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/raid1/www/Hosts/bankrupt/TCREUR_Public/031013.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 Monday, October 13, 2003, Vol. 4, No. 202 Headlines F R A N C E SCOR: S&P Places Ratings on CreditWatch Developing SUEZ SA: Plans to Cut M6 Metropole Stakes to About 5% G E R M A N Y BERTELSMANN AG: Seeks Joint Venture with Warner, EMI, Sony HVB GROUP: Sells Bank Von Ernst to Coutts Bank for CHF500 Mln MG TECHNOLOGIES: Moody's Downgrades Credit Rating to Ba1 READYMIX AG: HeidelbergCement Informs Cartel Office of Bid Plans H U N G A R Y K&H EQUITIES: Two Other Banks Included in Money-laundering Probe I R E L A N D DARMEL OVERSEAS: To Delist Shares October 14 as Part of Wind-up I T A L Y FIAT AUTO: Herbert Demel Relieves Boschetti as Chief Executive N E T H E R L A N D S HAGEMEYER: Faces Multi-million-euro Claim for Mismanaging Ceteco KONINKLIJKE AHOLD: Appoints New Chief Business Support Officer ROYAL KPN: Redeems Bond Ahead of 2005, 2006 Due Dates P O L A N D DAEWOO FSO: Leaner Daewoo Hopes to Rekindle MG Rover's Interest DAEWOO FSO: Observers Wary of Treasury's Role as Sole Negotiator ELEKTRIM SA: Interim Prexy Resigns over Row with State Treasury RMF FM: Files PLN10 Million Damage Suit vs. Regulator, Treasury S W I T Z E R L A N D ABB LTD.: Corners US$54 Million Bombardier Supply Contract U N I T E D K I N G D O M AMP LIMITED: To Discuss Demerger Plans with Analysts Today AMP LIMITED: Regulators Approve U.K. Business Spin-off AMP LIMITED: Injects More Cash into U.K. Biz to Effect Demerger AMP LIMITED: U.K. Business Will Be Debt-free After Demerger HOOVER: To Shut down Scottish Plant, Move Operations to China JOHN DAVID: Finance Chief Resigns; Move not Due to Poor Results MOSS BROS: Recovery Plan Halves Half-year Loss to GBP1.8 Million ROYAL MAIL: Speeds up Deliveries; Widens Area of Coverage ROYAL & SUN ALLIANCE: Puerto Rican Subsidiary off CreditWatch TELEWEST COMMUNICATIONS: Lead Banks Okay Debt-for-equity Swap ********* =========== F R A N C E =========== SCOR: S&P Places Ratings on CreditWatch Developing -------------------------------------------------- Standard & Poor's Ratings Services said its long-term ratings on France-based reinsurer SCOR and its subsidiaries -- including the 'BBB+' counterparty credit and insurer financial strength ratings -- remain on CreditWatch with developing implications. The ratings were initially placed on CreditWatch with negative implications on June 17, 2003, and the implications were revised to developing on July 4, 2003. The CreditWatch revision reflected the possibility of a material improvement in SCOR's balance sheet before year-end 2003. Standard & Poor's expects to resolve the CreditWatch placement by the end of November 2003. "SCOR is due to present its third-quarter 2003 results on Nov. 6, 2003. They will be carefully considered on an absolute and relative basis. In addition, clear evidence of material balance sheet improvement should be evident at this time," said Standard & Poor's credit analyst Marcus Rivaldi. This could flow from at least four areas. First, net premium volumes are expected to reduce in 2003 and should further reduce in 2004, which would lead to an improved level of underwriting exposure relative to capital. Second, any reserve strengthening aside, the group's near-term earnings prospects are positive. Third, SCOR has announced it is actively looking to commute business portfolios at its CRP subgroup (comprising Commercial Risk Reinsurance Co. Ltd. and Commercial Risk Re-Insurance Co.). If beneficially achieved, this will materially reduce the level and potential volatility of reserves held on the group's balance sheet. Finally, SCOR is pursuing the creation of a life reinsurance subsidiary, with a view to potentially opening its shareholding to outside investors. Standard & Poor's notes that SCOR has recently permitted several third parties to proceed with fuller due diligence, prior to the end of October 2003 deadline for the presentation of final bids relating to the life reinsurance subsidiary. If successfully executed, this transaction has the potential to be significantly positive from a capital perspective. However, deal specifics will need to be examined for adverse business position and prospective earnings implications. SUEZ SA: Plans to Cut M6 Metropole Stakes to About 5% ----------------------------------------------------- French utility Suez SA plans to trim down its shareholding in television broadcaster M6 Metropole Television, Dow Jones reports citing Les Echos. Suez will divest part of its 37.6% stake to Caisse d'Epargne, Credit Agricole, and Caisse des Depots et Consignations, the report said. It will additionally offer 22-29% to the market, but will keep 5-6% for itself. ING's Jean-Marie Caucheteux considers the plan a wise move: "Firstly, Suez will be taking a positive step in focusing on its core business and secondly, given that the stake in M6 is not easy to sell due to numerous regulatory obstacles, selling the stake for an acceptable price is a major achievement." Suez was not available for comment, according to the report. The company is currently divesting assets to reduce debt, which stood at EUR20.3 billion at the end of June. ============= G E R M A N Y ============= BERTELSMANN AG: Seeks Joint Venture with Warner, EMI, Sony ---------------------------------------------------------- Bertelsmann AG, the German publisher that has been positioning itself for a tie-up, admitted Thursday it negotiating with Time Warner, Sony and EMI Group Plc over a deal to create a joint venture with its BMG music label. Bertelsmann Chief Executive Officer Gunter Thielen told Reuters the media company is "talking to everybody," but declined to divulge further details about the negotiations. "We are talking to Warner, to EMI, to Sony," he said. "I'm not going to say which talks are most advanced." When asked about an outright sale of BMG, Thielen said: "I wouldn't say we would never do that, but for the moment I can't see it." He further indicated the company is aiming for a 50-50 joint venture with a potential partner. Last month, talks between BMG and Warner Music, part of AOL Time Warner Inc., failed to reach any agreement. A previous deal between BMG and EMI was also scotched due to regulatory concerns. HVB GROUP: Sells Bank Von Ernst to Coutts Bank for CHF500 Mln ------------------------------------------------------------- HVB Group and Coutts Bank (Switzerland), a subsidiary of The Royal Bank of Scotland Group, agreed on the sale of HVB's wholly owned subsidiary, the Zurich-based Bank von Ernst & Cie AG. Coutts Bank (Switzerland) is to acquire all of the shares for CHF500 million (approximately EUR323 million), payable in cash. This transaction, which is expected to be completed by the end of 2003, is subject to regulatory approvals. The sale of Bank von Ernst is the next important step in HVB's transformation program, which enhances HVB's strategic profile, reduces the Group's complexity, and further strengthens its capital base. HVB Group Board spokesman Dieter Rampl: "Selling Bank von Ernst is another important step toward strengthening HVB Group's business focus in our core markets Germany, Austria as well as Central and Eastern Europe. Coutts Bank (Switzerland) is the ideal partner for Bank von Ernst. This was very important for us in the interest of our clients and employees. At the same time, the transaction will have a positive impact on HVB Group's capital base." HVB Group and Coutts Bank (Switzerland) also agreed in principle upon the key terms of an agreement covering future cooperation in wealth management. This will enable HVB Group, Bank von Ernst and Coutts Bank (Switzerland) to continue the successful relationship that exists between HVB and Bank von Ernst. All