/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031001.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, October 1, 2003, Vol. 4, No. 194 Headlines F R A N C E ADCON TELEMETRY: French Subsidiary Files for Bankruptcy ALSTOM SA: Awarded Deal to Boost Electricity Service in Egypt G E R M A N Y PROSIEBENSAT.1 MEDIA: Moody's Affirms Bond Rating at Ba3 N E T H E R L A N D S KONINKLIJKE AHOLD: Bidding To Start as Offers Rush In UPC DISTRIBUTION: CreditWatch Implications Revised to Positive N O R W A Y HYDRO ALUMINIUM: Task Force Moves To Protect Hundreds of Jobs STATOIL: Consultancy Contract with Horton Under Formal Inquiry P O L A N D DAEWOO MOTOR: Auction Awards Lublin III Van to Russian Company ELEKTRIM SA: Realization of the Patnow II Investment Delayed NETIA SA: Deposit Agreement under ADR Facility Expires S W E D E N SAS GROUP: Completes Sale of Office Properties in Copenhagen U N I T E D K I N G D O M BRADSTOCK GROUP: Appoints Provisional Liquidators BRITISH ENERGY: Question Over Future to be Answered This Week CABLE & WIRELESS: Settles GBP1.8 Billion Legal Dispute With IBM FILTRONIC PLC: Chairman Reports Positive Progress in Trading GOSHAWK INSURANCE: Expects Continuing Business to Recover in 2H GOSHAWK INSURANCE: Forced to Up Reserve After Failure of TAG GOSHAWK INSURANCE: Rules Out Dividend After Recording Loss GOSHAWK INSURANCE: Bermudian Ops Reports Minimal Loss, Growth GOSHAWK INSURANCE: Syndicate 102 Reports Disappointing Results GOSHAWK INSURANCE: Could Face Huge Losses on Written Premiums GOSHAWK INSURANCE: Review Prompts Syndicate 102 to Reduce Scope GOSHAWK INSURANCE: Provision in Syndicate 102 Up to GBP5.3 MM GOSHAWK INSURANCE: Investments, Managed Assets Perform Well GOSHAWK INSURANCE: Breaches Covenant Due to First Half Loss GOSHAWK INSURANCE: Spencer Succeeds Hooker as Chairman GOSHAWK INSURANCE: Considers Selling All or Part of Group LINGAR PROPERTIES: Calls In Liquidators to Wind Up Operation MYTRAVEL GROUP: Terms of Finance Facilities Tailored to Needs NORTHERN FOODS: Job Loss Hot On Heels of Planned Merger QUEENS MOAT: Debt Negotiation Falls Behind Sked, Suspends Shares REGUS PLC: Announces Further Progress of Plan to Exit Chapter 11 ROYAL & SUNALLIANCE: A.M. Best Cuts Fin'l Strength Rating to B+ WESTPOINT: Unsecured Panel Turns to Lehman for Financial Advice WESTPOINT STEVENS: 11 Company Officers Seek Defense Cost Funding ********* =========== F R A N C E =========== ADCON TELEMETRY: French Subsidiary Files for Bankruptcy ------------------------------------------------------- Adcon Telemetry AG informs that French subsidiary Adcon RF Technology SA had to file for bankruptcy on September 24, 2003. This ad hoc release is based on information received by the financial department of Adcon RF Technology SA. ***** Adcon Telemetry, which is listed in the FWBs Prime Standard segment filed for bankruptcy at the commercial court of Korneuburg, Austria on September 15. It admitted in a statement that the original plan, presented by the Executive Board, to show a positive EBIT in 2004 and to achieve the operative turnaround of the company cannot be maintained. In the statement it also said a letter of comfort issued for French subsidiary Adcon RF Technology could bear significant financial risks for the company. CONTACT: ADCON TELEMETRY AG DI Felix Primetzhofer Phone: 0043 (0)2243 38280-0 E-mail: investor-relations@adcon.at Home Page: http://www.adcon.com ALSTOM SA: Awarded Deal to Boost Electricity Service in Egypt ------------------------------------------------------------- Troubled French engineering group Alstom was able to secure a major contract with the Egyptian government over the weekend, EUBusiness reports citing the French embassy. Alstom will do a GBP30-million (US$34 million) contract to boost electricity services in the western Nile Delta in northern Egypt, an embassy official said, according to the report. Alstom has been hit by cost overruns on key projects, accounting irregularities at its U.S. operation, and the bankruptcy of a major client. The company's share price has plunged 90%, and it has shed thousands of jobs over the past two years. It narrowly escaped bankruptcy recently when its directors came up with a state-backed EUR3.2 billion (US$3.7 billion) rescue package that fortunately pleased the European Union competition authorities. ============= G E R M A N Y ============= PROSIEBENSAT.1 MEDIA: Moody's Affirms Bond Rating at Ba3 -------------------------------------------------------- Moody's Investors Service confirmed the Ba3 senior unsecured bond rating of ProSiebenSat.1 Media as a conclusion of a rating review initiated in August. The review follows the announcement of P7S1 Holding LP, an indirect subsidiary of Saban Capital Group, Inc., that it was able to acquire a 36% (72% of voting rights) holding of ordinary shares in ProSiebenSat.1 for EUR525 million. Moody's said the rating action reflects the assumption that ProSiebenSat.1 will benefit from a EUR280 million equity capital increase that P7S1 will arrange or subscribe for in 2004. Moody's also expects that management will -- following the resolution of the company's ownership -- concentrate on improving operating performance and stabilizing the financial structure of the group. Moody's also assigned a Ba3 senior implied rating to ProSiebenSat.1. The outlook on all ratings is negative, reflecting ongoing pressure on the Ba3 rating from the challenging operating environment. ===================== N E T H E R L A N D S ===================== KONINKLIJKE AHOLD: Bidding To Start as Offers Rush In ----------------------------------------------------- Bidding for the Brazilian assets of Koninklijke Ahold kicked into gear with the troubled Dutch retailer receiving offers from each of the three expected suitors. Just-food.com news agency, citing an industrial source of Dow Jones International News, said Brazilian retailer Companhia Brasileira de Distribuicao, France's Carrefour and U.S. retail titan Wal-Mart all submitted bids for the assets last Friday. All three beat the deadline set by the Ahold for submission of final offers. The bidding process was postponed several times by ABN Amro, the Dutch bank managing the sale. Last month it moved the date to September 18. The schedule was delayed previously at the request of the bidders. The assets for sale are Ahold's northeastern supermarket chains Bompreco Supermercados do Nordeste, G.Barbosa Comercial, credit card business Hipercard, and Bompreco. The disposal is part of the Dutch retailer's exit from South America after getting hit with an accounting scandal in the U.S. UPC DISTRIBUTION: CreditWatch Implications Revised to Positive -------------------------------------------------------------- Standard & Poor's revised the CreditWatch implications of Denver, Colo.-based European cable operator UGC Europe Inc.'s (formerly United Pan-Europe Communications N.V.) funding entity, UPC Distribution Holding B.V., to positive from developing to reflect parent UGC Europe's emergence from bankruptcy on Sept. 3. The corporate credit rating on UPC Distribution Holding B.V. is 'C'. UGC Europe filed for bankruptcy in December 2002; however, UPC Distribution Holding B.V. was able to obtain waivers and amendments that eliminated the cross-default provision under the bank agreement, and UPC Distribution Holding continues to service the bank facility, which totaled $3 billion at June 30, 2003. =========== N O R W A Y =========== HYDRO ALUMINIUM: Task Force Moves To Protect Hundreds of Jobs ------------------------------------------------------------- The looming closure of Hunslet-based Hydro Aluminium Motorcast has prompted efforts to protect the future of 600 employees affected by the decision. According to Yorkshire Today, a new task force was set up by regional development agency Yorkshire Forward in collaboration with the city council, the unemployment service JobCentre Plus and Leeds Chamber of Commerce. The task force will work closely with the company in an attempt to get as many workers as possible into other jobs. The Leeds engineering firm, one of the biggest manufacturing firms in the place, announced its closure earlier this month. It