/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031212.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, December 12, 2003, Vol. 4, No. 246 Headlines F R A N C E BULL SA: Modifies Terms of Exchange Offer with Bondholders RHODIA SA: Redeploys Support Functions in France SUEZ SA: Concludes Sale of Belgian Communication Assets G E R M A N Y DEUTSCHE BAHN: Faces EUR3.2 Billion Funding Shortfall DEUTSCHE TELEKOM: Aims to Reduce Debt by EUR19 Billion in 2006 HEIDELBERGCEMENT AG: Divests Operations in Bulgaria HVB GROUP: Sells Bankhaus BethmannMaffei for EUR110 Million WESTLB AG: Financial Regulator Considers Action Against Execs I T A L Y CIRIO FINANZIARIA: Bankruptcy Commissioner Prefers Breakup PARMALAT SPA: Ratings Cut to 'CC/C' Due to Likelihood of Default VERSACE: Might Close Stores to Return to Profit L U X E M B O U R G MILLICOM INTERNATIONAL: Subscribers in Vietnam Now One Million N E T H E R L A N D S HAGEMEYER N.V.: To Put Restructuring Plan to Vote January 9 KONINKLIJKE AHOLD: Faces Fine if Wal-Mart Buys Brazilian Units P O L A N D POLSKA TELEFONIA: Ratings Affirmed after Failed Buyout R U S S I A VTB CAPITAL: Fitch Assigns 2008 Notes 'BB+' Long-term Rating S W E D E N SKANDIA INSURANCE: Moody's Gives Firm Stable Outlook VOLVO BUSES: Board Opts to Close Loss-making Denmark Plant U N I T E D K I N G D O M ABBEY NATIONAL: Sanctioned for Breaking Money Laundering Rules AES DRAX: Creditors Decide to Retain Control BRITISH AIRWAYS: E.U. Anti-trust Commission Clears Air Deal CABLE & WIRELESS: 'BB/B' Ratings Affirmed After U.S. Exit LEEDS UNITED: In Rescue Talks with Several Potential Buyers PPL THERAPEUTICS: Auctions Pilot Plant Equipment STELLA MCCARTNERY: Reports Second Consecutive Annual Loss TADPOLE TECHNOLOGY: Halves Full-year Loss as Turnover Doubles TSAR TIMBER: Calls in KPMG Administrators VERNON STAINLESS: Loks Plasma Division Sold to Metals U.K. WATFORD LEISURE: ITV Digital Collapse Hits Revenues WATFORD LEISURE: Plans to Raise Funds via Share Offering ********* =========== F R A N C E =========== BULL SA: Modifies Terms of Exchange Offer with Bondholders ---------------------------------------------------------- As a result of discussions with bondholders that took place after the communication concerning the recapitalization plan on November 20 were presented by the Group, the Management of Bull decided to modify the terms of the exchange offer which will be proposed to the bondholders simultaneously with the capital increase of EUR44 million. Bull will offer for each bond: (a) Either 20 new shares; (b) Or 16 new shares and 16 warrants (against 8 warrants previously), each warrant carrying with it the right for a period of one month following the settlement and delivery of the shares to subscribe to one share at the subscription price of EUR0.1 A significant number of bondholders, directly or through intermediaries, have already expressed their agreement on this proposal which will be ratified by the next Board of Directors meeting and will strengthen the recapitalization plan presented by Bull. The General Meeting of the bondholders that will take place December 11, 2003, was asked to amend the terms of their contract (as already stated in the press release dated November 20): (a) Postpone the maturity date to January 1, 2033; (b) Reduce the coupon to 0.1% starting January 1st 2004; (c) Redemption value fixed to 100% of the bond's nominal value (against 116.5% to 117.5% initially), i.e. EUR15.75; (d) Renounce the parity conversion adjustment, which will result in the implementation of the planned increase in capital by the Board. The operations will lead to a decrease of approximately 90% of the bonds economic value. CONTACT: BULL SA Marie-Claude Bessis Director Corporate and Financial Communication Groupe Bull 68 route de Versailles 78434 Louveciennes Cedex France Phone: +33(0)1 39 66 70 55 Mobile: +33(0)6 80 64 18 81 E-mail: marie-claude.bessis@bull.net RHODIA SA: Redeploys Support Functions in France ------------------------------------------------ Following the communication made to its European social partners on November 20 regarding the new Enterprise organization and the redeployment of European zone support functions, the Group's France Works Council was informed of the planned support function redeployment in France and employment consequences. Consistent with the change in direction announced October 3, required to ensure the Group's competitiveness, and with the communications made October 30, these plans aim to streamline and simplify the Group's structures and to rationalize the support functions into a platformed organization to optimize their competitiveness. Support function employees, formerly assigned to the Group's Enterprises, would be transferred to the Rhodia Services entity; researchers to the Rhodia Recherches entity; and plant engineering department staff to the Rhoditech entity. Adapting the organization to the situation of the markets and of the Group would result in a reduction in the number of employees of 572 positions in France. These initial measures are part of a cost reduction plan to achieve savings of approximately EUR120 million as of 2005, with a full-year effect of EUR165 million in 2006. Following this communication, the information/consultation process will continue at the European and individual country levels. In this regard, a European Works Council meeting will be held January 23, 2004, after which each Enterprise will implement the plan according to each country's appropriate legal process. You may view this press release on Rhodia's Web site: http://www.rhodia.com Rhodia is one of the world's leading manufacturers of specialty chemicals. Providing a wide range of innovative products and ser vices to the consumer care, food, industrial care, pharmaceuticals, agrochemicals, automotive, electronics and fibers markets, Rhodia offers its customers tailor-made solutions based on the cross-fertilization of technologies, people and expertise. Rhodia subscribes to the principles of Sustainable Development communicating its commitments and performance openly with stakeholders. Rhodia generated net sales of EUR6.6 billion in 2002 and employs 23,600 people worldwide. Rhodia is listed on the Paris and New York stock exchanges. CONTACT: RHODIA SA Investor Relations Fabrizio Olivares Phone: +33 1 55 38 41 26 SUEZ SA: Concludes Sale of Belgian Communication Assets ------------------------------------------------------- Suez has just concluded, according to schedule, the sale to Telenet of its 100% participation in Codenet, the national fiber optic network in Belgium. After the conclusion of the sale of Coditel, n1 Belgian cable operator on November 25, Suez thus completes its divestiture of communications assets in Belgium. Total disposals carried out since February 2003 has contributed EUR10 billion to reducing SUEZ debt. Therefore, already in 2003, the Group has achieved one of the principal goals of the Action Plan, namely, to reduce its net debt (which stood at EUR28 billion at June 30, 2002) by one-third. Net debt came at EUR16.5 billion, pro forma at June 30, 2003. SUEZ, (http://www.suez.com)a worldwide industrial and services Group, active in sustainable development, provides companies, municipalities, and individuals innovative solutions in Energy (electricity and gas) and the Environment (water and waste services). In 2002, SUEZ generated revenues of EUR40.218 billion (excluding energy trading). SUEZ is listed on the Euronext Paris, Euronext Brussels, Luxembourg, Zurich and New York Stock Exchanges. ============= G E R M A N Y ============= DEUTSCHE BAHN: Faces EUR3.2 Billion Funding Shortfall ----------------------------------------------------- Deutsche Bahn, the German railroad operator preparing for privatization, might not have enough money for its planned investments. The German government earmarked only EUR22 billion for investments in the medium term. Intesatrade, citing German daily Tagesspiegel, said Bahn Chief Executive Hartmut Mehdorn was counting on EUR24.1 billion in funds from the government. The EUR2.1 billion deficit, combined with other funding shortfalls, leaves Mr. Mehdorn short of around EUR3.2 billion for investments. The timeframe for Deutsche Bahn's investment plans was not specified in the article. The German government started looking for an advisor for the sale of the state-owned company in July, about two months after the railway company posted operating loss of EUR12 million in the first quarter. The company, which lost EUR82 million in the first quarter last year, had earlier expected a EUR138 million loss. Deutsche Bahn previously said preparations for the privatization is going ahead despite setbacks, particularly the railways' underperformance. The German government is considering publicly offering 20% of Deutsche Bahn shares in 2005. DEUTSCHE TELEKOM: Aims to Reduce Debt by EUR19 Billion in 2006 -------------------------------------------------------------- Deutsche Telekom AG, the German company that has been selling assets and cutting costs to reduce debt, could cut its monetary obligations to EUR30 billion by the end of 2006, German weekly Capital reports, citing an internal Deutsche Telekom document. The report said growing free cash flow, which is pegged at EUR6.5 billion for 2005 and EUR7.5 billion for 2006, would help achieve the EUR19 billion cut from the current EUR49 billion debt. The figures, however, exclude dividend payments and potential acquisitions. Capital further said Deutsche Telekom expects EUR22.5 billion in earnings before interest, taxes, depreciation and amortization in 2006, with EUR10.4 billion from mobile phone operations alone. The telecoms giant, which owns VoiceStream Wireless and its T-Mobile brand in the U.S., had its debt rating placed on review for a possible upgrade late Friday by Moody's. The rating agency said better operating performance has improved the company's financial leverage. Deutsche Telekom has net debt of EUR21 billion, EUR12.6 billion of which comes due next year and another EUR8.4 billion in 2005. It has been selling new bonds to refinance more expensive debt and has sold bonds backed by the receivables of its fixed-line and information technology units. HEIDELBERGCEMENT AG: Divests Operations in Bulgaria --------------------------------------------------- HeidelbergCement [rated BB+/Negative/B by Standard & Poor's] is selling its operations in Bulgaria, namely the companies Zlatna Panega Cement and Zlatna Panega Beton, to the Greek company Titan Cement Company S.A. The share purchase agreement was signed on December 8, 2003. Finalization of the deal is now subject to the approval of the anti-monopoly office in Bulgaria. Zlatna Panega is HeidelbergCement's sole cement plant in Bulgaria. Because of this and the fact that there are no prospects of reaching a more significant presence in the country, HeidelbergCement has decided to sell the operations. HeidelbergCement maintains its presence in Eastern Europe through its operations in the Czech Republic, Poland, Hungary, Romania, Croatia, Bosnia and Herzegovina, Ukraine, Russia and the Baltic states. It operates 14 cement plants as well as 70 aggregates and 140 ready mixed concrete plants in this region. HeidelbergCement is one of the largest companies in the construction and building materials industry, with 38,000 employees at approximately 1,500 locations in 50 countries around the globe. In 2002, the company achieved sales volumes of 46 million tons of cement and realized a turnover of EUR6.6 billion. HVB GROUP: Sells Bankhaus BethmannMaffei for EUR110 Million ----------------------------------------------------------- Munich-based HVB Group and ABN AMRO, headquartered in Amsterdam, have signed an agreement regarding the sale of Bankhaus BethmannMaffei, which is a wholly owned subsidiary of HVB. Under the terms of the deal, ABN AMRO, which conducts its private banking activities in Germany under the Delbruck brand, is to acquire the private BethmannMaffei bank based in Munich and Frankfurt for a total of EUR110 million. Subject to the approval of the regulatory authorities, the transaction is expected to be completed in January 2004. "We have found a strong, reputable partner for BethmannMaffei in the form of ABN AMRO. This was very important to us, particularly with the customers and employees in mind," said Michael Mendel, Member of the HVB Group Board of Managing Directors. In selling Bankhaus BethmannMaffei, HVB Group is concentrating its operations involving high net worth individuals on its own private banking unit within HypoVereinsbank. At the same time, the corporate group is sharpening its strategic profile by removing redundancies. Bankhaus BethmannMaffei resulted from the merger of Frankfurt-based Bethmann and Munich-based Maffei, which took effect on January 1, 2003. The organization specializes in providing extensive advisory services to wealthy private customers on complex financial and real estate investments. It employs around 210 staff at four locations (Munich, Frankfurt, Nuremberg and Stuttgart) and serves 7,500 customers. At September 30, 2003, BethmannMaffei had total assets of EUR785 million and assets-under-management of EUR5.4 billion. WESTLB AG: Financial Regulator Considers Action Against Execs ------------------------------------------------------------- Board members of WestLB AG could face disciplinary actions from German regulator BaFin for failing to adopt a more stringent risk management procedure, Intesatrade reported, citing Financial Times Deutschland. The report comes after a recent investigation conducted by accountant KPMG strongly criticized the state-owned bank's procedures for approving deals and monitoring risk in two of its units. BaFin is now considering admonishing the board members for acting illegally. An earlier audit commissioned by BaFin into WestLB's exposure to U.K. television-rental company BoxClever led to the departure of Juergen Sengera as WestLB chief executive. WestLB was recently asked by the regulator to set aside an extra EUR499 million (US$602.4 million) to cover risks incurred by Principal Finance and Global Specialized Finance. The suggestion triggered fears that the bank's losses may exceed its record EUR1.7 billion loss in 2002 and, in turn, WestLB may be forced to launch a further round of fund raising. ========= I T A L Y ========= CIRIO FINANZIARIA: Bankruptcy Commissioner Prefers Breakup ---------------------------------------------------------- The commissioning plans for bankrupt food group Cirio includes the possible separate winding up of Cirio De Rica and Del Monte brands, Industry Ministry Commissioner Luigi Farenga said, according to Agenzia Giornalistica. The plan does "not exclude a number of different solutions" including a group break up, he said. He also revealed there are around fifty offers for the group, but that they are "extremely generic." "Some concern the entire group, others just a part of the business," he said. According to him, the offers submitted to the Industry Ministry will have to be assessed within a mandatory 30-day period. The separate breakup of Del Monte brand is needed to provide a rapid solution to debts against Rabobank, the report said. The government wants to wrap up the company by next summer, as per the so-called "Prodi-bis" law, he said. Cirio was put into liquidation after failing to convince bondholders to accept a recovery plan put forward by the group's advisors. PARMALAT SPA: Ratings Cut to 'CC/C' Due to Likelihood of Default ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Italy-based leading global fluid-milk processor Parmalat Finanziaria S.p.A., and its main operating subsidiary Parmalat S.p.A., to 'CC/C' from 'B+/B', due to a clear risk of default. The ratings remain on CreditWatch with developing implications. "The downgrade and continuing CreditWatch listing reflect that Parmalat faces a risk of default, as the group has not been able to confirm how it will be in a position to repay the EUR150 million bond that matured on Dec. 8, 2003, by the end of the grace period on Dec. 15," said Standard & Poor's credit analyst Hugues de la Presle. "This indicates a fundamentally degraded liquidity situation, which is converse to information repeatedly provided to Standard & Poor's in writing up until the week ending Dec. 5, 2003, by Parmalat and its advisers." Parmalat has not yet repaid the EUR150 million bond by related entity Parmalat Finance Corp. B.V., which matured on Dec. 8, 2003. The group has only so far announced that it will delay any repayment until the deadline of five days grace period on December 15, 2003. As Parmalat is reported to own a significant share of this bond, its inability to honor such a relatively modest amount points to a highly stressed liquidity situation, which is in complete contradiction with the information that was presented to Standard & Poor's up to the week ending December 5, 2003. If Parmalat was not to honor the EUR150 million bond by the end of the grace period, the ratings would be lowered to 'D'. VERSACE: Might Close Stores to Return to Profit ----------------------------------------------- The company founded by the late Gianni Versace is planning to restructure itself to return to profit, according to the New York Post. Interim Chief Executive Fabio Massimo Cacciatori on Tuesday was set to present a reorganization plan to Versace's board of directors, the report said. But an official announcement of the details of the program is unlikely to be made before the end of the year, according to a spokesman. Versace could streamline its retail, manufacturing and marketing operations. It might also close underperforming retail stores, and adopt a conservative marketing budget, sources of New York Post said. The company is also considering selling its posh Via del Gesu palazzo headquarters. Versace, which is 20% owned by Gianni's sister, Donatela, is also trying to refinance the terms of a 100 million euro bond that comes due in July. =================== L U X E M B O U R G =================== MILLICOM INTERNATIONAL: Subscribers in Vietnam Now One Million -------------------------------------------------------------- Millicom International Cellular SA (Nasdaq:MICC) announces that Mobifone, its subsidiary in Vietnam, is the first Millicom operation to have reached the 1 million-subscriber mark. Marc Beuls, President and CEO of Millicom said: "We are delighted to have reached this important milestone in subscriber numbers in Vietnam. There are strong growth prospects in this and our other markets because of current low penetration levels combined with our pre-paid, mass-market product offering." ***** Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Luxembourg-headquartered emerging markets mobile telecommunications operator, Millicom International Cellular SA. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' long-term senior unsecured debt rating to Millicom's $550 million proposed notes. "The proposed notes will make up part of Millicom's debt restructuring and the proceeds will be used to refinance existing debt, thereby improving the company's overall maturity profile," said Standard & Poor's credit analyst Michael O'Brien. The notes are rated two notches lower than the corporate credit rating on the company, reflecting structural subordination with regard to priority obligations at Millicom's operating subsidiaries. At Sept. 30, 2003, Millicom had total adjusted debt of $845 million. CONTACT: MILLICOM INTERNATIONAL CELLULAR SA Marc Beuls President and Chief Executive Officer Phone: +352 27 759 101 SHARED VALUE LTD. Andrew Best Investor Relations Phone: +44 20 7321 5022 ===================== N E T H E R L A N D S ===================== HAGEMEYER N.V.: To Put Restructuring Plan to Vote January 9 ----------------------------------------------------------- Hagemeyer shareholders may be called to a meeting before the middle of January to approve the financial restructuring of the Dutch trading firm, chief financial officer Tjalling Tiemstra told analysts during a conference call, according to Reuters. The meeting will take place "likely on January 9," he said Tuesday, following the announcement