European Business News (EBN), 97-01-20

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated January 20 1745 CET

CONTENTS

[01] Olivetti Sells PC unit to Piedmont

[02] Deutsche Telekom offers investors some insight into finances

[03] Teitmeyer urges large-scale reform

[04] British Petroleum signs $1 bln deal to supply gas to Ruhrgas

[05] Arthuis rejects discussions with Credit Foncier employees

[06] Berlusconi trial faces re-start

[07] Eurotunnel says sales surpassed expectations last year

[01] Olivetti Sells PC unit to Piedmont

Olivetti said it will realize a total of 250-300 billion lire, although an exact sales price reflecting the division's net assets will be determined at the final signing of the agreement at the end of February.

Olivetti also said it would retain a 10% stake in the PC division.

Piedmont International is a company controlled by Edward Gottesman, a U.S. lawyer based in London who has been involved in the negotiations.

The news closes a chapter opened last October, when Olivetti announced it would seek to sell the PC division, which has been responsible for the lion's share of Olivetti's heavy losses in recent years.

The sale is part of a series of asset sales aimed at raising about 800 billion lire to help cut debt and restructure the company. Olivetti is seeking to shift its focus to telecommunications, largely through its controlling stake in cellular phone company Omnitel-Pronto Italia

Olivetti's shares were suspended in Monday's trading in Milan, but the stock has responded sharply in recent weeks to speculation as to a sale of the PC division. Since last summer, the company's stock has hit all-time lows following a series of management shakeups and the announcement of massive new losses.

[02] Deutsche Telekom offers investors some insight into finances

The company said in an unexpected regulatory statement that sale grew to more than 63 billion marks ($38.9 billion), that it would pay as promised a dividend of 60 pfennigs per share on 1996 results and that it was able to cut financial debt by 10 billion marks.

'Deutsche Telekom will exceed previous estimates for the full year,' chairman Ron Sommer said. 'All in all the expectations of the board have been more than fulfilled.'

[03] Teitmeyer urges large-scale reform

Bundesbank President Hans Tietmeyer was quoted as saying many European countries have faltered economically and should not wait for the planned European single currency before restructuring their economies. Meanwhile, Bundesbank council member Hans-Juergen Krupp attacked the government's insistence on a strict interpretation of the entry criteria for the currency union phase of Europe's economic and monetary union.

In an interview published in International Herald Tribune, Teitmeyer said EU countries, including Germany, have been too slow to realise the need for reforms in order to match the rising power of Asia, the growth of Eastern Europe as a production base and the dynamic revival of the United States. And he added that whilst he expects Germany's economy to grow this year between 2% and 2.5%, he warned that cold winter weather may hold back the recovery in the first quarter.

'I think we are on the way to recovery but we don't have enough of a self- supporting economic recovery yet,' Tietmeyer said. He suggested governments should not link these urgently needed reforms with the introduction of a single European currency, but instead treat them as a crucial step for Europe to become more competitive in the world economy.

But Europe must implement structural reforms to its labour market to bring down unemployment, which he described as 'the crucial issue for the future of Europe'. Tietmeyer also repeated a call for strict interpretation of the Maastricht treaty. Europe's leaders decide in early 1998 which countries qualify to join monetary union when it is launched in January 1999.

However, Krupp attacked the government's insistence on a strict interpretation of the entry criteria for the currency union phase of Europe's economic and monetary union.

[04] British Petroleum signs $1 bln deal to supply gas to Ruhrgas

The gas will be delivered from BP's North Sea portfolio via the Interconnector pipeline between Bacton on the east coast of England and Zeebrugge in Belgium.

The 450 million pound Interconnector is due to commence operations in October 1998 and the BP-Ruhrgas deal is third to be confirmed using the pipe to transport gas from the U.K. North Sea to continental Europe.

Last year Conoco and British Gas announced deals with Wingas, the joint venture between Wintershall of Germany and Gazprom of Russia. The Conoco deal was for 10 billion cubic meters over 10 years and the British Gas deal amounted to 20 billion cubic meters over 10 years.

[05] Arthuis rejects discussions with Credit Foncier employees

'There can't be a dialogue when one is deprived of one's liberty,' Arthuis said.

However, Arthuis also said that a plan to transfer some assets and employees to Credit Immobilier de France, which would eliminate around 1, 800 jobs, was not set in stone, nor would there be outright layoffs.

Arthuis added that a recapitalization of CFF by the state, as it has done with Credit Lyonnais, is out of the question, because, he said, 'the government has no interest in becoming the primary shareholder in a new state-owned bank. The times call for privatisations, not nationalisations.'

Arthuis backed away from the Credit Immobilier plan, however, refusing even to call it a plan. 'There are necessities,' he said. 'But we must proceed slowly....We must find a partner...right now, Credit Immobilier de France has possibilities, but we must discuss it.'

Arthuis added there would be no outright layoffs of CFF employees. Most would leave either through early retirement or voluntarily via incentive plans.

Press reports estimated that around 500 CFF employees remained in the bank's headquarters today after having spent the weekend there. On Friday, an estimated 2,000 employees took over the CFF building.

[06] Berlusconi trial faces re-start

Berlusconi, Italy's former Prime Minister, and ten others who also face charges of complicity in corruption, face the possibility of starting the trial from scratch because presiding judge Carlo Crivelli resigned in the wake of an appeal court ruling that found he had committed a `serious lapse of style'. The appeal court were examining allegations of Crivelli's partiality following an attempt by Silvio, his son Paolo Berlusconi and two other defendants last October to have him removed from the bench on grounds of prejudice.

Although the court of appeal rejected the suit, which was based on revelations of a private exchange between Crivelli and a prosecutor in which the judge spoke of a 'carrot and stick' approach to the trial, Crivelli felt the public had lost confidence in him.

In a written statement to the court, Crivelli said the appeal court ruling had exposed him to unjustified pressure and undermined his public prestige. He added that he thought the court had also allowed the defendants who had challenged his impartiality 'to avoid their natural judge and alter the duration of the trial'.

Proceedings were adjourned after Crivelli's announcement until February 5 pending the appointment of a new judge.

[07] Eurotunnel says sales surpassed expectations last year

The Anglo-French Channel Tunnel operator said 1996 sales rose to around £450 million from £300 million the year earlier. the company said that was an increase of 62% expressed at the average sterling/French franc exchange rate for the year and above the company's own 50% sales growth target.

The figure excludes payment from insurance companies to cover the loss of revenue due to the fire. Eurotunnel also said that representatives of creditor banks had recommended the extension of a debt standstill agreement until December.

'Representatives of the banking syndicate have decided to recommend to the syndicate an extension of the standstill to December,' the company said. The debt standstill went into effect in September 1995 and was due to run for 18 months. Commenting on the fall-out from the fire which led to a main section of a tunnel being closed last year, the group said.

'The board...believes that the November fire should not have any significant effects on the long-term financial performance of the company, nor will there will any need to review the financial restructuring plan which was agreed in principle with representatives from the banking syndicates on October 1, 1996.'

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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