/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031215.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, December 15, 2003, Vol. 4, No. 247 Headlines B E L G I U M TELENET COMMUNICATIONS: Assigned 'B+' Corporate Credit Rating F I N L A N D BENEFON OYJ: Resorts to Forced Leave to Avoid Bankruptcy F R A N C E ALSTOM SA: Concerns Raised on Mario Monti's Disposal Requirement SCOR GROUP: Back to Security Lists; Maintains Projected Results SUEZ SA: M6 Finds Possible Buyers for Part of Suez Shareholding G E R M A N Y BAYER AG: Pays US$747 Million to Settle 1,959 Baycol Cases DEUTSCHE BAHN: Sells Chemical Distributor, Steel Trader to Bain WOLFORD AG: First-half Earnings Improve Despite Sales Dive G R E E C E OLYMPIC AIRWAYS: Law Merges Units with Olympic Airlines H U N G A R Y K&H BANK: Receives HUF22.7 Billion Infusion from Belgian Parent I R E L A N D ELAN CORPORATION: Won't Sell Drug Delivery, Acute Care Units ELAN CORPORATION: Seeks Arbitration to Settle Row with Pharmacia I T A L Y FIAT SPA: Posts Key Dates for Fiscal Year 2004 N E T H E R L A N D S BUHRMANN U.S.: Proposed Syndicated Loan Assigned 'BB-' Rating N O R W A Y PAN FISH: Banks Refuse Sale of Aukra Business R U S S I A MENATEP ST.: S&P Cuts Ratings to 'CCC'; Cites Legal Fix OAO TATNEFT: Fitch Ups Rating to 'B'; Outlook Stable WIMM-BILL-DANN: Outlook Revised to Negative; Ratings Affirmed S W I T Z E R L A N D ABB LTD.: US$1.2 Billion Capital Hike Nearly 100% Subscribed SWISS INTERNATIONAL: Shakes up Lugano Management Structure U N I T E D K I N G D O M ARCON INTERNATIONAL: Tiff with Union Endangers 200 Mine Workers BRITISH AIRWAYS: Regains Place in Footsie HIBERNIA FOODS: Recent Buyout Talks Turn up Blank MYTRAVEL GROUP: Legacy, One-off Issues Drive GBP358.3 Mln Loss NORTHUMBIAN WATER: Fitch Downgrades Ratings; Outlook Stable SAFEWAY PLC: Wm Morrison Not Buying Asda's Bluff STODDARD INTERNATIONAL: Sells Elderslie Site to Reduce Debt STODDARD INTERNATIONAL: Property Disposal to Net GBP3.7 Million STODDARD INTERNATIONAL: To Seek Further Loans if Disposal Stalls TRINITY MIRROR: National Titles Revenue Remains Weak ********* ============= B E L G I U M ============= TELENET COMMUNICATIONS: Assigned 'B+' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Belgium cable operator Telenet Communications N.V. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' long-term rating to Telenet's proposed EUR400 million (US$486 million) senior unsecured notes issue maturing 2013. The ratings on Telenet reflect its position as a modestly sized and highly leveraged cable operator in Flanders, Belgium. Telenet operates an analogue cable television (CATV) business, which generates stable and positive cash flows. It also operates smaller, but growing telephony and Internet operations that face strong competition from the incumbent Belgacom S.A. (AA/Watch Neg/A-1+), among others. Telenet's credit ratios are aggressive with lease-adjusted gross debt (including convertible subordinated notes) to annualized third-quarter 2003 EBITDA of 6.1x on gross debt of EUR1.5 billion. "The group's financial profile is further constrained by the covenants on its secured bank credit facility, even after their renegotiation concurrently with the issuance of the notes," said Standard & Poor's credit analyst Leandro de Torres Zabala. "Telenet's challenge will be to expand sales of fixed-line telephony and broadband Internet quickly enough to service adequately its high debt levels and remain compliant with covenants that give access to the credit facility against strong competition from Belgacom and fixed-to-mobile substitution." Telenet is also putting in place a refinancing plan, of which the proposed EUR400 million notes issue and the concurrent renegotiation of the credit facility are part of, to reduce debt under its senior credit facility by EUR455 million and repay deferred purchase obligations and subordinated shareholder loans for EUR230 million. Telenet's liquidity after the refinancing plan will be adequate and the company generated positive free cash flow -- EUR35 million for the first nine months of 2003. Telenet is expected to grow rapidly its sales and cash flows to pay down debt, secure adequate liquidity at all times, and maintain ample headroom under covenants. The group is expected to run a conservative financial policy with no major acquisitions (other than those currently in progress) and no major network upgrades. ============= F I N L A N D ============= BENEFON OYJ: Resorts to Forced Leave to Avoid Bankruptcy -------------------------------------------------------- The implementation of the agreed solution of the industrial procedure of Benefon reported in November 26 and completed in December 5, 2003, was started Thursday. The applied measures are based on the necessary need for reducing the employment utilization during the re-organization procedure to avoid bankruptcy. The measures applied now touch about two-thirds of office personnel and all functions. The reduction of employment will be achieved by means of alternating forced leaves and of forced leaves for the time being. The measures do not include lay-offs. BENEFON OYJ Jukka Nieminen President =========== F R A N C E =========== ALSTOM SA: Concerns Raised on Mario Monti's Disposal Requirement ---------------------------------------------------------------- The European Commission is walking a tightrope in its efforts to secure concessions from the French state over the bailout of troubled engineering group Alstom. Commissioner Mario Monti is pushing for divestments of Alstom's showpiece high-speed train or large turbine businesses as a quid pro quo for the state authorizing subsidies totaling EUR2 billion and guarantees worth EUR2.275 billion to Alstom. But his commissioners found out these disposals could trigger "serious concerns" for antitrust policy, according to the Financial Times. The merger specialists said the key businesses involved are oligopolies or duopolies, in which further mergers could weaken competition. According to them, the high-speed train market is essentially a duopoly between Alstom and Siemens, while the turbines business is an oligopoly in which General Electric also participates. The Financial Times said one partial option is to push for open tenders by French state groups, which are among Alstom's biggest customers, and a commitment by the company to abstain from using subsidies to undercut its rivals. A decision could come by May next year, it said. SCOR GROUP: Back to Security Lists; Maintains Projected Results --------------------------------------------------------------- (a) Confirmation that SCOR Group is back on the security lists of the main brokers The launch of the capital increase, as well as the improvement in SCOR Group's ratings and outlook by Standard & Poor's, has led the reinsurance brokers Aon (worldwide except the Americas -- Americas committee due to meet shortly), Benfield Group, Guy Carpenter and Marsh to put SCOR back onto their security lists. As for Willis, it had maintained SCOR on its security list. SCOR is pleased with these decisions, which improve the outlook for the renewal of treaties and contracts expiring at the end of the year. (b) Flooding in France SCOR Group points out that in France there is a special public insurance regime for natural catastrophes, which covers most of the losses. In order for this regime to apply, the property damaged must be covered by a property and casualty insurance policy and the event must be officially declared a natural catastrophe by ministerial order. The current flooding in the south of France should not have an impact on SCOR Group's results. SUEZ SA: M6 Finds Possible Buyers for Part of Suez Shareholding --------------------------------------------------------------- A group of shareholders is interested in buying part of the stake of French utility Suez in French broadcaster M6, an official of the unit said, according to Reuters. "Shareholders who want to get a good deal and take a stake in M6, they are [receptive], we have found them," he