/raid1/www/Hosts/bankrupt/TCREUR_Public/030821.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Thursday, August 21, 2003, Vol. 4, No. 165
Headlines
C Z E C H R E P U B L I C
CET 21: Faces Multi-million-dollar Claim for Damages from CME
F I N L A N D
FINNAIR OYJ: Q2 Turnover Down, but 1st-Half Loss Figure Improves
FINNAIR OYJ: Acquires Controlling Interest in Nordic Airlink
F R A N C E
VIVENDI UNIVERSAL: Trade Union to File Case Over Messier's Pay
G E R M A N Y
DIAL THRU: German Subsidiary Files for Insolvency
PROSIEBENSAT.1 MEDIA: Strikes Deal with Paramount Pictures
WESTLB AG: Fitch Downgrades Individual Rating; Affirms Owner's
H U N G A R Y
MALEV AIRLINES: Offers Discounted Tickets for Autumn Season
I T A L Y
FIAT SPA: E.U. Commission OKs Carlyle's Acquisition of FiatAvio
N E T H E R L A N D S
KLM GROUP: French Govt Mulls Offer to Take Controlling Stake
KLM ROYAL: To Discuss Merger Plans with Workers Union Today
KONINKLIJKE AHOLD: Pulls out of Brazilian Market
KONINKLIJKE AHOLD: Axes 200 Jobs in Netherlands to Cut Costs
N O R W A Y
PETROLEUM GEO: Reports Results for Second Quarter of 2003
PETROLEUM-GEO: Baker Botts Retained U.S. Corporate Counsel
P O L A N D
BANK PEKAO: Weakness in Credit Volume Spoils First-half Results
S W E D E N
BOLIDEN NORDIC: Joint Venture with Hexagon Receives Green Light
INTRUM JUSTITIA: Accounting Errors in English Units Hit Earnings
OM AB: Board Decides to Increase Capital by More Than SEK63 Mln
S W I T Z E R L A N D
ABB LTD.: Minor Glitch to Delay Sale of Division by a Week
CENTERPULSE AG: Half-year Results on Track; Sales Up 9%
CENTERPULSE AG: Board Recommends Zimmer Holdings Offer
KUONI: Blames CHF44.1 Mln First-half Loss to SARS, War in Iraq
SWISS INTERNATIONAL: Reports CHF333 Million First-half Loss
U N I T E D K I N G D O M
AES DRAX: International Power Ups Offer for 'A Tranche Debt'
AMP LIMITED: Writedowns Result in Bottom Line Loss of AU$2.2 Mln
EDINBURGH FUND: Preferred Bidder Known this Week
MARCONI CORPORATION: Adds Leading Economist to Board
MEDIA ZEROS: Appoints Joint Administrative Receivers
NEC SEMICONDUCTORS: Court Confirms Reduction of Share Capital
PAN ATLANTIC: Court Sanctions Scheme of Arrangement
POWERHOUSE: Struggles to Avoid Falling into Administration
UNITED MILK: Suppliers Left in Limbo as Firm Calls in Receivers
WALTER GOLD: In Administration; Business Up for Sale
*********
===========================
C Z E C H R E P U B L I C
===========================
CET 21: Faces Multi-million-dollar Claim for Damages from CME
-------------------------------------------------------------
The operator of TV Nova, CET 21, is facing a US$275 million- breach of
contract suit from media company CME. CME previously launched a lawsuit
against the government on grounds that the state failed to protect its
investment in TV Nova. It received US$353 million (CZK988 million) in
claims for damages of US$400 million just three months ago.
According to Michal Donath, director of Donath-Burson-Marsteller, the public
relations firm that represents CME in the Czech Republic, the case was based
on the findings of the Stockholm court, which ruled on its lawsuit with the
government.
The new legal proceeding, which was filed on August 6 in Vienna, alleges
that CET 21 erred when it severed ties with CME in 1999. The US$275 million
claim was calculated from the amount CME lost in TV Nova.
"The Vienna arbitration should just ensure that CME gets the rest of the
compensation payment," Mr. Donath said. The court ruled during the first
case that CET 21 was responsible for US$72 million in damages to CME.
The Prague Post cited CET 21 spokesman Petr Kostka saying that paying the
amount of damages to CME would ruin TV Nova. CET 21 is a private limited
liability company with equity of only CZK200,000.
"If we lose the arbitration, we would not be able to pay even a fraction of
the requested sum and it would send our station virtually into bankruptcy,"
Mr. Kostka said.
In that case it would be forced to tender its TV license, and CME could grab
it.
=============
F I N L A N D
=============
FINNAIR OYJ: Q2 Turnover Down, but 1st-Half Loss Figure Improves
----------------------------------------------------------------
Finnair's turnover fell in the second quarter by 14.2% to EUR366.1 million.
The operating loss amounted to EUR9.9 million compared to an operating
profit of nearly EUR30 million a year earlier. Operational result for the
full financial year is still expected to be a clear loss.
"Profit-wise, this will be a miserable year. The beginning of the year was
characterized by falling prices and a loss of demand in the spring. The
double blow of Iraq and SARS that struck the industry had a deep impact on
Finnair due to the relatively high weighting of Asian traffic in our
operations," says President & CEO Keijo Suila.
Operating costs fell by 5.7%. The most significant factors were a cut in
sales and marketing costs by nearly a third and a fall in ground handling
and catering costs by nearly a fifth. The EUR160 million euro cost-cutting
program initiated in the spring has proceeded according to plan. The number
of Group personnel has fallen to slightly below 10,000 employees.
"The improvement in operational and cost structures that began already some
years ago will continue. It is with these measures that we will safeguard
our competitiveness also in future," Mr. Suila said.
A strong cash position has been maintained, despite a reduction in cash flow
from business operations. Finnair's net debt is close to nil. Capital
expenditure in the current year is expected to amount to EUR80 million.
"Our strong financial position gives us the necessary stamina to endure the
industry turbulence. It also enables us to fully implement our long-term
growth strategy," he added.
Load factors crashed in the second quarter, particularly due to the
weighting of Asian traffic in Finnair's operations. After the rock-bottom
figures of the spring, demand has recovered through the late summer and will
continue towards the end of the year.
"Asian traffic is recovering quickly and our new Shanghai route will sustain
our strong progress in Asia. I believe that in the latter part of the year
positive figures will be seen in overall demand - not only in Asia but also
in European traffic. Our new acquisition, low-cost airline Nordic Airlink,
will open up totally new opportunities for us to expand our operations in
our neighborhood," said Mr. Suila.
Price levels are expected to fall as domestic and international competition
intensifies, which will pose a challenge to profitability. Finnair will
respond to competition with new price and product concepts, to be introduced
during the autumn.
"I am convinced that the decisive actions to reduce our costs, new pricing
principles and strong growth in Asia and in the Nordic markets will put
Finnair once again on a profitable track," Mr. Suila said.
CONTACT: FINNAIR PLC
Mr. Petri Pentti, SVP and CFO
Phone: +358 9 818 4950
Mr. Christer Haglund, VP Corporate Communications
Phone: + 358 9 818 4007
FINNAIR OYJ: Acquires Controlling Interest in Nordic Airlink
------------------------------------------------------------
Finnair is acquiring a controlling interest in Swedish airline Nordic
Airlink through the acquisition of 85% of the company's shares.
"The Nordic countries are our home market, and we are now expanding and
deepening our operations in Sweden. We intend to turn Nordic Airlink into
the leading budget airline in the Nordic countries. This will enable us to
provide services for price-conscious passengers who are looking for
competitive travel alternatives in terms of price and efficiency," explains
Henrik Arle, Executive Vice President for Scheduled Passenger Traffic at
Finnair.
Nordic Airlink has six aircraft, which are used for scheduled flights
between Stockholm and Lulea, as well as charter and regional operations.
Finnair operates also MD-80 planes, which will generate a number of synergy
benefits.
"Up to now, there has been a monopoly at work on many busy flight routes in
Scandinavia, both in terms of services and price. We want to change this by
using Nordic Airlink and a budget airline strategy, in order to offer
passengers a low-cost alternative. Nordic Airlink has a fleet that is
well-suited to this purpose, a competent and highly motivated staff, and a
competitive cost level," Mr. Arle says. "We are convinced that this
strategic move will give us a firm foothold on the growing Scandinavian
budget flight market."
Gunnar Ohlsson, Managing Director of Nordic Airlink, is also pleased with
the deal: "This is good news for Nordic Airlink. Finnair is a successful
and well-managed airline which is capable of developing Nordic Airlink and
taking us forward in the right direction."
Operations will be managed by Finnair's Scheduled Passenger Traffic business
area. Ticket sales will be handled through Nordic Airlink's own Internet
site at http://www.nordicairlink.seand through the worldwide Amadeus
distribution network. The airline is expected to carry 200,000 passengers
this year, with turnover rising to some SEK240 million (EUR25.9 million).
Nordic Airlink will be expanding its flight network in the autumn.
The transaction still requires the approval of relevant authorities.
CONTACT: FINNAIR
Mr. Henrik Arle, Executive Vice President
Phone: +358 9 818 4200
Mr. Petteri Kostermaa, Vice President
Phone: +358 9 818 8504
Mr. Christer Haglund, Vice President
Corporate Communications
Phone: + 358 9 818 4007
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F R A N C E
===========
VIVENDI UNIVERSAL: Trade Union to File Case Over Messier's Pay
--------------------------------------------------------------
The CGT trade union threatened to overturn the awarding of a EUR20.5 million
severance bonus to former Vivendi Universal CEO, Jean-Marie Messier.
AFX, citing a statement from the group, said the union warned it will file a
civil lawsuit over the payment package, but failed to specify the defendant
of the case. The statement said it will sue for the "presentation of an
erroneous balance sheet and abuse of company funds," in an effort to make
the golden handshake null and void.
The suit will run in conjunction with criminal charges filed last month by
the APPAC small shareholders' association, which also alleges abuse of
company funds, the union said.
A French court last week supported Vivendi's move to hold off paying the
package and seek damages from Mr. Messier, who racked up billions of euros
of debt for the company, and his former deputy Eric Licoys. The claim is
for the same amount as the severance indemnities and associated costs.
=============
G E R M A N Y
=============
DIAL THRU: German Subsidiary Files for Insolvency
-------------------------------------------------
Dial Thru International Corp. (DTIX) (Dial Thru) announced that its German
Subsidiary, Rapid Link GmbH has received approval for its insolvency filing
effective August 2003. Rapid Link GmbH was recently turned over to a
trustee who is responsible for liquidating the operation within the next few
weeks. It is anticipated that as a result of this action there will be a
positive impact on Dial Thru's balance sheet and net income.
"We are really looking to streamline our operations, focus on profitable
parts of our business and shutting down or dissolving any business unit that
is not profitable," stated John Jenkins, President and CEO. "It was not a
difficult decision, when you think of it in terms of how it affects our
bottom line and shareholder value. In addition, we do not believe it will
have a significant impact on top line revenue in the next fiscal year.
