========
ALCATEL: Outlook Changed to Stable on Positive Q2 Results
---------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
France-based telecommunications equipment maker Alcatel to stable from
negative following publication by the company of its second-quarter results.
At the same time, Standard & Poor's affirmed its 'B+/B' corporate credit
ratings and its 'B+' senior unsecured debt ratings on Alcatel.
"Alcatel's ongoing restructuring program is mitigating the severe market
contraction affecting the global telecoms equipment industry and offsets any
short-term liquidity risk," said Standard & Poor's credit analyst Leandro de
Torres Zabala.
At June 30, 2003, Alcatel had gross debt of EUR6.52 billion, including bond
obligations of EUR6.04 billion. In the face of continuing challenging
market conditions, Alcatel has managed to reduce materially its cost base.
This has resulted in positive operating income before restructuring expenses
in the second quarter of 2003. With slower rates of sales decline expected
in the second half of 2003 and continuation of its rigorous cost-cutting
program, Alcatel should be in a position to become profitable for the full
year 2003, before restructuring costs, and to continue reducing negative
free operating cash flow (EUR403 million in the first half of 2003). The
latter, coupled with Alcatel's adequate liquidity profile, should help the
company to sustain its business and technological positions and offsets any
short-term liquidity risks.
The ratings on Alcatel are also supported by its position as one of the
leading global manufacturers of telecoms equipment, its established
relationship with major telephone operators, and substantial exposure to
non-telecoms operations.
"It is critical that Alcatel continues implementing its restructuring
program in order to restore sustained positive operating profitability and
free operating cash flow generation, while preserving an adequate liquidity
position at all times," said Mr. de Torres Zabala.
ALSTOM SA: U.S. SEC Opens Formal Probe on U.S. Unit
---------------------------------------------------
ALSTOM announced on June 30, 2003 that it had been advised that the United
States Securities and Exchange Commission was conducting an informal inquiry
relating to ALSTOM Transportation Inc., a U.S. subsidiary of the company.
ALSTOM has now been advised that the United States Securities and Exchange
Commission has issued a formal order of investigation in connection with its
inquiry relating to ALSTOM Transportation Inc. ALSTOM is continuing to
cooperate fully with the Securities and Exchange Commission.
*****
Alstom in June said it is "conducting an internal review assisted by
external accountants and lawyers following receipt of letters earlier this
month alleging accounting improprieties on a railcar contract being executed
at the Hornell, New York facility of Alstom Transportation Inc., a U.S.
subsidiary."
It added that: "Initial reviews have found out that losses have been
significantly understated in Alstom Transportation Inc.'s accounts, in
substantial part due to accounting improprieties by the understatement of
actual costs incurred, including by the non-recognition of costs incurred in
anticipation of shifting them to other contracts, and by the understatement
of forecast costs to completion."
CONTACT: ALSTOM SA
Investor relations
J-G. Micol
Phone: +33 1 47 55 26 04
E-mail: Investor.relations@chq.alstom.com
ALSTOM SA: To Turn U.K. Operation into Service Business
-------------------------------------------------------
Troubled industrial group Alstom will downsize its U.K. operations with as
much as 50% cut in its workforce, a report from the Sunday Times said,
citing Trade Unions and company executives.
According to the report, Alstom will cut its U.K. staff from 10,000 to
5,000, and reduce the status of operations from an exporting base to a
'service' center.
Nick Salmon, executive vice-president, said: "Alstom's operations in the
U.K. in the future will be a service business, looking after our installed
base in power stations, electrical systems, railways and rolling stock. It
will not be an exporter."
Under the plan, 1,100 jobs will be cut at Washwood Heath, Alstom's train
factory in Birmingham, while others will be transferred to new employees.
Alstom's remaining contract in the U.K. is only to produce trains for the
Jubilee line of the London Underground. Paul Barron, Alstom's senior U.K.
executive, was cited saying the company failed to gain support from the U.K.
government to secure contracts for the British plants.
Alstom recently received a EUR3.4 billion package, a third of which is
supported by the French state.
ALSTOM SA: U.K. Govt Urged to Intervene in Plan to Fire 5,000
-------------------------------------------------------------
Manufacturing union Amicus has urged the U.K. government to act over plans
by Alstom to slash local workforce to 5,000 from 10,000.
Derek Simpson, Joint General Secretary of Amicus, said: "The U.K. government
is failing the U.K. Alstom workforce on two counts -- firstly by not
implementing the kind of employment legislation that protects workers' jobs
in France, Spain and Germany, but also by failing to intervene in what
amounts to a devastating blow to U.K. manufacturing capability."
Joint General Secretary, Roger Lyons, said: "While the French government are
intervening to assist Alstom financially, the British government is standing
idly by. I have already written to the Secretary of State for Trade and
Industry to asking her to intervene parallel to any action taken by the
French government but the announcement of more job losses makes the
situation even more urgent."
The union deplored the country's weak employment protection measures, which
is the reason why job losses have become increasingly an inevitability in
the U.K. Consequently, when multinationals shed jobs, U.K. workers are
always targeted first, it said.
ALSTOM SA: Royal Caribbean Files Case Over Defective Products
-------------------------------------------------------------
French engineering group Alstom is facing a legal suit from Royal Caribbean
Cruises for allegedly supplying defective products to the U.S. cruise
operator, according to the Financial Times.
The American company is claiming US$300 million for damages caused by
equipment supplied by the French engineering group and the U.K.'s Rolls
Royce. It lodged its case at a Miami court late Thursday.
Celebrity Cruises, Royal Caribbean's luxury cruise line, said all four of
the Mermaid ship propulsion systems co-produced by Alstom and Rolls Royce
had "failed repeatedly, resulting in cancelled cruises and thousands of
disappointed guests," according to the report. It also claimed the two
suppliers had "misrepresented their product."
Alstom, which admitted receiving the formal notification of the charges last
month, said it rejects the entire claim. Rolls Royce hasn't received a
formal notice yet, but it said it would "vigorously contest any
allegations."
Alstom suffered after it was forced to spend EUR4 billion (US$4.5 billion)
in relation to a litigation over technical problems with heavy-duty gas
turbines acquired from Swiss-Swedish ABB. The lawsuit is blamed for
Alstom's financial woes.
The French government has come to the aid of Alstom with a EUR2.8 billion
bailout package.
A NOVO: Committee Brings in Navigant as Forensic Accountants
------------------------------------------------------------
The Official Committee of Unsecured Creditors of A Novo Broadband, Inc.,
asks for authority from the U.S. Bankruptcy Court to retain Navigant
Consulting, Inc. as its forensic accountants.
In this case, as in many other cases, one important estate asset
is the right to pursue avoidance actions under Chapter 5 of the Bankruptcy
Code and other applicable laws. Another important estate asset is the right
to pursue actions to equitably subordinate or re-characterize certain claims
against the Debtor's estate. The Committee -- whose constituency has a
significant interest in the outcome of such litigation -- is willing and
well suited to pursue these actions. The Committee indicates it will also
file a motion seeking authority to pursue the Debtor's avoidance actions.
The Committee notes that Litigation of this nature requires an analysis of
the Debtor's books and records, various public and private financial
documents, and a fair amount of forensic accounting work. In order for the
Committee to perform properly the functions and duties vested in it by the
Bankruptcy Code, and specifically to meaningfully assist in the process of
bringing these actions, it is essential that it have the expertise and
advice of experienced forensic accountants. The Committee believes Navigant
is well-suited -- far more so than the Committee's lawyers -- to conduct
these analyses. To that end, the Committee desires to employ Navigant to
perform these services.
Navigant will be compensated for its work at its standard hourly rates of:
directors $350 to $400 per hour
principals $275 to $350 per hour
Navigant has indicated that its hourly rate will likely average $200 per
hour.
A Novo Broadband, Inc., a business engaged primarily in the repair and
servicing of broadband equipment for equipment manufacturers and operators
of cable and other broadband systems in North America, filed for chapter 11
petition on December 18, 2002 (Bankr. Del. Case No. 02-13708). Brendan
Linehan Shannon, Esq., M. Blake Cleary, Esq., at Young, Conaway, Stargatt &
Taylor represent the Debtor in its restructuring efforts. When the Company
filed for protection from its creditors, it listed
$12,356,533 in total assets and $10,577,977 in total debts.
A Novo Broadband, Inc. is part of the Paris based A Novo Group
(http://www.a-novo.com),which services broadband, electronic, and
telecommunication equipment on an industrial scale within Europe, North
America, & South America.
=============
G E R M A N Y
=============
DEUTSCHE TELEKOM: Erases EUR2 Billion from Debt Ledger
------------------------------------------------------
Deutsche Telekom AG, which was recently given a stable outlook by Standard &
Poor's rating agency, has reportedly chipped off more than EUR2 billion from
its EUR56.3 billion debt.
AFX News, citing Welt am Sonntag, said the Germany-based fixed-line and
mobile telecommunications operator will reveal in its second quarter report
a narrowing of net debt to EUR54 billion.
Deutsche Telekom had a net debt of EUR61.1 billion at the end of 2002.
The newswire conducted a poll among analysts and results show that the
company is expected to have cut its debt to between EUR53-55 billion due to
cash flow generation, asset sales and the depreciation of the dollar.