capital market activities of Bank von Ernst will be transferred to a newly founded Swiss subsidiary of HVB Group. This subsidiary will continue to perform its successful CHF-foreign bond issuing activities. Bank von Ernst had some 450 employees and consolidated assets under management of CHF12.9 billion (EUR8.3 billion) and total assets of CHF1.6 billion (EUR1.0 billion) as of June 30, 2003. In 1993 the bank was acquired by a Swiss private banking subsidiary of former Bayerische Vereinsbank, one of the predecessors of HVB Group. HVB Group was exclusively advised by Citigroup in this transaction. MG TECHNOLOGIES: Moody's Downgrades Credit Rating to Ba1 -------------------------------------------------------- Moody's informed mg technologies ag that it plans to change the company's credit rating -- currently Baa3 -- to Ba1. Around two years ago Moody's put mg's rating to negative outlook before placing the company on its watch list at the end of August 2003. The potentially adverse impact of the downgrade will only have limited influence on mg's cost of funds. Due to the downgrade, the interest of the Euro-bond with a maturity of July 2005 will increase from 6.75% to 7.25%. On October 2 mg announced its new strategic focus on its process engineering and components businesses and plans to divest its chemicals activities. This decision was strategically necessary. In doing so, it aims to sharpen the Group's strategic focus and substantially repay its debt. By continuing to expand its high-potential growth businesses, mg plans to substantially enhance its value for shareholders. Its remaining core businesses will enable mg to effectively mitigate risk as a result of their various business cycles. There are already a number of prospective buyers for its chemicals business. The company believes it will have completed this disposal in the course of fiscal year 2004. mg welcomes Moody's fundamentally positive assessment of its new strategic focus -- especially the substantially improved financial flexibility, the considerable cost savings to be realized from the restructuring measures, and GEA's solid global business position in its capacity as the Group's earnings driver. Against this background the company is confident that its credit rating will soon be reviewed and upgraded. READYMIX AG: HeidelbergCement Informs Cartel Office of Bid Plans ---------------------------------------------------------------- HeidelbergCement has already informed the German Cartel Office of its plans to take over RMC Group's loss-making operation, Readymix AG. Financial Times Deutschland said the plan will involve Bankhaus Metzler buying Readymix and selling the assets to HeidelbergCement as well as Ulm-based cement maker Schwenk. Schwenk CEO Gerhard Hirth has confirmed his interest in the assets, according to the report. Die Welt, on the other hand, said HeidelbergCement, Schwenk and Holcim Ltd. will form a joint venture to take over Readymix and split its assets among themselves. Previously, Die Welt said Heidelberg is expected to make an offer running into the triple-digit millions of euros for the unit in the next few weeks. Analysts estimate the German business is worth a billion euros. The world's largest maker of ready-mixed concrete recorded a loss of GBP31.4 million on GBP351 million of turnover in the six months ended June 30, as the construction sector continued to be inactive. A price war in the concrete and cement sectors also contributed to the company's woes. ============= H U N G A R Y ============= K&H EQUITIES: Two Other Banks Included in Money-laundering Probe ---------------------------------------------------------------- The investigation into the money laundering scandal involving K&H Equities now includes Inter-Europa Bank and OTP Bank, according to Interfax-Europe. Csaba Molnar, chief of the money laundering department of the National Police Headquarters (ORFK), said last week two employees of Inter-Europa Bank and one employee of OTP Bank are under investigation for failure to report suspicious transactions involving money amounting to HUF6 billion. This was after two Syrian citizens, A. Mahmoud and E.A. Hasan, withdrew the HUF6.2 billion cash and transferred it to their accounts. The account holders reportedly took out the amount in cash installments of up to HUF100 million. Around HUF5 billion of the amount was withdrawn from Inter-Europa Bank and HUF1 billion from OTP Bank. The bank employees should have reported the suspicious transactions under the anti-money laundering regulations, authorities said. Meanwhile, the police have dropped its request to question Attila Kulcsar, a key suspect in the K&H Equities embezzlement case, in Vienna, according to ORFK official, Antal Gera. This was after prosecutors insisted he face extradition proceedings prior to the interrogation. Authorities previously questioned Gabor Garamszegi, CEO of construction firm Betonut Rt; Miklos Bitvai, the former CEO of State Motorway Management Rt; and executives at venture capital firm Britton Capital & Consulting Kft in relation to the brokerage scandal. Britton Capital is accused of using K&H customer's money provided by Mr. Kulcsar to fund financial transactions, including the April takeover of plastics maker, Pannonplast Rt. ============= I R E L A N D ============= DARMEL OVERSEAS: To Delist Shares October 14 as Part of Wind-up --------------------------------------------------------------- The Board of Directors of Darmel Overseas wishes to announce that pursuant to a resolution passed June 30, 2003, the Directors voted to wind up the operations of the company. The reason for the termination is that the Directors have been advised and believe that it is no longer economically feasible to continue operations and accordingly the company is being wound down. The Directors have requested the Irish Stock Exchange to delist the Shares of the company from the Official List. The Irish Stock Exchange has agreed to remove the Shares of the Company from the Official List with effect from October 14, 2003. CONTACT: HEMISPHERE MANAGEMENT LIMITED Ms. Maxine Taylor-Swain Phone: + 1 441 295 9166 NCB STOCBROKERS Ms. Joanne McEnteggart Phone: 353 1 6115907 ========= I T A L Y ========= FIAT AUTO: Herbert Demel Relieves Boschetti as Chief Executive -------------------------------------------------------------- Herbert Demel has been appointed Chief Executive Officer of Fiat Auto effective November 15, 2003. Fiat thanks Giancarlo Boschetti, who will leave the Group on the same date, for the intense work he performed in almost forty years of service at top management levels, and expresses its best wishes for his future. Since the end of 2002, Mr. Demel has been President and Chief Executive Officer of Magna Steyr, a leading company in automotive engineering, two- and four-wheel-drive transmissions and in the development and assembling of automobiles for third parties. Mr. Demel, born in Vienna 50 years ago, has a degree in mechanical engineering and vast professional experience in the automotive sector at an international level. From 1984 to 1990 he was responsible for the development of ABS applications and quality control at Robert Bosch. He has spent twelve years of his career with the Volkswagen-Audi Group. From 1990 onwards, he was Head of Product Development at Audi, and from 1994 to 1997 he was Chief Executive Officer of this company. In 1997 he took over the post of Chief Executive Officer of Volkswagen do Brasil, a position he held until the end of 2002. Mr. Demel's appointment is part of the Group's strategy to renew its managerial structure by ensuring that the wealth of talent available within the Group be complemented by new professional skills. ===================== N E T H E R L A N D S ===================== HAGEMEYER: Faces Multi-million-euro Claim for Mismanaging Ceteco ---------------------------------------------------------------- Debt-laden Dutch trading firm, Hagemeyer, is facing claims in relation to the bankruptcy of consumer goods firm, Ceteco, in which it is a majority shareholder, according to Reuters. Receivers of Ceteco have filed in court up to EUR200 million (US$234.2 million) in financial compensation from Ceteco's former board members and from Hagemeyer, the report said. The court-appointed receivers took up their cause October last year claiming Hayemer is liable for the bankruptcy of Ceteco and that it had acted negligently with respect to Ceteco and its creditors. Hagemeyer reiterated its innocence after the receivers made their statement last month. It said it was confident about the outcome of any civil proceedings. Hagemeyer is also currently facilitating a crucial refinancing deal with banks. KONINKLIJKE AHOLD: Appoints New Chief Business Support Officer -------------------------------------------------------------- The Ahold Corporate Executive Board has appointed Arthur Brouwer Chief Business Support Officer effective October 1, 2003. Mr. Brouwer, currently Chief Support Officer for Europe Region and Ahold Senior Vice President of Management Development & Organization, joined the company in 1992. The Chief Business Support Officer is a new role reporting to the President and CEO of Ahold, Anders Moberg. In a statement to the shareholders on September 4, 2003, Anders Moberg outlined his strategy for reducing costs by standardizing processes and reorganizing the business around marketplaces with similar characteristics. The Chief Business Support Officer will work in conjunction with Ahold's local businesses to lower the cost base. Mr. Brouwer will oversee common processes in the areas of Sourcing, Information Systems & Technology, and Supply Chain Management for the company's retail operations in the United States and Europe. Commenting on the appointment, Anders Moberg said: "I am very happy that Arthur has accepted this great challenge. Given his extensive experience in various fields I am confident that he will be able to drive the necessary synergies throughout the company. We will appoint a successor to Arthur's role as Senior Vice President of Management Development & Organization in due course." ***** Fitch Ratings, the international rating agency, recently said it is maintaining its Rating Watch Negative status on both the 'BB-' Senior Unsecured debt and 'B' Short-term ratings of Koninklijke Ahold N.V. The company's news conference on October 2 clarified the group's level of profitability, up until its FY02 "lost year", but did little to address the issues facing the group and its ratings, it said. This includes the amount of recent interim secured funding within the group, together with the control and structural subordination mechanisms this may afford; the reliance on continued support from core banks for available credit facilities, and near-term (including 2005's bulk) debt maturities. ROYAL KPN: Redeems Bond Ahead of 2005, 2006 Due Dates ----------------------------------------------------- KPN announces the early redemption of EUR666.7 million of bonds between September 12 and October 7, 2003, divided over these bonds: Convertible bond 2000 - 2005 : EUR135.4 million Global bond 2000 - 2005 : EUR80.5 million Eurobond 1996 - 2006 : EUR124.3 million Eurobond 2001 - 2006 : EUR326.5 million Total : EUR666.7 million The early redemption of these bonds fits KPN's policy to further reduce debt and maintain its prudent cash management, while considering further early redemptions if attractive. ***** The new management that saved Royal KPN from bankruptcy is aiming to slash net debt to EUR9.5 billion by the end of this year. By the end of June 2003 the company's net debt was EUR10.2 billion compared to EUR15 billion a year earlier. =========== P O L A N D =========== DAEWOO FSO: Leaner Daewoo Hopes to Rekindle MG Rover's Interest --------------------------------------------------------------- Renewed hopes that MG Rover's possible investment in Daewoo FSO, which is currently under negotiations, could materialize were sparked after the carmaker rationalized its production base and restructured debt, the Warsaw Business Journal suggested. Plans of MG Rover to buy 25% of Daewoo FSO plant for US$250 million this year failed to push through due to temporary reservations by both parties. The company is confident MG Rover will renew its interest after the Polish carmaker laid off half of its 3,000 staff at the Zeran plant, the report said. "The restructuring will make the plant more attractive to Rover" says Krystyna Danilczyk, spokeswoman for Daewoo FSO. "Debts to Polish and Korean banks needed to be reduced, and the offer made by MG Rover needed to be modified and provided with more details. At this moment there is the right setting for continuing the negotiations." Daewoo FSO's debt now stands at PLN4 billion (US$1 billion). Suzanne Bartch of MG Rover's communications consultancy group Maitland said: "Though MG Rover were not invited to the shareholder meeting, we continue to be very interested in investing in Poland and we continue to be interested in the Daewoo FSO plant." Negotiations, which will now be conducted entirely by the State Treasury, are already exclusive between Daewoo FSO and MG Rover, analysts observe. Previous talks had involved six investments banks and Daewoo parent company. DAEWOO FSO: Observers Wary of Treasury's Role as Sole Negotiator ---------------------------------------------------------------- Daewoo FSO currently faces two main issues that could greatly determine the continuity of its business after at least two years, an industry expert said, according to Warsaw Business Journal. Wojciech Drzewiecki, president of auto analysts Samar said: "A big question is about which of their models will last, and also about how the State will treat the plant now that it is the only representative in negotiations with foreign investors." Negotiations with Daewoo FSO's main creditor, MG Rover, about a possible investment, will now be conducted entirely by the State Treasury, and will exclude the six investment banks previously involved. Mr. Drzewiecki agreed with Daewoo FSO spokesman Krystyna Danilczyk that the set-up could streamline talks, but this could also add a political element to business decisions. "Though we have a market economy," comments Mr. Drzewiecki, "the FSO plant is a symbol for the Polish workforce. Pride, history and politics will affect the States' decisions. They may care more about securing jobs than about efficiency, and this will not necessarily help the relationship with MG Rover that they so dearly need." But granting that MG Rover's investment does materialize, Daewoo FSO might still face the question of how it is going to keep MG Rover's own car models on the market, he said. MG Rover's own car models are too highly priced to seriously compete on the price-sensitive Polish market, he said. He believes, however, that Daewoo would be safe for another two years at the very least. In an attempt to avoid the fate suffered by its bankrupt parent, Daewoo Motor, in 2001, Daewoo FSO decided to part with its truck construction plant and smaller car production plant outside Lublin. It is now left with its Zeran plant outside Warsaw. Representatives from the Zeran plant say that it is ready to produce a new car model. ELEKTRIM SA: Interim Prexy Resigns over Row with State Treasury --------------------------------------------------------------- Elektrim SA, the Polish conglomerate that filed for bankruptcy in September last year, lost its acting president after failing to settle an issue over the construction of an essential and additional power block. The project should have started a couple of days ago. Warsaw Business Journal said Piotr Nurowski submitted his resignation after he failed to reach agreement with the State Treasury concerning the future of the Patnow-Adamow-Konin plant group of which Elektrim owns 38%. Mr. Nurowski said: "My mission with Elektrim has come to an end. I have used all my potential in the negotiations with the State Treasury concerning Patnow-Adamow-Konin." A privatization contract signed in 1999 said the EUR400 million investment was to be finalized by March 2005, a date that was later postponed to the end of the same year. However, it now appears Elektrim will not make it on time, the report said. Elektrim has already spent some EUR200 million in the project. Elektrim filed for bankruptcy last year after failing to meet repayments on its US$480 million convertible bonds. RMF FM: Files PLN10 Million Damage Suit vs. Regulator, Treasury --------------------------------------------------------------- Indebted broadcaster RMF FM has filed legal proceedings against the Treasury Ministry and the National Radio and Television Council for the bad decisions they made concerning the company. Warsaw Business Journal, citing the company's representatives, said the Council allegedly hindered the expansion of the station by depriving it of various investment possibilities. RMF FM is demanding more than PLN10 million in damages from the Council. RMF FM Spokeswoman Anna Kozlowska said: "The legal proceedings may drag on. We estimate that the claim could increase to PLN100 million." The company blamed council members Wlodzimierz Czarzasty and Juliusz Braun for the adverse decisions against it. Owned by Broker FM, the company's debt stood at PLN106 million at the end of 2002. Of this amount, PLN46 million were short-term liabilities. Main creditor, Millennium Bank, has agreed to change these into long-term debts. ===================== S W I T Z E R L A N D ===================== ABB LTD.: Corners US$54 Million Bombardier Supply Contract ---------------------------------------------------------- ABB, the leading power and automation technology group, won an order from Bombardier Transportation to deliver traction transformers valued at US$54 million. The order includes several hundred traction transformers, specially designed for locomotives, which will be manufactured in ABB's focused factories in Halle, Germany and Geneva, Switzerland. ABB will produce the first units on a fast-track basis by early 2004, and deliver the remainder in stages until 2009. "The order was received because of ABB's strong performance with previous deliveries, and its technical experience with these special transformer products," says Peter Smits, head of ABB Power Technologies division. ABB traction transformers are compact, lightweight and reliable. This award extends a contract first obtained in 1995 with Bombardier Transportation, the global leader in the rail equipment manufacturing and servicing industry. ABB has so far delivered more than 1,000 transformers of this type, valued at about US$ 140 million. Most of the transformers from this award will be mounted on Bombardier Transportation's TRAXX locomotive body, used by many national and private railway companies. The remainder will be delivered mainly to Railion, the former Deutsche Bahn Cargo. Powerful traction transformers are mounted on locomotives to ensure power supply to the motors, and since the locomotive has no back-up system due to limited space, they must be failsafe. ABB (http://www.abb.com)is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 133,000 people. ***** ABB is currently disposing assets, including a power network and the Red Bank coal-powered electricity station in Australia, to reduce its debt to US$6.5 billion by year's end. The engineering company's debt burden reached US$8.3 billion at the end of the second quarter. =========================== U N I T E D K I N G D O M =========================== AMP LIMITED: To Discuss Demerger Plans with Analysts Today ---------------------------------------------------------- AMP Limited will hold open briefings to discuss financial details of its proposed demerger today. The details were released to the Australian Stock Exchange on October 10, 2003. AMP will hold two open briefings to discuss the financial details. Both will be Webcast live via AMP's Web site (http://ampgroup.com). An analysts briefing will be held on October 13 at 10.00 a.m. One-on-one meetings with both investors and analysts will be held in the weeks following these briefings to discuss financial details of the proposed demerger. A copy of presentation materials to be used in all briefings will be posted on the AMP Web site. CONTACT: AMP LIMITED Level 24, 33 Alfred Street Sydney NSW 2000 Australia ABN 49 079 354 519 AMP LIMITED: Regulators Approve U.K. Business Spin-off ------------------------------------------------------ AMP Limited has announced financial details of its proposed demerger, including capital structures, following "in principle" approvals from both Australian and U.K. regulators. AMP Chief Executive Officer, Andrew Mohl, said "in principle" regulatory approval had been received from both the U.K.-based Financial Services Authority and the Australian Prudential Regulation Authority. As a result, if approved by shareholders at a meeting later this year, the demerger will create two regionally based entities: (a) AMP Limited -- an Australian wealth management company comprising Australian Financial Services, which includes the largest financial planning network and superannuation provider in the country; and one of the country's leading investment managers, AMP Capital Investors. (b) HHG plc -- the new name for AMP's U.K. operations, which will include Henderson Global Investors, a leading investment manager with around GBP69 billion (AU$170 billion) in funds under management; and U.K. Life Services, closed life businesses which are expected to release significant capital over time. AMP LIMITED: Injects More Cash into U.K. Biz to Effect Demerger --------------------------------------------------------------- AMP CEO Andrew Mohl said the capital position of AMP was better than anticipated when the demerger was announced on May 1, 2003, while the capital position for HHG had also improved. "A significant number of steps have been taken to achieve this capital position, with three key changes to the position at June 30, 2003," Mr. Mohl said. "AMP is injecting a further net GBP34 million (AU$84 million) cash into the U.K. operations to facilitate the demerger. AMP will refinance its Reset Preferred Securities (RPS) with a rights offer of approximately AU$1.2 billion to eligible shareholders. Finally, HHG will issue a GBP100 million (AU$246 million) short-term convertible loan note to be repaid by an equity capital raising by June 30, 2004. "Within this framework we have been able to achieve more than we initially anticipated to position HHG as a stand-alone company, including majority ownership of the Henderson asset management business and a planned December 2003 listing on the London Stock Exchange." Mr. Mohl said AMP was pleased with the results of the new market-consistent embedded value methodologies in the Consulting Actuary's Report on the proposed demerger. The current report is a draft, with the final report to be included in the Explanatory Memorandum. "The new methodology has demonstrated the strong underlying value in our businesses and this will underpin investor support for both companies," Mr. Mohl said. "[Friday's] announcement follows more than five months of intensive work to achieve internal, FSA and Australian Prudential Regulation Authority approvals. The complexities of the demerger have been substantial but we believe we have achieved an outcome that is set to deliver real benefits to AMP shareholders. "These benefits include the creation of separate companies, able to focus on their home markets, and the simplification of AMP's complex structure to improve transparency and increase investor understanding. "The investor base is also likely to broaden by attracting new shareholders, as well as providing existing AMP shareholders with greater choice about their investments," he said. AMP LIMITED: U.K. Business Will Be Debt-free After Demerger ----------------------------------------------------------- AMP has submitted a draft Explanatory Memorandum containing full details of the demerger proposal to the Australian Securities & Investments Commission, and is on track to achieve the demerger by the end of 2003. 1. Key elements of capital plan Mr. Mohl said that the capital plan includes four key elements, outlined in detail below. (a) Allocation of AU$1.72 billion equity raised earlier this year through institutional placement and Share Purchase Plan In order to demerge, AMP needs to assume debt issued by U.K. entities, unwind internal loans that exist under the current complex corporate structure, and recapitalize the U.K. operations. To facilitate this, AMP raised AU$1.72 billion earlier in 2003. These funds have been allocated in three ways. First, around AU$650 million in internal loans have been or will be repaid, eliminating existing loans between AMP and HHG entities. Secondly, after assuming U.K. debt of around GBP1 billion, AMP's external corporate debt will be restructured by around AU$600 million, subject to achieving satisfactory pricing and maintaining appropriate liquidity, reducing the gearing of AMP. Thirdly, GBP191 million (AU$470 million) of capital has been or shortly will be injected into the U.K. operations. This comprises GBP157 million (AU$386 million) to, in part, recapitalize the Service Company, as previously announced in AMP's Half Year 2003 Investor Report. In addition another GBP34 million (AU$84 million) of capital will be provided to facilitate the demerger. This recapitalization is to create a capital structure for HHG that will enable it to operate on a standalone basis, as it will no longer have guarantees and funds available from AMP. As partial consideration for the recapitalization, AMP will hold a 15% stake in HHG and have representation on the HHG Board. To support the listing on the Australian and London stock exchanges, AMP will have a limited ability to sell its stake until after the release of HHG's full year 2004 results. (b) Enabling HHG to achieve majority ownership of Henderson HHG will acquire a controlling interest of between 50-60% in the parent company of Henderson (AMP Invest plc). The final level of ownership will be determined as a result of independent valuations of HHG group entities, to be conducted at the date of demerger. The controlling interest will be acquired as part of a series of complex financing steps. The details of these steps are outlined in the separate investor presentation being released with this announcement. The outcome of the transactions will be that: (1) HHG acquires direct majority ownership and voting control of AMP Invest; (2) HHG's share of dividends from AMP Invest can be distributed when appropriate to HHG; and (3) the Pearl shareholder fund improves its regulatory capital via the repayment of part of an inadmissible loan. (c) Undertaking a AU$1.2 billion AMP Rights Offer to redeem the RPS As previously flagged, AMP's RPS need to be refinanced as the demerger will trigger a regulatory event related to Tier 1 capital eligibility. Subject to the demerger proceeding and completion of the AMP non-renounceable rights offer, the RPS will be redeemed for cash in January 2004. They will be redeemed for face value plus the value of accrued distributions. The AMP rights offer will raise approximately AU$1.2 billion to facilitate redemption of the RPS. The structure to be used is innovative, in that the rights offer will close before the demerger occurs. The rights offer is conditional upon the demerger proceeding and will be priced via an institutional bookbuild. In addition there will be a cash payment to shareholders who choose not to take up their rights in the offer, to compensate them for the value of their rights not taken up. Shareholders will be invited to subscribe a fixed dollar amount per existing AMP share for additional shares in the demerged AMP entity. This fixed amount will be AU$0.77 for each share held, unless AMP reduces the size of the rights offer. The number of new shares each shareholder receives will be determined by the price set in the institutional bookbuild. Existing shareholders will subscribe for new shares at a 10% discount to this bookbuild price. Existing shareholders who choose not to take up their rights or are not eligible to participate will have their entitlement sold into the bookbuild. They will receive approximately 8.2 cents per right not taken up (representing the value of their entitlement after costs, and subject to adjustment if AMP reduces the size of the rights offer). The underwriters and joint lead managers for the rights offer are UBS and Macquarie Equity Capital Markets. Caliburn is the principal adviser to the rights offer. The record date for the rights offer will be in late October 2003. The prospectus is expected to be sent to shareholders shortly after the Explanatory Memorandum, with the offer to close in early December 2003. The institutional bookbuild is expected to be held in mid-December and the new shares will commence trading shortly thereafter. (d) Raising GBP100 million in additional capital in HHG HHG also requires GBP100 million (AU$246 million) to achieve the demerger objectives and buy out a majority of AMP Invest. HHG intends to achieve this through an equity raising of at least GBP100 million to be held by June 30, 2004. Subject to market conditions, the most likely timing of the capital raising will be March/April 2004, when HHG is expected to enter the FTSE 250 index. In the interim, with debt funding or further capital from AMP ruled out, the Board of HHG has determined that convertible loan notes are the best way to provide the additional capital required. UBS has entered into an agreement to subscribe for the convertible loan notes, subject to certain conditions. Half the convertible loan notes (GBP50 million/AU$123 million) will be drawn down at the time of the demerger. Up to a further GBP50 million, if required, will be drawn down at June 30, 2004 if the GBP100 million equity raising has not occurred by that time. It is intended that the convertible loan notes will be repaid using the proceeds of the equity raising. If the UBS agreement is terminated - for example, due to a material adverse change to HHG - AMP will provide a standby commitment to subscribe for the notes. Further details about the issue are contained in Attachment One. 2. Consulting Actuary's Report The final Consulting Actuary's Report by Tillinghast-Towers Perrin will be included with the Explanatory Memorandum and contain: (a) traditional embedded values for both the Australian and U.K. businesses at June 30, 2003; (b) market-consistent embedded values for both the Australian and U.K. businesses at June 30, 2003; (c) reconciliation of the differences between the traditional and market-consistent approaches; (d) value of six months' sales for the Australian business, using both traditional and market-consistent approaches; and (e) information on proposed new 'realistic solvency' guidelines for the U.K. life businesses. Background and information on market-consistent embedded values is contained in Attachment Two. In the Australian Financial Services business, AMP believes the Consulting Actuary's draft report shows more value than shown in the June 2003 Investor Report. The market-consistent methodology shows higher valuations, compared with traditional results using a 5% risk discount margin, for both embedded value and, in particular, value of six months' sales, even after allowing for some agency costs. AMP believes this supports its illustrative use of a 3% risk discount margin for the traditional embedded value, which is at the lower end of the range. In the U.K. Life Services business, AMP believes the Consulting Actuary's draft report shows consistency between its market-consistent and traditional embedded values, and supports the information provided in AMP's Investor Report as at June 2003. AMP also believes its illustrative use of 5% discount margin for the traditional embedded value, at the higher end of the range, has been validated. The Consulting Actuary has also undertaken work on the potential impact of proposed new Financial Services Authority 'realistic solvency' requirements. The new rules will begin in 2004 following feedback from industry and clarification of requirements by the Financial Services Authority. It is possible that the consultation process will result in material changes to the draft rules. Based on this work, AMP believes that its U.K. Life Services businesses should be able to meet Pillar 1 of the new requirements. It is not possible to assess the Pillar 2 requirements at this time. AMP believes that this work shows that the timing of any capital releases to HHG shareholders from its U.K. Life companies will depend on building and maintaining an excess level of capital above Financial Services Authority requirements. Given the uncertainty around Financial Services Authority requirements, any projections of capital releases would be speculative. It is likely that capital will be released over the long term, subject to performance, as the business runs off. However, it is unlikely that any material releases of capital will take place for a number of years. 3. Update on approaches for U.K. businesses AMP has received a number of conditional proposals for its U.K. businesses. AMP believes these conditional proposals are not attractive relative to the demerger proposal, because they fail to reflect the intrinsic value of the businesses and they involve a continuing exposure through warranties and indemnities. The demerger proposal therefore currently remains the preferred option for maximizing long-term shareholder value. 4. Timetable & conclusion AMP expects to complete its demerger in 2003. The Explanatory Memorandum will be sent to shareholders in late October-early November, with an EGM to be held in early December. If approved by shareholders and the Court, the demerger will be effected in mid-December and the two companies will trade as separate entities in mid-late December. Mr. Mohl said that since the demerger was announced on May 1, 2003 -- less than six months ago -- AMP had secured the foundations for a highly complex split of its businesses. "The demerger will unlock the underlying value of the businesses, with both AMP and HHG able to pursue strategies that reflect their strengths and capabilities," he said. "For HHG, the business will be locally based and run by local management who are committed to the business. We have worked closely with the Financial Services Authority to ensure the life businesses are appropriately capitalized and to secure and protect the interests of U.K. policyholders. "In Australasia, AMP will once again play to its traditional strengths in helping people manage their financial well-being. All of AMP's stakeholders - shareholders, customers, employees and planners - look forward to the start of a new era when AMP will once again reaffirm its status as an icon in our community." Mr. Mohl said that subject to ASIC and Court approval, shareholders would receive an Explanatory Memorandum within the next month, with the final decision to demerge then in their hands. Shareholders will receive both an Explanatory Memorandum and a Rights Offer prospectus, which will be sent around the same time. A Shareholder Information line has been established to assist shareholders who have questions. Numbers are: Australia: 13000 135 859 New Zealand: 0800 448 062 United Kingdom: 0800 783 3315 Rest of the World: 61 3 9649 5410 Demerger information can also be found at http://www.ampgroup.com/demerger AMP is being advised on its demerger plans by Caliburn and UBS. To view full report and attachments: http://bankrupt.com/misc/AMP_Limited.pdf CONTACT: AMP LIMITED Level 24, 33 Alfred Street Sydney NSW 2000 Australia ABN 49 079 354 519 Contact: Mark O'Brien Phone: +61 2 9257 7053 HOOVER: To Shut down Scottish Plant, Move Operations to China ------------------------------------------------------------- Hoover will close its 60-year-old plant in Cambuslang next year and transfer work to China and Wales due to stiff competition, making operations impossible to sustain. The company said: "This has been a very difficult day for all employees, but despite all their efforts and hard work we have been unable to reduce manufacturing costs sufficiently for the company to continue as it stands." Hoovers told its more than 260 employees last week most of their functions will be moved to China, while about 70 will be relocated to the vacuum cleaner manufacturer's U.K. headquarters in Merthyr Tydfil. Hoover's regional vice-president, Peter Murtagh, said: "We are being hit by more and more competition both in Europe and across the world... In response, we have tried to reduce manufacturing costs -- both by changing work practices and vacuum design -- but it hasn't been enough." Trade unions who outrightly opposed the decision will appeal to MPs and MSPs to support a campaign to block the plan, according to The Scotsman. Eddie McAvoy, leader of South Lanarkshire Council, commented: "I understand Hoover's concern about competition, but how will costs be saved in Wales as opposed to at Cambuslang?" JOHN DAVID: Finance Chief Resigns; Move not Due to Poor Results --------------------------------------------------------------- John David Group announced the resignation of its finance director, Malcolm Blackhurst, as it unveiled losses of GBP5.6 million at the half-year on Thursday. The group denied the exit of Mr. Blackhurst is due to the poor performance of the business. The resignation did not surprise some analysts, according to the Telegraph. One said: "The company has had a pretty torrid 18 months and he has had enough of making poor announcements to the City, although the issue at John David is operational not financial." John David Group made two profit warnings before reporting the GBP5.6 million-loss in the six months to the end of July due to exceptional costs of GBP4.5 million, including a GBP3 million loss on the disposal of fixed assets. Roger Best, chairman, blamed "the integration of First Sport [which] has continued to disrupt our day-to-day operational performance." John David closed 21 unprofitable stores, and will shutdown another 16 before the end of the year. The effect of this restructuring is expected to take effect only in the beginning of 2005, according to Mr. Best. Mr. Blackhurst will conclude his 11-year stay in the firm at the end of the year with GBP100,000 in compensation. To See Financial Results: http://bankrupt.com/misc/John_David_Financials.htm MOSS BROS: Recovery Plan Halves Half-year Loss to GBP1.8 Million ---------------------------------------------------------------- Highlights of Financial Performance for the half year ended July 26, 2003: (a) Pre-tax loss for the half year reduced by over 50% to GBP1.8 million (against GBP3.7 million loss last year). (b) On target to achieve profit for the full year (against a GBP2.5 million loss last year). (c) Sales up 3% on like for like basis in the first half; gross margin up 11%. (d) Cash balance at half-year GBP10.3 million (11.3 pence per share) against GBP4.3 million last year. (e) Stock levels 13% down on last year: residual Spring/Summer stock down 40%. (f) Gross margin in the first 10 weeks of the second half up 7% on last year. OPERATIONAL HIGHLIGHTS Recovery strategy for Company continues on track: (a) Strengthening of design and buying teams contributing to an increase in full price sales. (b) Cecil Gee repositioned as a leading fashion brand, Boss outperforming last year and Moss growing market share. (c) Hire bookings up 12% in expanding market. (d) Selective investment in store refurbishment/conversion started in second half. (e) Supply chain improvements delivering substantial working capital benefits. Commenting on the results, Adrian Wright, Chief Executive, said: "We are pleased to report a continued improvement in trading performance in the first half. The recovery plan for the Company remains on track. Our customers are responding well to a stronger product offer, the margin growth is particularly encouraging and reflects improvement in range selection together with a better-managed buy. We continue to expect the company to return to profit in the current financial year. Sales in first 10 weeks of the second half are 6% down on last year, which reflects the corrective action taken last year to clear excess stock. Sales in the first 10 weeks of new season stock are up 6% and total cash margin for the Company is up 7%." TRADING STATEMENT The company has made further progress in the first half of this financial year: the pre-tax loss reduced to GBP1.8 million against GBP3.7 million last year. Underlying trading in the first half has built on the improvement achieved in the second half of last year with like for like sales increasing by 3% and gross margin improving by 11%, in a difficult retail environment. The achieved gross margin percentage increased from 45.2% to 50.0%. Trading Results (like for like) 2003/04 2002/03 ---------------------------------------------------------------- 1st Half 1st Half 2nd Half ---------------------------------------------------------------- Sales v last year +3% (4)% +4% Gross profit v last year +11% (8)% +9% % gross profit 50.0% 45.2% 46.6% % gross profit v last year +4.8% (0.8)% +5.0% --------------------------------------------------------------- Operating (loss)/profit GBPm(1.9) (3.7) 1.2 ---------------------------------------------------------------- Operating (loss)/profit v last +1.8 +1.1 +3.4 year GBPm ---------------------------------------------------------------- The trading improvement reflects: improved range selection, increased emphasis on in-house design, a more controlled buy and strong underlying growth from Moss Bros Hire. Gross margin improvement in the first half of 4.8 percentage points follows the 5.0 percentage points improvement in the second half of last year. In the financial year 2002/03, margin was diluted by corrective action taken between June and September 2002 to clear excess stock, this increased sales during a 13 week period as an aggressive clearance program was pursued and diluted margin by 1.5% in the first half of last year (and 1.0% in the second half). Underlying gross margin improved by 3.3 percentage points in the first half of the financial year 2003/04. Operating loss for the first half of GBP1.9 million is against a GBP3.7 million loss last year which benefited from GBP0.5 million of gain from asset disposals (GBP0.1 million this year). Overheads have been tightly controlled with underlying first half costs up 2%; with further savings in head office and efficiency savings in stores off setting increased store occupancy costs. Stock was on average 16% down on last year throughout the first half on 6% less trading space and the company has ended the half with GBP21.5 million of stock, GBP3.3 million (13%) down on last year. As well as the corrective action taken last year, a fundamental change in supplier terms (smaller initial orders on shorter lead times) has significantly enhanced the liquidity position of the company and reduced stock risks. Capital expenditure in the first half was limited to GBP0.2m reflecting a period of restrained activity as a fundamental review was undertaken of the store portfolio. As a result a number of investment priorities have been identified and a program of selective investment has commenced. During the first half, two leasehold properties were assigned generating proceeds of GBP1.4 million. The working capital increase of GBP3.1 million (GBP3.5 million first half last year), primarily a seasonal reduction in creditors, reflects the pattern of in-take of stock and the higher VAT liability in January than July. The final dividend of 0.75 pence per share for 2002/03, which was paid in July 2003, amounted to GBP0.7 million. The Board is not recommending an interim dividend, but continues to anticipate that the Company will return to profit in the current financial year, in which case it would intend to propose a final dividend. Cash flow in the second half is forecast to be strongly positive. Operational Overview The Company is continuing to make progress and the recovery continues on track despite adverse external influences in the first half, particularly in Central London. The recovery strategy continues to focus on four key elements: (a) Developing the management team; (b) Simplifying the business (focusing on three core fascia: Moss, Cecil Gee and Boss); (c) Improving product ranges, availability and display; and (d) Improving business efficiency/cost management. Developing the Management Team Ten new managers have been recruited to improve staffing below Executive level in retail operations, buying and merchandising, marketing and finance. These individuals are key to the recovery strategy and have played an important part in developing the growth strategy. Core to this strategy is the belief that the company can trade significantly better from existing stores. Simplifying the Business Moss now has 104 stores, of which 98 contain a Moss Bros Hire department. The Moss stock package is being shaped to ensure that each Moss store is a destination store for men's wear with a product offer matching local customer need. The company has a number of existing variations in its stock offer and these successful formulas are being rolled out to capture an increased share of local markets. The product offer builds from strength in suits and dresswear with branded choice and size depth key to the selling proposition, as well as a more contemporary shirt and casual wear offer. Moss sales, including hire, increased by 3% in the first half with margin up 13% like for like. Suit sales showed 8% growth benefiting from the trend back to formal dressing. Moss Bros Hire has grown market share with bookings up 12% on last year. This expansion is supported by investment in new product, to include fashion ranges and more focused marketing to raise the profile of Hire. Cecil Gee is targeting a younger, affluent, fashion-conscious customer who understands brands. The core brand offer continues to include; Hugo Boss, Armani, D&G and Burberry as well as the Cecil Gee brand. The core offer has been extended to re-capture cutting edge fashion status with the introduction of new design labels such as Ozwald Boateng, Duffer, Etienne Ozeki, Religion, Style Lab and Rare. Cecil Gee gross margin was up 9% like for like with flat sales against last year. There are currently 25 Cecil Gee stores including two new stores in Glasgow and Long Acre, with three more conversions due for completion in the second half. Selective investment is needed in Cecil Gee to ensure customers are offered an inspirational environment that attracts 'hot brands.' Hugo Boss is an established international brand. Moss Bros operates nine Hugo Boss stores in the U.K. A new Hugo Boss store opens in Bluewater in late October, and a refurbishment of the flagship Boss store, in Regent Street, London will be completed in early November. Boss stores performed strongly in the first half with 7% like for like sales growth and gross margin up 9%. Boss continues to offer further investment potential and additional new store opportunities are being sought. Improved Product Range, Availability and Display Increased emphasis has been placed on in-house design and product development. Cecil Gee own label casual wear and suiting has made encouraging progress with Cecil Gee own label sales up 10% in the first half. New Moss suit collections have been launched including the Ventuno 21 brand positioned to appeal to a younger, contemporary suit market. The Blazer casual wear collection was launched in Moss in September in 12 stores. This brand has strong recognition and offers a great opportunity to establish authority in casual wear at the upper end of the market. Improving Business Efficiency and Cost Management Improvements to the supply chain are resulting in a reduced risk in the overall buy, with smaller orders on faster lead times. Further improvements in distribution and handling are contributing to a reduction in company stock levels. With a more balanced, controlled buy, end of season terminal stock was 40% down on last year with an 18% increase in new Autumn/Winter stock going in to the second half. Underlying operating costs for the first half were 2% up on last year, excluding the impact of closed stores and other one off factors. The store review has identified three further loss-making stores that have closed in the second half of the year. Outlook The U.K. men's wear market is highly competitive but improvements in range selection, design and store environment give the Company a real opportunity to grow market share from the existing chain of stores. Gross margin for the first 10 weeks of the second half is up 7% like for like on last year. Sales in this period are 6% lower than last year, which reflects the corrective action taken to clear excess stock. Sales of new season stock are up 6% like for like in the first 10 weeks. Capital investment in the second half is being increased but on a selective basis in existing locations. The Board continues to expect that the Company will return to profit in the current financial year and be strongly cash positive in the second half. To See Financial Statements: http://bankrupt.com/misc/Moss_Bros_Financials.htm CONTACT: MOSS BROS Phone: 020 7353 4200 Adrian Wright, Chief Executive Roddy Murray, Finance Director TULCHAN COMMUNICATIONS Phone: 020 7353 4200 Andrew Honnor Alexia Latham ROYAL MAIL: Speeds up Deliveries; Widens Area of Coverage --------------------------------------------------------- Royal Mail introduced a simplified range of international express and signature services offering a combination of more destinations and extra speed for customers posting important or urgent items overseas. Reach faster and further with Airsure Airsure, Royal Mail's international express service, has extended its global reach and can now be used to send items to some of the most popular countries for international mail posted in the U.K., such as Republic of Ireland, France, Germany and the USA. Items receive express handling both in the U.K. and abroad, and are tracked electronically with on-line confirmation of delivery. Airsure costs just GBP4 plus Airmail postage. This price includes standard compensation for loss or damage of up to GBP30. Extra compensation is available up to GBP500 for an extra fee of GBP1 Confidence with International Signed For International Signed For is available to all destinations worldwide. In addition to offering the extra security of a registered (signed for) delivery it now also offers priority handling in the U.K. ensuring it is dispatched on the first available flight from the U.K.. International Signed For costs just GBP3.30 in addition to Airmail postage. This price includes standard compensation for loss or damage of up to GBP30. Extra compensation is available up to GBP250 or GBP500 (depending on the destination) for an extra fee of GBP1. Colin Beesley, Director of Sales and Marketing International said, "These improved Airsure and International Signed For services provide customers, both consumer and business, with a real alternative to expensive international courier services. I believe they will be delighted at the high quality and excellent value for money the new improved services offer at prices that are significantly less than international courier services. The enhancement of the International Signed For service means it now encompasses all the service benefits previously offered by the Swiftair service. Swiftair will be discontinued from 9 October. CONTACT: ROYAL MAIL 148 Old Street LONDON EC1V 9HQ http://www.royalmail.com ROYAL & SUN ALLIANCE: Puerto Rican Subsidiary off CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB' counterparty credit and financial strength ratings on Royal & Sun Alliance Insurance (Puerto Rico) Inc. and removed the ratings from CreditWatch where they were placed on June 10, 2003, following the announcement by parent Royal & Sun Alliance Insurance Group PLC to sell its Puerto Rican subsidiary to Cooperativa de Seguros Multiples de Puerto Rico. The outlook is stable. "Effective Oct. 8, 2003, Cooperativa obtained full control of its new subsidiary upon regulatory approval of the transaction and paid $61 million in cash, which is about 33% of Cooperativa's surplus and will be subject to accounting adjustment," said Standard & Poor's credit analyst Polina Chernyak. Royal & Sun Alliance Insurance (Puerto Rico) Inc. commercial lines and Cooperativa's personal lines of business are similar in size. The financing and integration into Cooperativa's existing operations might pose a considerable challenge to the group's profitability and management capabilities. Cooperativa's risk-adjusted capitalization is expected to remain extremely strong following the Royal & Sun Alliance Insurance (Puerto Rico) Inc. purchase. Standard & Poor's will continue to evaluate the execution of the business strategy of the combined organization, the level of support provided to Royal & Sun Alliance Insurance (Puerto Rico) Inc., and its ability to obtain adequate reinsurance in the future, and maintain overall profitability. TELEWEST COMMUNICATIONS: Lead Banks Okay Debt-for-equity Swap ------------------------------------------------------------- Top banks of Telewest have agreed to the terms of the group's GBP3.5 billion (US$5.8 billion) debt restructuring, one person close to the negotiations said, according to the Financial Times. Royal Bank of Scotland, Bank of New York, Deutsche Bank and Bank of America, among others, signed off to the proposal, bringing the cable company a step closer to completing its planned debt-for-equity swap. The banks' decision eased concerns of opposition from the lenders who are known not to favor to Telewest's plan of moving its primary listing from London to the U.S.; but Telewest's restructuring could still take months to be completed as the plan still needs approval from other banks, the source said. Its relisting from the London Stock Exchange to Nasdaq, meanwhile, could come only next March, observers said. A listing in the U.S. could help Telewest facilitate a merger with NTL, although it could also put some of the group's lenders in an uncertain position in case of bankruptcy. Bankruptcy in the U.S. offers less protection than insolvency does in the U.K. ********* 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. 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