told a conference on the media organized by French financial daily Les Echos, the report said. The development comes 12 months after efforts to find a single French shareholder willing to buy a slice of Suez's 36.45% holding in M6 turned up blank, he said, without providing further details. Suez, which is trying to sell non-core assets to reduce debt, holds a 34% voting rights in the TV group, the limit set by the company's charter. European broadcaster RTL holds a 49% stake, and 34% voting rights. It is the talks between RTL and France's broadcasting regulator, CSA, that are stalling Suez's efforts to sell the stakeholding. The regulator wants to maintain RTL's voting rights. Suez plans to keep part of its stake in M6, sell some to financial investors and some on the market, the CSA has said, without giving details. ============= G E R M A N Y ============= BAYER AG: Pays US$747 Million to Settle 1,959 Baycol Cases ---------------------------------------------------------- Chemicals and pharmaceuticals company, Bayer AG, continues to lower the number of cases lodged against it over its cholesterol-lowering drug Baycol. As of December 5, Bayer was able to reduce the number of pending cases by 1,959 by paying around US$747 million, or an average settlement per case of around US$381,000, through insurance, Bayer AG spokesman Michael Diehl said, according to AFX. Some 10,378 Baycol cases are still pending, he said. Last month's total was 11,459. Bayer then said it had paid US$659 million to settle 1,811 lawsuits. In August 2001, Bayer's pharmaceutical division, which fell from being the sixth to eighteenth largest in the world, was forced to withdraw its cholesterol-lowering drug, Lipobay, after deaths connected to the drug were reported. Bayer has been settling Baycol-related suits ever since. DEUTSCHE BAHN: Sells Chemical Distributor, Steel Trader to Bain --------------------------------------------------------------- Deutsche Bahn's supervisory board approved the sale of its chemical distribution unit and steel trader on Wednesday, a spokesman said, according to Reuters. The company reportedly sold Brenntag and Interfer to U.S. private equity firm Bain Capital for around EUR1.4 billion (US$1.7 billion). The state-owned railway operator inherited the units when it acquired logistics group Stiness for EUR2.5 billion last year. Even then, it made clear its plan to sell the units as part of a drive to shed non-core assets and cut debt. The two businesses together turned over about EUR5.5 billion in 2002 but are set to post full-year 2003 sales that are EUR500 million less than targeted, sources have said, according to the report. WOLFORD AG: First-half Earnings Improve Despite Sales Dive ---------------------------------------------------------- From May to October 2003, despite easing sales, Wolford achieved a double-digit improvement in earnings at the EBIT level. For the first time since 2000, the company is reporting straight positive earnings figures again for the first half of the year (including net profit for the period). This is all the more significant in that, due to seasonality, less than one-half of the year's sales, but a full one-half of the year's costs, are posted in the first half of the fiscal year. The business trend in the completed second quarter was markedly different from that of the first 3 months. For the 6 months ended October 31, 2003 (the 1st half of the 2003/04 fiscal year), Wolford posted sales of EUR56.9 million, a decrease of 7.9% from the 1st half of the prior year. In the 2nd quarter the sales decrease eased to 6.4 percent, thus halting the falling trend of the 1st quarter. In constant-currency terms and on a same-store basis, sales were down only 1.9% year-over-year in the first 6 months. Net profit for the 1st half of the fiscal year was EUR0.5 million, an improvement of EUR0.8 million from one year earlier. Earnings before taxes also turned positive, rising to EUR0.1 million from -EUR0.3 million. EBIT was lifted by 22.7% to EUR1.0 million and cash flow from operating activities increased to EUR1.2 million. The financial result improved further from -EUR1.1 million to -EUR0.9 million. Net debt fell from EUR49.1 million one year earlier to EUR34.0 million and the gearing eased to 52.5%. Wolford benefited substantially from the rise in demand since September 2003; the share of orders for immediate delivery is growing continuously. On the other hand, this fact combined with the low predictability of the trend in the U.S. dollar makes it difficult to forecast sales with accuracy. In view of the sluggish sales during the first quarter and the slow forward orders thus far for the coming season, the management expects full-year sales slightly below last year's figure. But even on this assumption, as it stands today, the sound balance sheet and lean cost structure will enable Wolford to increase earnings from the prior-year level. CONTACT: WOLFORD AG Peter Simma, Chief Financial Officer Phone: +43 (0) 5574/690-1213 Nikolaus Kogler, Investor Relations Officer Phone: +43 (0) 5574/690-2448 E-mail: investor@wolford.com Home Page: http://www.wolford.com =========== G R E E C E =========== OLYMPIC AIRWAYS: Law Merges Units with Olympic Airlines ------------------------------------------------------- The Greek Parliament has enacted special legislation (No. 3185/2003) for the restructuring of the Olympic Airways Group of companies. This new law provides for the flight division of Olympic Airways as well as that of its subsidiary Olympic Aviation S.A. to be spu n off and merged with a subsidiary company known as Macedonian Airlines (ICAO code: MCS) that has been re-named Olympic Airlines. Olympic Airlines on Thursday was set to commence operations incorporating the total flight operation activities of the Olympic Airways Group (Olympic Airways, Olympic Aviation and Macedonian Airlines) December 12,2003 at 00:01 Athens. The legislation provides that Olympic Airlines acquires all rights, brands, assets and current liabilities of the flight operations divisions of Olympic Airways and Olympic Aviation. Olympic Airlines applied to IATA and is operating under airline designator code OA and accounting/prefix code 050 which used to be assigned to Olympic Airways. Olympic Airlines has accepted to honor all industry obligations of Olympic Airways under codes OA/050 including obligations and liabilities pertaining to settlements through the IATA Clearing House and Multilateral Interline Traffic Agreements. In addition, IATA is holding a security deposit, which may be used to offset excess refunds processed through BSPs. Olympic Airlines advises that it is currently using Olympic Airways traffic documents. Olympic Airlines is producing own traffic documents, which conform to IATA resolution specifications. Olympic Airlines has signed the MITA passenger and cargo agreements thru IATA. All concurrences presently held by Olympic Airways are to be transferred to Olympic Airlines through the applicable IATA procedures. Olympic Airlines operates the schedule and routes presently operated by Olympic Airways and its subsidiaries, using a fleet of A340-300, A300-605R, B737-400, B737-300, ATR72, ATR42 and Bombardier DASH8 aircraft. ============= H U N G A R Y ============= K&H BANK: Receives HUF22.7 Billion Infusion from Belgian Parent --------------------------------------------------------------- KBC Bancassurance Holding N.V., Belgium's No. 3 financial-services company, recapitalized its Hungarian unit, K&H Bank Rt, with HUF22.7 billion in cash, Budapest Business Journal said. The amount is intended to refinance future growth of Hungary's second-largest retail bank. KBC also appointed a new chief executive, John Hollows, to replace Tibor Rejto, who was arrested in September in connection with an investigation into suspected embezzlement at the bank's brokerage unit. Excluding the effects of the alleged fraud, K&H Bank made a net profit of HUF12.69 billion in the first nine months of 2003. But police say it could fall in the red for up to HUF10 billion due to losses at K&H Equities. ============= I R E L A N D ============= ELAN CORPORATION: Won't Sell Drug Delivery, Acute Care Units ------------------------------------------------------------ Elan Corporation plc is retaining NanoSystems, Elan's drug delivery business based in King of Prussia, Pennsylvania; Elan's drug delivery business and operations located in Gainesville, Georgia; and Elan's U.S. acute care business, which includes the hospital care products Maxipime(TM) and Azactam(TM). Elan believes that these businesses are value generating and provide opportunities for revenue growth and key technological capabilities. Kelly Martin, Elan President and Chief Executive Officer, said, "As we enter the final stages of our recovery plan, retaining these profitable businesses gives us strategic flexibility and the opportunity to optimize their value moving forward." 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 (NYSE: ELN) shares trade on the New York, London and Dublin Stock Exchanges. CONTACT: ELAN CORPORATION, PLC Investors: Emer Reynolds, Phone: 353-1-709-4000 800-252-3526 ELAN CORPORATION: Seeks Arbitration to Settle Row with Pharmacia ---------------------------------------------------------------- Elan Corporation plc announced it is seeking binding arbitration in connection with a dispute regarding its Exclusive and Mutual Beta Secretase Inhibitors Research, Development and Marketing Agreement with Pfizer Inc. The Agreement, originally entered into with Pharmacia Corporation in August 2000, concerns the discovery of small molecule inhibitors of beta secretase at the research stage for the treatment of Alzheimer's disease. The binding arbitration is based on Elan's termination of the Agreement for cause due to certain breaches by Pfizer. As a result of the termination, Elan believes that it holds the exclusive worldwide license to the intellectual property developed in connection with the beta secretase research program. "Prior to taking this step we made every effort to come to a mutually acceptable resolution that would enable us to move forward either with Pfizer or independently," said Kelly Martin, Elan President and Chief Executive Officer. "Given the potential medical importance of the beta secretase program and our leadership position in Alzheimer's research and development, we will take the appropriate course of action to protect and enforce our rights under the Agreement. As one of the world's leading companies dedicated to the treatment of Alzheimer's disease, Elan remains focused on changing the course of the disease in an effort to ultimately help millions of patients and their loved ones." In addition to its beta secretase research, Elan's Alzheimer's program includes a beta amyloid immunotherapy strategy, in collaboration with Wyeth, and research work on the development of inhibitors to gamma secretase, which, like beta secretase, is also associated with the development of the beta amyloid peptide. Neither its immunotherapy projects nor its gamma secretase research is affected by Elan's termination of the Pfizer collaboration. 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 (ELN) shares trade on the New York, London and Dublin Stock Exchanges. CONTACT: ELAN CORPORATION, PLC Investors: Emer Reynolds, Phone: 353-1-709-4000 or 800-252-3526 ========= I T A L Y ========= FIAT SPA: Posts Key Dates for Fiscal Year 2004 ---------------------------------------------- The Board of Directors of Fiat S.p.A. met Thursday in Turin under the chairmanship of Mr. Umberto Agnelli. The meeting focused on the Group's performance and the progress made vis-a-vis the relaunch plan presented last June. The 2004 calendar for company events was also defined during the meeting: February 27: Results for the fourth quarter and for the entire 2003 fiscal year March 26: 2003 Statutory and Consolidated Financial Statements May 8 and 11: Stockholders Meeting (1st and 2nd call) and results for the first quarter of 2004 July 30: Results for the second quarter of 2004 September 9: 2004 First-half Report October 29: Results for the third quarter of 2004 Prior to the beginning of the meeting, the Chief Executive Officer Giuseppe Morchio introduced Mr. Herbert Demel (Fiat Auto), Mr. Paolo Monferino (CNH Global) and Mr. Jose Maria Alapont (Iveco) to the Board Members. The Heads of the Group's principal Sectors outlined the activities underway in their areas and their respective products/market plans for 2004. ===================== N E T H E R L A N D S ===================== BUHRMANN U.S.: Proposed Syndicated Loan Assigned 'BB-' Rating ------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB-' long-term senior secured debt rating to Buhrmann U.S. Inc.'s proposed EUR770 million ($936 million) syndicated senior facility, subject to satisfactory documentation. Buhrmann U.S. Inc. is part of Netherlands-based office products supplier Buhrmann N.V. (BB-/Stable/--). The loan, together with a EUR114 million convertible bond, is intended to refinance the outstanding debt under Buhrmann U.S. Inc.'s original US$2.25 billion senior bank loan dating back to 1999. "Although the facility is senior and secured, it has been rated at the same level as Buhrmann N.V.'s long-term corporate credit rating," said Standard & Poor's credit analyst Omar Saeed. "This reflects the fact that Standard & Poor's stressed collateral valuation under a hypothetical default scenario is below 100%. Furthermore, enterprise and discrete value analysis have been used to estimate recoveries under such a scenario, and lenders should expect meaningful recoveries as a result of their secured position. These recoveries are assessed at 50% to 80%," he added. The EUR770 million senior secured facilities are split between three tranches: (a) A EUR163 million, seven-year amortizing term loan; (b) A EUR287 million, seven-year amortizing term loan; and (c) A EUR320 million, five-year revolving credit facility. An additional US$372 million can be drawn at a later stage subject to the company meeting certain leverage and performance criteria. This factor has been taken into account in the loan recovery analysis. The security package includes a comprehensive cross guarantee package and pledges of shares and assets from the Buhrmann group, primarily in the U.S. and The Netherlands. RATINGS LIST Buhrmann U.S. Inc. Proposed EUR770 million senior secured bond issue* BB- * Guaranteed by Buhrmann N.V. =========== N O R W A Y =========== PAN FISH: Banks Refuse Sale of Aukra Business --------------------------------------------- Pan Fish ASA's sale of its business in Aukra, Romsdal to Per Olav Mevold has fallen through, Aftenposten said citing newspaper Romsdals Budstikke. The report said the troubled fishery company had previously signed a letter of intent to sell the Aukra business for NOK175 million, but the deal failed to receive backing. It was not indicated why banks refused to back the sale of the operation. Pan Fish Aukra has 80 employees. Mevold had hoped to establish a local ownership group around former Vikenco, a former supplier to Pan Fish. Mevold is the managing director of Vikenco AS. In September, Pan Fish agreed over a total financing solution aimed at strengthening the company's solidity and cash position. It is also aiming to reorganize its total operations into a compact, integrated operation. Pan Fish is now controlled by creditor banks Den norske Bank and Nordea after repeated bailouts. =========== R U S S I A =========== MENATEP ST.: S&P Cuts Ratings to 'CCC'; Cites Legal Fix ------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on Russian bank Menatep St. Petersburg to 'CCC' from 'CCC+', and placed the rating on CreditWatch with negative implications based on concerns over damage to Menatep St. Petersburg's franchise stemming from ongoing legal and tax disputes involving the bank's management and owners. At the same time, the 'C' short-term counterparty rating was placed on CreditWatch with negative implications. The Russian tax authorities recently opened a criminal case charging Menatep St. Petersburg's managers with tax evasion. Menatep St. Petersburg is part of the banking arm of the Yukos-Menatep group, and is owned by IFA Menatep. "The allegations facing the bank's employees, along with similar charges against other Yukos-Menatep group owners and employees, including OAO NK Yukos (Yukos; BB/WatchNeg/--), have damaged the bank's reputation and could also limit the group's ability to support the bank if needed," said Standard & Poor's credit analyst Ekaterina Trofimova. In addition, Platon Lebedev, the head of IFA Menatep, and Michael Khodorkovsky, the largest shareholder of Yukos, were in custody at the time of writing. "These negative developments could make it difficult for the bank to retain customers and personnel," added Ms. Trofimova. The ratings on Menatep St. Petersburg also reflect the bank's large single-party lending concentrations, relatively weak, although improving, earnings profile, and small capital base. "Due to its concentrated funding and lending portfolios, the bank is highly vulnerable to potential customer departures," said Ms. Trofimova. "Moreover, the bank's low operating efficiency and weak capitalization provide it with limited capacity to withstand potential damage to its franchise." Resolution of the CreditWatch status will follow an examination of the extent to which the tax investigation is negatively affecting the bank's franchise, and the impact on the bank's funding and liquidity. OAO TATNEFT: Fitch Ups Rating to 'B'; Outlook Stable ---------------------------------------------------- Fitch Ratings upgraded Russian oil company OAO Tatneft's Senior Unsecured ratings to 'B' from 'B-'. At the same time, the agency has affirmed their Short-term ratings at 'B'. The rating Outlook is Stable. The upgrade reflects the improvement in the economic and financial environment in Russia and Tatarstan in the past two years, as a result of which it is less likely that Tatneft will be used as a financing vehicle for the Tatarstan government. The upgrade also considers Tatneft's progress towards vertical integration -- the base complex upgrade of its 63%-owned Nizhnekamsk refinery was commissioned in 2002 -- and partly improved financial flexibility following the restructuring and debt refinancing in 2002. The ratings reflect Taftnet's strong oil reserve base, estimated at 6 billion barrels (bbl) of proven reserves, mostly developed (92%) and producing (57%), its position as one of Russia's largest upstream oil producers at 25 million tons annually, as well as its substantial export base (c.57% of 1H03 revenues). Constraints on the Senior Unsecured rating include the continued high share, despite having fallen to c.33% from 56%, of pledged crude export receivables, the close links to Tatarstan (effective controlling shareholder), the company's declining operating profitability, and its comparatively high debt level, mostly short-term (61%) and secured (62%). While debt at the operating company has decreased, the consolidated gross debt (including banking operations) increased to RUR39.7 billion at June 30, 2003 from RUR35.6 billion at FYE02. This, together with a 17% year-on-year decline in 1H03 EBITDA to RUR8.9 billion, due primarily to increases in production taxes, export duties and transport costs, has led to a weakening in gross debt/EBITDA ratio to 1.8x from 1.5x at FYE02 and FYE01. New Russian oil production tax introduced in 2002 has led to increased taxation (at Urals above USD18/bbl). As both production tax and export duty are progressive, based on crude price, companies are facilitated to withstand a low-price environment by paying lower taxes. Although taxes are set to increase further, a formula change in 2005 based on crude sales revenues, rather then volume produced, should add to this flexibility. Although Tatneft has managed to cut controllable operating cost in 1H03 by about 10%, further improvement is needed to offset previous cost increases and higher taxes. Tatneft's average crude export price lagged markedly behind the Urals oil price index in 1H03 due to new railway exports (that are sold at lower prices as they exclude transport cost) and unfavorable pipeline export quota allocation. Sales cash collection rates have ceased to be a major problem, after having improved substantially to above 96%, but domestic selling prices remain significantly discounted to Urals, which continue to place Tatneft at a disadvantage to major Russian oil companies. Thanks to its shareholder structure, Tatneft is considered to be relatively well insulated from the turmoil recently witnessed in the Russian oil corporate sector. Until Tatneft shows a sustainable improvement in its operating cost profile, debt structure and its reduction, a further upgrade is unlikely. WIMM-BILL-DANN: Outlook Revised to Negative; Ratings Affirmed ------------------------------------------------------------- Standard & Poor's Rating Services revised the outlook on Russia-based dairy and juices manufacturer Wimm-Bill-Dann Foods OJSC to negative from stable, reflecting the company's weaker-than-expected financial performance over the first nine months of 2003. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and senior unsecured debt ratings, as well as its 'ruA+' Russian national scale ratings, on WBD. "The ratings on WBD are constrained by the company's aggressive growth strategy, which entails substantial investment needs for the extension and renovation of its plant facilities, and enhancement of its distribution network," said Standard & Poor's credit analyst Tatiana Kordyukova. "In addition, WBD faces a challenging operating environment and has incurred various cost increases and higher working capital requirements. This has resulted in weak operating cash flows and declining debt protection measures." On a more positive note, Wimm-Bill-Dann Foods enjoys a leading position in the dairy products and juices segments, although its market share has decreased slightly in 2003. Furthermore, the company's management has created high profile brands and a diversified product portfolio, and enlarged its countrywide production and distribution facilities. This expansion was mainly financed from external sources, including growing debt, which rose to more than $300 million in 2003. The company has ambitions to grow further in order to sustain its market position. This strategy will entail even higher risks because any further debt increases, coupled with declining profitability (the EBITDA-to-sales ratio is expected to be 8.3% at financial year-end 2003, down from 10.3% in 2002) and negative free operating cash flows, could lead to a deterioration in credit quality. "WBD's financial profile, which is currently below Standard & Poor's expectations, could continue to deteriorate as a result of declining earnings and still-significant cash requirements for working capital, capital expenditure, and bolt-on acquisitions," added Ms. Kordyukova. "Furthermore, although the company's debt measures are at present in line with the ratings, they have shown a gradual deterioration over the past year, and this trend is expected to continue. In addition, the company's bond issues contain a debt incurrence test that limits total debt to EBITDA to 4.0x plus $100 million. At Sept. 30, 2003, this ratio reached 3.8x and is expected to grow in the near term. Although breach of this financial covenant itself does not trigger a default, it imposes a restriction on new borrowing that could limit the company's financial flexibility." ===================== S W I T Z E R L A N D ===================== ABB LTD.: US$1.2 Billion Capital Hike Nearly 100% Subscribed ------------------------------------------------------------ ABB, the leading power and automation technology group, said that in total more than 99% of subscription rights were exercised in its US$2.5 billion capital increase. "We view this very high level of participation as another strong vote of confidence from our shareholders," said Peter Voser, ABB's chief financial officer. "Together with our recent EUR650 million bond and the new US$1 billion credit facility, we now have the capital base to ensure the long-term growth of our core businesses." ABB had hoped to receive the proceeds from the capital increase December 12, 2003. The capital increase consisted of a 7-for-10 rights offering for 840,006,602 new registered shares at an offer price of CHF4.00. The subscription period ended on December 9, 2003. The new shares started trading December 10. Of the 944,550,486 rights registered in the SIS SegaInterSettle clearing system in Switzerland, 942,659,380 rights were exercised to purchase 659,861,566 offered shares, which corresponds to a take-up of 99.8%. Of the 255,458,946 rights registered in the VPC clearing system in Sweden, at least 249,487,080 rights were exercised to purchase 174,640,956 shares, corresponding to a take-up of 97.7 percent. In accordance with the Swedish settlement timetable, the final number of new shares acquired by subscription through VPC will be determined on December 16, 2003. ABB expects to announce the final take-up results shortly thereafter. The final Swedish krona offer price for the shares has been set at SEK23.15. The difference between this price and the preliminary Swedish krona offer price of SEK24.50 -- which included a premium over the Swiss-franc price to allow for exchange rate fluctuations -- will be refunded, including interest, through VPC. Eligible shareholders can expect to receive the refund on or about December 23, 2003. Starting Thursday and extending over the next several days, the syndicate banks are placing in the market the remaining shares that were not taken up by existing shareholders. ABB (http://www.abb.com)is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 120,000 people. CONTACT: ABB LTD. Investor Relations: Switzerland Phone: +41 43 317 3804 Sweden Phone: +46 21 325 719 E-mail: investor.relations@ch.abb.com SWISS INTERNATIONAL: Shakes up Lugano Management Structure ---------------------------------------------------------- Swiss is realigning the management structure of its Lugano representation in view of the current business situation and the company's future needs. As part of these activities, the position of Executive Management Delegate for the Ticino Region will be abolished at the end of the year. Swiss now operates only four daily services to and from Lugano Airport. The sizeable reduction in frequencies since the start of the 2003/04 winter schedules and the more general resizing of the company's management structure are now having their impact on its Lugano organization, too. As part of these activities, the position of Executive Management Delegate for Canton Ticino, which Luca Bianda has held since August 1, 2002, will be abolished at the end of 2003. Luca Bianda will remain with Swiss for a time as an Avro RJ85/100 captain before leaving the company in spring 2004. Needless to say, Swiss will still be offering its usual services to customers in the Ticino region. And these services will continue to be provided by the company's central units in Basel and Zurich. Swiss would like to thank Luca Bianda for all the dedication and the professionalism he has brought to the many positions he has held over the past 19 years. CONTACT: SWISS INTERNATIONAL Corporate Communications P.O. Box, CH-4002 Basel Phone: +41 848 773 773 Fax: +41 61 582 3554 E-mail: communications@swiss.com Homepage: http://www.swiss.com =========================== U N I T E D K I N G D O M =========================== ARCON INTERNATIONAL: Tiff with Union Endangers 200 Mine Workers --------------------------------------------------------------- ARCON International Resources Plc has been involved in negotiations regarding wage rates for 2004 and beyond with its two Unions representing 120 of the 200 employees involved at its mining operations. Unfortunately due to the breakdown of these discussions with one of the Unions concerned, and the subsequent re-imposition of an overtime ban by the Union, the Company has been left with no alternative but to issue Protective Notices to its 200 mine employees. This decision has been forced on the Company because of the Union overtime ban, which has and will continue to impact on the production capacity of the mine. This impact on production, when coupled with the prevailing low zinc price and the rapid decline in the U.S. dollar, has resulted in continuing losses that are unsustainable for the Company. If the cessation of industrial action is not forthcoming, the mine may ultimately be placed on care and maintenance. CONTACT: MURRAY CONSULTANTS Pauline McAlester Phone: +353 (1) 498 0300 BANKSIDE CONSULTANTS LTD. Keith Irons Phone: +44 (207) 444 4155 ARCON Kevin Ross Phone: +353 (56) 883 7100 BRITISH AIRWAYS: Regains Place in Footsie ----------------------------------------- The FTSE Equity Indices Committee restored British Airways to the list of top 100 companies in London on Wednesday, according to The Scotsman. The Committee, which reshuffles the prestigious rooster every three months, used Tuesday's closing prices to determine the composition of the FTSE 100 Index. The changes come into effect on December 22. At the time of the review British Airways ranked as London's 80th biggest company with a market value of GBP2.47 billion, after shares in the company increase three-folds in the last nine months to 227p. The airline lost its FTSE 100 status in March after its share price dropped to 86p in the run-up to the Iraq war. This was after British Airways' brief return on the Footsie in December 2002. Despite the bright prospect for the company, Chief Executive Rod Eddington recently said the airline would continue to seek ways to reduce cost. HIBERNIA FOODS: Recent Buyout Talks Turn up Blank ------------------------------------------------- Administrators of troubled Hibernia Foods are losing hope they could find a buyer willing to rescue the company, and its employees by Christmas. This after "exclusivity period" for talks with a buyer for Hibernia Foods ended without result. KPMG spokesman Rayneer Peett said it was now unlikely a buyer would be found before the new year, according to Evening Gazette. They are continuing discussions with several other prospective buyers, though. The uncertainty is affecting more than 1,000 production workers on Teesside. Hibernia employs 693 at two sites in Hartlepool and 400 at Stockton. The workers at the factories in Teesside are to continue production "for the time being" and staff had been informed, Mr. Peett said. MYTRAVEL GROUP: Legacy, One-off Issues Drive GBP358.3 Mln Loss -------------------------------------------------------------- Highlight of results for the year ended September 30, 2003: (a) Operating loss* of GBP358.3 million (2002: GBP20.4 million) includes a significant amount of non-comparable items. (Interim operating loss* was GBP282.7 million) (b) Review of Group balance sheet results in GBP359.3 million exceptional write-off, contributing towards total exceptional items of GBP472.7 million (c) Loss on ordinary activities before tax of GBP910.9 million (2002: GBP72.8 million) (d) GBP1.3 billion of debt and facilities refinanced to at least May 2006 and GBP221.6 million of Convertible Bonds extended to January 2007 (e) John Allkins appointed Group Finance Director Trading (a) Bookings and margins for winter 2003/04 in line with expectations (b) Bookings for summer 2004 in line with industry; margins improved on last year Outlook (a) Action taken to implement turnaround plan based on Strategic Review; cost savings ahead of schedule and now expected to exceed originally identified GBP150 million in 2005 (b) Post year end disposals to raise in excess of $250 million (c. GBP144 million) (c) Group targeting significant improvement in 2004 and return to profitability in 2005 OPERATING LOSS* 2003 2002 GBPm GBPm U.K. (325.4) (24.1) Northern Europe (4.0) 6.7 North America (0.1) 21.1 Group Continuing Operations (329.5) 3.7 Germany (36.1) (31.2) Group (365.6) (27.5) Joint Ventures & Associates 7.3 7.1 Group & share of JV's and Associates (358.3) (20.4) * The operating loss includes the income from Joint ventures and associates and is stated before exceptional items and goodwill. The 2003 operating loss after goodwill amortization of GBP26.9 million and exceptional operating items of GBP373.9 million was GBP759.1 million. Peter McHugh, Chief Executive, MyTravel Group plc said: "2003 has been an extremely poor year for MyTravel, resulting in an operating loss of GBP358.3 million before exceptional items and goodwill. This very disappointing result was due to a combination of factors. A significant proportion of this operating loss was due to legacy and one-off issues. Furthermore, the Group's structural issues prevented us from responding effectively to an extremely tough trading environment. Finally, our performance was further exacerbated by poor management information systems, which impacted our ability to make reliable forecasts and take appropriate action. "During the year, we formulated a strategic plan which identified actions which had to be achieved to turn around the business -- reducing the proportion of fixed costs, improving utilization of assets and restructuring the U.K. charter and distribution business. We are vigorously implementing these actions. However, it is clear that we had significantly under-estimated the extent of the U.K. restructuring issues and the scale of the turnaround required is larger than originally envisaged. "We have made significant progress in implementing the actions that will underpin the turnaround. We have substantially de-risked the business. We have extended the maturity of our financing to May 2006. We have substantially improved our management information systems. Our approach to trading is more rigorous. We are ahead of schedule on delivering cost savings and believe they are now likely to exceed the originally identified GBP150 million in 2005. "Bookings for winter 2003/04 are currently in line with our expectations, with margins improved over the prior year. Bookings for summer 2004 are currently down on the prior year but in line with the rest of the industry. Summer margins are better than the prior year. Although the Group faces significant challenges, which will take time to overcome, the turnaround can be achieved, and we are working towards a significant improvement in 2004 and a return to profitability in 2005." CONTACT: MYTRAVEL GROUP PLC Phone: 020 7404 5959 0161 232 6523 Peter McHugh, Chief Executive Officer John Darlington, Chief Financial Officer BRUNSWICK Phone: 020 7404 5959 Fiona Antcliffe Sophie Fitton Roderick Cameron There will be an analyst meeting at 9:30 a.m. at Deutsche Bank, Winchester House, 1 Great Winchester Street, London, EC2N 2DB. To view full report and financials: http://bankrupt.com/misc/MyTravel_Group_Final_Results.htm NORTHUMBIAN WATER: Fitch Downgrades Ratings; Outlook Stable ----------------------------------------------------------- Fitch Ratings downgraded the Senior Unsecured debt and Short-term ratings of Northumbrian Water Limited from 'A/F1' to 'BBB+/F2', and for Northumbrian Services Limited, its immediate holding company, from 'A- (A minus)/F2' to 'BBB- (BBB minus)/F3'). This confirms the Expected Ratings announced by Fitch at the time of the Aquavit plc (now London Stock Exchange-listed) acquisition of the Northumbrian group in May 2003. All the ratings have been taken off Rating Watch Negative and now have a Stable Outlook. There have been three specific issues in relation to the rating of Northumbrian Water Limited and its parent Northumbrian Services Limited (formerly Ondeo Services U.K. plc). Resolution of some of the issues, and Fitch assuming a view on others, has enabled the group's ratings to be resolved. (a) IDOK Including Substantial Effect Determination On Thursday, Ofwat has announced its final determination of the request from Northumbrian Water Limited for an Interim Determination of K (an IDOK) including the application of the "Substantial Effects" clause (known as the Shipwreck clause) in its license. Ofwat has allowed the company to increase its FY05 revenue by a total GBP39 million, or 10%, plus RPI, to compensate for IDOK-specific increased costs and capex, and the Substantial Effect-related shortfall in turnover compared with regulatory parameters. The IDOK-related revenue increase of +6.8% can be regarded as largely a pass-thru of specific costs and remuneration on capex requirements, whereas the top-up +3.2% for the Substantial Effect clause enables Northumbrian Water Limited to revert to a financial profile consistent with that originally projected by Ofwat for FY05. The revenue shortfall was caused by a number of factors outside management's control, primarily related to lower turnover in the region (lower commercial and household growth, effect of metering) than Ofwat determined when setting Northumbrian Water Limited's FY01-05 revenue profile in 1999. During the five-year period the shortfall widened to a quantum, which triggered the materiality threshold for the Substantial Effect clause. The awarded uplift is applicable to Northumbrian Water Limited's FY05 turnover, thereby resulting in better coverage ratios. FY06's turnover has yet to be determined as part of the FY06-10 regulatory determination currently underway. The increase goes some way to glide customers' bills, Northumbrian Water Limited's turnover, up to FY06's likely level anyway. Fitch commented on Ofwat's initial findings on Northumbrian Water Limited's IDOK including Substantial Effect in a press release on November 5, 2003. (b) Acquisition Funding Facility As part of the May 2003 acquisition funding, the group's leverage has been increased to some 77% debt/RAV (although Northumbrian Water Limited's was broadly the same at 58% debt/RAV). The bank acquisition facility is short-dated -- it is scheduled to mature in May 2005. This is not conducive to long-term financing of the company and, given capital markets sentiment to this company in relation to the 2006 bond, would normally adversely affect a credit rating. Fitch has taken a view that Northumbrian Water Limited, aided by the regulatory framework, should be able to access funding to finance its regulated activities and refinance expected drawings, particularly under its GBP90 million working capital tranche of funding. The acquisition funding also had a GBP159 million tranche, to Northumbrian Services Limited, secured on the shares of Northumbrian Water Limited. Representative of some 7% debt/RAV, this was considered material to notch Northumbrian Services Limited's unsecured rating further to 'BBB-'. This unsecured rating is applicable to the un-guaranteed Northumbrian Services Limited GBP200 million bond due in June 2006. Management expects to repay this secured funding on receiving proceeds from financing the Kielder Reservoir. The company has stated that proceeds are likely to be at least GBP200 million. Fitch is neutral as to whether the EIB continues to lend to Northumbrian Water Limited, depending on its decision in April 2004 when an existing change of control waiver expires, since the company has capacity to refinance this debt (GBP376 million) albeit within the short-term bank acquisition financing (with a mechanism to request long-dated maturities). (c) Kielder Reservoir The group reports progress in arranging non-recourse funding based on the income stream from this non-regulated asset, which has the governmental Environmental Agency as its quasi-offtaker. Northumbrian Water Limited's net income is currently some GBP10m per year, indexed. Proceeds from this financing will be used to repay the acquisition funding facility, particularly Northumbrian Services Limited's secured tranche of funding. Even if the Kielder "securitization" financing does not go ahead, the regulatory value of this asset is a reported GBP170 million thus, again, cash proceeds could be raised to reduce acquisition funding debt. Credit Ratings Given the above, of which Ofwat's revenue increase is a helpful catalyst, Fitch is able to affirm the Expected Ratings of Northumbrian Water Limited and Northumbrian Services Limited originally announced in May 2003. Expected ratios for FY05, acknowledging FY04's dip, and the profile thereafter (assuming that the regulatory review will not markedly tighten parameters further), coupled with sector-wide weak ring-fencing provisions for this type of equity-model group, are considered to be commensurate with a 'BBB+' rating for Northumbrian Water Limited. There could be scope for further rating improvement if ring-fencing provisions are tightened to the benefit of Northumbrian Water Limited bondholders as enshrined in public bond documentation. Fitch's credit rationale requirements for Northumbrian Water Limited would still take into account the company's exposure to industrial metered content in its turnover (currently around 30%) within any quinquennium period, the company's recently limited out-performance in opex and capex, and its capital structure. The unsecured ratings of Northumbrian Services Limited are hindered by the secured debt financing which subordinates the 2006 bond. The refinancing of this bond in June 2006 is another deadline which management has to address, aided by the clearing-up of the above issues. Northumbrian Services Limited's water investments predominantly comprise the U.K. water and sewerage company Northumbrian Water Limited that includes the smaller water-only operational areas in Essex & Suffolk. The parent company's largely unregulated activities, with minimal profits, include a Gibraltar concession, and two Scottish PFI BOOTs. SAFEWAY PLC: Wm Morrison Not Buying Asda's Bluff ------------------------------------------------ Wm Morrison refused to be cowed by reports saying Asda could challenge its bid for Safeway at the last minute, according to The Telegraph. The report quoted one source close to Wm Morrison Chairman Sir Ken Morrison saying: "We're certainly not quaking in our boots. In fact, we're not taking it at all seriously." Word spread that Asda made a proposal to Safeway to buy 70 Safeway stores for up to GBP2 billion. "Given the thoroughness of the Competition Commission's investigations, we find it highly unlikely that Asda would get approval to buy 70 stores," the source added. Analysts also believe any possible bid could not get through the competition authorities. An offer would require the scrutiny of the Office of Fair Trading, which is understood to be extremely time-consuming. The sources also said that if it was Safeway who made the information circulate, its effort was in vain. "It won't affect what he offers for Safeway. He will make an offer based on what he believes the business is worth," they said. Both Safeway and Asda declined to comment, according to the report. Wm Morrison, which in January offered GBP2.9 billion to buy all of Britain's fourth-biggest supermarket chain, has until December 29 to make a fresh bid after the Trade Secretary published the required competition undertakings related to the offer. STODDARD INTERNATIONAL: Sells Elderslie Site to Reduce Debt ----------------------------------------------------------- Introduction The board of Stoddard International PLC announces that an agreement was entered into on December 10, 2003 for the sale of a twenty-two acre site which comprises the majority of Stoddard's land and buildings in Elderslie to Walker Holdings (Scotland) Limited. The total consideration receivable under the Disposal Agreement is GBP7 million. The remainder of the Elderslie Site comprises a one-acre site and an eight acre site. These are not part of the Disposal. Due to the size of the Disposal, the U.K. Listing Authority requires the board of Stoddard to seek the approval of the shareholders of Stoddard. This will be sought at an extraordinary general meeting of the Company expected to be held shortly. A circular containing further details on the Disposal and convening an extraordinary general meeting will be sent to Stoddard shareholders shortly. Completion of the Disposal under the terms of the Disposal Agreement is subject only to shareholder approval being obtained. Background to and reasons for the Disposal At December 31, 2002, the Group had net debt of GBP12.6 million. During the six months to June 30, 2003, net debt increased to GBP17.2 million as a result of the restructuring of the Group's operations, continuing losses and seasonal working capital requirements. The board's strategy is to develop key markets, invest in new manufacturing technology, achieve cost savings through site rationalization and reduce borrowings through the disposal of surplus sites. The Disposal is a major element of this strategy. Following the announcement in April 2002 of the closure of the Company's operations at Elderslie, the Elderslie Site was marketed through Ryden for residential development. The best offer received was from Walker and an agreement was entered into on September 23, 2002 that, upon the disposal of the entire Elderslie Site, was expected to result in gross proceeds of between GBP7 million and GBP10 million. Walker paid a deposit of GBP250,000 to Stoddard in November 2002 to fund the costs associated with obtaining planning and certain other consents for the Elderslie Site. Outline planning consent for the Property and the Additional Land was granted in June 2003 but was not granted for the Greenfield Land. The decision not to grant outline planning consent on the Greenfield Land has been appealed, the appeal was heard in November and a response is awaited. Following the granting of the consent for the Property and the Additional Land further negotiations took place with Walker and agreement was reached whereby Walker will pay a total of GBP7 million for the Property alone. During September 2003 further informal testing of the market was carried out by the Company through Ryden and this confirmed that the terms agreed with Walker for the Property remained the most attractive. Terms of the Disposal The Disposal Agreement supersedes the Option Agreement and relates only to the sale of the Property, was entered into on December 10, 2003 and will result in total proceeds for the Property of GBP7 million (including the deposit of GBP250,000). The balance is payable as: (i) the sum of GBP5 million, payable on the date of entry (which is expected to be around January 12, 2004); and (ii) a further sum of GBP1.75 million, payable either on March 31, 2004 or within 14 days of the granting of detailed planning permission for the Property, whichever is earlier. An application for detailed planning permission was lodged in November 2003 and the board expects to receive a positive response in the early part of next year. If the appeal seeking outline planning consent for the Greenfield Land is successful and the Greenfield Land and the Additional Land are subsequently sold, the board believes that the aggregate proceeds for the entire Elderslie Site are likely to be at the upper end of the predicted range of GBP7 million to GBP10 million. Completion of the Disposal is conditional only upon Stoddard shareholders' approval. A summary of the principal terms of the Disposal Agreement and a valuation report and description of the Property will be set out in the Circular. STODDARD INTERNATIONAL: Property Disposal to Net GBP3.7 Million --------------------------------------------------------------- Use of Disposal proceeds The proceeds from the Disposal [of twenty two acre site which comprises the majority of Stoddard's land and buildings in Elderslie to Walker Holdings (Scotland) Limited by Stoddard International] will be used to reduce the borrowings of the Company and its subsidiaries by around GBP4.6 million with the remainder being used to fund the working capital requirements of the Group. Financial effects of the Disposal The Property was included in the Group's unaudited interim report for the six months to June 30, 2003 at a value of GBP2.9 million as at that date and has since been independently valued by Ryden at GBP6 million. The valuation report prepared by Ryden will be set out in the Circular. The Group's results for the year ended December 31, 2003 are expected to include a gain on the sale of the Property of GBP3.7 million. The board has been advised that no tax liability will arise on the Disposal due to existing tax losses within the Group. Working capital Stoddard is of the opinion that following the Disposal, having regard to the bank facilities, which are currently available, the Group does not have sufficient working capital for its present requirements, being a period of at least 12 months from the date of this announcement. The board believes that the earliest date by which the Group may have to seek additional bank facilities is during June 2004. As explained above, the disposal of surplus properties is a key element of the board's plans to reduce Group borrowings. In addition to the Disposal the board expects to realize other material non-trading receipts from the disposal of the Greenfield Land, the Additional Land, two other smaller properties and other non-core assets. In addition the board expects to receive proceeds from an insurance claim, details of which will be set out in the Circular. Excluding the Greenfield Land, the directors expect these items to realize around GBP1 million over the next 12 months. In addition to these items, the board expects the Group's trading performance to improve early in the new year following completion of the significant restructuring exercise. While these proceeds, receipts and trading performance improvements are anticipated to reduce Group borrowings significantly, their amount and timing cannot be predicted with a sufficient degree of certainty for the board to be satisfied that the Group can rely on them to fund its future working capital requirements. If they are realized as expected then Stoddard is of the opinion that following the Disposal, the Group does have sufficient working capital for its present requirements, being a period of at least 12 months from the date of this announcement. However if they are not realized to the extent expected, the board would intend to seek additional bank facilities, although the board cannot be certain that such facilities would be available to the Group or of the terms on which they would be provided. STODDARD INTERNATIONAL: To Seek Further Loans if Disposal Stalls ---------------------------------------------------------------- If the Resolution is not passed The board emphasis' to shareholders that if the Resolution is not passed the Disposal cannot proceed. The Disposal is a key element of the board's plans to reduce the debt of the Group and the support of the Group's banks has been on the basis of these plans. If the Disposal does not proceed, the Group will have to seek additional funding to support the ongoing working capital requirements of the Group from, amongst other things, the realization of the Property, and other Group assets and by seeking additional borrowing facilities. The board cannot be certain of the basis on which such asset disposals would be made or whether such additional borrowing facilities would be available to the Group or the terms on which these facilities might be provided. In addition, if the Resolution is not passed, Stoddard will be required to pay Walker approximately GBP138,500 as a refund of the deposit and, in addition, Walker's costs of GBP50,000. Furthermore Stoddard would again be bound by the terms of the Option Agreement. This agreement provides Stoddard and Walker with the opportunity to continue to work together to seek the detailed planning and other necessary consents and permissions required for the development of the Elderslie Site for private housing. Commenting on the Disposal Alan Scott said: "The Disposal is an important milestone in the Company's strategy of reducing borrowings through the disposal of surplus sites. All activities have ceased at Elderslie and the Company is well advanced in consolidating operations from the previous three separate sites into one in Kilmarnock. We are confident that we will now realize the benefits of the single site operation." CONTACT: STODDARD INTERNATIONAL PLC Alan Lawson, Chief Executive Phone: 01563 578000 NOBLE GROSSART LIMITED Todd Nugent Phone: 0131 226 7011 TRINITY MIRROR: National Titles Revenue Remains Weak ---------------------------------------------------- Trinity Mirror plc is issuing a trading update in respect of the second half of the 52-week financial period ending December 28, 2003. This statement is being issued ahead of the Company's preliminary results on February 26, 2004. Overall the Group continues to trade in line with the Board's expectations for the year with improved advertising revenues for our Regionals division offsetting a weaker advertising performance from our Nationals division in the second half. Advertising revenues Whilst advertising conditions for our Regional newspaper titles have shown signs of stabilization during the past five months, conditions for our National titles continue to be difficult and volatile. Group advertising revenues for the 5 months to November 2003 increased by 1.0% year on year. The Regionals division (incorporating Digital Media and Metros) achieved advertising revenue growth of 3.9% year on year for the period. Excluding Digital Media and Metros, advertising revenues for the Regional newspaper titles increased by 3.0% year on year. This was despite advertising revenue falling by 0.7% year on year in the same period for our Regional newspaper titles in London and the South East. Our Regional Newspaper titles excluding Metro's and our titles in London and South East increased advertising revenues by 4.3%. For our Regional newspaper titles all categories achieved year on year growth with the exception of Motors, which declined by 2.2% for the period. Recruitment revenues increased by 1.4% year on year for the period representing an increase of 5.5% for our regional newspaper titles outside London and the South East, which was offset by an 11.3% fall in London and the South East. Whilst the South continues to experience year on year declines in recruitment advertising, an improving trend has emerged in the last three months with year on year declines of 15.6% for September, 8.7% for October and 6.7% for November. Advertising revenues for the Group's Nationals division fell by 5.7% year on year for the period, with declines of 5.7% and 5.5% for our U.K. national titles and Scottish national titles respectively. Circulation Group circulation revenues for the period July to November 2003 increased by 4.7% year on year for the 5 months to November 2003. Circulation revenues for the Regional newspaper titles increased by 2.1% year on year for the period, with cover price increases offsetting volume declines. Circulation revenues for the Nationals division increased by 5.2% year on year for the period. This reflects the benefits of restoring the cover price of the Daily Mirror to 32p outside Scotland partially offset by reduced circulation volumes. Circulation revenues for the U.K. national titles increased by 6.6% and for the Scottish national titles by 0.1% during the period. Outlook Our strategy 'Stabilize Revitalize Grow' is on course and the Board is confident that, despite the adverse effects of continued volatility in the advertising market for our National titles, performance for the year will be at least in line with expectations. (a) all advertising and circulation results of the regional newspaper titles are shown on a like for like basis excluding the results of Post Publications Limited and Ethnic Media Group Limited which were disposed of in June 2002, Channel One which was closed down in November 2002 and Wheatley Dyson which was sold in February 2003. CONTACT: TRINITY MIRROR PLC Phone: 020 7293 3000 Vijay Vaghela, Group Finance Director Nick Fullagar, Director of Corporate Communications FINSBURY Phone: 020 7251 3801 Rupert Younger James Leviton ********* 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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