/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/031218.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, December 18, 2003, Vol. 4, No. 250 Headlines B E L G I U M TELENET GROUP: Moody's Rates Senior Unsecured Notes (P) Caa2 TELENET GROUP: Subordinated Discount Notes Assigned 'CCC+' Grade C Z E C H R E P U B L I C UNION BANKA: Ex-managers Sued in Criminal Court F I N L A N D BENEFON OYJ: Seeks 'Regression' of Money Paid to Ex-financiers F R A N C E BELLON SA: Rating Affirmed at 'BB'; Outlook Negative SUEZ SA: Changes Terms of 2004 Zero Coupon Exchangeable Bonds G E R M A N Y BERTELSMANN AG: Award in U.S. Lawsuit May Reach US$1 Billion ESCADA AG: Restructuring to Return to Solid Profit on Track INFINEON TECHNOLOGIES: Further Simplifies Corporate Structures MG TECHNOLOGIES: Peter Steiner to Join Executive Board I T A L Y ALITALIA SPA: Govt Wants 'Golden Share' Even After Tie-up PARMALAT SPA: Hires PricewaterhouseCoopers to Review Finances SAFILO CAPITAL: Fitch Rates 2013 Senior Notes 'CCC+' L U X E M B O U R G STOLT-NIELSEN: Negotiations with Lenders Continue STOLT OFFSHORE: Close to Securing Covenant Waiver Agreement N E T H E R L A N D S GETRONICS N.V.: To Relocate to Smaller Office in Rembrandt Tower HEIJMANS N.V.: Cooperates in Industry-wide Probe S W E D E N SKANDIA INSURANCE: May be Selling Japanese Unit, Says Paper U N I T E D K I N G D O M ABBEY NATIONAL: Might Let go of Fund Management Arm AIRPLANES PASS-THROUGH: Subordinate Notes Downgraded to 'D' BEN NEVIS: Fitch Affirms Ratings on Secured Floating Rate Notes BIRMINGHAM PLASTICS: Business, Assets Up for Sale BRITISH AIRWAYS: Welcomes Government's Plan to Build New Runway BRITISH AIRWAYS: Might Make Further Job-cuts at CitiExpress BRITISH ENERGY: Heysham 1 to Remain Closed Until Next Year DE ROMA: Joint Administrators Sell Business as 'Going Concern' FAULDS ADVERTISING: KPMG to Investigate Dividend Paid to Owner HIBERNIA FOODS: Factories Sold to Kerry Foods; 450 Jobs Saved LE MERIDIEN: Appoints New CEO; CFO to Leave at Month's End NACHTMANN LIMITED: Joint Administrators Offer Business for Sale NETWORK RAIL: Union Raps Management for Reneging on Promises NORTHUMBRIAN WATER: Incentive Plan for Directors Approved PEARSON GROUP: Financial Times Advertising Revenues Drop Further ********* ============= B E L G I U M ============= TELENET GROUP: Moody's Rates Senior Unsecured Notes (P) Caa2 ------------------------------------------------------------ Moody's Investors Service assigned a (P) B2 senior implied rating to Telenet Group Holding N.V., and a (P) Caa2 rating to Telenet's proposed EUR245 million (in US$ equivalents) senior unsecured notes due 2014. The rating agency also affirmed the (P) B3 rating for the EUR500 million senior notes (upsized from EUR400 million) due 2013 of Telenet's wholly owned subsidiary, Telenet Communications N.V. The outlook for all ratings is stable. Telenet Communications' senior notes are guaranteed on a senior subordinated basis by certain subsidiaries. Part of the proceeds of the offering will be used to pay senior bank debt, and repay deferred purchase obligations. Telenet Group's notes offering will be used to refinance the remaining deferred obligations, mezzanine debt, and shareholder loans. According to Moody's, the ratings reflect Telenet's high debt leverage levels and continued high capital expenditure expectations; re-financing risk associated with the company's sizeable bank debt amortization requirements beginning in 2007; strong on-going competition; the inherent operating risks; the lack of ownership of the overall network for approximately one-third of the company's subscriber base; a degree of integration risk; and structural considerations relating to the company's consolidated capital structure. TELENET GROUP: Subordinated Discount Notes Assigned 'CCC+' Grade ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Telenet Group Holding N.V., the parent company of Belgium cable operator Telenet Communications N.V. (Telenet). At the same time, Standard & Poor's assigned its 'CCC+' debt rating to the new offering of EUR245 million subordinated discount notes issued by Telenet Group Holding. In addition, Standard & Poor's affirmed its 'B-' debt rating on Telenet Communications' senior unsecured notes issue maturing 2013, which has been increased to EUR500 million from EUR400 million. The 'B+' long-term corporate credit rating on Telenet was also affirmed. The outlook is stable. The increase in the amount of the senior notes issue follows strong demand in the capital markets. "The additional EUR100 million is intended either to be applied solely to the reduction of Telenet's existing bank loan debt or, alternatively, will be redeemed to bondholders at par. No specific maturities have been designated yet for the application of the additional amount," said Standard & Poor's credit analyst Leandro de Torres Zabala. "The change in the amortization schedule and distribution of debt will not affect headroom under the covenants of the bank facility, which will be modified to this effect." The rating on the EUR245 million subordinated discount notes reflects not only their subordination to the senior unsecured notes, but also the minimum covenant of net debt to EBITDA of 3.5x necessary for Telenet to upstream cash to service the subordinated discount notes at Telenet Group Holding. The ratings on Telenet reflect its position as a modestly sized and highly leveraged cable operator in Flanders, Belgium. Telenet operates an analogue cable TV 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 will need strong growth in sales and cash flows (mainly from fixed-line telephony and broadband Internet services) to pay down its high levels of debt, secure adequate liquidity at all times, and maintain ample headroom under its bank covenants. Strong growth will be challenging to achieve against strong competition from Belgacom and fixed-to-mobile substitution. Telenet is expected to maintain a conservative financial policy, with no major acquisitions (other than the acquisitions currently in progress) or network upgrades other than the upgrade to voice-over Internet protocol and the upstream upgrade to be implemented over the medium term. =========================== C Z E C H R E P U B L I C =========================== UNION BANKA: Ex-managers Sued in Criminal Court ----------------------------------------------- Three members of the former management of bankrupt Union Banka are facing criminal charges for violating their duties in managing foreign assets, Prague Business Journal reported Tuesday. The office for disclosing corruption and financial crime alleged the unnamed managers went over the limits of their functions by providing in 2002 a risky loan of CZK140 million to a person related to the bank. Union Banka went bankrupt in February. Invesmart B.V., the chief shareholder in the Ostrava-based bank, tried to avoid a complete collapse by offering a settlement, promising clients a yield exceeding the sum payable within the insurance of clients' deposits. However, an Ostrava court sent Union Banka into liquidation on May 19 at the Czech National Bank's request and the Ostrava regional court declared the bank bankrupt on May 30. The bankruptcy was proposed by 33 of Union Banka's creditors, including the state deposit insurance fund. ============= F I N L A N D ============= BENEFON OYJ: Seeks 'Regression' of Money Paid to Ex-financiers -------------------------------------------------------------- The official administrator of Benefon's reorganization has filed at the district court of Helsinki regression suits against Finnvera Oyj, OKO Osuuspankkien Keskuspankki Oyj and Sampo Pankki Oyj, the main financiers of the company. The suits address loan amortization and interest payments the company had performed to the said financiers in years 2000-2003, totaling about EUR10.7 million. The financiers have denied these claims. Benefon Oyj Jukka Nieminen President =========== F R A N C E =========== BELLON SA: Rating Affirmed at 'BB'; Outlook Negative ---------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on France-based Bellon S.A., the holding company of global foodservice and management services Sodexho Alliance S.A. (BBB+/Negative/A-2), following a review of the Bellon's financial structure and strategy. The outlook is negative. "While Bellon has recently succeeded in refinancing its EUR173 million indexed bond due in July 2004, thus removing a potential near-term rating concern, and in lengthening its debt maturity profile, the company remains highly exposed to the volatility of the equity markets and to Sodexho's share price in particular," said Standard & Poor's credit analyst Melvyn Cooke. "Bellon is by far the largest shareholder in Sodexho, with about 39% of shares and 40% of voting rights, and Sodexho accounts for nearly all of Bellon's asset value." As Bellon relies on Sodexho's shares as collateral for its EUR850 million of debt, a severe drop in Sodexho's share price could trigger a default if Bellon failed to pledge enough shares to respect minimum debt coverage covenants. Although the cushion between Bellon's debt and the value of its holding in Sodexho improved in the second half of 2003, the structure of the debt leaves Bellon vulnerable to developments in Sodexho's share price. Sodexho's share price could be influenced by a wide variety of factors -- many outside of the influence of either Sodexho or Bellon -- including general equity market trends. This is a key risk, and Standard & Poor's may lower Bellon's credit rating should Sodexho's share price deteriorate. In addition, Bellon depends primarily on dividends from Sodexho shares to service its debt. At the end of 2003, Bellon's financial holdings (based on their current market value) are expected to cover slightly over 1.7x its 2003 financial liabilities; dividends from its holdings in Sodexho are also expected to cover around 1x the interest payments due during Sodexho's fiscal year (ended Sept. 30, 2003). The company's coverage of net interest by Sodexho's dividends is particularly stretched for the rating, although this ratio is expected to improve gradually over time, as Sodexho's operating performance improves and net income increases, and as Bellon's debt largely carries fixed interest rates. "The negative outlook reflects Standard & Poor's view that Bellon's credit measures, especially the company's coverage of net interest by Sodexho's dividends, are somewhat stretched for the rating," added Mr. Cooke. "The negative outlook also reflects Bellon's lack of asset diversity, which, in case of a significant drop in Sodexho's share price, could lead to a downgrade." SUEZ SA: Changes Terms of 2004 Zero Coupon Exchangeable Bonds ------------------------------------------------------------- Notice is hereby given to all holders of Zero Coupon Exchangeable Bonds Due 2004 (Code ISIN FR0000492266) bonds Exchangeable into Ordinary Shares of AXA of Suez S.A., in accordance with Condition 5(e)(v) of the terms and conditions of the Bonds, that: the composition of the Exchange Property (as defined in the Conditions) has been adjusted pursuant to Condition 5(e)(iii)(B) of the Conditions, as a result of the issuance of preferential subscription rights of AXA, which give their holders the right to subscribe AXA 2004 ORANs on September 18, 2003. From and after the Adjustment Date, (i) the Exchange Property will consist of 22,175,896 AXA shares (Code ISIN FR0000120628) and 105,108 AXA 2004 ORANs (Code ISIN FR0010019349) in the aggregate, and (ii) a Bondholder will have the right to receive 4.0572 AXA Shares and 0.0193 AXA 2004 ORANs for each EUR144.00 principal amount of Bonds delivered for exchange in accordance with the Conditions (subject to adjustment to eliminate fractional shares as provided in Condition 5(f))(v) of the Conditions). All other terms of the Bonds remain unchanged. ============= G E R M A N Y ============= BERTELSMANN AG: Award in U.S. Lawsuit May Reach US$1 Billion ------------------------------------------------------------ A breach of contract suit brought against Bertelsmann AG could cost the media company up to US$1 billion, lawyers for the plaintiffs said, according to AFX. A California jury already awarded German entrepreneurs Jan Henric Buettner and Andreas von Blottnitz -- who said they were promised a stake in online provider AOL Europe in return for helping create the business for Bertelsmann -- EUR104.6 million each on four cases they raised. The total compensation is EUR837 million, but the businessmen's lawyer, Bill Price, said it's unclear whether the jury actually intended to award the men EUR209.2 million on each of the four causes of action or the entire suit, according to the report. The judge will set the final amount of the compensation "in the next several weeks," he said. Bertelsmann lawyers could not immediately be reached for comment, according to the report. ESCADA AG: Restructuring to Return to Solid Profit on Track ----------------------------------------------------------- Escada AG has created the basis for a lean platform in fiscal year 2002/2003 (fiscal year end: October 31) despite numerous external challenges, which will allow for future growth. Due to the successful capital measures in October 2003, with funds raised of almost EUR100 million, Escada is now in a very solid financial position: (a) Financial debt has been reduced by EUR100 million to EUR204 million since July 31, 2003. (b) Thanks to the capital increase and the re-negotiation of bank debt, repayment of the bond (EUR100 million) is secured in August 2004. (c) As of October 31, 2003 the Escada Group reached an economic equity ratio (including convertible bonds) of 20.5% (October 31, 2002: 17.0%). Sales and EBITDA of ESCADA Group for 2002/2003 developed as announced in September: (a) Group sales reached EUR621 million (2001/2002: EUR773 million). Adjusted for de-consolidation and foreign currency effects sales declined by 5.0%. (b) EBITDA was EUR6 million (2001/2002: EUR55.1 million). (c) As announced, there was a one-time negative impact of EUR42 million (thereof EUR26.5 million restructuring charges) on the profit after tax. After tax and minorities preliminary Group loss amounted to EUR75 million (2001/2002: plus EUR4.4 million). The execution of the restructuring program, which was announced in September, is well on track: (a) Within the end of fiscal year 2004/2005 costs to be reduced by EUR60 million (thereof EUR40 million already 2003/2004). (b) 75% of staff have been given notice. (c) Sale of Feraud is a further step in focusing on core ESCADA. Escada CEO Wolfgang Ley: "After a difficult year in fiscal 2002/2003, ESCADA is back on track. We now have a very solid financial base from which we can consequently build the Escada brand even further. Management believes that even without a worldwide economic pickup, our new lean platform will give us a chance to return to after-tax profitability at the Group level as early as fiscal 2003/2004." INFINEON TECHNOLOGIES: Further Simplifies Corporate Structures -------------------------------------------------------------- Infineon Technologies, the world's sixth biggest semiconductor company, is focusing further on its core business and spinning off its European real estate and facility management activities to Dussmann AG & CO KGaA, Berlin. The companies Air Liquide GmbH, Dusseldorf, and Kinetics GmbH, Eschau/Hobbach will be taking over operation of gas and chemicals supply and distribution at the European production sites. Relevant agreements have already been signed by the companies. By taking this step, Infineon is cutting the number of its suppliers for real estate and facility management from around 180 individual sources to just three prime contractors, which will radically reduce the number of its interfaces and simplify the processes involved for the company. The order value for the entire five-year term of the agreement runs to EUR145 million. It is also planned for the three prime contractors to take on some of Infineon's workforce. "By outsourcing real estate and facility management we are systematically pursuing our restructuring program following the successful spin-off of our SAP support activities, various HR functions, and our distribution centers in America and Asia," said Dr. Knut Merten, Head of Business Reengineering & Benchmark of Infineon Technologies. "Apart from cutting our costs we're also aiming to boost quality and productivity. Greater flexibility will also enable us to adjust faster to changing conditions in the semiconductor industry." Routine activities and the detailed planning of operation and of routine and preventive maintenance in the relevant sectors will be carried out by the prime contractors, though Infineon will retain overall responsibility, including strategic decision-making powers. Excluded from outsourcing is cleanroom servicing (supplying water, air conditioning, vacuum, electricity, etc.), which Infineon will continue to provide in full on its own account. According to the agreements, the relevant functions will be transferred to Infineon's outsourcing partners in the first half of calendar year 2004. Real estate and facility management for Infineon's locations in Munich, Regensburg, Dresden, Warstein (Germany), Villach (Austria), Porto (Portugal), and Cegled (Hungary) will transfer to Dussmann AG & Co KGaA. The prime contractors will then be responsible for infrastructure (including cleaning of buildings and outdoor spaces, and security), technical (including maintenance of the buildings and outdoor spaces) and commercial activities (including leasing agreement and space management). Furthermore, it is planned that he will also take care of catering requirements (works canteens, conference catering, etc.). Operation of the gas and chemicals supply and distribution system in Dresden will be handled by Air Liquide GmbH, and by Kinetics GmbH at the Regensburg, Munich, Villach, Porto, Warstein and Cegled locations. About Infineon Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for the automotive and industrial sectors, for applications in the wired communications markets, secure mobile solutions as well as memory products. With a global presence, Infineon operates in the U.S. from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In fiscal year 2003 (ending September), the company achieved sales of Euro 6.15 billion with about 32,300 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Further information is available at http://www.infineon.com. CONTACT: INFINEON TECHNOLOGIES AG Worldwide Headquarters P.O. Box 80 09 49 D-81609 Muenchen Germany Phone: +49-89-234-22404 Fax: +49-89-234-28482 Ralph Heinrich, Media Relations E-mail: ralph.heinrich@infineon.com Investors and Analysts based in Europe Phone: +49-89-234 26655 E-mail: investor.relations@infineon.com MG TECHNOLOGIES: Peter Steiner to Join Executive Board ------------------------------------------------------ At its meeting Tuesday, the Supervisory Board appointed Peter Steiner, 44, to the Executive Board of mg technologies ag effective March 1, 2004. On April 1, 2004 Mr. Steiner will take over as finance director from Karl-heinz Hornung, who will be leaving the company for personal reasons on March 31, 2004. Since January 2003, Mr. Steiner has been Spokesman for the Board of Management of Dyckerhoff AG, Wiesbaden. He has been a member of this Board since 1998, initially responsible for finance and administration. In 2001, he was given responsibility for Germany & Western Europe. Before joining the Dyckerhoff Group, Mr. Steiner had been an executive director at SUBA Bau AG, where he had been responsible for accounting, finance and international business. Previously he had worked as an audit manager with Arthur Andersen & Co. in Frankfurt. Peter Steiner graduated in business studies from the University of Cologne in 1985. He qualified as a tax accountant and auditor in 1989 and 1990. ***** A leading global technology group, mg technologies announced last week a major corporate repositioning prompted by a full strategic review initiated in June. The strategy includes focusing on engineering, divesting its chemicals businesses, and putting in place cost-cutting measures. The company also warned it will have to post pre-tax loss of approximately EUR150-170 million for the current fiscal year. ========= I T A L Y ========= ALITALIA SPA: Govt Wants 'Golden Share' Even After Tie-up --------------------------------------------------------- The Italian government sees Alitalia S.p.A. accounting for up to 25% of a possible alliance between the Italian carrier, Air France and KLM Royal Dutch Airlines, La Repubblica said, according to AFX. Economy Ministry Undersecretary Gianluigi Magri revealed the outlook at a parliamentary hearing on Alitalia's business plan. The government official also said Italy is considering converting a EUR1.207 billion bond it owns in Alitalia into shares. This could take place in different ways and at different times, possibly through a public offer, a private placement or a share exchange, he said. The government, which currently holds 62.4% of Alitalia, wants to keep a "golden share" stake, according to him. PARMALAT SPA: Hires PricewaterhouseCoopers to Review Finances ------------------------------------------------------------- Parmalat Finanziaria S.p.A. announces that the Board of Directors of its subsidiary Parmalat S.p.A. met and noted the resignation of Cav. Lav. Calisto Tanzi as Chairman, Chief Executive Officer and Board member. The Board of Directors appointed, by co-optation, three new members: (a) Dott. Enrico Bondi (b) Dott. Guido Angiolini (c) Avv. Umberto Tracanella All three new Board members accepted their nominations. The Board of Directors of Parmalat S.p.A. is now composed of: Enrico Bondi, Guido Angiolini, Domenico Barili, Francesco Giuffredi, Giuliano Panizzi, Giovanni Tanzi, Paolo Tanzi, Pier Giovanni Tanzi, Stefano Tanzi and Umberto Tracanella. The Board of Parmalat S.p.A. nominated Dott. Enrico Bondi as Chairman of the Board of Directors and as Chief Executive Officer. Dott. Bondi has assumed the powers already granted to the outgoing Chairman and Chief Executive Officer. Dott. Guido Angiolini was also made responsible for the Company's Corporate, Administration and Fiscal Control functions. Parmalat Finanziaria has mandated PricewaterhouseCoopers to review the financial assets and liabilities of the Parmalat Group, including derivative contracts and commitments, and particularly those of its financial subsidiaries. SAFILO CAPITAL: Fitch Rates 2013 Senior Notes 'CCC+' ---------------------------------------------------- Fitch Ratings assigned a 'CCC+' rating to Safilo Capital International S.A.'s EUR300 million 9.650% Senior Notes due 2013. The agency also assigned parent company Safilo S.p.A. a Senior Unsecured rating of 'B' and a Senior Secured rating of 'B+'. The Short-term rating is 'B'. The rating Outlook is Negative. The three-notch differential between the notes and the senior secured facilities reflects the agency's view of the significant difference in the potential recovery prospects between the two classes of debt in the event of any future forced restructuring or distressed sale scenario. The differential reflects the structural subordination of the notes and the potential difficulty in realizing the value attached to the licensing agreements in a distress scenario, as well as the fact that certain features of the legal structure remain untested in Italian courts. "In difficult market conditions, the company has surprised investors with the level of underperformance recorded since the bond was syndicated last May, but the ratings factor in a certain level of recovery in 2004 and liquidity does not appear to be an immediate issue" said Fitch analyst Stefano Podesta. "However, the outlook is negative given the poor visibility that the company seems to have on its financial performance, limited details on recently announced cost cutting initiatives and increased pressure on cash flow from senior loan mandatory amortization from 2004 onwards." While sales for the nine months to September 2003 are only marginally behind the same period last year, EBITDA is some 30% lower. The company retains the potential to improve profitability as early as next year with the full launch of the Armani branded collection of prescription frames and sunglasses. However, scheduled debt amortization payments under the Senior Secured Facilities will increase the pressure on cash flow in future years. The notes were issued in May 2003 to refinance the EUR300 million bridge facility put in place to part finance the EUR1.43 billion leveraged buy-out of Safilo S.p.A. by Vittorio Tabacchi and CSFB Private Equity in 2001. The acquisition was also financed by approximately EUR620 million of senior secured debt, of which EUR60m relates to a capex facility, currently undrawn. Other sources that support liquidity are a EUR50 million revolving credit facility (of which EUR25m was undrawn by September 2003), EUR45 million of cash on balance sheet and a contingent equity contribution of EUR25 million in the form of PIK notes which the management can call from the equity sponsors. The senior notes benefit from second ranking upstream guarantees to be provided by Safilo S.p.A., and certain other subsidiaries, which represented 79% of the group's consolidated net assets and 53% of turnover at December 31, 2002. However, Fitch believes that potential recoveries for the noteholders are likely to be severely restricted. This is mainly because in the event of enforcement by senior lenders and sale of the business during the 179 days standstill period, the second ranking guarantees can be released and shares owned by Safilo S.p.A. in Safilo Capital International SA may be put to its parent Safilo Holding S.p.A. In such a case, Safilo S.p.A. and its operating subsidiaries could be sold free from any obligations towards noteholders. Also there are uncertainties over the company's ability to retain all its licensing agreements under such a scenario with obvious potential negative effects on recovery values for all classes of creditors. Safilo is the world's second largest manufacturer and wholesaler of eyewear products with a strong portfolio of licensing agreements with major fashion brands. Headquartered in Padua, Italy, the Company generated net revenue of EUR894 million and EBITDA of EUR180 million in FY 02. =================== L U X E M B O U R G =================== STOLT-NIELSEN: Negotiations with Lenders Continue ------------------------------------------------- Stolt-Nielsen S.A. (Nasdaq NM: SNSA; Oslo Stock Exchange: SNI) said that while the waivers of covenant defaults granted by its primary lenders expired Monday (December 15), the Company and its lenders remain in constructive discussions aimed at establishing longer-term waivers. "We continue to work closely with our primary lenders toward longer-term waivers that will give us the necessary time to allow us to develop a sensible financial restructuring plan," said Niels G. Stolt-Nielsen, Chief Executive Officer of Stolt-Nielsen S.A. "Stolt-Nielsen S.A. is taking action to improve its liquidity, reduce debt and strengthen its balance sheet." About Stolt-Nielsen SA Stolt-Nielsen S.A. is one of the world's leading providers of transportation services for bulk liquid chemicals, edible oils, acids, and other specialty liquids. The Company, through its parcel tanker, tank container, terminal, rail and barge services, provides integrated transportation for its customers. The Company also owns 63.5% of Stolt Offshore S.A. (NASDAQNM: SOSA; Oslo Stock Exchange: STO), which is a leading offshore contractor to the oil and gas industry. Stolt Offshore specializes in providing technologically sophisticated offshore and subsea engineering, flowline and pipeline lay, construction, inspection, and maintenance services. Stolt Sea Farm, wholly-owned by the Company, produces and markets high quality Atlantic salmon, salmon trout, turbot, halibut, sturgeon, caviar, bluefin tuna, and tilapia. CONTACT: Reid Gearhart Phone: USA 1 212 922 0900 E-mail: rgearhart@dgi-nyc.com Valerie Lyon Phone: U.K. 44 20 7611 8904 E-mail: vlyon@stolt.com STOLT OFFSHORE: Close to Securing Covenant Waiver Agreement ----------------------------------------------------------- Stolt Offshore S.A. (NasdaqNM: SOSA; Oslo Stock Exchange: STO) said it is concluding the administrative aspects of its covenant waiver extension and continuing discussions with its lenders towards a long-term agreement. Stolt Offshore also confirms that it was approached on Monday by Pareto Securities ASA, on an unsolicited basis, to consider a capital raising alternative. While Stolt Offshore is receptive to interest in the Company, it wishes to clarify that it continues to work, as planned, with its existing advisors to evaluate the various alternatives in restructuring its balance sheet. Stolt Offshore is a leading offshore contractor to the oil and gas industry, specializing in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas CONTACT: STOLT OFFSHORE SA Julian Thomson/Fiona Harris Phone: U.S. +1 877 603 0267 (toll free) U.K. +44 1224 718436 E-mail: julian.thomson@stoltoffshore.com Patrick Handley (U.K.)/Tim Payne (U.S.) Brunswick Group Phone: U.K. +44 207 404 5959 U.S. +1 212 333 3810 E-mail: phandley@brunswickgroup.com tpayne@brunswickgroup.com ===================== N E T H E R L A N D S ===================== GETRONICS N.V.: To Relocate to Smaller Office in Rembrandt Tower ---------------------------------------------------------------- Getronics [Moody's, 'B2' senior implied; 'Caa1' senior subordinated bond debts], a leading international Information and Communications Technology (ICT) Company, will move its corporate head office to the Rembrandt Tower in Amsterdam. The reason for the move, which will be accomplished by February 2004, is the fact that the current head office buildings in the Amsterdam industrial quarter of Westpoort have become too large. Getronics CEO Klaas Wagenaar comments: "The move to the Rembrandt Tower marks a new start, it gives us the space and location we need. We now have a smaller and more dynamic head office team, based on the demands of the local Getronics organizations. For this team we wanted an attractive new facility and we wanted it to be in a business neighborhood close to our corporate advisors. We also wanted our new head office to be easily accessible by public transport and to have good links with Schiphol. The Rembrandt Tower meets these demands." Getronics has approximately 70 head office staff. The current head office has been rented since the early eighties. Getronics Netherlands has business operations on various sites in the Westpoort area. These will be unaffected by the head office move. About Getronics With 23,000 employees in over 30 countries and forecast revenues of circa EUR2.7 billion in 2003, Getronics is one of the world's leading providers of vendor independent Information and Communication Technology solutions and services. Getronics today combines the capabilities of the original Dutch company with those of Wang Global, acquired in 1999, and of the systems and services division of Olivetti. Getronics is ranked second worldwide in network and desktop outsourcing and fourth worldwide in network consulting and integration (Source: IDC 2002-2003). Getronics designs, integrates and manages ICT infrastructures and business solutions for many of the world's largest global and local companies and organizations, helping them maximize the value of their information technology investments. Getronics headquarters are in Amsterdam, with regional offices in Boston and Singapore. Getronics' shares are traded on Euronext Amsterdam. For further information about Getronics, visit http://www.getronics.com HEIJMANS N.V.: Cooperates in Industry-wide Probe ------------------------------------------------ Heijmans N.V. (construction, property development and related activities) has received notification from the Public Prosecutions Department that it intends to prosecute in the context of the investigations into irregularities in the construction industry. Its intention is to prosecute the division Heijmans Infrastructuur B.V. as well as three individuals employed at Heijmans. The suspicions pertain to fraud, violation of the Economic Competition Act, forgery and participation in a criminal organization, and relate to the announcements made late in 2001 regarding possible price-fixing agreements throughout the Dutch construction industry. In the interest of a due and balanced process of law, Heijmans will avail itself of the opportunity offered by the Public Prosecutions Department to have a limited preliminary inquiry conducted, headed by an Examining Magistrate. By means of this limited preliminary inquiry, Heijmans can and will convey its views regarding the PPM's intentions. On the basis of the complete case file, the PPM will then take its final decision. Guus Hoefsloot, Chairman of the Executive Board of Heijmans, responded: "Heijmans was one of the first companies in the industry to crack down on irregularities, among other things by implementing a code of conduct, setting up a code of conduct committee and introducing measures to ensure that history will not repeat itself. For example, each quotation is now accompanied by signed statements that no restrictive trade practices have taken place. Clearly, it goes without saying that Heijmans will wholeheartedly endorse a code of conduct for the industry as a whole." CONTACT: HEIJMANS NV Corporate Communications A.H.M. van Lith Phone: (073) 528 9232 E-mail: flith@heijmans.nl =========== S W E D E N =========== SKANDIA INSURANCE: May be Selling Japanese Unit, Says Paper ----------------------------------------------------------- Swedish financial services group, Skandia, appears to be selling its Japanese operations, Skandia Life Insurance (Japan), according to the Financial Times. Iain Messenger, joint chief executive of Skandia's Japanese operations would not confirm or deny a possible sell-off, but acknowledged the communications to two Japanese executives obtained by the Financial Times, which indicate that some sort of a deal is underway. The letter refers to an internal project codenamed "Project Miko," which talks about bonuses of JPY45 million and JPY33 million payable to two executives when a "share purchase agreement is signed by both seller and buyer." Skandia entered the Japanese market in the 1990s hoping to become a global financial service provider, but a stock market crash blew that plan. The crisis forced it to sell its flagship operation, American Skandia, this year and rumors swirl there may be more sell-offs underway. Mr. Messenger says: "There is nothing approved as yet." Accordingly, the bonuses must still be approved by the remuneration committee in Sweden, and that they are not related to a sale. Project Miko "doesn't mean a sale, it means a review of the strategic options the management has," he said. In the first nine months of the year, Skandia made a SEK26 million (US$3.5 million) profit on sales of SEK1.9 billion in Japan, where it has SEK9.5 billion of assets under management. The Financial Times sees Millea Holdings, the holding company encompassing Tokio Marine and Fire, Japan's largest non-life insurer, as potential buyer for Skandia's Japanese operation. One London-based analyst said the unit could fetch up to SEK1 billion. =========================== U N I T E D K I N G D O M =========================== ABBEY NATIONAL: Might Let go of Fund Management Arm --------------------------------------------------- A strategic review of Abbey National's business focus could see the sale of its fund management arm, Abbey National Asset Manager, an unsourced report from The Daily Telegraph said, according to AFX. Chief Executive Lugman Arnold is aiming for a customer-focused retail financial services operation committed to "turning banking upside down," according to the article. Last month, he subjected the division to a strategic review aimed at streamlining operations to suit the vision he has. A progress on the study is expected to come out in January. Abbey National Asset Manager has 120 staff and manages GBP30 billion in assets. A sale of the fund manager could spark strong interest from acquisitive fund managers such as Isis Asset Management and HBOS subsidiary Insight Investments, the report said. AIRPLANES PASS-THROUGH: Subordinate Notes Downgraded to 'D' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on all three of Airplanes Pass-Through Trust's subordinate classes of notes to 'D' from 'CC' and removed them from CreditWatch. At the same time, the ratings on all three tranches of senior notes were affirmed (see list below). The ratings on the subordinate class B, C, and D notes were lowered to 'D' following nonpayment of interest on the December 2003 interest payment date. A deferral of interest on these classes of notes had been anticipated for some time. The ratings on all three classes were lowered to 'CCC/Watch Neg' in July 2002, and subsequently lowered to 'CC/Watch Neg' in October of this year. Prior to Sept. 11, 2001, Airplanes Pass-Through Trust had suffered from somewhat poorer cash flow performance than was originally expected. Market trends in the aircraft industry since then have caused further erosion of the cash flows, to the extent that available funds have now been switched exclusively to the senior noteholders, and in particular to the subclass A-6 noteholders. Payments of principal are made sequentially within the A class, in the order of A-6, A-8, and A-9, respectively. Each class must be fully repaid before principal on the subsequent classes can begin to be paid. RATINGS LIST Rating Class To From Airplanes Pass-Through Trust $1.112 Billion Floating- and Fixed-Rate Pass-Through Certificates* Ratings Lowered and Removed From CreditWatch B D CC/Watch Neg C D CC/Watch Neg D D CC/Watch Neg $2.3 Billion Floating-Rate Pass-Through Certificates* Ratings Affirmed A-6 AA-/Negative A-8 A/Negative A-9 BBB-/Negative *Initial outstanding amount of remaining classes. BEN NEVIS: Fitch Affirms Ratings on Secured Floating Rate Notes --------------------------------------------------------------- Fitch Ratings affirmed Ben Nevis One (Asset Backed Securities) Limited's Class A and Class B Secured Floating Rate Notes at 'BBB' and 'C' respectively. In May 1998, Ben Nevis One, a special purpose vehicle incorporated under the laws of Jersey with limited liability, acquired a portfolio of asset-backed securities from The Royal Bank of Scotland Plc. This acquisition was financed by issuing US$475 million Class A Secured Floating Rate Notes and US$35.5 million Class B Secured Floating Rate Notes. The scheduled maturity of the notes is in 2030. Fitch has carried out a review of this transaction and its performance to date. The divergence in performance between collateralized bond obligations and residential mortgage backed securities in the underlying portfolio has continued, with the former continuing to deteriorate and the latter remaining stable. However, the condition of the underlying portfolio has not worsened significantly. Fitch believes that while the Class B noteholders are extremely unlikely to receive full principal at the redemption of their notes, the enhancement available to the Class A noteholders is still sufficient to maintain the current rating. As of November 2003, US$100 million Class A notes were outstanding, as compared to an initial amount of US$475 million while US$20.9 million of the initial US$35.5 million of Class B notes remained. Fitch notes that US$12.1 million of late principal receipts will further reduce the Class A amount at the next payment date. BIRMINGHAM PLASTICS: Business, Assets Up for Sale ------------------------------------------------- Ian James Gould and Brian James Hamblin, the Joint Administrative Receivers, offer for sale the trade and trade assets of Birmingham Plastics Limited (in Administrative Receivership), a long-established plastic injection molding company, including: (a) 18,754 sq. ft. freehold (part long leasehold) premises close to Birmingham City Center (b) Established customer base (c) Turnover year ended 2003 circa GBP2.3 million (d) Skilled and experienced workforce (e) Modern plant and machinery (f) Thermo plastic injection moldings to 350t (g) Thermo Set processing (DMC up to 320t) (h) Compression moldings up to 150t (i) Toolroom facilities (j) Sub-assembly including ultrasonic, heat insert-ultrasonic welding (k) Inspection department with CMM equipment (l) ISO 9001-2000 BVQI 31872 (m) Expertise in procurement of Tooling from far East For sales information or further details please contact Kaye O'Reilly or Ian Gould of PKF. PKF, New Guild House 45 Great Charles Street Queensway, Birmingham B3 2LX Phone: 0121 212 2222 Fax: 0121 212 2300 Homepage: http://www.pkf.co.uk BRITISH AIRWAYS: Welcomes Government's Plan to Build New Runway --------------------------------------------------------------- British Airways' chief executive Rod Eddington commented on the Government's aviation white paper: "We congratulate the government on recognizing the enormous benefits that a third runway at London Heathrow airport will bring to Britain. "For the first time, we have an effective forward-looking aviation policy which recognizes Heathrow's key role as Britain's main gateway airport. Its continuing development has been guaranteed with Terminal Five, the opportunity to introduce mixed mode in peak periods and a third runway with a dedicated terminal. That is excellent news for the aviation industry, customers, national and regional businesses and tourism. "We will work with the government and local authorities to establish an immediate program of action that addresses the environmental issues at Heathrow and we will play a full part in ensuring that these issues are resolved. "We will engage with BAA and other interested parties to ensure that Heathrow's third runway is built as soon as possible in the timescale specified by the government. "The government's plans for new runways at Birmingham and Edinburgh airports are also welcomed." BRITISH AIRWAYS: Might Make Further Job-cuts at CitiExpress ----------------------------------------------------------- British Airways is rumored to cut another 5,000 jobs next year as it continues to weather a critical stage in its existence, according to The Scotsman. The job-cuts are likely to affect its loss-making domestic service, CitiExpress, which has already suffered losses under Chief Executive Rod Eddington's cost-savings program. CitiExpress fell into the red to the tune of more than GBP360 million over two years, instead of breaking even as hoped. It survived the group's efforts to cut 20% of domestic services last Christmas, and continues to operate on nearly 100 routes from 26 airports across the U.K. and Ireland. British Airways is to present a new business plan early in 2004, which is expected to include measures to revive its short-haul business. A spokeswoman said: "It is true that the new business plan will outline efforts to address the competition from low-cost airlines. However, the details have not been finalized, so any rumors are pure speculation." BRITISH ENERGY: Heysham 1 to Remain Closed Until Next Year ---------------------------------------------------------- Further to its announcement of November 24, British Energy confirms that the inspections of the seawater cooling pipes at Heysham 1 have now been completed. Having reviewed the inspection results received in recent days, British Energy has decided it is necessary to extend the current outage in order to replace further pipework. As a consequence, it is now expected that the outage on the two units will continue into the first quarter of 2004. A further announcement will be made in due course. ***** The Company is facing short-term pressures on liquidity resulting from the combined effect of seasonality, the recent unplanned outages at Sizewell B (which returned to service on November 15, 2003) and Heysham 1 and the increased levels of collateral and costs of unplanned outages brought about by the increased volatility of electricity prices. CONTACT: FINANCIAL DYNAMICS Media Enquiries Andrew Dowler Phone: 020 7831 3113 Investor Relations Paul Heward Phone: 01355 262201 Homepage: http://www.british-energy.com DE ROMA: Joint Administrators Sell Business as 'Going Concern' -------------------------------------------------------------- Joint Administrators, S. Allport and G. Wilsom of Ernst & Young LLP, offer for sale as a going concern the business and assets of De Roma Ice Cream Limited (in Administration). Features: (a) Manufacturer of multi-pack take-home ice cream products. (b) Sales comprise primarily own-label products sold into the major supermarket chains. Historical turnover of approximately GBP21 million per annum. (c) Based in Wian, Lancashire, with approximately 150 employees (seasonally driven). (d) Freehold site of approximately 3.65 acres, with two production units (six production lines) totaling 78,000 sq ft, and 3,000 sq ft of warehousing. (e) Significant, relatively new and well-maintained related plant and equipment. For further information, please contact Abelines Geldenhuys or Matt Smith at: Ernst & Young LLP, 100 Barbirolli Square Manchester, M@ 3EY Phone: 0161 333 2818 Fax: 0161 333 3008 FAULDS ADVERTISING: KPMG to Investigate Dividend Paid to Owner -------------------------------------------------------------- Faulds Advertising had debts of GBP3.25 million when it shut down in September, a joint receivers report said, according to The Scotland. The company was once Scotland's second-largest advertising agency. Some GBP1.4 million of the debts were owed to trade creditors, including several publishers, the report said. Receivers at KPMG are continuing to investigate circumstances leading to the fall into administration of the Edinburgh advertising agency. It is in particular trying to establish whether Dennis Chester, owner and managing director, paid himself the money when the agency was already trading insolvently, or if the dividend was the one that caused Faulds' downfall. Mr. Chester is understood to have received GBP750,000 in dividend in April, when Faulds lost GBP5 million Kwik-Fit advertising brief. The payment was thought to have been made without the knowledge of other directors. Blair Nimmo, Faulds' joint receiver at KPMG, said: "Any substantial transaction carried out with a connected party so close to an insolvency merits investigation. We are not saying Mr. Chester has done anything wrong; we are saying this issue requires further investigation." The company haven't paid a dividend since 2001 when Jim Faulds still owned the agency and it made an annual pre-tax profit of GBP655,000 on turnover of GBP25.5 million. At the time of Mr. Chester's payout, Faulds had a pre-tax loss of GBP80,000 on turnover of GBP12.4 million. The receivers are hoping to recover the money, even if they have to take it from Mr. Chester's business interests. Mr. Nimmo said: "Hopefully, if we prove our case he will return the funds. Otherwise, we would have to consider other options open to us." The receiver is seeking a meeting with Chester shortly. It is being advised by law firm Shepherd & Wedderburn on the legality of the transaction and the prospects of recovery. HIBERNIA FOODS: Factories Sold to Kerry Foods; 450 Jobs Saved ------------------------------------------------------------- Following the appointment of Myles Halley and Allan Graham of KPMG Corporate Recovery as joint administrative receivers to the Hibernia Foods group on October 24, 2003, the receivers have been seeking buyers for the various Hibernia businesses. Myles Halley, joint administrative receiver said: "We are pleased to announce the sale of the ready meals and chilled desserts businesses of the Hibernia group to Kerry Foods, on Monday December 15. These businesses incorporate the factories at Birmingham, Bristol and Brenda Road (Hartlepool), and this sale will result in the transfer of 450 employees going forward." With regard to the other sites, the receivers are continuing to talk to interested parties, although they have stressed that sales of the remaining divisions are uncertain. The receivers are keeping the unions and employees on the sites informed of significant developments, and have indicated that they will provide a further statement before the Christmas holidays. ***** The six subsidiaries of Hibernia Foods Holdings (U.K.) Limited include Hibernia Brands Limited, Majestic Food Group Limited, Hibernia Holdings Limited, Hibernia Chilled Foods Limited, Hibernia Foods Limited, Hibernia Foods Bakeries Limited. CONTACT: KPMG Rayner Peett, Corporate Communications Phone: 0207 694 8381 Mobile: 07887 567292 E-mail: rayner.peett@kpmg.co.uk LE MERIDIEN: Appoints New CEO; CFO to Leave at Month's End ---------------------------------------------------------- Troubled Le Meridien said Tuesday it appointed Robert Riley as chief executive of the British hotel group. Mr. Riley will take over the functions of Stephen Alexander, who has been serving as interim CEO for the past nine months. The company also said that Chief Financial Officer David Maloney will leave the company at the end of December. He will be replaced by Iain Ferguson, who is currently vice president of finance after joining the hotel chain last summer. Directors Alexander and Finlay McFadyen, meanwhile, will return to private equity firm Terra Firma Capital Partners where they were previously managing directors. Le Meridien, which owns the Grosvenor House and Waldorf hotels in central London, breached borrowing agreements with its banks earlier this year after being hit hard by a slowing economy and slumping tourism. Efforts to hand over control of its international operations to Lehman fell through last month after various parties failed to reach agreement. The company's senior banks include Merrill Lynch, and Canada's CIBC. They and 12 other banks are owed about GBP750 million. NACHTMANN LIMITED: Joint Administrators Offer Business for Sale --------------------------------------------------------------- The Joint Administrators, Robert Michael Young & Ian Michael Rose, offer for sale the business and assets of Nachtmann (U.K.) Limited (in Administration). The Company trades as retailers of glass, china and kitchenware from 11 retail outlets and 4 in store concessions in the U.K. (a) Prime out of town shopping malls at Colne, Lancashire; Shiremoor, Newcastle upon Tyne; Bridgend, Mid Glamorgan; Ellesmere Port, South Wirral; Livingston, Wesy Lothian; South Normanton, Derbyshire; Churchward, Swindon; Salford Quays, Manchester; Fareham, Hampshire; Worcester and York. (b) Turnover of approximately GBP2.1 million. For sales particulars contact Lisa Moore at: Poppleton & Appleby, Insolvency Practitioners, Brampton House Mews, 10 Queen Street, Newcastle under Lyme, Staffordshire, ST5 IED. Phone: 01782 382930 Fax: 01782 382931 E-mail: lisam@pandastoke.co.uk All offers to be received by midday on Monday, January 5, 2004. NETWORK RAIL: Union Raps Management for Reneging on Promises ------------------------------------------------------------ Rail, Maritime and Transport union expressed its discontent over how Network Rail, the successor of Railtrack, is taking its stand on issues affecting members, in a letter sent to the company that leaked to the Guardian. The union, which welcomed Network Rail's arrival hoping that its not-for-profit structure would be conducive to fair treatment of staff, sent a letter to Network Rail's chief executive, John Armitt, criticizing the way the company is handling a move to take all track maintenance in-house. The union accuses the company of reneging on promises over pension contributions. It said Network Rail was axing a system under which it matched additional voluntary pension contributions for workers transferring from defunct contractors. It also alleged that Network Rail encouraged maintenance firm Serco to make staff redundant before they move into Network Rail's employment. A Network Rail spokesman said the company had opted to take on the Serco staff after a "consultation process." The union said there was no consultation held with its members ahead of a one-day cull in which 603 managers were made redundant last month. The spokesman further accused unions of making the group's program of redundancy more difficult by leaking the date on which the sackings were to be announced. The union's letter also attacks a new rule requiring line workers to wear hard hats at all times, saying the headgear was "cooking their brains" during the summer. NORTHUMBRIAN WATER: Incentive Plan for Directors Approved --------------------------------------------------------- The Company announces that two copies of the resolutions passed at the Extraordinary General Meeting of the Company held Tuesday, have been sent to the UKLA's Document viewing facility and will shortly be available for inspection. It was resolved: (a) That the Northumbrian Water Group plc Share Incentive Plan (SIP) 2003, the rules of which are produced to the meeting and signed by the Chairman for the purposes of identification and a summary of which is set out in the Appendix to the circular to shareholders accompanying this notice, be and are hereby approved, and that the directors of the Company be authorized to adopt the SIP, subject to such amendments thereto as may appear to the directors to be necessary or desirable, and to do all things necessary to give effect to the SIP, including obtaining the approval of the Inland Revenue. (b) That the Northumbrian Water Group plc Long Term Incentive Plan 2003 (LTIP), the rules of which are produced to the meeting and signed by the Chairman for the purposes of identification and a summary of which is set out in the Appendix to the circular to shareholders accompanying this notice, be and are hereby approved, and that the directors of the Company be authorized to adopt the LTIP, subject to such amendments thereto as may appear to the directors to be necessary or desirable, and to do all things necessary to give effect to the LTIP. (c) That the Company and its subsidiaries be and are hereby authorized to make Donations to EU Political Organizations and to incur EU Political Expenditure in an aggregate amount not exceeding GBP40,000 during the period ending two years from the date of the passing of this resolution (and, for the purposes of this resolution, the terms 'Donations', 'EU Political Organizations' and 'EU Political Expenditure' have the meanings set out in section 347A of the Companies Act 1985, as amended by the Political Parties, Elections and Referendums Act 2000). CONTACT: FINSBURY Phone: 020 7251 3801 Rollo Head Mark Harris Anthony Silverman PEARSON GROUP: Financial Times Advertising Revenues Drop Further ---------------------------------------------------------------- Pearson remains on track to make earnings progress again this year. We expect our reported adjusted earnings per share to be within the range of current market expectations, as the effect of the weaker dollar and lower profits in our Professional division are partially offset by a lower tax rate. Though market conditions remain tough for corporate advertising and technology-related businesses, we continue to perform strongly in our markets and are benefiting from further efficiency gains. With two important weeks of trading still to go -- especially for Higher Education and Penguin -- our expectations for 2003 are: Pearson Education Our School and Higher Education businesses will report good underlying progress on revenues and profits, but our Professional division will be significantly lower than last year and below current expectations due to the TSA contract. School We continue to expect underlying revenues in our School division to be a little ahead of last year. Our basal publishing business has taken the leading share of new U.S. state adoptions and is growing ahead of the industry. This strong competitive performance has offset weak trading conditions as state budget pressures continue to affect school funding, especially for discretionary purchases such as supplementary materials and curriculum software. Higher Education Our Higher Education business is growing faster than the industry for the fifth consecutive year, helped once again by strong publishing, the integration of textbooks and technology, and custom publishing. We expect it to increase underlying revenues in the 5-7% range. Professional Results from our Professional division will reflect the absence of the TSA contract and closeout costs associated with it. Excluding the TSA contract, revenues in our Government Solutions business will show good growth as we benefit from the major contracts with the U.S. Departments of Health and of Justice, which began this year. New contract wins We are announcing a series of long-term contract wins across our education businesses: (a) Our school testing business has won several multi-year state testing contracts in the second half worth more than $160 million. These contracts, which will be effective from 2005, take our total contract wins in educational testing this year to more than $300 million. (b) In Government Solutions, the U.S. Department of Education has renewed and expanded our work on the Federal Student Aid program, in a $160 million ten-year contract beginning in 2004. (c) In Professional Testing, we have won a nine-year contract to provide testing services to the U.S. National Association of Securities Dealers. This follows our recent contract wins from the Graduate Management Admissions Council for its GMAT examination and the U.K.'s Driving Standards Agency. Financial Times Group We expect the FT Group to report profits slightly ahead of last year, benefiting from another strong year at IDC. Advertising revenues across our business newspapers continue to be erratic. At the Financial Times, advertising has continued to decline year-on-year, despite modest growth in September and good growth in the U.S. Certain advertising categories, including recruitment, corporate results and transactions, and online are showing signs of stabilization. We expect the FT's total advertising revenues to be some 12% lower in the second half and approximately 15% lower for the full year (after an 18% decline in the first half). We have reduced the FT's cost base by approximately GBP15 million this year, around half of which has been reinvested in the newspaper. Since 2000, the FT has reduced costs by approximately GBP100 million. Penguin We expect Penguin to increase underlying revenues by 1-2%. A strong frontlist performance, particularly in the US and Australia, has been partially offset by tough conditions for backlist sales. Penguin's cash performance will be affected by the concentration of its publishing schedule in the fourth quarter, pushing collections into next year, and by investment in new authors for 2004 and future years. Cash The TSA continues to owe Pearson approximately US$150 million relating to the contract we successfully completed last year. If we receive payment before the year-end, we will deliver total free cash flow ahead of last year. We also expect the average working capital/sales ratio to be slightly lower than last year, excluding the TSA receivable. Interest, exchange and tax rates Our interest charge for the second half of the year will be similar to the first half. As Pearson generates approximately 70% of revenues in the U.S., the weakening of the U.S. dollar will affect our reported results. Our full-year exchange rate will be approximately GBP1: US$1.63 (compared to GBP1:$1.51 in 2002), which reduces our reported adjusted earnings per share by approximately two pence. We expect our effective tax rate to be at the low end of our 33-35% guidance. Outlook We are confident that we will make progress on earnings, cash and returns next year, even at current exchange rates. At this early stage, the outlook for our major businesses in 2004 is: Pearson Education As a particularly slow adoption cycle combines with state budget pressures, we expect the U.S. School publishing industry to decline in the mid-single digits ahead of a significant rebound from 2005 onwards. In 2004, as in 2003, we expect the U.S. Higher Education industry to fall below its average growth rate of 5-7%, but we expect our Higher Education business to grow ahead of the market, somewhere in the 4-6% range. We expect sales and profits in Professional to be ahead of 2003, despite continued weakness in technology publishing and approximately GBP10 million of start-up costs relating to our new professional testing contracts. FT Group Although the outlook for advertising remains uncertain, we expect a significant profit improvement as our business newspapers benefit from continuing cost reductions. We also expect further growth at IDC. Penguin We expect Penguin to grow faster than the consumer publishing market, with another strong publishing schedule and the launch of several new imprints in the U.S. Pearson will announce its preliminary results for the 12 months ending December 31, 2003 on March 1, 2004. Note: All growth rates in this statement are stated on an underlying basis. Underlying growth excludes the impact of acquisitions, disposals and currency movements. CONTACT: PEARSON PLC Luke Swanson/Charlotte Elston Phone: + 44 (0) 20 7010 2310 ********* 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *