/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/081107.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, November 7, 2008, Vol. 9, No. 212 Headlines A U S T R I A GJEVDET SHALA: Claims Registration Period Ends Nov. 18 KRISTO LLC: Claims Registration Period Ends Nov. 23 QXR CLEANING: Claims Registration Period Ends Nov. 18 VADEX LLC: Claims Registration Period Ends Nov. 25 D E N M A R K ROSKILDE BANK: EU Commission Approves Danish Liquidation Aid KINGDOM OF DENMARK: S&P Sees Drop in Banking Sector Asset Quality G E R M A N Y BAV MASCHINENBAU: Claims Registration Period Ends November 13 BKR BAU: Claims Registration Period Ends November 12 E.T.S. GLAS: Claims Registration Period Ends November 12 ELEMENTS GMBH: Claims Registration Period Ends November 12 GROB AEROSPACE: German Unit Declared Insolvent INDUSTRIAL SERVICES: Claims Registration Period Ends Nov. 12 SENSO WORKS: Claims Registration Period Ends November 12 * Fitch: German Municipal Companies -- Essentially a Public Risk G R E E C E TITAN CEMENT: S&P Cuts Rating to 'BB+/B' on Weak Metrics I C E L A N D GLITNIR BANKI: Auction Sets CDS Values at 3% on Senior Debt GLITNIR BANKI: Auction Sets CDS Values at 0.125% on Sub. Debt KAUPTHING BANK: Swedish Branch Sells Pension Unit to Employees LANSBANKI: Auction Sets CDS Values at 0.125% on Sub. Debt LANDSBANKI: Auction Sets CDS Values at 1.25% on Senior Debt STRAUMUR BURDARAS: Fitch Cuts Individual Rating to 'D/E' I T A L Y ALITALIA SPA: Files Chap. 15 Petition to Save U.S. Assets ITALFINANCE SECURITISATION: S&P Affirms Ratings on 2 Note Classes TISCALI SPA: In Talks With BSkyB Regarding Sale of UK Business K A Z A K H S T A N AES COAL: Creditors Must File Proofs of Claim by December 12 AMANGELDY LLP: Creditors' Claims Deadline Slated for December 12 ASIATIC MANAGEMENT: Creditors' Claims Filing Period Ends Dec. 12 ENBEK-98 LLP: Creditors Must Register Claims by December 12 ENERGETIC-NS LLP: Creditors' Claims Due on December 12 REGION-MASH LLP: Creditors Must File Proofs of Claim by Dec. 12 SINERGIA LLP: Creditors' Claims Deadline Slated for December 12 TEMIR-JAYIK LLP: Creditors' Claims Filing Period Ends Dec. 12 TORESHE LTD: Creditors Must Register Claims by December 12 URALSKAYA BAZA: Creditors' Claims Due on December 12 K Y R G Y Z S T A N IVANOVSKY MASHINOSTROITELNY: Claims Deadline Set on November 28 M A C E D O N I A * Fitch Changes Macedonia's Outlook to Stable; Affirms IDRs at BB+ N E T H E R L A N D S AZOVSTAL CAPITAL: Strong Price Reduction Cues Moody's B2 Rating METINVEST B.V.: Weakening Demand Cues Moody's to Cut Rating to B1 P O R T U G A L BANCO PORTUGUES: Fitch Downgrades Individual Rating to 'F' R O M A N I A SC HIDROELECTRICA: S&P Affirms 'BB' Ratings; Outlook Negative R U S S I A KAZANORGSINTEZ OJSC: Liquidity Concerns Cue S&P to Junk Rating OPIN JSC: Fitch Holds IDR at 'B' & Changes Outlook to Stable RBC OJSC: S&P Slashes Ratings to 'CCC/ruB' on Refinancing Concerns * RUSSIA: PM Says Banking Industry Has Enough Liquidity * Russian Gov't Measures Ease Emerging-Market Oil & Gas Pressures * Most Rated Russian Local Gov'ts. to Withstand Economic Pressure S W E D E N KAUPTHING BANK: Swedish Branch Sells Pension Unit to Employees S W I T Z E R L A N D BREITENMOSER ISO: Creditors Must File Proofs of Claim by Nov. 15 COOLWAVE JSC: Deadline to File Proofs of Claim Set November 14 GIVING BASKET: Creditors Have Until Nov. 14 to File Claims HR MANAGEMENT: Proofs of Claim Filing Deadline is Nov. 14 LMB LLC: Creditors' Proofs of Claim Due by Nov. 14 STARS & VIBES: Nov. 15 Set as Deadline to File Claims WOBAG-IMMOBILIEN JSC: Creditors Must File Claims by Nov. 15 XARDAS LLC: Deadline to File Proofs of Claim Set Nov. 15 U K R A I N E AZOVSTAL CAPITAL: Strong Price Reduction Cues Moody's B2 Rating BUSINESS TECHNOGROUP: Creditors Must File Claims by Nov. 16 CENTRAL EUROPEAN: S&P Affirms 'BB' Ratings; Outlook Negative INDUSTRIAL UNION: Moody's Puts B1 Rating on Review for Downgrade INSTITUTE OF GEOPOLITICS: Creditors Must File Claims by Nov. 16 METINVEST B.V.: Weakening Demand Cues Moody's to Cut Rating to B1 NASH #1: Creditors Must File Claims by November 16 FIKS LLC: Creditors Must File Claims by November 16 U N I T E D K I N G D O M ARTHRO KINETICS: In Talks to Sell Business; May Liquidate BLUESTONE SECURITIES: S&P Puts 'BB' Rtngs on 3 Classes on WatchNeg CASTLE HOLDCO: Liquidity Concerns Spur S&P to Junk L-T Rating CEVA GROUP: Moody's Affirms Caa1 Rating on EUR225 Mil. Sr. Notes GALVANIC TECHNICAL: Taps Joint Administrators from Baker Tilly KAUPTHING SINGER: Chancellor Waves Responsibility for Deposits KTS WIRE: Brings in Joint Administrators from KPMG MAGELLAN RESIDENTIAL: Goes Into Administration PIPE HOLDINGS: S&P Keeps 'B-' Rating; Outlook Neg on Market Woes QUEST 4 FINANCE: Brings in Joint Administrators from BDO Stoy SUNBERRY PROPERTIES: Taps Administrators from Grant Thornton SUNSHINE FINE: Brings in Joint Administrators from PwC TEATHERS LTD: Administrators Sell Private Client Broking Biz TI AUTO: S&P Cuts Rating to 'CCC+'; Outlook Negative TISCALI SPA: In Talks With BSkyB Regarding Sale of UK Business WAGE PAYMENT: Taps Joint Administrators from BDO Stoy WESTBRIDGE HOMES: Goes Into Administration * Fitch: 30% UK House Price Decline to Hit Junior NC RMBS Notes * Financial Sector Dominates Global Defaults, S&P Finds * Consumer-Based Sectors Face a Frightening Environment, S&P Says * S&P Sees High Recovery Prospects for Lenders in Oil Sector * IFRS Changes Allow EUR Banks to Avoid Fair Value Accounting * S&P Says Gov't. Support EU Banks, But Ratings Pressure Persists * S&P Says No Funding Agreement-backed Issuance in October 2008 * Q2 Global Project Finance Ratings Remain Stable, S&P Says * Upgrade Potential Falls To Four-Year Low, S&P Article Says * S&P Says 786 Issuers Face Downgrade Risk, A Three-Year High * BOOK REVIEW: Crafting Solutions for Troubled Businesses: ********* =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D A U S T R I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D GJEVDET SHALA: Claims Registration Period Ends Nov. 18 ------------------------------------------------------ Creditors owed money by LLc Gjevdet Shala (FN 218782p) have until Nov. 18, 2008, to file written proofs of claim to the court- appointed estate administrator: Katharina Twaroch-Nowak Gusshausstra=DFe 23 1040 Vienna Tel: 505 88 31 Fax: 505 94 64 E-mail: kanzlei.twaroch@kainz-wexberg.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 12:00 p.m. on Dec. 2, 2008, for the examination of claims at: Land Court of Vienna Room 1701 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Oct. 7, 2008 (Bankr. Case No. 6 S 119/08d). KRISTO LLC: Claims Registration Period Ends Nov. 23 --------------------------------------------------- Creditors owed money by LLC Kristo (FN 267850y) have until Nov. 23, 2008, to file written proofs of claim to the court- appointed estate administrator: Dr. Alexander Isola Marburger Kai 47 8010 Graz Tel: 0316/833777 Fax: 0316/833777-33 E-mail: graz@gmp.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:00 a.m. on Nov. 26, 2008, for the examination of claims at: Land Court of Graz Room 222 Graz Austria Headquartered in Graz, Austria, the Debtor declared bankruptcy on Oct. 16, 2008, (Bankr. Case No. 26 S 119/08g). QXR CLEANING: Claims Registration Period Ends Nov. 18 ----------------------------------------------------- Creditors owed money by LLC QXR Cleaning Products (FN 273481d) have until Nov. 18, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Katharina Widhalm-Budak Favoritenstrasse 22/12a 1040 Vienna Tel: 504 64 08 Fax: 504 64 08 22 E-mail: widhalm-budak@mitrecht.com Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:00 a.m. on Dec. 11, 2008, for the examination of claims at: Trade court of Vienna Room 1701 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Oct. 9, 2008, (Bankr. Case No. 6 S 120/08a). VADEX LLC: Claims Registration Period Ends Nov. 25 -------------------------------------------------- Creditors owed money by LLC Vadex (FN 293564m) have until Nov. 25, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Ute Toifl Tuchlauben 12/20 1010 Vienna Tel: 535 46 11 Fax: 535 46 11 11 E-mail: office@thr.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 11:20 a.m. on Dec. 9, 2008, for the examination of claims at: Trade Court of Vienna Room 1606 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Oct. 8, 2008,(Bankr. Case No. 28 S 129/08m). =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D D E N M A R K =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D ROSKILDE BANK: EU Commission Approves Danish Liquidation Aid ------------------------------------------------------------ The European Commission has authorized, under EC Treaty rules on state aid, a package of measures to liquidate Roskilde Bank in Denmark. In August 2008, when it became clear that the rescue of the bank would fail, the Danish National Bank and the Danish association of private banks (DPB) took over, through a newly created entity, all assets and liabilities of Roskilde Bank, with a view to preparing an orderly winding-up. In the context of the liquidation, the new entity was provided with capital and continued to benefit from the liquidity facility granted as a rescue measure. Furthermore, the Danish authorities agreed to provide a guarantee to the Danish National Bank for any losses it may incur in relation to this transaction. The new entity will only exist as a bank for the time needed to complete the sale of the branches, which already took place on October 7, and the redemption of all senior creditors of the bank. The Commission found the liquidation to be in line with its Guidance Communication on state aid to overcome the financial crisis, because it was an appropriate and proportionate measure to address a serious disturbance of the Danish economy, while keeping the potential distortions of competition to the minimum. The liquidation measures are therefore compatible with Article 87.3.b. of the EC Treaty. Competition Commissioner Neelie Kroes said: "Thanks to good cooperation with the Danish authorities, the Commission was able to provide legal certainty on the liquidation of Roskilde Bank. In the current context of financial turmoil this was important for both Roskilde's creditors and for the Danish financial market as a whole." Roskilde Bank, based in the town of Roskilde, was the eighth largest bank in Denmark, with a balance sheet total of DKK42.9 billion as of March 31, 2008. In July 2008, in view of the turmoil in the global financial markets and the crisis in the Danish real estate market, the bank ran into financial difficulties and received state aid to be able to continue its business. However, the rescue, approved by the Commission did not succeed. As a result, the Danish National Bank (DNB) and Det Private Beredskab (DPB) decided on August 24, 2008 to take over, through a newly created entity, all assets and liabilities of Roskilde Bank, to wind up Roskilde Bank's activities. The purchase price for the transferred assets was DKK37.3 billion (around EUR5 billion). DNB and DPB also agreed to provide a capital base contribution of minimum DKK4.5 billion (around EUR603 million) to the newly created entity. In addition, the liquidity facility granted by DNB to Roskilde Bank was prolonged. It was further agreed that Roskilde Bank's creditors, apart from hybrid core capital and subordinated loan capital, would be fully redeemed. After subsequent negotiations, a large part of Roskilde Bank's branches were sold on September 29, 2008 to Nordea, Spar Nord Bank and Arbejdernes Landsbank. The buyers agreed to take over loans worth around DKK10 billion (around EUR1.3 billion) and deposits of DKK5 billion (around EUR670 million). The difference would be paid in cash, including DKK550 million (around EUR73.7 million) for goodwill i.e. for the value of branches sold above book value of loans. Following intensive contacts between the Danish authorities and the Commission, the liquidation aid measures were formerly notified by Denmark on October 7, 2008. The Commission's examination showed that no state aid was involved in the sale of the branches to Nordea, Spar Nord Bank and Arbejdernes Landsbank, because the price achieved for the sale was the maximum possible market price and the assets and liabilities were transferred to the buyers without any aid attached. In other words, the buyers could not rely on any support from the state. On the other hand, the rest of the measures supporting the liquidation of the bank do constitute state aid. However, in the current financial situation, a possible default of Roskilde Bank could put at risk confidence in the Danish financial system, which is very dependent on international financing. This constitutes a serious risk of a systemic crisis, which may also have spill-over effects into other business sectors. The objective of the Danish authorities was to preserve financial stability of the Danish financial system. Therefore, in view of this objective, the Commission considered the implemented measures to be appropriate. The measures were also necessary, as the Danish authorities had to restore the confidence of institutional lenders. The Commission noted that in this context subordinated debt was not covered by the state, which means that the risk of moral hazard is minimized, if not avoided. Furthermore, the implemented measures were proportionate, as the aid and distortions of competition were kept to the minimum, inter alia by the contribution of the private banks, through the DPB, to the measures. The Commission concluded that these liquidation aid measures were an appropriate and proportionate means of addressing a serious disturbance of the Danish economy and as such in line with Article 87.3.b of the EC Treaty and the Commission guidance. * * * As reported in the Troubled Company Reporter-Europe, Moody's Investors Service has withdrawn for business reasons all ratings of Roskilde Bank A/S whose name was changed to Selskabet af 1. september 2008 A/S on October 6, 2008. "The rating withdrawal of the E Bank Financial Strength Rating (BFSR) and the A3/Prime-1 debt and deposit ratings follows the announcement by the Danish FSA (Finanstilsynet) that it has withdrawn the bank's permission to operate as a bank," Eeva Antila, Moody's analyst for Roskilde Bank, said. KINGDOM OF DENMARK: S&P Sees Drop in Banking Sector Asset Quality ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its Banking Industry Country Risk Assessment on the Kingdom of Denmark to Group 2 from Group 1. The revision reflects S&P's expectations that asset quality in the sector will deteriorate. It also reflects the increasing vulnerability of the banks at the smaller end of the sector. This has become increasingly apparent in the currently tight liquidity conditions in the global debt markets. The large Danish financial institutions (Danske Bank A/S, Nordea Bank Danmark A/S, Nykredit Realkredit A/S, and Jyske Bank A/S) have well-established banking franchises and have not radically changed their business and financial profiles in the last three to four years of market bonanza, as some of the small regional and local banks have. As a result, they are now much more resilient to the tougher current market conditions, underpinned by well diversified business mixes, strong risk management, sound underwriting criteria, and easier and more diverse access to international funding. S&P is concerned about credit risk in the system. The slowdown in the Danish economy and global demand combined with a sharp correction in domestic housing prices has already started to put pressure on real estate developers and construction companies as well as on some small and midsize companies. The resulting credit losses will in particular impact those banks that have been expanding their lending aggressively in recent years in a quest for greater market share. In the case of Roskilde Bank A/S (not rated), the country's central bank had to intervene in July 2008 when the level of loan loss provisions rendered the bank insolvent. The current international financial and liquidity crisis has exposed the weaknesses of many smaller Danish financial institutions. The inability of smaller banks to access liquidity or to find financing has in many cases triggered a forced acquisition by a larger bank. Whereas in other countries, the banks subject to bailouts and acquisitions have been major players, the impact in Denmark has been on the small end of the banking spectrum, where about 150 banks account for a small (20%- 25%) but significant proportion of the wider banking sector. To safeguard financial stability and in line with similar measures taken in other European countries, the Danish Parliament approved on Oct. 10, 2008 the Act on Financial Stability, whereby all deposits and senior unsecured debt with Danish banks will be guaranteed for a two-year period. Moreover, the Danish central bank has launched a number of new lending facilities involving further lending against collateral. S&P believes that while the guarantee and the central bank measures should restore confidence in the interbank lending market, structural issues in the Danish financial sector remain. In S&P's opinion, Denmark has far too many small banks with very narrow business profiles, potentially risky loan portfolios and, given their rapid lending growth in the past few years, heavy reliance on volatile short-term funding. S&P believes that consolidation in the Danish banking sector is necessary and expect it to continue. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D G E R M A N Y =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D BAV MASCHINENBAU: Claims Registration Period Ends November 13 ------------------------------------------------------------- Creditors of BAV Maschinenbau GmbH have until Nov. 13, 2008, to register their claims with court-appointed insolvency manager Marc Schaumann. Creditors and other interested parties are encouraged to attend the meeting at 10:00 a.m. on Dec. 4, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Luebeck Hall E3 Burgfeld 7 23568 Luebeck Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Marc Schaumann Falkenstr. 22 23564 Luebeck Germany The District Court of Luebeck opened bankruptcy proceedings against BAV Maschinenbau GmbH on Oct. 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: BAV Maschinenbau GmbH Attn: Josef Beil und Matthias Rudolf Mogler Managers Traveweg 5 23569 Luebeck Germany BKR BAU: Claims Registration Period Ends November 12 ---------------------------------------------------- Creditors of BKR Bau- und Vertriebsgesellschaft mbH have until Nov. 12, 2008, to register their claims with court-appointed insolvency manager Dr. Achim Ahrendt. Creditors and other interested parties are encouraged to attend the meeting at 9:00 a.m. on Dec. 12, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Hamburg Hall B 405 Fourth Floor Annex Civil Justice Bldg. Sievkingplatz 1 20355 Hamburg Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Achim Ahrendt Albert-Einstein-Ring 11/15 22761 Hamburg Germany The District Court of Hamburg opened bankruptcy proceedings against BKR Bau- und Vertriebsgesellschaft mbH on Sept. 23, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: BKR Bau- und Vertriebsgesellschaft mbH Attn: Rahlf und Joerg Knoop, Managers Chrysanderstrasse 32 a 21029 Hamburg Germany E.T.S. GLAS: Claims Registration Period Ends November 12 -------------------------------------------------------- Creditors of E.T.S. Glas-, Gebaudereinigung und Gruenanlagenpflege GmbH have until Nov. 12, 2008, to register their claims with court-appointed insolvency manager Dr. Stephan Laubereau. Creditors and other interested parties are encouraged to attend the meeting at 10:30 a.m. on Dec. 10, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Wiesbaden E 36 A Building E Moritzstrasse 5 Hinterhaus 65185 Wiesbaden Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Stephan Laubereau C/o Pluta Rechtsanwalts GmbH - Buero Frankfurt/Main Trakehner Strasse 7-9 / Eingang A 60487 Frankfurt am Main Germany Tel: 069 / 850 9693 0 Fax: 069 / 850 9693 29 E-mail: frankfurt@pluta.net Web site: www.pluta.net The District Court of COURT opened bankruptcy proceedings against E.T.S. Glas-, Gebaudereinigung und Gruenanlagenpflege GmbH on DATE. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: E.T.S. Glas-, Gebaudereinigung und Gruenanlagenpflege GmbH Attn: Edip Isiktas, Manager Liebigstrasse 18 65439 Floersheim am Main Germany ELEMENTS GMBH: Claims Registration Period Ends November 12 ---------------------------------------------------------- Creditors of Elements GmbH have until Nov. 12, 2008, to register their claims with court-appointed insolvency manager Nikolai Weber. Creditors and other interested parties are encouraged to attend the meeting at 10:30 a.m. on Dec. 16, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Esslingen Hall One Insolvency Tribunal Strohstrasse 5 73728 Esslingen Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Nikolai Weber Breitscheidstrasse 10 70178 Stuttgart Germany Tel: 0711/252566-0 Fax: 0711/252566-66 The District Court of Esslingen opened bankruptcy proceedings against Elements GmbH on Oct. 