by Hagemeyer of an extensive rescue package agreed with a syndicate of more than 20 banks led by ABN Amro. The plan includes a EUR460 million rights issue priced at EUR1.20 a share, which has been fully underwritten; and an issue of EUR150 million worth of subordinated convertible bonds. Both will be launched in January. The terms of the convertible bond have been underwritten at a conversion price of EUR1.50 per share and a coupon of 8%. In addition, Hagemeyer's 25.7 million cumulative preference shares will be converted to ordinary shares. Hagemeyer said it was also able to reach an agreement with lenders on a EUR905 million new financing facilities. The rescue plan will also entail 1,000 additional job-cuts in 2004, mainly in the U.S. and the U.K. This is on top of the 1,300 job-cuts this year. The company employs 22,000 people. KONINKLIJKE AHOLD: Faces Fine if Wal-Mart Buys Brazilian Units -------------------------------------------------------------- Speculations that Companhia Brasileira de Distribuicao might get back in the running to acquire Royal Ahold's Brazilian assets swirled after U.S. retail giant Wal-Mart hit a snag in its efforts to buy the operations. Wal-Mart is in advanced talks to buy Ahold's Bompreco and G Barbosa supermarket chains in Brazil, but antitrust concerns are stalling the process. Recently a judge in the northeastern state of Sergipe issued a court order threatening to fine Ahold if it sells the two dominant retailers to the same buyer. An antitrust body, meanwhile, has advised Ahold to sell off part of its G. Barbosa chain to avoid an overlap with Bompreco stores, Dow Jones reported, according to just-food.com. There is no final ruling yet from the company's competition authority, the report said. "Wal-Mart has pulled out in front but we don't believe this is over by a long shot," Dow Jones quoted a person familiar with the matter saying. "Talks with Wal-Mart have hit some stumbling blocks and this is good for Companhia Brasileira de Distribuicao." =========== P O L A N D =========== POLSKA TELEFONIA: Ratings Affirmed after Failed Buyout ------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on Poland-based mobile telecommunications operator Polska Telefonia Cyfrowa Sp. z o.o. and related entities, including its 'BB+' long-term corporate credit rating on the company, and removed the ratings from CreditWatch, where they were placed on September 19, 2003. The outlook is stable. "The rating actions follow the failed buy out by Deutsche Telekom AG (BBB+/Stable/A-2) of the 51% of Polska Telefonia Cyfrowa that it does not already own," said Standard & Poor's credit analyst Michael O'Brien. "Although Standard & Poor's continues to believe that a change of ownership structure at Polska Telefonia Cyfrowa remains likely at some point, this is no longer expected to happen during the next three months." The ratings on Polska Telefonia Cyfrowa are constrained by foreign exchange exposure, as a large proportion of its debt and interest liabilities, almost all of its handset purchases, and a significant part of its capital expenditures, are denominated in euros or U.S. dollars. The net effect of foreign exchange movements was negative for Polska Telefonia Cyfrowa in 2002 and the first nine months of 2003. Any future devaluation of the Polish zloty would increase Polska Telefonia Cyfrowa's debt-service obligations, despite hedging of more than 70% of the interest payments on its foreign-denominated debt. The ratings are supported by the company's solid financial profile and continued strong operating performance. Furthermore, the ratings reflect Polska Telefonia Cyfrowa's continued strong market position in the rapidly growing and intensely competitive Polish mobile market, which has translated into strong revenue and profit growth, and sustainable positive free operating cash flow. "Polska Telefonia Cyfrowa is expected to maintain its credit profile by sustaining its market position, maintaining operating margins, generating sustainable free operating cash flow, and controlling future investment expenditures," added Mr. O'Brien. =========== R U S S I A =========== VTB CAPITAL: Fitch Assigns 2008 Notes 'BB+' Long-term Rating ------------------------------------------------------------ Fitch Ratings, the international rating agency, assigned VTB Capital S.A.'s US$300 million 6.875% loan participation notes due December 2008 a Long-term 'BB+' rating. Proceeds from the notes will be used to finance a deposit with Deutsche Bank Luxembourg S.A. for the purpose of financing a loan to Russia's JSC Vneshtorgbank (VTB). The issue is the first under VTB's US$2 billion loan participation note program, to which final ratings have now been assigned at Long-term 'BB+' for senior notes with maturities in excess of one year and Short-term 'B' for senior notes with maturities of less than one year. The program does not allow for the issuance of subordinated or structured (e.g. index-linked) notes. Further details on the structure of the program can be found in Fitch's press release of November 17, 2003 (see http://www.fitchratings.com). VTB was founded in 1990 and is Russia's second largest bank by equity and assets (consolidated assets of US$8.8 billion at end-1H03). VTB's roots are in foreign trade. While continuing to work with some of Russia's largest corporates, it has plans to expand retail, small- and medium-sized enterprises and investment banking services in the next five years. =========== S W E D E N =========== SKANDIA INSURANCE: Moody's Gives Firm Stable Outlook ---------------------------------------------------- Moody's Investors Service revised the rating outlook for Skandia Insurance Company Ltd. to stable from developing. Separately, Moody's assigned an insurance financial strength rating of A3/stable outlook to Skandia Insurance Company Ltd. Moody's said that the revision of Skandia's outlook from developing to stable reflects the completion of the group's strategic review, the group's improved leverage and risk profile following the sale of American Skandia, and the prospects for greater stability in the group's earnings following extensive cost cutting and product redesign, as demonstrated in the stabilizing profit margin. Moody's also noted the positive sales volumes in the U.K. and selective European operations. These factors are likely to translate into tangible benefits in the coming year, in Moody's opinion. Offsetting these positives, Moody's also notes that the Skandia Group's cash flow has been negative for the first nine months of 2003, in part due to one-off items. However, Moody's expects that Skandia's cash flow will move into balance during the course of 2004. Moody's said the rating is also supported by the low risk profile of the business written, good liquidity, and Skandia's leadership position in the market with 29% market share in the domestic unit linked insurance market. VOLVO BUSES: Board Opts to Close Loss-making Denmark Plant ---------------------------------------------------------- Volvo Buses is to close its bodybuilding plant in Aabenraa, Denmark. The formal decision was taken Tuesday by the board of Aabenraa Karosseri A/S. In all, about 200 employees will be affected by the closure. Volvo Buses has suffered substantial losses in recent years due to a severe decline in demand in several markets, not least in Denmark. As a result, Volvo Buses now has significant overcapacity in its European production plants. In a move to improve its profitability, the company is presently restructuring its manufacturing organization by concentrating the production of finished buses in a smaller number of plants and using its Polish plant as a high-volume facility. The Aabenraa plant is expected to close during the second half of 2004. Although the workforce of approximately 200 will be made redundant, opportunities of alternative employment at other Volvo plants will be examined. Under the plans, buses for the Danish market will continue to be bodied mainly by Saffle Karosseri AB, which is already producing vehicles for markets including Denmark. Worldwide, Volvo Buses has reduced its workforce by about 800 in 2003 to date. =========================== U N I T E D K I N G D O M =========================== ABBEY NATIONAL: Sanctioned for Breaking Money Laundering Rules -------------------------------------------------------------- The Financial Services Authority fined Abbey National companies a total of GBP2,320,000 for serious compliance failings. Abbey National plc was fined GBP2 million for breaches of the Financial Services Authority's Money Laundering Rules, while Abbey National Asset Managers Limited (ANAM) was fined GBP320,000 for systems and control breaches. Both cases reflected wider control failings, including inadequate monitoring of key regulatory risks, across the Abbey National group over a prolonged period. Abbey National plc Andrew Procter, Financial Services Authority Director of Enforcement, said: "The FSA has repeatedly made it clear to the regulated community that it expects all financial firms as part of their compliance regime to establish and maintain strong and effective anti-money laundering procedures. "The failure by Abbey National to monitor compliance with Financial Services Authority Money Laundering Rules demonstrated a marked lack of regard for its regulatory obligations. Abbey National failed to ensure that suspicious activity reports were promptly considered and reported to the National Criminal Intelligence Service and to identify customers adequately. Both these controls are fundamental to the U.K.'s Anti-Money Laundering regime's effectiveness. Their failings also reflected the fact that the overall control environment, particularly compliance monitoring, has been weak across the group over a prolonged period. "The size of the fine demonstrates that failure by firms to put in place these fundamental systems and controls will be dealt with severely by the Financial Services Authority and it reflects the importance the Financial Services Authority attaches to its statutory objective of reducing the chance of regulated firms being used for purposes connected to financial crime. "I was, however, pleased to see the personal commitment of Abbey's CEO to resolving these cases promptly." The Financial Services Authority's investigation revealed weaknesses in Abbey National's anti-money laundering controls across its retail banking division. The investigation found that from December 2001 until April 2003 Abbey National failed to adequately monitor anti-money laundering compliance following the introduction of the Financial Services Authority's Money Laundering Rules. The failings included reliance on a system of self-certification of anti-money laundering compliance by branches, the lack of anti-money laundering compliance monitoring by a central function and the failure to provide key management information to the Money Laundering Reporting Officer function regarding this process. These failings contributed to high rates of non-compliance with 'know your customer' requirements, which persisted until April 2003. The Financial Service Authority's enquiries also revealed that, in respect of customer transactions carried out or attempted during 2002, Abbey National's Money Laundering Reporting Officer function failed to ensure that internal suspicious activity reports were promptly considered and reported to NCIS. This breach extended from February 2002 to October 2003. The control failings and breaches occurred despite increased regulatory emphasis on the importance of effective anti-money laundering controls since the introduction of the Financial Service Authority's Money Laundering Rules. In mitigation, Abbey National has devoted considerable resources in taking prompt and effective remedial action in addressing the issues identified. As a result the rate of non-compliance with 'know your customer' requirements has reduced considerably. Senior management have also taken prompt action to strengthen Abbey National's central Money Laundering Reporting Officer function and to address the issues surrounding suspicious activity reports. These changes have resulted in a reduction of the internal backlog and improvements in reporting to NCIS. The Abbey National Board has affirmed its commitment to deliver on a detailed and demanding remedial action plan, which will ensure that both the anti-money laundering and wider control failings are tackled effectively and that a robust compliance regime is put in place across the Abbey Group. As a result of this commitment, the FSA has decided not to take formal disciplinary action concerning the wider control failings. Abbey National Asset Manager Limited (ANAM) The Financial Services Authority has also fined ANAM GBP320,000 for breaches of Financial Services Authority Principle 2 and Rules 3.1.1 and 3.2.6 of the Financial Services Authority's Senior Management Arrangements, Systems and Controls Sourcebook. The FSA found that ANAM failed to ensure that its systems and controls in relation to its fund management business complied with the Financial Services Authority's Systems and Controls Sourcebook Rules during the period between December 2001 and June 2003. The investigation revealed that ANAM repeatedly failed to act with due skill, care and diligence in addressing compliance shortcomings identified by its divisional compliance function during this period. Furthermore the resourcing of the compliance function was insufficient to maintain adequate compliance oversight, which may have contributed to control failings, which manifested themselves in the misconduct of a senior fund manager. ANAM was found to have lacked relevant management information that would have enabled it to identify and address regulatory risks in the period between December 2001 and June 2003. Following a comprehensive investigation by ANAM into its dealing procedures the firm has paid out approximately GBP300,000 in compensation to clients of the funds which suffered losses as a result of the senior fund manager's misconduct. In deciding the level of penalty to be imposed the Financial Services Authority has taken into account that ANAM has co-operated fully with the Financial Services Authority. ANAM has taken effective remedial action by implementing comprehensive systems and controls in its fund management business. AES DRAX: Creditors Decide to Retain Control -------------------------------------------- Majority of AES Drax creditors on Wednesday rejected International Power's bid to buy out one trance of the power station's debt for a stake in the company. International Power made an offer of up to GBP100 million -- 71 p in the pound -- to buy the debt, increasing it to 95p in the pound. But only few creditors accepted the offer. They will receive just over GBP500,000 cash for debt with a principal value just less than GBP1 million. AES Drax's creditors were owed GBP1.3billion. According to The Telegraph, Fraser McLaren, analyst at ING, said: "The reason for the increased confidence of Drax's lenders can be attributed to a more bullish outlook for U.K. wholesale electricity prices." International Power will receive GBP2 million in compensation for its contribution to the restructuring process and GBP500,000 in legal fees from Drax. BRITISH AIRWAYS: E.U. Anti-trust Commission Clears Air Deal ----------------------------------------------------------- British Airways, Iberia Airlines and British Airways franchise partner GB Airways were given approval by the European Commission for an alliance which the carriers say will deliver significant benefits to international air travelers and to their businesses. Following a three-month consultation period that ended December 10, the EU has granted the airlines, exemption from competition legislation for six years, subject to conditions necessary to maintain competition on four U.K.-Spain routes. The exemption allows extensive cooperation, including, (a) Joint network planning and coordinated capacity and pricing (b) Joint sales operations (c) Use of profit-sharing or other economic co-operation (d) Joint pricing, management, sales and handling of cargo British Airways' chief executive, Rod Eddington, said: "This is a sensible step forward in our efforts to progress consolidation in Europe. The alliance will give customers access to more destinations and more convenient schedules. It will also bring significant cost benefits which will be passed on to customers in lower fares." Iberia's president, Fernando Conte, said: "This agreement is a major step forward in our already solid relationship with British Airways which will make us more competitive in today's difficult environment, while offering our customers a larger range or services, frequencies and destinations. The aim of this cooperation model is to achieve synergy benefits while preserving the separate identities of the two companies." The regulatory conditions set by the EU under Article 81 (3) of the Treaty of Rome include an undertaking by the airlines to provide: (a) Enough slots at Gatwick and Madrid airport to allow a competitor to operate a maximum of four daily return services from London Gatwick to Madrid. (b) Slots at Gatwick to allow a competitor to operate one daily return service to Bilbao. (c) Slots at Gatwick to allow a competitor to operate a daily return service to each of Valencia and Seville, subject to growth and demand. (d) A freeze on frequencies from London to Madrid, Barcelona, Bilbao, Valencia and Seville for two seasons following handover of the slots (until March 2005 for Barcelona). (e) British Airways, Iberia and GB Airways to enter into an interline and frequent flyer agreement with a competitor, if requested, on London Heathrow to Madrid, Bilbao, Valencia and Seville. CABLE & WIRELESS: 'BB/B' Ratings Affirmed After U.S. Exit --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on U.K.-based telecommunications provider Cable & Wireless PLC (C&W) and related entities, including its 'BB/B' corporate credit ratings on the group, following confirmation of the group's exit from the U.S. The outlook is negative. C&W has confirmed that its U.S. operations are to be sold while under the protection of Chapter 11 of the U.S. bankruptcy code. At Sept. 30, 2003, C&W reported total debt of GBP1.3 billion ($2.3 billion) and total cash of GBP2.9 billion. "By capping the cash burn of its U.S. operations at an additional GBP300 million, C&W has materially reduced downside risk for the ratings," said Standard & Poor's credit analyst Simon Redmond. "The group has yet to articulate a comprehensive strategy for its pivotal U.K. operations, however." Standard & Poor's has based its opinion on public information available concerning the announced bankruptcy filing and the sale of the group's U.S. operations. It will continue to monitor the sale; in particular to establish that no material liabilities arise for C&W. C&W has indicated that no cross-default clauses under the group's bonds will become operative. C&W faces continuing execution risks regarding the restructuring of the group and the challenges that remain in delivering a sustainable, cash-generative enterprise and rebuilding strategic and operational credibility. A convincing strategy for C&W's U.K. operations, combined with continued progress with restructuring and operational performance, could mitigate the remaining fundamental uncertainties and effectively remove downside risk for the ratings. LEEDS UNITED: In Rescue Talks with Several Potential Buyers ----------------------------------------------------------- Leeds United confirmed Wednesday it is in takeover talks with "a number of interested parties," but that the process is still at a very early stage. The company had confirmed last week it had been approached by a company associated with Bahraini Sheikh Abdulrahman Bin Mubarak Al Khalifa. In a report of The Sun, Al Khalifa said he made an offer to rescue Leeds United, and that his group is one of two possible buyers for the troubled football club. The future of Yorkshire-based Leeds United turned bleak after it failed to agree on a rescue with lenders, prompting it to shelve plans for fresh equity injection. Saddled with around GBP80 million in debts, the club has warned it might to have call in administrators. It said last week key creditors have agreed to give the club until January 19 to find parties ready to invest in it or buy it. Leeds United made a pre-tax loss of GBP49.5 million. PPL THERAPEUTICS: Auctions Pilot Plant Equipment ------------------------------------------------ Further to its announcement on November 11, 2003, PPL confirms that, on December 9, 2003, it held a public auction to sell certain items of fixtures, fittings, plant, manufacturing and laboratory equipment from its pilot manufacturing plant in the U.K. The aggregate gross proceeds before selling expenses receivable by PPL in respect of the auction is GBP169,000. The proceeds will be received in cash prior to December 31, 2003. The pilot plant building was not included in the auction and continues to be marketed for sale as do other items of fixtures, fittings, plant, manufacturing and laboratory equipment from the manufacturing plant, which were not sold during the auction. PPL will continue to provide further updates to shareholders at the appropriate time. STELLA MCCARTNERY: Reports Second Consecutive Annual Loss --------------------------------------------------------- The Stella McCartney label, named after the fashion designer daughter of ex-Beatles singer Sir Paul, reported annual loss of about GBP4.5 million, accounts at Company House in London showed, according to just-style.com. About a third of the losses for 2002-2003 were salary payments for 12 staff, including a GBP1.6 million share for the highest-paid director, believed to be Ms. McCartney, the report said. The label that Netherlands-based fashion house Gucci helped to sign in 2001, lost about GBP2.7 million for the fiscal year 2001-2002. Gucci paid almost GBP6 million to sign the label in 2001, and has since then contributed GBP8.94 million. Despite the drain, Gucci is expected to continue to support Stella McCartney because of the significant investment it already had in the label. TADPOLE TECHNOLOGY: Halves Full-year Loss as Turnover Doubles ------------------------------------------------------------- Highlights of preliminary results for the year ended September 30, 2003: (a) Turnover from continuing operations doubled to GBP3.6 million, losses more than halved to GBP3.3 million (b) Significant software revenue growth forecast for H2 confirmed, operating loss from continuing operations reduced to GBP0.7 million in H2 against GBP4.3 million for same period last year (c) Cartesia subsidiary returns maiden FY profit, generates GBP1 million earnings on H2 sales, completes first phase of Ordnance Survey's digital mapping project, extends its business into additional vertical markets (d) Endeavors subsidiary wins new contracts from Autodesk and is now positioned to deliver revenues in 2004; post year sees subsidiary gain Microsoft Gold Partner Status (e) Outlook 2004 - further improvement in trading performance expected. David Lee, executive chairman, comments: "The year 2003 saw an improvement in industry's appetite for IT solutions, particularly those that boost enterprise security, effectiveness and productivity. After several years of product development and investment, Tadpole has those solutions. The challenge remains to convert the business opportunities now on the table into sustainable revenues and earnings." TSAR TIMBER: Calls in KPMG Administrators ----------------------------------------- Richard Fleming and Julian Whale from KPMG Corporate Recovery have) were appointed joint administrators to Tsar Timber Distribution Ltd. on Tuesday. The importer of Russian timber, which has offices in Goole, Shoreham and Ipswich, employs 10 staff in the U.K. and turned over GBP9 million last year. The appointment has come after a period of financial difficulty prompted by a significant decrease in the market price of timber over the last few months. Richard Fleming, Joint Administrator at KPMG Corporate Recovery, said: "At present, we are continuing to trade the business as a going concern and are very hopeful of finding a buyer." KPMG Corporate Recovery has over 500 professional staff in 22 offices around the U.K. and provides two distinct types of service: advice and assistance to insolvent companies, their creditors, and their other stakeholders (known as Insolvency Services); and restructuring advice to companies who are under-performing or experiencing liquidity problems (known as Restructuring Services). CONTACT: KPMG CORPORATE RECOVERY Katy Broomhead, Corporate Communications Phone: 0161 838 4623 Mobile: 07775 708917 KPMG Press Office Phone: 020 7694 8773 VERNON STAINLESS: Loks Plasma Division Sold to Metals U.K. ---------------------------------------------------------- The joint administrators of Vernon Stainless Ltd. confirmed the s ale of the company's Loks Plasma division to Metals U.K. Group Ltd. for an undisclosed sum. The deal saves the jobs of the majority of the employees at the division's site in Blackburn. Loks Plasma became part of the Vernon Stainless group in April 2000, and boasts the largest capacity for stainless steel profiling in the U.K. Joint administrative receiver, Paul Flint, commented, "I am delighted that we were able to reach agreement with Metals U.K. Group, which had been interested in the Loks Plasma business since we were first appointed as administrators to Vernon Stainless. It is always very satisfying to see any business survive, particularly when it involves local manufacturing." Ian Griffiths, Group MD of Metals U.K. Group Ltd, commented, "This acquisition establishes the group as the largest processor of stainless steel plate in the U.K." Vernon Stainless Limited, an independent stainless steel and aluminum stockholder and processor, went into administration on December 5, 2003, and the bulk of the business was subsequently sold as a going concern to ASD plc for an undisclosed sum. CONTACT: KPMG Katy Broomhead Phone: 0161 838 4623 KPMG Corporate Communications Mobile: 07775 708917 E-mail: katy.broomhead@kpmg.co.uk Victoria Works Commercial St Oswaldtwistle Accrington Lancs BB5 3JW United Kingdom Phone: (01254) 386969 Fax: (01254) 388844 Homepage: http://www.vernongroup.co.uk WATFORD LEISURE: ITV Digital Collapse Hits Revenues --------------------------------------------------- Chairman's statement Overview I am pleased to announce the results for the year ended June 30, 2003 in my second year as Chairman of Watford Leisure. I reported in my Interim Statement earlier this year that the year to June 30, 2003 would likely be a year where the imbalance of costs (particularly football salaries) with revenues, brought about in large part by the collapse of ITV Digital, would continue. Whilst this was indeed the case the results for the year under review are slightly better than expected primarily due to our run in the FA Cup about which I write later. Despite these results our focus remains on increasing commercial income and controlling costs so that eventually we return to profitable trading. It also remains our aim to repurchase our freehold as quickly as possible. Financial Results The loss for the year was GBP10.3 million (2002: GBP6.9 million loss) based on turnover of GBP8.7 million (2002: 16.8 million). The decrease in revenues in the year was due primarily to the end of our entitlement to Premier League parachute payments and the loss of income from the ITV Digital Television contract. The group maintained ticket and commercial revenue and benefited from our successful FA Cup campaign although this was tempered to some extent by a reduction in League ticket income as a result of the focus on the FA Cup. The group also benefited from the first year of its in-house catering income, through its wholly owned subsidiary Watford Catering Limited. Ticketing income totaled GBP2.20 million (2002: GBP1.52 million) and season ticket income amounted to GBP1.50 million (2002: GBP1.81 million) from the sale of 8,203 season tickets (2002: 8,838 season tickets). Salary costs totaled GBP11.33 million (2002: GBP15.56 million). This includes accelerated costs of contract settlements with certain former members of the playing and coaching squad, and some further redundancy costs. However, the benefit of a reduced cost base will be felt in the longer term. Football Given the very difficult financial conditions that currently exist, it is fair to say that last season was a successful one on the pitch. We finished 13th in the Nationwide League first division, an improvement on the previous season. The only disappointment was our defeat in the first round of the Worthington Cup by our neighbors Luton Town. However this was more than made up for by our tremendous run to the FA Cup Semi Final where we were eventually narrowly beaten by Southampton. I must also mention the achievement of our reserve team and their coach Nigel Gibbs, who with a young side won the Premier Reserve League Southern Division. Average home game attendance last season was 13,838 (2002: 14,896). Football Management Much credit for last season's performance goes to Ray Lewington our team manager, Terry Burton his assistant and the entire coaching staff. I would also like to mention Terry Byrne our Director of Football, who has recently left us to take up a position with David Beckham. Terry has been responsible for establishing much of the foundation from which this club can move forward and I wish him all the very best in his new career. People At the risk of being repetitive, in every report I write, I stress the importance of the people that work for the company. My thanks go to all of the staff working for the Club and the group whose dedication and loyalty has been outstanding. I also wish to take this opportunity to mention a few individuals. Brian Anderson resigned as a director earlier this year and I wish to acknowledge his contribution to the Club. Likewise, Tim Shaw is stepping down as Chief Executive at the end of this year and I would like to thank him on behalf of the Board and myself for the financial support to the Company and the hard work and dedication he has shown over the last 3 1/2 years. I would also like to acknowledge his support and vision in helping me to build what I believe is a strong platform from which the Club can now move forward. Unfortunately I must also officially record the deaths of Geoff Smith, the Club's former Vice-chairman and most recently Life President, and Jimmy Davis, a player on loan to us from Manchester United. Geoff's contribution to the Club over many years has been immense and he will be sorely missed by everyone who knew him. Whilst Jimmy was with the Club for a very short time, he also had a very positive impact on us whilst he was here. My sincere condolences go to both families during this difficult time. Other Developments and Future Prospects Total became our official Club, youth and community sponsor in July 2003, and I would like to officially welcome them in this role although this represents a development of a relationship, which has existed for some time. I look forward to developing and strengthening this bond further over the coming years. I would also like to thank Toshiba for their outstanding support as Club sponsor over the previous two years, together with all of our other sponsors who contribute so much to the Club. It is worth reiterating our clear targets over the coming years: (a) Achieve promotion to the Premier League (b) Repay wages owed to players and other staff (c) Return value to our shareholders (d) Buy back the freehold of the Vicarage Road stadium (e) Develop a new East Stand I am confident that all of these targets can be achieved in the short and medium term with the continued invaluable help of our staff, supporters and other organizations with the interests of the Club at heart. Graham Simpson, Chairman December 5, 2003 To view financials: http://bankrupt.com/misc/Watford_Leisure_Financials.htm WATFORD LEISURE: Plans to Raise Funds via Share Offering -------------------------------------------------------- Chairman Graham Simpson's Letter to Shareholders Fundraising In a letter accompanying the Company's Annual Report, which is was posted to shareholders, I inform shareholders of the need to raise additional funds to provide working capital for the Company and to assist it in repurchasing the freehold to Vicarage Road, alongside the monies raised by the Supporters Trust and the club's 'Let's Buy Back the Vic' campaign. This fundraising is expected to take the form of a firm placing and open offer of new shares. As far as the firm placing is concerned, the Company hopes to announce shortly the amount raised from existing shareholders and new investors. Shareholders will be able to participate in the fundraising by taking up some or all of their entitlements under the open offer. Full details of the placing and the open offer will be contained in a prospectus currently being prepared and which will be posted to shareholders in the near future. The funds raised in the firm placing and open offer should substantially improve the club's finances. This sound financial base should then allow the building of the new East Stand to be put back on the club agenda, a project that is an important part of the club's overall development. Graham Simpson Chairman ********* 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. 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