/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031024.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 Friday, October 24, 2003, Vol. 4, No. 211 Headlines B E L G I U M SOLUTIA EUROPE: Moody's Lowers EUR200 Million Notes to 'Caa1' F R A N C E CMA CGM: 'BB-' Senior Unsecured Debt Ratings on Watch Negative EURO DISNEY: Counts on Saudi Prince to Bailout Theme Park Anew METALEUROP SA: Files for Creditor Protection G E R M A N Y AERO LLOYD: BayernLB Lends Just Enough Cash to Resume Flights MG TECHNOLOGIES: Senior Executives Back Strategic Shift * Lapse of Govt Guarantees Would Adversely Impact State Insurers I R E L A N D ELAN CORPORATION: aaiPharma Buys Pain Products for US$100 Mln I T A L Y CIRIO FINANZIARIA: Police Search Cragnotti's House, Offices L U X E M B O U R G MILLICOM INTERNATIONAL: Third-quarter Revenues Jump 18% TORUS SA: Notes Down Due to British Energy Restructuring N E T H E R L A N D S LAURUS N.V.: Looks Forward to Modest Profit Despite Lower Sales VERSATEL TELECOM: Maintains Financial Guidance for the Year U N I T E D K I N G D O M AVON ENERGY: 'Caa1' Senior Unsecured Debt Ratings Affirmed BOOSEY & HAWKES: Regent Music to Decide on Offer October 29 BOOSEY & HAWKES: Hg Capital Urges Shareholders to Accept Offer BRAKE BROS: Fitch Assigns 'B-' Rating to Senior Notes IMPERIAL CHEMICALS: Unions Threaten to Launch Strike INDEPENDENT NEWS: Regulator Blocks Sale of Some Titles INVENSYS PLC: Sells Metering Business for US$650 Million INVENSYS PLC: Standard & Poor's Maintains Rating at 'BB-' MAL HOLDINGS: Sets Creditors Meeting November 4 MONTPELLIER GROUP: Divests Non-core Construction Subsidiaries MYTRAVEL GROUP: Issues Conversion Shares, Warrants NETWORK RAIL: Macclesfield, Stoke-on-Trent Sections Defective ROOM SERVICE: Shares Suspended Due to Uncertainty of Refinancing ROYAL MAIL: Thousands of Employees Stage Illegal Strike ROYAL & SUNALLIANCE: Sells Sequence to Connells Limited SPRINGHEALTH LEISURE: Mulls Sale of Northern Clubs to Repay Debt SSL INTERNATIONAL: Six-months to September Sales Slightly Up ********* ============= B E L G I U M ============= SOLUTIA EUROPE: Moody's Lowers EUR200 Million Notes to 'Caa1' ------------------------------------------------------------- Moody's Investors Service downgraded Solutia Europe S.A.'s guaranteed EUR200 million senior unsecured notes due 2005 to 'Caa1' from 'B3' following Solutia Inc.'s announcement that it has initiated discussions with bondholders regarding a potential debt restructuring. Solutia Inc.'s senior implied rating was similarly downgraded to 'Caa3' from 'B3'. Solutia said it has approximately US$1.25 billion of funded debt including four series of bonds issued by the company and its subsidiaries. The outstanding bonds include the 11.25% 2009 Senior Secured Notes (principal amount US$223 million), the 6.72% 2037 debentures (principal amount US$150 million and puttable in October 2004), the 6.25% 2005 Euro Notes issues by Solutia Europe S.A. (principal amount EUR200 million), and the 7.375% 2027 debentures (principal amount US$300 million). According to the rating agency, the action reflects the greater prospects for a recovery of principal for these notes in a potential restructuring. The secured notes benefit from a second priority liens on the assets of which the banks hold 1st priority liens. Solutia Inc.'s European assets also do not secure the new credit facility. Solutia Europe is a wholly owned subsidiary of Solutia Inc. =========== F R A N C E =========== CMA CGM: 'BB-' Senior Unsecured Debt Ratings on Watch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' senior unsecured debt rating on the EUR100 million notes due 2013, issued by France-based container shipping company CMA CGM SA, on CreditWatch with negative implications. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on CMA CGM SA. The outlook is positive. "Standard & Poor's is concerned that the group's ratio of priority liabilities, including net present value of operating leases, to total assets will not fall to less than 30% -- which is the threshold for a two-notch differential from the corporate credit rating -- in the near to medium term as expected due to high investment levels," said Standard & Poor's credit analyst, Andreas Kindahl. "We will discuss this issue with CMA CGM's management and expect to come to a conclusion within the coming weeks." The ratings on CMA CGM reflect the group's average business profile, with an extensive route network and demonstrated substantial organic growth. They also reflect the container shipping industry's slightly worse-than-average industry characteristics, the group's large investment commitments, and an aggressive financial profile. The ratings could be raised in the intermediate term if CMA CGM is able to improve its financial profile. The group is well positioned to leverage off its exposure to the booming Chinese economy, which should lead to improved revenues and earnings in the near term. Large committed investments in assets over the next few years, however, could constrain meaningful debt reduction. EURO DISNEY: Counts on Saudi Prince to Bailout Theme Park Anew -------------------------------------------------------------- Prince Al-Walid bin Talal bin Abdul Aziz is in talks with Euro Disney, the embattled operator of the Disneyland Resort Paris theme park, a spokesman for the Saudi billionaire was quoted by AFX News as saying. "Obviously, the company is not doing as well as expected, so the talks would have to be about how it would improve," Amjad Shacker said. He, however, did not confirm whether the tycoon was considering a rescue plan, saying it would be "premature to jump to conclusions." He also did not comment when asked whether the prince has plans of pouring more cash into the company, or whether he was trying to broker a deal with creditor banks. In 1994, Prince Al-Walid bailed out Euro Disney in exchange for a 24% stake. Since then, he has reduced this stake to 17%, according to Mr. Shacker. French newspaper Le Parisien said last week the group is likely to report a net loss of EUR58 million (US$67.28 million) in the year, worse than last year's EUR33.1 million- loss. Euro Disney said Monday it expects losses to deepen in the 2002-2003 financial year, but advised to wait for reliable data after the accounts had been audited and published. The company blamed the fall in tourism and economic downturn for the slump. METALEUROP SA: Files for Creditor Protection -------------------------------------------- French non-ferrous metal producer Metaleurop S.A. was put under bankruptcy protection Monday, months after its Noyelles Godault-based Metaleurop Nord business fell into receivership. The EUR12 million- bridge loan granted by its shareholder, Glencore International AG, expired at the end of August. Creditors are now seeking to recover EUR40 million from the company, Intesatrade, citing Les Echos, said. Metaleurop's woes started when its German shareholder, TUI, opposed plans to continue sustaining Metaleurop Nord's operation through injection of additional funds. A statement issued by Metaleurop said, cumulative losses at Metaleurop Nord amounted to an estimated EUR97 million in 2001 and 2002. Metaleurop Nord, which had been producing lead and zinc for over a century until its bankruptcy filing, closed in January. Parent company, Metaleurop, said in May the impact of the unit's liquidation on March 10, 2003 will open an EUR100 million gap on its 2002 consolidated statements. In September talks between Metaleurop S.A. and creditors with regard to the company's short-term debts and the future cash flow financing ended in deadlock. ============= G E R M A N Y ============= AERO LLOYD: BayernLB Lends Just Enough Cash to Resume Flights ------------------------------------------------------------- Germany's fifth-largest vacation airline, Aero Lloyd, which filed for bankruptcy late last week, received on Wednesday a EUR5 million- (US$5.9 million) loan from majority stakeholder and largest creditor, Bayerische Landesbank. Frankfurter Allgemeine Zeitung said the loan will enable Aero Lloyd to recommence business next week with two aircraft. It will save the jobs of at least half of the workforce, according to insolvency manager, Gerhard Walter. Aero Lloyd was forced to file for insolvency after creditors rejected the airline's restructuring plan amidst a pronounced slump in the travel industry. The move compelled the airline to cancel all its flights, leaving thousands of passengers grounded at airports in Germany and abroad. Mr. Walter, a Frankfurt-based lawyer appointed by the district court in Bad Homburg last week, had said a loan would afford the company more time to look for an investor. He said the company needs between EUR40 million and EUR50 million to continue operations. Aero Lloyd, which mainly flies to Mediterranean destinations, has about 1,400 employees, and 21 Airbus jets. It transported 3.5 million package tour passengers last year. MG TECHNOLOGIES: Senior Executives Back Strategic Shift ------------------------------------------------------- The overwhelming majority of senior managers in the mg technologies ag Group support the company's new strategy. At an internal conference in Frankfurt am Main, around 90% of mg's executives were in favor of the disposal of its chemicals business and its plans to focus on engineering, particularly on the process technology and components business and industrial plant engineering. Only ten percent thought its current strategy would suffice to ensure the company's long-term success. The Group's new strategic focus therefore has the support of those senior managers whose companies are directly affected by the program of divestments and restructuring. Udo Stark, CEO of mg technologies ag, called for the swift implementation of these measures: "The review we launched in June has been completed earlier than expected. The swift implementation of our new strategy must now follow." He said the top priorities were to sell the chemicals division with Dynamit Nobel and solvadis and to repay the company's debt. The proceeds from these disposals would then be used to strengthen the process engineering and components businesses by making targeted acquisitions, with the main focus on fast-growing markets such as foodstuffs, pharmaceuticals and petrochemicals. * Lapse of Govt Guarantees Would Adversely Impact State Insurers ---------------------------------------------------------------- Fitch Ratings says German state-owned insurers face challenges in reorganizing themselves within regional savings bank structures, once governmental guarantor liabilities (Gerwahrtragerhaftung) and maintenance obligations (Anstaltslast) lapse in 2005, according to a Special Report issued Wednesday. In the report, "Ratings of German Public Sector Insurance Companies - After the Lapse of State Guarantees," the agency says it expects to see greater diversity in the performance among state-owned insurers following the withdrawal of state guarantees. The sector has not been immune to the financial difficulties facing German life insurers and some have already called upon their owners for financial aid. Fitch also notes that the reorganization of German public sector insurers within the savings banks group network could allow entity ratings that are weak on a stand alone basis to be replaced or to be improved through group ratings or rating floors. In the past, Gerwahrtragerhaftung and Anstaltslast have included coverage of public sector insurance companies. However, as a result of the Brussels Agreement of July 17, 2001, government guarantees to savings banks and federal state banks will end at the beginning of 2005. While the agreement between the E.U. and Germany has had significant consequences for German federal state banks and savings banks, state-owned insurance companies will also be affected. This is due to comprehensive restructuring of the state-owned insurance sector over the last 10 years, which has seen the ownership of the insurance companies gradually transferred to savings bank and giro associations of their respective states. When the shareholding of the saving bank associations reaches 100%, the E.U. agreement becomes applicable to the respective state-owned insurer. In the report, Fitch analyzed the consequences of the ending of governmental guarantees for state-owned insurance companies and gave an estimate on the probable future rating range of this type of insurer. Key conclusions of the report indicate that the Insurer Financial Strength and Long-term ratings of a public sector insurance company primarily depend on whether: (a) A state-owned insurance company is affected by the EU agreement, i.e. whether or not Gewahrtragerhaftung and Anstaltslast of a public sector insurance company will lapse or have already lapsed. Despite the agreement, those state-owned insurers to which these guarantees still apply may still achieve a 'AAA' rating. (b) The relevant insurance company has sufficient equity capital and competitive financial strength. In case of non-existing or lapsing liability guarantees, higher equity capital requirements will have to be met to some extent in order to compensate for existing business risks. (c) The insurer succeeds in presenting a convincing and future-oriented approach to the challenges brought about by (and that will continue to arise from) the abolition of insurance monopolies, as well as the EU-wide deregulation of the insurance sector for primary insurers. The organization of the future cooperation of public sector insurance companies, and their integration into the regional Savings Bank Finance Group, will be of particular importance in this context. For more detailed information on the rating of regional savings bank associations see Fitch's September 2003 Special Report: "Rating Regional Associations of German Savings Banks". (d) The insurance industry as a whole will succeed in introducing a functioning and lasting insolvency guaranty fund for insurers that are deeply in debt. ============= I R E L A N D ============= ELAN CORPORATION: aaiPharma Buys Pain Products for US$100 Mln ------------------------------------------------------------- Elan Corporation, plc (ELN) has agreed to sell four pain products and related assets to aaiPharma Inc. These products include the rights to Roxicodone(TM) (oxycodone hydrochloride) tablets and oral solution, Oramorph(TM) SR (morphine sulfate sustained-release) tablets, Roxanol(TM) (morphine sulfate) and Duraclon(TM) (clonidine hydrochloride injection). Under the terms of the agreement, Elan will receive total consideration of US$100 million upon closing. This consideration comprises a cash payment to Elan of US$51.6 million including an estimated US$3 million payment for product inventory. aaiPharma will acquire the product inventory from Elan at closing and consequently the US$3 million estimated value may be subject to change. In addition, aaiPharma will assume US$51.4 million of Elan's product related payments. Kelly Martin, President and Chief Executive Officer of Elan, said, "The proceeds from the sale of these pain products are part of our previously announced asset divestiture plan and overall plan to simplify and refocus the company. With the sale, total asset divestitures come to nearly US$1.9 billion. Elan remains committed to research and development in specialty treatments for severe pain. The completion of the divestment of this and other non-core assets will give us a greater ability to focus on our key therapeutic areas of neurology, severe pain and autoimmune diseases." In 2002, Elan recorded net revenue of US$59.8 million for these pain products and generated gross profit of US$40.8 million, before sales and marketing costs and amortization. The carrying value of these pain products' intangible asset as at September 30, 2003, amounted to approximately US$68 million and Elan expects to record a pre-tax gain of approximately US$30 million in respect of the disposal. The transaction is subject to regulatory approvals, third party consents and other customary conditions, and is expected to close during the fourth quarter of 2003. 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. CONTACT: ELAN CORPORATION Investors Emer Reynolds Phone: 353-1-709-4000 800-252-3526 ========= I T A L Y ========= CIRIO FINANZIARIA: Police Search Cragnotti's House, Offices ----------------------------------------------------------- Italian policemen, acting under a search order in relation to the current investigation on Cirio Finanziara's bankruptcy, searched Thursday the house and offices of former Lazio owner, Sergio Cragnotti, according to Agenzia Geornalistica Italia. Mr. Cragnotti is one of 20 individuals currently being questioned for the demise of the Italian agro-food firm that filed for bankruptcy in August. A previous article of TCR-Europe said Mr. Cragnotti is being suspected as the main reason for Cirio's troubles. The owner of the Lazio football club defaulted on EUR1.1 billion (US$1.25 billion) ungraded bonds in November, forcing the company to seek new financing from creditor banks. It failed, however, to persuade creditors into granting more loans; worse the Italian government ruled out a bailout. CONTACT: CIRIO Phone: ++39 06 4145700 Fax: ++39 06 4145729 Home Page: http://www.cirio.it =================== L U X E M B O U R G =================== MILLICOM INTERNATIONAL: Third-quarter Revenues Jump 18% ------------------------------------------------------- Millicom International Cellular S.A. (Nasdaq Stock Market: MICC), the global telecommunications investor, announces results for the quarter and nine months ended September 30, 2003. Financial and Operating Summary (a) Subscriber growth: (b) An annual increase in worldwide gross cellular subscribers of 43% to 5,303,841 as at September 30, 2003* (c) 30% underlying annual growth in gross subscribers excluding El Salvador (d) An annual increase in worldwide proportional cellular subscribers of 46% to 3,806,646 as at September 30, 2003* (e) 29% underlying annual growth in proportional subscribers excluding El Salvador (f) In the third quarter of 2003 Millicom International added 832,006 net new gross cellular subscribers including some 460,000 for Telemovil, Millicom International's operation in El Salvador which was re-consolidated in September 2003. Underlying subscriber additions for the quarter excluding El Salvador were the highest on record. (g) Proportional prepaid subscribers increased to 3,341,001 from 2,263,975 as at September 30, 2002* (h) Excluding El Salvador, proportional prepaid subscribers increased by 33% from September 2002 Financial highlights*: (a) Revenue for the third quarter of 2003 was $156.7 million, an increase of 18% from the third quarter of 2002 (b) EBITDA increased by 34% in the third quarter of 2003 to $82.9 million, from $61.7 million for the third quarter of 2002 (c) The Group EBITDA margin was 53% in the third quarter of 2003 increasing from 46% in the third quarter of 2002 (d) Total cellular minutes increased by 30% for the three months ended September 30, 2003 from the same quarter in 2002, with prepaid minutes increasing by 54% in the same period. (e) The offering by Millicom International's subsidiary, Millicom Telecommunications SA of approximately SEK2,556 million (US$310 million) of secured Notes mandatorily exchangeable into Series B shares of Tele2 AB, closed in August 2003. The Notes, which will mature in August 2006, carry a coupon of 5% per annum, which is secured by the acquisition of securities, and the exchange premium has been set at 30% with a reference price of SEK285. (f) Millicom International used part of the proceeds of the Mandatory Exchangeable Bond offering to retire $167 million of its 11% Senior Notes due 2006, following the repayment of its $60.4 million debt facility with Toronto Dominion Bank and the prepayment of interest for the Exchangeable Bond. The results for the third quarter 2003, include a final charge of $20.8 million reflecting the adjustment of the Tele2 share price to the reference price of SEK285 of the Mandatory Exchangeable Bond. (g) Millicom International has announced it is to host a meeting of holders of the Mandatory Exchangeable Notes on November 11, 2002, in order to seek their approval of certain changes to the terms of the Exchangeable Notes and Deutsche Bank AG London Branch, to make certain technical amendments to the documentation relating to the Exchangeable Notes. (h) From September 15, 2003 Millicom International recommenced consolidating Telemovil, its operation in El Salvador, following the successful resolution of the shareholder disputes with its local partners. (i) As at September 30, 2003, Millicom International reports total net debt, after cash and time deposits, excluding the 5% Mandatory Exchangeable Bond and the 2% PIK Notes, of $612.4 million, a reduction of 46% compared with total net debt of $1,141.9 million as at December 31, 2002, and a reduction of 54% compared with total net debt of $1,337.7 million as at September 30, 2002. (j) In August 2003, 2% PIK Notes with a value of $937,000 were converted by their holders into 87,161 new Millicom International shares. To See Financial Statement: http://bankrupt.com/misc/MICQ3.pdf TORUS SA: Notes Down Due to British Energy Restructuring -------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on TORUS S.A.'s class A and B floating-rate notes. The downgrades result from the combined effects of both the restructuring credit event that was declared on British Energy PLC and the negative credit migration that the portfolio has suffered. The TORUS transaction is a partially funded synthetic CDO managed by TD Securities. The underlying reference portfolio, with a current notional value of $4.83 billion, consists mainly of senior unsecured corporate bonds and loans domiciled in North America and Western Europe. This transaction closed in March 2001 but was restructured in January 2003 following the declaration of credit events on Enron Corp., Teleglobe Inc., and WorldCom Inc. The additional credit enhancement that was provided to the class A and B notes at the time of restructuring resulted in the ratings on the class A and B notes being reset to 'BBB-' and 'B+', respectively. The declaration of the additional British Energy credit event and the rating migration since the restructuring has lead to a sufficient increase in the expected loss levels relative to the reduced subordination to warrant the one notch downgrade for both classes of notes. Standard & Poor's will continue to closely monitor the performance of the transaction to ensure that the new credit ratings assigned to all of the classes of notes remain consistent with the credit enhancement available. RATINGS LIST Class Rating To From TORUS S.A. $171.5 Million Floating-Rate Asset-Backed Notes Ratings Lowered A BB+ BBB- B B B+ ===================== N E T H E R L A N D S ===================== LAURUS N.V.: Looks Forward to Modest Profit Despite Lower Sales --------------------------------------------------------------- Over the first three quarters of 2003 (weeks 1-40), Laurus generated consumer sales of EUR3.498 billion (including sales by affiliated retailers) with its core activities in the Netherlands (Edah, Konmar and Super De Boer), down 8.3% compared to consumer sales in the same period of 2002 (EUR3.816 billion). This decrease reflects the sale of a number of stores to Sperwer and other purchasers and the difficult market conditions created by the economic downturn. On a like-for-like basis, Edah's sales over the first three quarters of 2003 were 1.3% higher (own stores +0.4%, affiliated retailers +4.8%) while Konmar, which operates almost exclusively with own stores, recorded a 9.1% fall. Super De Boer's like-for-like sales were slightly lower (-0.7%,) with its own stores performing less well than those operated by affiliated retailers (-2.6% and +0,3%, respectively). Like-for-like sales for the three banners together were down 2.1%. The combined net sales of Laurus with the three formats in the Netherlands were down 6.8% at EUR2.986 billion (2002: EUR3.205 billion). Sales in the third quarter of 2003 were lower than in the first two quarters, due to slower market growth and increasing price competition. Laurus started the year 2003 with a clear goal: to restore profitability. Action has been taken on many fronts to achieve this objective, including reducing leakage, negotiating better purchase conditions, raising the standard of IT and cutting overhead. The combined effect of the actions which have been taken contributed to the increase in the operating result for the first half year of 2003 to EUR27 million, compared with EUR5 million negative in the same period in 2002. Laurus continues on the path on which it has embarked. Restoring profitability will remain the goal for 2003, even in today's adverse economic conditions. In the second half of the year therefore, Laurus continues to work unceasingly on the cost-reduction projects which were already under way. The present price battle in the Dutch supermarket sector confirms the rightness of this policy, because the actions taken by Laurus in this battle, including price reductions on over 1,000 products by the three formats, could not be sustained without cost-efficient operation. Although the result for the remaining months of 2003 will inevitably be affected by the price reductions made by the Laurus formats in fighting the Dutch supermarket price battle, the Board of Management is standing by the forecast it gave at the time of presentation of the half year results 2003. Barring unforeseen circumstances and assuming no further deterioration in the economic climate, the Board of Management is looking forward to a modest net profit for the full year. This projection takes account of the tax asset arising from the sale of the activities in Belgium and the provisions to be formed for lowering overhead and logistics expenses and reducing the number of employees in connection with the conversion of Konmar Supermarkets to the Super De Boer and Edah formats. Number of stores in the Netherlands 05-10-2003 30-06-2003 31-12-2002 Edah 264 264 263 of which, operated by affiliated retailers 60 62 66 Konmar 105 125 134 of which, operated by affiliated retailers 4 4 4 Super De Boer 363 355 374 of which, operated by affiliated retailers 217 220 237 Total 732 744 771 of which, operated by affiliated retailers 281 286 307 VERSATEL TELECOM: Maintains Financial Guidance for the Year ----------------------------------------------------------- Dutch newspaper De Telegraaf on Thursday falsely suggested that Versatel has been talking this week to analysts in order to downplay the financial market 's expectation with regards to the Company's third quarter 2003 financial results. Versatel would like to emphasize that it always only discloses financial information via publicly available press releases. Versatel's third quarter results will be published on Wednesday November 5, before opening of Euronext. The Company reiterates its financial guidance for full year 2003. Versatel Telecom International N.V. (Euronext: VRSA), based in Amsterdam, is a competitive communications network operator and a leading alternative to the former monopoly telecommunications carriers in its target market of the Benelux and Germany. Founded in October 1995, the Company holds full telecommunication licenses in The Netherlands, Belgium and Germany and has over 1 million customers and over 1,469 employees. Versatel operates a facilities-based local access broadband network that uses the latest network technologies to provide business customers with high bandwidth voice, data and Internet services. Versatel is a publicly traded company on Euronext Amsterdam under the symbol "VRSA". News and information are available at http://www.versatel.comor http://www.versatel.nl CONTACT: VERSATEL TELECOM AJ Sauer Corporate Finance & Investor Relations Manager Phone: +31-20-750-1231 E-mail: aj.sauer@versatel.nl Anoeska van Leeuwen Director Corporate Communications Phone: +31(0)20 750 1322 E-mail: anoeska.vanleeuwen@versatel.nl =========================== U N I T E D K I N G D O M =========================== AVON ENERGY: 'Caa1' Senior Unsecured Debt Ratings Affirmed ---------------------------------------------------------- Moody's Investors Service affirmed the 'Caa1' senior unsecured debt ratings of Avon Energy Partner Holdings with a negative outlook following the announcement of its owners to sell the company to the power utility subsidiary of EON.AG. Aquila Inc. and First Energy Corporation reached a conditional agreement to sell Avon Energy to Powergen U.K. plc for an enterprise value of GBP1,146 million. The transaction includes GBP36 million cash consideration for the equity holders and Aquila, Inc. and FirstEnergy Corporation, GBP484 million in assumed debt either at or guaranteed by the regulated electricity distribution network Aquila Networks plc, and GBP626 million in cash payments to existing AEPH bondholders. AEPH bondholders has to agree to tender their bonds as part of the sale process for 95.8% of their nominal value plus accrued interest in addition to other various regulatory approvals. According to Moody's, the rating action on Avon Energy reflects the fact that the transaction is conditional upon AEPH bondholders agreeing to tender their bonds for 95.8% of their nominal value, which the rating agency regards as a distressed debt exchange with some impairment. Moody's also changed the outlook to positive from developing on the 'Baa3' issuer rating of Aquila Networks and the 'Baa3' guaranteed debt rating of Midlands Electricity plc and affirmed the ratings following the announcement of the transaction. Avon Energy Partners Holding is the parent company of Midlands Electricity plc. BOOSEY & HAWKES: Regent Music to Decide on Offer October 29 ----------------------------------------------------------- Regent announces Wednesday that, as at 3:00 p.m. London time on October 21, 2003, the third closing date of the Offers: (i) valid acceptances of the Ordinary Offer had been received by Regent in respect of a total of 2,802,478 Boosey & Hawkes Ordinary Shares, representing approximately 13.61% of the issued ordinary share capital of Boosey & Hawkes. Valid acceptances with respect to 2,086,095 Boosey & Hawkes Ordinary Shares representing 10.13 % of the issued ordinary share capital of Boosey & Hawkes have been received pursuant to irrevocable undertakings and are included in the acceptances figure above; (ii) valid acceptances of the 3.85% Preference Offer had been received by Regent in respect of a total of 1,020 Boosey & Hawkes 3.85% Preference Shares, representing approximately 46.66% of the issued 3.85% preference share capital of Boosey & Hawkes; and (iii) valid acceptances of the 4.9% Preference Offer had been received by Regent in respect of a total of 14,045 Boosey & Hawkes 4.9% Preference Shares, representing approximately 52.56% of the issued 4.9% preference share capital of Boosey & Hawkes. As indicated in our announcement of October 8, 2003, the board of Regent notes the recommended cash offers by Classic Copyright Limited for the entire issued and to be issued ordinary and preference share capital of Boosey & Hawkes. The board of Regent continues to consider its options and confirms that it expects to clarify its position definitively by October 29, 2003, two days prior to the first closing date of the Classic Copyright offers. Accordingly, the board of Regent encourages Boosey & Hawkes Shareholders to take no action in respect of the Classic Copyright offers at this stage. The Regent Offers have been extended and will remain open for acceptance by Boosey & Hawkes Shareholders until 3.00 p.m. on 29 October 2003. Regent reserves the right (but will not be obliged, other than as required by the Panel) to further extend the Offers after such time. Save as disclosed above, neither Regent nor any person acting, or deemed to be acting, in concert with Regent held Boosey & Hawkes Shares (or rights over Boosey & Hawkes Shares) immediately before the commencement of the Offer Period or, during the Offer Period, has acquired or agreed to acquire Boosey & Hawkes Shares (or rights over Boosey & Hawkes Shares) and no acceptances of the Offers have been received from any persons acting, or deemed to be acting, in concert with Regent. Boosey & Hawkes Shareholders who wish to accept the Offers, and who have not done so, should complete their Forms of Acceptance as soon as possible, in accordance with the instructions printed thereon, whether or not their Boosey & Hawkes Shares are in CREST, and return them as soon as possible, to the Receiving Bank, Computershare Investor Services PLC, PO Box 859, The Pavilions, Bridgwater Road, Bristol BS99 1XZ or by hand only (during normal business hours) at Computershare Investor Services PLC, 7th Floor, Jupiter House, Triton Court, 14 Finsbury Square, London EC2A 1BR and in any event by no later than 3.00 p.m. on October 29, 2003. If you require further assistance on how to complete the Forms of Acceptance, or require additional copies of any of the Forms of Acceptances, please telephone Computershare Investor Services PLC on 0870 7020100 (or, from outside the U.K., +44 870 7020100). Terms defined on the Offer Document dated September 9, 2003, have the same meaning in this announcement save where the context requires otherwise. CONTACT: CITIGROUP Phone: 020 7986 4000 Simon Gluckstein CUBITT CONSULTING Phone: 020 7367 5100 Fergus Wylie Sarah Brydon BOOSEY & HAWKES: Hg Capital Urges Shareholders to Accept Offer -------------------------------------------------------------- HgCapital notes the announcement from Regent Street Music Limited further extending its offers for Boosey & Hawkes plc. On October 3, 2003 Deloitte & Touche Corporate Finance announced the terms of recommended cash offers on behalf of Classic Copyright Limited, a company formed by HgCapital funds for the purpose of acquiring Boosey & Hawkes, at a higher level than the Regent offers made on September 9, 2003. In particular the offer for the ordinary shares from Classic Copyright is 215 pence compared to 195 pence from Regent. HgCapital would remind shareholders that in accordance with the offer document posted to shareholders on October 10, 2003, the closing date for acceptance of the higher offers from Classic Copyright is October 31, 2003 and therefore HgCapital encourages shareholders to accept the recommended cash offers from Classic Copyright immediately. Other than required by the Takeover Panel, Classic Copyright is under no obligation to, but reserves the right to, extend the offers on this closing date. CONTACTS: HG CAPITAL Nick Martin/Ian Armitage Phone: 020 7089 7888 DELOITTE & TOUCHE CORPORATE FINANCE Jonathan Hinton/Byron Griffin Phone: 020 7936 3000 HOLBORN PUBLIC RELATIONS LIMITED David Bick/Trevor Phillips Phone: 020 7929 5599 BRAKE BROS: Fitch Assigns 'B-' Rating to Senior Notes ----------------------------------------------------- Fitch Ratings has assigned a 'B-' rating to Brake Bros Finance plc's GBP105 million 12.0% Senior Notes due 2011 and the EUR105 million 11.5% Senior Notes due 2011. The agency also assigned Brake Bros Acquisition plc, a subsidiary of Brake Bros Finance plc, a Senior Unsecured rating of 'B' and a Senior Secured rating of 'BB-'. The Short-term rating is 'B'. The Rating Outlook is Stable. The three-notch differential between the 'B-' rating assigned to the Notes and the 'BB-' rating assigned to the Senior Secured facilities reflects the agency's view of the significant difference in the potential recovery prospects between the two classes of debt in the event of any future forced restructuring or distressed sale scenario. The differential reflects the subordination of the Notes, as well as the relative sizes of the two classes of debt. "The successful negotiation that provided noteholders with upstream guarantees from operating companies is a step forward on the long road towards achieving full contractual subordination for European high yield notes," said Fitch analyst Stefano Podesta. "However, because of the standstill provisions and the automatic release of the noteholders' guarantees on any sale of the business following enforcement by Senior Secured lenders, this structure could leave noteholders in a typical structurally subordinated position". The Notes will be used to refinance the GBP175 million-bond bridge facility that was put in place to part finance the GBP615 million- leveraged buy-out of Brake Bros plc by Clayton Dubilier and Rice Inc. (CD&R) in July 2002. Apart from the bond bridge facility, the acquisition was financed by GBP295 million of senior secured debt, of which GBP75 million relates to a revolving credit facility, currently undrawn, and an equity contribution totaling GBP270 million. The issuer of the Notes, Brake Bros Finance PLC, is a holding company and the Notes represent its only senior unsecured obligations. The proceeds were down-streamed to Brake Bros Acquisition plc through a subordinated inter-company funding loan. This will be subordinated in right of payment to the Senior Secured credit facilities issued at the Brake Acquisition level. The Notes benefit from second ranking upstream guarantees to be provided by Brake Acquisition, Brake Bros Limited and certain other subsidiaries of the Issuer, which represented 68% of the group's consolidated net assets at 31st December 2002. Within the group's capital structure, the Senior Secured credit facilities lent to Brake Bros Acquisition PLC rank ahead of the Notes in terms of priority. As Brake Bros Finance has no material assets other than the shares of Brake Bros Acquisition PLC and the subordinated inter-company funding loan, it is entirely reliant on upstream payments from its subsidiaries in the form of dividends and distributions to make coupon payments on the Notes. Therefore, the Notes have been rated one notch below the Senior Unsecured rating to reflect their subordination to the senior secured lenders, albeit initially they rank pari passu with the vast majority of the trade creditors at the Brake Bros Limited and other operating subsidiary levels. However, given the potential release of the second ranking guarantees in the event of enforcement by senior lenders and sale of the business during the 179 days standstill period, Fitch believes that potential recoveries for the noteholders would be likely to be severely restricted. This view is further supported by the absence of a requirement that the Senior Secured lenders obtain a "Fair Value" opinion for any sale of the business or individual subsidiaries in the event that they enforce their security. Brake Bros is the U.K. leading foodservices distribution business with operations primarily focused on distributing food to catering businesses. For the six months period ended June 30, 2003, the company achieved sales and EBITDA (before exceptional items) of GBP738 million and GBP34 million respectively, compared to sales and EBITDA of GBP692.4 million and GBP30.3 million in the first half of 2002. For the full year the company expects operating results before exceptional items to be slightly higher than those achieved in 2002. CONTACT: Stefano Podesta, London Phone: +44 (0) 20 7417 4316 Junaid Jafar, London Phone: +44 (0) 20 7417 3499 Tony Stringer, London Phone: +44 (0) 20 7417 6332 IMPERIAL CHEMICALS: Unions Threaten to Launch Strike ---------------------------------------------------- Amicus, U.K.'s largest private sector union, will hold a vote on the proposed strike against Imperial Chemicals Industries, which plans to layoff workers at its Stowmarket and Slough sites. The union met with Imperial Chemical Industries management on Tuesday to discus a company proposal to cut nearly 140 jobs from the two sites. Amicus is opposing these job-cuts, in particular, 21 compulsory redundancies. The union believes the redundancy is a sham because the company, in fact, plans to open 21 new posts. Tuesday's meeting was attended by Amicus and T&GWU and was the last in a series of discussions held between the company and the unions. The meeting broke down without agreement, which now leaves the unions with no choice but to ballot members on a possible industrial action. Ray Dillon, Amicus Regional Officer, said: "We will be balloting members on industrial action because the company have refused to move on the issue of compulsory redundancies. This is compounded by the fact that they have refused 43 volunteers and intend on employing 21 new people. Time is now running out for those under threat. It's going to be a bleak Christmas for those forced out of the door, with no job to come back to in the New Year." INDEPENDENT NEWS: Regulator Blocks Sale of Some Titles ------------------------------------------------------ The U.K. Department of Trade and Industry on Tuesday agreed to the unconditional transfer of the majority of Independent News & Media PLC's regional newspaper titles in the Greater London area to Newsquest. Due to discreet competition overlaps that were detailed in the Competition Commission's report, eight titles in the Kent division -- four of which are free newspapers -- based specifically around the Bromley area, have been excluded and will be disposed of separately to other interested parties. MP Gerry Sutcliffe, the Competition Minister, said he was as yet undecided on whether consent should be given for the transfer of two other titles in the North London division, the Hornsey Journal series and North London Weekly Herald series. Independent announced the sale of its Greater London regional newspaper network -- which comprises five distinct operating divisions -- for a total consideration of GBP60.0 million on March 26, 2003. Following that announcement, the proposed sale was referred to the Competition Commission on May 20, and the Commission subsequently sent its report and recommendations to the DTI on August 17. Having recommended its approval for the bulk of the transfer, the Competition Commission said that there was a possible risk that the North London titles "might cease to be viable" if they were separated from the rest of the North London division, and if they were to go out of business "such consequences would be adverse to the public interest and could be worse than those arising from a transfer to Newsquest." Mr. Sutcliffe said that he had asked his department officials to immediately discuss with Newsquest and Independent News & Media "the likely impact of a refusal to consent on the titles' viability." A meeting is being arranged as soon as possible. Commenting on the ruling, Ivan Fallon, chief executive of Independent News & Media U.K., said: "We are pleased that the Competition Minister has agreed to the transfer of the majority of our London regional titles. We have received a number of approaches separately for our Kent division, and we look forward to concluding all elements of the transaction as soon as possible." ***** Proceeds of the disposal will help Independent News & Media cut its EUR1.3 billion- (GBP900 million) debt burden to EUR1 billion. CONTACT: INDEPENDENT NEWS & MEDIA U.K. Ivan Fallon, CEO, Phone: +44.20.7005.3800 Mark Edwards, Buchanan Communications Phone: +44.20.7466.5000 INVENSYS PLC: Sells Metering Business for US$650 Million -------------------------------------------------------- Invensys plc, a global leader in production technology, has signed an agreement to sell its Metering business to IMS Meters Holdings Inc., a company sponsored by The Resolute Fund, L.P., a private equity fund managed by The Jordan Company, L.P., for a gross cash consideration of US$650 million (GBP388 million). The Metering business is a leader in advanced metering and communications solutions for the worldwide utility industry. The business reported sales of GBP329 million and operating profit (before exceptional items, but after pension costs of GBP3 million and other central charges of GBP9 million) of GBP44 million in the year ended March 31, 2003. The net operating assets of the Metering business which are the subject of the disposal were GBP59 million at March 31, 2003. As at that date, goodwill amounted to GBP296 million, of which GBP251 million had been written off to reserves. The sale of the Metering business is consistent with the decision announced by the Board of Invensys on April 15, 2003 to simplify the Group's structure by narrowing its focus to Production Management whilst also continuing to develop its Rail Systems business. All other businesses will be divested, either partially or wholly, in order to secure a greater level of financial stability for Invensys. The transaction is expected to complete by the end of the calendar year 2003 and the proceeds from this disposal will be used towards satisfying the Group's liabilities. The sale of the Metering business is conditional upon, among other things, the approval of Invensys Shareholders at an Extraordinary General Meeting and the completion of financing by the purchaser. A circular will be sent to the Shareholders in due course setting out full details of the disposal and a notice of the Extraordinary General Meeting to consider, and if thought fit, approve the disposal. Chief Executive of Invensys, Rick Haythornthwaite, said: "The early results of our disposal program have been mixed: whilst the outcome for Baan and Teccor exceeded expectations, the price obtained for this, the first of our four larger businesses for disposal, was at the lower end of estimates. Nevertheless, we are continuing to make progress in dealing with our liabilities." About Invensys plc Invensys is a global leader in production technology. The group helps customers improve productivity, performance and profitability using innovative services and technologies and a deep understanding of their industries and applications. Invensys Production Management works closely with customers to increase performance of production assets, maximize return on investment in production and data management technologies and remove cost and cash from the supply chain. The division includes APV, Avantis, Eurotherm, Foxboro, IMServ, SimSci-Esscor, Triconex, M&I and Wonderware. These businesses address process and batch industries -- including oil and gas, chemicals, power and utilities, food and beverage, pharmaceuticals and personal health care products, metals and mining -- plus the discrete and hybrid manufacturing sectors. Invensys Rail Systems is a global leader in the design, manufacture, supply, installation, commissioning and maintenance of safety-related rail signaling and control systems as well as a complete range of rail signaling and communications products. The business includes Westinghouse Rail Systems Limited (WRSL), Dimetronic Signals, Safetran Systems, Burco Services, Westinghouse Signals Australia and Foxboro Transportation. WRSL was recently awarded a contract valued at more than GBP850m (US$1.3 billion) for the renewal of signaling on the London Underground. Invensys also currently serves other market sectors through its Development Division. The businesses in this division are: Appliance Controls, APV Baker, Climate Controls, Hansen Transmissions, Lambda and Powerware. Invensys is actively seeking to develop these businesses through equity partners or new owners. Invensys operates in more than 60 countries, with its headquarters in London. For more information, visit http://www.invensys.com About the Metering business The Metering business is a leader in advanced metering and communications solutions for the worldwide utility industry. The Metering business is the world's largest manufacturer of water meters and has a substantial share of sales of automatic meter reading devices through its sale of advanced, proprietary AMR systems to North American water utilities. In addition to water meter solutions, the Metering Business is a global leader in gas and heat meter solutions and recently entered the North American electricity metering market. The Metering business is also the leading North American producer of clamps and couplings used by water and natural gas utilities to join and repair pipe and is a premier supplier of precision-manufactured, thin-wall aluminum die-castings, which are used internally for gas meter housings and sold externally to Tier I auto suppliers. The business is headquartered in Raleigh, North Carolina and operates 13 primary manufacturing facilities in 8 countries worldwide. About The Jordan Company, L.P. The Jordan Company, L.P. is a New York-based investment firm with approximately $2.5 billion of capital under management that has been sponsoring and investing in middle market leveraged buyout transactions for more than 20 years. Jordan currently has a portfolio of investments in over 20 businesses representing more than $4.0 billion in annual revenue. CONTACT: INVENSYS PLC Victoria Scarth/Mike Davies Phone: 011-44-20-7821-3538 Taylor Rafferty Brian Rafferty Phone: 212-889-4350 INVENSYS PLC: Standard & Poor's Maintains Rating at 'BB-' --------------------------------------------------------- Standard & Poor's Ratings Services said the announcement by U.K.-based engineering group Invensys PLC (BB-/Negative/-), that it has reached an agreement to sell its U.S.-based water metering business IMS Meters Holding Inc. for US$650 million, will not affect the ratings on the group, given that the execution of the group's disposal program is already factored into the ratings. "The sale of the water metering business represents the first asset disposal in Invensys' GBP1.8 billion ($3.0 billion) disposal program aimed at generating sufficient proceeds to significantly reduce group liabilities and ensure ongoing financial viability," said Standard & Poor's credit analyst Leigh Bailey. "Standard & Poor's notes that the sale price achieved for the business is at the low end of expectations but, at the present time, we still expect Invensys to be able to generate net proceeds from disposals in line with its targets," she added. MAL HOLDINGS: Sets Creditors Meeting November 4 ----------------------------------------------- Notice is hereby given pursuant to Section 48(2) of the Insolvency Act 1986, that a meeting of the unsecured creditors of Mal Holdings Limited (in administrative receivership) will be held at Holiday Inn Birmingham Airport, Coventry Road, Birmingham B26 3QW on November 4, 2003 at 11.00 a.m. for the purpose of having laid before it a copy of the report prepared by the Joint Administrative Receivers under section 48 of the said Act. The meeting may, if it thinks fit, establish a creditors' committee to exercise the functions conferred on it, by, or under the Act. Creditors are only entitled to vote if: (a) they have delivered to us at the offices of RSM Robson Rhodes LLP, 186 City Road, London EC1V 2NU, no later than 1200 hours on the business day before the meeting, written details of the debts they claim to be due, and the claim has been duly admitted under the provisions of the Insolvency Rules 1986; and (b) there had been lodged with us any proxy which the creditor intends to use on his behalf. Creditors may obtain a copy of the report, free of charge, on application to the Joint Administrative Receivers at RSM Robson Rhodes LLP, 186 City Road, London EC1V 2NU. CONTACT: Simon Peter Bower John Neville Whitfield Charles William Anthony Scott Joint Administrative Receivers MONTPELLIER GROUP: Divests Non-core Construction Subsidiaries ------------------------------------------------------------- Further to the announcement made on October 3, 2003, Montpellier is pleased to announce the disposal of the entire issued share capital of three of its wholly owned loss-making subsidiaries, Cornhill Interiors Limited, Lodge & Sons (Builders) Limited and YJL Facilities Limited (together the Subsidiaries) as well as its 30% interest in McLaren Construction Limited to Roger Feast, former chief executive of its Construction Division. Mr. Feast resigned from the Board of Montpellier on October 3 in order to pursue the acquisition of these businesses. The principal activity of Cornhill Interiors is building fit-outs and refurbishment for the commercial and residential sectors. Lodge & Sons (Builders) specializes in the restoration of churches and listed buildings, while YJL Facilities is a provider of facility services and management. For the year ended September 30, 2002, the audited aggregate contribution from the Subsidiaries was a loss of GBP1,125,000. Under the terms of the disposal agreement, each of the Subsidiaries is being sold for GBP1, and Montpellier is required to inject sufficient cash into the Subsidiaries to ensure that their overall net asset value equates to GBP495,000. The amount of this required cash injection is estimated to be GBP383,000. In addition, Montpellier will make a GBP350,000 loan to the Subsidiaries for six years, the first three of which are interest free. The interest in McLaren Construction is to be sold at its book value of GBP150,000. The directors consider, having consulted with Rowan Dartington & Co. Limited, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. Paul Sellars, Managing Director, said: 'We are pleased to have agreed terms for the disposal of these loss-making businesses. This allows us greater flexibility to focus on the development of our core and profitable construction businesses, while assessing strategically attractive opportunities in the marketplace." CONTACT: MONTPELLIER GROUP PLC Phone: 020 7522 3200 Paul Sellars, Group Managing Director COLLEGE HILL Phone: 020 7457 2020 Matthew Gregorowski MYTRAVEL GROUP: Issues Conversion Shares, Warrants -------------------------------------------------- MyTravel Group plc announces that the Conversion Shares and Warrants issued in connection with the proposal approved by the holders of its 5.75% subordinated convertible bonds due 2004 (now 7% subordinated convertible bonds due 2007) at the meeting of the holders of the Bonds held on September 15, 2003 were issued on October 21, 2003. A total of 22,164,779 Conversion Shares and 93,089,831 Warrants have been issued. As stated in the circular posted to holders of the Bonds on August 18, 2003, the Warrants will be exercisable at any time on or before January 5, 2007 save that Warrants may not be exercised in respect of more than such number of Ordinary Shares as is equal to the Warrant Exercise Limit (being 27,325,281 Ordinary Shares) before the Warrants are listed. The number of Warrants in respect of which notices of exercise are received during each Warrant Exercise Period shall be aggregated. If such number, when aggregated with the number of Warrants which have been validly exercised prior to the commencement of the Warrant Exercise Period would exceed the Warrant Exercise Limit, the number of Warrants the exercise of which shall be effective will be reduced accordingly and the number of Warrants exercised during such Warrant Exercise Period will be scaled down pro rata to the number purported to have been exercised. The first Warrant Exercise Period will expire on 28 October 2003. Up to 24,745,030 Ordinary Shares to be issued on exercise of the Warrants have been admitted to the Official List of the U.K. Listing Authority and to trading on the London Stock Exchange subject to allotment. Application will be made for the Block listing of 2,580,251 additional Ordinary Shares to be issued in connection with the exercise of the Warrants to be admitted to the Official List of the U.K. Listing Authority and to trading on the London Stock Exchange subject to allotment. It is expected that dealings in the Ordinary Shares issued in respect of notices of exercise received during the first Warrant Exercise Period will commence on November 5, 2003. Terms used but not defined in this announcement have the meaning given to them in the Circular. NETWORK RAIL: Macclesfield, Stoke-on-Trent Sections Defective ------------------------------------------------------------- Network Rail, the railway operator which is currently trying to cut cost and improve performance, launched an investigation into whether allegations of document falsifications on a project made by rail contractor Jarvis were true, according to the Telegraph. Errors in the documents relating to the renewal of sections of track between Macclesfield and Stoke-on-Trent emerged after this week's cold weather highlighted faults on the project. Speed restrictions were imposed on the section after the discovery. Network Rail said last night: "We only heard about the allegations [Thursday] and we are obliged to investigate." A Jarvis spokesman said: "Work on the section of track had been completed but quality and other testing checks had not taken place. No stressing certificate had been issued for the section of track by Jarvis. "On checking the site report both Jarvis and Network Rail noted that incorrect stressing methods had been used. This has now been corrected." Network Rail, the successor to Railtrack, has agreed to cut its financial requirements by GBP5 billion over the next five years. The rail operator in June said it will need GBP29.5 billion between April 2004 and April 2009. But due to pressure from the rail regulator, Tom Winsor, it now consented to trimming this to GBP24.5 billion by postponing some renewal work -- such as replacing track -- for two years and instead increasing maintenance. ROOM SERVICE: Shares Suspended Due to Uncertainty of Refinancing ---------------------------------------------------------------- The chairman's statement contained in the preliminary announcement of results for the year ended December 31, 2002, referred to a convertible loan of GBP100,000 from Chiddingfold Investments Limited. That loan will not take place and alternative proposals for refinancing the Company are being considered. Accordingly, the directors of Room Service have requested that trading in its ordinary shares on AIM is temporarily suspended, pending the announcement of refinancing proposals. A further announcement will be made as soon as possible. ***** Room Service reported operating loss for the year of GBP1.091 million (2001: loss GBP3.574 million) from turnover of GBP0.017 million (2001: GBP0.991 million). ROYAL MAIL: Thousands of Employees Stage Illegal Strike ------------------------------------------------------- Mail deliveries at Royal Mail were further disrupted Thursday after thousands of postal workers in London walked out in an unofficial strike to protest against issues including the suspension of union officials. Ananova news agency said at least 4,000 workers were involved in the industrial action. Royal Mail said there were only fewer than 2,000. Royal Mail management and the Communication Workers Union, which represents 160,000 Royal Mail postal workers in Great Britain, have been on a long-standing dispute over pay. The union has called for the London Weighting allowance to be raised to GBP4,000 a year, from GBP3,281 currently in inner London and GBP2,038 in outer London. The union is expected to call further walkouts in the run-up to Christmas unless the row is settled, the report said. Meanwhile, hundreds of postal workers in North London are also set to vote on industrial action in support of Tom Doherty's claim he was being denied a transfer to the Midlands. Mr. Doherty was an employee who previously won an employment tribunal case on unfair dismissal. ROYAL & SUNALLIANCE: Sells Sequence to Connells Limited ------------------------------------------------------- Royal & Sun Alliance Insurance Group plc sold its UK estate agency operations, Sequence (U.K.) Limited to Connells Limited -- a subsidiary of the Skipton Building Society Group. As at September 30, 2003 the net asset value of Sequence (U.K.) Limited was GBP7 million. The transaction will not have any material effect on the Group's shareholders funds, capital or net assets. The operating loss, after taking account of reorganization costs, of Sequence for the year ended December 31, 2002 was GBP7 million. The Group's 29% investment in Rightmove.co.uk Limited will be retained. The business has been sold as a going concern. ***** As of December 31, 2002 the net asset value of Sequence (U.K.) Limited was GBP12 million. In accordance with the provisions of Financial Reporting Standard 3 -- 'Reporting Financial Performance' -- the disposal of Sequence will involve the reinstatement of goodwill originally written off on the various originating acquisitions in accordance with previous U.K. accounting standards. Such goodwill, amounting to GBP221 million, will be credited to shareholders funds and debited to the Profit and Loss Account for the purposes of presentation of the loss on disposal. This accounting treatment has no impact on shareholder funds or technical reserves. CONTACT: For Analysts: Malcolm Gilbert Phone: +44 (0) 20 7569 6134 SPRINGHEALTH LEISURE: Mulls Sale of Northern Clubs to Repay Debt ---------------------------------------------------------------- Introduction SpringHealth announces that it has conditionally agreed the terms of the sale of the Northern Clubs to the Buyer Companies for a consideration of GBP4.0 million in cash. The consideration will be paid through a clearing arrangement made available by Lloyds TSB Bank plc to the Company to enable the Company to repay the amount due to Stanley Henry and Avril Henry in respect of the outstanding GBP4.0 million principal of 7% loan notes of the Company due October 2004. The Disposal is conditional upon, inter alia, the approval of Shareholders, pursuant to the provisions of the Act. A document explaining why the Independent Directors consider that the Disposal is in the best interests of the Company and its Shareholders as a whole, and containing a notice convening the Extraordinary General Meeting, was posted to Shareholders Wednesday. Shareholders should be aware that if the Resolution is not approved at the EGM, the Company may or may not have sufficient resources to redeem the Loan Notes when they become due in October 2004. The Disposal is a related party transaction because Stanley Henry, who together with his wife, Avril Henry controls each of the Buyer Companies (and is a director of each of the Buyer Companies), is also a director of, and substantial shareholder in, the Company. Accordingly, neither Stanley Henry nor his wife Avril Henry nor any of Stanley Henry's other associates is entitled to vote on the Resolution to be proposed at the EGM. The Independent Directors and their family and other interests, representing in aggregate approximately 30.2% of SpringHealth's issued Ordinary Shares, have undertaken to vote in favor of the Resolution. The Independent Directors believe that the Disposal is in the best interests of the Company and its Shareholders as a whole and, having consulted with Arbuthnot, consider the terms of the Disposal are fair and reasonable in so far as Shareholders are concerned. In giving its advice, Arbuthnot has taken into account the commercial assessments of the Independent Directors. Background to and reasons for the Disposal In October 2000, following its acquisition of Springhealth Fitness Limited, Mazaran Leisure plc was renamed SpringHealth. A total consideration of GBP15.25 million was paid through a mixture of cash (GBP2.6 million), new Ordinary Shares (GBP6 million) and loan notes. The loan notes, whose aggregate value was GBP6.65 million on issue, were to be redeemed on the second, third and fourth anniversary of their issue in tranches of GBP1.7 million, GBP0.95 million and GBP4.0 million respectively. The first and the second tranches have already been repaid. The first was financed through short-term bank debt, which was repaid from the net proceeds of GBP2.45 million from the sale of the Bristol and Leicester clubs in April 2003. The second tranche was financed by a loan of GBP0.9 million from Thistledown. This therefore leaves the largest tranche of GBP4.0 million outstanding. The Independent Directors are proposing to redeem the Loan Notes through a clearing arrangement of GBP4.0 million to be made available immediately prior to Completion by Lloyds TSB Bank plc. The consideration of GBP4.0 million for the sale of the Northern Clubs to the Buyer Companies (which are controlled by Stanley Henry, who is also the holder of the Loan Notes) will be paid on the same day. The Disposal is subject to the approval of Independent Shareholders, the redemption of the Loan Notes and the obtaining of certain third party landlord consents (where the ultimate landlord is not Barton House). The Company reported in its unaudited interim results for the six months to 28 February 2003, which were released on May 30, 2003, that market conditions at that time were, and continue to be, highly competitive, resulting in pricing pressure and fierce competition among operators for new members. These conditions restricted growth in operating cash flows and, together with net debt and interest payments of GBP0.89 million and capital expenditure of GBP0.22 million, led to a net cash outflow of GBP0.5 million in the first half of the financial year. This net cash outflow was subsequently partially financed by the net proceeds of the sale of the Bristol and Leicester clubs. The balance of the consideration from the sale of the Bristol and Leicester clubs was utilized to repay debt and interest of GBP1.87 million, which included the short term debt of GBP1.4 million taken out to repay the first tranche of loan notes which was due in October 2002, and further capital expenditure in the second half of the year. The Company has now put in place additional funding of GBP0.9 million which it has borrowed from Thistledown, to repay the second tranche of loan notes of GBP0.95 million. The loan from Thistledown is repayable on the second anniversary of drawdown. Despite the competitive conditions referred to above, the Company is budgeting for improved trading results in the financial year to August 31, 2004, relying more on a reduction in costs than an increase in revenues. Further senior management and club level restructuring has been carried out in September and October 2003 at an estimated cost of GBP80,000 in redundancies (which will be provided for in the financial statements for the year ended August 31, 2003). Despite the planned restructuring, the Independent Directors have concluded that there is no reasonable chance that trading will generate GBP4.0 million in twelve months to enable the Loan Notes to be repaid from existing resources. Furthermore, the Company's auditors have indicated to the Board that should the arrangements for the repayment of the Loan Notes not be made the Directors may have to note the uncertainty that exists with regard to the repayment of the Loan Notes in the Company's accounts for the financial year ended August 31, 2003, although the auditors' opinion may not be qualified in this respect. The Directors have reviewed the options open to them and decided against selling the more profitable clubs in and around the London area, so that there is a financially viable company left after Completion. Operating profits (before goodwill and the allocation of certain central costs) from those remaining clubs in the South were GBP0.89 million in the year to 31 August 2002 and net assets were GBP6.55 million as at that date. Furthermore, despite an effort to market the Northern Clubs to third parties over a period of many months, no offer was received sufficient to solve the debt problem now. The Independent Directors wished to secure the trading future of the Company rather than prolong the uncertainty. They are satisfied that the Disposal provides such a premium over market value that a further delay would not be beneficial to Shareholders. Given these circumstances, the Independent Directors have concluded that the Disposal is the best option available to the Company to provide the Company with sufficient funds to redeem the Loan Notes. Details of the Disposal The Independent Directors instructed Edward Symmons to undertake a market valuation of the Company's clubs. Edward Symmons have commented on the changes which have taken place in the industry, both in respect of the privatization of previously publicly quoted health and fitness companies and the diminution in the earnings multiples for the purposes of valuing leasehold sites, compared to two or three years ago. Their report valued the Northern Clubs at GBP3.335 million. Further details of Edward Symmons' valuation report on the Northern Clubs will be set out in the Circular to Shareholders. The Northern Clubs which are the subject of the Disposal are: Existing Use Value* Approx. size GBP'000 Location of Club Tenure sq.ft. Hartlepool** Leasehold 25,600 345 Kingston Park Leasehold 28,400 2,000 Low Fell** Leasehold 23,000 190 Pandon Bank Leasehold 7,500 0 South Shields** Leasehold 18,800 100 Sunderland** Leasehold 25,800 700 Teesside Park** Leasehold 24,500 0 -------- Total 3,335 * as extracted from Edward Symmons' valuation report to be set out in the Circular; ** the immediate landlord of these clubs is Barton House. Operating profit (before goodwill and the allocation of certain central costs) for the year to August 31, 2002 for the Northern Clubs was GBP0.58 million and net assets were GBP4.1 million as at that date. Membership at these clubs as at September 1, 2003 totaled 11,400 against an estimated capacity of 16,750. Under the terms of the Sale and Purchase Agreement, the Buyer Companies shall purchase the Northern Clubs for a total consideration of GBP4.0 million. The Northern Clubs will be bought as a going concern with the Buyer Companies assuming control of the Business following Completion. A summary of the principal terms of the Sale and Purchase Agreement is set out in the Circular. Financial effects of the Disposal If the Disposal is approved by Independent Shareholders and completed in accordance with the terms of the Sale and Purchase Agreement and the relevant landlords' consents relating to certain club premises are obtained, the Group will immediately repay in full the outstanding Loan Notes through a clearing arrangement of GBP4.0 million to be made available immediately prior to Completion by Lloyds TSB Bank plc. The consideration of GBP4.0 million for the sale of the Northern Clubs to the Buyer Companies (which are controlled by Stanley Henry, who is also the holder of the Loan Notes) will be paid on the same day. Consequently, the Group's indebtedness will be reduced by GBP4.0 million and its gearing will be reduced to approximately 22% from its current level of approximately 38%. As a consequence of the Disposal and the early redemption of the Loan Notes, the Company will save approximately GBP0.25 million of interest payments which would otherwise have had to be made by October 2004 together with potential liabilities for dilapidations in respect of those club premises where Barton House is the landlord. The consideration of GBP4.0 million represents a premium of approximately GBP0.7 million to the aggregate valuation of the Northern Clubs as stated by Edward Symmons in its report to be set out in the Circular. The Disposal will result in a loss on disposal of the fixed assets and goodwill of approximately GBP9.1 million against the price of GBP4.0 million to be received. Current trading and prospects of the SpringHealth Group Shareholders will be aware of the competition experienced by the Group and, in particular, the pricing pressure that now exists in the health and fitness market. The Directors believe that since the release on 30 May 2003 of the Company's unaudited interim results for the six months ended February 28, 2003, the difficult trading conditions have continued and are likely to continue in the foreseeable future. For this reason and the fact that following Completion the Group will comprise, in aggregate, five clubs which are operated in and around London, the Directors will examine all strategic options regarding the continuing viability of the Company as a quoted entity. Extraordinary General Meeting For the reasons stated above, the Disposal constitutes a substantial property transaction with a director of the Company pursuant to the provisions of the Act. Accordingly, the Disposal is conditional, inter alia, on the passing by Independent Shareholders of the Resolution. A notice convening an Extraordinary General Meeting of the Company at which the Resolution will be proposed to approve the Disposal, will be set out in the Circular. Stanley Henry who may not vote on the Resolution has therefore undertaken to abstain and to take all reasonable steps to ensure that his wife, Avril Henry, and his other associates abstain from voting on the Resolution. The Independent Directors and their family and other interests, representing in aggregate approximately 30.2% of the Company's issued share capital, have undertaken to vote in favor of the Resolution. Further information A circular containing, inter alia, Edward Symmons' valuation report and a notice convening the EGM, was dispatched to Shareholders Wednesday. Arbuthnot, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for SpringHealth and no one else and will not be responsible to anyone other than SpringHealth for providing the protections afforded to customers of Arbuthnot nor for giving advice in relation to the Disposal. CONTACT: SPRINGHEALTH LEISURE PLC Eric Lowry, Chief Executive Phone: 07768 338636 Russell Hudson, Finance Director Phone: 01454 877648 SSL INTERNATIONAL: Six-months to September Sales Slightly Up ------------------------------------------------------------ Sales for the six months to September 30, 2003 are likely to be in the region of GBP316 million and are expected to generate a pre-exceptional operating margin in excess of 10%. Sales in the comparative period of GBP308 million generated a margin of 10%. Branded consumer sales are expected to be approximately GBP188 million, being some 5% ahead of the same period last year largely as the result of strong underlying growth in Durex and positive Euro/GBP exchange rate movements. Underlying Scholl sales are expected to be broadly in line with last year, as growth in Europe has been offset by the effects of poor economic conditions in the Asia Pacific region in the first quarter. As previously indicated, OTC sales in Italy have continued to be affected by pharmacy de-stocking. Medical sales of approximately GBP92 million are expected to be 2% ahead of last year as underlying growth of 5% in Biogel gloves was offset by negative US$/GBP exchange rate movements and a decline of approximately GBP1 million in sales of our wound management products. The outlook for the full year remains in line with our expectations. Disposal Program The disposal program is on track. Negotiations for the disposal of the industrial gloves business are well advanced and we expect to make an announcement very shortly. As previously indicated, we have received interest from a substantial number of parties for the disposal of our medical division. We are now in discussions with a short list of interested parties. Further announcements will be made in due course. ***** SSL International recently ended talks over a takeover of the company after it received no formal offer from potential buyers. SSL, best known for making Durex condoms and Scholl sandals, was accused of overstating its results in 1999 and 2000. The company entertained a potential takeover offer in July this year. CONTACT: SSL INTERNATIONAL PLC Phone: 020 7367 5760 Garry Watts, Group Finance Director Jan Young, Head of Investor Relations The Maitland Consultancy Phone: 020 7379 5151 William Clutterbuck Brian Hudspith ********* 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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