"These actions are part of our continuing efforts to ensure we retain a
leadership role in the VoIP market," Mr. Jenkins said. "We continually
assess all of our operations with a long-term goal of enhancing their
contributions to Dial Thru." Mr. Jenkins also stated, "We are focused on
our core business and felt that this subsidiary, which was one of the assets
acquired in the Rapid Link acquisition, was draining resources, taking away
from our core business and hurting the company's overall bottom line. We
believe this is a positive move in achieving positive EBITDA growth in the
coming months. In addition, this will improve our working capital deficit
by approximately three million dollars, thus getting us closer to our goal
of positive working capital. This is one of our objectives that will help
us in our ultimate goal of being re-listed on the NASDAQ."
Dial Thru International Corporation with operations in Los Angeles,
California and Atlanta, Georgia is a facilities-based provider of
communication products to businesses and consumers. The company provides a
variety of international and domestic communication services including
international dial-thru, Internet voice and fax services, e-Commerce
solutions and other value-added services. The Company's IP telephony network
utilizes voice-over-IP or "packetized" voice technology to introduce
products that combine the delivery of voice and data information.
CONTACT: DIAL THRU INTERNATIONAL CORP.
John Jenkins or Allen Sciarillo
Phone: 310-566-1700
PROSIEBENSAT.1 MEDIA: Strikes Deal with Paramount Pictures
----------------------------------------------------------
The ProSiebenSat.1 Group has secured exclusive Free TV rights to all
qualifying Paramount Pictures films released during 2002 through 2005. The
package covers numerous feature films and series, including such hits as
"The Sum of All Fears" with Ben Affleck, "How to Lose a Guy in 10 Days" with
Kate Hudson and Matthew McConaughey, and the highly anticipated "Mission:
Impossible 3," which is currently scheduled to go into production in 2004,
as well as upcoming television series from Paramount's new 2003-2004 season
including "Navy NCIS" starring Mark Harmon and "Jake 2.0" starring
Christopher Gorham.
Paramount Pictures is among the world's leading producers of programming.
Among the studio's great successes are the "Star Trek" films and the
Oscar-winning "Forrest Gump."
"The Paramount package completes our supply of high-quality Hollywood
productions for the next few years," said ProSiebenSat.1 CEO Urs Rohner.
"The first Paramount features will be available to our stations as of 2004.
The contract expands our position as German television's leading provider of
Hollywood feature films and series. Our stations already are and will
remain Germany's No. 1 source for great films."
"We are pleased to open the doors to a new era and relationship with the
ProSiebenSat.1 Group," said Gary Marenzi, President of Paramount
International Television.
The top titles under the new agreement include "Star Trek: Nemesis," the
latest in the legendary "Star Trek" line of theatrical films. The
ProSiebenSat.1 Group has also acquired Free TV rights for the thriller
"Changing Lanes" with Ben Affleck and Samuel L. Jackson, and the
science-fiction thriller "The Core." In addition it acquired the series
"In-Laws," executive produced by "Frasier" star Kelsey Grammer.
The ProSiebenSat.1 Group has signed long-term film agreements not only with
Paramount, but also with almost every other Hollywood studio. In July,
Germany's largest television corporation acquired a highly attractive
programming package from Sony Pictures Television International, including
such blockbusters as "Spider-Man" and "Men in Black II." There are also
agreements with Disney, Touchstone, Miramax, Dimension, and Lucasfilm from
the US, and Senator, Epsilon, Highlight, Constantin and Tobis from Europe.
CONTACT: PROSIEBENSAT.1 MEDIA GROUP
Dr. Torsten Rossmann
Medienallee 7
D-85774 Unterfohring
Phone: +49 [89] 95 07-1180
Fax: +49 [89] 95 07-9-1181
E-mail: Torsten.Rossmann@ProSiebenSat1.com
WESTLB AG: Fitch Downgrades Individual Rating; Affirms Owner's
--------------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded the
Individual rating of WestLB AG to 'D' from 'C/D' and removed it from Rating
Watch Negative. Fitch has also removed the Individual rating of WestLB's
owner, Landesbank Nordrhein Westfalen, from Rating Watch Negative and
affirmed it at 'C/D'. The 'AAA' Long-term ratings, 'F1+' Short-term ratings
and '1' Support ratings of both banks are affirmed. The Outlook for the
Long-term ratings remains Stable.
The downgrade of WestLB AG's Individual rating reflects serious concerns
over the bank's profitability and the severe asset quality problems that
have continued to come to light in 2003. It also takes into account
uncertainty about the bank's future top management, still to be appointed,
and strategic orientation. Fitch considers it vital that these matters are
sorted out in the short-term, bearing in mind questions in the market about
the bank's corporate governance and the looming removal of state guarantees
in July 2005. WestLB AG reported a EUR1.7 billion net loss in 2002, a
EUR359 million pre-tax loss in the first half of 2003 and does not expect to
break even this year.
Landesbank Nordrhein Westfalen's Individual rating was also previously on
Rating Watch Negative, but has been affirmed at C/D as a reflection of
Fitch's view that the financial strength of the two banks will probably be
de-linked in the future. Landesbank Nordrhein Westfalen wholly owns and
consolidates WestLB AG, and WestLB AG makes up the bulk of its assets.
However, in Fitch's view, Landesbank Nordrhein Westfalen treats the
subsidiary as an equity investment. Landesbank Nordrhein Westfalen is
seeking development bank status, which would not be approved by the European
Commission (EC) without legal "ring-fencing" of future exposure to WestLB AG
as defined in the agreement of July 17, 2001 between Germany and the EC
("Verstaendigung I"). It is currently enshrined in state law that any
liabilities incurred by WestLB AG up until July 18, 2005, provided they
mature before end-2015, are guaranteed directly by Landesbank Nordrhein
Westfalen's owners, the State of North Rhine Westphalia (43.2%), the
regional association of the Rhineland (11.7%), the regional association of
Westphalia-Lippe (11.7%), the savings and giro association of the Rhineland
(16.7%) and the savings and giro association of Westphalia-Lippe (16.7%).
This means that Landesbank Nordrhein Westfalen is under no obligation to
support WestLB AG in the short-term. Although treating WestLB AG as an
equity investment still exposes Landesbank Nordrhein Westfalen to a
substantial loss if the net asset value declines and WestLB AG's net assets
are equivalent to most of Landesbank Nordrhein Westfalen's reported
unconsolidated equity, there are additional ample hidden reserves in
Landesbank Nordrhein Westfalen's balance sheet that could easily absorb any
hit it may have to take on this.
Landesbank Nordrhein Westfalen's Individual rating reflects its low
profitability and its lack of track record, stripping out WestLB AG, but
also its low-risk, predominantly public sector business and its extremely
high capitalization in real terms. Should the bank start to establish a
good record as a development bank and should de-linking from WestLB AG risk
become more apparent, its Individual rating will rise. Fitch expects signs
of this to emerge over the next six months to one year.
The Long-term, Short-term and Support ratings of the two banks are based on
the strength of the support mechanisms provided by Landesbank Nordrhein
Westfalen's owners for both banks directly in the form of Anstaltslast and
Gewaehrtraegerhaftung ("A and G") and Fitch's 'AAA' rating for North Rhine
Westphalia. These state guarantees cover all obligations except those
entered into between July 19, 2001 and July 18, 2005 maturing after
end-2015. They will not apply to obligations entered into after 18 July
2005, but will be grandfathered for obligations existing at that time.
=============
H U N G A R Y
=============
MALEV AIRLINES: Offers Discounted Tickets for Autumn Season
-----------------------------------------------------------
Hungarian airline, Malev, has offered lower fares for major European and
Near-East cities for the remaining seats on its flights if booked until
October. Its one-way ticket will now cost only HUF14,900 (EUR57.3). The
number of discounted tickets, however, varies according to the demand of
tickets in a particular day. It is expected for example that there will be
no cheap tickets on peak times, which falls on Friday evenings.
Malev's announcement is understood to have opened a price war between the
airline and Germany-based Lufthansa. The row even went as far as Malev
planning to start a legal action against Lufthansa, which it alleged to have
used the same photo in advertising its cheap service.
Cash-strapped Malev has struggled to stay afloat since it posted losses of
EUR36.2 million in 2000. It has been searching for a partner when its
owner, the State Privatization and Holding Rt, failed to sell a 50% stake in
the company to a strategic investor through a tender in January. It hopes
to break even in 2003.
=========
I T A L Y
=========
FIAT SPA: E.U. Commission OKs Carlyle's Acquisition of FiatAvio
---------------------------------------------------------------
The European Commission has authorized the acquisition of Avio (formerly
FiatAvio) by the Italian conglomerate Finmeccanica and the U.S. private
investment group Carlyle. Carlyle will hold 70% of Avio's share capital and
Finmeccanica will hold the remaining 30%. However, Finmeccanica and Carlyle
will exercise joint control over Avio.
The operation was notified to the Commission on July 11, 2003. Although
Carlyle will hold a 70% shareholding, the Shareholder's Agreement between
Carlyle and Finmeccanica provides that Finmeccanica -- although a minority
shareholder will hold veto rights over major strategic decisions concerning
Avio. Finmeccanica and Carlyle will thus exercise joint control over Avio.
Avio, which prior to the operation was 100% controlled by Fiat (under the
name FiatAvio), produces aero-engine components for commercial and military
aircraft and helicopters; systems used in power generation and for maritime
propulsion and equipment for space propulsion. Avio also provides
maintenance, repair and overhaul (MR&O) services for both military and civil
aircraft engines.
The Commission found that the operation did not raise any competition
concerns, as the activities of the parties do not overlap. Even in the
sector of gas turbines, in which both Finmeccanica and Avio (to some degree)
are present, the two companies are not in competition, as Finmeccanica
produces heavy-duty turbines of 68 MW and more, whereas Avio produces
components for smaller and lighter turbines of 18-46 MW.
Besides, there are some vertical relationships between the three companies.
Companies controlled by Carlyle supply certain items such as forged parts
and engineered seals which are used in downstream products which Avio
manufactures. Avio supplies components for torpedoes, tactical missiles and
satellites and assembles engines for aircraft, markets in which Finmeccanica
or companies controlled by it are active as prime contractors. However, the
Commission has concluded that these vertical relationships between Carlyle's
portfolio companies, Finmeccanica and Avio do not raise any competition
concerns.
=====================
N E T H E R L A N D S
=====================
KLM GROUP: French Govt Mulls Offer to Take Controlling Stake
------------------------------------------------------------
The French government might swap its shares in national carrier Air France
for a controlling interest in KLM Royal Dutch airlines, according to
reports. The option could see the French state's 54% stake in Air France
decrease to a residual 20%, while KLM shareholders would have a 15% stake in
the French air carrier.
The French government would also have to place some EUR500 million worth of
Air France shares on the market, to meet its initial privatization plans,
Dow Jones quoted French daily L'Agefi as saying.
Spokespersons for Air France and KLM declined to comment on the report,
although the latter is believed to welcome talk of a tie-up. KLM spokesman
Frank Houben repeated the company's line that it is "keeping all options
open (on an alliance), including a share swap."
Ireland Online news agency said French banking sources expects the deal
could be announced in the next few weeks, as Air France and the French
government want to clarify issues surrounding air traffic slots, licenses
and the use of the Paris and Amsterdam hubs before making an offer.