DEUTSCHE TELECOM: Holds on to 24% Stake in Globe Telecom
--------------------------------------------------------
Further to Circular for Brokers No. 2062-2003 dated July 27, 2004, Ayala
Corporation in its SEC Form 17-C dated August 11, 2003 stated that:
"Further to our June 27, 2003 disclosure letter, Ayala Corporation wishes to
announce that the offer period covering the offer to sell by DeTeAsia
Holding GmbH, a wholly owned subsidiary of Deutsche Telecom AG, of its
entire 24.8% stake in Globe Telecom to Ayala and Singapore Telecom
International Pte Ltd., a wholly owned subsidiary of Singapore
Telecommunications Limited, expired on Friday, August 8, 2003 with no
agreement reached by the parties.
For your information
TRISHA M. ZAMESA
Head, Disclosure Department
Ayala Group
*****
In a report about the failed transaction, the Financial Times said,
"[Deutsche Telekom's] willingness to hold out for a better price in spite of
limited interest from other investors is a reflection of the company's
recent progress in eroding its debt mountain."
ENERGIE BADEN-WURTTEMBERG: Not Selling Hungarian Subsidiaries
-------------------------------------------------------------
Energie Baden-Wurttemberg AG, the South German utility that revealed
worse-than-expected financial results following an audit, is reportedly
planning to hold on to its Hungarian subsidiaries, Budapest Business Journal
said.
Company spokeswoman Petra Wollmer revealed the information days after the
board decided at the end of July to streamline its portfolio.
Energie Baden-Wurttemberg is a minority shareholder in the electricity
distributor for northern Hungary, Emasz Rt, with a 27.25% stake. It also
holds a 26.83% stake in power distributor Elmu Rt, which supplies 1.3
million consumers in Budapest. The company has a 21.4% stake in the 800
mega-watt power station Matra Power Plant Rt as well.
CONTACT: ENBW ENERGIE BADEN-WURTTEMBERG AG
Communications Department
Durlacher Allee 93
76131 Karlsruhe
Phone: +49 (07 21) 63-1 43 20
Fax: +49 (07 21) 63-1 26 72
E-Mail: unternehmenskommunikation@enbw.com
MANNHEIMER AG: Forms Partnership with Continentale Holding
----------------------------------------------------------
Mannheim. Continentale and Mannheimer Group are becoming strategic partners.
Continentale Holding AG is initially taking a 51% stake in Mannheimer
Krankenversicherung AG. The Continentale sales force will be able to
mediate the special Mannheimer Versicherung AG products. As a countermove,
the Mannheimer sales force can offer Continentale life insurance products.
*****
Mannheimer Holdings fell victim to three years of declining stock prices
that eroded investment income. It was forced to write down the value of
stock holdings. The firm received another blow when the planned injection
of new capital in the company failed to come through.
Mannheimer's shareholders are Austrian insurer Uniga
Versicherunger, which holds a 13% stake, Munich Re, with 10%, and Swiss Re,
Frankona Re, Cologne Re, and Gerling's reinsurance business, which all hold
less than 5%.
MG TECHNOLOGIES: Q2 Sales, Earnings Report Down Year-on-year
------------------------------------------------------------
In the second quarter of 2003, the performance of mg technologies ag,
Frankfurt, failed to meet expectations. This was largely attributable to
one-time charges.
The sales and earnings reported by the mg Group were down year-on-year
during the period under review. In the second quarter, the company
generated sales of EUR2.0 billion, which was 6.2% less than in the same
period of last year. In the first half of the year, sales declined from
EUR4.3 billion to EUR3.9 billion. In the second quarter it posted a pre-tax
loss of EUR21.2 million, EUR100.4 million down on the figure it reported for
the same period last year.
In the first six months of the current fiscal year, consolidated pre-tax
earnings came to EUR18.1 million, a year-on-year decrease of EUR107.5
million. In the first half of 2003 alone, earnings were depressed by
one-time charges of EUR53.1 million. Moreover, the strong euro reduced the
Group's earnings by roughly EUR25 million.
mg technologies ag is currently conducting a thorough and comprehensive
review, which will be completed in late fall. We aim to use this to
strengthen the company's balance sheet and create sufficient financial
leeway to enable us to take advantage of selected growth opportunities.
Despite the difficult economic conditions and the continued strength of the
euro, as things stand the operating results posted by the Group's two main
companies, GEA and Dynamit Nobel, for 2003 will be down only slightly year
on year. However, mg still expects to be burdened by substantial one-time
effects in the second half of the year: the company's balance sheet will be
placed on a more conservative footing, which might necessitate changes to
the accounting and valuation methods it applies. The Group's structures,
including its multi-level holding companies, are being scrutinized. Their
simplification, which will incur one-time charges in the short term, will
deliver significant cost savings for the future. The review will also
entail a reassessment of risk.
The mg Group's earnings will therefore remain under considerable pressure
throughout 2003. From today's perspective, mg does not expect to see any
improvement on its weak first-half earnings in the second half of the year.
MWG BIOTECH: Achieves EBITDA Breakeven in Second Quarter
--------------------------------------------------------
For the first time since it went public in 1999, MWG Biotech AG, Ebersberg,
was able to achieve a break-even quarterly EBITDA result (earnings before
interest, taxes, depreciation and amortization), its consolidated EBITDA
result for the first half of the year being just -EUR0.3 million. The
biotechnology specialist has thus continued to show a good development of
its business by reducing its EBITDA deficit by the equivalent of 93%
(from -EUR4.3 million in the first half of 2002), despite the fact that its
turnover was still less than expected (EUR22.6 million in the first half of
2003 as compared with EUR24.8 million in the same period of 2002). For the
year as a whole, MWG is still expecting to achieve a total turnover of EUR60
million (previous year EUR49.6 million) and an EBITDA result of plus EUR5
million (previous year -EUR 13.6 million).
Results of the individual divisions:
Turnover in EUR million EBITDA in EUR million
1H 03 1H 02 1H 03 1H 02
Genomic Information 4.1 5.3 -0.1 0.1
Genomic Synthesis 10.5 10.4 2.5 0.4
Genomic Diagnosis 3.4 3.7 -1.2 -1.1
Genomic Technology 4.5 5.4 -1.5 -3.7
The overall gross profit margin is, at 46.6%, considerably better than the
previous year's 42.7%. This improvement, despite low turnover figures and
currency exchange influences, shows the extent to which operative efficiency
has been increased in all four divisions of the Company.
At June 30, 2003 MWG Biotech AG had at its disposal liquid funds of EUR16.5
million (previous year EUR22.5 million). At EUR4.1 million, the company's
cash burn in the first half of 2003 was 46% lower than that of the first
half of 2002 (EUR7.6 million). The reasons why the company's cash flow is
still negative include the outlays required in connection with the
introduction of the new laboratory automation systems in the Genomic
Technology division, as well as expenditure for current projects and array
developments being undertaken in Genomic Diagnosis.
PROSIEBENSAT.1 MEDIA: Saban Capital Acquires Voting Control
-----------------------------------------------------------
A subsidiary of Saban Capital Group, Inc., the private investment firm of
media entrepreneur Haim Saban, and KirchMedia GmbH & Co KGaA announced that
they have completed an agreement in which Saban Capital Group acquired the
majority of the voting rights of ProSiebenSat.1 Media AG, the largest
private television network in Germany.
Through a subsidiary, Saban Capital Group acquired 36% of the share capital
of ProSiebenSat.1 Media AG (72% of the voting rights). The acquisition was
financed with equity from Saban Capital Group and additional financing from
Saban Capital Group Investments I Corp., Bain Capital L.L.C., Hellman &
Friedman LLC, Thomas H. Lee Partners, L.P., Providence Equity Partners,
Inc., Quadrangle Group LLC and Alpine Equity Partners L.P.
The creditor committee of KirchMedia approved the transaction on August 05,
2003, after the recommendation of insolvency administrator Dr. Michael
Jaffe. The approvals of the Bundeskartellamt (federal anti-trust
authorities) and the Kommission zur Ermittlung der Konzentration im
Medienbereich (commission on concentration in the media) have already been
received.
Haim Saban, Chairman and CEO of Saban Capital Group, said: "We are pleased
to have completed this agreement with KirchMedia and to enter one of the
world's most exciting media markets. ProSiebenSat.1 has outstanding assets
and a talented employee base. By providing enhanced capital resources and
necessary stability, we are confident that ProSiebenSat.1 has the potential
to become the most successful television broadcasting company in Europe. We
are looking forward to working together with the management team headed by
Urs Rohner on the future of the channels."
"We recognize the challenges in returning ProSiebenSat.1 to higher earnings,
but we are committed to a long term business plan and are excited about the
opportunity to enter the German market at this time," said Adam Chesnoff,
President and Chief Operating Officer, Saban Capital Group.
The insolvency administrator Dr. Michael Jaffe and KirchMedia consultant
Hans-Joachim Ziems have reached a significant step during the selling
process of KirchMedia. Jaffe said: "It was the task of the insolvency
administrator to act both in the best interests of the creditors and to
provide the best possible solution for the assets of these channels. This
has been successful. The creditors' committee decided unanimously that Haim
Saban's offer was both plausible and attractive."
Hans-Joachim Ziems added: "The completion is to a large extent the execution
of already negotiated contract terms, which had been mutually agreed upon
with insolvency administrator Michael Jaffe during the insolvency management
period. I am very pleased that the efforts in the past months led to this
excellent result."
The CEO of ProSiebenSat.1, Urs Rohner is delighted about the acquisition and
closing: "We are pleased that we now have a clear and stable ownership
structure again. With Saban Capital Group we have gained extremely
professional and internationally experienced partners with whom we will
significantly increase the speed of our business processes. For us a new
and exciting chapter of our company history is starting. We have been
looking forward to this for a long time and have great expectations."
