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/raid1/www/Hosts/bankrupt/TCREUR_Public/030918.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, September 18, 2003, Vol. 4, No. 185 Headlines C Z E C H R E P U B L I C VITKOVICE HOLDING: National Property Fund Delays Takeover F R A N C E ALSTOM SA: E.U. Commission Weighs Merits of Enjoining State Aid VIVENDI UNIVERSAL: U.S. SEC Blocks Payment of Ex-CEO's Severance G E R M A N Y BERTESLSMANN AG: Merger with Kluwer to Take Effect Next Year GERLING KONZERN: A.M. Best Assigns Gerling Life A- Rating WESTLB AG: Panmure Execs Plan GBP50 Million Management Buyout H U N G A R Y POSTABANK RT: Privatization Tender Attracts Three Bidders I R E L A N D ELAN CORPORATION: Atrix Terminates BEMA-fentanyl Joint Venture I T A L Y ALITALIA SPA: DTI Chief Agrees Alliance with Air France Possible N E T H E R L A N D S GETRONICS N.V.: To Sell Stake in DigitalNet Under Disposal Plan KLM ROYAL: Alliance Talks with Air France Enters Homestretch KLM ROYAL: Wants Own Identity Even if Air France Tie-up Succeeds KLM ROYAL: Labor Union Demands Enforcement of Labor Agreements KONINKLIJKE AHOLD: To Revamp Supervisory Board Soon KONINKLIJKE AHOLD: Board Says New CEO's Salary at Par with Peers P O L A N D DAEWOO-FSO: Creditor Banks Consider Exchanging Debt for Shares ELEKTRIM SA: Wants Sale of Zespol Shares Invalidated ELEKTRIM SA: Deal with Deutsche Telecom Triggers Market Rally R O M A N I A AKER BRAILA: Blames Poor State of Shipbuilding Market for Losses S W I T Z E R L A N D ZURICH FINANCIAL: Outlook of Core Entities Revised to Stable U N I T E D K I N G D O M ABBEY NATIONAL: To Announce Sale of Italian Mortgage Unit Soon AQUILA INC.: Fitch Welcomes Sale of Canadian Utility Business BALTIMORE TECHNOLOGIES: First-half Losses Drop Significantly BRITISH AIRWAYS: Open to Alliance with KLM, But not Merger CORUS GROUP: Dutch Workers Suggest Breaking off Ties with U.K. EMI GROUP: Warner-BMG Merger Threatens Survival, Says Analysts EMI GROUP: Senior Unsecured Notes Assigned (P) Ba1 Rating MARCONI CORPORATION: Redeems Part of Junior Secured Notes MOTHERCARE PLC: To Release Half-year Results October 11 MURRAY FINANCIAL: Board Composition Halved ROYAL MAIL: Break Down in Negotiations Makes Strike Imminent SAFEWAY PLC: Preferred Bidder Could be Announced Next Week WS ATKINS: Interim Results Better than June Update ********* =========================== C Z E C H R E P U B L I C =========================== VITKOVICE HOLDING: National Property Fund Delays Takeover --------------------------------------------------------- The National Property Fund stymied Lahvarna Ostrava's takeover of engineering group, Vitkovice, at the extraordinary general meeting Monday. According to Czech Happenings, the Fund did not transfer 68.3% of Vitkovice shares to Lahvarna and abstained from voting at the meeting. As a result, the report said, Vitkovice's articles of association as well as its supervisory board remained unchanged. The plan was to reduce the number of supervisory board members from twelve to six and shorten their term of office from five to one year, ending the term of all of the current supervisory board members. Lahvarna was supposed to elect four of its representatives to the board, two of which representing employees, during the EGM. Lahvarna paid a bank guarantee worth CZK470 million for the state-held stake in the engineering part of Vitkovice and met all terms of the contract on Friday after paying in August the purchase price of CZK402 million to a so-called trust account at ING Bank. The board of directors of Vitkovice holding resigned on Friday following the sale of the company. The National Property Fund said it will transfer Vitkovice shares held by the fund and its subsidiary PAL to Lahvarna Ostrava Vitkovice shares held by the fund and its subsidiary PAL to Lahvarna Ostrava in the next few days. After which, another extraordinary general meeting will be convened where the decision to vote for the 68.3% of shares will already be on Lahvarna. =========== F R A N C E =========== ALSTOM SA: E.U. Commission Weighs Merits of Enjoining State Aid --------------------------------------------------------------- Up until Tuesday, the European Commission had yet to decide whether or not to sanction France for its additional aid to troubled engineering group, Alstom, the Financial Times said. According to the report, Commission members are still deliberating the wisdom of enjoining the over EUR600 million (US$670 million) aid, which is in addition to the EUR3.1 billion in subsidies that the government has already allegedly handed Alstom. The latter is currently under a formal investigation by the Commission. The report said Commission members are concerned that a "permanent" aid before their investigation is completed would amount to a fait accompli that could put the credibility of the Commission's state aid regime at risk. Some Commission members, in particular Frenchmen Michel Barnier and Pascual Lamy, are also concerned the Commission might be blamed if the injunction further worsen the company's financial woes. Alstom employs 110,000 employees. The French government originally planned to extend the EUR600 million- aid in the form of a subordinated loan and 50% of a capital increase. It said the company badly needs the money by end of the month. In a motion that just might lead to a compromise, European Commissioner Mario Monti proposed to extend the money through a convertible bond. The French government said it would consider this option. VIVENDI UNIVERSAL: U.S. SEC Blocks Payment of Ex-CEO's Severance ---------------------------------------------------------------- The Security and Exchange Commission filed a lawsuit against Vivendi Universal (Paris Bourse: EX FP; NYSE: V) in Federal Court in New York City to prevent Vivendi Universal from paying former CEO Jean-Marie Messier his severance package pursuant to an arbitration award handed recently. The lawsuit was filed pursuant to Section 1103 of the Sarbanes-Oxley Act, which permits the SEC to freeze extraordinary payments to officers or directors during an SEC investigation. Vivendi Universal has indicated that it would fully cooperate with the SEC. The SEC wants Vivendi Universal to place in escrow the severance payment. The SEC commenced its investigation into Vivendi in November 2002 to look into possible violations of securities laws by the company and its directors, officers, controllers, agents or employees. ============= G E R M A N Y ============= BERTESLSMANN AG: Merger with Kluwer to Take Effect Next Year ------------------------------------------------------------ The merger of Springer Science+Business Media and Kluwer Academic Publishers, owned by leading European private equity houses Cinven and Candover, will commence in the spring of 2004. Derk Haank, who will take on the role of CEO effective February 1, 2004, will head the new company. Until that time, both publishing groups will continue to operate as separate companies and under their own names. The merger will create the second largest professional publisher in the fields of science, technology and medicine worldwide. In August, Candover and Cinven received approval from the U.S. Department of Justice and European Commission for the acquisition of BertelsmannSpringer and the transaction legally completed on September 16, 2003. At the Frankfurt Book Fair, the publishing group BertelsmannSpringer will present itself under its new name, Springer Science+Business Media (October 8, 2003). Cinven and Candover had already acquired Kluwer Academic Publishers in January 2003. Together, the companies will publish 1,350 magazines and more than 5,000 book titles each year, with revenues of about EUR880 million. "Through the merger of Kluwer Academic Publishers and Springer Science+Business Media we will strengthen our market position in editorial publishing and sales and thus be better equipped to meet the tough competition in this