KLM ROYAL: To Discuss Merger Plans with Workers Union Today
-----------------------------------------------------------
KLM Royal Dutch Airlines and union officials will meet Thursday to discuss
mergers and partnerships, union sources of Agence France-Presse said,
according to AFX.
"It is an informative meeting which will deal with mergers and alliances and
union officials have been invited, the invitation arrived Monday," a Dutch
union source who asked not to be named said.
KLM Royal is in talks with Groupe Air France and British Airways PLC
regarding a possible cooperation after suffering three failed merger
ventures with British Airways and one with Alitalia SpA. The airline said
it could name its choice within the next two months.
The invitation came as reports of a possible merger with the French company
emerge. The French media believes the French government, which is seeking
to privatize Air France, could swap 15% of its stake with that of KLM. The
swap could lead the way for Air France's eventual control of the Dutch
carrier.
KLM spokesman Bart Koster said: "We are in talks with Air France about the
possibilities for cooperation and all the options for that scenario are
being discussed." He said he had heard the reports circulating in the
French media, but declined to confirm or deny them.
As for KLM's fear that Air France's state-owned status complicated the
talks, Mr. Kosner said: "[This] does not have to be an obstacle if Air
France and the French authorities give guarantees the carrier will be
privatized in future."
KONINKLIJKE AHOLD: Pulls out of Brazilian Market
------------------------------------------------
A major restructuring of Ahold's Brazilian board took place with Ronald van
Solt replacing Roberto Britto as chief executive of the Dutch retailer's
Brazilian operations.
Mr. Solt was senior vice president at Ahold, while Mr. Britto headed the
Brazilian operations for nearly a year. Online news agency Reuters, citing
the company's press office, reported that Mr. Solt's arrival coincides with
Ahold's efforts to sell its Latin American operations to raise cash to pay
off the company's EUR12 billion debt.
The scandal-hit retailer is selling supermarket chains Bompreco
Supermercados do Nordeste and G. Barbosa Comercial, as well as its Hipercard
credit card business. Bompreco, which Ahold bought into in 1996, has 119
stores, while G. Barbosa, a family company the Dutch company purchased last
year, has 32 stores. Together, they will give the buyer the dominant
position in Brazil's poor, but profitable, northeast.
Wal-Mart Stores Inc., the world's largest retailer; French chain Carrefour;
and Brazil's Companhia Brasileira de Distribuicao have all expressed
interest in Ahold's Brazilian assets.
KONINKLIJKE AHOLD: Axes 200 Jobs in Netherlands to Cut Costs
------------------------------------------------------------
Scandal-hit Dutch retailer, Ahold, announced that it will cut around 9% of
the 2,200 workforce of its foodservice operator Deli XL as a cost-saving
measure. Associated Press, citing Ahold spokesman Fritz Schmuhl, said all
the cuts will be made in Netherlands. He declined to give details of the
expected cost savings or the time frame of the job cuts.
Ahold is the world's third largest food retailer with a total of 450,000
employees. It shocked the global financial market in February by revealing
it overstated earnings in 2001-2002, forcing the company to make needed
adjustments in its operations.
Though the cuts coincides with divestments following the discovery of the
accounting error, the cuts had been decided before the overstatement came to
light, a report from just-food.com, citing Reuters, said.
"A request to approve the job cuts has already been sent to the works
council. The final goal is to increase efficiency at Deli XL," Ahold
spokesman Walter Samuels was quoted as saying. He added that the work
council is expected to give its verdict in mid September.
Deli XL also operates in Belgium and runs an Internet home delivery service
called Albert.
===========
N O R W A Y
===========
PETROLEUM GEO: Reports Results for Second Quarter of 2003
---------------------------------------------------------
Petroleum Geo-Services ASA (Debtor in possession) (OSE: PGS; PINK SHEETS:
PGOGY) announced its 2nd quarter 2003 results.
Highlights:
(In millions of dollars)
Q2 2003 Q2 2002 Q1+Q2 2003 Q1+Q2 2002
Revenues $295.4 $248.0 $593.1 $475.3
Operating profit (loss)
(0.5) 55.3 36.5 118.9
Net income (loss)(61.8) (30.6) (91.5) (208.9)
EBITDA, as defined (A)
120.3 111.9 263.9 228.1
CAPEX (B) (16.4) (13.4) (26.6) (40.2)
Investments in multi-client (C)
(23.2) (47.6) (68.6) (120.1)
Cash flow defined as (A+B+C)
$80.8 $50.9 $168.6 $67.9
Financial Highlights:
(a) An agreement in principle on the terms for a proposed financial
restructuring achieved with a majority of the Company's banks and
bondholders and its largest shareholders.
(b) Proposed restructuring involves a rightsizing of the Company's debt to a
sustainable level - from approximately US$2.5 billion to approximately
US$1.2 billion.
(c) U.S. Chapter 11 restructuring implementation process, commenced on July
29, allow PGS operating subsidiaries to continue full operations.
Q2 Operations:
(a) 48 % increase in contract seismic revenues compared to Q2, 2002;
(b) 51 % reduction in multi-client investments compared to Q2, 2002;
(c) Multi-client late sales affected by Brunei $18.1 million reversal in Q2,
2003 due to boarder dispute between Brunei and Malaysia;
(d) Continued strong combined revenues from Pertra AS and Petrojarl Varg;
(e) Unusual items include $12.9 million Isle of Man tax contingency accrual
and $10.3 million in severance cost;
To View Full Financial Report:
http://bankrupt.com/misc/Petroleum_Geo-Services.pdf
CONTACT: PETROLEUM GEO-SERVICES
Sverre Strandenes, SVP Corporate Communications
Dag W. Reynolds, Director European Investor Relations
Phone: +47 6752 6400
Suzanne M. McLeod, U.S. Investor Relations
Phone: +1 281-589-7935
PETROLEUM-GEO: Baker Botts Retained U.S. Corporate Counsel
----------------------------------------------------------
Petroleum Geo-Services ASA wants approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ and retain Baker Botts LLP as
its U.S. Corporate, Employee Benefits and Litigation Counsel.
The Debtor chose Baker Botts because the firm's attorneys have
extensive experience and knowledge in the fields of corporate
finance, commercial litigation, U.S. securities law, general U.S. corporate
and contract law matters, U.S. federal income tax, employee benefits and
employment litigation. Accordingly, the Debtor believes that Baker Botts is
well qualified to represent it as counsel.
Baker Botts is expected to:
(a) Advise the Debtor in connection with, without
limitation, U.S. corporate, banking, securities, real
estate, litigation, tax and employee benefit matters;
(b) Take all necessary action to protect and preserve the
Debtor's estate, including, if required by the facts and
circumstances, the prosecution of actions on the
Debtor's behalf, the defense of any actions commenced
against the Debtor, and negotiations concerning
litigation in which the Debtor is involved;
(c) Prepare, on behalf of the Debtor, all necessary
applications, motions, answers, orders, briefs, reports
and other papers in connection with the administration
of the Debtor's estate, and more specifically, U.S.
corporate, banking, securities, real estate, litigation,
tax and employee benefit matters;
(d) Review and comment on the Debtor's proposed chapter 11
plan of reorganization, disclosure statement and related
matters;
(e) Represent the Debtor at hearings and proceedings as
required; and
(f) Perform other necessary legal services in connection
with this chapter 11 case.
Baker Botts' professionals will bill the Debtors at their current hourly
rates:
Attorneys Hourly Rate
--------- -----------
Joe S. Poff $475 per hour
Tull R. Florey $315 per hour
Gail w. Stewart $475 per hour
Tony P. Rosenstein $400 per hour
Jonathan R. Larrabee $265 per hour
Jeff Starzec $190 per hour
Courtney Watson $190 per hour
Legal Assistant
---------------
Susan Dillard $120 per hour
Petroleum Geo-Services ASA, headquartered in Lysaker, Norway is a
technology-based service provider that assists oil and gas
companies throughout the world. The Company filed for chapter 11 protection
on July 29, 2003 (Bankr. S.D.N.Y. Case No. 03-14786).
Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher
represents the Debtor in its restructuring efforts. As of May 31, 2003, the
Debtor listed total assets of $3,686,621,000 and total debts of
$2,444,341,000.
===========
P O L A N D
===========
BANK PEKAO: Weakness in Credit Volume Spoils First-half Results
---------------------------------------------------------------
Bank Pekao showed encouraging results with net results for the first half of
PLN506 million, significantly up from the PLN168 million netted in the same
period last year. But Poland's largest listed bank still needs to improve
its credit volume, an analyst said, according to Interfax-Europe.
The report cited ING Bank Slaski banking analyst Dariusz Gorski saying, "in
terms of credit volumes, Pekao is looking weak."
Bank Pekao reported a 4.6% fall in retail lending in the first half to
PLN6.35 billion, and 5.6% in corporate lending to PLN22.7 billion. The
bank's lending was down 3.0% without the bank's sale of its NYC branch.
Mr. Gorski said : "The result on mortgage credits was poor - PLN70 million
for this size bank."
Outgoing bank president Maria Wisniewska countered: "The pressure on the
interest margins will be lower than we had in the first half... The motor
for interest income growth will be lending -- both for households as for
corporates."
She also said that the bank's rate of growth in mortgage lending is starting
to pick up in the third quarter. "This will be a significant element of
second half growth," she said. The president also maintained its target of
ending the year with a double-digit growth. The bank, though, remains
cautious of the economic recovery that's just starting to show.
===========
S W E D E N
===========
BOLIDEN NORDIC: Joint Venture with Hexagon Receives Green Light
---------------------------------------------------------------
Boliden Nordic Brass has received approval from the Swedish Competition
Authority. Approval from the Finnish Competition Authority has already been
received. The company, founded by Boliden and Hexagon through a
joint-venture between Boliden Gusum AB and Nordic Brass AB, will now be able
to commence operations from September 1, 2003.
"It's positive that the process involving the competition authorities is
complete, so we can now begin the fusion between the two companies. The
objective is to implement the majority of changes before the end of 2003,
enabling synergies to be fully achieved during 2004," says the company's
CEO, Goran Ek.
The new company creates a strong Nordic player with the right
characteristics to meet increasing competition from the European brass
industry. The annual turnover of the new company is estimated to be SEK500
million (approximately US$60 million). Production will be concentrated at
the Gusum plant. Operations in Vasteras are to be wound up and some
production equipment moved to Gusum. Production costs of Boliden Nordic
Brass will be at the same level as the most profitable brass companies in
Europe.
A consequence of rationalizing production has been a surplus in labor at
both plants. In total, 160 persons are affected. Initial discussions have
commenced with the relevant unions and personnel in both companies.