Saban Capital Group was advised by Alpine Capital Group and JP Morgan on
this transaction.
About ProSiebenSat.1 Media AG
ProSiebenSat.1 Media AG is Germany's largest TV company. Formed in 2000 by
merging ProSieben Media AG and Sat.1, the group has four strong TV
stations -- Sat.1, ProSieben, Kabel 1 and N24 -- and holds a leading
position in both the multimedia and merchandising fields. Through its
shareholding in Euvia Media, the Group has entered the promising area of
Transaction-TV. The publicly listed MDAX company has 2,900 employees in
Munich and Berlin.
About Saban Capital Group
Saban Capital Group, Inc. is a private investment firm specializing in the
media and entertainment industries. Based in Los Angeles, Saban Capital
Group was established in 2001 by Haim Saban, founder of global family
entertainment company Saban Entertainment, a global television broadcasting,
production, distribution, merchandising and music company that was sold to
the Walt Disney Corporation in October 2001 in a US$5.2 billion transaction.
The firm makes both controlling and minority investments in public and
private companies and adds strategic value through its established
relationships and industry experience. In addition, Saban Capital Group
owns and operates a music company, Saban Music Group, which operates an
independent music-publishing company.
About Thomas H. Lee Partners L.P.
Thomas H. Lee Partners, L.P. is a Boston-based private equity firm focused
on identifying and acquiring substantial ownership positions in growth
companies. Founded in 1974, Thomas H. Lee Partners currently manages
approximately US$12 billion of committed capital. Notable transactions
sponsored by the firm include: American Media, Inc., AXIS Capital Holdings
Limited, Houghton Mifflin, TransWestern Publishing, National Waterworks,
Endurance Specialty Insurance, Vertis, Eye Care Centers of America, Cott
Corporation, United Industries, Rayovac, Fisher Scientific International,
Experian, GNC and Snapple Beverage.
About Bain Capital:
Bain Capital is a global private investment firm that manages several pools
of capital including private equity, high-yield assets, mezzanine capital
and public equity with over US$15 billion in assets under management. Since
its inception in 1984, the firm has made private equity investments and
add-on acquisitions in over 225 companies around the world, in a variety of
sectors, including media and entertainment. Bain Capital partners with
exceptional management teams in order to build long-term value in its
portfolio companies. Headquartered in Boston, Bain Capital has offices in
Munich, London, New York, and San Francisco. For more information visit
http://www.baincapital.com
About Hellman & Friedman LLC
Hellman and Friedman LLC is a San Francisco-based private equity investment
firm. Since its founding in 1984, the Firm has raised and managed US$5
billion of committed capital and invested in over 40 companies. The Firm's
strategy is to invest in superior business franchises and to be a
knowledgeable and value-added investor in select industries, including
financial services, media, marketing, professional services, and information
services. Representative investments include the Nasdaq Stock Market, Inc.;
Arch Capital Group Limited; Young & Rubicam, Inc.; Formula One Holdings,
Ltd.; Western Wireless Corporation; Voicestream Wireless Corporation; Eller
Media Company, Inc.; Franklin Resources, Inc.; and others. For more
information on Hellman & Friedman, visit http://www.hf.com.
About Providence Equity Partners Inc.
Providence Equity Partners Inc. is one of the world's leading private
investment firms specializing in equity investments in media and
communications companies. The principals of Providence Equity manage funds
with over US$5.0 billion in equity commitments, including Providence Equity
Partners IV, a US$2.8 billion private equity fund, and have invested in more
than 60 companies operating in over 20 countries since the firm's inception
in 1991. Providence Equity's current and previous areas of investment
include television and radio broadcasting, cable television content and
distribution, wireless and wireline telephony, publishing and other media
and communications sectors. Recent investments include YES Network, Craig
Media, Mountain States, Casema and eircom. Visit http://www.provequity.com
for additional information.
About Quadrangle Group LLC
Quadrangle Group LLC manages Quadrangle Capital Partners LP, a private
equity fund that specializes in the media and communications industries.
The firm also invests in financially troubled companies across industry
groups through a separately managed distressed debt investment program.
Quadrangle Group was founded in March 2000 by four former Managing Directors
of Lazard Freres & Co. LLC who have more than 60 years of combined
experience in private equity and in media and communications. Additional
information may be found at http://www.quadranglegroup.com
About Alpine Equity Partners L.P.
Alpine Equity Partners L.P. is a New York based merchant banking firm and an
affiliate of Alpine Capital LLC, a mergers and acquisitions advisory firm
principally involved in media, entertainment, communications and financial
services. Included in the Alpine Equity Partners L.P. portfolio are
investments in Daily Racing Form. LLC., Sit-Up Ltd., and Money Mailer LLC.
CONTACT: KIRCHMEDIA GMBH & CO KGAA:
rw konzept GmbH
Rudolf Wallraf
Phone: +49 (0)89 99562324
Mobile: +49 (0)170 4332832
CITIGATE DEWE ROGERSON GMBH
Bernhard Meising
Phone: +49 (0)211 5775 902
Elisabeth Ramelsberger
Phone: +49 (0)211 5775 913
or
SABAN CAPITAL GROUP, U.S.
Citigate Sard Verbinnen
Stephanie Pillersdorf
Phone: 212-687-8080
PROSIEBENSAT.1 MEDIA: Saban Tenders Offer for Outstanding Shares
----------------------------------------------------------------
A subsidiary of Saban Capital Group, Inc., the private investment firm of
media entrepreneur Haim Saban, announced Monday that consistent with German
law, it will make a cash tender offer for all outstanding shares of
ProSiebenSat.1 Media AG (XETRA:PSMG_p.DE). The offer for the preference
shares will be made at the weighted average share price for the three-month
period prior to the announcement of the acquisition of the voting control of
ProSiebenSat.1 by Saban Capital Group.
Saban Capital Group does not intend to pursue the conversion of the
preference shares into ordinary shares. Saban Capital Group has provided a
backstop of EUR280 million to ProSiebenSat.1 for a capital increase,
replacing the previous guarantee by the KirchMedia administrator and the
KirchMedia banks to provide the funds.
The offer document will be filed with the BAFin (Federal German Financial
Services Supervisory Authority) within four weeks, the statutory period
prescribed. After approval by BAFin, a tender offer will be published and
the terms of the offer will be made available to shareholders.
As announced, through a subsidiary, Saban Capital Group acquired 36% of the
share capital of ProSiebenSat.1 Media AG (72% of the voting rights) from
KirchMedia.
The acquisition, planned tender offer and capital increase will be financed
with equity from SCG and additional financing from Saban Capital Group
Investments I Corporation, Bain Capital L.L.C., Hellman & Friedman LLC,
Thomas H. Lee Partners, L.P., Providence Equity Partners, Inc., Quadrangle
Group LLC and Alpine Equity Partners L.P.
This notice does not constitute an offer to sell or a solicitation offer to
buy any securities.
About ProSiebenSat.1 Media AG
ProSiebenSat.1 Media AG is Germany's largest TV company. Formed in 2000 by
merging ProSieben Media AG and Sat.1, the group has four strong TV
stations -- Sat.1, ProSieben, Kabel 1 and N24 -- and holds a leading
position in both the multimedia and merchandising fields. Through its
shareholding in Euvia Media, the Group has entered the promising area of
Transaction-TV. The publicly listed MDAX company has 2,900 employees in
Munich and Berlin.
About Saban Capital Group
Saban Capital Group, Inc. is a private investment firm specializing in the
media and entertainment industries. Based in Los Angeles, Saban Capital
Group was established in 2001 by Haim Saban, founder of global family
entertainment company Saban Entertainment, a global television broadcasting,
production, distribution, merchandising and music company that was sold to
the Walt Disney Corporation in October 2001 in a US$5.2 billion transaction.
The firm makes both controlling and minority investments in public and
private companies and adds strategic value through its established
relationships and industry experience. In addition, Saban Capital Group
owns and operates a music company, Saban Music Group, which operates an
independent music-publishing company.
About Thomas H. Lee Partners L.P.
Thomas H. Lee Partners, L.P. is a Boston-based private equity firm focused
on identifying and acquiring substantial ownership positions in growth
companies. Founded in 1974, Thomas H. Lee Partners currently manages
approximately US$12 billion of committed capital. Notable transactions
sponsored by the firm include: American Media, Inc., AXIS Capital Holdings
Limited, Houghton Mifflin, TransWestern Publishing, National Waterworks,
Endurance Specialty Insurance, Vertis, Eye Care Centers of America, Cott
Corporation, United Industries, Rayovac, Fisher Scientific International,
Experian, GNC and Snapple Beverage.
About Bain Capital:
Bain Capital is a global private investment firm that manages several pools
of capital including private equity, high-yield assets, mezzanine capital
and public equity with over US$15 billion in assets under management. Since
its inception in 1984, the firm has made private equity investments and
add-on acquisitions in over 225 companies around the world, in a variety of
sectors, including media and entertainment. Bain Capital partners with
exceptional management teams in order to build long-term value in its
portfolio companies. Headquartered in Boston, Bain Capital has offices in
Munich, London, New York, and San Francisco. For more information visit
http://www.baincapital.com
About Hellman & Friedman LLC
Hellman and Friedman LLC is a San Francisco-based private equity investment
firm. Since its founding in 1984, the Firm has raised and managed US$5
billion of committed capital and invested in over 40 companies. The Firm's
strategy is to invest in superior business franchises and to be a
knowledgeable and value-added investor in select industries, including
financial services, media, marketing, professional services, and information
services. Representative investments include the Nasdaq Stock Market, Inc.;
Arch Capital Group Limited; Young & Rubicam, Inc.; Formula One Holdings,
Ltd.; Western Wireless Corporation; Voicestream Wireless Corporation; Eller
Media Company, Inc.; Franklin Resources, Inc.; and others. For more
information on Hellman & Friedman, visit http://www.hf.com.
About Providence Equity Partners Inc.
Providence Equity Partners Inc. is one of the world's leading private
investment firms specializing in equity investments in media and
communications companies. The principals of Providence Equity manage funds
with over US$5.0 billion in equity commitments, including Providence Equity
Partners IV, a US$2.8 billion private equity fund, and have invested in more
than 60 companies operating in over 20 countries since the firm's inception
in 1991. Providence Equity's current and previous areas of investment
include television and radio broadcasting, cable television content and
distribution, wireless and wireline telephony, publishing and other media
and communications sectors. Recent investments include YES Network, Craig
Media, Mountain States, Casema and eircom. Visit http://www.provequity.com
for additional information.
About Quadrangle Group LLC
Quadrangle Group LLC manages Quadrangle Capital Partners LP, a private
equity fund that specializes in the media and communications industries.
The firm also invests in financially troubled companies across industry
groups through a separately managed distressed debt investment program.
Quadrangle Group was founded in March 2000 by four former Managing Directors
of Lazard Freres & Co. LLC who have more than 60 years of combined
experience in private equity and in media and communications. Additional
information may be found at http://www.quadranglegroup.com
About Alpine Equity Partners L.P.
Alpine Equity Partners L.P. is a New York based merchant banking firm and an
affiliate of Alpine Capital LLC, a mergers and acquisitions advisory firm
principally involved in media, entertainment, communications and financial
services. Included in the Alpine Equity Partners L.P. portfolio are
investments in Daily Racing Form. LLC., Sit-Up Ltd., and Money Mailer LLC.
CONTACT: CITIGATE DEWE ROGERSON GMBH
Bernhard Meising
Phone: +49 (0)211 5775 902
Elisabeth Ramelsberger
Phone: +49 (0)211 5775 913
or
SABAN CAPITAL GROUP, U.S.
Citigate Sard Verbinnen
Stephanie Pillersdorf
Phone: 212-687-8080
PROSIEBENSAT.1 MEDIA: New Owner Dispels Fears on Future Plans
-------------------------------------------------------------
Haim Saban, the new owner of ProSiebenSAT.1, Germany's second-largest
television broadcaster, ruled out management change at the broadcaster, the
Financial Times said, citing an interview of Welt am Sonntag with the
investor.
According to the report, the U.S. billionaire said: "My partners and I stand
by the management . . . we will support their decisions." ProSiebenSAT.1
is currently headed by Urs Rohner.
He also assured that his shareholding would not politicize the editorial
content of news programming.
"I have no intention to interfere journalistically. But they must remain
balanced," he said.
Germany is the only large western market not to restrict the foreign
ownership of large media assets, the report noted. Mr. Saban who acquired
the broadcaster in an almost EUR1 billion deal refused to further disclose
his future strategy for the channels.
SALAMANDER AG: Parent Gives Nod to Acquisition by Garant
--------------------------------------------------------
The Supervisory Board of parent company EnBW approved the purchase agreement
drawn up between Salamander AG and Garant Schuh + Mode AG.
Under the contract, signed on June 20, 2003, Garant Schuh + Mode AG will
acquire these from the Salamander shoe division, effective October 1, 2003:
(a) 230 Salamander AG specialist shoe shops in Germany and in
eight further countries in western and eastern Europe;
(b) The rights to the Salamander brand;
(c) The license for the Lurchi children's shoe brand;
(d) A production facility in Martfu, Hungary; and
(e) 2,900 employees.
The Board of Management of Salamander AG sees Garant as a strategic partner
with a strong international presence.
According to Dr. Volker Grub, chairman of Salamander AG, this deal clears
the way for the formation of Europe's largest specialist shoe retail group.
CONTACT: SALAMANDER AG
Birgit Fink
Corporate Communications
Stammheimer Str.10
D-70806 Kornwestheim
Phone: +49 (0) 71 54/15 28 80
Fax: +49 (0) 71 54/15 26 10
E-mail: birgit.fink@salamander.de
TFG VENTURE: Records First Operating Profit in Two Years
--------------------------------------------------------
The strategic reorientation at TFG Capital AG already bore positive fruit in
the first semester. For the first time in two years, the company posted a
modest operating profit once again. EBIT was in the region of EUR0.06
million as at June 30, 2003, following a loss of EUR7.67 million in the
previous year. This return to positive earnings territory is attributable
to the fact that no major amortization had to be made this year. Due to the
sale of holdings from the old portfolio and business income earned in line
with the new investment strategy, in the first six months of the year the
company posted a total of EUR1.33 million in participation income (previous
year: EUR1.46 million).
Earnings before depreciation & amortization, tax and interest came to
EUR4.79 million (previous year: EUR2.25 million). DVFA/SG-based earnings,
at -EUR0.01 per share, likewise reflect a substantial improvement on the
previous year (-EUR0.72).
In the course of a further restructuring of the old portfolio, the value of
the company's holdings as at June 30, 2003 declined by roughly 6%, to
EUR28.8 million. Nevertheless, the company's net asset value as at the
reporting date was stable as liquid funds remained high at EUR20.2 m and
thanks to a substantial reduction in liabilities. It amounted to EUR36.59
million (Q1: EUR36.15 million) or EUR3.33 (Q1: 3.29) per share.
At the General Meeting held in June, the majority of shareholders voted in
favor of adopting the necessary steps for the company's reorientation, such
as capital measures, amendments to the articles of incorporation and the
change in legal form of the enterprise. The full half-year report will be
available for download from http://www.tfg.deas of August 15, 2003.
CONTACT: TFG CAPITAL AG
Phone: 02365/ 9780-0
Fax: 02365 / 9780-33
E-mail: investorrelations@ftg.de
T-ONLINE INTERNATIONAL: 1st-half Operating Results, Revenues Up
---------------------------------------------------------------
T-Online International AG increased its operating results and revenue
considerably compared with last year. Excluding the effects of sales of
shareholdings*, operating results improved to EUR122 million compared with
EUR43 million in the first half of last year. EBITDA excluding the effect
of sales of shareholdings increased to EUR156 million after negative EBITDA
of -EUR13 million last year. Income before taxes was thus also positive,
EUR23 million, compared with -EUR130 million in the first six months of
2002. Revenue increased from EUR731 million in the first half of 2002 to
EUR894 million. The group's revenue is thus 22% higher than in the same
period last year. The increase in the group's underlying profitability is
mainly attributable to a positive development of the gross margin while
revenue increased. The margin in the second quarter was 57.5% (Q1: 56.0%).
The customer base increased compared to the prior-year-period by 10% up to
12,67 million customers.
T-Online had 3.01 million broadband customers at the end of June 2003 (2.19
million at the same time last year) - 1.82 million of them using the flat
rate.
Broadband customers now account for 29% of customers in Germany
(June 30, 2002: 23%). The proportion of broadband customers on the group
increased to 25% at the end of the second quarter 2003 (June 30, 2002: 20%).
Effective January 1, 2003, T-Online International AG moved from the German
Commercial Code (HGB) to International Financial Reporting Standards
(IFRS),formerly International Accounting Standards (IAS), as the basis of
its consolidated financial reporting. The move to IFRS was made both to
enhance the international comparability of our reporting and to meet the
requirements for listing under the new Prime Standard on the stock exchanges
of Deutsche Borse AG.
*Effects of sales of shareholdings: Sale of t-info in the second quarter of
2003 for EUR24 million. Sale of stake (40%) in T-Motion in the second
quarter of 2003 for EUR41 million.
Issuer's information/explanatory remarks concerning this
ad-hoc-announcement:
T-Online increases operating results and revenue in the first half of 2003
T-Online International AG increased its operating results and revenue
considerably compared with last year. Excluding the effects of sales of
shareholdings*, operating results improved to EUR122 million compared
with -EUR43 million in the first half of last year. EBITDA excluding the
effect of sales of shareholdings increased to EUR156 million after negative
EBITDA of -EUR13 million last year. Income before taxes was thus also
positive, EUR23 million, compared with -EUR130 million in the first six
months of 2002.
Revenue increased from EUR731 million in the first half of 2002 to EUR894
million. The group's revenue is thus around 22% higher than in the same
period last year. T-Online recorded a year-on-year revenue increase of 47%
to EUR82 million in the segment Rest of Europe.
The increase in the group's underlying profitability is mainly attributable
to a positive development of the gross margin while revenue increased. The
margin in the second quarter was 57.5% (Q1: 56.0%). The increased
proportion of broadband customers and good capacity utilization on the
network made a positive contribution to this development. The proportion of
broadband customers increased from 24% in the first quarter of the year to
25% in the second quarter. With an average of 3,240 minutes per customer
per month in the second quarter, usage stabilized at a high level similar to
that of the first quarter (3,248 minutes). This reflects the positive
effect of customers' changing use of the media following major events.
The development of the customer base, which increased by 10% year-on-year,
is the result of T-Online's consistent implementation of its broadband
strategy in one of the major Internet growth markets. While the growth of
recent years has consolidated in the narrowband segment, business with
broadband services has continued to develop very well: The number of
broadband users in Germany increased by 37% year-on-year. The volume
tariffs introduced in the fall of last year continue to meet with a positive
response: The number of customers opting for these tariffs increased by 139%
compared with the end of 2002 to 177,000. T-Online had 3.01 million
broadband customers at the balance sheet date (2.19 million at the same time
last year) -1.82 million of them using the flat rate. Broadband customers
now account for 29% of customers in Germany.
Foreign subsidiaries increased their customer base by 10% year-on-year and
recorded strong growth in the broadband segment. In April, Ya.com became
one of the first providers on the Spanish market to introduce a 128 Kbits
ADSL tariff that, with its low price, is intended to open up the market as a
starter package. Business in this segment is developing positively: EBITDA
improved to -EUR9 million in the second quarter of this year compared
with -EUR 22 million in the first quarter.
In the product segment, the focus in the second quarter continued to be on
paid content and services. Several high-profile additions have been made to
T-Online Vision's games on demand service. Particular emphasis was put on
the development of the design and the user interface for leasing and sale of
PC games. Customers who regularly want to use games on demand can register
for a special subscription and play 20 games without any time limit.
"Kinoticketing" (a ticket booking service for the movies) has been
established in the Services segment. For a fee, customers can reserve
precise seats using their PCs and pick up the tickets quickly and
conveniently on site from a machine. This service was developed in
cooperation with CinemaxX as is available at selected movie theatres. The
application was designed and developed by the T-Online subsidiary Atrada
Trading Network AG.
in Million Euro 1.HJ 03 1. HJ 02 Q2/03 Q2/02
Net revenues 894 731 449 367
Subscribers as at reporting date 12.67 11.57
Gross margin (percent) 56.7 45.5 57.5 47.5
Operating profit (loss) 146 (2) 87 26
Operating profit (loss)excl. sales 122 (43) 63 (15)
of businesses*
EBITDA 180 28 104 42
EBITDA excl. sales of businesses* 156 (13) 80 1
Earnings (loss) before taxes 23 (130) 21 (38)
Group net loss (46) (136) (16) (46)
* Effects of sales of shareholdings: Sale of t-info in the second quarter of
2003 for EUR24 million. Sale of stake (40%) in T-Motion in the second
quarter of 2002 for EUR41 million.
=========
I T A L Y
=========
LAZIO SPA: Ricucci, Ligresti Take Part in Capital Increase
----------------------------------------------------------
The owners of Societa Sportiva Lazio SpA -- the troubled soccer club whose
parent, Cirio Finanziaria, filed for bankruptcy -- recently made changes in
the company's ownership.
Agenzia Geornalistica Italia reported that entrepreneur Stefano Ricucci and
real estate tycoon Salvatore Ligresto have entered the social capital of
team Lazio, while ex-patron Sergio Cragnotti has significantly reduced his
stake.
Consob announced that the division allowed Ricucci's Magistre International
to own 11.596%, while Ligresti holds 7.048% with the Atahotels chain.
However, Cragnotti slid to 2.915 from 43.720% before the capital increase
operation concluded last week. Cragnotti's shares were divided between
Cirio Finanziaria (2.321%) and Cirio Holding (0.594%), the report added.
Cirio Finanziaria, the Italian agro-food firm that defaulted on EUR1.1
billion of bonds in November, owns 51% of troubled Lazio SpA. It lost
EUR145 million in 2002 and had EUR1.4 billion in long- and short-term debt.
Lazio's own finances have been plagued by declining cash flow and rising
costs that have resulted in a EUR55.1 million loss in the first three months
of 2003.
CONTACT: SOCIETA SPORTIVA LAZIO SPA
Via Augusto Valenziani 10
00187 Rome, Italy
Phone: +39-06-42-07-01
Fax: +39-06-42-07-04-35
Homepage: http://www.sslazio.it
CIRIO
Phone: ++39 06 4145700
Fax: ++39 06 4145729
Home Page: http://www.cirio.it
===========
P O L A N D
===========
ELEKTROWNIA TUROW: Energy Reform Renders Debt Status Uncertain
--------------------------------------------------------------
Standard & Poor's Ratings Services said that uncertainty continues to
surround Polish electricity sector reforms, owing to ongoing negotiations
over the cancellation of long-term Power Purchase Agreements. As a result,
the outlook on Poland-based electricity generator Elektrownia Turow S.A.
(B/Developing/--) remains developing.
There is some indication that Elektrownia Turow could be offered
compensation almost equal to the debt secured by Power Purchase Agreements,
but less than total company debt. In this scenario, questions would arise
as to how the compensation would be allocated among Turow's lenders and what
would happen to the guarantees given by the Polish government and the Swiss
Export Risk Guarantee Agency that cover Turow's debt not secured by Power
Purchase Agreements.
A further unresolved ratings issue is the structure and timing of the
government's planned consolidation of Turow with two other state-owned
electricity plants, Belchatow SA and Elektrownia Opole SA. The indications
are that this could be accomplished in the short term and could reduce the
credit risk on Turow's outstanding debt obligations by creating a stronger
business position and financial structure.
UPC POLSKA: Court to Hear Disclosure Statement September 16
-----------------------------------------------------------
The Honorable Judge Burton R. Lifland schedules the Hearing to approve the
adequacy of the Disclosure Statement of UPC Polska, Inc. As previously
reported in the Troubled Company Reporter's July 16, 2003 issue, the Debtor
filed its Prepackaged Reorganization Plan in the U.S. Bankruptcy Court for
the Southern District of New York.
The Court will consider the adequacy of the Debtor's Disclosure Statement on
September 16, 2003 at 10:00 a.m. (Eastern Time) before Judge Lifland, United
States Bankruptcy Judge, of the United States Bankruptcy Court for the
Southern District of New York, Alexander Hamilton Custom House, One Bowling
Green, New
York, New York 10004.
All written objection to the Disclosure Statement or the Solicitation and
Tabulation of Procedures must provide a specific reference it objected and
must be filed with the Court, with hard copy delivered to Judge Lifland's
chambers and received by:
(a) Counsel to the Debtor
Baker & McKenzie
101 West Broadway, Twelfth Floor
San Diego, CA 92101
Attn: Ali M.M. Mojdehi, Esq.
Baker & McKenzie
805 Third Avenue
New York, NY 10022
Attn: Ira A. Reid, Esq.;
(b) Counsel to the UPC Entities and Polska Finance
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attn: Howard S. Beltzer, Esq.;
(c) Counsel to the Participating Noteholders
Cahill, Gordon & Reindel LLP
80 Pine Street
New York, NY 10005
Attn: Roger Meltzer;
(d) Counsel to any appointed creditors committee; and
(e) The Office of the United States Trustee
33 Whitehall Street, Suite 2100
New York, NY 10004
on or before September 9, 2003 at 4:00 p.m., Eastern Time.
UPC Polska, Inc., who holds headquarters in Denver, Colorado, is an
affiliate of United Pan-Europe Communications N.V. The Debtors is a holding
company, which owns various direct and indirect subsidiaries operating the
largest cable television systems in Poland. The Company filed for chapter 11
protection in July 7, 2003 (Bankr. S.D.N.Y. Case No. 03-14358). Ali M.M.
Mojdehi, Esq., and Ira A. Reid, Esq., at Baker & McKenzie represent the
Debtor in its restructuring efforts. As of March 31, 2003, the Debtor
listed $704,000,000 in total assets and $940,000,000 in total debts.
===========
S W E D E N
===========
LM ERICSSON: 'BB' Corporate, Unsecured Debt Rating Affirmed
-----------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BB' long-term
corporate credit and senior unsecured debt ratings on Sweden-based
telecommunications equipment maker Ericsson following publication of the
company's second quarter 2003 results. The outlook is negative. At the
same time, Standard & Poor's affirmed its 'B' short-term corporate credit
rating on the company.
"The ratings on Ericsson continue to reflect the severe and prolonged
contraction affecting the global telecoms equipment industry, which has
translated into a sharp decline in year-on-year sales and heavy operating
losses after restructuring expenses for the company," said Standard & Poor's
credit analyst Leandro de Torres Zabala. "The management's ability to
successfully implement its restructuring program in order to break even on
falling sales and reach a sustainable self-financing position will remain a
critical rating factor over the medium term."
Ericsson's adequate liquidity and strong market position in the global
second-generation (2G) mobile systems market and in the nascent
third-generation (3G) market are the main supporting factors for the
ratings. Ericsson's interest-bearing provisions and liabilities amounted to
SEK51.4 billion (US$6.3 billion) at June 30, 2003.
The ratings assume that Ericsson's liquidity position will remain adequate
at all times and commensurate with future cash burn levels and general
trading conditions.
SCANDINAVIAN AIRLINES: Reports Group Interim Report for 1H
----------------------------------------------------------
Scandinavian Airlines released this interim first-half report recently.
These are the highlights:
Six-month summary
(a) Operating revenue for the first half of 2003 amounted to
SEK29,010 million (31,643), a decrease of 8.3%. For
comparable units, and adjusted for currency effects,
operating revenue for the period decreased by 8.7% or SEK
2,741 million.
(b) Operating revenue for Scandinavian Airlines amounted to SEK
15,568 million (18,938). Adjusted for currency effects,
operating revenue fell 15.5 %.
(c) Income before depreciation and leasing costs for aircraft
(EBITDAR) was SEK1,210 million (3,832) for the first half of
the year. EBITDAR in the second quarter amounted to
SEK1,608 million (3,248).
(1) Income before capital gains amounted to -SEK1,996 \
million (-133) in the first six months of the year and -
SEK57 million (1,180) in the second quarter.
(d) Income before tax amounted to -SEK1,789 million (-407) and
SEK87 million (1,039) in the second quarter.
(e) Income after tax amounted to -SEK1,533 million (-354) and
SEK66 million (968) in the second quarter.
(f) CFROI for the 12-month period July 2002-June 2003 was 8%
(9%).
(g) Earnings per share for the period January-June amounted to
-SEK9.32 (-2.17) for the SAS Group and equity per share was
SEK80.42 (89.62).
(h) The unit cost for Scandinavian Airlines decreased by 13% in
the second quarter.
(i) The SAS Group's restructuring program Turnaround 2005 is
proceeding as planned.
(j) The earnings trend is still difficult to assess. However,
in view of reduced uncertainty surrounding external factors,
the SAS Group estimates that income before tax, capital
gains and restructuring costs for the full-year 2003 will be
negative by approximately SEK2 billion.
The SAS Group estimates that cash flow from operations in the period
July-December, after investments and excluding any sales, will be positive.
Financial calendar
Interim Report 3,January-September 2003 November 11, 2003
Year-end report 2003 February 2004
Annual Report and Environmental Report 2003 March 2004
All reports are available in English and Swedish and can be ordered from
SAS, SE-195 87 Stockholm, telephone +46 8 797 00 00, fax +46 8 797 51 10.
The reports can also be accessed and ordered via the Internet:
http://www.sasgroup.net
The SAS Group's monthly traffic and capacity statistics are published on the
sixth working day of each month.
To view full report and financials:
http://bankrupt.com/misc/SAS_Group_Interim_Report.pdf
CONTACT: SAS GROUP
Investor Relations
Sture Stoelen
Phone: +46 8 797 14 51
E-mail: investor.relations@sas.se
SAS AB (publ) COMPANY
reg. no. 556606-8499
SE-195 87 Stockholm
Phone: +46 8 797 00 00
=====================
S W I T Z E R L A N D
=====================
SWISS INTERNATIONAL: Restructuring on Right Track, Says Board
-------------------------------------------------------------
At its meeting in Basle, the SWISS Administrative Board was briefed by the
Management of the gratifying progress being made in the "Foundation for
Winning" restructuring program and on the detailed Business Plan which has
been drawn up. The Board discussed this Business Plan at length and also
examined various scenarios with a view to future strategic decisions.
The implementation of the measures that SWISS announced on June 24, 2003 are
proceeding more efficiently and faster than planned. The Board noted with
satisfaction what has been achieved so far. This includes agreements with
the various unions on the downsizing of the workforce. Discussions with
partners and suppliers on considerably more advantageous terms for SWISS are
proceeding constructively and should be finalized shortly.
In the opinion of the Board, this progress will create new trust in the
employees and, above all, in the SWISS clients. The Management was
instructed to further increase the tempo of the "Foundation for Winning"
restructuring measures
The Business Plan has now been worked out and discussed in its definitive
form. It forms an important basis for future strategic decisions. On the
strength of this plan, the Board has introduced promising scenarios for the
future. No decisions were taken, however, and the evaluation will be
continued in the weeks to come.
The rumors spread by some media on the possible bankruptcy did not form a
part of the scenarios examined.
We draw the attention of editorial staff that this press release will not be
the subject of further commentary or orally dealt with by the SWISS media
department
CONTACT: SWISS Corporate Communications
P.O. Box, CH-4002 Basel
Phone: +41 (0) 848 773 773
Fax: +41 61 582 35 54
E-mail: communications@swiss.com
Home Page: http://www.swiss.com
SWISS INTERNATIONAL: Gets Invitation to Join OneWorld Alliance
--------------------------------------------------------------
British Airways has invited Swiss International Air Lines Chief Executive
Andre Dose to join the OneWorld Alliance after a meeting in London last
week, Swiss newspaper SonntagsZeitung reported.
The invitation was only oral, but a formal invitation is forthcoming, the
SonntagsZeitung article said, without citing a specific source. American
Airlines reportedly pressed for the invitation on worries about recent
negotiations between Swiss International and Germany's Lufthansa, which is
cooperating with United Airlines under the roof of Star Alliance. United
Airlines is American Airlines competitor.
Swiss confirmed having met the British officials but declined to comment
further. Its board is expected to take a formal decision on the matter on
August 18, according to the report.
Membership in an alliance would certainly help Swiss obtain a needed GBP500
million credit line, the report said. Swiss' current reserves could only
last until October, according to Swiss Sunday paper Sonntags Blick. Swiss
daily Tages-Anzeiger even said that the airline has discussed possible
implications of a creditor protection with Switzerland's department of
justice.
SWISS RE: Obtains Catastrophe Protection via Arbor Program
----------------------------------------------------------
Swiss Re has received US$205 million protection against a series of natural
catastrophe risks, through the 'Arbor program.' As part of the transaction,
six new special purpose Cayman Islands exempted companies (SPC) were
created, which issued the catastrophe bonds. Swiss Re Capital Markets
Corporation, acting as sole bookrunner, privately placed the securities with
institutional investors. The proceeds from the offering fully collateralize
financial contracts between Swiss Re and the SPCs. These financial
contracts will indemnify Swiss Re should any of the specified natural
catastrophes occur.
The details of the issuance are:
----------------------------------------------------------------
SPC Peril Amount(1) Rating(2) Spread( 3)
Palm Capital Ltd. North
Atlantic
Hurricane 22 million BB+/Ba3 575 bp
Oak Capital Ltd. European
Windstorm 24 million BB+/Ba3 475 bp
Sequoia Capital Ltd.
California
Earthquake 23 million BB+/Ba3 575 bp
Sakura Ltd. Japanese
Earthquake 15 million BB+/Ba3 450 bp
Arbor I Ltd. Multi-Peril(4) 95 million B 1550 bp
Arbor II Ltd. Multi-Peril(4) 27 million A+/A1 100 bp
Notes:
(1) Amounts in USD
(2) Ratings by Standard & Poor's Rating Service and Moody's Investors
Service, Inc., respectively
(3) Spread (in basis points) to three month LIBOR
(4) Includes all preceding four single perils
The financial contracts provide protection to Swiss Re based on parametric
index triggers and have similar structural characteristics (e.g., index,
attachment points, etc.) as the corresponding single peril tranches of
Pioneer.
Bruno Porro, Chief Risk Officer of Swiss Re, comments, "The Arbor program
confirms Swiss Re's commitment to the capital markets as a capacity provider
for insurance risks. The placement of the B rated Arbor I is an important
enhancement from PIONEER, as it is a particularly efficient risk management
tool for Swiss Re. At the same time, it enables institutional investors to
tap into a broader spectrum of risks. Pricing is becoming increasingly
attractive as the market for catastrophe bonds continues to expand."
Swiss Re
Swiss Re is a leading reinsurer and the world's largest life and health
reinsurer. The company is global, operating from 70 offices in 30
countries. Since its foundation in 1863, Swiss Re has been in the
reinsurance business. Swiss Re has three business groups: Property &
Casualty, Life & Health and Financial Services. Swiss Re offers a wide
range of traditional reinsurance products and related services, which are
complemented by insurance-based corporate finance solutions and
supplementary services. Swiss Re is rated "AA" by Standard & Poor's, "Aa1"
by Moody's and "A++" by A.M. Best.
Parametric index triggers are based on physical parameters such as
earthquake strength or wind speed.
CONTACT: SWISS RE
Investor Relations
Phone: +41 43 285 4444
ZURICH FINANCIAL: To Wind Down Parts of Zurich Capital Markets
--------------------------------------------------------------
Zurich Financial Services plans to wind down the parts of its alternative
asset management group that are not being sold, Reuters said, citing
sources.
The insurer announced in July a transaction to sell parts of Zurich Capital
Markets to BNP Paribas under its divestment program of non-core assets. The
deal saw the French bank acquire Zurich Capital Markets' portfolio of 140
investments in hedge funds, which were sold mainly to U.S. institutional
investors, retail banks and high net worth individuals, according to a BNP
Paribas insider. BNP took along 60 of 260 people who worked at the
alternative asset management group.
According to the report, Daniel Hoffman, a spokesman at Zurich Financial,
declined to comment on future plans for the remainder of Zurich Capital
Markets, but sources familiar with the matter said Zurich is currently
winding down its ZCM office in London. Zurich has also moved some staff
from Zurich Capital Market in Dublin to another subsidiary, Zurich Bank.
Analyst blamed Zurich Capital Markets' woes to the rating downgrades that
hit their cost of borrowing; others, to a wrong choice of hedge funds to
back.
===========================
U N I T E D K I N G D O M
===========================
CHUBB PLC: UTC Now Owns More than 90% of Shares
-----------------------------------------------
United Technologies Corporation announces, in relation to the recommended
cash offer made by a wholly owned subsidiary of UTC and (outside the United
States) by UBS Investment Bank and
JPMorgan on its behalf for the entire issued and to be issued share capital
of Chubb plc, as set out in the offer document dated June 18, 2003, that the
Offeror has, as of 1 p.m. on 6 August 2003, acquired or agreed to acquire,
or received valid acceptances under the Offer in respect of more than 90% of
the Chubb Shares to which the Offer relates and will shortly implement the
procedures set out in sections 428 to 430F of the
Companies Act to acquire compulsorily those Chubb Shares for which it has
not already received acceptances of the Offer.
CONTACT: UBS INVESTMENT BANK
Leanne Gordon-Kagan
Phone: +44 20 7567 8000
JPMORGAN
Edward Banks
Phone: +44 20 7777 2000
COMPUTERSHARE INVESTOR SERVICES
Phone: 0870 703 0147 (receiving agent)
or
Phone: +44 870 703 0147 (if outside the U.K.)
EDINBURGH FUND: Board to Press for Amendment to Borrowing Power
---------------------------------------------------------------
Further to an announcement dated July 9, 2003 regarding Edinburgh Fund
Managers Group plc's borrowing powers, the Board has convened an
extraordinary general meeting to be held on August 14, 2003 to approve an
amendment to the restrictions in the company's articles of association on
the directors' power to borrow and to ratify the company's non-compliance
with the current borrowing restrictions.
A copy of the circular and notice relating to such meeting has been
submitted to the UKLA and will shortly be available for inspection at the
UKLA's Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Phone: 0207 066 1000
EDINBURGH FUND: Head of U.K. Equity Team Resigns
------------------------------------------------
Edinburgh Fund Managers announced that Robert Waugh, Head of the U.K. Equity
team has resigned to take up a position as Head of U.K. Equities at Scottish
Widows Investment Partnership. We will be working with Robert over the
coming weeks to ensure an orderly succession. David Binnie, the current
deputy, will be taking over as Head of U.K. Equities.
Anne Richards, joint managing director and chief investment officer
comments:
"We wish Robert well in his new role and thank him for his contribution to
the company. We have a strong team-based approach and the U.K. team as a
whole has significant depth of expertise with a total of over 65 years of
experience. U.K. performance is good, with our generalist U.K. OEIC
sub-funds producing upper quartile performance and all of our U.K. equity
institutional mandates outperforming year to date. The majority of our U.K.
investment trusts also continue to perform well and we are confident in the
team's ability to sustain this going forward. Over the company as a whole,
EFM continues its run of outperformance, with 73% of all actively managed
funds outperforming their benchmark year to date."
*****
Edinburg Fund's assets under management have halved since 2001 to GBP3.5
billion and its share price has fallen from 278.5p this time last year after
a period of continued under performance.
CONTACT: POLHILL COMMUNICATIONS
Julian Polhill/ Lucy Copeman
Phone: 0207 655 0540
JOHNSON SERVICE: Disposes Connacht Court to National Linen
----------------------------------------------------------
Johnson Service Group PLC announces that it has disposed of the whole of the
share capital of Connacht Court Group Limited Ltd. to National Linen Limited
for a net consideration of GBP14.7 million in cash on completion, less an
adjustment of up to GBP1.2 million in relation to pension liabilities. The
proceeds from this disposal will be used to reduce borrowings.
Connacht Court Group, which operated Johnson's textile rental business in
The Republic of Ireland, was acquired in 1998 for a consideration of GBP24.9
million. Since acquisition and, as noted in the CEO's review of operations
in the Annual Report for 2002, this business has produced consistently
worsening returns and reported an adjusted operating profit of nil in 2002.
Turnover and loss before tax of Connacht Court Group in 2002 were GBP17.9
million and GBP0.9 million respectively and net assets at December 2002 were
GBP10.5 million.
In spite of management action reducing the cost base and improving the sales
performance management concluded that future prospects for the business were
not sufficient to warrant the continued investment and that this was the
right time to make a disposal.
Johnson's results for the first half of 2003, to be announced in mid
September, will include an exceptional charge in respect of the write down
of goodwill on Connacht Court Group of some GBP10.5 million.
Johnson is the U.K.'s market leader in workwear textile rental and the
nation's leading retail drycleaner. Other activities include washroom
services and the manufacture and sourcing of garments.
Johnsons Cleaners, the dry-cleaning business, has approximately 500 units
throughout Britain with a relatively small presence in Greater London and
the South East of England.
The acquisition by Johnson of Jeeves of Belgravia ' London's Finest Dry
Cleaners ' was announced on May 12, 2003.
CONTACT: JOHNSON SERVICE GROUP PLC
Stuart Graham, CEO
Phone: 0151 933 6161
Hudson Sandler
Wendy Baker
Phone: 020 7796 4133
IMPERIAL CONSOLIDATED: Defaults on JPY12 Bln Payout in Japan
------------------------------------------------------------
British investment firm, Imperial Consolidated Group, was unable to repay
around JPY12 billion in principal and interests due to some 280 Japanese
fund investors, Japan Today said, citing investors.
The group, which went into voluntary administration in the United Kingdom in
June 2002, was involved in offshore scams extensively reported by KYC News
Inc. According to Tax-News.com, subsidiaries of Imperial Group have been
the subject of investor warnings and court cases in a number of countries
for at least three years before the filing.
The group had a Delaware-registered holding company and operations that were
based in Grenada and the United Kingdom. Its offshore bank, Imperium Bank,
was taken over by regulators in Grenada in April 2002.
INTER-ALLIANCE GROUP: Resolutions to Issue New Shares Passed
------------------------------------------------------------
At the Extraordinary General Meeting of the company the Resolutions put to
Shareholders to effect the Placing, which was announced on July 18, 2003,
were duly passed. The third resolution was put to a poll. The result of
the poll on the third resolution was 78,282,514 votes in favor representing
94.28% of the votes cast and 4,752,701 votes against representing 5.72% of
the votes cast. The Placing remains conditional on Admission.
Application has been made for the 750,000,000 New Ordinary Shares to be
issued under the Placing to be admitted to trading on the Alternative
Investment Market of the London Stock Exchange and it is expected that
trading in the 750,000,000 New Ordinary Shares will commence, August 12,
2003.
Words and expressions used in this announcement shall, unless the context
otherwise requires, bear the same meanings as set out in the circular to
Shareholders dated July 18, 2003 copies of which are available from
Inter-Alliance Group plc, Tuition House, 27-37 St. George's Road, London,
SW19 4DS.
*****
The net proceeds of the Placing of approximately GBP14 million will be used
to satisfy the general working capital requirements of the Group.
MANAGEMENT CONSULTING: Sees Promising Prospect Despite 1H Loss
--------------------------------------------------------------
Management Consulting Group PLC, the international management consultancy
group, announces its results for the six months ended June 30, 2003.
Key points:
(a) Turnover of GBP43.3 million (June 30, 2002: GBP55.7 million) slightly
ahead of the indications given in July;
(b) Operating loss before goodwill amortization of GBP1.0 million (June 30,
2002: profit of GBP5.2 million);
(c) Loss before tax of GBP2.8 million (June 30, 2002: profit of GBP4.1
million);
(d) Net cash of GBP9.6 million (December 31, 2002: GBP21.9 million);
(e) Loss per share before goodwill amortization of 0.8 pence (June 30, 2002:
profit of 3.6 pence);
(f) Parson Consulting turnaround progressing on course;
(g) Order book currently 40% higher than at start of 2003 and strong
business prospect stream;
(h) Board expects stronger trading performance in second half of 2003 in
light of growth in order book and client demand;
Rolf Stomberg, Chairman: "The results reflect the low order book that we had
at the beginning of the year together with a slow-down in client
decision-making in the second quarter of 2003. We expect that the second
half will be stronger than the first half and will establish a solid base
for 2004."
Kevin Parry, Chief Executive: "We are now seeing a greater volume of
prospects in Proudfoot Consulting than at any time in the last year. New
senior management is now in place at Parson Consulting and the turnaround is
progressing satisfactorily and in line with our plans."
Management Consulting Group PLC comprises two consulting businesses,
Proudfoot Consulting and Parson Consulting.
Proudfoot Consulting is a specialist consultancy which implements
sustainable operational improvements in sales, costs and overheads, and
major capital expenditure typically at no net annualized cost to its
clients.
Parson Consulting is a financial management consultancy that improves the
accuracy, speed and efficiency of finance and support functions free of
auditing conflicts of interest.
To view full report and financials:
http://bankrupt.com/misc/Management_Consulting_Group_PLC.htm
CONTACT: MANAGEMENT CONSULTING GROUP PLC
Kevin Parry, Chief Executive
Phone: 020 7832 3700
Stephen Purse, Finance Director
Phone: 020 7832 3700
THE MAITLAND CONSULTANCY
Suzanne Bartch
Phone: 020 7379 5151
Mobile: 07769 710335
Michelle Jeffery
Phone: 020 7379 5151
Mobile: 07989 977837
MORGAN CRUCIBLE: Applies for Listing on London Bourse
-----------------------------------------------------
Pursuant to the company's conversion of 7.5p (net) Cumulative Convertible
Redeemable Preference shares of GBP1 each, 49,095 Ordinary shares of 25p
each have been issued.
Accordingly application has been made to the London Stock Exchange and the
U.K. Listing Authority for these shares to be admitted to the Official List
and dealings in the Ordinary shares are expected to commence at 8 a.m. on
Friday August 15, 2003. The new Ordinary shares rank pari passu with the
existing Ordinary shares of the company.
*****
The company is currently disposing non-core business to reduce group debt,
which was GBP251.6 million at January 4, 2003.
ROYAL MAIL: Chairman Forecasts GBP100 Million FY2003 Profit
-----------------------------------------------------------
Royal Mail Chairman Allan Leighton sees the possibility of posting a GBP100
million profit this year if all goes well for the firm, according to the
Sunday Telegraph.
The chairman cites the looming threat of industrial action as an undermining
factor in its effort to bounce back to profitability, the report said.
Without national postal strike ruining the courier's projected profits,
Royal Mail could recover by GBP700 million from last year's GBP600 million
loss, Mr. Leighton told the Telegraph.
"This is a business which is recovering, which will be profitable this year.
We will probably make GBP100 million this year compared with a loss of
GBP1.2 billion two years ago. But we are in a position where we could
really surge forward or fall back to where we were. We could lose
momentum," he was quoted saying.
The firm's chances of hitting its profit projection hinges on whether a deal
could be reached this week between the company and the workers.
Royal Mail employees are dissatisfied with the company's 14.5% pay offer,
and are threatening to launch a first national postal strike in seven years.
The Communication Workers Union warned a strike ballot will be announced on
Thursday unless Royal Mail makes a "significantly improved offer".
SHERWOOD GROUP: Studies Future of Loss-making Lace Operations
-------------------------------------------------------------
Sherwood Group plc is the leading U.K. designer, manufacturer and dyer and
finisher of lace, and a leading U.K. designer and supplier of garments for
the ladies lingerie, nightwear and swimwear markets.
Future of Lace manufacturing and dyeing and finishing
As previously reported, the Group has been studying the future of its
loss-making textile trading divisions, Birkin International, a lace
manufacturer in Borrowash, Derbyshire, and Textile Finishing, a commission
dyer and finisher in Colwick, Nottingham. The future of these divisions has
been under review following a dramatic loss of turnover in recent years,
during which time substantial operating losses and exceptional charges have
been incurred.
Over this same period virtually the entire Nottingham-based intimate apparel
lace manufacturing industry has disappeared through closure, liquidation or
receivership. This has primarily resulted from the search by the U.K.,
European and U.S. retailers to buy lower-cost garments especially from the
Far East.
In turn, this has meant the emergence of new garment suppliers based in
low-cost countries or the transfer of developed-country garment factories to
the Far East where they too can enjoy lower-cost operations. In either case
these garment suppliers have moved towards sourcing their component
requirements, such as fabrics and laces, locally.
Birkin
In the period 1997 to 2001, the Group sold or closed its lace manufacturing
businesses in France, Holland, Germany, the U.S. and Mexico. Accordingly,
lace has long since ceased to be a core business for the Group. Despite
extensive discussions with many parties, it has not been possible to find a
buyer for Birkin. Therefore the Group intends that Birkin should cease
operating in its present form and is in advanced negotiations with
interested parties to form a 'Newco', which it is intended will acquire
certain assets (lace machines) and goodwill from the Group for a cash
consideration of GBP1.45 million.
Newco will remain an East Midlands-based lace manufacturing company but with
reduced manufacturing capacity. Its shareholders will include Noyon, the
world's leading lace company, certain members of the Birkin management team
who are not directors of any Group company, a Far East-based company and the
Group itself will take up approximately a 25% share (at a cost of
approximately GBP250,000). Newco is expected to be competitive due to its
ability to manufacture lace in a number of locations both locally and with
manufacturing partners in Europe and the Far East.
Negotiations with potential financial funders are also at an advanced stage
and it is hoped to draw these to a successful conclusion in the next few
weeks. Newco is planning to relocate in due course to alternative, smaller
local premises. The existing premises will be sold and surplus lace
manufacturing machinery will be sold to lace manufacturers in the Far East.
Regrettably the plan for Newco will mean securing employment for less than
one-third of the present 209 employees at Borrowash and the Group will enter
into consultations with its staff representatives over the associated
proposed redundancies. There will be additional job opportunities in Sri
Lanka and China on temporary or long-term contracts for those employees with
appropriate skills who may wish to work there.
In the year ended 31 December 2002, the Birkin division had net sales of
GBP10.4 million, operating losses of GBP0.7 million (before exceptional
charges) and a net book asset value subject to disposal of GBP7.1 million,
with GBP1.75 million to be sold to Newco and GBP5.35 million to other
non-related parties. In the six months to June 30, 2003, operating losses
were GBP311,000.
TexFin
TexFin has been the main commission dyer and finisher of lace in the East
Midlands for many years and its only significant remaining local intimate
apparel lace customer is Birkin. Accordingly lace activity levels have
declined dramatically for the reasons given above. Efforts to diversify the
division's capability into industrial and technical fabrics have only been
partly successful in mitigating the decline. For some months the Group has
sought a purchaser for this division.
The Group is therefore pleased to announce the proposed sale of TexFin for a
consideration of GBP450,000 paid in cash. Contracts have been signed and
exchanged with completion scheduled for September 30. The purchaser is a
U.K.-based specialist fabric producer and the acquisition represents a
strategic move designed to protect its market position. The purchaser has
no plans for lace dyeing and finishing in the future.
The Group announces with regret that during the period to completion it will
enter into consultations with staff representatives over proposed
redundancies to take place before completion as the purchaser wishes to
employ less than half of the present total staff of 63.
Nonetheless the Group believes that this transaction is the best way forward
for TexFin in today's tough market place for textiles and represents the
best option in preserving a significant fabric dyeing and finishing facility
in the East Midlands. The facility will continue to support local warp
knitting producers and ensure optimum employment preservation for TexFin
staff.
In the year ended December 31, 2002, the Textile Finishing division had net
sales to third parties of GBP1.8 million, operating losses of GBP362,000 and
net assets subject to disposal of GBP1.8 million. In the six months to June
30, 2003 operating losses were GBP255,000.
The Group
The net proceeds receivable in cash from the above transactions will be
added to the Group's existing cash resources; the Group will also collect
the net cash benefit arising from liquidating these divisions' working
capital balances. Overall this will provide the Group with considerable
additional financing flexibility.
Trading Update
The Group also announces that its Profit before Tax in the six months to
June 30, 2003 is expected to be close to a break-even position, before
exceptional costs and any impairment provisions that may apply to the TexFin
disposal in this period. The Profit before Tax in the comparable period to
June 2002, before exceptional charges, was GBP840,000.
The decline in profitability is due to an increase in the losses incurred in
Birkin and TexFin as well as lower profits in the core garment business.
Lower garment profits are primarily associated with the setting-up of a
rival business by some former Group executives previously reported as well
as continuing general price pressure from U.K. retailers.
Redundancy costs associated with the above transactions are expected to
amount to approximately GBP1.5 million in fiscal year 2003.
Whilst closed to new members since April 1, 2002, the position of the
Group's defined benefit pension scheme has continued to be under the close
scrutiny of its directors. The scheme's actuary was requested to provide a
fresh review of the data disclosed in the Group's 2002 Report & Accounts,
taking into account the latest Government measures announced on 11 June 2003
and the scheme's declining current membership in the light of the proposed
redundancies.
At December 31, 2002, in the Group's 2002 Report & Accounts, the scheme was
reported to be at 91% of the minimum funding requirement which was
equivalent to a GBP1.1 million deficit on this measure, based on figures
originally provided by the Group's actuary. The actuary has now
subsequently revised these figures to 75% of minimum funding requirement and
a GBP2.9 million deficit. Furthermore, although the directors believe the
possibility to be a rather unlikely one, the cost of a possible winding-up
of the fund is estimated to be GBP14 million under the new Government action
plan for occupational pensions; it is to be emphasized that this is a very
preliminary calculation based on what has so far been announced under this
plan and the limited market for such transactions.
The immediate implication of the review is that, under current legislation,
the Group is required to make additional cash contributions to increase the
funding level to 90% of minimum funding requirement over a 3-year period;
this will mean an additional cash contribution of approximately GBP1.8
million over and above regular company contributions, starting in the
second-half of fiscal year 2003.
The Group will continue to provide more data in respect of SSAP24
requirements (which will involve charges to the Group's 2003 Profit & Loss
account due to the proposed redundancy of employees who are members of the
fund) and FRS17, as more accurate and comprehensive information becomes
available.
The Group's directors have appointed a specialist pensions adviser to help
manage the Group through this difficult situation.
CONTACT: SHERWOOD GROUP
Noel Jervis, Chairman
Phone: 07710 491083
Carol Duncumb, Group Chief Executive
Phone: 0115 946 1070
COLLEGE HILL
Phone: 020 7457 2020
Gareth David
Crawford Burden
TELEWEST COMMUNICATIONS: Hopes NTL Will Revive Merger Talks
-----------------------------------------------------------
NTL's over GBP400 million-issue of new shares could eventually lead the
American owner of U.K.'s largest cable network to revive merger talks with
struggling Telewest, reports say.
NTL, which only recently emerged from Chapter 11 bankruptcy, is expected to
announce an optimistic survey of current prospects, when it asks
shareholders to subscribe to the fund-raising exercise. The company plans
to use the proceeds of the issuance to redeem some GBP225 million of bonds,
which were due to start paying interest at 19% a year from January. It will
also use the cash to fund NTL's U.K. operations.
According to the Scotsman, shareholders hope that the package will further
support a rebound in NTL's shares in recent months. Shares in the company
quadrupled to US$40 (GBP24.80 since April). A growing confidence in its
finances might then encourage NTL to approach Telewest for a possible
merger, speculations say.
Telewest is currently in the middle of its negotiation with bankers and
bondholders for a GBP3.5 billion debt restructuring that could potentially
wipe out but 1.5% of shareholders' investment. Telewest reported net losses
of GBP201 million last week.
*********
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
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Information contained herein is obtained from sources believed to be
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