blamed global over-capacity in the automotive components industry for the demise, claiming it had not won any new orders for five years or reported a profit since 1997. Leeds City Council chief economic services officer Paul Stephens commented: "the closure of Hydro Aluminium is a major loss for the manufacturing sector in Leeds but more particularly for the workers at the company and their families." He added: "While, unfortunately we cannot prevent the closure of the factory, we will be doing everything we can to assist workers with retraining and finding alternative employment." Hydro Aluminium was bought last year by Norwegian firm Norsk Hydro. It plans to cease production in early 2005 with about half the jobs made redundant in 12 months and operations gradually phased out over the following six months. CONTACT: HYDRO ALUMINIUM MOTORCAST Drammensveien 264 N-0240 Oslo Norway Phone: +47 22 53 81 00 Fax: +47 22 53 79 30 E-mail: corporate@hydro.com STATOIL: Consultancy Contract with Horton Under Formal Inquiry -------------------------------------------------------------- The U.S. Securities and Exchange Commission has informed Statoil (OSE: STL, NYSE: STO) that it is conducting an informal inquiry into matters relating to the consultancy contract for business development in Iran which has been the subject of media coverage. It has issued a request for Statoil to produce certain documents in connection with this, and the group intends to cooperate fully with the inquiry. ***** Statoil lost its Chief Executive two weeks ago in the wake of a US$15.2 million Iranian bribery scandal involving the son of Iran's former president, Hashemi Rafsanjani. The debacle concerns the contract Statoil awarded to Horton International. The company previously admitted paying consultancy group Robert Horton US$5.2 million before canceling the contract last year. Police raided Statoil offices acting on suspicions that some of the money may have been used to bribe Iranian oil officials. =========== P O L A N D =========== DAEWOO MOTOR: Auction Awards Lublin III Van to Russian Company -------------------------------------------------------------- A Russian consortium is now holding the right to produce and sell the Lublin III van of bankrupt Polish carmaker Daewoo Motor Poland, according to Warsaw Business Journal. International Truck Alliance acquired the exclusivity for US$4.5 million after adding only US$500,000 to the starting price. Polish company Andoria-Mot also tendered a bid, but lost. The firm has resumed assembling cars in the factory, but it would soon have to pull out after losing the auction. "Although the tender was closed on Tuesday, I still have not obtained any official information from the receiver. As soon as I do, I will ask him a few questions. As for now, I want to withdraw from the contract on leasing the real estate that we are using to produce Lublin vans," said the head of Andoria-Mot Tadeusz Starowicz. International Truck Alliance assured it would sustain production and keep all of the company's current employees. It did not disclose further plans for the factory, however. ELEKTRIM SA: Realization of the Patnow II Investment Delayed ------------------------------------------------------------ The Management Board of Elektrim SA announced that after four months of intensive efforts on the part of Elektrim SA, the Minister of the State Treasury has declared it is willing to set a new deadline for the realization of the "Patnow II" investment, in accordance with the company's request. Elektrim SA, has accepted this position with satisfaction, and on its part has confirmed its willingness to introduce changes in the Statutes of Zespol Elektrowni Patnow-Adamow-Konin SA proposed by the Minister of the State Treasury, to secure the interests of the State Treasury regarding control over decisions related to the assets of Patnow-Adamow-Konin SA and its strategic subsidiaries, although -- according to Elektrim -- demands for introducing such amendments are groundless. Furthermore, Elektrim SA has declared it is willing to withdraw from arbitration proceedings (Current Report no. 77/03), however, this should be the subject of independent arrangements between the parties. The determination of the finalization deadline of the "Patnow II" investment is urgent and of utmost importance, and should be dealt with immediately. NETIA SA: Deposit Agreement under ADR Facility Expires ------------------------------------------------------ Netia SA (NET), Poland's largest alternative provider of fixed- line telecommunications services, announced that the Deposit Agreement, dated August 3, 1999, between Netia, The Bank of New York and the owners and beneficial owners of the American Depositary Receipts issued thereunder, terminated Monday in accordance with the terms of the Deposit Agreement and pursuant to the termination notice distributed by the Depositary to holders of Netia's ADRs earlier this year. As a result of termination of the Deposit Agreement, the Depositary has lost the right to make the distribution of dividends and other distributions to holders of Netia's ADRs and will not provide any further notices or perform any further acts under the Deposit Agreement. The Depositary will continue to collect from Netia the dividends and other distributions pertaining to deposited shares and will continue to deliver the deposited shares, together with any dividends and other distributions pertaining to deposited shares, in exchange for the ADRs surrendered to the Depositary. Holders of Netia's ADRs will be able to submit their ADRs to the Depositary in order to exchange such ADRs for deposited shares until Friday, March 26, 2004. Commencing Monday, March 29, 2004, the Depositary may sell all remaining deposited shares on the Warsaw Stock Exchange and hold the net proceeds of such sales for the benefit of ADR holders. The Depositary will distribute the net proceeds of any such sales to ADR holders who did not submit their ADRs to the Depositary for exchange. CONTACT: NETIA S.A Anna Kuchnio (IR) Phone: +48-22-330-2061 Jolanta Ciesielska (Media) Phone: +48-22-330-2407 Taylor Rafferty, London Mark Walter Phone: +44(0)20-7936-0400 Taylor Rafferty, New York Abbas Qasim Phone: +1-212-889-4350 =========== S W E D E N =========== SAS GROUP: Completes Sale of Office Properties in Copenhagen ------------------------------------------------------------ The SAS Group has in connection with the latest quarterly result informed about a program of release of capital including office properties. The SAS Group has signed an agreement with the Danish company Keops to sell five office properties in Copenhagen. The transaction will release capital of approximately SEK1,000 million and will reduce net debt by a similar amount. The transaction will provide a gain on sales in excess of SEK500 million. The SAS Group has also signed a lease agreement of between 10 an 15 years and will also in the future use the properties involved. The costs for the leaseback are neutral compared with depreciations and interest cost of today. The transaction is also part of the SAS Group's focus on core business and enhances flexibility for the SAS Group's future need for office properties. The transaction is pending full completion of all conditions in the agreement and relevant government approvals. =========================== U N I T E D K I N G D O M =========================== BRADSTOCK GROUP: Appoints Provisional Liquidators ------------------------------------------------- Further to the earlier announcement, Bradstock announces that it has this afternoon applied to the High Court for a provisional liquidation order in respect of Bradstock Group plc and three of its subsidiaries. The High Court has made an order appointing Gareth Hughes and Martin Fishman of Ernst & Young as joint provisional liquidators. Bradstock Group has ceased trading in consequence of its inability to secure the renewal of its professional indemnity policy at an affordable premium. The provisional liquidators are having discussions with the directors in order to realize the assets of the Group to best advantage. BRITISH ENERGY: Question Over Future to be Answered This Week ------------------------------------------------------------- Senior executives at British Energy were during the weekend in a last minute attempt to forge a restructuring deal ahead of a government-imposed deadline at the end of September. Failure of the company to reach an accord with creditors and government officials would mean the nuclear generator's fall into administration. But a British Energy spokesman assured the company is confident of meeting the deadline, according to The Scotsman. Trade Secretary Patricia Hewitt warned this month the government is ready to put the company in administration should the company is unable to propose a plan that will "lead to a viable, restructured entity" independent of government support in the long-term. There are industry sources who believe the government will take an uncompromising approach if a full agreement is not reached with creditors this week. But there are also sources close to the talk who said the government was unlikely to let this happen after its painful experiences in restructuring Railtrack. They believe the state would extend the deadline for the parties to reach an agreement. Talks regarding the company's rescue have been ongoing for the past seven months. British Energy owed bondholders and banks GBP1.3 billion. CABLE & WIRELESS: Settles GBP1.8 Billion Legal Dispute With IBM --------------------------------------------------------------- Troubled telecoms group Cable & Wireless (C&W) and leading computer services business IBM have finally settled a legal dispute over a GBP1.8 billion outsourcing contract. IBM supplies C&W with support for its information technology infrastructure and its customer and billing systems. AFX News said C&W dropped its GBP128 million claim against IBM for alleged overcharging for services supplied over 14 months from January 1, 2001. But the decision did not prevent the cancellation of the 10-year contract, which still has five years to run. A C&W spokesman said: "IBM and Cable & Wireless are pleased that the matters between them which have been the subject of proceedings in the commercial court in England have been settled amicably." The precise terms of the settlement are confidential. The Telegraph news agency, which has been monitoring the case, said the two groups had been due to fight the case in the High Court in London on September 8. C&W originally appointed IBM because of its concern that its own IT systems were cumbersome and too expensive. It then transferred an estimated 1,000 staff to IBM as part of the outsourcing project. The case came to light in June, wherein C&W accused IBM of "significant levels of overcharging, claiming GBP115 million in respect of work IBM carried out at its U.K. operations and a further GBP13.2 million (US$22 million) in the U.S. IBM countered the charges, alleging that C&W did not provide it with the correct levels of work under the original agreement. IBM also claimed that C&W had failed to pay it for work it carried out in Japan. FILTRONIC PLC: Chairman Reports Positive Progress in Trading ------------------------------------------------------------ Filtronic plc, a leading designer and manufacturer of customized microwave electronic subsystems for the wireless telecommunications and defense industries, held its Annual General Meeting at the Midland Hotel, Bradford at 11.00 a.m. Friday. Prior to the start of the formal proceedings, Professor J David Rhodes CBE FRS FREng made this statement to shareholders about current trading and the near term outlook: "After three months of the current year, trading is ahead of internal budgets. Sales in our largest business, Wireless Infrastructure, and operating profit in our second largest business, Cellular Handset Products, have been strong. The outlook indicates that the improved trading climate is likely to continue for the rest of the first half of the current financial year. On Monday September 22, we announced that Filtronic had been selected by a new OEM customer to supply initial quantities of an integrated radio frequency head unit for 3G wideband code division multiple access base stations. The units contain power amplifiers, which incorporate our unique, high power, compound semiconductor transistors manufactured in our own fabrication facility at Newton Aycliffe. The units also contain the up/down converters and the high-speed digital baseband interface and processing capability. This is a new product for Filtronic. This business represents our first customer for this class of product and establishes our presence in a growth market. Production quantities are not expected to commence until the second half of calendar year 2004. Overall, the range of products and processes throughout Filtronic, particularly at Newton Aycliffe, has been expanded to provide the platform for growth.' ***** Standard & Poor's Ratings Services said it lowered its long-term corporate credit rating on U.K.-based telecommunications and electronic warfare equipment manufacturer Filtronic PLC to 'B-' from 'B' due to concerns about the company's medium-term liquidity. The outlook is negative. At the same time, Standard & Poor's lowered its senior unsecured debt rating on Filtronic, which is applicable to the company's US$94 million of outstanding notes, to 'CCC+' from 'B-'. "The rating action reflects Filtronic's weakened cash flow generation in fiscal 2003, which has put increased pressure on the company's future liquidity in the run up to the repayment of its US$94 million notes due December 2005," said Standard & Poor's credit analyst Michael O'Brien. CONTACT: FILTRONIC PLC Professor J David Rhodes CBE FRS FREng (Executive Chairman) Phone: 01274 530622 John Samuel (Financial Director) Phone: 01274 530622 BINNS & CO PR LTD. Peter Binns/Emma McCaffrey Phone: 020 7786 9600 GOSHAWK INSURANCE: Expects Continuing Business to Recover in 2H --------------------------------------------------------------- Financial and Operational Summary (a) Group loss after tax of GBP30.8 million (2002: profit of GBP6.3 million) (b) GoshawK Re operating profit of GBP14.2 million (c) Significant increase in GoshawK Syndicate 102's reserves (d) Strategic and underwriting reviews completed (e) Key appointments to senior management team (f) Robust investment return in difficult market conditions London Bermuda Total Operations Operations Group 2003 2002 2003 2002 2003 2002 GBPm GBPm GBPm GBPm GBPm GBPm Gross Written Premium 118.5 204.5 52.5 36.4 171.0 240.9 Net Earned Premium 52.6 96.2 58.5 3.5 111.1 99.7 Operating (loss)/profit (44.8) 14.2 (30.6) 4.3 Profit after tax(45.0) 14.2 (30.8) 6.3 Combined ratios 158% 95% 86% 72% 121% 90% (Loss) / Earnings per share (p) (17.5) 3.6 Net assets per share (p) 76.3 95.4 All figures are for the six months ended June 30 Chris Fagan, Chief Executive commented: "Considerable pain has been taken in this set of results and the board is now confident of Goshawk's ability to trade profitably on its continuing business during the second half of 2003 subject to normal levels of loss experience. Goshawk Re, the Group's Bermudian reinsurance operation, has capitalized on its excellent start last year and recorded results ahead of our expectations." CONTACT: GOSHAWK INSURANCE Chris Fagan, Chief Executive Phone: 020 7621 0777 Andrew Castell, Finance Director COLLEGE HILL ASSOCIATES James Henderson Phil Wilson-Brown Phone: 020 7457 2020 GOSHAWK INSURANCE: Forced to Up Reserve After Failure of TAG ------------------------------------------------------------ Interim Results for the Six Months Ended June 30, 2003 Chief Executive Chris Fagan's Statement GoshawK's performance has been overshadowed in the year to date by the need for reserve strengthening in Syndicate 102, the Group's wholly owned business at Lloyd's. The increase in reserves follows an independent actuarial review carried out by Tillinghast Towers Perrin. We believe that this is a very positive step in creating confidence in the Syndicate's reserves and will be a basis from which to move forward. GoshawK's business in the first half of 2003 has continued to enjoy very favorable trading conditions. Rates remain firm and the ability to secure good terms has been a dominant feature of the first half of the year. GoshawK Re, the Group's Bermudian reinsurance operation, has capitalized on its excellent start last year and recorded results ahead of our expectations. Syndicate 102 has experienced a sharp contrast in fortunes. Reserve strengthening required across many lines of business identified by Tillinghast, as well as the specific consequences of the failure of The Accident Group and additional reserving required in respect of contingent cost insurance have all adversely affected performance. However the reserves of Syndicate 102 are now much stronger than they have been for some time. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Rules Out Dividend After Recording Loss ---------------------------------------------------------- Chief Executive's Statement on Financial Results and Dividend The loss before tax for the six months to June 30, 2003 is GBP30.6 million. The London operations recorded a loss of GBP44.8 million and the Bermudian operations recorded a profit of GBP14.2 million. After tax, the loss is GBP30.8 million or 17.5p per share compared with a profit of GBP6.3 million or 3.6p per share for the six months to June 30, 2002. Gross premium written of GBP171.0 million for the period compares with GBP240.9 million written in the first half of 2002. Net written premium of GBP84.2 million compares with GBP120.1 million in the first half of 2002. This reduction is a direct reflection of the reinstatement premiums received in the 2001 underwriting year as a result of the WTC disaster which inflated the 2002 financial year figures and have not been repeated. Otherwise the Group's trend of premium written remains upwards. No interim dividend is proposed. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Bermudian Ops Reports Minimal Loss, Growth ------------------------------------------------------------- Chief Executive's Statement on GoshawK Re in Bermuda GoshawK Re has made significant progress in the first half of 2003 in consolidating its position as a profitable player within the increasingly important Bermuda reinsurance market. We have been successful in developing our marine and non-marine catastrophe portfolios, which are the core of our business. We achieved significant growth into a well-balanced book, which continues to enjoy a very low incidence of loss. Russell Brooke has joined us as Chief Executive and Chief Underwriting Officer from his previous role as Chief Underwriting Officer at ACE Tempest Re. Russell is a well established and successful short tail catastrophe underwriter and his arrival will help us to develop this core area of our business. Gross written premiums have risen by 44% over the same period in 2002, but both gross and net earned premiums have risen by over ten times the equivalent figure for 2002. This is partly because the premiums written in 2002 are now coming through as earnings for this year. The resulting contribution to profit from underwriting is $15.4 million compared to $1.2 million in the first half of 2002. The SCPIE run off portfolio continues to perform in line with our expectations. A limited number of contracts within the run off portfolio have been renewed but the business is focused more on short tail excess of loss catastrophe covers this year and less on pro rata business acquired as quota shares of other insurers. The combined ratio for the first half of 2003 is 86%. Capital and surplus stands at $261 million. This is important for GoshawK Re not only because the larger capital base allows for increased line sizes which in turn help to attract business, but the milestone of $250 million of capital and surplus is now allowing us access to a wider showing of business. Catastrophes and Major Losses 2003 to date has recorded a very low level of catastrophes. Although at the time of writing we have experienced hurricanes Fabian and Isabel, neither will have resulted in significant losses for Syndicate 102 or GoshawK Re. The continued low level of major losses has afforded us the opportunity to build our capital base in Bermuda. Syndicate 102 was involved in the space shuttle Columbia disaster through its cargo account. The SpaceHab laboratory, carried in the cargo bay of Columbia, was led by Syndicate 102 and the resulting gross loss was $10 million. This loss to the Syndicate was only marginally reduced at the net level due to limited reinsurance recovery. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Syndicate 102 Reports Disappointing Results -------------------------------------------------------------- Chief Executive's Statement on Syndicate 102 at Lloyd's Syndicate 102 has incurred significant losses on the 2001 year of account which are recognized in these Group accounts. The forecast result for the 2002 underwriting year is in the range of -7.5% to +2.5% return on capacity. These are disappointing results in one of the best underwriting environments of recent years. The poor performance of the CCI and legal expenses accounts is a key component of this poor result. CCI, which had been written since 1999, and legal expenses, written since 2000, were both new lines of business entered into in soft market conditions when the Syndicate was searching for more productive uses for its capacity. Both classes exposed the Syndicate to systemic risks which were inadequately researched. The level of aggregate assumed without the benefit of reinsurance cover then caused the damage. GoshawK's World Trade Center (WTC) gross and net loss estimates of GBP72 million and GBP21 million respectively have now remained substantially unchanged for over a year. Gross incurred losses now stand at GBP51 million and have increased GBP7 million over the last six months. There has been considerably more development in paid claims which have moved from GBP9 million to GBP23 million over the last six months. Based on the existing development pattern we remain confident that the Syndicate is prudently reserved for WTC losses. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Could Face Huge Losses on Written Premiums ------------------------------------------------------------- Chief Executive's Statement on Actuarial Review of Reserves in Syndicate 102 Tillinghast was asked to undertake an independent actuarial review of Syndicate 102's reserves as at June 30, 2003 and their review, together with the conclusions of the internal actuarial review, has lead the Board to make a material strengthening of reserves. The Syndicate is reserved at Tillinghast's actuarial best estimate for all business other than CCI. CCI, which is also known as viatical or life settlement business, was written between 1999 and early this year. At December 31, 2002 a reserve of GBP29.6 million had been established which represented 100% of premiums written, plus a specific reserve for the only claim experienced. The claims reserve has been increased to GBP38.1 million as at June 30, 2003, which represents expected ultimate losses of 150% of the premiums written. Tillinghast's findings indicate a wide range of possible outcomes, which suggest ultimate loss ratios of between 144% and 373% of the premiums written. However, Tillinghast's view is that there is material uncertainty as to the eventual outcome. Data relating to CCI business is in short supply making it difficult to form reliable estimates of the ultimate outcome. GoshawK is progressing, but has yet to complete, a data gathering exercise that should allow it resolve some of the uncertainties that have complicated this analysis. We will focus closely on the under reporting of mortalities, which we believe occurs because there is no incentive to report, and this is distorting the data. Further steps are also being taken to reduce the Group's ultimate exposure which have not been factored into the actuarial work as ,at the half year. The ultimate outcome for TAG is also uncertain. A number of issues surrounding the collapse of TAG are expected to impact on the ultimate outcome and whilst the level of uncertainty is being reduced as we work through the issues it remains too early to predict the final resolution with any level of certainty. Tillinghast's best estimate reserves for TAG are based on the Syndicate's assessment of current reasonable expectations. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Review Prompts Syndicate 102 to Reduce Scope --------------------------------------------------------------- Chief Executive's Statement on Underwriting Review of Syndicate 102 KPMG was retained to undertake a review of Syndicate 102 with a specific brief to look at how the Syndicate assumes and manages underwriting risk and the basis on which this is directed, overseen and controlled by the Syndicate's and the Group's management. KPMG has now concluded this review and reported to the Boards of both GoshawK and GoshawK Syndicate Management Limited. Their observations and recommendations have been accepted fully. These have shed light on the genesis of some of the Syndicate's recent problems and suggested practical means of addressing the structural and procedural issues that may have given rise to, or exacerbated those problems. GoshawK worked closely with KPMG during the review and has already implemented some of KPMG's recommendations, and continues to work on implementation of all others. As a result of the underwriting review Syndicate 102 will reduce the number of classes of business in which it is involved for the remainder of 2003 and for 2004. The Syndicate has already ceased to underwrite CCI and after the event legal expenses insurance, such as TAG. We have also decided to exit the satellite market as results over the years have been volatile and not consistently profitable enough to justify the level of capital required. Syndicate 102 will focus on property, personal accident, professional indemnity, kidnap and ransom, creditor and contingency in its non marine account and on hull, liability and cargo in its marine account. This is subject to approval by Lloyd's. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Provision in Syndicate 102 Up to GBP5.3 MM ------------------------------------------------------------- Chief Executive's Statement on Reinsurance Program Syndicate 102 has consistently bought an extensive reinsurance program as part of its core business strategy to maintain aggregate risk assumed within the Board's risk appetite. This program is focused on aggregate management and is therefore effective when a disaster strikes, as was shown by the effective recoveries in connection with the WTC disaster. It is the areas written without the benefit of reinsurance cover including CCI and legal expenses which have caused most damage to syndicate reserves. GoshawK has a policy of providing for reinsurance bad debt based on Standard & Poor's and/or A M Best credit ratings of reinsurers. The continued decline in the credit rating of many reinsurers over recent years has resulted in an increase in our overall provision against reinsurance debtors. An increase of GBP1.2 million in the first half of 2003 takes the provision in Syndicate 102 to GBP5.3 million. This issue is not specific to GoshawK but common across the industry. The credit quality of reinsurers on the GoshawK program remains high with 84% of outstanding recoverables rated A and above, or secured by Letters of Credit. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Investments, Managed Assets Perform Well ------------------------------------------------------------ Chief Executive's Statement on Investment Income, Asset Management GoshawK's investments performed exceptionally well in the six months to June 30, 2003. The overall return, shown below, is only marginally below the long-term rate of return assumptions, which remain unchanged at 5.8% for fixed income and 7.5% for equities and alternatives. Asset allocation remains largely unchanged from the year-end and is set out below. In particular, the performance of GoshawK's alternative investments held by GoshawK Re has been pleasing, yielding an annualized return of 13.6% for the period, with little volatility. The high yield fixed income investments made late in 2002 have also provided some particularly good returns. Investment Return London Funds London Bermuda Total at Lloyd's Syndicate GBPm GBPm GBPm GBPm Long Term Rate of Returns 1.52 2.41 5.61 9.54 Actual 1.55 1.24 6.38 9.17 0.03 (1.17) 0.77 (0.37) Asset Allocation Funds at London Bermuda Total Lloyd's Syndicate GBPm GBPm GBPm GBPm Fixed income 32.7 62.0 104.9 199.6 High yield fixed income 20.1 20.1 Equities 15.6 10.1 25.7 Alternatives 10.6 10.6 Cash 10.5 32.4 37.8 80.7 58.8 94.4 183.5 336.7 A significant rise in U.S. dollar fixed income yields in July has led to some of the Group's gains to June 30 being taken back. However these in turn have been largely offset by gains in Euro and Sterling denominated securities held in GoshawK Re, which have gained in value as the dollar has weakened. We believe that this demonstrates the balanced and hedged nature of the Group's investment portfolio. Asset Management GHK Asset Management Ltd., the Group's wholly owned asset management business, manages GHK First Equity Limited, an absolute return fund listed on the Irish Stock Exchange, which invests in U.K. equities. GHK First Equity Limited now has a track record of twelve months during which time it has shown a positive return and outperformed the FTSE All Share index whilst recording lower volatility. James Fox has joined the Board of GHK Asset Management Ltd. as a non-executive director. Until his retirement in May this year James was Managing Director of Deutsche Investment Trust Managers and Investment Manager of Anglo & Overseas Trust their successful global investment trust. Prior to joining Deutsche he was a director of Warburg Investment Management and a director and Chief Investment Officer of Hill Samuel Investment Management. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Breaches Covenant Due to First Half Loss ----------------------------------------------------------- Chief Executive's Statement on Capital and Banking Covenants The Group had GBP119.7 million of net assets less intangible assets and GBP195.4 million of capital employed as at June 30, 2003, including letters of credit supporting funds at Lloyd's of GBP35 million, of which GBP15.0 million is provided with no recourse to the Group balance sheet. Total borrowings and letters of credit supported by the Group's balance sheet amount to GBP61.0 million, or gearing of 45%. In an announcement made to the London Stock Exchange on September 18, we indicated that the Group might be in breach of its banking covenants. The loss generated in the first half of this year and the resulting reduction in net assets less intangible assets to GBP119.7 million (or 68.0p per share) has resulted in a breach of the Group's net worth covenant as at 30 June 2003. The Group's lending banks have agreed to a suspension of the relevant covenants whilst we work with them to affect the necessary changes to the facility. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Spencer Succeeds Hooker as Chairman ------------------------------------------------------ Chief Executive's Statement on Board and Management Paul Spencer is appointed Non Executive Chairman of the Group. He is a non-executive director of Britannic Group plc, National Savings & Investments, State Street Managed Pension Funds and various private businesses. Prior to his current non executive roles he was Chief Executive of the Royal & Sun Alliance U.K. businesses from 1999 to 2002, Group Finance Director of Royal & Sun Alliance plc from 1996 to 1999 and before that worked as the Group Treasurer for Rolls Royce plc and Hanson plc. David Hooker is now stepping down as Chairman but will remain available until the end of the year to help in the handover process after which he will retire. The Board would like to record its thanks to David who has made a significant contribution to the Group. We have already announced that Russell Brooke joined the Group as Chief Executive and Chief Underwriting Officer to run GoshawK Re. Russell has an exceptional underwriting record and reputation from his time at ACE Tempest Re, where he was most recently Chief Underwriting Officer for international business. Russell's arrival has freed up Andrew Gammell's time, which will allow him to focus on his role at Syndicate 102 as Underwriting Director. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm GOSHAWK INSURANCE: Considers Selling All or Part of Group --------------------------------------------------------- Chief Executive's Statement on Strategic Review In an announcement made on July 3, 2003 we indicated that a review of GoshawK's strategic options would be undertaken by the joint advisers Dresdner Kleinwort Wasserstein and Numis Securities. The review has considered a number of options open to the Group including the possibility of a sale of all or part of the Group. Following the September 18 trading statement the scope of the strategic review has been broadened to assess available options to provide the necessary capital for the Group to trade in line with its revised business plan. Outlook GoshawK's business prospects and outlook appear at first sight divided between Bermuda and London. Syndicate 102 has declared losses over recent years after a long and uninterrupted period of profitability. Considerable pain has been taken in this set of results and the Board is now confident of GoshawK's ability to trade profitably on its continuing business during the second half of 2003 subject to normal levels of loss experience. We are no longer expecting reinsurance rates to increase and in some areas, most notably U.S. property catastrophe, they have started to fall albeit only marginally. However rates for all classes of reinsurance are high and do not need to rise for GoshawK Re to continue to provide a very attractive return on capital. Rates in most classes of insurance written by the Syndicate are continuing to increase. We expect rates to remain firm across most classes of business throughout 2004. The Board will continue actively to pursue all options to recover and then maximize shareholder value. To View Full Copy of Report: http://bankrupt.com/misc/GoshawK_Interim.htm LINGAR PROPERTIES: Calls In Liquidators to Wind Up Operation ------------------------------------------------------------ Notice is hereby given that we, Tracey Elizabeth Callaghan of Baker Tilly, 1st Floor, 46 Clarendon Road, Watford, Hertfordshire WD17 1JJ and Loiuse Mary Brittain of Baker Tilly, Marlborough House, Victoria Road South, Chelmsford, CM1 1LN were appointed Joint Liquidators of Lingar Properties Ltd. On September 16, 2003 by the Members. Notice is also hereby given that the creditors of the above named company, which is being voluntarily wound up, are required on or before October 23, 2003 to send in their names and addresses, with particulars of their debts or claims, to the undersigned Louise Mary Road South, Chelmsford, CM1 1LN, the Joint Liquidator of the company and, if so required by notice in writing to prove their said debts or claims at such time and place as shall be specified in such notice, or in default thereof they will be excluded from the benefit of any distribution made before such debts are proved. NOTE: This notice is purely formal, all known creditors have been or will be paid in full. CONTACT: Louise Mary Brittain, Joint Liquidator MYTRAVEL GROUP: Terms of Finance Facilities Tailored to Needs ------------------------------------------------------------- MyTravel Group plc announces that it has reached agreement with its bankers for a number of revisions to be made to certain of the terms applying to GBP1.3 billion of its finance facilities. In particular, consent has been given to the disposals, which the Group is contemplating and to the retention by the Group of the proceeds arising for general working capital purposes. In addition, certain covenants have been amended to accommodate the Group's needs better, including in relation to the planned disposals. In return, the Group has agreed to pay a consent fee. This fee is payable on the maturity date of the facilities in May 2006 or, if earlier, the date on which such facilities are refinanced. The fee (which is payable in cash or, at the company's option, the equivalent in ordinary shares of 10p each in the capital of the Company) is based on a sliding scale tied to the increase, from a base of approximately GBP50 million, in the company's market capitalization over the period (starting Monday, September 30, rising from zero to approximately 13.5% by May 2006). ***** Consent fees: The consent fee described above is in addition to the fee agreed in June 2003 as part of the refinancing. It was then agreed that a success fee would be payable on the maturity date in May 2006, or if earlier, the date the facilities are refinanced. That fee is based on a sliding scale tied to the increase, from a base of GBP40 million, in the company's market capitalization over the period (rising from 2.5% to 15% by May 2006, but subject to a cap on the total fee payable of GBP65 million). CONTACT: BRUNSWICK Sophie Fitton/Roderick Cameron Phone: 020 7404 5959 NORTHERN FOODS: Job Loss Hot On Heels of Planned Merger ------------------------------------------------------- Northern Foods, the largest food supplier to Marks & Spencer, has announced it would merge its Fox's and Elkes biscuit division. According to Just-food.com news agency, while no brands are expected to be discontinued, the integration of the two units will lead to a number of redundancies. Fox's employs 1,500 people in Batley and a further 500 in Kirkham, while Elkes employs 1,200 staff in Uttoxeter. The merged business will have its headquarters in Batley. A spokesman was quoted as saying: "The biscuit market is fiercely competitive and we believe that, by joining forces, we can maximize the strengths of each and make the new business even more successful in the future than the two existing ones have been in the past." Northern Foods recently sold Fox's Confectionery business in Leicester to Big Bear Limited, a new company formed by a management buy-in team. It said in a statement that the disposal continues Northern's program of adjusting its portfolio of activities to align the Group ever more closely with some of the fastest growing sectors of the food market and to increase its focus on leading retailers. The U.K. food manufacturer has also been searching for a new chief executive after the recent departure of Jo Stewart, spurred by yet another profit warning the company has issued. A report by This is Money news agency said the company's past two years have been strewn with profit warnings. However, big changes are believed to be afoot, with new management and a more focused approach to engineer a break from the past. CONTACT: NORTHERN FOODS Peter Blackburn, Chairman Sean Christie, Finance Director Phone: 01482 325432 thereafter Hudson Sandler Keith Hann/Wendy Baker Phone: 020 7796 4133 QUEENS MOAT: Debt Negotiation Falls Behind Sked, Suspends Shares --------------------------------------------------------------- On August 5, 2003, the Board of Queens Moat Houses plc announced that it was undertaking a full strategic review of its business and that it had initiated discussions with lenders seeking their support for the outcome of the review, in addition to significant modification to certain terms of the existing debt. The Board had expected to be in a position to announce the conclusions of the strategic review and to issue its interim results for the 26 weeks to June 29, 2003 before the end of September 2003. Although the company has made progress in its discussions with lenders, it has now become apparent that they will not be completed before the end of September. The Board believes that the outcome of these negotiations may have an impact on the company's complex debt structure and on the basis of preparation of its interim announcement. Under the UKLA's listing rules, the company was obliged to issue its interim announcement by September 27, 2003. Accordingly, the company has agreed with the UKLA to a temporary suspension of trading in the company's shares. It is the Board's firm intention to conclude both the strategic review and the discussions with lenders and to be in a position to issue its interim announcement as soon as possible. The company confirms that trading remains in line with the comments made at the Annual General Meeting on May 2, 2003 and in the announcement of August 5, 2003. CONTACT: QUEENS MOAT HOUSES PLC Stuart Metcalfe Ashley Krais Phone: 01708 730522 CAZENOVE Roger Lambert Phone: 020 7588 2828 COLLEGE HILL Mark Garraway Phone: 020 7457 2020 REGUS PLC: Announces Further Progress of Plan to Exit Chapter 11 ---------------------------------------------------------------- Regus plc said on Friday that the U.S. Bankruptcy Court of New York has approved its Disclosure Statement and Plan of Reorganization. The court also allowed the company present the plan to creditors and shareholders for final approval. This marks a further positive step in Regus' progress towards its planned exit from Chapter 11. ***** On August 29, Regus Plc announced a Plan of Reorganization which it expect will result in the company exiting Chapter 11 of the Bankruptcy Code of the United States at an earlier date than expected. This follows the successful restructuring of Regus' U.S. operations. In a statement it said: "Subject to the necessary court, creditor and shareholder approvals being achieved, Chapter 11 has enabled the Regus Group to restructure a U.S. business which was losing US$4 million per month. As a result of this and other actions, the Group as a whole has now moved to cash break-even at the operating level on a global basis." For preferred creditors, the terms of the Plan include the payment of US$6.0 million immediately in cash and the payment of US$1.2 million over six years. In respect of the bulk of the Chapter 11 claims of US$41.5 million, creditors have the option of exchanging their claims for either: (i) new ordinary shares in either a new London listed holding company that will be introduced above Regus by way of a scheme of arrangement under section 425 of the Companies Act 1985 or if for any reason the scheme does not go ahead, new ordinary shares in Regus itself, in each case at 35p per share; or (ii) convertible unsecured loan stock repayable over 3 to 6 years. Further details of the terms of the equity and loan stock offers are set out in the Appendix to this release. In addition, Regus has restructured the leases of its joint venture in the U.S. with Equity Office Properties (EOP). Under the terms of this agreement, Regus will issue US$12.8 million of 7% unsecured loan stock to EOP, repayable over the next 5 years. U.S. bankruptcy practice dictates that illustrative projections are included in the Plan. These illustrative projections anticipate the reconstructed Regus Group being EBIT positive and cash generative in 2004. Extracts from these projections are included in the Appendix to this release. The illustrative projections have been prepared solely for the specific purposes of the Chapter 11 process and have not been prepared to comply with guidelines from the SEC or the American Institute of Certified Public Accountants. The illustrative projections have not been prepared as representing, and are not intended to represent, profit forecasts within the meaning of paragraph 12.23 of the Listing Rules of the U.K. Listing Authority and should not be relied upon as such. Events and circumstances frequently do not occur as expected and the Group's actual results may therefore differ materially from the illustrative projections. Regus' independent auditors have not examined or compiled the illustrative projections. The scheme of arrangement under which it is intended that Newco will be introduced as the new holding company of the Group will involve existing Regus shareholders being issued with new shares in Newco in exchange for their existing shares in Regus. If the scheme is approved, Newco will also issue the Plan Shares required to be issued to creditors on implementation of the Plan and on conversion of the convertible unsecured loan stock issued under the Plan. If the scheme is approved, Newco will also guarantee the unsecured loan stock issued to creditors and EOP under the Plan. It is expected that the scheme circular, listing particulars and related documentation will be posted to shareholders in September, along with Regus' Plan of Reorganization and accompanying Disclosure Statement, and that the meetings of shareholders and creditors to confirm the Plan and approve the other necessary steps will be held during October, with the formal exit from Chapter 11 and implementation of the Plan following in November. Copies of Regus' draft Disclosure Statement and Plan of Reorganization, which are subject to the approval of the U.S. bankruptcy court, have been submitted to the U.K. Listing Authority and are available for inspection at the U.K. Listing Authority's Document Viewing Facility, which is situated at Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS To See Appendix: http://bankrupt.com/misc/Regus_Appendix.htm CONTACT: REGUS PLC Stephen Jolly Phone: +44 1932 895 135 ROYAL & SUNALLIANCE: A.M. Best Cuts Fin'l Strength Rating to B+ --------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength ratings to B+ (Very Good) from A- (Excellent) of the Royal & SunAlliance USA Insurance Pool (North Carolina) (NYSE: RSA) and the Royal Surplus Lines Insurance Company (Connecticut). The surplus lines company is a wholly-owned subsidiary of Royal Insurance Company of America, a member of the pool. The ratings remain under review with negative implications. The rating actions follow A.M. Best's review of the U.S. group's business profile, portfolio uncertainties and reduced financial flexibility following the September 4 announcement by the U.S. group's UK parent, Royal & Sun Alliance Insurance Group plc (RS&A), of the group's restructuring of its U.S. business. The restructuring will include a substantial charge for loss reserves as well as disposition of a sizable portion of the U.S. group's mid-market commercial and personal lines business. While the proposed restructuring in the U.S. will reduce the group's global consolidated risk capital requirements for ongoing business, the restructuring will negatively impact the business profile of its U.S. operations as well as significantly erode the capital position of R&SA's U.S. insurance entities. As a result, the companies' ability to sustain additional adverse loss reserve development of existing liabilities is hampered. In A.M. Best's opinion, there is potential for additional reserve development in light of the significant and lengthy history of reserve deficiencies experienced by the U.S. entities. In addition, A.M. Best no longer considers the U.S. group to be strategically important to the U.K. parent, significantly reducing the U.S. group's financial flexibility. However, the U.K. parent remains committed to ensuring that the U.S. operation's statutory surplus is maintained at appropriate levels for regulatory purposes. A.M. Best expects to resolve the under review status of the U.S. ratings following a review of the group's third quarter and pro forma full-year operating performance, capitalization and reserve adequacy. For a complete listing of companies with affected financial strength ratings, please visit http://www.ambest.com/press/092601RSAUSA.pdf 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 ***** Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Royal & Sun Alliance Insurance PLC's (R&SAIP;A-/Negative/A-2) U.S. insurance operations to 'BB+' from 'BBB-' and removed them from CreditWatch. Standard & Poor's also said that the outlook on RSA USA is negative. "The ratings were lowered to reflect Standard & Poor's view that RSA USA's ongoing businesses could potentially be sold in the near term," explained Standard & Poor's credit analyst Frederick Loeloff. "In addition, the managed run-off of its discontinued business lines will remain an earnings and liquidity drag for both RSA USA and, indirectly, Royal & Sun Alliance Insurance Group LC." WESTPOINT: Unsecured Panel Turns to Lehman for Financial Advice --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of WestPoint Stevens Inc., and its debtor-affiliates seeks the Court's authority to retain Lehman Brothers Inc. as its financial advisor, nunc pro tunc to July 30, 2003. The Committee explains that the services of a financial advisor are necessary and appropriate to evaluate complex financial and economic issues raised by the Debtors' reorganization proceedings. The Committee selected Lehman because of its expertise in providing financial advisory services in restructuring and distressed situations. Lehman is an investment-banking firm with principal offices in New York. It is a public company and has over $302,000,000,000 in assets with 13,000 employees in 38 industrial offices around the world. Lehman's professionals have extensive experience in the reorganization and restructuring of troubled companies. Lehman, in its capacity as financial advisor to the Committee, will: (a) review and analyze WestPoint's business, operations, properties, financial condition and prospects and financial projections; (b) evaluate WestPoint's debt capacity in light of its projected cash flows; (c) provide advice regarding the restructuring of WestPoint's existing indebtedness and assist in the determination of an appropriate capital structure; (d) give a valuation analysis of WestPoint and its assets on a going concern basis, including preparation of expert testimony relating to valuation; (e) attend meetings and assist in negotiations with the Debtors with respect to any proposed reorganization plan; (f) advise the Committee on the timing, nature, terms and value of any new securities, other consideration or other inducements to be offered pursuant to a restructuring; (g) assist the Committee in assessing strategic options, including the sale of the Debtors' businesses, and pre- confirmation and exit debt equity financing; (h) provide testimony, as necessary, in any court proceeding; and (i) provide the Committee with other appropriate general restructuring advice. Lehman will be compensated in this manner: (a) The Debtors will pay a cash retainer fee equal to $75,000 per month for the first six months, the retainer will be reduced to $50,000 per month after that. The first monthly retainer will be payable upon the execution of the Lehman Engagement Letter, and subsequent monthly retainers will be payable every first day of each month; (b) In consideration of Lehman as exclusive financial advisor to the Committee, the Debtors will pay $100,000 due upon the Effective Date of the Debtors' Plan; and (c) The Debtors will also pay all reasonable fees, disbursements and out-of-pocket expenses incurred by Lehman. The Committee maintains that the Fee Structure is both fair and reasonable under standards set forth in Section 328(a) of the Bankruptcy Code. Lehman may resign at any time and the Committee may terminate its services at any time as well by giving prior written notice. If Lehman resigns or the Committee terminates its engagement, the firm and its counsels will be entitled to receive all the amounts due up to the date of the resignation or termination. The Committee believes that the Debtors should provide Lehman with an indemnity, which they find appropriate in light of the cost of services in a non-bankruptcy context. Indemnification is a standard provision for investment bankers and financial advisors. Mark Shapiro, Managing Director of Lehman, assures the Court that the firm does not represent or hold any interest adverse to the Debtors, their estates, creditors, equity security holders, or affiliates, and is a "disinterested person" within the meaning of Section 101(14). (WestPoint Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPOINT STEVENS: 11 Company Officers Seek Defense Cost Funding ---------------------------------------------------------------- Eleven officers and directors of WestPoint Stevens, Inc. ask the Court to approve a defense funding under an Executive and Organization Liability Insurance Policy issued to them and to WestPoint Stevens by National Union Fire Insurance Co. of Pittsburgh, Pa., a division of American International Companies: Holcombe T. Green, Jr. Morgan M. Schuessler William F. Crumley Dale C. Williams Thomas J. Ward M. Katherine Dwyer Hugh M. Chapman John F. Sorte John H. Hudson Charles W. McCall Gerald B. Mitchell Ms. Dwyer, Mr. Chapman, and Mr. Sorte are current directors while the rest are former officers and directors of the Debtors. All of them were targeted as defendants in several securities fraud and derivative actions brought by WestPoint's disappointed common stockholders. From the time the Securities Lawsuits were filed, the Debtors paid all defense costs incurred. Pursuant to the Liability Insurance Policy, National Union is only liable for the amounts of loss, including defense costs, in excess of the $1,000,000 retention amount. As of the Petition Date, defense costs for the Securities Lawsuits are approximately $519,000.00, thus, National Union has not yet been required to expend funds under the Liability Insurance Policy. National Union notified the D&Os that they needed to obtain the Court's approval prior to any release of the Liability Insurance Policy proceeds, for defense costs or otherwise. National Union represented that upon entry of a Court order lifting the automatic stay, it will pay the D&Os' defense costs in the Securities Lawsuits without requiring the remaining retention amounts to be paid. However, National Union will file a general, unsecured claim for the remaining retention payment it will pay on the Debtors' behalf. The Securities Lawsuit (1) Securities Class Action On October 5, 2001, Mr. Green, Mr. Schuessler, Mr. Crumley, Mr. Ward, Mr. Williams, Mr. McCall and the Debtors were defendants in a purported stockholder class action filed in the United States District Court for the Northern District of Georgia. The stockholders allege that the defendants caused false and misleading statements regarding, inter alia, overcapacity and excessive inventories of the Debtors' towel-related products and customer demand, and that they wrongfully sold or pledged stock at inflated prices. The complaint also includes the press releases and the quarterly and annual reports filed with the Securities Exchange Commission, which discussed results and forecasts for the fiscal years 1999 and 2000. The stockholders allege that these reports failed to disclose that sales would be adversely affected in future quarters and years. The stockholders also allege that revenues were overstated by making premature shipments of products. (2) Georgia Derivative Action On March 11, 2002, Mr. Green, Mr. Crumley, Mr. Ward, Mr. Schuessler, Mr. McCall, Mr. Williams, Mr. Mitchell and the Debtors were defendants in another shareholder suit filed in the Superior Court of Fulton County in the State of Georgia. The Georgia Derivative Action alleges that the defendants acted in bad faith and wasted corporate assets. Pursuant to an agreement of counsel, on June 7, 2002, the Superior Court of Georgia entered a Consent Order for Stay of Litigation pending the outcome of the Class Action Defendants' Motions to Dismiss. After the denial of these Motions to Dismiss, the Superior Court of Georgia entered a Consent Agreement for Stay of Litigation Discovery pending the outcome of the Class Action. (3) Delaware Derivative Action On July 1, 2002, Mr. Green, Ms. Dwyer, Mr. Chapman, Mr. Sorte, Mr. Hudson, Mr. Mitchell, Mr. Ward, Mr. McCall and the Debtors were defendants in a civil action filed in the Court of Chancery in the State of Delaware. The Delaware Derivative Action alleges that the defendants breached fiduciary duties and knowingly or recklessly failed to exercise oversight responsibilities to ensure financial reporting integrity. The claims are based on similar facts alleged in the Class Action. Similar to the Georgia Derivative Action, the Delaware Court entered a Stipulation and Order for Stay of Litigation pending the outcome of the Class Action Defendants' Motions to Dismiss on August 21, 2002. Subsequent to the denial of these motions, the Delaware Court entered a Stipulation and Order for Stay of Discovery pending the outcome of the Class Action. At present, the Class Action, pending in the Northern District of Georgia, is the sole active and ongoing case. (WestPoint Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) 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 * * *