business. With our new owners, we will receive the necessary financial and strategic support that is needed for further growth and quality leadership," stated Dr. Dietrich Gotze, member of the management board at Springer Science+Business Media. He also emphasized that Kluwer Academic Publishers is an innovative scientific publishing house and, together with the Springer publishing group, will set new standards in electronic publishing. Peter Hendriks, CEO at Kluwer Academic Publishers, commented, "We are delighted about the upcoming merger, and are convinced that together we will drive our businesses forward. Our portfolios are compatible and will complement each other in an ideal way. As a strong, new enterprise, it will be possible to offer our worldwide customers even better information and services. We will especially profit from the Springer publishing group's extensive experience in the B2B segment and the practice-oriented professional books. Until the merger takes effect, Kluwer's focus naturally remains on serving our customers with the quality they are accustomed to." BertelsmannSpringer/Springer Science +Business Media is one of the world's leading publishing groups for scientific and specialist literature and is the market leader in Germany, far ahead of its competitors. The group owns 70 publishing companies and publishes 700 journals and around 4,000 new book titles each year. Its key subjects include science, medicine, economics, engineering, architecture, construction and transport. Total sales reached EUR731 million in the year to December 2002. The company has 5,200 employees in 16 countries. On April 1, 2003, Candover Partners Ltd and Cinven Ltd., two of the leading providers of equity for European buyouts, acquired the specialist publishing group, which before was a division of Bertelsmann AG. http://www.bertelsmannspringer.de. Kluwer Academic Publishers is a leading publisher of scientific information, specializing in numerous fields within science, technology, medicine, humanities and social sciences. It provides high quality online products and services and annually publishes 650 journals and 1200 books featuring leading authors and researchers from around the world. Located in Dordrecht, Boston, New York and London, the company has 550 employees. Turnover in 2002 was EUR151 million. The company was acquired by Candover and Cinven in January 2003. For more information on Kluwer, visit http://www.wkap.com CONTACT: BERTELSMANNSPRINGER Sabine Schaub Phone: +49 (0)30 827 875 282 E-mail: sabine.schaub@bertelsmann.de Kluwer Academic Publishers Petra Sprado Phone: +31 (0)78 657 6542 E-mail: petra.sprado@wkap.nl GERLING KONZERN: A.M. Best Assigns Gerling Life A- Rating --------------------------------------------------------- A.M. Best Co. has assigned an initial financial strength rating of A- (Excellent) to Gerling Life Reinsurance GmbH, Germany. The outlook is stable. At the same time, A.M. Best has upgraded the financial strength ratings to A- (Excellent) from B++ (Very Good) of Gerling Global Life Insurance Company (Toronto) and Gerling Global Life Reinsurance Company (Los Angeles, CA). The under review status has also been removed. The outlook for both companies is stable. Gerling Life Reinsurance has been established by Gerling Konzern Globale Rueckversicherung and has assumed the life reinsurance book of business previously underwritten by Gerling Konzern Globale Rueckversicherung. The rating reflects Gerling Life Reinsurance's excellent risk-adjusted capitalization, very good business position in the life reinsurance market, experienced management team and prospective excellent operating performance. The rating takes into account the fiduciary sale to VHV Vermogensanlage AG, a subsidiary of the German mutual insurer, VHV Vereinigte Hannoversche Versicherung a.G. The sale will be subject to the final regulatory approval outside Germany, although A.M. Best does not expect any objections to the sale. The upgrade of the U.S. and Canadian subsidiaries reflects their strategic importance to their ultimate parent company, Gerling Konzern Globale Rueckversicherung. Excellent risk-adjusted capitalization -- A.M. Best regards Gerling Life Reinsurance's prospective risk-adjusted capitalization as excellent with initial consolidated capital of EUR446 million (US$504 million) and EUR75 million (US$85 million) subordinated debt. A.M. Best expects Gerling Life Reinsurance to further strengthen its capital base from emerging profits. Although Gerling Life Reinsurance's financial flexibility is limited under the new ownership structure and the current legal company status, A.M. Best does not anticipate additional capital requirements in the short term. Very good business position -- Gerling Konzern Globale Rueckversicherung acquired a very good business position in the world-wide life reinsurance sector through its focus on providing value-added service and individual risk solutions. A.M. Best expects Gerling Life Reinsurance to pursue a similar strategy, capitalizing on Gerling Konzern Globale Rueckversicherung's business profile in this segment. Experienced management team -- Gerling Life Reinsurance's management team has been transferred from Gerling Konzern Globale Rueckversicherung and is highly experienced with a strong actuarial background. A.M. Best does not expect a loss of key personnel as result of the new company structure. Prospective excellent operating performance -- Gerling Konzern Globale Rueckversicherung's life reinsurance portfolio was consistently profitable. The return of equity based on allocated capital is expected to be 11% in 2003. A.M. Best believes that Gerling Life Reinsurance will be able to produce excellent results by continuing its conservative underwriting and pricing standards whilst expanding its life reinsurance book of business. Future ownership -- In A.M. Best's view, the current ownership allows Gerling Life Reinsurance to consolidate its position in the global life reinsurance market, although uncertainties regarding the sales process could have a negative impact on Gerling Life Reinsurance's business profile. A.M. Best will reassess its current ratings once a final buyer has been determined. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. CONTACT: A.M. BEST CO. Public Relations Jim Peavy Phone: 908-439-2200, ext. 5644 E-mail: james.peavy@ambest.com Rachelle Striegel Phone: 908-439-2200, ext. 5378 E-mail: rachelle.striegel@ambest.com Analysts Michael Zboron Phone: +(44) 20 7626 6264 E-mail: michael.zboron@ambest.com Vasilis Katsipis Phone: +(44) 20 7626 6264 E-mail: vasilis.katsipis@ambest.com WESTLB AG: Panmure Execs Plan GBP50 Million Management Buyout ------------------------------------------------------------- WestLB has opened talks with the management of Panmure's corporate broking division about a possible buyout, the Financial Times said recently. Panmure CEO Tim Linacre and Business Manager Jeremy Davies are understood to have met Manfred Puffer of WestLB's management board regarding the possibly more than GBP50 million (US$80 million) transaction that could come through by the end of the year. Panmure has already informed its 76 staff about the matter. WestLB, which restructured its business following a disastrous investment in BoxClever, could also opt to sell Panmure to a third party. Its management board is believed to have received indications of interest from investment banking boutique Bridgwell and private client stockbroker, Teather & Greenwood. Panmure Gordon has more than 70 corporate broking clients in the U.K., including Safeway, the U.K. retailer; WPP, the advertising group; and Six Continents, the hotels and pubs company. In March, WestLB Panmure restructured its pan-European strategy, splitting it into two operations, Panmure U.K. and WestLB Equities in Dusseldorf. ============= H U N G A R Y ============= POSTABANK RT: Privatization Tender Attracts Three Bidders --------------------------------------------------------- GE Capital's Hungarian subsidiary, Budapest Bank, Austria's Erste Bank and Bank Austria-Creditanstalt on Friday submitted bids for the privatization tender of Postabank, according to Bluebull. Press reports say one bidder submitted an offer amounting to EUR314 million. Erste Bank, meanwhile, is rumored to be willing to pay "any price" for PostaBank. The Hungarian Privatisation and State Holding Company will make public additional details about the privatization on September 25, the report said. Postabank in July reported narrower than expected non-consolidated pre-tax losses of HUF176 million in the first half of the year, according to CEO Bela Singlovits. The bank, which made HUF1.776 million losses last year, was expected to post around HUF876 million in non-consolidated pre-tax losses. Postabank was also able to report increased activity in the areas of retail loans and deposits as well as corporate loans, according to Mr. Singlovits. The bank previously received some HUF174.5 billion in funds needed to sustain operations. The government rescued the bank during a run in February 1997. ============= I R E L A N D ============= ELAN CORPORATION: Atrix Terminates BEMA-fentanyl Joint Venture -------------------------------------------------------------- Atrix Laboratories, Inc. announced Tuesday the company and Elan Corporation plc (NYSE: ELN) have reached an agreement to terminate their joint venture focused on the development of pain management products. Termination of the joint venture returns the BEMAT-fentanyl product to Atrix. David R. Bethune, Atrix's chairman and chief executive officer commented, "While our joint venture with Elan was productive, at this point it is in the best interest of both companies to move beyond this JV." Termination of the joint venture allows Atrix to control the development of BEMA-fentanyl, transmucosal delivery of the opiate, fentanyl, for breakthrough cancer pain. To date, preliminary Phase I clinical testing as been conducted on initial dosage forms. On June 22, 2000, Atrix and Elan formed a joint venture for the development of products focused on pain management utilizing Atrix's proprietary BEMAT technology. Upon termination, Atrix acquires Elan's ownership interest in the joint venture in exchange for Elan receiving a portion of any consideration Atrix receives from the licensing of BEMA-fentanyl and a royalty based on net sales if the product is ever commercialized. Atrix Laboratories, Inc. is an emerging specialty pharmaceutical company focused on advanced drug delivery. With five unique patented technologies, Atrix is currently developing a diverse portfolio of proprietary products, including oncology, pain management, and dermatology products. The company also partners with large pharmaceutical and biotechnology companies to apply its proprietary technologies to new chemical entities or to extend the patent life of existing products. CONTACT: ATRIX LABORATORIES, INC. Danette R.M. Meyer, Ph.D. (Dmeyer@atrixlab.com) Director of Investor Relations Phone: (970) 482-5868 ========= I T A L Y ========= ALITALIA SPA: DTI Chief Agrees Alliance with Air France Possible ---------------------------------------------------------------- Government-controlled Alitalia SpA could consolidate with Groupe Air France and KLM Royal Dutch Airlines NV, Industry Minister Antonio Marzano told reporters who asked him about the possibility of an alliance grouping the three airlines. "I believe it will be done," Mr. Marzano was quoted as saying. According to AFX News, Alitalia Chairman Giuseppe Bonomi previously said the airline is favorable to joining a tie-up with Air France and KLM. The Italian government, meanwhile, announced Tuesday it is ready to sell shares in flagship airline Alitalia to pave the way for a closer integration with Air France. Dow Jones Newswires said Italian Prime Minister Silvio Berlusconi and French Prime Minister Jean-Pierre Raffarin agreed in a phone conversation that a common economic policy goal should be to foster alliances in the airline sector. "The two premiers... gave a positive evaluation to the (consolidation) efforts made by Alitalia and Air France, which could also be extended to a possible alliance between Air France and KLM," the Italian government said. Alitalia announced a EUR315 million net loss for the first half, compared with a net loss of EUR49 million a year earlier, and an operating loss of EUR266 million, compared with EUR62.8 million. ===================== N E T H E R L A N D S ===================== GETRONICS N.V.: To Sell Stake in DigitalNet Under Disposal Plan --------------------------------------------------------------- Getronics announces that it has reached an agreement to sell 33,500 Class B Preferred Stock in the U.S. network solutions company DigitalNet Inc. to a U.S. based investment fund. One of the closing conditions is a 45 days period in which DigitalNet or its shareholders have the possibility to match the offer. This matching condition (a right of first refusal) was agreed at the time of the sale of Getronics Government Solution-business to DigitalNet. Getronics expects, if all conditions are being met, to close the sale of the shareholding on October 28, 2003. This transaction is part of the Getronics program to dispose non-core assets. The proceeds will be used to further strengthen the Company's balance sheet. Total cash proceeds will be US$27 million and the book profit will be approximately EUR5 Million. Getronics acquired the DigitalNet shares in 2002 as part of the sale of Getronics Government Solutions. DigitalNet builds integrates and manages enterprise-wide network computing solutions for government organizations. Claris Capital has acted as financial advisor to Getronics in respect of the sale of the shareholding in DigitalNet. About Getronics With 23,000 employees in over 30 countries and revenues of EUR 3.6 billion in 2002, Getronics is one of the world's leading providers of vendor independent Information and Communication Technology (ICT) solutions and services. Getronics combines the capabilities of the original Dutch company with those of Wang Global, acquired in 1999, and of the systems and services division of Olivetti. Getronics is ranked second worldwide in network and desktop outsourcing and fifth worldwide in network consulting and integration (Source: IDC July-August 2002). Getronics designs, integrates and manages ICT infrastructures and business solutions for many of the world's largest global and local companies and organizations, helping them maximize the value of their information technology investments. Getronics headquarters are in Amsterdam, with regional offices in Boston and Singapore. Getronics' shares are traded on Euronext Amsterdam. For further information about Getronics, visit http://www.getronics.com CONTACT: GETRONICS N.V. Investor Relations Phone: +31 20 586 1964 Fax: +31 20 586 1455 E-mail: investor.relations@getronics.com KLM ROYAL: Alliance Talks with Air France Enters Homestretch ------------------------------------------------------------ Europe's second-largest airline, Air France, and KLM Royal Dutch Airlines are in the final stages of negotiations regarding an alliance, according to a KLM spokesman. KLM's board may meet this week to consider a proposal, said KLM spokesman Bart Koster, according to Bloomberg. Air France spokeswoman Brigitte Barrand, meanwhile, said: "We are in active discussions with KLM but for the moment, no board meeting has been scheduled." KLM Royal negotiated with Air France regarding the tie-up and a possible entry into the latter's SkyTeam alliance late in August. This follows failed merger talks with British Airways and Alitalia SpA. The Amsterdam-based carrier reported a EUR416 million ($470 million) loss for the year ended in March. Air France, meanwhile, reported a profit for the three months through June and forecasted a profit before interest and tax for the fiscal year ending in March 2004. "An alliance would drive KLM stock higher as Air France is a good company and there are lots of synergies between the two," says Eric Raets, who helps manage US$46 billion at KBC Bank N.V. in Brussels and holds about 40,000 KLM shares. KLM ROYAL: Wants Own Identity Even if Air France Tie-up Succeeds ---------------------------------------------------------------- KLM Royal wants to preserve its independence under an imminent alliance with Air France, Europe's second- largest airline, a company spokesman, according to Bloomberg. An alliance may include the swapping of shares, or the sale of state-owned shares in Air France to the public by the end of 20-3, according to Dominique Bussereau, France's secretary of state for transport in an interview with French radio station BFM. French newspaper L'Agefi, without naming sources, said the Paris-based airline might take over Royal KLM. The French government, which wants to lower its 54.4% ownership of the carrier to about 20%, will give KLM 15% of the carrier in exchange for control of KLM, the newspaper said. KLM spokesman Bar Koster refused to comment on "speculation" but he said: "We absolutely want certain assurances about remaining Dutch... We don't want to give anyone complete control of our identity." The Dutch identity guarantees KLM landing rights in the U.S. and other countries outside the European Union under international treaties. The stand was similar to that it posed on aborted merger plans with British Airways. "KLM might want autonomy and not just be the Dutch branch of a French airline," said Gert-Jan Geels, an asset manager at Eureffect BV in Amsterdam who holds KLM shares. "Remaining Dutch was an obstacle in the past and might be an obstacle now." Mr. Geels said: "I am confident that an alliance is extremely positive for an airline like KLM as it can get with a large group of carriers in SkyTeam." SkyTeam wants to double its figures to as many as 12 members. Erik Vos, an analyst at Rabo Securities believes a full merger is the "best solution" for KLM and Air France because it would produce more cost savings and synergies. An alliance might precede a full merger because of legal and political complications about landing rights, he said. But he also cautioned "it would be very difficult to complete a full-merger at once" because of "high political issues there." "The last hurdles can be the hardest and you can stumble," Mr. Koster said. "We want to be 100% confident before we make an announcement." KLM ROYAL: Labor Union Demands Enforcement of Labor Agreements -------------------------------------------------------------- The Dutch pilots union threatened KLM Royal with court action to enforce labor agreements should the carrier pushes through with merger plans with Air France, according to the Financial Times. The parties are reportedly close to agreeing an alliance that may lead to a merger that could bring significant changes in the position of airlines and alliances in the industry. Talks are reportedly at a very advanced stage, but both companies refused to comment on the schedule of their next board meeting, which could give the final approval to the plan. The president of VNV, the Dutch pilots' union, Henk de Vries, said: "We are preparing ourselves to enforce our agreements in the courts, if there is any violation. We are preparing ourselves for a worst case scenario, that would mean that KLM would cease, and jobs in the Netherlands are threatened. The very existence of KLM could be at stake here." KONINKLIJKE AHOLD: To Revamp Supervisory Board Soon --------------------------------------------------- The Supervisory Board of Ahold announced that it will change its composition in the months ahead. Henny de Ruiter will resign as Chairman of the Supervisory Board at the close of the General Meeting of Shareholders to approve the 2002 financial statements. This meeting is likely to be held in October 2003. De Ruiter will be succeeded as Chairman by Karel Vuursteen, who was appointed as Supervisory Board member on May 7, 2002. Further changes to the Supervisory Board will be made at the 2004 Annual General Meeting of Shareholders, likely to be held in May 2004. A nomination committee has been established to consider retirements and new members to the Ahold Supervisory Board. Following the announcement on February 24, 2003, on accounting irregularities, the Supervisory Board took charge of the company's affairs. Its Chairman, Mr. de Ruiter, steered the company, together with the members of the Executive Board, through the initial difficult phase, including the securing of a EUR2.65 billion-credit facility to stabilize Ahold's financial situation. After the nomination of Anders Moberg as CEO in May 2003, the Supervisory Board has continued to oversee the transition of Ahold's business to a more stable environment. The Supervisory Board now believes that a predominantly new team should assist Ahold in shaping its future. CONTACT: KONINKLIJKE AHOLD P.O. Box 3050 1500 HB Zaandam Netherlands Phone: +31 (0)75 659 57 20 FAX: +31 (0)75 659 83 02 KONINKLIJKE AHOLD: Board Says New CEO's Salary at Par with Peers ---------------------------------------------------------------- Dutch retailer Royal Ahold defended its controversial remuneration package to its new chief executive, Anders Moberg, saying it is in line with peers. Ahold's supervisory board sent a letter to PGGM and ABP on Wednesday explaining the issue that created a furor on last Thursday's shareholder meeting after the pension funds complained of the way the salary was disclosed to shareholders. "The remuneration package doesn't differ -- according to a report from a leading research bureau -- from those of companies selected in a peer group; the package is in fact lower than remuneration packages at large U.S. retailers'," the letter said. PGGM and ABP are also against the fact that the new CEO has high variable pay and a large exit arrangement, according to Dow Jones. Under the pay package, Mr. Moberg will earn at least EUR6 million in the next two years. The supervisory board also expressed in the letter their regret on the commotion caused by the remuneration package during the shareholder meeting. An Ahold spokesman declined to comment, according to the report. =========== P O L A N D =========== DAEWOO-FSO: Creditor Banks Consider Exchanging Debt for Shares -------------------------------------------------------------- Creditor banks of Daewoo-FSO Motor Corporation are currently considering converting the Polish carmaker's debts into shares, as proposed by both Daewoo-FSO's President and the State. According to Polska Agencja Prasowa news agency, Bank Pekao spokesman Robert Moren said his institution was in favor of dividing half of the troubled carmaker's liabilities into installments with maturity at the end of 2006, and canceling the remaining amount. Daewoo-FSO owes Pekao SA PLN29 million, and creditor banks, PLN591 million (around US$155 million). The banks include BPH PBK, Handlowy, Pekao, Millennium, ING Bank Slaski and Kredyt Bank. Mr. Moren said conditions for reaching agreement were allowing banks to include the losses connected with the restructuring Daewoo debts into operating costs and then in turn, banks would demand paying off the liabilities without regular interest. The percentage of debts the other institutions are willing to cancel, however, is not yet determined. The banks involved in the ongoing negotiations did not comment on the talks. Daewoo-FSO in 2001 lost PLN1.1 billion after losing PLN2 billion in 2000. It is presently carrying a PLN4.8 billion debt burden. Trouble started brewing when it posted a net loss of PLN2.3 billion in 2000. General Motors took over most of Daewoo's operations, although it did not include the Polish investments in the acquisition. General Motors offered to hand over intellectual property rights that concern production of the company's Matiz and Lanos models by the plant owned by Daewoo-FSO. Britain's MG Rover recently agreed to revive the company, but mounting financial legal problems necessitated the inter-ministerial team working on the restructuring of Daewoo-FSO. Also, the lack of financial agreement with banks has frustrated the plans of the company's annual shareholder's meeting. CONTACT: DAEWOO-FSO MOTOR CORPORATION Ul. Jagielloivska 88 03-215 Warszawa Phone: +48-22-676-3955 Fax: +4822-676-1501 Homepage: http://www.daewoo.com.pl ELEKTRIM SA: Wants Sale of Zespol Shares Invalidated ---------------------------------------------------- The Management Board of Elektrim SA has filed a claim with the Arbitration Court at the National Chamber of Commerce in Warsaw against the State Treasury of the Republic of Poland. In its claim, Elektrim motions for the Agreement for the Sale of Shares in Zespol Elektrowni Patnow Adamow Konin SA made on March 30, 1999, to be declared invalid, as a result of Elektrim SA's statement, made in its letter dated August 22, 2003 (RB 68/03), in which Elektrim SA avoided the consequences of its declaration of intent contained in the aforementioned agreement. ***** Polish conglomerate Elektrim filed for bankruptcy in September last year after failing to meet repayments for its US$480 million convertible bonds. It was then expected that Elektrim's key assets will go into receivership, pending a ruling by a Polish court. ELEKTRIM SA: Deal with Deutsche Telecom Triggers Market Rally ------------------------------------------------------------- Shares in Elektrim SA soared by almost 10% to PLN3.92 after the company concluded a deal to sell its stake in mobile telecom Polska Telefonia Cyfrowa to Deutsche Telekom. The Polish holding company agreed to a deal wherein Deutsche Telekom will acquire 51% in Polska Telefonia Cyfrowa from a joint venture of Elektrim and Franco-American Vivendi for EUR1.1 billion. Vivendi will get EUR700 million from the sale, while the remaining EUR400 million will go to Elektrim. Warsaw Business Journal said analysts initially expected the funds obtained from the sale will first be used to pay back Elektrim Telekomunikacja's loan to Vivendi, while the remaining share will be divided among the shareholders. According to Stefan Knopik of BM BPH PBK, both Vivendi and Elektrim have "achieved as much as they could at this moment." He added: "If they would not have to sell Polska Telefonia Cyfrowa today, then in a year's time, they could have achieved much, much more." It is believed that Elektrim will use the funds to pay back its liabilities. It recently announced plans to liquidate most of its assets, which are not its core business activities. The holding company could keep shares that are only in Patnow-Adamow-Konin power plants, which is Poland's second largest generating plant. ============= R O M A N I A ============= AKER BRAILA: Blames Poor State of Shipbuilding Market for Losses ---------------------------------------------------------------- Aker Braila shipbuilder posted ROL36.4 billion in losses during the first half as a result of a lack of new contracts and the use of reserve accounting. The company, which posted a profit of ROL400.9 million a year earlier, reported operating losses of ROL33.68 billion, compared to ROL2.1 billion a year earlier. Sales went down sharply and were not offset by declining expenses. The company's managers said Aker Braila's results were negatively affected by the poor state of the shipbuilding market, according to Bluebull. Aker Braila moved into the ship body construction business during the first half of the year, making more than 300 layoffs in the process. The report noted that the company's debts rose in the first half by about 10%, reaching ROL690.62 billion. Its debt-to-assets ratio climbed by 18% to 82.5%, despite a 41% debt reduction year-on-year to ROL181.8 billion. The company is thus significantly over-leveraged according to industry analysts. The company's solvency ratio in fact fell during H1 to 14.74%. The majority shareholder of Aker is Scandinor, which owns a 69.51% stake in the company, along with SIF Moldova with 14.47%. Shares in Aker last traded in the First Segment of the Rasdaq electronic market on July 11 at ROL21,000 a share. ===================== S W I T Z E R L A N D ===================== ZURICH FINANCIAL: Outlook of Core Entities Revised to Stable ------------------------------------------------------------ Standard & Poor's Ratings Services said it revised its outlook on the core operating entities of the Switzerland-based composite insurance group Zurich Financial Services (collectively ZFS) and the outlook on the group holding company, Zurich Group Holding (ZGH), to stable from negative. At the same time, Standard & Poor's affirmed its 'A+/A-1' counterparty credit and insurer financial strength ratings on the core operating entities of ZFS. In addition, Standard & Poor's affirmed its 'A-' counterparty credit rating on ZGH. "The outlook revision reflects Standard & Poor's expectation that management's ongoing efforts to improve the group's operating profitability will result in a sustainable turnaround in earnings performance, even in a continued difficult operating environment," said Standard & Poor's credit analyst Karin Clemens. The rating is further supported by Standard & Poor's positive view of management, a very strong business position, and strong capitalization. These positive factors are partly offset, by the need for further reserve strengthening at Centre Solutions (Bermuda) Ltd. Management has implemented a comprehensive improvement program that covers all facets of the operations, including pricing, underwriting and claims management, the transformation of business models, as well as significant cost reductions. In doing so, management has demonstrated strong execution skills despite a difficult operating environment. ZFS has successfully completed its US$5 billion risk-based capital improvement program and is on track and even slightly ahead of plan in implementing its $1 billion operational improvement program in 2003. "The stable outlook reflects the assumption that ZFS' performance ill be in line with Standard & Poor's expectations," said Ms. Clemens. These are: that the group's operational improvement program will yield additional earnings of US$1 billion in 2003, a non-life combined ratio of below 100% in 2003 and 2004, and an operating return on life embedded value of about 8% in 2003, increasing to about 10% by the end of 2005, reflecting the successful implementation of its transformation program for its life insurance activities. In addition, Standard & Poor's expects that the group will be able to achieve an operating return on International Accounting Standards (IAS) equity of about 12% in the medium term. =========================== U N I T E D K I N G D O M =========================== ABBEY NATIONAL: To Announce Sale of Italian Mortgage Unit Soon -------------------------------------------------------------- British bank Abbey National is now in exclusive talks with Unicredito regarding the sale of its Italian mortgage unit, a senior executive at the Italian bank said, according to Reuters. It is expected to confirm the disposal later this week, The Times said. The transaction is valued at between GBP50 million and GBP200 million, way below the value of the unit, whose assets are estimated to be worth EUR4 billion. The sale is part of Chief Executive Lugman Arnold's GBP65 million-disposal program of non-core assets announced in February. He has already sold First National, the consumer finance business, to GE Capital for GBP848 million, and is still seeking a buyer for Porterbrook, the train leasing company, and its French mortgage business. Abbey National closed First National Motor Finance and its offshore banking business previously. It also closed new business for most of its life operation. AQUILA INC.: Fitch Welcomes Sale of Canadian Utility Business ------------------------------------------------------------- The announcement that Aquila Inc. (ILA) has reached an agreement to sell its Canadian utility operations for approximately US$990 million, including the assumption of debt, is in line with Fitch's expectations. ILA's current ratings -- senior secured at 'B+' and senior unsecured at 'B-' -- have incorporated expectations of asset sales and the consequent improvements in leverage. Aquila Canada Finance is a financing subsidiary of ILA that does not hold any Canadian utility operating assets nor does it have any claim upon upstream cash flows from the Canadian utility business. Cash flows to service debt at Aquila Canada Finance are derived exclusively from the parent guarantor, ILA, and thus the 'B-' rating of Aquila Canada Finance is equal to the rating of ILA. The Rating Outlook remains Negative. Fitch notes that the sale of the Canadian utility operations is in line with ILA's strategic plan to return the company to a domestic regulated utility, and restore credit quality. Earlier in the year, ILA completed the sale of its Australian assets. However, ILA continues to experience negative cash flows from unprofitable merchant tolling agreements and natural gas pre-pay obligations, as well as a high debt burden relative to operating EBITDA. Improvement in the Rating Outlook and ratings will depend on reducing the cash flow drag from the residual merchant contracts and demonstrating the stand-alone cash profitability of the U.S. utilities. BALTIMORE TECHNOLOGIES: First-half Losses Drop Significantly ------------------------------------------------------------ Baltimore Technologies (London:BLM), announced its interim results for the six months ended June 30, 2003. Highlights: (a) Total revenues for H1 were GBP9.7 million (H1 2002: GBP22.1 million). (b) Revenues for continuing operations were GBP9.3 million (H1 2002: GBP13.2million) (c) LBITDAE (Loss before interest, tax, depreciation, amortization and exceptional items) were reduced to GBP2.2 million from GBP9.9 million in H1 2002. (d) Non-cash write-offs totaled GBP6.3 million, following amortization charge and impairment of goodwill and investments (GBP20.4 million in H1 2002). (e) Cash Balance of GBP14.6 million at 30 June 2003 (H1 2002: GBP23.1 million). A further GBP15.9 million in gross proceeds is expected from the sales of SelectAccess (GBP8.3 million), OmniRoot (GBP2.0 million), the managed services operations (approximately GBP1.1 million) and the settlement with Clearswift (GBP4.5million). (f) Net operating cash outflow reduced to GBP3.5 million from GBP9.4 million in H1 2002. (g) Headcount has been reduced to 255 as at June 30, 2003 (H1 2002: 422). (h) Major contract wins include the Saudi Arabian Monetary Authority, the Government of Finland, Hong Kong Post Office and Intelink. Bijan Khezri, Chief Executive of Baltimore Technologies plc commented: "During the reported period, we succeeded in cutting our losses further and continued to demonstrate the outstanding competitiveness of our core PKI business by winning some of the world's leading e-government projects. We will continue generating cash through divestments and further reduce the cash burn of existing operations. We will not tolerate any operational cash burn beyond the end of the year and are prepared to deploy all available means to maximize value for our shareholders." Chairman's Statement Overview After consideration of the strategic positioning of the company, the Board announced on May 22, 2003, a controlled sale process, inviting offers for the whole of the company. That process is now closed as it did not result in an appropriate offer. However, during the process it was clear that there was interest from various parties in elements of the business. Ongoing discussions have so far concluded in the announcement of the sale of three parts of the business. The SelectAccess business has been sold to HP for a total consideration of GBP8.3 million in cash and we expect this transaction to close in September. Baltimore has also sold its managed services related operations to beTRUSTed for approximately GBP1.1 million. This transaction has now closed. In addition, Baltimore has sold its OmniRoot business to beTRUSTed for a total of GBP2.0 million and this transaction is expected to close within the next eight weeks. Following the controlled sale process, we expect that the shape and structure of the business and the company is likely to continue to change during the course of the next months. We are committed to achieving the best possible outcome for our shareholders. The continued reduction of overheads and expenses has meant that, despite lower revenues than hoped for, Baltimore can report that cash burn and losses have been reduced in line with our expectations. Cash balances reduced by GBP3.3 million resulting in cash at bank of GBP14.6 million, with further funds to come from disposals announced after 30 June 2003. This will support our core PKI business, which continues to win important and prestigious new contracts. Financial Highlights As in previous periods, the disposals made during 2002 make a true comparison of the Group's performance difficult. To help make the comparison, the 2002 figures are split to show the 'discontinued' operations. Total revenues for H1 2003 were GBP9.7 million and revenues for the continuing business were GBP9.3 million. This represents a decrease of 56% (GBP12.4 million) from GBP22.1 million in H1 2002. Excluding the GBP8.5 million fall in revenue due to the discontinued businesses, the continuing business revenues fell by 29% (GBP3.5 million) from GBP13.2 million in H1 2002. The major reduction was in the higher margin license fee revenue, which fell from a 'continuing' GBP4.7 million to GBP2.0 million. Professional Services, which include new license implementation, accounted for GBP1.0 million of the remaining fall in revenue. Continuing service and support revenue for H1 2003 of GBP3.9 million showed a 15% increase from GBP3.4 million in H1 2002. Gross profit margin of 53% is down 4.0% from 57%, 3.5% of this is due to the transfer of our hardware sales to third party status. The balance is due to the mix of revenue with a lower proportion of high margin licenses sold. LBITDA (before exceptionals) of GBP2.2 million improved from GBP9.9 million in H1 2002, due to the reduced cost base and operating efficiencies. Total operating expenses before exceptional items for H1 2003 were GBP11.1 million representing a decrease of 71% from GBP38.6 million in 2002. For continuing operations the reduction was from GBP30.0 million to GBP10.5 million, a decrease of 65%. This decrease includes a reduction of amortization charges from GBP13.1 million to GBP2.3 million. Excluding both exceptional charges and amortization, operating expenses reduced from GBP25.4 million to GBP8.8 million. Exceptional charges in the period included GBP4.0 million arising from the writedown of the value of investments. Agreement has been reached with Clearswift Ltd. on the outstanding elements of the consideration for the sale of Content Technologies last year. The value of the investment in Clearswift, as at June 30, 2003, has been reduced to GBP2.0 million. The company expects to receive GBP4.5 million by 30 September 2003 in respect of that investment and in final settlement of warranty claims. In order to retain an interest in Clearswift's potential, Baltimore will also receive GBP300,000 in warrants. The company had a cash balance of GBP14.6 million at the end of the period. The cash outflow of the period was GBP3.3 million which included an outflow of GBP3.5 million from operations. Management Changes Simon Enoch, who served as company Secretary and General Legal Counsel, left the company at the end of July 2003. We are very pleased to retain him as a non-Executive Director. Phil Smith, Chief Financial Officer, has taken over the role of company Secretary. Chief Executive's Report Business Highlights The first half of 2003 has been a period of significant consolidation and change for Baltimore. During the first half of the year, our leadership in the PKI infrastructure market has been further reinforced through significant customer wins in our core Government and Finance markets throughout the world. Baltimore Technologies is effectively the world's leading high end PKI security company in Government and Finance. These customer wins include the Saudi Arabian Monetary Authority, the Finnish Population Register Centre, Intelink and Hong Kong Post. All of these projects are critical infrastructure projects requiring a highly scalable, policy-based security infrastructure, with flexible registration features that are capable of supporting a national roll-out. In addition, Baltimore UniCERT was the first combined product and managed service to be certified by the U.S. Federal Bridge Certification Authority. The Way Forward While we have succeeded in consolidating our position as the leading high-end security infrastructure player, we continue to believe that Baltimore Technologies' long-term competitiveness requires critical mass. We continue to evaluate all possible options to achieve this. In addition to our employees, our customers represent Baltimore's most critical asset. We are supporting around 300 of the world's leading electronic security infrastructures. We will make use of all possible means to preserve and grow this valuable asset. Whilst our cash balance provides us with a high level of flexibility we will not tolerate any operational cash burn beyond the end of the year. Therefore, we will implement a further reduction in headcount throughout our worldwide operations. We will continue generating cash through divestments and further reduce the cash burn of existing operations. I look forward to updating our stakeholders in due course. About Baltimore Technologies Baltimore Technologies' products, services and solutions solve the fundamental security and trust needs of e-business. Baltimore's e-security technology gives companies the necessary tools to verify the identity of who they are doing business with and securely manage which resources and information users can access on open networks. Many of the world's leading organizations use Baltimore's e-security technology to conduct business more efficiently and cost effectively over the Internet and wireless networks. Baltimore also offers worldwide support for its authorization management and public key-based authentication systems. Baltimore's products and services are sold directly and through its worldwide partner network, Baltimore TrustedWorld. Baltimore Technologies is a public company, principally trading on London (BLM). For more information on Baltimore Technologies please visit http://www.baltimore.com To See Financial Statements: http://bankrupt.com/misc/Baltimore_Technologies_Interim.htm CONTACT: SMITHFIELD FINANCIAL Phone: 020 7360 4900 Andrew Hey Phone: 020 7903 0676 Nick Bastin Phone: 020 7903 0633 Will Swan Phone: 020 7903 0647 BRITISH AIRWAYS: Open to Alliance with KLM, But not Merger ---------------------------------------------------------- British Airways said it is open to the idea of striking an alliance with KLM, such as a joint membership of OneWorld, a month after the parties broke off talks. Ananova quoted a company spokesman saying there are no discussions currently going on between the two, but he said "the door is not closed from our point of view." The U.K. flag carrier, however, ruled out a full blown merger, an idea they left off three years ago because of potential regulatory concerns. The comment follows a report of potential tie-up of KLM with another carrier. French financial newspaper L'Agefi said Air France and KLM could officially announce a long-discussed merger next Thursday. A spokesman for KLM confirmed that the two companies were near an agreement. Air France, on the other hand, refused to comment. British Airways said it is still open for a possible resumption of negotiations regarding an alliance should talks breakdown with Air France, according to a KLM spokesman. CORUS GROUP: Dutch Workers Suggest Breaking off Ties with U.K. -------------------------------------------------------------- The workers council of the Dutch unit of loss-making steel maker Corus Group PLC is planning to suggest that the unit be made independent from its British counterpart to safeguard its future, Dow Jones Newswires reported, citing a letter addressed to staff. The letter said: "The council will make an urgent call on the management and the supervisory board of Corus Netherlands to steer its own course focused on the continuity of Corus Netherlands." According to the report, the council said the unit's future is in jeopardy because it was unlikely the British units at Corus would contribute much profit to the group in coming years. The advisory board is expected to put its case strongly to the management at a meeting on Friday. Corus was formed through the merger of British Steel and Dutch Hogovens in 1999. It has been struggling with severe losses at its U.K. operations, which has put pressure on the company's finances and led to the resignation of top management. The company's new managers have struck new financing arrangements and implemented heavy restructuring measures to bring the U.K. activities back to profit. EMI GROUP: Warner-BMG Merger Threatens Survival, Says Analysts -------------------------------------------------------------- EMI, one of the world's largest music companies, could be isolated from other music groups once Warner Music and BMG pushes through with plans to merge their recorded music businesses, according to the Financial Times. After the five main music groups are reduced to four following the merger the question is will EMI "survive or succumb to the brutal economics of the music industry?," the paper asked. EMI insists it can stand alone with its reduced costs, trimmed down artist roster, and adjustments to a lower sales environment. But EMI is expected to reveal continuing pressure on both sales and profits at its interim results in November, according to the report. For the full year, sales are expected to be down about 5% at GBP2.06 billion (US$3.46 billion). Analysts at Citigroup expect pre-tax profits to decline from GBP178.1 million to GBP160.5 million. Although senior executives claim EMI is performing better than the industry as a whole, and that the company has restructured, analysts still believe a deal between Warner and BMG could be source of potential additional danger. "The merger would be bad news for EMI because one of the ways it has maintained margins despite falling sales is through cost cutting," says one, according to the report. "That is a finite thing and the classic strategy would be to expand the cost-cutting horizon by merging." EMI GROUP: Senior Unsecured Notes Assigned (P) Ba1 Rating --------------------------------------------------------- Moody's Investors Service said it assigned a (P) Ba1 rating to EMI Group plc's proposed EUR300 million issue of senior unsecured notes due 2013, subject to final documentation. Proceeds of the notes are expected to go towards refinancing the company's existing revolving credit facility and cer tain bilateral facilities, which together amounts to around GBP650 million. While saying that the rating recognizes EMI's international presence, leading world-wide position in music publishing, and restructuring efforts, it also said that the action reflects: the continuing deterioration in the world recorded music markets, the limited visibility to date on the success of anti-piracy measures taken by the company, uncertainties about the company's ability to produce free cash flow at current dividend levels and the challenges of building revenues and profits from legitimate distribution of EMI's music content over the Internet. The rating outlook is stable but it does not yet take into consideration the possibility that EMI may contemplate on participating in the ongoing consolidation of world music players. Moody's commented: While such a consolidation step could well have the potential to yield considerable cost savings, it would also create integration and regulatory risks and could therefore lead to negative ratings pressure as would any worsening of EMI's debt protection." MARCONI CORPORATION: Redeems Part of Junior Secured Notes --------------------------------------------------------- Marconi Corporation plc (MONI) gave notice to the owners of its 10% guaranteed Junior Secured Notes, due 2008 (the Securities) pursuant to Section 3.02 of the Indenture dated as of May 19, 2003 (the Indenture) made between the Company, the guarantors named therein and JP Morgan Chase Bank (the Trustee) that pursuant to Section 3.08 of the Indenture $103,195,433 aggregate principal amount of Securities (the Redemption Securities) will be redeemed on September 30, 2003 (the Redemption Date). The redemption price (the Redemption Price) shall be 110.0% of the principal amount of the Redemption Securities redeemed plus 60 days accrued interest to the Redemption Date and any Additional Amounts (as defined in the Indenture). In line with the mechanism used for the previous partial redemption of the Junior Secured Notes, which took effect on July 31, 2003, a pool factor will be applied to every holding. Further details of the pool factor to be applied from the redemption date will be announced once the pool factor has been confirmed by the Registrar. This mandatory partial redemption has primarily resulted from the previously disclosed sale of the Group's remaining stake in Easynet Group plc, its entire stake holding in Gamma Telecom Holding Ltd, and the release of collateral following expiry of certain performance bonds and letters of credit. The paying agent with respect to the Redemption Securities is: The Bank of New York One Canada Square London E14 5AL England Attention: Corporate Trust Office Any queries in respect of payment, pool factor or related matters should be directed to Emma Wilkes at Bank of New York on (+44) 20 7964 7662, who are the Registrar, the Depositary and the Paying Agent. On the Redemption Date, the Redemption Price, together with accrued interest and any Additional Amounts, will become due and payable. Unless the Company defaults in making the redemption payment, the Redemption Securities shall cease to bear interest from and after the Redemption Date. The Redemption Securities will be cancelled following redemption by the company. MOTHERCARE PLC: To Release Half-year Results October 11 ------------------------------------------------------- Mothercare plc, in accordance with best practice, confirms that it will release pre-close trading statements at both the half-year and year-end. Therefore, a pre-close trading statement will be released on Wednesday October 8, 2003 in advance of Mothercare's half-year end on October 11, 2003. Mothercare's interim results announcement will be made on November 20, 2003. ***** In the last year Mothercare closed 13 stores and opened 5 stores, leading to a net sales decline due to space change in the period of 1.5%. CONTACT: BRUNSWICK GROUP LIMITED Philippa Power/Chi Lo Phone: 020 7404 5959 MURRAY FINANCIAL: Board Composition Halved ------------------------------------------ Since the Extraordinary General Meeting held on July 2, 2003, Murray Financial Corporation plc has had eight directors. The Board of Murray Financial Corporation believes that a continuing board of four is more appropriate for a company of its size. Accordingly, at a Board Meeting held Tuesday, Julian Lewis, Richard Causton, Jonathan Cohen and Philip Court resigned as directors. The Board would like to thank them for their contribution. Jonathan Cohen will continue to act as Company Secretary of Murray Financial Corporation. ***** Murray Financial also announced in June the departure of three of its executives following reports of mounting pressure to cut costs in the firm, which has already been reduced to a cash shell. CONTACT: MURRAY FINANCIAL CORPORATION Philip Reid Phone: 07789 555544 ROYAL MAIL: Break Down in Negotiations Makes Strike Imminent ------------------------------------------------------------ Talks between Royal Mail management and Communication Workers Union to avert the first national strike in seven years failed to end a deadlock Monday night. Postal workers are now expected to deliver a vote of action, The Times said. The union has balloted 160,000 workers on whether to strike in protest at an offer said by Royal Mail to be worth 14.5% but linked to productivity. The union says the offer amounts to only 4.5% upfront money with 3% paid in October and 1.5% next April. However, both sides agreed to resume negotiations before the outcome of the ballot could be announced, which could see walkouts begin as early as next week. The ballot result comes as the Trade and Industry Select Committee is believed to be preparing an inquiry into Royal Mail in relation to allegations by union leaders that the courier was exaggerating when it said it is losing GBP750,000 daily. According to TCR-Europe an influential group of back-bench MPs are set to find out whether indeed Royal Mail overstated the amount to justify a plan to make 30,000 workers redundant and to support the group's aggressive stance on pay negotiations. SAFEWAY PLC: Preferred Bidder Could be Announced Next Week ---------------------------------------------------------- The government could announce its preferred bidder in the battle to takeover supermarket group Safeway earlier than expected, people close to a number of potential buyers said, according to the Financial Times. The announcement was expected after the Labor party conference, or the second week of October as the meeting starts September 28. But sources said they have been advised it could come next week, probably Thursday or Friday. The Department of Trade and Industry is currently looking at three controversial takeover reports from the Competition Commission. "There are three big reports and they need to be staggered and we cannot announce them during the conference," said a person close to the process. Wm Morrisson Supermarkets is understood as the frontrunner in the bidding battle. Its bigger rivals Tesco, Asda/Wal-Mart and J Sainsbury are all thought to have lost out, according to the report. WS ATKINS: Interim Results Has Marked Improvement Since June ------------------------------------------------------------ At the Annual General Meeting, held at 4.30 p.m. Tuesday, the Chairman Michael Jeffries made this statement to shareholders in relation to current trading: "The Group's core businesses are operating well. Metronet has started satisfactorily and is performing broadly in line with expectations. Continued focus on net margin improvement, rigorous cash management and the ongoing elimination of loss-making and low margin activities is delivering benefits. Combined with the cash received from disposals and recovery of Metronet bid costs, the Group has been able to reduce net debt significantly since the year-end. "Consequently, the Board expects to report interim and full year results significantly better than last year and ahead of our expectations at the time of the preliminary results announcement in June. "Interim results for the six months to September 30 will be announced on December 2, 2003. "As previously announced, we look forward to Keith Clarke joining Atkins as Chief Executive on October 1, 2003." * * * In June, WS Atkins reported an unaudited full-year net debt of GBP71.9 million, wider than the GBP57.2 million recorded the previous fiscal year. CONTACT: ATKINS Michael Jeffries, Chairman Phone: +44 (0) 1372 726 140 Stephen Billingham, Group Finance Director BRUNSWICK Phone: +44 (0) 20 7404 5959 Craig Breheny or Harry Chathli ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *