/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031023.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, October 23, 2003, Vol. 4, No. 210 Headlines B E L G I U M FORD MOTOR: Protests Cripple Southampton Facility F R A N C E ALSTOM SA: Picked to Implement EUR360 Mln Rail Project in Taiwan ALSTOM SA: Rules Out Possible Collaboration with Italian Firm G E R M A N Y GERLING-KONZERN: In Talks with Capital Union Over Globale Rueck I R E L A N D ELAN CORPORATION: Records US$257 Million First-half Net Loss I T A L Y FIAT SPA: Chairman Optimistic about Rescue of Car Business TELECOM ITALIA: Looks to Bond Market to Raise US$4 Billion TELECOM ITALIA: Sells Stake in Olivetti-owned Gaming Company N O R W A Y PETROLEUM GEO-SERVICES: Court Confirms Restructuring Plan S W I T Z E R L A N D ABB LIMITED: In No Hurry to Sell Oil and Gas Unit DEGUSSA AG: Q3 Impairment Charges to Result in Full-year Loss KABA HOLDING: Moves to Enhance Credibility, Negotiation Leverage U N I T E D K I N G D O M 3I GROUP: Resignation of Top Bosses to Compromise Fund-raising AQUILA INC.: Sells Aquila Sterling to Powergen Affiliate AQUILA INC.: E.On Bid Draws Varied Reactions from Fitch AQUILA INC.: S&P Maintains CreditWatch Pending Bid Outcome AQUILA INC.: Union Vows to Oppose Layoffs after Ownership Change BALLAST PLC: Administrators Offer Business, Assets for Sale DE BAER PLC: Administrators Sell Business as 'Going Concern' EDINBURGH FUND: Shareholders Accept Aberdeen Offer IMPERIAL CHEMICAL: Peter Ellwood Replaces Chairman Trotman KINGSTON COMMUNICATIONS: Rumors of Break-up Refuse to Die Down MYTRAVEL GROUP: Reaches Agreement Over World Choice Travel RESOURCE & PROCUREMENT: Administrators Seek Buyers for Business ROYAL MAIL: Limits Standard Parcels to 20 Kilograms ROYAL & SUNALLIANCE: Nears Deal with Skipton Over Estate Unit SAFEWAY PLC: Philip Green Shows Renewed Interest SCOTTISH WIDOWS: Names Ron Whatford New Managing Director TRINITY MIRROR: To Slash Editorial Positions at Birmingham Post WHITE AND MACKAY: Signs up Two New Senior Executives ********* ============= B E L G I U M ============= FORD MOTOR: Protests Cripple Southampton Facility ------------------------------------------------- Work disruptions due to protests over job cuts at Ford's Genk plant stopped production of Transit vans in Southampton last week, according to the Financial Times. Earlier this month, workers at Ford Genk launched an unruly strike outside the 40-year-old company, burning tires and blocking delivery of spare parts, while militant union members prevented all finished vehicles from leaving the plant. Last week, local politicians joined workers in deploring the plan to axe 3,000 jobs to stem losses amid falling sales. Ford Europe recently reported third quarter losses of US$25 million. The Southampton operation was halted due to lack of essential parts after strikers prevented the shipment of metal panels to the facility. "We don't see any effect on other factories any time soon," said Niel Golightly, a Ford spokesman, adding "at the moment it is only Southampton." Mr. Golightly believes talks with unions in Belgiums are developing as Mondeo executive cars are now allowed to leave the factory in Genk. Ford expects to break even at its troubled Ford Europe unit after having forecast a small profit. =========== F R A N C E =========== ALSTOM SA: Picked to Implement EUR360 Mln Rail Project in Taiwan ---------------------------------------------------------------- The Department of Rapid Transit Systems (DORTS) of Taipei City, Taiwan, has just declared the Alstom-led consortium the 'awarded bidder' for the Orange and Blue line extensions of the capital's metro system. Once the order is confirmed, Alstom's share of this EUR360 million contract is expected to be worth approximately EUR125 million. Alstom will be responsible for project management, system integration, the signaling and half of the track work and maintenance depot equipment. The signaling equipment will be similar to the equipment already supplied by Alstom and in service on the Taipei network. Alstom's partner in this consortium is China Technical Consultant Inc., CTCI. ***** 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. CONTACT: ALSTOM SA Investor relations: E. Chatelain Phone: +33 1 47 55 25 33 E-mail: Investor.relations@chq.alstom.com ALSTOM SA: Rules Out Possible Collaboration with Italian Firm ------------------------------------------------------------- Debt-ridden engineering firm Alstom SA denied it is studying a possible tie-up with Finmeccanica, the Italian defense and engineering group, according to AFX. Il Sole 24 Ore reported earlier that the company is considering an alliance involving railway equipment, electricity generating equipment and shipbuilding sectors with the aerospace holding group. According to Il Sole, the study is still at a preliminary phase and has not been presented to the companies' boards. It said the alliance could include all three sectors or be limited to railway equipment. But AFX News said an Alstom spokesman told Agence France-Presse "there have been no talks with Finmeccanica and there are none taking place now." Alstom had debt of EUR5 billion and other liabilities of about EUR17 billion at the end of March. It was rescued with financing of EUR3.2 billion from the French state and banks after E.U. competition authorities blocked an earlier rescue under which the state would have acquired a holding of 31.5%. ============= G E R M A N Y ============= GERLING-KONZERN: In Talks with Capital Union Over Globale Rueck --------------------------------------------------------------- Dubai- and Bahrain-based investment bank, Capital Union, has tabled a serious bid for the ailing reinsurance unit of Germany's Gerling-Konzern Allgemeine, Financial Times Deutschland said, according to Intesatrade. The offer values troubled reinsurer Gerling Globale Rueck at EUR250 million, according to the report. The two sides have already signed a letter of intent, and experts from Swiss bank Credit Suisse Group are currently reviewing the reinsurer's accounts. Credit Suisse owns 25% of Capital Union. Gerling Globale Rueck revealed EUR583 million in losses in 2001, a result of the September 11 terrorist attacks in the U.S. Gerling, which also announced a EUR300 million (US$325 million) net loss for 2002, has been seeking a buyer for the loss-making reinsurance arm. ============= I R E L A N D ============= ELAN CORPORATION: Records US$257 Million First-half Net Loss ------------------------------------------------------------ Elan Corporation, plc (ELN) announced Tuesday that it has filed its interim results for the six months ended June 30, 2003, prepared under Irish GAAP, with the Irish and London Stock Exchanges. Six months to 30 June 2003 Financial Highlights: (a) Total Irish GAAP revenue was $445.5 million compared to $773.5 million for the first half of 2002, a decrease of 42%. The fall in revenue was due mainly to the sale of certain non-core products and businesses as part of the recovery plan, the impact of generic competition on revenues from Zana.ex, the termination of arrangements with Pharma Marketing Ltd. ("Pharma Marketing") and Autoimmune Drug Research Corporation compensated for by the continued growth of revenues mainly from Zonegran, Maxipime, Azactam and the pain portfolio. (b) A net gain of $265.3 million was recorded on disposal of non-core businesses (mainly the primary care franchise) before charging $196.4 million related to the purchase of related royalty rights from Pharma Operating Ltd., a wholly owned subsidiary of Pharma Marketing. (c) Irish GAAP net loss of $257.0 million ($0.73 loss per diluted share) compared to net loss of $672.4 million ($1.92 loss per diluted share) for the six months ended June 30, 2002. (d) Net exceptional costs related to the implementation of the recovery plan of $63.1 million are included in the operating loss for the six months ended 30 June 2003 (2002: $177.3 million). Exceptional charges in 2002 also included an additional $353.2 million mainly relating to investment losses and impairments. (e) The decrease in fixed assets in the six-month period to June 30, 2003 of $718.1 million is mainly due to the sale of the primary care franchise, other businesses and financial assets. (f) Cash and liquid resources at June 30, 2003 of $1,000.8 million (including $35.0 million in restricted cash held by Elan Pharmaceutical Investments II/III Ltd. (''EPIL II/III'')) compared to $1,086.5 million (including $72.5 million in restricted cash held by EPIL II/III) at December 31, 2002. Research & Development Update (a) Elan and our partner Biogen are currently working with the U.S. and European regulatory authorities to determine the regulatory path forward for Antegren (natalizumab) in Crohn's disease (induction). Following discussions with the U.S. Food and Drug Administration we will initiate an additional three-month phase III (induction) trial. The definitive path forward for Antegren in Crohn's disease will be strongly influenced by data generated from the maintenance trial, ENACT-2, which becomes available in the first quarter of 2004. (b) The detailed Antegren data from the Crohn's disease (induction) trial was presented on October 15, 2003 at the American College of Gastroenterology 2003 Congress in Baltimore, Maryland and will be presented in November at the United European Gastroenterology Week 2003 Congress in Madrid, Spain. (c) An Investigational New Drug (IND) application was filed with the FDA in August for the study of a monoclonal antibody as part of the Alzheimer's immunotherapy program. The antibody is being developed in close collaboration with Wyeth, is directed against A-beta amyloid and is intended for the treatment of mild to moderate Alzheimer's disease. The IND has been reviewed by the FDA during the 30-day review period. Initiation of a phase I clinical trial in the fourth quarter of this year remains on track. About Elan Elan is focused on the discovery, development, manufacturing, sale and marketing of novel therapeutic products in neurology, severe pain and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. To See Financial Results: http://bankrupt.com/misc/Elan_Interim_Results.pdf CONTACT: ELAN CORPORATION, PLC Investors: Emer Reynolds, Phone: 353-1-709-4000 800/252-3526 ========= I T A L Y ========= FIAT SPA: Chairman Optimistic about Rescue of Car Business ---------------------------------------------------------- Carmaker Fiat SpA, Italy's largest private industrial employer, will not sell its car business as there is still hope that the ailing business could be saved. AFX News cited Fiat Chairman Umberto Agnelli saying at a meeting of the Italy-Japan Business Group that Fiat will not cede its right on Fiat Auto to General Motors, the firm's 10% owner. He said if the group fulfills the objectives of its business plan "Fiat will be saved, like Nissan." Japanese automaker Nissan Motor Co. was on the verge of bankruptcy five years ago. It implemented a turnaround plan, which includes adding new products to the market. Fiat is also pushing through with its plan aimed at bringing Fiat Auto to operating breakeven in 2005 from a record EUR1.3 billion- loss in 2002. New models will have to be released in order to reverse a slump in sales brought on as buyers turned their backs on Fiat's old and uncompetitive line-up. Agnelli acknowledges the difficulty of achieving this, saying that unlike Nissan, it will take more than a year to turn around the Italian carmaker. Fiat has an option to sell the rest of Fiat Auto to GM from early 2004 to 2009. TELECOM ITALIA: Looks to Bond Market to Raise US$4 Billion ---------------------------------------------------------- Telecom Italia is planning to sell US$4 billion in a three-tranche debt offering in the 144a private placement market, market sources said, according to Dow Jones. The sale, which is being arranged by Citigroup Global Markets, J.P. Morgan and Lehman Brothers, is expected to include $1 billion in five-year notes, $2 billion in 10-year notes and $1 billion in 30-year bonds, the report said. Chairman Marco Tronchetti Provera is aiming to reduce the telecom's net debt to EUR30.6 billion by the end of 2004 through non-core assets disposals. Financing the debt became harder, however, after Moody's Investors Service in August cut the company's long-term credit rating by one notch to Baa2, saying the merger with Olivetti SpA exposed bondholders to greater risk. Standard & Poor's rates Telecom Italia's debt 'BBB+'. TELECOM ITALIA: Sells Stake in Olivetti-owned Gaming Company ------------------------------------------------------------ Telecom Italia announced Friday, October 17, that it has reached agreement with Leisure&Gaming Corp. for the disposal of its 4.98% equity stake in Cirsa Business Corporation SA, held by 100%-owned Telecom Italia Group Olivetti Rap SA. Under the terms of the deal, Olivetti Rap SA transferred an initial 2.46% tranche of Cirsa Business Corporation SA shares in exchange for EUR40 million. Upon disposal of the remaining 2.52% shareholding covered in the deal between the parties, the aggregate value of the transaction will amount to EUR81 million. Leisure&Gaming has the right to acquire a further 1.23% equity stake in Cirsa Business Corporation SA by 30 March 2005 for EUR20 million, and the remaining 1.29% for EUR21 million by the end of November 2007. This transaction is part of the Telecom Italia Group's disposal of non-core activities. ***** Telecom Italia is selling non-core assets to cut debt to EUR30.6 billion by the end of 2004 from EUR35 billion as of June 30, 2003. =========== N O R W A Y =========== PETROLEUM GEO-SERVICES: Court Confirms Restructuring Plan --------------------------------------------------------- Petroleum Geo-Services ASA (debtor in possession) (OSE: PGS; OTC: PGOGY) announced Tuesday that the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's Modified First Amended Plan of Reorganization. The Company expects to consummate the Plan and emerge from Chapter 11 in early November. Under the Plan, the Company's existing bank debt and outstanding senior notes will be cancelled in exchange for a combination of new senior notes, new ordinary shares, cash and possibly interests in a new term loan facility. The Company's outstanding junior subordinated debentures and existing ordinary shares will be cancelled in exchange for new ordinary shares. Additionally, the rights offering contemplated under the Plan, which will allow holders of existing ordinary shares the right to purchase additional new ordinary shares of the reorganized Company, is expected to commence on October 22, 2003. Holders of existing ordinary shares must hold their ordinary shares through the effective date (now expected to be November 5, 2003) of the Plan to be eligible to exercise their rights under the rights offering. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com CONTACT: PETROLEUM GEO-SERVICES Sam R. Morrow Svein T. Knudsen Phone: +47-67-52-6400 Suzanne M. McLeod Phone: +1 281-589-7935 ===================== S W I T Z E R L A N D ===================== ABB LIMITED: In No Hurry to Sell Oil and Gas Unit ------------------------------------------------- Negotiations regarding the sale of ABB Ltd.'s oil and gas unit now center on the price of the possible transaction, sources said, according to Reuters. Despite this progress, a deal is not forthcoming. "... It's not going to happen in weeks, it's probably a month or two away," an unnamed source told Reuters. The discussions are believed difficult as ABB is thought unlikely to agree on a fire sale after having been boosted by a CHF1 billion (US$750.8 million) convertible bond issue in the bag. "Valuations are going up. Why should they sell right now?" Bank Sarasin analyst Andreas Riedel said. "They have the convertible bond. They are in no hurry," he added, according to the report. A sale is expected to raise US$1 billion. Chairman and Chief Executive Juergen Dormann wants to reach a deal by the end of the year, although the closure could run into next year pending regulatory approval. ABB reiterates the transaction will not be delayed by the unit's pending asbestos-related lawsuits. ABB has US$750 million in debt due in December. The loan is part of a US$1.5 billion lifeline thrown to the firm by banks last year. DEGUSSA AG: Q3 Impairment Charges to Result in Full-year Loss ------------------------------------------------------------- German specialty chemicals company, Degussa AG, will be in the red in the third quarter and the full year, Intesatrade reported citing German news agency VWD. The report quoted a Degussa spokeswoman saying the net loss is due to a EUR500 million charge arising from its fine-chemicals arm. On Monday, Degussa said the charge was due to significant changes in market conditions in the fine-chemicals sector; EUR250 million of the sum is for goodwill from mergers and acquisitions and EUR250 million is for other intangible assets. The impairment charge, which will be included in the non-operating result for the third quarter of 2003 as a non-recurring effect, is a non-cash item and thus does not impact cash flow. It is being made as a result of impairment testing that under U.S. GAAP now has to be carried out at least once a year, it said. KABA HOLDING: Moves to Enhance Credibility, Negotiation Leverage ---------------------------------------------------------------- The General Meeting of Kaba Holding AG approved all of the proposals that had been submitted by the Board of Directors. Accordingly, shareholders will receive an unchanged dividend of CHF3 (gross) per registered share. Rudolf Hauser (Chairman) Thomas Zimmermann (member) was reelected for a further three-year term. By approving the creation of authorized capital, Kaba's shareholders granted the Board of Directors the option to increase the company's share capital by a maximum of CHF3.5 million by no later than October 21, 2005. This is equivalent to the issuance of a maximum of 350,000 registered shares to be fully paid up at CHF10 par. As already pointed out at the press conference on September 22, 2003, the purpose of creating authorized capital is to enhance Kaba's credibility and negotiation leverage in acquisition talks while facilitating access to suitable candidate companies. Acquisitions would be restricted to companies that can accelerate the implementation of the "Total Access" strategy, strengthen the Kaba Group's earnings potential, and have a positive impact on the development of earnings per share. Kaba is a globally active, publicly traded security corporation. With its "Total Access" strategy, the Kaba Group is specialized in integrated solutions for security, organization, and convenience at building and information access points. Kaba is also the world market's No. 1 provider of key blanks, key cutting and coding machines, transponder keys, and high security locks. It is a leading provider of electronic access systems, locks, master key systems, hotel locking systems, security doors, and automatic doors. Further information is available at http://www.kaba.com CONTACT: KABA HOLDING Ulrich Graf, President and CEO Phone: +41 1 818 90 61 Dr. Werner Stadelmann, CFO Phone: +41 1 818 90 61 =========================== U N I T E D K I N G D O M =========================== 3I GROUP: Resignation of Top Bosses to Compromise Fund-raising -------------------------------------------------------------- Four senior executives at 3i Group, including Chris Graham, the head of media investments, and director Tom Sweet-Escott, decided to leave the venture capital company in the wake of its preparations for a fund-raising. Chris Davison, head of research at AltAssets, which tracks private equity firms, said the departures are going to be 'unhelpful' to the fund raising," according to Bloomberg. Europe's largest publicly traded venture capital company is planning to raise a new EUR3 billion- (US$3.5 billion) buyout fund after posting a third straight annual decline in the value of its holdings. Shares of 3i have dropped about 62% from their peak in September 2000. "Investors have found enough reasons to be cautious about investing in new funds," Mr. Davison said. Graham, who joined 3i about 14 years ago, worked this year on the purchase of six European yellow pages businesses from Verizon Communications Inc. Sweet-Escott was involved in the acquisition and sale of budget U.K. airline, Go Fly Ltd. But Chief Financial Officer Michael Queen said: "No one individual or team is critical to the success of 3i... the strength of 3i is in the depths of its human resources." 3i, which has about 250 investment professionals, has annual personnel turnover of 2% to 8%, according to Bloomberg. AQUILA INC.: Sells Aquila Sterling to Powergen Affiliate -------------------------------------------------------- Avon Energy Partners Holdings announces that Aquila, Inc. and FirstEnergy Corp. (together, the Sellers) have reached a definitive agreement to sell Aquila Sterling Limited to a subsidiary of Powergen U.K. plc for GBP36 million. Aquila Sterling Limited through Avon Energy Partners Holdings owns Midlands Electricity plc, the holding company for Aquila Networks plc, a U.K. electricity distribution company. Based on net debt as at September 30, 2003 of approximately GBP484 million (excluding the Avon Energy Partners Holdings bonds), Powergen's offer represents an enterprise value of approximately GBP1.146 billion for Aquila Sterling Limited. Powergen's obligation to acquire Aquila Sterling Limited is conditional upon a commitment of the holders of the outstanding U.S. Dollar notes and U.K. Sterling bonds of Avon Energy Partners Holdings (the Bondholders) to sell their bonds to an affiliate of Powergen for 95.8% of their nominal value (less fees to the advisors of the ad-hoc committee of Bondholders) plus accrued interest to the date of completion (the Bond Offer). As at October 20, 2003, these fees are estimated to amount to approximately US$4.5 million to the date of completion, which would be equivalent to approximately 0.4% of the nominal value per bond. Powergen has already received commitments from the holders of approximately half of the outstanding Avon Energy Partners Holdings bonds, to accept the terms of the Bond Offer. The Avon Energy Partners Holdings bonds subject to the Bond Offer are the GBP360 million Variable Coupon Bonds due 2006, the US$250 million Senior Notes due 2007 and the US$250 million Senior Notes due 2008. The Bond Offer may include a tender offer, a scheme of arrangement and an extraordinary resolution of the Bondholders. The Sale is also conditional upon: (a) No material adverse change in the Midlands business; (b) No insolvency event at either of the Sellers or Aquila Sterling Holdings LLC (the parent company of Aquila Sterling Limited); (c) Approval from the European Commission; and (d) Approval from the State Corporation Commission of the State of Kansas, United States of America. Close Brothers Corporate Finance Limited is acting as financial adviser and Cadwalder Wickersham & Taft is acting as legal adviser to the ad-hoc committee of Bondholders in connection with Bond Offer. Bondholders should contact Close Brothers (Martin Gudgeon, Tel: +44 20 7655 3100) or Cadwalader (Andrew Wilkinson, Tel: + 44 20 7170 8700) for further information. This announcement does not constitute, and shall not be relied upon as constituting, investment advice and is not (and is not intended to form the basis of) any offer or solicitation of an offer or an invitation for the sale or purchase of any securities. CONTACTS: AQUILA, INC. Don Bacon Phone: + 44 1905 761 487 AQUILA INC.: E.On Bid Draws Varied Reactions from Fitch ------------------------------------------------------- Fitch Ratings, the international rating agency, has taken a mixed rating response to the announcement by E.ON that an agreement has been reached to purchase Aquila Sterling Limited, the U.K. ultimate holding company of Midlands Electricity, Aquila Power Network and various ancillary subsidiaries of Avon Energy Partners Holdings. The agency's rating actions are as follows: Avon Energy Partners Holdings ratings downgraded to 'DDD/D' from 'CC/C' Outlook Negative Midlands Electricity plc Senior Unsecured and Short-term ratings of 'BBB-/F3', respectively, placed on Rating Watch Positive Aquila Power Networks plc ratings affirmed at BBB+/F2'; the long-term rating Outlook remains Stable. The agency notes that the E.ON's (rated 'AA-/F1' Outlook Negative) purchase agreement has been reached with Aquila Inc. (rated 'B-' Outlook Negative), FirstEnergy Corp. (rated 'BBB-/F3' Stable Outlook) and Avon Energy Partners Holdings bondholders. The rationale for the downgrade of Avon Energy Partners Holdings to 'DDD/D' from 'CC/C' is underpinned by the acceptance from bondholders of a 4.2% discount on the nominal value, the explicit recovery rate being within 90% and 100%. The Rating Watch Positive for Midlands Electricity's ratings reflect the prospect of a change in ownership to a higher rated entity. The acquisition is expected to be made through E.ON's U.K. subsidiary Powergen Plc (rated 'A/F1' Outlook Negative); Powergen owns East Midlands Electricity's distribution asset that are contiguous to the territory served by Midlands Electricity. The affirmation of Aquila Power Networks' ratings is predicated upon its standalone credit profile: leverage of c. 50% debt/RAB and coverage ratios above 4.5x. total consolidated debt at Midlands Electricity include the GBP150 million eurobond due 2007, a GBP100m securitization and a GBP15 million EIB loan, with the bank borrowing comprising the balance of GBP220 million. At FYE02 net pensions liabilities for the group amounted to c. GBP106 million. E.ON's total offer price amounts to GBP1,146 million, comprising an agreed GBP36 million for the equity and GBP1,110 million in assumed debt and discounted purchases. The price offered to bondholders represents 95.8% of their nominal value (c. GBP626 million equivalent value). Tuesday's announcement follows only three weeks after the failed bid made by Scottish & Southern plc ("SSE" rated 'AA-/F1+' Outlook Stable) that comprised c. 86% of Avon Energy Partners Holdings bonds nominal value and resulted in strong opposition from bondholders. AQUILA INC.: S&P Maintains CreditWatch Pending Bid Outcome ---------------------------------------------------------- Standard & Poor's Ratings Services said its ratings on U.K. distribution network operator Aquila Networks PLC and its holding companies, Midlands Electricity PLC and Avon Energy Partners Holdings remain on CreditWatch. This follows offer by Powergen U.K. PLC (A-/Stable/A-2) to acquire Avon Energy Partners Holdings, following the withdrawal of Scottish and Southern Energy PLC (AA-/Stable/A-1+) from the acquisition process. The offer is conditional on the Avon Energy Partners Holdings bondholders accepting a discounted valuation for their bonds. The ratings on Midlands and Avon Energy Partners Holdings were initially placed on CreditWatch on Nov. 20, 2002. The ratings on Aquila Networks were initially placed on CreditWatch on May 22, 2003. The 'CC' long-term ratings on Avon Energy Partners Holdings are on CreditWatch with negative implications. The 'B' long-term issuer credit rating and 'BBB-' senior unsecured debt rating (guaranteed by Aquila Networks) on Midlands, and the 'BBB-/A-3' issuer credit ratings on Aquila Networks, are on CreditWatch with positive implications. The maintenance of the positive CreditWatch implications for Midlands and Aquila Networks reflects the probability that the companies' credit quality will improve if the acquisition proceeds, because of the higher ratings on Powergen U.K. "If the acquisition does not proceed, the ratings on Aquila Networks will remain at 'BBB-', while those on Midlands could deteriorate," said Standard & Poor's credit analyst Paul Lund. "Once the bid becomes unconditional following acceptance by bondholders, the ratings on both companies are expected to be equalized with those on Powergen U.K., reflecting the expectation that Midlands will be quickly merged into Powergen's core distribution activities. However, the acceptance of an offer to purchase the Avon Energy Partners Holdings bonds below their nominal value would lead to an automatic default according to Standard & Poor's criteria." Powergen has offered to purchase Avon Energy Partners Holdings' predominantly U.K.-focused electricity distribution business for GBP1,146 million. This valuation reflects assumed Midlands and Aquila Networks debt of about GBP484 million, payment for the equity of about GBP36 million, and a valuation of the Avon Energy Partners Holdings bonds at GBP626 million (or 95.8% of their face value before costs). The CreditWatch placement will be resolved once Powergen U.K.'s bid is accepted by all parties and becomes unconditional, which is expected by January 2004, subject to regulatory approval. AQUILA INC.: Union Vows to Oppose Layoffs after Ownership Change ---------------------------------------------------------------- Dougie Rooney, Amicus National Officer for Energy, said of Powergen's agreement to acquire Midlands Electricity: "We have been aware for some time that Midlands Electric (Aquila) was heavily in debt and our members were concerned for the future of the company. We will support the acquisition by Powergen if that means we will get assurances on members' jobs and their intention to grow the business. We will oppose any attempts to cut jobs or outsource any key functions of the business." ***** Amicus, U.K.'s largest private sector union, in September warned the government about the plight of West Midlands Manufacturing at its report "Rebuilding British Manufacturing." The report highlights the problems that face U.K. Manufacturing including low output levels which are at their lowest since 1995 and only 7% higher than in 1973. A huge trade deficit that reached GBP28.2 billion in 2002, massive decline in employment levels within manufacturing and massive productivity gap with the U.K. productivity 32% lower that in the US and 29% lower than France and Germany. BALLAST PLC: Administrators Offer Business, Assets for Sale ----------------------------------------------------------- The Joint Administrators, Nick Edwards and Nick Dargan, offer for sale the business and assets of Ballast, including Ballast Plc, Ballast Wiltshier Investments Ltd., Wiltshire Facilities Management Ltd. (In Administration) - ("Ballast"). Ballast is an integrated Construction and Services business. The assets available include: Construction Division (a) 5 regional businesses offering national coverage (b) Significant contracts across sectors including education, industry, retail, homecare and housing. Services Division (a) Enviable PFI/PPP position with a dominant position in the education sector, with substantial contracts nationwide (b) Currently operating on 7 PFI projects, with substantial further ongoing project bids Annual turnover approximately GBP230 million. For details of Ballast's business and assets, please contact Carlton Siddle (0781 8012815) or Tom Keir (07803 176473); E-mail: csiddle@deloitte.co.uk or tkeir@deloitte.co.uk DE BAER PLC: Administrators Sell Business as 'Going Concern' ------------------------------------------------------------ W. D. Joseph & I. J. Allan, the joint administrators of the company, offer the business and assets for sale as a going concern. Features: (a) Established supplier of work-wear to large "blue chip" customers (b) Annual turnover of some GBP5.7 million (c) Bespoke garment and fabric stock with a book value of some GBP1 million (d) Supply contracts with a number of prestigious customers (e) Skilled and experienced work force including in-house design capabilities (f) Leasehold premises in Kennington, London SW9 and outsource warehouse partner in Dartford, Kent Interested parties requiring sales particulars should contact Robyn Clayton at: Smith & Williamson Limited No 1 Riding House Street London W1A 3AS Phone: 0207612 8742 Fax: 020 7323 5683 E-mail: rmc@smith.williamson.co.uk EDINBURGH FUND: Shareholders Accept Aberdeen Offer -------------------------------------------------- The board of Edinburgh Fund Managers Group plc announces that this resolution was passed as an ordinary resolution by shareholders at the EGM of the company held Tuesday: "THAT in connection with the recommended offer by Ernst & Young LLP on behalf of Aberdeen Asset Management PLC for the entire issued and to be issued ordinary share capital of the company, the subscription of A ordinary shares of GBP5 each in the capital of New Star Asset Management Group Limited for a total subscription price of up to GBP10 million by the trustees of the British Telecommunications plc pension scheme be and is hereby approved for the purposes of Rule 16 of the City Code on Takeovers and Mergers." ***** Edinburgh Fund previously lost important asset management contracts, including that of Bank of Scotland pension fund and Edinburgh Small Companies Trust. It is now left with GBP3.2 billion trusts under management, mainly investment trust, unit trust and venture capital funds. It has been in trouble since rejecting a takeover approach last year by Hermes, the BT pension fund manager and its biggest shareholder. Four non-executives and the chief executive resigned in the wake of that move. CONTACT: EDINBURGH FUND MANAGERS GROUP PLC Rod MacRae, Director Phone: 0131 313 1000 IMPERIAL CHEMICAL: Peter Ellwood Replaces Chairman Trotman ---------------------------------------------------------- The Imperial Chemicals Industries Board Meeting in London Tuesday decided on: (a) The retirement Of Lord Trotman and Appointment of Peter Ellwood. Lord Trotman has indicated his wish to retire as Chairman from the end of this year. He will be succeeded by Deputy Chairman Peter Ellwood, as was announced on June 27, 2003. Mr. Ellwood who was formerly Group Chief Executive of Lloyds TSB Group PLC and is Chairman of the U.K. Royal Parks Advisory Board and Chairman of The Work Foundation of Great Britain will take up his new role on January 1, 2004. Senior Non-Executive Director Lord Butler said, "Lord Trotman has successfully steered the Board of Imperial Chemicals Industries through some very difficult times. We are very grateful for his positive influence throughout his period on the Board and particularly during the past two years as Chairman. While the Group still faces challenges, strong new leadership has been put in place and there is a clear recovery program in train. It is now the appropriate time to make the orderly transition to the next Chairman and the Board looks forward to working under Peter Ellwood's leadership to realize the Group's potential." (b) Appointment of New Executive Director David Hamill has been invited to join the Imperial Chemicals Industries Board as an Executive Director and has been appointed as Chairman and Chief Executive of Imperial Chemicals Industries Paints. Mr Hamill joins Imperial Chemicals Industries from Royal Philips Electronics where he is a member of the Group Management Committee. Mr Hamill, who has broad experience in international business, has held senior management roles in Europe and Asia where he gained production, commercial, marketing and finance experience. He has a strong track record of leadership in global businesses and in working with large retail groups. Born in Airdrie, Scotland in 1957, David Hamill graduated from Strathclyde University with an honors degree in production engineering and management. After working for Honeywell and general Instruments, he joined Philips Semiconductors as product manager in 1986. Two years later he was appointed plant director of Philips Hazel Grove, U.K. In 1990 he became business group manager Power Semiconductors and three years later he was appointed senior vice-president of Philips Lighting Asia-Pacific responsible for its activities in China and Hong Kong. In 1996, he became president of Philips Lighting Asia-Pacific. Mr. Hamill was appointed executive vice-president of Philips Lighting and CEO of the Lamps business group in 1998 and chairman of the LumiLeds Board in 1999. He became president and chief executive officer of Philips Lighting from May 2001 and at the same time was appointed a member of the Group Management Committee of Royal Philips Electronics. He will take up his new role at Imperial Chemicals Industries with effect from December 8, 2003. Imperial Chemicals Industries Chairman Lord Trotman said' I am delighted to welcome David Hamill to the Board of Imperial Chemicals Industries. His energy and vigor allied to his broad international business experience will further strengthen the senior management team taking Imperial Chemicals Industries forward." October 21, 2003 Imperial Chemicals Industries is one of the world's largest producers of specialty products and paints. It is a global leader in creating, developing, making and marketing ingredients for foods and personal care, adhesives, specialty polymers, electronic materials, fragrances and flavors. Together with its traditional strengths in paints, Imperial Chemicals Industries is a major player in the worldwide development of sensory products. Products made by Imperial Chemicals Industries are the vital ingredients that add value to its customers' products and processes. Imperial Chemicals Industries has 36,000 employees worldwide, and had sales in 2002 of more than GBP6 billion. Further information can be found on Imperial Chemicals Industries' website - http://www.ici.com Imperial Chemicals Industries Paints is a leading international paint business with a particularly wide geographic spread. With some of the world's leading paint and decorative product brands, serving both the professional and DIY markets, Imperial Chemicals Industries Paints has products to prepare and care for all building materials. The business also provides coatings for cans and packaging. The business is headquartered in the U.K. and operates manufacturing sites in 25 countries. Imperial Chemicals Industries Paints had sales of more than GBP2 billion in 2002. ***** Imperial Chemical is currently initiating the second stage of its group-wide restructuring program aimed at cutting more than GBP100 million in annual cost by 2005. At June 30, 2003, ICI had net debt of about GBP1.7 billion. At the end of 2002, Imperial Chemical had a high pension funding gap of about GBP820 million. KINGSTON COMMUNICATIONS: Rumors of Break-up Refuse to Die Down -------------------------------------------------------------- Speculations regarding the possible break-up of troubled telecommunications group Kingston Communications persisted one month after the departure of Chief Executive Steve Maine. Mr. Maine ended six years of stay in the company in September as a result of what observers believe his failure to turn around the company's loss-making business services division. Since then speculations have surfaced that Mr. Maine resigned because he had resented the board's decision to consider a break-up of the GBP230 million- business. Last week, a Sunday newspaper suggested the company is mulling options that include selling the bulk of its business to rival Thus. Energis and Colt Communications are also reportedly interested in its operation. Sought for comments, Kingston director of communications, Anita Pace, said: "We don't comment on rumor and speculation." A source close to Kingston also denied there are talks currently taking place over a sell-off of the company, taking as proof acting Chief Executive Malcolm Fallen's stake building in Kingston. But the report said: "The feeling is that if he is confirmed as Chief Executive, that would herald the start of talks which may ultimately decide Kingston's future." MYTRAVEL GROUP: Reaches Agreement Over World Choice Travel ---------------------------------------------------------- MyTravel Group plc announces that it has entered into an agreement to sell the business and assets of World Choice Travel, Inc. to Travelocity.com LP, a Sabre Holdings company, for US$50 million (GBP29.9 million) in cash. The consideration is subject to adjustment for any variance between the actual working capital at completion, and the amount estimated for the purposes of the agreement. World Choice Travel is MyTravel's U.S. consolidator and distributor of hotel rooms and other travel-related products through a distribution network of web-based affiliates. World Choice Travel made an operating profit in the year to 30 September 2002 of US$0.6 million (GBP0.4 million). It had net liabilities excluding inter-group balances at September 30, 2002 of GBP0.3 million. At completion, all inter-group balances will have been settled. The sale will result in an exceptional profit in the year to 30 September 2004 of GBP24.7 million. Due to its size, the sale of World Choice Travel is conditional on MyTravel shareholders' approval. The sale is also conditional upon clearance having been obtained from antitrust regulators in the U.S. and on other normal conditions. Subject to these conditions having been satisfied, the sale would be expected to complete in mid-November 2003. Following the agreements for disposals of the Cruise Business and SunTrips and Vacation Express announced on October 20, 2003, the disposal of World Choice Travel represents the next stage of the continuing program of disposals of non-core businesses that the Board of MyTravel is pursuing to raise cash in order to provide working capital for the Group. There is little inter-relationship between World Choice Travel and the Group's core interests. The net proceeds of the disposal will be used for working capital purposes. The Board has been taking significant steps to manage its cash flows and will have to continue to do so to ensure that it has sufficient cash resources to fund the significant cash outflows which it experiences in the first quarter of its financial year. The Group will be sending shareholders a circular containing information both on the disposal of the Cruise Business, announced on October 20, 2003, and on the disposal of World Choice Travel, and will give notice of the date of an Extraordinary General Meeting for shareholders to consider an ordinary resolution to approve the sale. Exchange rate US1.67 = GBP1 Background information Information on World Choice Travel World Choice Travel is headquartered in North Palm Beach, Florida and consolidates and distributes primarily hotel rooms and other travel-related products through a distribution network of web-based affiliates. World Choice Travel provides a privately branded online booking engine through its no-cost travel affiliate program to a network of approximately 1,700 affiliates operating over 2,300 web sites in 42 countries, focused primarily on North America. Information on Travelocity Travelocity, a Sabre Holdings company, gives consumers web access to airlines, hotels, cruise, last-minute and vacations packages, and car rental companies, backed by 24 hour assistance from customer service representatives. With 40 million members, Travelocity is the seventh largest travel agency in the U.S. Sabre Holdings Corporation is a world leader in travel commerce, retailing travel products and providing distribution and technology solutions for the travel industry. More information is available at http://www.sabre-holdings.com CONTACT: BRUNSWICK Phone: 0207 404 5959 Sophie Fitton Roderick Cameron RESOURCE & PROCUREMENT: Administrators Seek Buyers for Business --------------------------------------------------------------- The Joint Administrators, Derek Oakley and Simon Thomas of Tenon Recovery offer for sale the business and assets of facilities management company Resource & Procurement Management Limited. Key features include annual turnover of approximately BP1.4 million, extensive range of catering and cleaning contracts, and opportunities for further cross selling. For further details please contact: Nichola Lloyd TENON RECOVERY Arkwright House Parsonage Gardens Manchester M3 2LF Phone: 0161 834 3313 Fax: 0161 827 8402 E-mail: nichola.lloyd@tenongroup.com ROYAL MAIL: Limits Standard Parcels to 20 Kilograms --------------------------------------------------- Royal Mail Tuesday welcomed Postcomm's decision to allow it to make alterations to its Standard Parcel service. From April 1, 2004, Royal Mail will withdraw the delivery of Standard Parcels weighing more than 20kgs -- a service historically provided, although not required under the terms of the Universal Service Obligation within the Postal Services Act. Royal Mail's network is not designed for handling items weighing more than 20kgs, which account for less than one percent of the four-and-a-half million Standard Parcels it delivers each year. Special arrangements are needed, including the use of two delivery people and specialist equipment, and this means that Royal Mail loses money on every higher weight item it handles. Royal Mail will continue to deliver parcels weighing up to 20kgs at a standard, uniform price to all addresses across the U.K. Royal Mail's Head of Goods Distribution, Ross Drake, said: "There are specialist carriers that have designed their networks to handle items weighing more than 20kgs. Our network is not designed for this and for every higher weight parcel we handle, we have to put ad hoc arrangements in place to distribute and deliver it." Royal Mail's current charge for handling Standard Parcels weighing between 20kg and 30kgs is GBP10.76. The real cost of providing the higher weight delivery is between GBP22 and GBP36, depending on a variety of factors including the destination, resulting in an annual loss on the service of around GBP1 million. Postcomm has also agreed to allow Royal Mail to make alterations to its next day guaranteed service, Special Delivery, if it so wishes. The service remains the same for the time being while Royal Mail considers how the changes should be implemented. The package of alterations agreed by Postcomm allow Royal Mail to increase compensation for loss or damage as part of the basic price, charge for a copy of the signature on delivery, and to adapt the time at which a money back guarantee is paid for late delivery. The vast majority of people would not see a change to the Special Delivery service they receive. CONTACT: ROYAL MAIL 148 Old Street LONDON EC1V 9HQ http://www.royalmail.com ROYAL & SUNALLIANCE: Nears Deal with Skipton Over Estate Unit ------------------------------------------------------------- Insurer Royal & SunAlliance is close to selling its estate agency business, Sequence, to a subsidiary of Skipton building society, Connells, according to The Guardian. It was believed last month that Royal & SunAlliance has entered into exclusive talks regarding a sale with a foreign company, reportedly American group Cendant. The move is thought part of the insurer's plan to move away from areas such as selling life policies to focus on general insurance. When asked about the recent development, Royal & SunAlliance and Connells said they could not comment on market speculation, according to the report. Sequence, Britain's second largest estate agency business with 360 branches, holds brands such as Fox & Sons, Barnard Marcus and William H Brown. Smaller rival Connells has more than 150 branches throughout the Midlands and the south of England. SAFEWAY PLC: Philip Green Shows Renewed Interest ------------------------------------------------ Philip Green received new financial information on Safeway, the fourth largest supermarket group in which it was given clearance to bid since March, according to The Telegraph. When asked if he is bidding for Safeway, Mr. Green, BHS and Arcadia owner, said: "It means that I'm looking at it. I like to see the information." Wm Morrison, which last month received the green light from the competition regulator, also received new financial information ahead of it making a renewed offer. The revival of Mr. Green's interest to look into the possible acquisition could surprise some City analysts, who thought the fire has died on the investor. The Competition Commission's blocking of Asda, Sainsbury's and Tesco from acquiring the whole or any part of Safeway -- apart from the 53 stores that Wm Morrison is being forced to sell if it buys Safeway -- led some to believe the regulator ruled out the sale of Safeway to a financial buyer. One analyst said: "Of course, Philip [Green] could just be having a bit of fun, but there seems little point in him wasting everyone's time, including his own." SCOTTISH WIDOWS: Names Ron Whatford New Managing Director --------------------------------------------------------- Troubled Scottish Widows Investment Partnership appointed Ron Whatford to replace Ian Thompson as new managing directors of operations, according to The Scotman. Mr. Whatford, who previously worked at Alliance & Leicester, is former director of group operations at the bank. His appointment will enable Mr. Thompson to become director of group operational services at parent group Lloyds TSB. Scottish Widows Chief Executive Archie Kane believes Mr. Whatford will "bring a fresh perspective to the way we operate". The reshuffling came weeks after Scottish Widows fund manager Ian Cormack joined the exodus of senior staff leaving the firm in recent months. Scottish Widows has been in dire straits for the past three years, weighing down on its Lloyds TSB's dividend all the while. TRINITY MIRROR: To Slash Editorial Positions at Birmingham Post --------------------------------------------------------------- Parent company Trinity Mirror disclosed fresh rounds of redundancies at its Midlands title last week, according to HoldtheFrontpage. The company, which announced 550 job-cuts at the company early this year, is now planning to cut the roles of deputy editor, head of news, head of content, head of features, head of business, and two London-based posts of city correspondent and political correspondent at Birmingham Post. The cut follows the reduction of pages from 220 to 180 recently. A company spokeswoman said: "Nine editorial jobs will be made redundant. We will seek to achieve these through voluntary redundancy. "They are part of a restructure and streamlining of the editorial department the aim of which is to increase performance and efficiency within the function. There is a need to rightsize inline with the paper's sales and revenue performance. We are, however, very confident that there will be no effect on our ability to produce high quality newspapers," she added. Trinity Mirror is aiming to save GBP25 million in costs a year. The spokeswoman said a month-long consultation, which reportedly would involve National Union of Journalists' Birmingham father of chapel, Chris Morley, is now under way to work out the way forward. WHITE AND MACKAY: Signs up Two New Senior Executives ---------------------------------------------------- Scotch whisky group, Whyte and Mackay, has appointed Sian Marshall and Jonathan Cleland as senior managers to help the company implement strategic initiatives. Mr. Marshall, group account director at Scottish advertising firm Fauld's, is now the company's brand controller with responsibility for shaping the investment in core brands. Mr. Cleland, who has worked with FMCG companies such as RJR Nabisco and Coca-Cola, meanwhile, joins as Whyte and Mackay as international sales director. Both will report into brands director Glen Gribbon. Mr. Gribbon said: "We have been very clear in mapping out a future for Whyte and Mackay underpinned by big brands with international scope. To facilitate this we need good, commercially minded, people and it is encouraging to see Sian and Jonathan joining the team. They bring a wealth of experience to their new roles and I look forward to working with them." Whyte and Mackay, formerly known as Kyndal Spirits Ltd., announced last month it is consolidating existing operations in Leith and Grangemouth as part of a restructuring announced at the end of July. The decision involves the transfer of the company's bottling plant to Grangemouth. The whisky distiller, which has been weighed down by debt since its buy-out in October 2001, believes the move could help it position the business for long-term success and ensure competitiveness in the global spirits industry where prices are continually under pressure. CONTACT: Kyndal Spirits Ltd 310 St Vincent Street Glasgow, Scotland G2 5RG. Contact: denise.marshall@kyndal.co.uk Phone: +44 (0) 141 248 5771 Fax: +44 (0) 141 221 1993 ********* 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., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland 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. 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