CONTACT: BOLIDEN NORDIC BRASS
Goran Ek, Chief Executive Officer
Phone: + 46 21 19 88 00
INTRUM JUSTITIA: Accounting Errors in English Units Hit Earnings
----------------------------------------------------------------
Intrum Justitia (Other OTC:INJJF) reports Interim Report for first half-year
of 2003. These are the highlights:
(a) Revenues increase 7%;
(b) Consolidated revenues grew by 7% to SEK 1,419.7 million
(1,331.8) in the first half-year, with SEK 702.1 million
(675.4) generated in the second quarter 2003;
(c) Intrum Justitia returned a net deficit of -SEK3.1 million
(39.8) in the first half-year; the net deficit in the second
quarter was -SEK9.3 million (13.8); earnings include items
affecting comparability of SEK121.0 million (0.0);
(d) Earnings per share for the first half-year were -SEK0.04
(0.83);
(e) Cash flow from operating activities in the first-half year
2003 was SEK84.6 million (61.0);
(f) Intrum Justitia reiterates its view that deficiencies in
accounting in English operations exerted a negative earnings
effect of SEK80 million before tax;
(g) Organic growth for full year 2003, excluding the English
operation, expected to reach 6%
CONTACT: INTRUM JUSTITIA
Jan Roxendal, President & CEO
Phone: +46 8 546 10 200
Bertil Persson, Vice President & CFO
Phone: +46 8 546 10 200
Anders Antonsson, Investor Relations
Phone: +46 8 546 10 206
Mobile: +46 70 336 7818
Intrum Justitia AB (publ) SE-105 24
Stockholm, Sweden
Phone: +46 8 546 10200
Fax: +46 (0)8 546 10 211
OM AB: Board Decides to Increase Capital by More Than SEK63 Mln
---------------------------------------------------------------
As a consequence of OM AB's public offer to the shareholders and warrant
holders of the Finnish company, HEX Oyj, an extraordinary general meeting of
the shareholders of OM on August 18 decided to authorize the Board of
Directors to decide on the issuance of not more than 31,785,027 shares,
entailing an increase in the company's share capital by not more than
SEK63,570,054. The authorization also covers HEX shares, which may be
issued as a consequence of the exercise of warrants in HEX.
In addition, the general meeting adopted, among other things, resolutions,
which shall apply on condition upon and with effect from the time that OM
takes possession of shares in HEX acquired as a consequence of the public
offer.
The general meeting of the shareholders adopted resolutions regarding
amendments to the articles of association, including a change in the company
's name to OM HEX Aktiebolag.
The general meeting of the shareholders further decided that there shall be
nine members of the Board of Directors and that no alternate members shall
be appointed. Timo Ihamuotila (Member of the HEX Board of Directors since
2003, Corporate Treasurer in Nokia and chairman in Nokia Abp's pension
fund), Tarmo Korpela (Chairman of the HEX Board of Directors, Member of the
HEX Board of Directors since 1986, Director General for the Confederation of
the Finnish Industry and Employers until July 31, 2003, Deputy Director
General for the Confederation of
Industry and Employers, member of the Board of Directors of Finnvera Abp and
Fide Ab, Chairman of the Board of Directors for OKR-Issuers Cooperative),
Mikael Lilius (CEO Fortum Abp, member of the Boards of Directors for
Ahlstrom Abp, Huhtamaki Oyj and RAO Lenenergo), and Markku Pohjola (Deputy
Group CEO Nordea AB, CEO Nordea Bank Finland Plc, member of the Boards of
Directors for Nordea Bank Finland, Nordea Bank Sweden, Nordea Bank Denmark
and Nordea Bank Norway) were elected as new members of the Board of
Directors. Adine Grate Axen, Gunnar Brock, Thomas Franzen, Bengt Halse,
and Olof Stenhammar were elected as members of the Board of Directors at the
annual general meeting of the shareholders held on March 19, 2003. Bengt
Ryden, who supports the merger with HEX, has decided to leave the Board of
Directors in conjunction with completion of the transaction.
Compensation to each newly elected member of the Board of Directors was
decided upon in an amount of SEK200,000, reduced by an amount in respect of
the period during which the person was not a member of the Board of
Directors, calculated from the annual general meeting in 2003. For the board
member who has resigned from the Board of Directors, the compensation shall
be SEK200,000, reduced by an amount in respect of the period until the
annual general meeting in 2004 during which the person is no longer a member
of the Board of Directors. Other fees to the Board of Directors apply in
accordance with resolutions adopted at the annual general meeting on March
19, 2003.
Finally, the general meeting of the shareholders resolved, in accordance wit
h a proposal from the Board of Directors, to issue debentures with warrants
and approve the assignment of warrants. The warrants shall be offered to
approximately 110 key employees in OM HEX, who thereby will obtain the
possibility to share in OM HEX's growth in value. The aforesaid serves as
an incentive to them, which also benefits the company's shareholders.
OM's Board of Directors has confirmed that OM's public offer to the
shareholders of HEX also applies to new HEX shares to be issued as a
consequence of exercise of warrants in HEX, provided that the owner has duly
accepted the offer before the expiry of the offer period and that the newly
issued HEX shares are registered on the owner's book-entry securities
account not later than the third day after the expiry of the acceptance
period.
OM is a world-leading provider of transaction technology to the financial
services and energy industries. Developing and marketing IT solutions that
boost the efficiency of markets worldwide, OM has over 300 customers in 20
countries. OM also owns and operates exchanges and clearing organizations
and has operations in 10 countries. OM is listed on Stockholmsbörsen. For
more information please visit http://www.om.com
CONTACT: OM AB
Olof Stenhammar, Chairman of the Board of Directors,
Phone: +46 8 405 66 42
Anna Eriksson, VP Brand and Communication,
Phone: +46 8 405 66 12
=====================
S W I T Z E R L A N D
=====================
ABB LTD.: Minor Glitch to Delay Sale of Division by a Week
----------------------------------------------------------
The sale of ABB Ltd.'s oil, gas and petroleum unit to a consortium of
private equity firms has hit a minor delay, sources close to the deal said,
according to Reuters.
"It has slowed down a bit in documentation," one of the sources said. "It
probably won't be this week. It now looks like it's going to be late next
week."
Swiss-Swedish engineering company ABB is in final negotiations with bank
J.P. Morgan, and British buy-out firms Candover and 3i Group regarding the
US$1 billion transaction.
Talks leading to a deal was previously delayed because part of the oil, gas
and petroleum division -- Lummus Global -- was involved in the complex
asbestos litigation against the group's U.S. unit, Combustion Engineering.
The glitch was settled after it was agreed that the sale would exclude
Lummus.
A successful sale of the business is crucial to ABB meeting its promise to
cut debt by US$2 billion to US$6.5 billion this year.
CENTERPULSE AG: Half-year Results on Track; Sales Up 9%
-------------------------------------------------------
Centerpulse's strong operating results in the second quarter are in line
with its recently issued guidance and its objectives of profitable growth
and cash generation. Sales increased 9% in local currencies for the first
six months to CHF634 million (prior year CHF639 million). In Swiss franc
terms, sales decreased by 1%, due primarily to a weaker U.S. dollar.
EBITDA* in the first six months increased by 3% to CHF163 million from
CHF159 million in 2002 thanks to operational improvements within the
European Orthopedics business. Operating cashflow more than tripled to
CHF88 million from CHF25 million in the first half.
This performance demonstrates the strength and resilience of the company in
the reconstructive, spinal and dental implant markets notwithstanding the
uncertainty related to the bid activity for the company.
Net income decreased to CHF71 million from CHF95 million in the first half
and was influenced by a 5% increase in the costs recognized for the
previously disclosed hip and knee implant litigation (CHF61 million) and
costs directly related to the potential takeover of Centerpulse (CHF16
million), partially offset by income related to an agreement with ATS
Medical, Inc. (CHF10 million).
Overview first half results 2003
(unaudited, in millions CHF)
Jan. - June Jan. - June Change Change in local
2003 2002 in CHF currency
Net Sales 634 639 -1% +9%
EBITDA* 163 159 +3% +13%
Net Income 71 95 -25% n/a
Operating Cashflow 88 25 +252 % n/a
Overview second quarter results 2003
(unaudited, in millions CHF)
Jan. - June Jan. - June Change Change in local
2003 2002 in CHF currency
Net Sales 316 318 -1% +7%
EBITDA* 84 76 +11% +20%
Net Income 27 51 -47% n/a
Operating Cashflow 101 27 +274% n/a
Group Results
Gross profit decreased by 2% to CHF212 million in the second quarter (prior
year CHF216 million). The gross margin decreased to 67.1% in the second
quarter from 67.9% in the same period last year. This development was
primarily the result of an increase in obsolescence reserves in the
Spine-Tech and Orthopedics Divisions in North America. For the first six
months, gross profit decreased by 2% to CHF426 million from CHF434 million
for the same period in 2002. The gross margin decreased to 67.2% in the
first half from 67.9% in the same period last year.
EBITDA* as percentage of sales increased from 23.9% to 26.6%
quarter-on-quarter and increased from 24.9% to 25.7% for the first six
months. The increase in the EBITDA* margin for the second quarter was
mainly driven by cost savings achieved in the Orthopedics Division in
Europe, which are a direct result of measures initiated in the second half
of last year. In addition, favorable currency effects of CHF6 million
positively impacted the result.
There was an operating loss of CHF4 million in the second quarter 2003
(compared to an operating income of CHF56 million for the same period last
year) and operating income of CHF64 million for the first six months (prior
year CHF115 million).
Net income for the second quarter decreased by 47%, to CHF27 million, from
CHF51 million in the same period of 2002. Net income for the first six
months of 2003 decreased by 25% to CHF71 million (prior year CHF95 million).
Cash flow from operating activities was CHF101 million in the second quarter
of 2003 (prior year CHF27 million) and CHF88 million for the first six
months of 2003 (prior year CHF25 million). This significant increase in
operating cash flow was mainly the result of strong operating performance.
It also included approximately CHF45 million in cash outflow in the first
six months, of which 25 million occurred in the second quarter, attributable
to the hip and knee implant litigation and costs related to the potential
takeover of Centerpulse.
Divisions
Sales Orthopedics Division
(unaudited, in millions CHF)
Europe North America Rest of World Total
2nd quarter 2002 138 74 24 236
2nd quarter 2003 142 71 25 238
Growth rate in %
- In CHF 3 -4 4 1
- In local currencies 1 15 12 6
Sales at the Orthopedics Division increased by 6% in local currencies to
CHF238 million in the second quarter.
Sales growth in North America reached 15% in local currencies, which is in
line with the estimated market growth. The primary drivers were the Natural
Knee unicompartemental system, the Natural Knee II system, the highly
cross-linked polyethylene components for both hip and knee (Durasul) and the
Alloclassic hip system. The trend towards minimally invasive surgery
continues to become more important and is addressed by the CARET MIS program
and the Bio Skills Learning Lab, where surgeons are being trained in the
latest surgical techniques for both hip and knee implants.
In Europe, the sales growth was 1% in local currencies. Sales growth in
Switzerland, the Netherlands, the U.K. and Sweden was remarkable. Belgium
achieved outstanding sales growth (28% in local currency) during the
quarter. Sales growth was flat as expected in the major markets Germany,
France and Italy due to the continued pricing pressure coupled with our
increased focus on profitability and cash generation. These objectives led
also to a significant decrease in sales to third party distributors. The
primary product growth drivers were again the INNEX knee system and the CLS
and Alloclassic cementless hip system. The new DUROMT hip resurfacing
system was launched in major markets in Europe towards the end of the second
quarter and enables the company to offer an innovative solution to treat
younger and more active patients.
In Japan, sales growth in local currency was 27%, which was again
significantly above the estimated market growth. The Natural Hip and the
Natural Knee, together with the highly cross-linked Durasul components, were
the strongest contributors to the growth in that market.
Sales Spine-Tech Division
(unaudited, in millions CHF)
Europe North America Rest of World Total
2nd quarter 2002 5 41 2 48
2nd quarter 2003 5 38 1 44
Growth rate in %
- In CHF 9 -8 -41 -7
- In local currencies 7 11 -40 9
Sales at the Spine-Tech Division were CHF44 million in the second quarter,
an increase of 9% in local currencies, and significantly higher than the 2%
growth in local currencies reported in the previous quarter.
In North America, the company successfully launched two new products in the
second quarter: the OptimaT inner-set pedicle screw system, which broadens
the company's lumbar fusion offerings, and the cervical specialty graft to
complement its allograft options. The primary growth drivers were the ST
360° pedicle screw system, which was launched in the previous quarter, the
Trinica and Trinica Select cervical plates and the Puros allografts. The
cage market continued to decline, but the new products launched have more
than offset the decrease of cage sales. In July 2003, the company received
FDA approval for the BAK Vista radiolucent cage and began to market it
immediately. The BAK Vista is the only radiolucent cage approved for
stand-alone use in the U.S. and management expects this product to further
stabilize its cage sales in the following quarters.
In Europe, the sales growth was 7% in local currencies. The Dynesys dynamic
stabilization system for the lumbar spine continues to be the main growth
driver in this region.
Sales Dental Division
(unaudited, in millions CHF)
Europe North America Rest of World Total
2nd quarter 2002 7 21 6 34
2nd quarter 2003 8 20 6 34
Growth rate in %
- In CHF 7 -4 -7 -3
- In local currencies 16 15 3 13
Sales at the Dental Division were CHF34 million in the second quarter, a 13%
increase in local currencies, which was in line with the estimated market
growth.
Sales growth in North America and in Europe was 15% and 16% in local
currencies, respectively, which were either in line with or above the
estimated market growth. France and Spain have contributed strongly to the
growth, whereas Germany and Israel were below expectations and offset
positive developments in Korea and Japan. The company further continues
with its successful Peer Practicum educational programs to target general
practitioners and its Smart StepsSM campaign.
In the second quarter, the company launched the reusable Driva drills, which
enhances the ease of use of the implant systems offered. The primary
drivers for sales growth were the Tapered Screw-Vent and the Puros bone
products.
Outlook
Max Link, Chairman of the Board and CEO said: "I am pleased with the
half-year results which demonstrate the strength and resilience of our
performance and our strong position in the reconstructive, spinal and dental
implant markets, notwithstanding the current uncertainty related to the bid
activity for the company."
However, any delay in the takeover timetable as recommended by the Swiss
Takeover Board may have a negative impact on the business. If the takeover
process remains within the current timetable, the company can confirm the
previously disclosed objectives for the full-year as follows: Sales growth
of at least 10% in local currencies and an EBITDA* margin in the range of
24% to 25%.
After a careful analysis of all strategic options, the Board of Directors of
Centerpulse has concluded that a combination of Centerpulse with either
Smith&Nephew or Zimmer offers a unique opportunity to create an industry
leader and would better serve the long-term interests of patients, surgeons,
employees and shareholders than the continued independence of Centerpulse.
The Board recommended the acceptance of the Zimmer offer, contingent upon
approval of Zimmer's shareholders to the transaction. The offer period for
both offers ends on August 27, 2003, according to the current timetable.
Centerpulse's subsidiaries develop, produce, and distribute medical implants
and biological materials for orthopedic, spinal and dental markets
worldwide. The product array includes artificial joints, dental implants,
spinal implants and instrumentation.
* EBITDA = Operating Income before depreciation, goodwill amortization of
continuing operations; gain on the sale of discontinued operations;
transaction costs/gain on contractual settlement and hip and knee implant
litigation.
CONTACT: CENTERPULSE AG:
Investor Relations
Suha Demokan
Phone: +41 (0)1 306 98 25
Mobile: +41 (0)79 430 81 46
Fax: +41 (0)1 306 98 31
E-mail: investor-relations@centerpulse.com
Marc Ostermann
Phone: +41 (0)1 306 98 24
Mobile: +41(0)79 787 92 84
Fax: +41 (0)1 306 98 31
E-mail: investor-relations@centerpulse.com
For bidding process:
Brunswick
Steve Lipin
Office: +1 212 333 38 10
Mobile: +1 917 853 08 48
Simon Holberton
Office: +44 20 7404 59 59
Mobile: +44 7974 98 23 47
CENTERPULSE AG: Board Recommends Zimmer Holdings Offer
------------------------------------------------------
The Board of Centerpulse Ltd. recommends the tender offer from Zimmer
Holdings, Inc. contingent upon Zimmer's shareholders approving the
transaction.
As stated in the Centerpulse Board report dated July 8, 2003, the Board,
together with management, analyzed the short and long-term prospects of
Centerpulse as an independent enterprise and the advantages of joining
forces with a strategic partner. The Board concluded that joining forces
with either of the two bidders for the company, Smith & Nephew plc or
Zimmer, would be better for Centerpulse, its customers, employees and
shareholders, than remaining a standalone company. The Board also stated
that it would recommend the offer that represented the better value for
Centerpulse's shareholders.
The Board has decided to recommend Zimmer's offer in light of Smith & Nephew
's announcement on August 6 that it would not increase its offer. This
recommendation is conditional upon Zimmer's shareholders approving the
issuance of new shares as part of the consideration to be paid to
Centerpulse shareholders in the offer. Once this condition is met, the
board report including the recommendation will be published following Zimmer
's shareholders' decision. The Board's recommendation is supported by an
independent fairness opinion prepared by KPMG.
Max Link, Chairman and Chief Executive Officer, Centerpulse, said: "We
believe the Zimmer offer delivers better value for our shareholders and
recommend that they tender their shares into the Zimmer offer. The
combination of Centerpulse and Zimmer will create a global leader in the
orthopedic sector to the benefit of our customers and employees. We are
very excited about the new opportunities ahead and look forward to working
with Zimmer on the successful integration of our two companies."
Centerpulse shareholders who have already tendered their shares into the
Smith & Nephew offer, have the right to withdraw their shares at any time
and can tender them to Zimmer.
The offer period is expected to close on August 27.
CONTACT: CENTERPULSE AG:
Investor Relations
Suha Demokan
Phone: +41 (0)1 306 98 25
Mobile: +41 (0)79 430 81 46
Fax: +41 (0)1 306 98 31
E-mail: investor-relations@centerpulse.com
Marc Ostermann
Phone: +41 (0)1 306 98 24
Mobile: +41(0)79 787 92 84
Fax: +41 (0)1 306 98 31
E-mail: investor-relations@centerpulse.com
For bidding process:
Brunswick
Steve Lipin
Office: +1 212 333 38 10
Mobile: +1 917 853 08 48
Simon Holberton
Office: +44 20 7404 59 59
Mobile: +44 7974 98 23 47
KUONI: Blames CHF44.1 Mln First-half Loss to SARS, War in Iraq
--------------------------------------------------------------
Switzerland's largest travel tour operator Kuoni fell into a CHF44.1 million
(US$31.59 million) net loss in the first half, slightly better than last
year's CHF47.5 million. Turnover was down 16.9% to CHF1.378 billion due to
the conflict in Iraq which hit the industry strongly in March and April.
The difficulties were further aggravated by the outbreak of SARS.
The travel group expects this year's turnover to be down by 10%. It
predicts net profit to be about half of 2002 (CHF26.2 million). The second
half of the year will saw a "slight recovery" unless hampered by some
exceptional events, the company said, according to English Window.
SWISS INTERNATIONAL: Reports CHF333 Million First-half Loss
-----------------------------------------------------------
Swiss International Air Lines generated total income from operating
activities of CHF2,098 million in the first six months of 2003 and reports a
net loss of CHF333 million for the period. The CHF133 million net loss
posted for the second quarter of the year was an improvement on the CHF200
million net loss sustained in the first three months. The better
performance helped produce a first-half result which was also an improvement
on the CHF447 million net loss sustained for the first six months of 2002.
The cost economies already initiated -- some of them as early as winter
2002/03 -- are now beginning to bite. The liquidity of the SWISS Group
(including three-to-twelve-month fixed-term deposits) stood at CHF811
million at the end of June 2003 (compared to CHF913 million at the end of
March).
SWISS carried 5.5 million passengers on its scheduled air services in the
first half of 2003, generating operating revenue of CHF1,715 million. The
seat load factor amounted to 68.7%, and the gross yield per revenue
seat-kilometer totaled CHF0.14. Pressure on yields thus remained strong
throughout the period. The reasons for the tough business climate, which
continued to be experienced in the first six months, can be found partly in
the highly cyclical nature of the air transport industry, which is currently
suffering from sizeable overcapacities, and partly in the shock impact on
demand of exogenous factors, primarily the SARS outbreak and the hostilities
in Iraq. SWISS has also had to contend with increasing pricing pressure
from the no-frills carriers.
The company's cargo business produced encouraging first-half operating
revenue of CHF260 million, a result, which was largely in line with previous
quarters' performance. The CHF57 million in revenue from charter operations
was 13.6% down on the same period last year, a decline largely attributable
to the reduction in capacity following fleet downsizing activities. A
further CHF22 million in revenue was generated from other operations,
including aircraft maintenance performed on other airlines' behalf.
SWISS generated total income from operating activities of CHF2,098 million
in the first half of 2003. The result includes other operating income of
CHF44 million earned through the leasing-out of aircraft, flight simulators
and office facilities and through commissions on ticket sales for other
airlines.
The airline market: current health and trends
IATA, the International Air Transport Association, was still reporting
dramatically low traffic volumes for its member airlines as recently as its
June monthly report. After May traffic had been 21% below its prior-year
level (and as much as 55% below on Far East routes), a modest recovery was
seen in June, though results for the month were still a tangible 11.8% down
overall and 35.8% down for the Far East on their 2002 equivalents. SWISS'
results should also be viewed and assessed against this overall industry
background. And, in an extremely turbulent second three months, the airline
did post a significantly-improved quarterly result.
In its own latest report, which was published at the end of July, the
Association of European Airlines (AEA) even speaks of the first signs of a
slow recovery. Total traffic volume in the European airlines' prime markets
(within Europe, across the North Atlantic and to and from the Far East) was
1.7% higher for the last week of July than for the same period last year, a
result which appears to confirm the trend reversal seen over the past few
weeks. The growth was strongest over the North Atlantic at 6.7% -- partly,
of course, because these routes had suffered the greatest declines in 2002.
Traffic in Europe rose by 2.0%. And the markets seem to be recovering in
the Far East, too, where volumes are now approaching their prior-year
levels. The severity of the decline in the Far East, which hit SWISS hard,
is illustrated by the fact that, despite a continuous recovery over the past
eleven weeks, market volumes are still some 6.6% below their 2002
equivalents.
A CHF333 million first-half loss
SWISS' earnings from operating activities show a loss of CHF346 million for
the first six months of the year. With financial expenses of CHF25 million
and financial income of CHF40 million (the latter deriving from
currency-exchange gains and interest on liquid funds), the financial result
contributed a profit of CHF15 million to this first-half performance.
Income taxes -- paid on profits achieved by subsidiary companies -- amounted
to CHF2 million. As a result, the first six months of 2003 produced a net
loss for the period of CHF333 million.
The exceptional costs, which are being incurred as a result of the
restructuring activities currently under way are not included in the present
half-yearly results. These non-recurring costs have been budgeted at around
CHF200 million. This amount includes the leaving settlements associated
with the out-of-court agreement recently concluded with a section of the
pilot corps, the costs arising from "Sozialplan" severance benefits packages
and early retirements, and the additional costs incurred through the early
withdrawal of equipment from the aircraft fleet. These provisions will be
shown at the end of the second half of 2003, when they will be included in
the consolidated financial statements for the year as a whole.
SWISS' first-quarter results were adversely affected by the lingering global
economic recession, the sizeable uncertainties in the period leading up to
the hostilities in Iraq and the lower travel volumes during the conflict
itself. Revenues in the second quarter were severely depressed by the
outbreak of SARS, and are substantially below budgeted projections.
Net cash outflow of CHF445 million; liquidity still intact
The consolidated balance sheet shows cash and cash equivalents, short-term
fixed-term deposits and marketable securities amounting to CHF811 million at
the end of June, CHF445 million less than these positions had totaled at the
end of 2002 and CHF102 million below their aggregate total at the end of
March 2003. These figures clearly show that the cash drain slowed down in
the second three months of the year. The trend can be partly attributed to
seasonal business fluctuations and to steps taken to reduce non-cash net
working capital; but the actions implemented under the Target Turnaround
cost reduction program launched last November are also now being fully felt,
and made a particularly strong contribution to the sizeable savings effected
in areas such as IT, sales and marketing and commissions paid.
Shareholders' equity of CHF1 360 million
The value of the aircraft fleet on June 30, 2003 amounted to CHF2 050
million, a CHF16 million decline on its equivalent at the end of 2002. That
the capitalized value of the aircraft fleet fell despite the arrival of the
first Airbus A340 is due primarily to the fact that the reduction in the
number of Embraer aircraft ordered resulted in the partial repayment of a
prepayment already made (and capitalized) for the aircraft concerned.
The value of the property, plant and equipment position amounted to CHF302
million, CHF36 million more than at the beginning of the year. The increase
can be largely ascribed to the completion of the Basel head-office extension
and to the capitalization of properties in Zurich and IT facilities.
Non-current assets accounted for 60.0% of the company's total assets at the
end of June 2003.
Shareholders' equity stood at CHF1,360 million after incorporation of the
loss sustained in the first-half period, giving a balance sheet equity ratio
of 31.0%. The capital reduction by reducing the share's nominal value from
CHF50 to CHF32 which was approved by the 2003 Ordinary General Meeting was
effected on May 9, lowering share capital by a total of CHF946 million. The
share premium position was also reduced by CHF338 million, and the loss
carried forward was reduced by the same overall amount.
Restructuring and cost reduction programs showing first success
The first half of 2003 was dominated by the downsizing and restructuring
programs initiated in view of a further weakening of the economy, the Iraq
crisis, the outbreak of SARS and general fundamental shifts and trends in
the airline market.
The company launched its first cost reduction program -- Target
Turnaround -- back in November 2002, resolving at the same time to reduce
the size of its aircraft fleet. With economic conditions continuing to
deteriorate and tension growing in and around Iraq, the Board of Directors
approved a further restructuring program at the end of February 2003 which
resulted in the withdrawal of services or reductions in frequencies on
routes to and from Zurich, Basel, Geneva, Lugano and Bern. The aircraft
fleet was further downsized with the withdrawal of 17 regional aircraft, two
Boeing MD-83s and one Airbus A320. These actions also entailed the
elimination of some 700 jobs, and were to be implemented with the start of
the 2003 summer schedules on March 30.
March 20 brought the first attacks on Iraq, and with them the entry into
operation of the SWISS Task Force Iraq. The task force followed
developments daily; but no changes had to be effected to schedules to and
from the Gulf at any time during the hostilities. A higher security fee was
temporarily levied, however, in view of the increased security precautions.
The outbreak of the SARS illness and the war in the Middle East had a clear
and direct impact on the global demand for air transport services. As a
result, SWISS effected a temporary reduction in its capacity from April to
May. These actions affected both its European and its long-haul network.
On June 24, SWISS announced a repositioning of its entire organization.
Radical steps are required if the company is to achieve the further cost
reductions needed to effect the turnaround desired. The Board of Directors
thus resolved to withdraw 34 more aircraft from the fleet and reduce the
company payroll by some 3,000 further positions.
This new and substantially smaller company is SWISS' direct response to the
fundamental changes currently under way in the airline market. On its
intercontinental services, SWISS will continue to offer its
tried-and-trusted premium quality in three classes. On its European
services, customers will be able to choose from a range of price and product
options.
"Round-table" discussions with suppliers and partners are proceeding well
and in a positive spirit. The talks and negotiations with Unique, Gate
Gourmet, SR Technics, Swissport, Cargologic and further suppliers and
partners are designed to put SWISS on a sound cost footing. Securing this
solid foundation is crucial to the company achieving sustained success.
Market and product
The "Swiss TravelClub", SWISS' new frequent flyer program, was launched on
January 1, 2003. Miles earned under its predecessor program remained valid,
and could continue to be redeemed for awards under the previous program's
terms until the end of February. New terms and conditions were introduced
from March 1.
The company's "Swiss Europe Savers" program, which offers flights bookable
online at particularly attractive fares, was extended to 21 European routes
from the start of June. In view of the success of the initial program,
which had been limited to departures from Geneva, the new routes also saw
the concept extended to Zurich and Basel.
In introducing its new business model for the European markets, SWISS is
taking an innovative path in pricing and product differentiation terms.
Under the new concept, the price of the ticket on European flights will be
determined directly by demand: if demand is high, the price will rise; if
demand is low, the price will be lower, too. In simple terms, the new
concept means that people who book their flight early will stand the best
chance of benefiting from a lower fare. In addition to attractive Business
and Economy Class fares, the new approach will also provide greater pricing
transparency.
Future customers on SWISS' European services will also see and feel a clear
distinction between the Swiss Business and Swiss Economy products. While
Swiss Business travelers will continue to enjoy the familiar premium product
with its comprehensive on-board service and its popular inflight cuisine,
Swiss Economy customers can expect a product that is tailored specifically
to their needs: on top of a basic product offering the usual friendly
service, Swiss Economy passengers can continue to enjoy inflight foodservice
if they wish, subject to an additional charge. Thus, whatever class or
product they choose, SWISS travelers will receive precisely the service they
desire.
The company also reorganized its charter business for the start of the 2003
summer schedules. The charter fleet of three new Airbus A320 aircraft, the
last of which will be delivered in 2004, will operate under the "Swiss Sun"
name. These aircraft have been specially configured for charter operations
and - as attractive innovations - feature Sony PlayStations and an external
camera mounted under the fuselage to ensure great entertainment for the
young and the young-at-heart on board.
SWISS also extended its presence to six continents in spring 2003. The new
Australian service is the result of attractive codeshare agreements with
Japan Airlines and Qantas. The company also concluded a codeshare agreement
with Finnair.
Personnel and organizational developments
Two key appointments were announced in mid-March, when Ulrik Svensson was
named Managing Director Finance from mid-May and Manfred Brennwald was
appointed Managing Director Operations (with responsibility for the
Technical Services and Flight Operations divisions) from the beginning of
April. Their appointments complete the new three-member top management
level reporting directly to CEO Andre Dose: William Meaney had already
assumed his new duties as Managing Director Commercial on January 1.
The company informed its shareholders about its results for the 2002
business year at its Annual General Meeting in Basel on May 6. The
shareholders approved all the recommendations of the Board of Directors --
including a reduction in the company's share capital -- by sizeable
majorities. The AGM also saw changes to the Board of Directors. The total
number of Board members was reduced from eleven to nine, as planned. Kevin
Benson, Philip Geier and Riccardo Gullotti resigned from the Board; and
Walter Bosch, a Swiss marketing and communications specialist, and Jan Audun
Reinas, a Norwegian airline expert, were newly elected to its ranks.
The total workforce at SWISS (including its subsidiaries) stood at 9,331
full-time positions on June 30, 2003, a reduction of 1 190 on the 10,521
positions at the end of March. More jobs have been eliminated since the
beginning of July through natural attrition and dismissals. As a result,
and as projected, personnel numbers will see a further decline over the
second half of the year.
Having reached agreement with its cabin and ground personnel on its planned
workforce downsizing, SWISS management also concluded an out-of-court
agreement with the executive committee of the Swiss Pilots Association (SPA)
on July 15 following months of negotiations. The union's members voted to
approve the recommendations of its executive committee on August 8, thereby
meeting one of the key conditions for SWISS to continue its restructuring.
The agreement with the SPA can be regarded as a victory for all sides. The
pilots leaving the company and those who will stay have both elected to
accept a fair and generous offer from SWISS. In doing so, they have helped
resolve a conflict which threatened the company's very existence, and have
enabled everyone concerned to take a further key step on the road to
restructuring and recovery.
In reaching these settlements, the company's unions and personnel have also
sent a positive message of their own loyalty and commitment. Executive
Management acknowledges and appreciates this substantial support from its
employees - support, which is particularly invaluable in the present
difficult times.
Aircraft fleet
SWISS took delivery of its first Airbus A340-300 aircraft on the last day of
June, initiating as scheduled the renewal of its long-haul fleet. A total
of seven A340s will be delivered to SWISS by the end of the year, and will
gradually replace the Boeing MD-11s presently in service, which are now some
ten years old. SWISS has also concluded a binding memorandum of
understanding with manufacturer Airbus Industrie covering the financing of
the new transports. The first aircraft's delivery followed extensive
negotiations, which permitted a revision of the original aircraft order.
Discussions were also held with Embraer on modifications to the fleet size
envisaged. As a result, the number of firm orders for Embraer 170s and
Embraer 195s was reduced from 60 to 30 aircraft, and the commencement of
deliveries was postponed from 2003 to 2004 (for the Embraer 170) and 2006
(for the Embraer 195). The number of options held was lowered from 100 to
20 aircraft.
To see Consolidated interim income statement:
http://bankrupt.com/misc/Swiss_International_Consolidated_Interim_Income_Statement.htm
Prior-year comparisons: Revenue results for the prior year are only
comparable to a limited extent, as SWISS did not commence its
intercontinental flight operations until the second quarter of 2002.
Year-on-year cost comparisons are also only meaningful to a limited degree,
since the Airbus A320-family fleet used to operate the extended European
network in the first quarter of 2002 was leased-in from Swissair under a
"wet lease" agreement, i.e. including the requisite crews.
The one-off restructuring costs of around CHF200 million arising from the
restructuring activities announced on June 24, 2003 are not included in the
above results.
To See Financial Statements:
http://bankrupt.com/misc/Swiss_International_Financials.htm
CONTACT: SWISS Corporate Communications
P.O. Box, CH-4002 Basel
Phone: +41 848 773 773
Fax: +41 61 582 3554
E-mail: communications@swiss.com
Homepage: http://www.swiss.com
===========================
U N I T E D K I N G D O M
===========================
AES DRAX: International Power Ups Offer for 'A Tranche Debt'
------------------------------------------------------------
London-based International Power has offered GBP100 million for so-called A
tranche debt (65% of face value) of AES Drax, Bloomberg reported citing a
letter released by the firm's creditors.
International Power previously offered GBP80 million, and 55p in the pound
for debt in return for up to 36% of the Yorkshire-based power plant. A
competing bid from Goldman Sachs Group Inc., the third-biggest U.S.
securities firm by capital, consists of a GBP130 million cash for 21% of
Drax's GBP1.3 billion debt in return for an almost 25% stake in the
restructured business.
Under the new offer International Power promises to close the deal without
due diligence, and not to charge an underwriting fee. It also assured it
has the management expertise in running coal-fired power plants.
Creditors took responsibility of AES Drax after U.S. parent AES withdrew its
support of the power station. AES' walkout follows the rejection of its
financial restructuring offer by the lenders who favored a rival offer from
International Power. Drax ran into trouble after its biggest client, TXU
Europe Ltd., fell victim to a 40% drop in U.K. power prices.
AMP LIMITED: Writedowns Result in Bottom Line Loss of AU$2.2 Mln
----------------------------------------------------------------
AMP Limited has announced a bottom line loss of AU$2,159 million, reflecting
the impact of writedowns and restructuring costs announced on May 1, 2003.
Operating profit after tax but before other items was 7% lower at AU$317
million, compared with AU$341 million in the previous corresponding period.
The final audited result for U.K. writedowns was in line with the GBP900
million estimate anticipated on May 1, 2003.
AMP Chief Executive Officer Andrew Mohl said that while very disappointing,
the bottom line loss had been well-flagged and reflected the poor situation
the company had encountered in its U.K. Life operations in the face of
prolonged bear markets and ill-timed acquisitions.
"The underlying results show that our Australian financial services business
remains resilient, reflecting its strength in brand, distribution and
scale," Mr. Mohl said.
"In our asset management arm Henderson, the lagged effect of weak investment
markets continues to impact the business, although it is well positioned for
market recovery. U.K. Financial Services made a small operating loss in the
half-year but is transitioning quickly to a closed book business with a
strong focus on costs and management of balance sheet risk.
"Looking ahead, this is the first six month period for four years in which
global equity markets have finished the half at a higher level than at the
start of the period. This is an encouraging signal of a turn in the
investment market cycle and our businesses are well placed to benefit from a
sustained upturn.
"While the actions we have had to take since late 2002 -- including a new
Board and management team, the closure of businesses, reduction in costs and
risks, and ultimately the decision to demerge -- have had painful
consequences, they are decisive steps aimed at putting AMP on a much
stronger footing."
Mr. Mohl said the demerger of the company into two regionally based
entities, announced on May 1, 2003, remains the best strategic solution for
the company.
"The proposed demerged companies will be focused regional players, pursuing
distinctive strategies, customer bases and growth prospects, and operating
in simpler, more transparent structures," he said. "While a number of
details are yet to be resolved, implementation of the demerger is
progressing."
Summary of results
Australian Financial Services (AFS)
The Australian retail financial services business showed its resilience with
operating margins down just 9% to AU$172 million for the half.
New business fell by 20% compared with the first half of 2002, reflecting
the depressed industry environment. Outflows rose by 10%. In the second
half to date, net cash flows have improved noticeably.
Persistency rates remained strong at 82.5 %. AMP has increased its customer
retention efforts, which have included the introduction of short-term
planner incentives. The number of self-employed planners in AFS was up
slightly to 1,976 in the first half (1,927 in the previous corresponding
half).
The benefit of strong cost management also contributed to the result.
Controllable costs were reduced by 16% to AU$255 million, while the cost to
income ratio (excluding AMP Banking) was a record low at 40%.
Return on Invested Capital excluding AMP Banking was virtually steady at
14.8%.
The restructuring of AMP Banking, which is now focusing on Australian
mortgages and retail deposits, is paying off with operating margins in this
area up to a profit of AU$2 million from a loss of AU$5 million in the
previous corresponding half. Following divestments and an increased
securitization program, discussions have now commenced with APRA regarding
the timing of potential capital releases, expected to total around AU$300
million in the second half.
In New Zealand, underlying net profit was AU$25.3 million (NZ$27.9 million)
compared with AU$21.9 million (NZ$26.4 million) in the previous
corresponding half. AMP's relative market performance remains strong, with
the business regaining its position as the largest personal superannuation
provider in the half.
The new business model implemented across AFS in the half, which makes
business heads directly accountable for their operating margins, return on
capital and the value of the business, is now operating successfully.
U.K. Financial Services
U.K. Financial Services profit fell substantially in the first half,
reflecting the impact of markets and the significant restructuring of this
business. U.K. Life Services recorded GBP9 million in operating margins for
the half, offset by a GBP16 million loss in U.K. Contemporary Financial
Services operating margins. All U.K. life companies are now effectively
closed to new business with the closure of NPI Ltd., announced in June 2003.
Cost reduction is now one of the primary drivers of the U.K. Financial
Services business, with controllable expenditure in the first half down 26%
on the previous corresponding half, due primarily to reduced employee
numbers. In spite of this, the cost to income ratio increased to 72% due to
a number of factors, including a cost overhang in the Service Company and
the reduction in revenue.
However cost savings initiatives remain on target with GBP160 million in
savings to be delivered in 2003 (against 2001 cost numbers).
In terms of capital management, best estimates show that all U.K. life
companies met minimum regulatory capital requirements at the end of June
2003. Risk reduction initiatives in the U.K. life funds, which have reduced
equity exposure, have ensured that capital requirements will be less
impacted by large swings in equity markets.
Persistency fell to 85% from 88% in the first half of 2002. With all books
now closed to new business, segmentation of the customer base is currently
underway to ensure appropriate retention strategies are in place.
Henderson Global Investors
The lag effect of bear markets continues to impact Henderson, with operating
margins down 39% to AU$62 million. This included a 50% fall in Henderson
North margins to GBP11 million (AU$28 million) and a 23% decline in
Henderson South margins to AU$34 million.
In Henderson North, management expenses were reduced by GBP2 million to
GBP80 million, which included lower investment administration, employee and
marketing costs. This was partially offset by an increase in systems costs.
There has been a significant improvement in investment performance, with 71%
of listed assets outperforming their benchmarks in the first half.
Return on Invested Capital was lower at 5% from 7.6% in the previous
corresponding half. Assets under management were virtually steady from the
end of 2002 at GBP69.4 billion but down 8% on the first half of 2002.
In Henderson South, expenses were reduced by AU$7 million in the half with
the cost to income ratio only slightly higher at 59%. Henderson South
experienced a loss on asset sales of a post-tax AU$39 million for the half,
due to the transfer of trust and property management rights in the AMP
Diversified Trust. The annualized operating profit impact of LPT changes
from 2004 will be a reduction of AU$16.5 million.
In terms of investment performance, 68% of property assets, 58% of listed
assets and 99% of fixed interest assets outperformed benchmarks for the year
to 30 June 2003.
Return on Invested Capital was stable at 27.7% while assets under management
were slightly lower at AU$70.4 billion.
Discontinued businesses & Corporate
Discontinued businesses include the reinsurance and direct insurance run-off
portfolios of AMP, managed by Cobalt. This portfolio continues to be
tightly managed, resulting in steady operating margins of AU$19 million.
AMP is continuing to progress a sale of the Cobalt/Gordian business.
There was also an operating profit of AU$11 million from the units of AMP
Banking, which have now been divested.
Tight controls contributed to a 55% % fall in Corporate costs to AU$20
million in the first half.
Other financial matters
Dividend & RPS
Directors have declared a dividend of AU$0.07 for the half, 15% franked,
compared with AU$0.26 in the previous corresponding half. The dividend in
the second half of 2002 was AU$0.20. The record date for this dividend is
October 3, 2003 while the payment date is October 28, 2003.
Mr. Mohl said that despite the loss in the period, Directors had taken into
account AMP's large retail shareholder base in setting the dividend, as well
as the future prospects of 'new' AMP.
The next date for payment of the Reset Preferred Securities distribution of
AU$4.32 per AU$100 security is 24 October 2003. This amount is expected to
be paid to holders registered on the record date of 8 October 2003.
In addition, following the completion of AMP's AU$1.7 billion capital
raising earlier this year, the Board, having taken external advice, has
decided to increase the Minimum Conversion Number set out in the RPS Terms
in accordance with Clause 3.12 of the RPS Terms. The Minimum Conversion
Number has been increased from 5.1282 to 5.1620 with immediate effect as the
Board considered such an increase was consistent with the spirit of the RPS
terms.
Writedowns & transformation costs
On May 1, 2003, AMP indicated that as a result of changes in strategy and
the reduction of risk in the UKLS business, significant writedowns were
expected.
Following audit and actuarial review, writedowns associated with risk
reduction initiatives were AU$1,318 million while writedowns linked to
strategy changes were AU$950 million. In GBP terms, the final writedowns
were GBP907 million compared to the 1 May estimate of GBP900 million.
An increase in the valuation of Australian controlled entities including
Hillross and AMP Financial Planning of AU$250 million resulted in the final
valuation adjustments charge of AU$2,018 million.
Transformation costs include a AU$233 million charge for restructuring
costs, primarily in the U.K., while a further AU$111 million reflects
demerger costs incurred and provisions for further demerger and U.K. listing
costs.
Directors have also announced that if the proposed demerger proceeds, the
net assets of the U.K. operations will be demerged from AMP Limited's
consolidated statement of financial position at "fair market value", as
defined by Australian accounting principles for business separations of this
kind. This "fair market value" will be the market value of the U.K.
operations at the time of the demerger, which is likely to be less than
their carrying value at that time.
Any difference will be reflected in AMP's accounts for the year to December
31, 2003.
Demerger update
Mr. Mohl said that a number of steps towards the completion of the demerger
had been achieved.
As previously advised, AMP is investigating an expedited listing for 'new'
Henderson on the London Stock Exchange. A letter of "Suitability for
Listing" will be lodged with the U.K. Listing Authority, with a view to a
U.K. listing by the end of 2003. This would allow 'new' Henderson the
flexibility of listing on the LSE concurrent with the ASX listing.
Mr. Mohl said that while total shareholder capital resources of AU$11.5
billion were adequate to facilitate the demerger, the mix of capital needed
to change.
"If the demerger proceeds, refinancing the RPS is both necessary and
desirable to achieve regulatory, ratings and tax efficiency," Mr. Mohl said.
"A simple conversion of the RPS is not in the best interests of
shareholders. Alternatives being investigated involve refinancing the RPS
into equity and/or other Tier 1 instruments in the 'new' AMP, subject to
APRA approval.
"It is likely that the refinancing will be for the full amount of the RPS
given U.K. asset sales such as NPI did not occur. Other asset sales are
still progressing and any proceeds from these sales will be taken into
account in the final capital structure.
"In addition, we are investigating methods of achieving majority shareholder
ownership of Henderson North, which is currently owned by Pearl, given the
decision to investigate the feasibility of a U.K. listing in 2003. This
restructuring was not contemplated on May 1, 2003. Discussions with the
U.K. regulator on this restructuring are continuing."
The final capital structure of both new entities remains subject to ongoing
discussions with regulators. Any refinancing of the RPS will also only take
place with the approval of AMP shareholders to the demerger proposal and
would occur post the EGM.
In terms of the content in the Explanatory Memorandum (EM), it will include
substantial new information including capital structures, organizational
structures, business strategies, historic pro formas, forecasts for 'new'
AMP and outlook statements for both new entities, more sophisticated
embedded values for AFS and U.K. Financial Services and the independent
expert's report.
Board changes
As flagged in February 2003 when the Board was significantly restructured,
Directors Sir Malcolm Bates and Ian Renard will retire from the AMP Limited
Board with effect from 31 August 2003. Mr Renard will leave the AMP Bank
Limited Board the same day.
However Sir Malcolm Bates will remain as Chairman of AMP (U.K.) Plc. Under
AMP's proposed demerger, AMP (U.K.) Plc will become the listed public
company, 'new' Henderson. Since 'new' Henderson may be listed on the London
Stock Exchange sooner than originally anticipated, it is considered more
appropriate to have a U.K.-based Chairman. Sir Malcolm Bates has agreed to
take on this role.
Australian-based AMP Director Pat Handley was originally proposed as 'new'
Henderson Chairman. He will be a Director of 'new' Henderson and will
remain on the AMP Limited Board.
Conclusion
Mr. Mohl said that AMP shareholders had every right to feel frustrated and
disappointed in light of the poor bottom line result and share price
performance.
"Unfortunately there is no 'quick fix' for the mistakes of the past," he
said.
"It's easy to lose sight of how much we have achieved in the last ten
months. Many -- if not most -- of the decisions we have had to make have
sought to limit the damage to shareholder value from AMP's exposure to U.K.
equity markets and ill-timed acquisitions.
"It is also important to remember that AMP's underlying businesses remain
strong, with net profit before other items of more than AU$300 million in
the first half.
"The Board and management are determined to turn AMP around and our
objective continues to be maximizing the long term value of our businesses."
CONTACT: AMP LIMITED
Level 24, 33 Alfred Street
Sydney NSW 2000
Australia
ABN 49 079 354 519
Investor inquiries
Mark O'Brien
Phone: +61 2 9257 7053
EDINBURGH FUND: Preferred Bidder Known this Week
------------------------------------------------
EDINBURGH Fund Managers is expected to decide whether to recommend the bid
of ISIS Asset Management or that of Britannic to shareholders this week,
according to The Herald.
One senior source said ISIS with its existing Edinburgh-based investment
trust operation is frontrunner. But Britannic, which is also believed
capable of providing Edinburgh's investment trusts with Scottish
credentials, is also keen on pursuing the acquisition that industry source
valued at GBP30 million in July. A decision regarding the preferred buyer
could make an announcement of a deal as early as next week, the report said.
Industry sources recommends that Edinburgh Fund come up with a decision fast
to ease out the uncertainty hanging over employees and clients while matters
stood unresolved.
Although the sale of the business appears to be nearing its end, there are
still talks that a third potential buyer might come out. Aberdeen Asset
Management or New Star might make an offer at the last minute, rumors say.
MARCONI CORPORATION: Adds Leading Economist to Board
----------------------------------------------------
Marconi Corporation plc (London: MONI) announces the appointment of Douglas
McWilliams, founder and chief executive of the Center for Economics and
Business Research, as a non-executive Board director. The appointment
becomes effective after the company's annual general meeting on September 8,
2003. Center for Economics and Business Research is an independent
consultancy providing analysis, forecasting and strategic advice to major
U.K. and multi-national corporations, financial institutions, government
departments and agencies and the European Commission.
Prior to founding Center for Economics and Business Research in 1993,
Douglas spent four years as chief economic adviser to the Confederation of
British Industry. He is also a former chief economist with IBM United
Kingdom Ltd.
Welcoming Douglas to the Board, John Devaney, chairman of Marconi
Corporation plc, said: "Douglas is a highly regarded economist of
international standing who will add his significant experience and
analytical skills to our Board. He will bring an increased awareness of the
role international economics plays in Marconi's key markets and this will
aid our Board's strategic thinking and international planning. Following
the recent appointment of Pavi Binning as our new chief financial officer, I
am confident that this Board will continue to take Marconi Corporation back
to full health and strength."
Douglas is also an economics adviser to the Chartered Institute of
Marketing. He is a graduate of the University of Oxford and lives in
London.
About Marconi Corporation plc
Marconi Corporation plc is a global telecommunications equipment, services
and solutions company. The company's core business is the provision of
innovative and reliable optical networks, broadband routing and switching
and broadband access technologies and services. The company's customer base
includes many of the world's largest telecommunications operators.
The company is listed on the London Stock Exchange under the symbol MONI.
Additional information about Marconi Corporation can be found at
http://www.marconi.com
MEDIA ZEROS: Appoints Joint Administrative Receivers
----------------------------------------------------
The Media Zeros Plc
Registered number: 04039086
Nature of business: Other business activities and other financial
intermediation
Trade classification: 7487 and 6523
Date of appointment of Joint Administrative Receivers: July 8, 2003
Name of appointer: The Royal Bank of Scotland Plc
CONTACT: S. P. BOWER and M. J. HORE
Joint Administrative Receivers
(office holder No.s 8338 and 1630)
RSM Robson Rhoses, 186 City Road
London EC1V 2NU
NEC SEMICONDUCTORS: Court Confirms Reduction of Share Capital
-------------------------------------------------------------
In the High Court of Justice Chancery Division Companies Court No. 004379 of
2003
In the matter of NEC SEMICONDUCTORS (U.K.) LIMITED and in the matter of the
Companies Act 1985
Notice is hereby given that an Order of the High Court of Justice, Chancery
Division dated July 23, 2003 confirming the reduction of share capital of
NEC SEMICONDUCTORS and the Minute approved by the Court showing with respect
to the capital as altered the several particulars by the Registrar of
Companies on the 24th day of July 2003.
CONTACT: CLIFFORD CHANCE LIMTED LIABILITY PARTNERSHIP
200 Aldersgate Street, London EC1A 4JJ (Ref: KO)
Solicitors to the Company
PAN ATLANTIC: Court Sanctions Scheme of Arrangement
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In the High Court of Justice (In England and Wales) Chancery Division
Companies Court No 3308 of 2003
In the matter of PAN ATLANTIC INSURANCE COMPANY LIMITED and in the matter of
the Companies Act 2985
Notice is hereby given that, by an Order dated July 22, 2003 made in the
High Court of Justice of England and Wales in the matter of Pan Atlantic
Insurance Company Limited, the scheme of arrangement proposed to be made
between the Company and its Scheme Creditors (as defined in the Scheme)
pursuant to section 425 of the Companies Act 1985 which was voted on and
approved by Scheme Creditors at a meeting held on July 9, 2003, was
sanctioned. A copy of the Order was lodged with the registrar of companies
on July 24, 2003, and the Scheme became effective on that date.
Scheme Creditors wishing to claim in the Scheme must complete and return
Claim and Certificate Forms in accordance with the instructions accompanying
them and the provisions of the Scheme, by the Bar Date, being September 18,
2003. Failure to do so will result in the Scheme Creditor concerned not
being entitled to claim a dividend under the Scheme.
Should you have any questions regarding this Notice, please address them to
Edward Walter at:
CONTACT: GRANT THORNTON HOUSE
Melton Street, Euston Square
London NW1 2EP
Phone: +44 (0) 870 991 2261
Fax: +44 (0) 20 7383 4077
E-mail: Edward.J.Walker@gtuk.com
POWERHOUSE: Struggles to Avoid Falling into Administration
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The board of PowerHouse, U.K.'s largest independent electrical goods
retailer, has petitioned to put the company into administration, according
to the Financial Times.
The future of the company was placed into uncertainty following the pullout
of trade insurers from PowerHouse suppliers on fears that the company's risk
profile had become doubtful. PowerHouse said there are insurers who
remained with their suppliers, but analysts are wary they could also panic
once doubts regarding the company's ability to pay bills surface.
According to the report the retailer was currently in "urgent discussions"
with its lenders for a possible rescue.
Derrick Broomfield, chairman and chief executive, said: "We are doing all we
can to find a solution...and keep the business trading. We are considering
how best to protect our business and maintain appropriate sources of
supply."
"We want to reassure our customers that their purchases of appliances,
guarantees or financing products remain sound and valid," he added.
PowerHouse declined to disclose its current cash reserves, according to the
Financial Times, but its report noted that during the firm's last full
financial report in March 2002, net cash stood at GBP8.5 million (US$13.5
million).
PowerHouse reported post-tax profit for the financial year ended March 2003
of GBP300,000, down from GBP5.2 million from last year's, despite a rise in
sales.
Nine members of the company's management team own some 96% of the company;
Barclays Private Equity holds the remaining 4%.
UNITED MILK: Suppliers Left in Limbo as Firm Calls in Receivers
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United Milk's Westbury operation in Wiltshire, a major farm cooperative
dairy processing operation, is currently in the hands of receivers. The
Scotsman reported that receivers PricewaterhouseCoopers LLP were called in
after the GBP45 million operation hit the buffers, leaving about 300 dairy
farmers' suppliers in uncertain position.
The state-of-the-art United Milk dairy is owned by 400 dairy farmers and is
backed by more than GBP10 million of their own money. It is designed to
give farmers a secure future by providing them with a direct route to market
for their milk, processing 800 million liters of milk a year into skimmed
milk powder, cream and butter.
Its primary aim was to shore up the price paid by processors to farmers by
taking milk off the market to create skim milk powder and butter for their
intervention market.
However, industry analysts have suggested that the co-op owes its suppliers
about GBP5 million on top of capital debts of about ten times that figure.
Bank of Scotland provided much of the finance, the report said. A
spokeswoman for the bank declined to confirm or deny repeated exposure of
about GBP35 million to United Milk.
Doubts regarding the operation's future surfaced even before the factory
began to hit its targets this spring, which was several months behind
schedule. Major changes to the board had taken place, with Paul Deakin
taking over chairmanship and Steve Satherley appointed managing director.
More recently, delays in payment have alarmed farmers.
It is understood that milk will continue to be uplifted from farms for the
next two weeks, assuming alternative outlets are not found.
WALTER GOLD: In Administration; Business Up for Sale
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WALTER GOLD & SONS LIMITED (In Administration)
The Administrator, Adnrew Fender of Sanderlings LLP, offers for sale, as a
going concern, the business and assets of the Midlands-based manufacturing
company.
Principal Features: 2 miles from Motorway network; Leasehold Premises; Plant
& Equipment; Stock & work-in-progress; Turnover GBP610,000 Est. Customer
base; Future Order Book
CONTACT: SANDERLINGS LLP
Sanderling House,
Springbrook Lane
Earlswood Solihull
B94 5SG
Phone: 0870 243 0540
Fax: 01564 703822
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