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Elements GmbH Fabrikstrasse 15 73230 Kirchheim Germany Attn: Andreas Aschenbrenner, Manager Fabrikstrasse 5 73230 Kirchheim Germany GROB AEROSPACE: German Unit Declared Insolvent ---------------------------------------------- Grob Aerospace GmbH in Germany has been declared insolvent on October 31, 2008. In Switzerland, Grob Aerospace AG had been granted the postponement of the insolvency by the competent Swiss Court until October 31, 2008. It is also expected that the company will be put in insolvency by the Swiss court in the coming days. "Since August 2008, both the Swiss and German administrators and the entire management team of Grob Aerospace, have been working jointly and relentlessly on a solution to secure an investment in the near future," Grob Aerospace CEO Niall Olver said. "We have been in discussion with a significant number of potential investors around the world. These interested parties included financial investors, as well as strategic investors already active in the aviation industry. A number of them have performed a due diligence process and are well advanced in the commercial and contractual negotiations." However, he noted "we have unfortunately not been able to finalize the transaction at this stage, and within the timeframe allowed by the court. Clearly, the worldwide economic crisis and shortage of financing capability has not helped us in this process." Grob Aerospace GmbH in Germany had to file for preliminary insolvency on August 18, 2008, as a result of the delays in the spn program which in consequence led to an increased cash requirement in order to complete the project. The company's former loan provider elected to discontinue their support. From Monday, November 3, 2008, most employees will be released from work. A core team will remain in Mattsies to keep business activities running on a minimum scale. The remaining management team of Grob Aerospace GmbH together with the Grob Aerospace AG in Zurich are continuing the ongoing discussions with potential investors. As reported in the Troubled Company Reporter-Europe on September 22, 2008, Learjet terminated its development agreement with Grob Aerospace AG of Switzerland. Bombardier Aerospace is assuming complete responsibility for the detail design and manufacturing of all primary and secondary structures for the all-new Bombardier Learjet 85 midsize business jet, the TCR-Europe report disclosed. Headquartered in Zurich, Switzerland, Grob Aerospace -- http://www.grob-aerospace.net/-- is one of the world's largest and most experienced composite aircraft manufacturers since 1971. Grob's research, development, manufacturing and assembly facilities are located in Tussenhausen-Mattsies, Germany, where it maintains its own purpose built airfield. Its central base in the United States is located in Portsmouth, New Hampshire with several regional sales offices throughout the USA. INDUSTRIAL SERVICES: Claims Registration Period Ends Nov. 12 ------------------------------------------------------------ Creditors of Industrial Services Paper Lenningen GmbH have until Nov. 12, 2008, to register their claims with court-appointed insolvency manager Dr. Jan Markus Plathner. Creditors and other interested parties are encouraged to attend the meeting at 10:00 a.m. on Dec. 12, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Esslingen Hall One Insolvency Tribunal Strohstrasse 5 73728 Esslingen Germany Hall One Insolvency Tribunal Strohstrasse 5 73728 Esslingen Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Jan Markus Plathner Lyoner Strasse 14 60528 Frankfurt Germany Tel: 069 / 962334 - 0 Fax: 069 / 962334 - 22 The District Court of Esslingen opened bankruptcy proceedings against Industrial Services Paper Lenningen GmbH on Oct. 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Industrial Services Paper Lenningen GmbH Attn: Axel H. Scheufelen, Manager Adolf-Scheufelen-Strasse 26 73252 Lenningen Germany SENSO WORKS: Claims Registration Period Ends November 12 -------------------------------------------------------- Creditors of Senso Works GmbH have until Nov. 12, 2008, to register their claims with court-appointed insolvency manager Dr. Achim Ahrendt. Creditors and other interested parties are encouraged to attend the meeting at 11:00 a.m. on Dec. 12, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Norderstedt Hall B Rathausallee 80 22846 Norderstedt Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Achim Ahrendt Albert-Einstein-Ring 11 22761 Hamburg Germany The District Court of Norderstedt opened bankruptcy proceedings against Senso Works GmbH on Oct. 2, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Senso Works GmbH Attn: Dr. Ralph Ottensmeyer, Manager Carl-Benz-Strasse 9 24568 Kaltenkirchen Germany * Fitch: German Municipal Companies -- Essentially a Public Risk ---------------------------------------------------------------- Fitch Ratings says in a special report that although German municipal companies vary in terms of legal status, activities, financial performance and structure, they have fundamental similarities which are critical to their creditworthiness and which require a specific rating approach. The report focuses on the key characteristics of the sector. Most municipal companies have strong links with their municipality or Lander and their ratings are therefore based on Fitch's criteria for rating public-sector entities. The agency assesses the likelihood of support and the ability of the sponsor entity to provide it in a timely and adequate manner should it be required. In some cases, the legal status or a particular legal agreement imposes a bailout obligation on the local authority. More frequently, the need for and the probability of support will be assessed based on the economic and financial link (dependency) between the entity and its sponsor. German municipal companies are often grouped in joint organisations called Stadtwerke. Many of them were created in the late 19th and early 20th Century to serve a fast-growing urban population as the country became industrialized. German municipalities traditionally provide public services that aid economic development, such as energy, water, waste disposal, public transport and housing. Municipal companies were established by local authorities to fulfil public needs. Local authorities designate their public mission and keep control over strategic decisions (prices, investment). Many municipal companies provide basic public services and there would therefore be a strong interest from local authorities in bailing out companies that require financial assistance. In the vast majority of cases, a municipal company's majority shareholder is a public body. This is critical for their credit quality, based on the amount and likelihood of support from the local authority in case of need. Public ownership is also important for large profit-making entities in sectors that are open to competition, because legal agreements may empower the majority shareholder to use profits to set off operating losses from other activities, or to provide the municipal budget with an additional income. The special report, entitled "German Municipal Companies - Essentially a Public Risk", is available on the agency's public Web site, http://www.fitchratings.com/ =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D G R E E C E =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D TITAN CEMENT: S&P Cuts Rating to 'BB+/B' on Weak Metrics -------------------------------------------------------- Standard & Poor's Ratings Services lowered its long- and short- term corporate credit ratings on Greek cement manufacturer Titan Cement Co. S.A. to 'BB+/B' from 'BBB-/A-3'. The ratings remain on CreditWatch with negative implications, where they were originally placed on Oct. 27, 2008. "The downgrade reflects our belief that the group's financial profile will considerably weaken this year compared with last year, and that credit metrics will not significantly improve before 2010 at best," said Standard & Poor's credit analyst Xavier Buffon. This belief is founded on the ongoing market decline in Greece, an unlikely substantial recovery in the U.S. over this time horizon, S&P's view that the cushion provided by developing markets will erode, and the impact of heavier interest charges. The ratings action also incorporates S&P's opinion that the group's liquidity is weak, given covenant risks. The ratings remain on CreditWatch negative as S&P believes that as headroom under certain financial covenants will likely be extremely tight at year-end 2008. With sales of EUR1.2 billion in the first nine months of 2008, Titan Cement is a midsize multiregional player in the global cement industry. It operates primarily in Greece, the eastern U.S., southeastern Europe, and Egypt. The ratings reflect the company's limited size and geographic diversity compared with a number of peers, heavy outlays on expansion projects and acquisitions, and an aggressive financial profile. These negatives are mitigated by the group's still robust generation of cash, very strong market position in Greece, increasing geographic diversity towards non mature markets, and overall healthy, albeit dropping, margins and return on capital. Standard & Poor's will re-examine the group's liquidity position in several weeks, in order to determine if any further ratings change is warranted. Should S&P gets comfort on the covenants side, it would likely affirm the ratings and remove them from CreditWatch. Conversely, any increased likelihood that covenant will be breached, and if the group doesn't adequately address this issue, could result in further ratings pressure. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D I C E L A N D =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D GLITNIR BANKI: Auction Sets CDS Values at 3% on Senior Debt ----------------------------------------------------------- Creditex and Markit, in partnership with 14 major credit derivative dealers, on Wednesday, November 5, announced the results of a Credit Event Auction that determined a price to facilitate the settlement of credit derivative trades referencing the senior debt of Glitnir Banki hf. At 2:00 pm GMT on Wednesday, the final price for Glitnir senior debt for the purpose of settling credit derivative transactions was determined to be 3%. The auction was conducted in accordance with the International Swaps and Derivatives Association (ISDA) 2008 Glitnir CDS Protocol. Creditex and Markit are the official administrators of Credit Event Auctions. The Credit Event Auction enables market participants to cash settle credit derivative transactions. During a Credit Event Auction, dealers submit orders electronically on the Creditex platform. The auction submissions are delivered to Markit electronically. Markit calculates and verifies the results, and publishes them on www.creditfixings.com. About Glitnir Headquartered in Reykjavik, Iceland, Glitnir banki reported total assets of ISK346 billion (EUR30.9 billion) at the end of June 2008. * * * As reported in Troubled Company Reporter-Europe on October 13, 2008, Standard & Poor's Ratings Services has lowered its long-term and short-term counterparty credit ratings on Iceland-based Glitnir Bank to 'D' from 'CCC' and 'C', respectively, after the bank was placed into receivership by the country's banking supervisor. On October 2, 2008, the TCR-Europe reported that Moody's Investors Service downgraded the Bank Financial Strength Rating (BFSR) of Glitnir banki hf to D from C-, the long-term bank deposit and senior debt ratings to Baa2 from A2 and the short-term rating to Prime-2 from Prime-1. In addition, Moody's downgraded the bank's subordinated debt to Ba1 from A3 and its preferred stock to B1 from Baa1. The BFSR remains on review for possible downgrade, while the outlook on debt and deposit ratings is developing. The rating action follows recent announcement that the Government of Iceland provided Glitnir with a capital injection of EUR600 million, thereby giving the government a 75% stake in the bank. The capital injection was in response to Glitnir's temporary liquidity difficulties in light of adverse market conditions. GLITNIR BANKI: Auction Sets CDS Values at 0.125% on Sub. Debt ------------------------------------------------------------- Markit and Creditex, in partnership with 14 major credit derivative dealers, on Wednesday announced the results of a Credit Event Auction that determined a price to facilitate the settlement of credit derivative trades referencing the subordinated debt of Glitnir Banki hf. At 3:45 pm GMT on Wednesday, the final price for Glitnir subordinated debt for the purpose of settling credit derivative transactions was determined to be 0.125%. At 2:00 pm GMT on Wednesday, the final price for Glitnir senior debt for the purpose of settling credit derivative transactions was determined to be 3%. The auctions were conducted in accordance with the International Swaps and Derivatives Association (ISDA) 2008 Glitnir CDS Protocol. Markit and Creditex are the official administrators of Credit Event Auctions. Credit Event Auctions enable market participants to cash settle credit derivative transactions. During a Credit Event Auction, dealers submit orders electronically on the Creditex platform. The auction submissions are delivered to Markit electronically. Markit calculates and verifies the results, and publishes them on www.creditfixings.com. About Glitnir Headquartered in Reykjavik, Iceland, Glitnir banki reported total assets of ISK346 billion (EUR30.9 billion) at the end of June 2008. * * * As reported in Troubled Company Reporter-Europe on October 13, 2008, Standard & Poor's Ratings Services has lowered its long-term and short-term counterparty credit ratings on Iceland-based Glitnir Bank to 'D' from 'CCC' and 'C', respectively, after the bank was placed into receivership by the country's banking supervisor. On October 2, 2008, the TCR-Europe reported that Moody's Investors Service downgraded the Bank Financial Strength Rating (BFSR) of Glitnir banki hf to D from C-, the long-term bank deposit and senior debt ratings to Baa2 from A2 and the short-term rating to Prime-2 from Prime-1. In addition, Moody's downgraded the bank's subordinated debt to Ba1 from A3 and its preferred stock to B1 from Baa1. The BFSR remains on review for possible downgrade, while the outlook on debt and deposit ratings is developing. The rating action follows recent announcement that the Government of Iceland provided Glitnir with a capital injection of EUR600 million, thereby giving the government a 75% stake in the bank. The capital injection was in response to Glitnir's temporary liquidity difficulties in light of adverse market conditions. KAUPTHING BANK: Swedish Branch Sells Pension Unit to Employees -------------------------------------------------------------- Kaupthing Bank hf's Swedish branch has sold its pension unit Kaupthing Pension Consulting to a group of employees for an undisclosed amount, the Associated Press reports. The company, as cited by the report, said the group is led by the unit's chief executive Dick Simonsson. "Kaupthing Sweden has, for some time, aimed at selling the wholly owned subsidiary KPC. The sale is completely in line with customers' demand for a totally independent pension consultancy," Kaupthing Sweden spokesman Peter Borsos was quoted by the report as saying. The new company, the report notes, will change its name but will continue to cooperate with Kaupthing Sweden. About Kaupthing Bank Headquarted in Reykjavik, Iceland, Kaupthing Bank -- http://www.kaupthing.com-- is engaged in the provision of financial services, such as private banking, asset management, pension services, brokerage services, investment banking, as well as corporate and retail banking. The Bank's offer is targeted at companies, institutional investors and individuals. The Bank is operational in thirteen countries, including Luxembourg, Switzerland, the Nordic countries, the United Kingdom and the United States. The main subsidiaries include Kaupthing Singer & Friedlander and FIH Erhvervsbank. * * * As reported in the Troubled Company Reporter-Europe on October 13, 2008, Fitch Ratings downgraded Kaupthing Bank hf.'s Long-term Issuer Default rating to 'D' from 'CCC' and removed it from Rating Watch Evolving. This follows the announcement that Kaupthing is now subject to similar arrangements as its two Icelandic peers, Glitnir Banki and Landsbanki Islands, with the Icelandic authorities effectively seizing control of the bank. At the same time, Moody's Investors Service downgraded the bank financial strength rating (BFSR) of Kaupthing Bank hf to E from D+, its long-term deposit ratings to Caa1 from Baa3, the long-term senior debt ratings to Caa2 from Ba1. In addition, Moody's downgraded the bank's subordinated debt to C from Ba2 and its preferred stock to C from B1. The bank's short-term rating was downgraded to Not-Prime from P-3. Moody's is maintaining Kaupthing's long-term deposit ratings, the long-term senior debt ratings and its BFSR on review for further possible downgrade. LANSBANKI: Auction Sets CDS Values at 0.125% on Sub. Debt --------------------------------------------------------- Markit and Creditex, in partnership with 14 major credit derivative dealers, on Tuesday, November 4, determined a price to facilitate the settlement of credit derivative trades referencing the subordinated debt of Landsbanki Islands hf in Europe's first ever Credit Event Auctions. At 3:45 pm GMT on Tuesday, the final price for Landsbanki subordinated debt for the purpose of settling credit derivative transactions was determined to be 0.125%. At 2:00 pm GMT on Tuesday, the final price for Landsbanki senior debt for the purpose of settling credit derivative transactions was determined to be 1.25%. The auctions were conducted in accordance with the International Swaps and Derivatives Association (ISDA) 2008 Landsbanki CDS Protocol. Markit and Creditex are the official administrators of Credit Event Auctions. Credit Event Auctions enable market participants to cash settle credit derivative transactions. During a Credit Event Auction, dealers submit orders electronically on the Creditex platform. The auction submissions are delivered to Markit electronically. Markit calculates and verifies the results, and publishes them on www.creditfixings.com. About Landsbanki Headquartered in Reykjavik, Iceland, Landsbanki Islands hf. -- http://www.landsbanki.is-- is engaged in the provision of retail, corporate an investment banking services. The Bank's product range includes financial products and services, such as specialty insurance and real estate financing, for both corporate and private clients. It is also operational through a number of subsidiaries, including Heritable Bank Ltd, operating consultancy and financing services for residential development; Landsbanki Holdings Europe SA, a Luxembourg-based holding company providing banking services; Landsbanki Guernsey Ltd, offering retail banking; Landsbanki Securities (UK) Holdings plc, engaged in the provision of stockbrokers and financial services; Landsvaki hf, an operation company for mutual funds; Verdbrefun hf, a securitization company; Landsbankinn eignarhaldsfelag hf, a real estate company, and others. * * * As reported in the TCR-Europe on Oct. 10, 2008, Moody's Investors Service downgraded the bank financial strength rating (BFSR) of Landsbanki Islands hf to E from C-, its long-term deposit ratings to Caa1 from A2 and its senior unsecured ratings to Caa2 from A2. Consequently, the bank's Prime-1 short-term rating was downgraded to Not-Prime. In addition, the bank's subordinated, junior subordinated and preferred stock ratings were downgraded to C. The outlook on all ratings is developing. At the same time, Fitch Ratings downgraded the Long-term Issuer Default ratings of Glitnir Banki hf. and Landsbanki Islands to 'B' from 'BBB-' and 'BBB' respectively, and that of Straumur Burduras Investment Bank to 'BB-' from 'BB+'. The ratings of Kaupthing Bank hf. are under review. This rating action follows the announcement of legislative measures providing for broad authority to Icelandic authorities to intervene in the Icelandic financial system and the statement that Landsbanki has been placed in receivership, and reflects Fitch's view that both the ability and propensity of the Icelandic authorities to support the Icelandic banking system are becoming increasingly compromised. The support rating floor for the major Icelandic banks is now 'B'. Both Glitnir, following the acquisition by the Icelandic authorities last month of a 75% stake, and Landsbanki, which was placed in receivership, are now at their support rating floor. Glitnir's Individual rating of 'F' is affirmed and Landsbanki's Individual rating has been downgraded to 'F' from 'C' to reflect the receivership arrangement. LANDSBANKI: Auction Sets CDS Values at 1.25% on Senior Debt ----------------------------------------------------------- Creditex and Markit, in partnership with 14 major credit derivative dealers, on Tuesday, November 4, determined a price to facilitate the settlement of credit derivative trades referencing the senior debt of Landsbanki Islands hf in Europe's first ever Credit Event Auction. At 2:00 pm GMT on Tuesday, the final price for Landsbanki senior debt for the purpose of settling credit derivative transactions was determined to be 1.25%. The auction was conducted in accordance with the International Swaps and Derivatives Association (ISDA) 2008 Landsbanki CDS Protocol. Creditex and Markit are the official administrators of Credit Event Auctions. The Credit Event Auction enables market participants to cash settle credit derivative transactions. During a Credit Event Auction, dealers submit orders electronically on the Creditex platform. The auction submissions are delivered to Markit electronically. Markit calculates and verifies the results, and publishes them on www.creditfixings.com. About Landsbanki Headquartered in Reykjavik, Iceland, Landsbanki Islands hf. -- http://www.landsbanki.is-- is engaged in the provision of retail, corporate an investment banking services. The Bank's product range includes financial products and services, such as specialty insurance and real estate financing, for both corporate and private clients. It is also operational through a number of subsidiaries, including Heritable Bank Ltd, operating consultancy and financing services for residential development; Landsbanki Holdings Europe SA, a Luxembourg-based holding company providing banking services; Landsbanki Guernsey Ltd, offering retail banking; Landsbanki Securities (UK) Holdings plc, engaged in the provision of stockbrokers and financial services; Landsvaki hf, an operation company for mutual funds; Verdbrefun hf, a securitization company; Landsbankinn eignarhaldsfelag hf, a real estate company, and others. * * * As reported in the TCR-Europe on Oct. 10, 2008, Moody's Investors Service downgraded the bank financial strength rating (BFSR) of Landsbanki Islands hf to E from C-, its long-term deposit ratings to Caa1 from A2 and its senior unsecured ratings to Caa2 from A2. Consequently, the bank's Prime-1 short-term rating was downgraded to Not-Prime. In addition, the bank's subordinated, junior subordinated and preferred stock ratings were downgraded to C. The outlook on all ratings is developing. At the same time, Fitch Ratings downgraded the Long-term Issuer Default ratings of Glitnir Banki hf. and Landsbanki Islands to 'B' from 'BBB-' and 'BBB' respectively, and that of Straumur Burduras Investment Bank to 'BB-' from 'BB+'. The ratings of Kaupthing Bank hf. are under review. This rating action follows the announcement of legislative measures providing for broad authority to Icelandic authorities to intervene in the Icelandic financial system and the statement that Landsbanki has been placed in receivership, and reflects Fitch's view that both the ability and propensity of the Icelandic authorities to support the Icelandic banking system are becoming increasingly compromised. The support rating floor for the major Icelandic banks is now 'B'. Both Glitnir, following the acquisition by the Icelandic authorities last month of a 75% stake, and Landsbanki, which was placed in receivership, are now at their support rating floor. Glitnir's Individual rating of 'F' is affirmed and Landsbanki's Individual rating has been downgraded to 'F' from 'C' to reflect the receivership arrangement. STRAUMUR BURDARAS: Fitch Cuts Individual Rating to 'D/E' -------------------------------------------------------- Fitch Ratings has downgraded Iceland-based Straumur-Burdaras Investment Bank's Long-term Issuer Default rating (IDR) to 'B' from 'BB-' (BB minus) and changed the Rating Watch to Negative from Evolving. The agency has simultaneously downgraded the Individual rating to 'D/E' from 'D' and changed the Rating Watch to Negative from Evolving. The rating action reflects the refinancing risk facing Straumur when its EUR200 million syndicated loan matures in mid-December 2008. Repayment in full of this loan represents a significant cash consideration for Straumur, which has been subject to severe liquidity stress for the past two months, exacerbated by the Icelandic banking crisis in early October and the challenging international wholesale funding markets. Management is confident that Straumur has sufficient liquidity to meet its obligations at least up to mid-December, and Fitch acknowledges management's actions so far to preserve its cash position. The amount of cash needed for the repayment will depend on the bank's ability to negotiate a roll-over of at least part of the loan with the banks involved in the syndication. In addition, the repayment capacity of Straumur is contingent on the bank disposing of certain assets. While support from shareholders and/or the Icelandic authorities is possible, it cannot, in Fitch's view, be relied upon for timely payment of the bank's obligations. The Rating Watch Negative on the bank's IDR and Individual ratings reflects the near-term risk that lending banks may decide not to refinance the syndicated loan and/or asset sales cannot be realised in sufficient time to meet any shortfall. In Fitch's opinion, should either, or both, of these circumstances occur, default is probable, in the absence of external support, and the agency would expect to downgrade the IDR to 'CC' and the individual rating to 'E'. Success in rolling over a material part of the syndicated loan would take pressure off Straumur's funding needs and give the bank more time to implement further liquidity contingency plans if needed. This would materially reduce downward pressure on the ratings. Nevertheless, Fitch believes Straumur continues to face the risk of a liquidity shortfall, until the bank has successfully refinanced part of the syndicated loan and disposed of further assets. Fitch has been informed by management that Straumur is on track to dispose of the targeted assets in order to meet the mid- December repayment although the agency believes this may be challenged by current difficult conditions in the financial markets. Success in obtaining external liquidity support may benefit the bank's ratings. Even if Straumur is successful in navigating its way through the next two months, Fitch believes that the bank has a limited margin of safety and will remain dependent upon continued reductions in its balance sheet assisted by a sustained improvement in the market environment and sentiment. Fitch expects to comment further within the next week. Straumur's ratings are: -- Long-term IDR: downgraded to 'B' from 'BB-' (BB minus); Rating Watch changed to Negative from Evolving -- Short-term IDR 'B'; Rating Watch changed to Negative from Evolving -- Support rating: affirmed at '5' -- Support Rating Floor: affirmed at 'No Floor' -- Individual rating: downgraded to 'D/E' from 'D'; Rating Watch changed to Negative from Evolving -- Senior debt: downgraded to 'B' from 'BB-' (BB minus); Rating Watch changed to Negative from Evolving; Recovery Rating of 'RR4' assigned -- Subordinated debt: downgraded to 'CCC+' from 'B'; Rating Watch changed to Negative from Evolving; Recovery Rating of 'RR6' assigned =3D=3D=3D=3D=3D=3D=3D=3D=3D I T A L Y =3D=3D=3D=3D=3D=3D=3D=3D=3D ALITALIA SPA: Files Chap. 15 Petition to Save U.S. Assets --------------------------------------------------------- Alitalia-Linee Aeree Italiane, S.p.A. has filed for Chapter 15 protection with the U.S. Bankruptcy Court in the Southern District of New York. Italy's national airline experienced financial difficulties for a number of years caused, in large measure, by a combination of competition from low-cost air carriers, poor management and onerous union obligations, according to papers filed with the court. Despite a EUR1.4 billion state-backed restructuring in 1997, Alitalia posted net losses of EUR256 million and EUR907 million in 2000 and 2001 respectively. Alitalia posted EUR93 million in net profits in 2002 after a EUR1.4 billion capital injection. The carrier booked annual net losses of EUR520 million in 2003, EUR813 million in 2004, EUR168 million in 2005, EUR625.6 million in 2006, and EUR494.64 million in 2007. In the petition filed October 29, 2008, Prof. Augusto Fantozzi, the appointed administrator, said the airline's financial difficulties have been and exacerbated by spiraling fuel prices. Within the last two years, Mr. Fantozzi stated that efforts were made by Alitalia and the government of Italy to find a strategic airline partner to purchase the airline or, alternatively, an investor willing to recapitalize it. As these efforts progressed, Alitalia attempted to renegotiate its union contracts, a condition imposed by all would-be strategic partners and potential investors. Mr. Fantozzi recalled that in April, one of the purchasers, Air France/KLM, withdrew its offer to buy Alitalia when it was unable to reach an agreement with Alitalia's several unions. Investor Consortium Formed Following Air France/KLM's withdrwal, a new Italian investor consortium, Compagnia Aerea Italiana, was formed with the expectations that it would invest approximately US$1.4 Billion to buy many of Alitalia's assets and to relaunch a "new' Alitalia. It likewise, however, initially ran into difficulties in reaching a suitable agreement with many of Alitalia's unions, Mr. Fantozzi noted. By late August 2008, with time running out, it became apparent to Alitalia's Board that, in the absence of immediate success in the negotiations with the unions and the resultant commitment of CAI to purchase its assets and assume its operations, it would run out of cash, and would need to likely wind down its operations and liquidate. Bankruptcy Bill To ensure continuity of Alitalia's operations, the government of Italy adopted the Bankruptcy Bill which, broadly speaking, is the rough equivalent of Chapter 11 of the Bankruptcy Code. The bill, among other things, allowed Alitalia to liquidate its assets and lay off workers as it might deem necessary. At or about the same time, the government relaxed certain antitrust laws in order to permit the possibility of a partnership or strategic alliance between Alitalia and Air One, Italy's second largest carrier. Italian Bankruptcy Filing On Aug. 29, 2008, Alitalia declared insolvency and filed for commencement of extraordinary administration procedure at the Tribunal of Rome. Italian Prime Minister Silvio Berlusconi appointed Mr. Fantozzi as extraordinary commissioner. Under the Bankruptcy Bill, the Administrator has supplanted the directors and other management of Alitalia. CAI Rescue Plan In late September, CAI finally reached agreement with all of Alitalia's major unions. Specifically, CAI agreed to: -- continue its due diligence to purchase Alitalia's assets, -- negotiate with appropriate governmental authorities to acquire flight privileges and authority currently held by Alitalia, -- collect funds from its investors (approximately US$1.4 Billion) needed, and -- launch a newly created airline. However, Mr. Fantozzi said that until this time, the future of Alitalia itself continues to remain uncertain. Mr. Fantozzi pointed out that to protect Alitalia's estate and creditors and to keep it flying during this period, seeking relief under Chapter 15 of the U.S. Bankruptcy Code is necessary. The Chapter 15 petition, according to Mr. Fantozzi, will ensure the preservation of the airline's assets in the United States. Alitalia's property in the United States mainly consists of cash in its operating bank accounts, furniture and fixtures in its various offices and facilities located throughout the country (but mostly in New York, New Jersey, Florida, Illinois and California), and relatively modest amounts of equipment used in its air carrier and air freight operations. In sum, the value of this property is approximately US$1,000,000. Mr. Fantozzi further disclosed that upon information and belief, similar relief is being sought in other countries where Alitalia operates. Kaplan, von Ohlen & Massamillo, LLC serves as Mr. Fantozzi's U.S. Counsel. About Alitalia Based in Rome, Alitalia S.p.A. -- http://www.alitalia.it/-- provides air travel services for passengers and air transport of cargo on national, international and inter-continental routes, including United States, Canada, Japan and Argentina. The Italian government owns 49.9% of Alitalia. ITALFINANCE SECURITISATION: S&P Affirms Ratings on 2 Note Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services removed from CreditWatch negative and affirmed its credit ratings on the class A and B notes issued by Italfinance Securitisation Vehicle S.r.l. series 2006-1 (Italfinance 2006-1). S&P placed the class A and B notes on CreditWatch negative on Sept. 17, 2008. The removal of the notes from CreditWatch follows the successful substitution of Lehman Brothers Holdings Inc. as swap counterparty in the Italease Finance SpA series 2004-1 and 2005-1 transactions on Oct. 27 and Oct. 3, 2008, respectively. Italfinance 2006-1 was backed at closing by a portion of the remuneration of the junior unrated asset-backed notes issued by Italease Finance SpA series 2002-1, 2003-1, 2004-1, and 2005-1. Following the redemption in September 2007 of Italease 2002-1, the transaction is now backed only by the portion of the junior remuneration related to series 2003-1, 2004-1, and 2005-1. The junior remuneration relates to the deferred purchase price that is paid back to the originators as a component of the remuneration of the junior bonds. The deferred purchase price was determined by the sale of the original and subsequent portfolios at a price equal to the net present value (NPV) of the future installments of the transferred receivables. The NPV was calculated using as discount rate the higher of (i) the contractual interest rate of the lease contracts, and (ii) European interbank offered rate (EURIBOR) plus 500 basis points. Following Lehman's substitution, the new swap counterparties agreed to waive any monetary rights that could arise following a swap termination event. This is relevant for S&P's affirmation as the remuneration of the junior asset-backed notes under the underlying transactions is junior to the termination payments under the relevant swap agreements. Our ratings on the notes issued by Italfinance 2006-1 address the ability of the cash flows in the transaction to pay ultimate principal and timely interests on the class A notes and ultimate principal and interest on class B notes. S&P's analysis showed that the outstanding ratings on the notes can be affirmed at this stage. Key input variables in S&P's review were assumed default rates, prepayment levels, and recoveries assumed on stressed defaults and on the outstanding defaulted loans. At the latest IPD, there was a total of about EUR44 million of defaulted assets outstanding in the Italease series 2004-1 and 2005-1 transactions. As these defaults have already been fully provisioned for, any recoveries on these assets will likely constitute a release of excess spread. The transaction should also benefit, at the next IPD, from the release of a substantial portion of the cash reserve in the Italease series 2005-1 transaction. It should be noted that the cash flow assumptions for the Italfinance 2006-1 class A and B notes continue to factor in the originator's active role throughout the transaction term. The ratings on the class A and B notes will continue to reflect the structure's reliance on the comprehensive support provided by Banca Italease SpA. Therefore, any changes in Banca Italease's credit quality are likely to affect the outstanding ratings on Italfinance 2006-1. RATINGS LIST Rating Class To From ----- -- ---- Ratings Removed From CreditWatch Negative And Affirmed Italfinance Securitisation Vehicle S.r.l. EUR191.765 Million Asset-Backed Floating-Rate Notes Series 2006-1 A BB+ BB+/Watch Neg B BB BB/Watch Neg TISCALI SPA: In Talks With BSkyB Regarding Sale of UK Business -------------------------------------------------------------- Tiscali S.p.A confirmed it is currently holding talks with the BSkyB Group plc in relation to certain UK assets. Citing the Sunday Times, BBC News discloses that BSkyB had proposed an indicative offer of GBP450 million for the UK business. Carphone Warehouse, the Daily Telegraph relates, is thought to have withdrawn from the bidding race. Other competitors understood to have walked away from the auction include Vodafone and BT, the Daily Telegraph adds. According to the Daily Telegraph, if the acquisition pushes through, BSkyB, which has 1.79 million broadband customers, could become the third biggest player in the market behind BT and Virgin Media. AOL Money says Tiscali, which has 1.8 million broadband customers in the UK, is the fourth largest provider. However, AOL Money notes, the group's market share is believed to have come under recent pressure. Tiscali put itself up for sale this year following a strategic review of its business in February, BBC relates. About Tiscali Tiscali S.p.A. (Borsa Italiana, Milan: TIS) -- http://www.tiscali.com/-- is one Europe's alternative telecommunications operators. Tiscali supplies a wide range of services to its customers, both private individuals and companies, namely: Internet access through dial-up and ADSL, as well as voice, VoIP, media, added-value services and other technologically advanced products. As at June 30, 2008, Tiscali counted both in Italy and the UK a total of 3.2 million active users. Of these, over 2.4 million were ADSL subscribers. * * * As reported in the Troubled Company Reporter-Europe on October 23, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit rating to 'B' from 'B+' on Tiscali SpA, an alternative provider of Internet, telephony, and TV services in the U.K. and Italy. At the same time, S&P lowered its long-term debt ratings on the EUR50 million senior secured term loan and EUR50 million senior secured revolving credit facility (RCF) of financing vehicle Tiscali U.K. Holdings Ltd. to 'B' and 'B+', respectively, from 'B+' and 'BB-'; these loans are guaranteed by Tiscali SpA. The recovery ratings on these two debt facilities are unchanged at respectively '3' (indicating S&P's expectation of meaningful {50%-70%} recovery in the event of a payment default) and '2' (indicating its expectation of substantial {70%-90%} recovery in the event of a payment default). =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D K A Z A K H S T A N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D AES COAL: Creditors Must File Proofs of Claim by December 12 ------------------------------------------------------------ LLP Aes Coal has declared liquidation. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: LLP Aes Coal Shoptykol Bayanaulsky Pavlodar Kazakhstan AMANGELDY LLP: Creditors' Claims Deadline Slated for December 12 ---------------------------------------------------------------- The Specialized Inter-Regional Economic Court of West Kazakhstan has declared LLP Amangeldy insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of West Kazakhstan Vagonnaya Str. 2/1 Uralsk West Kazakhstan Kazakhstan Tel: 8 (7112) 97-14-29 ASIATIC MANAGEMENT: Creditors' Claims Filing Period Ends Dec. 12 ---------------------------------------------------------------- The Specialized Inter-Regional Economic Court of North Kazakhstan has declared LLP Asiatic Management Group insolvent on Sept. 26, 2008. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of North Kazakhstan Jumabayev Str. 102-25 Petropavlovsk North Kazakhstan Kazakhstan ENBEK-98 LLP: Creditors Must Register Claims by December 12 ----------------------------------------------------------- The Specialized Inter-Regional Economic Court of North Kazakhstan has declared LLP Enbek-98 insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of North Kazakhstan Jumabayev Str. 102-25 Petropavlovsk North Kazakhstan Kazakhstan ENERGETIC-NS LLP: Creditors' Claims Due on December 12 ------------------------------------------------------ Almaty Branch of LLP Energetic-NS has declared liquidation. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: Almaty Branch of LLP Energetic-NS Zemnuhov Str. 5a Almaty Kazakhstan REGION-MASH LLP: Creditors Must File Proofs of Claim by Dec. 12 --------------------------------------------------------------- The Specialized Inter-Regional Economic Court of Akmola has declared LLP Region-Mash insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of Akmola Room 228 Auelbekov Str. 139a Kokshetau Akmola Kazakhstan Tel: 8 (7162) 25-79-32 SINERGIA LLP: Creditors' Claims Deadline Slated for December 12 --------------------------------------------------------------- The Specialized Inter-Regional Economic Court of Aktube has declared LLP Sinergia insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of Aktube Altynsarin Str. 31 Aktobe Aktube Kazakhstan Tel: 8 (3132) 21-30-32 TEMIR-JAYIK LLP: Creditors' Claims Filing Period Ends Dec. 12 ------------------------------------------------------------- The Specialized Inter-Regional Economic Court of West Kazakhstan has declared LLP Temir-Jayik insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of West Kazakhstan Vagonnaya Str. 2/1 Uralsk West Kazakhstan Kazakhstan Tel: 8 (7112) 97-14-29 TORESHE LTD: Creditors Must Register Claims by December 12 ---------------------------------------------------------- The Specialized Inter-Regional Economic Court of Akmola has declared LLP Toreshe Ltd. insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of Akmola Room 228 Auelbekov Str. 139a Kokshetau Akmola Kazakhstan Tel: 8 (7162) 25-79-32 URALSKAYA BAZA: Creditors' Claims Due on December 12 ---------------------------------------------------- The Specialized Inter-Regional Economic Court of West Kazakhstan has declared LLP Uralskaya Baza Stroitelnyh Materialov (Uralsk Base of Construction Materials) insolvent. Creditors have until Dec. 12, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of West Kazakhstan Seifullin Str. 37 Uralsk West Kazakhstan Kazakhstan =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D K Y R G Y Z S T A N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D IVANOVSKY MASHINOSTROITELNY: Claims Deadline Set on November 28 --------------------------------------------------------------- CJSC Ivanovsky Mashinostroitelny Zavod (Ivanovka Machine-Building Plant) has declared insolvency. Creditors have until Nov. 28, 2008, to submit written proofs of claim. Inquiries can be addressed to (0-777) 55-00-50. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D M A C E D O N I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D * Fitch Changes Macedonia's Outlook to Stable; Affirms IDRs at BB+ ------------------------------------------------------------------ Fitch Ratings corrects its earlier ratings release because the 2007 figures for the current account deficit and the fiscal balance have been revised. "Fitch Ratings has revised the Outlook on the Republic of Macedonia's foreign currency and local currency Issuer Default Ratings (IDR) to Stable from Positive. The agency has affirmed the IDRs at 'BB+', the Short-term foreign currency rating at 'B' and the Country Ceiling at 'BBB-' (BBB minus). "The downward revision in the rating Outlook to Stable reflects both a marked widening in the current account deficit this year at a time when financing is becoming more uncertain and adverse political events that make the prospect of Macedonia's EU accession more distant," says Chris Pryce, Director in Fitch's European sovereigns group. "Macedonia has experienced a series of political shocks this year. In April, its application for NATO membership was rejected due to the Greek government's objection to the use of Macedonia as the country's name. Many commentators expect that Greece will also refuse to support the EU setting a start date for accession negotiations. The road map and final destination of EU accession provides important economic benefits and an anchor to political stability, particularly in view of the country's ethnic tensions and potential instability in neighboring countries, including Kosovo. Additionally, the handling of national elections this year (effectively a major EU benchmark for Macedonia) was poor. There was sporadic violence and open corruption in some areas which forced second and subsequent elections to be held in a number of constituencies. Local elections to be held next spring will be closely watched by both domestic and international observers to see if the malign influence of local groups/parties in the worst affected areas has been curbed. "Macroeconomic risks have also increased this year. Fitch's main concern is the rapid widening in the current account deficit (CAD), which Fitch projects to reach around 12% of GDP this year, compared with 7% in 2007 and a virtual balance in 2006. On current macroeconomic policy settings, Fitch expects only a moderate improvement in 2009 and 2010, helped by lower oil prices. On the other hand, the slowdown in the EU economy poses downside risks to exports and remittances (equivalent to around 15% of GDP), which Fitch expects to fall 3% this year. Foreign direct investment has remained relatively strong and could finance around half the CAD this year. However, private sector external borrowing, including by the banks, is rising. Moreover, the global credit crunch will make it more difficult for Macedonia to secure the capital inflows it needs to finance the CAD, risking downward pressure on foreign exchange reserves, which have fallen as a ratio of imports this year, and ultimately could put pressure on the exchange rate, which has been pegged to the euro for over a decade. "A major driver of the widening in the CAD has been the exceptional growth in credit to the private sector, admittedly from a low base. This grew by almost 40% in 2007 and despite central bank-induced increases in interest rates and a rather ineffectual cap on loans (set at 40%), as yet has given no clear indication of slackening, though this is likely as capital inflows wane. The government has also contributed to pressures on inflation and the CAD through its expansionary budget, which increased expenditure. Fitch expects the budget deficit to widen somewhat to about 1% of GDP this year from a surplus of 0.6% in 2007. Further expenditure increases are planned for 2009. "Macedonia's rating continues to be underpinned by its moderate and declining government debt-to-GDP ratio, which was 25% at end- 2007, below the 'BB' category median of 35%. Other strengths include a moderate external debt ratio and a track record of macroeconomic stability. Economic growth has strengthened in recent years, and Fitch forecasts real GDP growth of about 6% in 2008, up from 5.1% in 2007 and 4% in 2006. However, the global economic slowdown is likely to cause a slowdown in 2009. Recent governments have pursued some reforms in the area of taxation, bureaucratic and judicial reform although much remains to be done before these will have the fully desired impact on economic performance. Macedonia rose to 71st in the World Bank Ease of Doing Business Survey for 2009, up from 79th in 2008." =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D N E T H E R L A N D S =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D AZOVSTAL CAPITAL: Strong Price Reduction Cues Moody's B2 Rating --------------------------------------------------------------- Given recent collapse in demand for semi finished steel products and for prices especially from the CIS Moody's Investors Service has downgraded the Ba3 corporate family rating and the Aa1.ru national scale rating of Metinvest B.V. to B1 and Aa3.ua respectively and the senior unsecured rating of the loan participation notes, issued by Azovstal Capital B.V. to B2. The outlook on all ratings remains negative. The rating action was prompted by a further weakening in the demand for steel products in the Ukraine, the strong reduction of steel prices which is expected to lead a significant reduction in Metinvest's operating profitability and cash flow generation for the remainder of 2008 and into 2009. Coupled with lower than initially expected cash flow generation Moody's considers the short term liquidity of the group which has to renew some significant credit facilities in the beginning of next year to be constrained. The negative outlook reflects the effects of the weaknesses in the industry, the low visibility for prospects of short term recovery and the current limitations for Ukrainian companies to receive funding from their banks. Moody's will continue to follow closely the measures the company is taking to offset these negative market developments, by reducing planned capex projects and dividend payments. Moody's notes that Metinvest is already planning to scale back significant capex projects to conserve cash generated, and that also steel production has been reduced by around 20% to reduce the current supply/demand imbalance on the market for steel produced in the CIS. Although Metinvest is still considered the strongest of the Ukrainian steel producers, with access to own iron ore and -- to some extent -- also coking coal reserves, which should keep the cost base at a flat level, the significant changes within a very short period of time for the CIS steel production has raised the extent of operating challenges for the company.. Downgrades: Issuer: Azovstal Capital B.V. * Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Issuer: Metinvest B.V. * Probability of Default Rating, Downgraded to B1 from Ba3 * Corporate Family Rating, Downgraded to a range of B1 to Aa3.ua from a range of Ba3 to Aa1.ua Metinvest B.V., a company set up under Dutch law, but with major operations in Donetsk/Ukraine is the largest steel and iron ore producer of the Ukraine. In 2007 the company generated revenues of US$7.4 billion and operating profit of US$1.8 billion. Metinvest is 75% owned by System Capital Management, an investment holding company in the Ukraine. 25% (blocking stake) of Metinvest's shares are owned by Smart Group based in the Ukraine. METINVEST B.V.: Weakening Demand Cues Moody's to Cut Rating to B1 ----------------------------------------------------------------- Given recent collapse in demand for semi finished steel products and for prices especially from the CIS Moody's Investors Service has downgraded the Ba3 corporate family rating and the Aa1.ru national scale rating of Metinvest B.V. to B1 and Aa3.ua respectively and the senior unsecured rating of the loan participation notes, issued by Azovstal Capital B.V. to B2. The outlook on all ratings remains negative. The rating action was prompted by a further weakening in the demand for steel products in the Ukraine, the strong reduction of steel prices which is expected to lead a significant reduction in Metinvest's operating profitability and cash flow generation for the remainder of 2008 and into 2009. Coupled with lower than initially expected cash flow generation Moody's considers the short term liquidity of the group which has to renew some significant credit facilities in the beginning of next year to be constrained. The negative outlook reflects the effects of the weaknesses in the industry, the low visibility for prospects of short term recovery and the current limitations for Ukrainian companies to receive funding from their banks. Moody's will continue to follow closely the measures the company is taking to offset these negative market developments, by reducing planned capex projects and dividend payments. Moody's notes that Metinvest is already planning to scale back significant capex projects to conserve cash generated, and that also steel production has been reduced by around 20% to reduce the current supply/demand imbalance on the market for steel produced in the CIS. Although Metinvest is still considered the strongest of the Ukrainian steel producers, with access to own iron ore and -- to some extent -- also coking coal reserves, which should keep the cost base at a flat level, the significant changes within a very short period of time for the CIS steel production has raised the extent of operating challenges for the company. Downgrades: Issuer: Azovstal Capital B.V. * Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Issuer: Metinvest B.V. * Probability of Default Rating, Downgraded to B1 from Ba3 * Corporate Family Rating, Downgraded to a range of B1 to Aa3.ua from a range of Ba3 to Aa1.ua Metinvest B.V., a company set up under Dutch law, but with major operations in Donetsk/Ukraine is the largest steel and iron ore producer of the Ukraine. In 2007 the company generated revenues of US$7.4 billion and operating profit of US$1.8 billion. Metinvest is 75% owned by System Capital Management, an investment holding company in the Ukraine. 25% (blocking stake) of Metinvest's shares are owned by Smart Group based in the Ukraine. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D P O R T U G A L =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D BANCO PORTUGUES: Fitch Downgrades Individual Rating to 'F' ---------------------------------------------------------- Fitch Ratings has changed the Rating Watch on Portugal-based BPN- Banco Portugues de Negocios, SA's (BPN) Long-term Issuer Default Ratings (IDR) of 'BBB' to Positive (RWP) from Negative (RWN) and placed the Short-term IDR of 'F3' on RWP, following the Portuguese government's announcement to nationalize BPN. BPN's RWP will be resolved once Fitch has received more details on the bank's nationalization, especially regarding any explicit guarantees and BPN's future business model. At the same time, the agency downgraded BPN's Individual rating to 'F' from 'C' and removed it from RWN. The downgrade of BPN's Individual rating reflects Fitch's view that the bank has faced insurmountable challenges as an individual entity and failed. In the absence of government nationalization, Fitch considers that the bank would have defaulted, in line with the agency's definition of a 'F' Individual rating. BPN's Support Rating and Support Rating Floor are upgraded to '2' from '5' and to 'BBB' from 'No Floor', respectively, and put on RWP. The upgrade of BPN's Support rating and Support Rating Floor reflects the intervention by the Republic of Portugal and its propensity to support BPN, in order to stave off systemic risk for the Portuguese banking system. Fitch believes the Portuguese government acted to stabilize the banking system, in line with actions announced and taken by other governments in Europe. Fitch has also downgraded BPN SGPS's, the 100% shareholder of BPN, Long-term IDR to 'CCC' from 'BBB', maintaining the RWN, and the Short-term IDR to 'C' from 'F3'and placing it on RWN. BPN SGPS's Individual rating is downgraded to 'F' from 'C', and removed from RWN. Its Support rating is affirmed at '5' and Support Rating Floor at 'No Floor'. The downgrade on BPN SGPS reflects the loss of BPN as its main asset, which accounts for about 97% of total assets, following the transfer of its shares in BPN to the Portuguese treasury. Fitch expects to resolve BPN SGPS's RWN once the amount of the compensation to BPN's current shareholders is made public and the structure of the BPN SGPS following the nationalization of BPN is known. BPN is a small commercial bank focusing on SMEs. BPN SGPS, which also holds interests in consumer finance, insurance, investment banking and asset management, was established in 2000 under SLN SGPS, the holding company for the whole group. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D R O M A N I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SC HIDROELECTRICA: S&P Affirms 'BB' Ratings; Outlook Negative ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to negative from stable on Romania-based S.C. Hidroelectrica S.A., the 80% state-owned electricity generator and supply company. At the same time, Standard & Poor's affirmed its 'BB' long-term foreign and local currency corporate ratings. "The negative outlook on Hidroelectrica reflects the possibility of further deterioration in the macroeconomic conditions in the Republic of Romania and the potential affect on Hidroelectrica's credit quality," said Standard & Poor's credit analyst Tania Tsoneva. Standard & Poor's assessment of Hidroelectrica does not incorporate any explicit state support and is not directly linked to the ratings on the Republic of Romania (foreign currency BB+/Negative/B; local currency BBB-/Negative/A-3). However, Standard & Poor's views Hidroelectrica as a strategic company for the state in its role as the operator and developer of indigenous hydropower resources, contributing to the policy of limiting the country's dependence on energy imports. The ratings continue to reflect uncertainties about a potential energy sector restructuring; the company's partly regulated earnings and the associated regulatory reset risk; its inherently volatile cash flows and weak liquidity; significant, partly debt- funded capital expenditure plans in the medium term; and exposure to the remaining transitional features and worsening macroeconomic conditions of the Romanian economy. These factors are mitigated by access to competitive, low-cost hydrogeneration assets with strategic importance to the energy sector; moderate leverage to date; and implicit support from the company's majority owner, the Republic of Romania. Hidroelectrica's creditworthiness may weaken if Romania's macroeconomic environment further worsens on the back of expansionary fiscal policy or tightening of external finance conditions. Despite the company's strong market position as a provider of about 30% of total electricity consumption in the country, it also has a quota to supply 20% of its generated volumes at low regulated prices. Its cash flow generation and debt protection may be somewhat affected by higher costs and inflation that are not recovered in full or on a timely basis through tariff increases. The deteriorating conditions might affect payment collection as well. The company's credit quality might be affected by its exposure to financial risks in the absence of stated financial targets and below-average financial risk management practices. Hidroelectrica does not hedge against interest rates and foreign exchange risks. At the end of December 2007, all of its long-term debt was at floating interest rates and represented borrowing in euros and Swiss francs. These risks are mitigated by relatively low leverage of 7% debt to capital, some flexibility in the Romanian leu (RON) 6.3 billion large capital investment program through 2012, and a portion of revenues in foreign currency. At Dec. 31, 2007, the Republic of Romania guaranteed about 25% of the company's total debt outstanding, although Standard & Poor's does not expect such guarantees for new debt. Downside rating factors include adverse energy sector restructuring, credit-dilutive acquisitions, and negative corporate restructuring measures, including the sale of large- scale hydropower plants that are considered core to the company's operations. A material increase in investment expenditures or a lack of improvement in the company's liquidity position may also have negative consequences. To maintain the rating, S&P expects Hidroelectrica to improve its liquidity position while maintaining a strong financial profile and continuing to benefit from implicit state support. S&P would expect to revise the outlook to stable if the macroeconomy in Romania improves or the company's liquidity position strengthens. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D R U S S I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D KAZANORGSINTEZ OJSC: Liquidity Concerns Cue S&P to Junk Rating -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Russian petrochemical group Kazanorgsintez OJSC from 'B-' to 'CCC+'. The outlook is negative. At the same time, S&P lowered the Russia national scale rating from to 'ruBB' from 'ruBBB'. S&P also lowered the issue-level rating on senior unsecured debt issued by subsidiary Kazanorgsintez S.A. (KOS) and guaranteed by Kazanorgsintez to 'CCC+' from 'B-'. The recovery rating of '4', indicating its expectation of average (30%-50%) recovery in the event of a payment default, remains unchanged. "The downgrade reflects uncertainty regarding Kazanorgsintez' medium-term profitability and the group's extremely tight liquidity position," said Standard & Poor's credit analyst Lucas Sevenin. The group is facing a potential covenant breach, the need to refinance some US$360 million in short-term debt that isn't fully covered with existing cash and bank lines, and a huge debt load (with debt to EBITDA at 7x). S&P also expects that the group will generate materially negative free operating cash flow (FOCF) in 2008, due to heavy capital expenditures and a potential margin squeeze in the industry. The rating agency's concern is that in the currently difficult financial markets, operational issues will raise the hurdles Kazanorgsintez confronts to refinance. The ratings also factor in the group's corporate governance uncertainties, good market share for its main products, and fast- growing demand for polyethylenes in Russia given their still-low market penetration. Headquartered in the Republic of Tatarstan (BB/Positive/--), Kazanorgsintez is one of the leading petrochemical players in Russia, with 2007 sales of US$900 million. "The negative outlook reflects our concerns regarding Kazanorgsintez' ability to obtain sufficient financing and improve its EBITDA against weaker overall demand and softer prices in the petrochemicals industry," said Mr. Sevenin. The rating would be pressured if new bank lines or other liquidity enhancing measures are not in put in place in the short term, if covenants are breached and not waived, or if EBITDA decreases versus the first-half 2008 figure. S&P could revise the outlook to stable, and ultimately to positive, if the group successfully obtains new financing, improves its liquidity position, and stabilizes its operating performance. OPIN JSC: Fitch Holds IDR at 'B' & Changes Outlook to Stable ------------------------------------------------------------ Fitch Ratings has changed the Outlooks on Russian property developer JSC OPIN's (OPIN) Long-term Issuer Default Rating (IDR) and National Long-term rating to Stable from Positive. The agency has simultaneously downgraded OPIN's National Long-term rating to 'BBB(rus)' from 'BBB+(rus)', and affirmed its Long- and Short-term IDR at 'B'. The rating action reflects Fitch's belief that OPIN is unlikely to successfully execute its planned expansion strategy during H208 and FY09 and meet its financial forecasts. The agency expects OPIN to deliver considerably fewer property units in 2009 and 2010 than previously forecast, with profit margins also expected to be lower-than-anticipated, due to falling property demand and a lack of external debt to fund new projects. The lack of external debt -- caused by the ongoing global liquidity squeeze affecting Russia's real estate market -- will likely prevent OPIN from achieving its 2008 fund-raising targets. Although OPIN appears to have sufficient funds to complete its current projects, partly aided by a switch back to a pre-sales model (whereby construction is funded by customer deposits), the property developer may find it harder to fund future projects. This could restrict its medium-term expansion plans and reduce future cash flows. Demand for OPIN's properties is expected to weaken during Q408 and 2009, driven by falling GDP growth (Fitch recently revised its 2009 GDP forecasts for Russia to 4% from 6.7%), and the reduction of foreign investment into Russian real estate. Demand is also likely to be affected by the prospect of rising unemployment, rising mortgage rates and increasingly negative sentiment among potential real estate buyers. OPIN's residential operations also tend to concentrate on 'elite' residencies, the purchase of which tends to be more discretionary than in the mass-market segment, and therefore in Fitch's opinion may be more exposed to falling demand. OPIN's credit profile has weakened slightly in recent weeks in the face of these pressures which are expected to persist. However, Fitch believes the company's IDRs retain some headroom at the current level of 'B', and therefore the Outlook is Stable. Fitch also believes that OPIN is better placed than most of its Russian real estate peers to weather current conditions. The company continues to benefit from its large, equity-funded landbank (which is big enough to support approximately 40 years of operations), its ability to self-finance projects through pre-sales, and a competent and experienced management team. Furthermore, OPIN has a manageable liquidity position, with a relatively back-ended maturity profile and sufficient cash to cover short-term debt (US$103 million as at end-H108), interest and committed capex by approximately 1x as of October 2008. The company also has access to long-term committed undrawn facilities that could be used to fund a portion of OPIN's future capex. Nevertheless, concerns remain, and Fitch will continue to monitor market conditions for signs of further deterioration. Potential problems include a possible scale back in infrastructure investment by the Russian government due to the country's ongoing financial troubles. This could reduce demand for OPIN's future residential projects, as many of these will be located next to the proposed - but as yet incomplete - Moscow-St. Petersburg highway. Further depreciation of the rouble relative to the US dollar could also raise problems for OPIN, as much of its debt is dollar- denominated while its cash flow is predominately rouble- denominated. This could inflate OPIN's debt burden relative to its cash flows. Fitch will also continue to monitor management's reaction to the ongoing difficulties in the real estate market. RBC OJSC: S&P Slashes Ratings to 'CCC/ruB' on Refinancing Concerns ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Russian media group OJSC RBC Information Systems (RBC) to 'CCC' from 'B'. At the same time, the Russia national scale and senior unsecured debt ratings on RBC were lowered to 'ruB' from 'ruBBB+', and the short-term corporate credit rating was lowered to 'C' from 'B'. In addition, Standard & Poor's said that it maintains the ratings on CreditWatch, but has revised the implications to developing from negative. "The downgrades reflect RBC's severe liquidity problems, arising from material impairments to its investment portfolio and the uncertain progress in its refinancing efforts, in an environment of particularly tough capital market conditions in Russia," said Standard & Poor's credit analyst Raam Ratnam. "The revised CreditWatch placement follows the management team's efforts to restructure the group's short-term debt and explore additional sources of long-term financing, including attracting new equity investors." The recent sharp fall in equity prices in Russia has had a dramatic effect on the value of the group's financial investments -- which S&P currently views as illiquid and of highly uncertain value. RBC no longer has sufficient liquid assets to cover debt obligations through to the end of 2009. At this stage, RBC's capacity to meet its debt obligations is therefore dependent on additional equity financing, the rollover of debt maturities, or issuance of new debt. Although S&P acknowledges that these financial resources could become available in the short term -- provided management is able to progress its refinancing plans -- this move remains beset with uncertainties in the current market conditions. A failure to secure such resources could rapidly prompt a default. Beyond the immediate liquidity concerns, RBC's business performance continues to suggest higher long-term credit fundamentals. However, S&P believes that the pace of growth in the Russian advertising market has slowed down overall, with some sectors significantly curtailing their advertising expenditures. In our opinion, this will mean that RBC will be unable to sustain its strong operating performance of the first half of 2008 in the second half of the year and into 2009. Nevertheless, if the near- term financing difficulties can be overcome, RBC has the potential to build on its strong market positions in several segments of the Russian media sector. "In resolving the CreditWatch, we will take into account RBC's plans to refinance its 2009 debt maturities and put in place suitable financing to cover debt obligations at least until financial year-end 2009," added Mr. Ratnam. "We will also expect the group to provide details of how it will reduce its costs base and control capital expenditures, while at the same time continuing to increase its share of the Russian media market. Furthermore, as part of our review, we will reassess the group's efforts to improve corporate governance, risk management, internal controls, and operations to better protect the interests of its bondholders and stakeholders." On resolution of the CreditWatch, the ratings could be either lowered, upgraded, or affirmed. A further downgrade would reflect the group's inability to address its near-term refinancing needs. Equally, the ratings could be upgraded or affirmed if RBC is able to rapidly secure its 2008/2009 debt obligations through adequate refinancing and show prudent liquidity management. * RUSSIA: PM Says Banking Industry Has Enough Liquidity ------------------------------------------------------- The Russian banking industry has sufficient liquidity for all settlements and crediting, despite the ongoing global financial crisis, RIA Novosti reports, citing First Deputy Prime Minister Igor Shuvalov. "At the current moment we understand that cash, which has been provided to the banking sector, is sufficient and the banking industry has enough liquidity to carry out both settlement operations and provide credits," Mr. Shuvalov was quoted by RIA Novosti as saying. Mr. Shuvalov also urged Russian banks to provide financial aid to auto-making, the defense and industry complex, construction and retail trade, the report notes. Russia's government and Central Bank have recently carried out urgent measures to inject billions of U.S. dollars into the domestic financial market in an effort to to shore up its liquidity after the global credit crisis hit the country, the report relates. Russia's stock markets have lost around two thirds of their value since their May highpoints, amid declining oil prices and other investor concerns, RIA Novosti adds. * Russian Gov't Measures Ease Emerging-Market Oil & Gas Pressures ----------------------------------------------------------------- Upward rating momentum for Russia and its oil and gas industry has come to an abrupt end with the dramatic drop in oil prices and major turmoil in the global financial markets. Still, S&P's ratings and outlooks on the majority of Russian oil and gas companies remain unchanged, said Standard & Poor's Ratings Services in a report titled "Russian Government Initiatives Mitigate Liquidity Pressures In Emerging-Market Oil & Gas Industry." "We expect the various liquidity measures taken by the Russian government and initiatives to reduce the tax burden on the oil industry to have a stabilizing effect, particularly as liquidity and cash flows in fourth-quarter 2008 will be significantly impacted by lower oil prices and the export tax lag," said Standard & Poor's credit analyst Karl Nietvelt. These measures, combined with S&P's use of conservative oil price assumptions when analyzing oil and gas companies, means that the impact on the ratings in the sector in Russia, Kazakhstan, and South Africa is likely to be limited. * Most Rated Russian Local Gov'ts. to Withstand Economic Pressure ----------------------------------------------------------------- After numerous positive rating actions on local and regional governments in The Russian Federation between 2006 and mid-2008, the creditworthiness of rated Russian LRGs is expected to stabilize, according to a report published on Nov. 3, 2008, by Standard & Poor's Ratings Services. The report card titled "Most Rated Russian Local And Regional Governments Set To Withstand Economic Pressure," highlights the need for further political and administrative reforms and better financial management, and indicates that negative rating actions on some of those entities most affected by the recent market turmoil are also likely. "The immediate effect of deteriorating borrowing conditions, coupled with tightening liquidity on those LRGs with high refinancing requirements by the end of this year, has already resulted in several -- albeit limited -- downgrades and CreditWatch placements," said Standard & Poor's credit analyst Boris Kopeykin. The expected long-term consequences of the credit market dislocation are the deceleration of economic growth in the Russian economy in 2009-2010 and, consequently, weaker budget revenue growth in 2009-2010. This could potentially lead to weaker financial performance unless appropriate measures are taken. The increased need for LRGs to support related companies may put additional pressure on their budgets. Moreover, S&P doesn't expect material improvements in the quality of Russia's institutional framework or the LRGs' financial flexibility in the short term. The state's system of interbudgetary relationships should remain broadly unsupportive, so, for the time being, S&P does not factor in an assumption of timely federal support for debt service in ratings on Russian LRGs. "Nevertheless, we do not expect an overall or radical deterioration of Russian LRGs' credit quality because most of them will continue to demonstrate economic growth, improve management sophistication, enjoy relatively sound financial performance, and generally keep debt low," said Mr. Kopeykin. "The effects of revenue growth, which generally resulted in a sound budgetary performance, acceleration of capital expenditures, cash accumulation, and easing of debt burdens, and was the main factor supporting most of the positive rating actions since the start of the decade, will somewhat abate, but will not fully disappear in 2009." =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D S W E D E N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D KAUPTHING BANK: Swedish Branch Sells Pension Unit to Employees -------------------------------------------------------------- Kaupthing Bank hf's Swedish branch has sold its pension unit Kaupthing Pension Consulting to a group of employees for an undisclosed amount, the Associated Press reports. The company, as cited by the report, said the group is led by the unit's chief executive Dick Simonsson. "Kaupthing Sweden has, for some time, aimed at selling the wholly owned subsidiary KPC. The sale is completely in line with customers' demand for a totally independent pension consultancy," Kaupthing Sweden spokesman Peter Borsos was quoted by the report as saying. The new company, the report notes, will change its name but will continue to cooperate with Kaupthing Sweden. About Kaupthing Bank Headquarted in Reykjavik, Iceland, Kaupthing Bank -- http://www.kaupthing.com-- is engaged in the provision of financial services, such as private banking, asset management, pension services, brokerage services, investment banking, as well as corporate and retail banking. The Bank's offer is targeted at companies, institutional investors and individuals. The Bank is operational in thirteen countries, including Luxembourg, Switzerland, the Nordic countries, the United Kingdom and the United States. The main subsidiaries include Kaupthing Singer & Friedlander and FIH Erhvervsbank. * * * As reported in the Troubled Company Reporter-Europe on October 13, 2008, Fitch Ratings downgraded Kaupthing Bank hf.'s Long-term Issuer Default rating to 'D' from 'CCC' and removed it from Rating Watch Evolving. This follows the announcement that Kaupthing is now subject to similar arrangements as its two Icelandic peers, Glitnir Banki and Landsbanki Islands, with the Icelandic authorities effectively seizing control of the bank. At the same time, Moody's Investors Service downgraded the bank financial strength rating (BFSR) of Kaupthing Bank hf to E from D+, its long-term deposit ratings to Caa1 from Baa3, the long-term senior debt ratings to Caa2 from Ba1. In addition, Moody's downgraded the bank's subordinated debt to C from Ba2 and its preferred stock to C from B1. The bank's short-term rating was downgraded to Not-Prime from P-3. Moody's is maintaining Kaupthing's long-term deposit ratings, the long-term senior debt ratings and its BFSR on review for further possible downgrade. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D S W I T Z E R L A N D =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D BREITENMOSER ISO: Creditors Must File Proofs of Claim by Nov. 15 ---------------------------------------------------------------- Creditors owed money by SC Breitenmoser Iso are requested to file their proofs of claim by Nov. 15, 2008, to: Arthur Breitenmoser Liquidator Hochbuehlstrasse 32 9532 Rickenbach Switzerland The company is currently undergoing liquidation in Rickenbach. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Oct. 3, 2008. COOLWAVE JSC: Deadline to File Proofs of Claim Set November 14 -------------------------------------------------------------- Creditors owed money by JSC Coolwave are requested to file their proofs of claim by Nov. 14, 2008, to: Bruno von Allmen Liquidator Ch=E4sereiacher 4 3317 Limpach Switzerland The company is currently undergoing liquidation in Kirchberg BE. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Aug. 19, 2008. GIVING BASKET: Creditors Have Until Nov. 14 to File Claims ---------------------------------------------------------- Creditors owed money by LLC The Giving Basket are requested to file their proofs of claim by Nov. 14, 2008, to: Robert Gottschalk Liquidator Hofmatt 46 6332 Hagendorn Switzerland The company is currently undergoing liquidation in Cham. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 18, 2008. HR MANAGEMENT: Proofs of Claim Filing Deadline is Nov. 14 --------------------------------------------------------- Creditors owed money by LLC HR Management Zug are requested to file their proofs of claim by Nov. 14, 2008, to: Susanne Koller Brunner Quantenweg 2 8360 Eschlikon Switzerland The company is currently undergoing liquidation in Zug. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 25, 2008. LMB LLC: Creditors' Proofs of Claim Due by Nov. 14 -------------------------------------------------- Creditors owed money by LLC LMB are requested to file their proofs of claim by Nov. 14, 2008, to: LLC Innoplus Liquidator Rundbuckstrasse 6 8212 Neuhausen am Rheinfall Switzerland The company is currently undergoing liquidation in Neuhausen am Rheinfall. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 22, 2008. STARS & VIBES: Nov. 15 Set as Deadline to File Claims ----------------------------------------------------- Creditors owed money by LLC Stars & Vibes Publishing are requested to file their proofs of claim by Nov. 15, 2008, to: P. Alioth Liquidator Allschwilerweg 24 4102 Binningen Switzerland The company is currently undergoing liquidation in Allschwil. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 24, 2008. WOBAG-IMMOBILIEN JSC: Creditors Must File Claims by Nov. 15 ----------------------------------------------------------- Creditors owed money by JSC Wobag-Immobilien, Sempach are requested to file their proofs of claim by Nov. 15, 2008, to: Willy Blattler Guggistrasse 7 6055 Luzern Switzerland The company is currently undergoing liquidation in Sempach. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 11, 2008. XARDAS LLC: Deadline to File Proofs of Claim Set Nov. 15 -------------------------------------------------------- Creditors owed money by LLC Xardasin are requested to file their proofs of claim by Nov. 15, 2008, to: Hans Reichlin Liquidator Chueweid 11 8906 Bonstetten Switzerland The company is currently undergoing liquidation in Rueschlikon. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Aug. 7, 2008. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D U K R A I N E =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D AZOVSTAL CAPITAL: Strong Price Reduction Cues Moody's B2 Rating --------------------------------------------------------------- Given recent collapse in demand for semi finished steel products and for prices especially from the CIS Moody's Investors Service has downgraded the Ba3 corporate family rating and the Aa1.ru national scale rating of Metinvest B.V. to B1 and Aa3.ua respectively and the senior unsecured rating of the loan participation notes, issued by Azovstal Capital B.V. to B2. The outlook on all ratings remains negative. The rating action was prompted by a further weakening in the demand for steel products in the Ukraine, the strong reduction of steel prices which is expected to lead a significant reduction in Metinvest's operating profitability and cash flow generation for the remainder of 2008 and into 2009. Coupled with lower than initially expected cash flow generation Moody's considers the short term liquidity of the group which has to renew some significant credit facilities in the beginning of next year to be constrained. The negative outlook reflects the effects of the weaknesses in the industry, the low visibility for prospects of short term recovery and the current limitations for Ukrainian companies to receive funding from their banks. Moody's will continue to follow closely the measures the company is taking to offset these negative market developments, by reducing planned capex projects and dividend payments. Moody's notes that Metinvest is already planning to scale back significant capex projects to conserve cash generated, and that also steel production has been reduced by around 20% to reduce the current supply/demand imbalance on the market for steel produced in the CIS. Although Metinvest is still considered the strongest of the Ukrainian steel producers, with access to own iron ore and -- to some extent -- also coking coal reserves, which should keep the cost base at a flat level, the significant changes within a very short period of time for the CIS steel production has raised the extent of operating challenges for the company.. Downgrades: Issuer: Azovstal Capital B.V. * Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Issuer: Metinvest B.V. * Probability of Default Rating, Downgraded to B1 from Ba3 * Corporate Family Rating, Downgraded to a range of B1 to Aa3.ua from a range of Ba3 to Aa1.ua Metinvest B.V., a company set up under Dutch law, but with major operations in Donetsk/Ukraine is the largest steel and iron ore producer of the Ukraine. In 2007 the company generated revenues of US$7.4 billion and operating profit of US$1.8 billion. Metinvest is 75% owned by System Capital Management, an investment holding company in the Ukraine. 25% (blocking stake) of Metinvest's shares are owned by Smart Group based in the Ukraine. BUSINESS TECHNOGROUP: Creditors Must File Claims by Nov. 16 ----------------------------------------------------------- Creditors of LLC Business Technogroup Ltd. (code EDRPOU 35534301) have until Nov. 16, 2008, to submit proofs of claim to: Economic Court of Kiev B. Hmelnitskiy str., 44-b 01030 Kyiv Ukraine The Arbitration Court of Kyiv commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 9, 2008. The case is docketed as 24/383-b. CENTRAL EUROPEAN: S&P Affirms 'BB' Ratings; Outlook Negative ------------------------------------------------------------ Standard & Poor's Ratings Services revised to negative from stable the outlook on Bermuda-based emerging markets TV broadcaster Central European Media Enterprises Ltd. (CME). At the same time, the 'BB' long-term foreign and local currency corporate credit ratings were affirmed. S&P also affirmed its 'BB' debt ratings on CME's US$475 million senior secured convertible notes due 2013 and its EUR245 million and EUR150 million notes due 2012 and 2014, respectively. "The outlook revision reflects our concerns that Central European Media Enterprises' credit measures may not remain commensurate with the 'BB' ratings over the next few quarters," said Standard & Poor's credit analyst Manuela Gabetta. The group's debt leverage has been increasing throughout 2008 as the result of an aggressive acquisition policy. Standard & Poor's expects fully adjusted gross debt to EBITDA to approach 4.0x at the end of financial 2008, compared with 3.5x at Sept. 30, 2008, and well below the 2.3x reported at Dec. 31, 2007. CME's aggressive financial policy raises concerns in light of the increased macroeconomic uncertainties and lower revenue visibility in the Eastern European countries in which the group operates, notably Ukraine (foreign currency B/Negative/B; local currency B+/Negative/B) and, to a lesser extent, the Republic of Romania (foreign currency BB+/Negative/B; local currency BBB-/Negative/ A-3). CME generates most of its revenues from selling TV advertising space. The attractiveness of its free-to-air TV channels to advertisers could, therefore, decline if economic conditions in its main local markets weaken, as the recent situation in Ukraine demonstrates. In addition, the gradual devaluation of CME's main local operating currencies against its reporting currency, the U.S. dollar, has forced the group to revise its consolidated EBITDA guidance (before corporate costs) to US$370 million from the US$425 million originally forecast in early 2008. This is a concern because credit measures may deteriorate further if the local currencies of the countries where CME operates continue to devaluate, since the group's debt is in euros and U.S. dollars and is not hedged for debt principal. The group's debt increase follows the merger-and-acquisition transactions made during the year aimed at strengthening its market positions in Eastern Europe. These transactions include the buyout of the remaining 40% equity interest in the Ukrainian broadcaster Studio1+1 that CME didn't already own and the acquisition of an 80% interest in two Bulgarian television channels. The ratings on CME remain burdened by its high concentration of profitability in a single TV channel in the Czech Republic (foreign currency A/Stable/A-1; local currency A+/Stable/A-1) and Romanian TV channels; the potential for regulatory interference; and political risks. These factors are mitigated by the group's leading position in the main markets in which it operates and its position as a producer of established, locally made content. S&P may lower the ratings if the group fails to restore adequate credit measures for the ratings, such as adjusted total debt to EBITDA in the range of 3.5x on a sustainable basis. If CME's largest local operations were to significantly underperform or if the group were to embark on any additional acquisition that could further weaken its credit protection measures, S&P could also lower the ratings. Conversely, S&P could revise the outlook to stable, despite the unfavorable macroeconomic conditions, if the group manages to achieve sound EBITDA growth and healthy operating cash flow generation that would translate into sustainable adjusted total leverage of 3.5x. The outlook does not incorporate potential severe macroeconomic stress on one or several of the group's major operations. INDUSTRIAL UNION: Moody's Puts B1 Rating on Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service has put the B1 corporate family rating for Industrial Union of Donbass on review for possible downgrade. The rating action was prompted by recent collapse in demand for steel products and consequential significant reduction in prices for steel products from the CIS steel producers as well as the low visibility for prospects of short term recovery and the current limitations for Ukrainian companies to receive funding from their banks. These developments are expected to have a negative effect on the company's profitability and cash flow generation. The review will focus on: -- over the next few weeks monitoring of the operating performance of the company to see whether there is an indication of stabilization in the production level and prices; -- assessing the profitability level and cash flow generation capability under the negative market developments; and -- assessing the availability of liquidity to cover operating needs including changes in working capital, debt repayments and mandatory capex investments. Moody's notes that ISD is already cutting back significant capex investments to preserve generated cash and that steel production has been reduced by 50% at Ukrainian plants to reduce the current supply and demand imbalance on the market for steel produced in the CIS. Due to the fact that significant changes took place within a short period of time, the susceptibility of ISD to weather the current market turmoil is being tested which creates an additional pressure on the current rating level. Industrial Union of Donbass is one of the leading steel producers in Eastern Europe and is one the largest in Ukraine with an annual production of 10.1 million tones of liquid steel in 2007. The company's production assets are located in four sites, with two mills in the Ukraine and one each in Hungary and Poland. Through its JV with Duferco, the company also has equity interests in Danish Steel in Denmark, MakStil in Macedonia and supplies slabs to Farrell in the US. ISD is primarily exporting its products (85% of 2007 revenues) with the main export markets being Europe (45% of total sales) following by sales to South-East Asia (20% of the sales). The company is indirectly controlled by several individuals or their representatives. In 2007, the company reported revenue of US%6.15 billion and US$1.3 billion of EBITDA based on audited consolidated financial statements. INSTITUTE OF GEOPOLITICS: Creditors Must File Claims by Nov. 16 ---------------------------------------------------------------- Creditors of LLC Kiev Institute of Geopolitics, Economics and Management (code EDRPOU 25635811) have until Nov. 16, 2008, to submit proofs of claim to: Mrs. Olga Zalutskaya Liquidator Ap. 45 Livarnaya Str. 9 49000 Dniepropetrovsk Ukraine The Arbitration Court of Kyiv commenced bankruptcy proceedings against the company after finding it insolvent on Aug. 19, 2008. The case is docketed as 15/782-b. Economic Court of Kiev B. Hmelnitskiy str., 44-b 01030 Kyiv Ukraine METINVEST B.V.: Weakening Demand Cues Moody's to Cut Rating to B1 ----------------------------------------------------------------- Given recent collapse in demand for semi finished steel products and for prices especially from the CIS Moody's Investors Service has downgraded the Ba3 corporate family rating and the Aa1.ru national scale rating of Metinvest B.V. to B1 and Aa3.ua respectively and the senior unsecured rating of the loan participation notes, issued by Azovstal Capital B.V. to B2. The outlook on all ratings remains negative. The rating action was prompted by a further weakening in the demand for steel products in the Ukraine, the strong reduction of steel prices which is expected to lead a significant reduction in Metinvest's operating profitability and cash flow generation for the remainder of 2008 and into 2009. Coupled with lower than initially expected cash flow generation Moody's considers the short term liquidity of the group which has to renew some significant credit facilities in the beginning of next year to be constrained. The negative outlook reflects the effects of the weaknesses in the industry, the low visibility for prospects of short term recovery and the current limitations for Ukrainian companies to receive funding from their banks. Moody's will continue to follow closely the measures the company is taking to offset these negative market developments, by reducing planned capex projects and dividend payments. Moody's notes that Metinvest is already planning to scale back significant capex projects to conserve cash generated, and that also steel production has been reduced by around 20% to reduce the current supply/demand imbalance on the market for steel produced in the CIS. Although Metinvest is still considered the strongest of the Ukrainian steel producers, with access to own iron ore and -- to some extent -- also coking coal reserves, which should keep the cost base at a flat level, the significant changes within a very short period of time for the CIS steel production has raised the extent of operating challenges for the company. Downgrades: Issuer: Azovstal Capital B.V. * Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Issuer: Metinvest B.V. * Probability of Default Rating, Downgraded to B1 from Ba3 * Corporate Family Rating, Downgraded to a range of B1 to Aa3.ua from a range of Ba3 to Aa1.ua Metinvest B.V., a company set up under Dutch law, but with major operations in Donetsk/Ukraine is the largest steel and iron ore producer of the Ukraine. In 2007 the company generated revenues of US$7.4 billion and operating profit of US$1.8 billion. Metinvest is 75% owned by System Capital Management, an investment holding company in the Ukraine. 25% (blocking stake) of Metinvest's shares are owned by Smart Group based in the Ukraine. NASH #1: Creditors Must File Claims by November 16 -------------------------------------------------- Creditors of LLC Nash #1 (code EDRPOU 32951529) have until Nov. 16, 2008, to submit proofs of claim to: Mr. R. Breus Liquidator Ap. 70 Novoprudnaya Str. 4 61018 Kharkov Ukraine The Arbitration Court of Kharkov commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 6, 2008. The case is docketed as B-48/131-08. Economic Court of Kharkov Region Derzhprom, 8-th Svoboda Square, 5 61022 Kharkov Ukraine The Debtor can be reached at: LLC Nash #1 Ivan Dubovoy Lane, 13 61003 Kharkov Ukraine FIKS LLC: Creditors Must File Claims by November 16 --------------------------------------------------- Creditors of LLC Fiks (code EDRPOU 30615216) have until Nov. 16, 2008, to submit proofs of claim to: Mrs. Nathalie Ivleva Liquidator Ap. 9 S. Tarkhov Str. 5 61189 Kharkov Ukraine Tel: 8(067)902-72-57 The Arbitration Court of Kharkov commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 6, 2008. The case is docketed as B-39/122-08. Economic Court of Kharkov Region Derzhprom, 8-th Svoboda Square, 5 61022 Kharkov Ukraine The Debtor can be reached at: LLC Fiks Sverdlov Str. 19 Kolomak Kharkov Ukraine =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D U N I T E D K I N G D O M =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D ARTHRO KINETICS: In Talks to Sell Business; May Liquidate --------------------------------------------------------- Arthro Kinetics plc provided a business update on Wednesday, November 5. Arthro Kinetics announced on September 29, 2008 that it was in preliminary discussions which may or may not lead to an offer for the issued share capital of the Company. These discussions continue but there is no material progress to report and the Directors are concerned by the speed of recent progress which it understands has been hampered in part by the impact of the current economic climate on obtaining acquisition funding. Of the various other discussions to realize value from certain assets within the group, one has progressed to the stage of proceeding to legal documentation. The Company is deemed through its subsidiary companies to have control over the Cell and Tissue Bank Austria (CTBA) and consolidates its results accordingly. The owners of the CTBA are in negotiation for its sale. Completion of the sale would enable the repayment by CBTA of a loan of approximately EUR1 million made to it by an Arthro Kinetics subsidiary which would materially enhance the group's cash position. The transaction is targeted to complete by the end of November 2008 and, although negotiations are continuing, there can be no certainty this transaction will complete. The cash position of the group remains in line with the Company's interim results announcement of September 29, 2008 indicating sufficient cash within the group to support operations through the first quarter of 2009. This assessment continues to be made on a going concern basis. The Directors have assessed the business in the event it cannot continue on a going concern basis and concluded that the group's forecast cash position at the end of November 2008 will match the costs of a solvent liquidation of the group. The Directors are focused on achieving sufficient certainty with the negotiations for the sale of the group and/or the repayment of the loan from the CTBA by the end of November to continue trading as a going concern. On this basis the group will continue to minimize costs where possible, including headcount reductions in non revenue generating areas, to reduce the group's cash burn. One area of consideration is the cost of maintaining the public listing on AIM. This is a material cost to the group in terms of external compliance costs and the cost and structure of the Company's board. The party in discussions for the purchase of the group is not interested in maintaining the public listing following the transaction. Should there be sufficient certainty in the group's ongoing trading position from the end of November the Directors will approach shareholders with a recommendation to de-list the Company. In the absence of sufficient certainty with regard to transactions at the end of November, the Directors will take steps to close the business. Headquartered in Macclesfield, England, Arthro Kinetics plc (AIM: AKI) -- http://www.arthro-kinetics.com/-- is an orthopedics company dedicated to regenerating joint mobility and spinal disc function. BLUESTONE SECURITIES: S&P Puts 'BB' Rtngs on 3 Classes on WatchNeg ------------------------------------------------------------------ Standard & Poor's Ratings Services placed on CreditWatch positive its credit ratings on the class B and C notes series 2004-01 and the class B notes series 2005-01 issued by Bluestone Securities PLC. S&P also placed on CreditWatch negative S&P's ratings on the class C to E notes series 2006-01 and the class C, Da, and Db notes series 2007-01 issued by Bluestone Securities. All other notes in these transactions remain unaffected. The CreditWatch placements follow an initial review of the most recent information that S&P has received in September 2008. As of the September 2008 investor report, the pool factor was 13.24% in Bluestone 2004-01 and 20.42% in Bluestone 2005-01. The reserve fund in these transactions does not amortize and is now 9.92% for Bluestone 2004-01 and 3.93% for Bluestone 2005-01. The credit enhancement has improved and S&P will now carry out a more detailed analysis to investigate whether the affected classes can attain a higher rating level. Bluestone 2006-01 and Bluestone 2007-01 have experienced higher losses compared with the earlier deals at a similar stage in their seasoning. There is concern that, given the house price decline since the origination of these deals, repossessions and losses will continue to increase. Both deals have interest-only classes outstanding which, together with the high losses experienced, have resulted in reducing excess spread. This increases the likelihood of future reserve fund draws and a potential effect on the junior notes of the transaction. S&P will continue to monitor the performance of these transactions using the most recent loan-level data for a full credit and cash flow analysis. S&P will pay particular attention to current repossessions, losses, and collection rates. The results of S&P's analysis, together with any effects on the ratings on any of the notes, will be released in due course. RATINGS LIST Rating Class To From ----- -- ---- Ratings Placed On CreditWatch Positive Bluestone Securities PLC GBP288 Million Mortgage-Backed Floating-Rate Notes Series 2004-01 B A/Watch Pos A C BBB/Watch Pos BBB Bluestone Securities PLC GBP108.05 Million Mortgage-Backed Floating-Rate Notes Series 2005- 01 B A/Watch Pos A Ratings Placed On CreditWatch Negative Bluestone Securities PLC GBP109.98 Million And EUR164.6 Mortgage-Backed Floating-Rate Notes Series 2006-01 C BBB/Watch Neg BBB D BB/Watch Neg BB E B/Watch Neg B Bluestone Securities PLC EUR80 Million And GBP405.58 Million Mortgage-Backed Floating-Rate Notes Series 2007-01 C BBB/Watch Neg BBB Da BB/Watch Neg BB Db BB/Watch Neg BB CASTLE HOLDCO: Liquidity Concerns Spur S&P to Junk L-T Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Castle HoldCo 4, the holding company for U.K.- based real-estate services provider Countrywide PLC, to 'CCC from 'B' due to concerns over the company's ability to maintain adequate liquidity to meet its debt-servicing commitments. The outlook is negative. "The downgrade reflects Castle HoldCo 4's worsening liquidity position during the first nine months of 2008, and our expectation that this position will progressively deteriorate over the next 12 months as transaction volumes remain at depressed levels," said Standard & Poor's credit analyst Mohammed Fayek. "Given the U.K.'s weakening economic environment, the poor outlook for U.K. house prices, and extremely tight lending conditions, we believe Castle HoldCo 4 will find it increasingly difficult to improve financial performance and maintain adequate liquidity during fiscal 2009." In the nine months to Sept. 30, 2008, the company reported revenues of GBP327 million, representing a 33% decline relative to the same period in 2007. Castle HoldCo 4's leading position in the U.K. housing market, and its substantial streamlining efforts, have provided limited benefits in view of the difficult industry fundamentals and the company's current debt level. Extremely harsh trading conditions have exceeded the group's cost- cutting efforts, resulting in a net decrease in cash balances (excluding the GBP90 million revolver utilization) of GBP64 million in the nine months ended Sept. 30, 2008. If, as S&P expects, market conditions do not improve markedly, the group will exhaust its sources of liquidity before the end of 2009. Market conditions remain extremely poor and ongoing cash outflows are expected to progressively erode the company's liquidity sources over the next 12 months. Ratings will likely remain under pressure over the near term and any further weakening in liquidity would result in a further downgrade. In the event that transaction volumes improve, and cash outflows were to be reversed, a revision of the outlook to stable could be considered. CEVA GROUP: Moody's Affirms Caa1 Rating on EUR225 Mil. Sr. Notes ---------------------------------------------------------------- Moody's Investors Service has affirmed CEVA Group plc Corporate Family Rating of B2 and all ratings of the rated debt instruments issued by the Group but changed the outlook to negative from stable. The action was prompted by Moody's concerns on deteriorating market conditions in the broader logistic industry and the possible negative impact on the company's weak financial profile. "The rating action reflects Moody's expectation that the logistic segment might endure a period of soft demand and pricing pressure that might result in a delay in the previously anticipated improvements in the company's credit metrics," said Paolo Leschiutta a Moody's Vice President - Senior Analyst and responsible for CEVA. "Moody's acknowledges the company' success in growing the business during difficult market conditions, with revenues growing 10% on a pro-forma basis during the nine months period ending September 2008, although remains concerned that operating performance and cash flow generation during the current year might fell short of expectation, and that thin operating margins offer modest headroom to accommodate sudden shocks in the market," continued Mr. Leschiutta. During the nine months period ending September 2008, the company reported revenues of EUR4,762 million and an EBITDA margin of 5.5%, slightly lower than the year before (6% at September 2007) on a pro-forma basis. In addition Moody's notes the significant interest burden and one off items (although the majority of these are not expected to be recurring) that quarter after quarter erode cash flow generation. CEVA's B2 Corporate Family Rating reflects the group's sound business profile offset by the weak credit metrics. The rating is supported by the group's global reach and relatively large size, the cross-selling opportunities provided by the combination of the Contract Logistic activity and Freight Management business and the improved diversification in terms of geography and customer base following the acquisition of EGL in 2007. However, the rating also reflects CEVA's high financial leverage following the acquisitions, the current weak economic outlook in key reference markets and the Group's exposure to the automotive and high technology sectors (which, however, Moody's recognizes is reducing over time). The current B2 rating also incorporates Moody's expectations that financial leverage will reduce over time. Erosion in operating performance, inability to make progress on constant de-leveraging with Debt to EBITDA ratio -- adjusted for leases and pension liability -- reducing below 6.5x at YE 08, weakening of operating cash flow generation (resulting in negative free cash flow generation) or a reduction in liquidity headroom would exert immediate downward pressure on the ratings. Ratings could be also downgraded in the case of a change in Moody's perception of current market conditions. In Moody's view, however, CEVA has sufficient liquid sources to handle daily operational flows thanks to stable cash flow generation, EUR126 million of cash on balance sheet as of September 30, 2008 (part of which was not readily available), a EUR190 million committed senior secured revolving facility (which is currently fully utilized but partially maintained as cash balance). Moody's also notes the modest working capital and investments commitments and the basically absence of long term debt maturing within the next twelve months. Ratings affirmed are: -- CEVA Corporate Family Rating and Probability of Default Rating of B2; -- The senior secured Ba2 (LGD2, 18%) rating on the US$1.01 billion term loan due 2013, on the US$250 million credit facility due in 2013 and on the US$ 250 Revolving credit facility due in 2012; -- The Senior Secured Second lien B3 (LGD5, 71%) rating on the US$400 million notes due 2014; -- The Senior Unsecured B3 (LGD5, 71%) rating on the EUR505 million notes due 2014; -- The Senior Subordinated Caa1 (LGD6, 95%) rating on the EUR225 million notes due 2016. The outlook is negative. CEVA Group plc (CEVA) is the fourth-largest integrated logistic provider in the world in terms of revenues, which at year-end December 2007 stood at approximately EUR6.3 billion on a pro-forma basis and at nine month end September 2008 stood at EUR4.8 billion. As of year-end 2007, CEVA had a presence in over 100 countries worldwide, employing more than 54,000 people and managing in excess of 8.6 million square meters of warehouse facilities. CEVA's activities include the former Contract Logistics (CL) business as acquired from TNT N.V. during 2006 together with the Freight Management (FM) business of EGL, a US- based company that the group acquired in August 2007. GALVANIC TECHNICAL: Taps Joint Administrators from Baker Tilly --------------------------------------------------------------- John Ariel and Matthew Wild of Baker Tilly Restructuring and Recovery LLP were appointed joint administrators of Galvanic Technical Services Ltd. on Oct. 21, 2008. Baker Tilly -- http://www.bakertilly.co.uk-- is an independent firm of chartered accountants and business advisers. The company is a national firm with over 2,200 employees and over 280 partners generating a fee income of over GBP204 million making them one of the leading mid-tier accountancy firms. They have a network of 30 offices in 25 locations across the UK. The company can be reached at: Galvanic Technical Services Ltd. c/o Baker Tilly Restructuring and Recovery LLP 12 Gleneagles Court Brighton Road Crawley RH10 6AD England KAUPTHING SINGER: Chancellor Waves Responsibility for Deposits -------------------------------------------------------------- Tony Brown, the chief of minister of the Isle of Man, has criticized Chancellor Alistair Darling's remarks concerning the crown dependancy's status as a tax haven, ifaonline.co.uk reports. The Chancellor, the report relates, told the Treasury Select Committee Monday that the Government would review its relationship with the offshore tax haven in the wake of the Icelandic banking crisis. Mr. Brown, as cited by the report, asserted the Chancellor "did not seem to be aware that the relationship between the United Kingdom and the Isle of Man has already been reviewed, and that an agreement reinforcing that relationship was signed by the Lord Chancellor on behalf of the UK Government in May last year." Mr. Brown maintained the Isle of Man is not asking the UK for any favors, but points out that it does have a constitutional responsibility to the crown dependancy internationally, the report notes. He also blamed the UK directly for the closure of Kaupthing, Singer & Friedlander in the Isle of Man. The Chancellor's comment earned similar criticism from Isle of Man Finance Director John Spellman, the report adds. Sharon Flaherty at the Financial Times writes that at the Treasury Select Committee meeting on Monday the Chancellor "waved responsibility" for British deposits totaling GBP550 million held in affected Isle of Man banks. Mr. Darling, the FT added, was also non-committal about what action would be taken, if any, by the British government to protect people who invested in Derbyshire Offshore, a subsidiary of the Derbyshire Building Society based in the Isle of Man. "The British government's obligation must be to depositors who have put their deposits into UK banks," Mr. Darling was quoted by the FT as saying. "The Isle of Man is independent of us, it has got its own regulator." About Kaupthing Singer & Friedlander (Isle of Man) Ltd. Kaupthing Singer & Friedlander (Isle of Man) Ltd. -- http://www.kaupthingsingers.co.im/-- is the UK subsidiary of Iceland-based Kaupthing Bank hf. On Oct. 9, 2008, the Isle of Man Court made a provisional liquidation order in relation to Kaupthing Singer & Friedlander (Isle of Man). Subsequently, Michael Simpson of PricewaterhouseCoopers was appointed as provisional liquidator of the bank. On Oct. 8, 2008, The Isle of Man Financial Supervision Commission suspended the banking license of Kaupthing Singer & Friedlander (Isle of Man). KTS WIRE: Brings in Joint Administrators from KPMG -------------------------------------------------- Howard Smith and Richard Dixon Fleming of KPMG LLP were appointed joint administrators of KTS Wire Industries Ltd. on Oct. 22, 2008. KPMG LLP -- http://www.kpmg.co.uk/-- offers accounting, audit, and tax-related services to customers in such target industries as banking, media and entertainment, consumer products, health care providers, insurance, and pharmaceuticals. The company can be reached at: KTS Wire Industries Ltd. c/o KPMG LLP 1 The Embankment Neville Street Leeds MAGELLAN RESIDENTIAL: Goes Into Administration ---------------------------------------------- Chris Holland at The Telegraph & Argus reports that Magellan Residential Ltd. and Magellan Residential (Denholme) Ltd. have been placed into administration after being hit by the slump in the housing market. Dan Butters and Ian Brown of the Leeds office of business advisory firm Deloitte have been appointed as administrators, the report relates. "Where appropriate, the completion of building works will continue while purchasers are sought for the business or the sites. We are working with all key stakeholders to establish an ongoing strategy for the business and will minimize disruption wherever possible," Mr. Butters was quoted by The Telegraph & Argus as saying. The Magellan business, which employs eight people at its headquarters in Ashley Lane, has developments under construction at Denholme, Idle, Wilsden, Baildon and Garforth, near Leeds, the report notes. PIPE HOLDINGS: S&P Keeps 'B-' Rating; Outlook Neg on Market Woes ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on U.K.- based manufacturer of plastic pipes and systems Pipe Holdings PLC to negative from stable due to ongoing deterioration in the group's main markets and S&P's concerns regarding the refinancing risk at the ultimate parent company, Hamsard 3054 Ltd. (Hamsard; not rated). At the same time, Standard & Poor's affirmed its 'B-' long-term corporate credit and 'CCC' senior unsecured debt ratings on Pipe Holdings, and lowered its senior secured debt rating on the group to 'B' from 'B+'. In addition, the recovery rating on the senior secured debt was revised to '2' from '1', due to S&P's assumption of lower enterprise value at default on the back of exceptionally negative market dynamics and the consolidated group's (the group's) complex capital structure. "The outlook revision reflects our expectation that the group's trading performance will continue to deteriorate as a consequence of the severe building materials market downturn in the U.K.," said Standard & Poor's credit analyst Sabine Gromer. "A further key consideration is the consolidated group's weak liquidity profile with a significant debt maturity ahead in May 2009. "This leaves the the group exposed on two fronts: First, we expect its pricing power to suffer due to sharp sales volume declines that will further deteriorate operating margins. Second, the group's already exposed cash flow adequacy after a secondary buyout in August 2007 leaves little cushion to support liquidity, particularly in relation to the significant refinancing and/or extension needs in May 2009." The group's cash flow adequacy is highly leveraged following the secondary management buyout. As a consequence, group debt (including payment-in-kind {PIK} notes and shareholder loans) to rolling 12 months EBITDA rose to 7.7x at June 30, 2008, compared with about 5.1x at June 30, 2007. This has left the group even more exposed to weakening cash flows arising from fluctuations in market conditions. "[T]he next most significant debt maturity is the already extended GBP85.6 million bridge facility at ultimate parent Hamsard, due in May 2009," added Ms. Gromer. "This represents a key refinancing risk for the group, which will need to be carefully managed and will be closely monitored by Standard & Poor's." Negative rating pressure could be triggered by an inability to refinance or extend maturing facilities, a significant payout under the earn-out liability with the group's former owners, Castle Harlan, and aggressive management action, particularly if these were to compromise the group's liquidity or debt levels. Equally, the ratings would come under pressure if the group were to suffer weaker-than-expected trading performance with substantially diminished revenues and operating cash flow. QUEST 4 FINANCE: Brings in Joint Administrators from BDO Stoy ------------------------------------------------------------- Martha H. Thompson, David H. Gilbert and Simon Girling of BDO Stoy Hayward LLP were appointed joint administrators of Quest 4 Finance Ltd. on Oct. 17, 2008. BDO Stoy Hayward -- http://www.bdo.co.uk/-- focuses on business assurance (audit), corporate advisory, tax, and investment management services, specializing in such industries as charities, educational institutions, family businesses, financial services, leisure, and hospitality. The company is the U.K. arm of BDO International and has offices in more than 15 cities throughout the U.K. The company can be reached at: Quest 4 Finance Ltd. c/o BDO Stoy Hayward LLP Kings Wharf 20-30 Kings Road Reading Berkshire RG1 3EX England SUNBERRY PROPERTIES: Taps Administrators from Grant Thornton ------------------------------------------------------------ Malcolm Shierson and Robert Harry Pick of Grant Thornton UK LLP were appointed joint administrators of Sunberry Properties Ltd. on Oct. 20, 2008. Grant Thornton UK LLP -- http://www.grantthornton.com/-- is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity. The company can be reached at: Sunberry Properties Ltd. 65 New Cavendish Street London W1G 7LS England SUNSHINE FINE: Brings in Joint Administrators from PwC ------------------------------------------------------ Mark David Arthur Loftus and Ian David Green of PricewaterhouseCoopers LLP were appointed as joint administrators of Sunshine Fine Art (Holding) Ltd. on Oct. 20, 2008. PricewaterhouseCoopers -- http://www.pwc.com/-- provides industry-focused services for public and private clients in order to build public trust. The company earned aggregated worldwide revenues of US$28 billion for fiscal year 2008, and employed over 146,000 people in 150 countries. The company can be reached at: Sunshine Fine Art (Holding) Ltd. Units 1a and b Ram Boulevard Foxhills Industrial Estate Scunthorpe South Yorkshire DN1 8QW England TEATHERS LTD: Administrators Sell Private Client Broking Biz ------------------------------------------------------------ The administrators to Teathers Ltd. on Wednesday, November 5, confirmed the sale of the private client stock broking business of Teathers to Redmayne-Bentley, one of the UK's largest independent private client stock broking and investment management firms. Richard Heis and Samantha Rae Bewick were appointed as administrators to Teathers (formerly known as Landsbanki Securities Ltd.) at the request of the directors on October 23, 2008. About KPMG LLP (UK) KPMG LLP (UK) -- http://kpmg.co.uk/-- provides professional services including audit, tax, financial and risk advisory. KPMG in the UK has over 10,000 partners and staff working in 22 offices and is part of a strong global network of members firms. As part of KPMG Europe it has merged with its German and Swiss firms, making it the largest integrated accounting firm in Europe. TI AUTO: S&P Cuts Rating to 'CCC+'; Outlook Negative ---------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on U.K.-based automotive supplier TI Automotive Ltd. (TI Auto) to 'CCC+' from 'B-' due to ongoing sharp deterioration in the auto sector. The rating outlook is negative. At the same time, the bank loan rating on TI Auto's GBP75 million revolving credit facility was lowered to 'B+' from 'BB-'. The '1+' recovery rating on this facility remains unchanged, indicating S&P's highest expectation of full recovery of principal in the event of a default. In addition, the bank loan rating on the company's GBP380 million senior secured debt was lowered to 'B' from 'B+'. The recovery rating of '1' remains unchanged, indicating S&P's expectation of very high recovery (90%-100%) in the event of a default. "The downgrades reflect further deterioration in the auto markets over the past three months and our expectation that these conditions will persist in the remaining months of 2008 and into 2009 as the auto industry enters recession," said Standard & Poor's credit analyst Andres Albricci. "As a result, TI Auto's EBITDA and cash generation will be negatively affected and this might prejudice the company's ability to meet scheduled interest payments in the near to medium term." The ratings also reflect S&P's concerns regarding TI Auto's ability to meet its financial covenants at the end of December 2008. Although favorable exchange rates contributed to good EBITDA generation in the first nine months of 2008 relative to budget, the weakness of the British pound sterling relative to the euro and U.S. dollar led to a significant increase in TI Auto's net debt level, therefore increasing the possibility of a breach under the leverage covenant. In addition, EBITDA generation in the fourth quarter of 2008 might suffer from sharply deteriorating market conditions. A breach of financial covenants would represent an event of default under TI Auto's facilities agreement and could ultimately trigger a default on all or part of the facilities. S&P is not aware of any ongoing discussion between the company and lenders to renegotiate the covenants. Similarly, S&P is not have any information about the intention of TI Auto's shareholders to support the company in the event of a breach in covenants. TISCALI SPA: In Talks With BSkyB Regarding Sale of UK Business -------------------------------------------------------------- Tiscali S.p.A confirmed it is currently holding talks with the BSkyB Group plc in relation to certain UK assets. Citing the Sunday Times, BBC News discloses that BSkyB had proposed an indicative offer of GBP450 million for the UK business. Carphone Warehouse, the Daily Telegraph relates, is thought to have withdrawn from the bidding race. Other competitors understood to have walked away from the auction include Vodafone and BT, the Daily Telegraph adds. According to the Daily Telegraph, if the acquisition pushes through, BSkyB, which has 1.79 million broadband customers, could become the third biggest player in the market behind BT and Virgin Media. AOL Money says Tiscali, which has 1.8 million broadband customers in the UK, is the fourth largest provider. However, AOL Money notes, the group's market share is believed to have come under recent pressure. Tiscali put itself up for sale this year following a strategic review of its business in February, BBC relates. About Tiscali Tiscali S.p.A. (Borsa Italiana, Milan: TIS) -- http://www.tiscali.com/-- is one Europe's alternative telecommunications operators. Tiscali supplies a wide range of services to its customers, both private individuals and companies, namely: Internet access through dial-up and ADSL, as well as voice, VoIP, media, added-value services and other technologically advanced products. As at June 30, 2008, Tiscali counted both in Italy and the UK a total of 3.2 million active users. Of these, over 2.4 million were ADSL subscribers. * * * As reported in the Troubled Company Reporter-Europe on October 23, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit rating to 'B' from 'B+' on Tiscali SpA, an alternative provider of Internet, telephony, and TV services in the U.K. and Italy. At the same time, S&P lowered its long-term debt ratings on the EUR50 million senior secured term loan and EUR50 million senior secured revolving credit facility (RCF) of financing vehicle Tiscali U.K. Holdings Ltd. to 'B' and 'B+', respectively, from 'B+' and 'BB-'; these loans are guaranteed by Tiscali SpA. The recovery ratings on these two debt facilities are unchanged at respectively '3' (indicating S&P's expectation of meaningful {50%-70%} recovery in the event of a payment default) and '2' (indicating its expectation of substantial {70%-90%} recovery in the event of a payment default). WAGE PAYMENT: Taps Joint Administrators from BDO Stoy ----------------------------------------------------- Martha H. Thompson, David H. Gilbert and Simon Girling of BDO Stoy Hayward LLP were appointed Joint Administrators of Wage Payment Ltd. on Oct. 17, 2008. BDO Stoy Hayward -- http://www.bdo.co.uk/-- focuses on business assurance (audit), corporate advisory, tax, and investment management services, specializing in such industries as charities, educational institutions, family businesses, financial services, leisure, and hospitality. The company is the U.K. arm of BDO International and has offices in more than 15 cities throughout the U.K. The company can be reached at: Wage Payment Ltd. c/o BDO Stoy Hayward LLP Kings Wharf 20-30 Kings Road Reading Berkshire RG1 3EX England WESTBRIDGE HOMES: Goes Into Administration ------------------------------------------ South Cave, East Yorkshire-based property development firm Westbridge Homes Ltd., has gone into administration, the Hull and East Riding Daily Mail reports. The company, the report relates, brought in administrators Ernst & Young after running into significant cash flow problems due to conditions in the housing market. Peter Lee, one of the Westbridge's directors, said the company lost more than GBP1 million of contracted sales not completed in the space of a month, leaving a massive hole in its cash flow. "The reason the company went into administration is because we are owed money ourselves. We ended up with a development where we had people that were on contract to buy but would not or could not complete because of the housing market," Mr. Lee was quoted by the report as saying. According to the report, the company owes GBP33,000 to TAS Communications of Beverley, and more than GBP20,000 to D&D Decorators of Hull. It also owes GBP11,000 to ICS Cleaning of Hull, and an amount to DLJ Associates in Leeds, the report adds. In a letter sent to creditors cited by the report, administrators Ernst & Young said the firm was unable to indicate whether there would be a "surplus" of cash available for those owed money. * Fitch: 30% UK House Price Decline to Hit Junior NC RMBS Notes --------------------------------------------------------------- Fitch Ratings says in a report that it expects UK house prices to decline by approximately 30% from their peak in October 2007. The agency has stress-tested its existing UK non-conforming RMBS ratings against the expected fall in house prices and found that negative rating migration should be predominantly confined to lower rated tranches. RMBS ratings are designed to withstand a significant increase in defaults and house price depreciation, with the higher ratings possessing greater ability to withstand more stress as compared to lower ratings. On a Fitch portfolio basis (by value), 3% of notes (GBP1.1bn equivalent) could potentially default and a further 11% (GBP4.4bn equivalent) could face downgrade. However, no defaults are expected at the 'AAA' or 'AA' level with potential rating migration limited to around 8% (GBP3.5bn). By contrast, non- investment grade notes, which are designed to absorb the losses generated by the increase in mortgage arrears and possessions, will suffer more significantly. The potential default rates on the 'BBB', 'BB' and 'B' tranches as a proportion of total 'BBB', 'BB' and 'B' tranches outstanding are 40%, 78% and 100% respectively. "With evidence suggesting that the UK is in the formative stages of a recession and the ongoing distress in the global banking system restricting the availability of mortgage credit, we are likely to see house price declines to the extent last seen in the early 1990s," says Rodney Pelletier, Managing Director in Fitch's Structured Finance team. "Our tests showed that in such a scenario while higher rated notes are less susceptible to downgrade and defaults, widespread downward rating migration is a distinct possibility for lower rated notes," Mr. Pelletier adds. Fitch stress-tested 108 UK non-conforming transactions, rated from 2003 - 2007 vintages. The stress test has identified a number of transactions where negative rating action is expected to occur. These transactions have been placed on priority review and the results and rating actions occurring from these reviews will be published shortly. The report 'Impact of Declining House Prices on UK Non-conforming Ratings' is available at http://www.fitchresearch.com/ Fitch is in the process of carrying out a similar exercise for UK Prime RMBS transactions and expects to publish its results in December. A teleconference to discuss the findings in the report will take place in the coming days. * Financial Sector Dominates Global Defaults, S&P Finds ------------------------------------------------------- Globally, 28 companies -- 24 public and 4 confidentially rated -- defaulted in the third quarter of 2008, said an article by Standard & Poor's. This is the largest number of defaults since the third quarter of 2003 and already five more than the total number of defaults for all of 2007. The volume of rated debt affected by third quarter's defaults was a massive US$186.2 billion, dwarfing the US$8.15 billion recorded in all of 2007 and making this the largest defaulting debt amount in recent memory, according to the report, titled "Quarterly Default Update And Rating Transitions (Premium)." The vast majority of this amount stems from the collapse of both Lehman Brothers Holdings Inc. and Washington Mutual Inc. (along with their various subsidiaries). Twenty-four of the defaults in the third quarter of 2008 were domiciled in the U.S., two came from Europe, and one each was from Canada and Hong Kong. Globally, the corporate default rate for speculative-grade-rated entities moved to 0.75% at the end of third-quarter 2008 from 0.20% during the same period in 2007. "After hitting record lows in 2007, the pace of defaults has picked up markedly," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "If the pace of defaults set so far this year is maintained through the remainder of the year, 2008 would have the largest number of defaults, at 88, since 2003." Of the 24 defaults in the third quarter, seven were financial institutions: -- four were from the consumer products sector, -- three each from leisure time/media and the forest and building products/homebuilders sectors, -- two from both transportation and real estate, and -- one each from insurance, health care/chemicals, and aerospace/automotive/capital goods/metal. * Consumer-Based Sectors Face a Frightening Environment, S&P Says ----------------------------------------------------------------- The consumer products, media and entertainment, and retail/ restaurants sectors remained most susceptible to economic and credit-market turbulence as of Oct. 30, 2008, said an article published by Standard & Poor's. These sectors consistently have the highest levels of risk among our lists of distressed companies (defined as speculative-grade- rated companies with securities trading in excess of 1,000 basis points above U.S. Treasuries), weakest links (companies rated 'B-' or lower with either a negative outlook or ratings on CreditWatch with negative implications), and potential bond downgrades (investment-grade or speculative-grade-rated companies that have either a negative outlook or ratings on CreditWatch with negative implications). S&P identified 303 companies across these sectors on the basis of the three criteria, according to the article, titled "Stress In Corporate America: Frightening Environment For Consumer-Reliant Sectors (Premium)." In the month of October, the number of defaults continued to rise as the aftermath of the September collapses continued to haunt the stressed sectors. Consumer spending for discretionary purposes remained inhibited in the wake of rising unemployment, combined with businesses facing restricted access to funding in the credit markets. "Consumer spending accounts for 70% of U.S. GDP, and we expect consumer spending to rise only 1% in 2008, compared with an observed growth rate of 2.8% in 2007," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Consumer products companies have had to face cost pressures, particularly rising energy and commodities prices in recent months, though they should experience a reprieve if the current declines in commodity prices continue." Of the 303 companies in these three sectors, 14 companies are on all three lists, while 58 are on more than one list. This indicates the underlying vulnerability of these entities that could be exposed in the coming quarters. * S&P Sees High Recovery Prospects for Lenders in Oil Sector ------------------------------------------------------------ Corporate default rates have been rising steadily since mid-2007, and debtholders are increasingly concerned about what their recovery prospects might be if an issuer defaults. Standard & Poor's Ratings Services began assigning recovery ratings to the unsecured debt of speculative-grade issuers earlier this year to help investors evaluate what their recovery prospects might be in a default. Oil and gas companies, on average, provide higher recovery prospects for unsecured creditors compared with other industries, according to a recent commentary published by Standard & Poor's. The article, "Unsecured Lenders In The Oil And Gas Sector Have Strong Recovery Prospects," published Oct. 28, 2008, on RatingsDirect, examines the criteria -- including high hydrocarbon prices -- that underpin the higher recovery ratings on speculative-grade companies in the oil and gas sector. "Another reason the oil and gas sector has exhibited comparatively higher recovery is that speculative-grade oil and gas companies tend to have more unsecured debt than secured debt in their capital structure," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. "With a limited amount of secured debt ahead of the unsecured creditors, more value typically remains available to satisfy unsecured creditors in the sector." The report also discusses the differentiating factors for varying recovery prospects between oil and gas subsectors. For example, companies in the oilfield service sector generally offer better recovery prospects versus exploration and companies due to lower debt to capitalization ratios and secured facilities that are not affected by borrowing bases. * IFRS Changes Allow EUR Banks to Avoid Fair Value Accounting ------------------------------------------------------------- In a report, Standard & Poor's Ratings Services said that it believed the changes to International Financial Reporting Standards to allow certain reclassifications of assets represented a path of least resistance to quickly address capital and earnings concerns, and the fact that the flexibility introduced was already available to U.S. banks made it an easy target (see "European Banks: IFRS Revisions Allow Banks Certain Options To Avoid Fair Value Accounting"). The International Accounting Standards Board (IASB) has introduced changes that give banks the option to reclassify certain assets as early as the reporting of results for the already completed third quarter of this year. "From a financial analysis standpoint, we believe that the permitted reclassifications will render the balance sheet carrying amounts of transferred assets less meaningful and will generally not facilitate meaningful comparisons," said Standard & Poor's credit analyst Sue Harding. "The result will be neither fair value nor a typical amortized cost. Instead it will be fair value as of a somewhat arbitrary reclassification date, that has then been amortized. Earnings analysis will, in our view, continue to be at least as complex." Ms. Harding continued: "We expect there to be a trade-off of potentially higher capital requirements in exchange for more predictable reported earnings and capital that should be less of a moving target for banks. Assets transferred to the banking book may on average require capital that is several times the level required if they had been left in the trading book. However, we do not expect increases in capital requirements to be significant overall, as a multiple of a modest capital requirement would still be modest." Ms. Harding also noted that early examples of the disclosure of reclassifications seem to be limited in detail at best. Standard & Poor's believes the full level of disclosure would be most helpful to market participants if made when the transfer is initially announced. * S&P Says Gov't. Support EU Banks, But Ratings Pressure Persists ----------------------------------------------------------------- The top-50 European banks face an exceptionally difficult environment due to the confluence of reduced asset valuations, contracted market liquidity, varying levels of capital strains, and extremely fragile investor and client confidence, Standard & Poor's Ratings Services noted in a report published on Nov.5, 2008, on RatingsDirect titled "Extraordinary Times, Extraordinary Responses--External Support For Major European Bank Ratings In The Face Of Acute Market Difficulties." S&P expects the European banking system to continue to restructure and recapitalize. It will likely emerge with better capital and lower risk profiles, which would be positive for future creditworthiness. Before S&P gets to this point, however, S&P expects to see continuing rating pressure as banks work through the dislocations. The median rating for the top-50 Western European banks has slipped to 'A+' from 'AA-' in the last month. Banks also face the prospect of rising domestic credit problems as European economies weaken. Government support toward the banking sector underpins the ratings on systemically important banks, but does not, in S&P's view, fix the sector's deteriorating fundamentals. "We are increasingly pessimistic about the depth and duration of the economic downturn, and we now expect it to be deeper than we did three months ago," said Standard & Poor's credit analyst Michelle Brennan. Our view of the future business fundamentals for banks has therefore weakened over the quarter. "Our ratings reflect these fundamentals so we believe that European bank ratings will remain under strong pressure over the coming quarters as profitability deteriorates and loans losses increase, even more so if funding remains scarce and expensive and even after the recently announced government-sponsored bank rescue plans," she added. The severity of the current environment is, in S&P's view, evident in the numerous support packages launched by European governments, something not seen in decades. S&P considers these measures as extraordinary government actions, consistent with S&P's view of those that are made by supportive countries in times of extreme stress, when no market-based solution is feasible. S&P expects these measures to provide stability to bank ratings that otherwise were potentially vulnerable to deteriorating market confidence and an associated "credit cliff." "We believe these government measures are likely to help improve confidence in the banking sector, alleviating a key risk for banks' liquidity, but they will not solve all the sector's problems," said Ms. Brennan. "We can still envisage rating pressure based on weaker business prospects and financial profiles, even where systemic support has strengthened," she added. Despite the expected prominence of government-guaranteed bank debt over the next three years, S&P will focus on what the underlying business models are going to look like as a result of the changes that the sector is undergoing, and what these business models will mean for creditworthiness. * S&P Says No Funding Agreement-backed Issuance in October 2008 --------------------------------------------------------------- Funding agreement-backed issuance has swung between the two extremes this year. The first half and the second quarter each had the highest issuance totals for those respective periods, while the third quarter had the lowest quarterly issuance total since 2002. October ended without a single issuance, and Standard & Poor's has seen nothing to indicate that issuance will be picking up anytime soon. Although it did expect a decrease in issuances in October, the total lack of issuance is surprising. Market participants have told the rating agency that the precipitous drop in issuance could be because of several reasons: -- First, and likely foremost, because of the dislocation in the credit markets, there has been a lack of debt issuance in other asset classes, which would leave an issuer of these notes without a place to invest the proceeds it receives. -- Funding agreement providers appear to be focused on preserving capital. Issuance would increase the size of their balance sheets, potentially making these companies appear more leveraged, but it would also expose them to credit risk on the assets purchased. -- Rates that investors are looking for appear to have widened more for insurance companies than they have for non insurance-related obligations. -- Market participants have told Standard & Poor's that some insurance companies have been accessing the Federal Home Loan Bank system as a source of capital for spread lending because it currently has the lowest cost of funding. This has been a challenging time for issuers of funding agreement- backed notes. At this time, it is difficult to estimate when the market for these investments will open up again, but issuers have shown resiliency in previous downturns. S&P expects them to return to the market eventually because over time, this has been a profitable line of business for the issuers. * Q2 Global Project Finance Ratings Remain Stable, S&P Says ----------------------------------------------------------- Project finance around the world continues to show resilience in the face of current market volatility, according to a report published by Standard & Poor's Ratings Services on RatingsDirect titled Industry Report Card: Global Project Finance Ratings Remain Stable Despite Uncertain Credit Markets. Of the 237 global project-financed issues Standard & Poor's rates, 69% were investment grade and 73% had stable outlooks. Of the remaining projects, 35 have negative outlooks, 19 are on CreditWatch Negative, and seven have positive outlooks, "Rating actions that we took so far in 2008 on bond insurers that provided credit enhancements to these entities resulted in an increased number of project finance rating actions compared with our last report card in June 2008," said Standard & Poor's credit analyst Arthur Simonson. "Overall, most projects performed as we expected and typically benefited from sound long-term contractual arrangements with stable and predictable revenues," Mr. Simonson continued. However, there were 17 rating downgrades due to project-specific operational, financial or parental company issues, and one due to the downgrade of its insurer. Two rating upgrades resulted from improved project economics. The outlook for the project finance market remains good, and the rating agency expects the sector to see an increasingly diversified market looking to fund infrastructure projects using nonrecourse debt. * Upgrade Potential Falls To Four-Year Low, S&P Article Says ------------------------------------------------------------ The number of issuers poised for upgrades fell to 245 this October, 24 fewer than almost a month ago, said Standard & Poor's in an article titled "Upgrade Potential Across Credit Grades And Sectors (Premium)." The number of potential upgrades in October was the lowest count since the rating agency started its report in September 2004. On the other hand, potential bond downgrades are at their highest level in 38 months at 786 entities. "The drop in upgrade potential is largely attributable to credit deterioration across the globe," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group, "especially in the U.S. and Europe, where adverse economic conditions and a freeze on the credit markets have effectively reduced an upward trajectory for even well-positioned issuers." However, there are a few sectors, including metals, mining, and steel, as well as telecommunications, that are poised to better weather the current credit storm. Issuers in these sectors have a positive bias -- defined as the number of entities listed with either a positive outlook or ratings on CreditWatch with positive implications -- that exceeds the historical average. This highlights the likelihood that companies within these sectors have greater upgrade potential relative to other sectors or at least a stronger position of stability. * S&P Says 786 Issuers Face Downgrade Risk, A Three-Year High ------------------------------------------------------------- The number of potential downgrades reached 786 in October 2008, the highest since September 2005, said an article by Standard & Poor's. This is an increase of 28 issuers over last month's count. Potential downgrades are defined as entities that have either a negative outlook or ratings on CreditWatch with negative implications across rating categories 'AAA' to 'B-'. By comparison, the number of potential downgrades in October is 136 more than what was reported in the same period a year ago and 118 more than the average of the past 38 months, according to the article, titled "Downgrade Potential Across Credit Grades And Sectors (Premium)." Further, the number of potential downgrades is more than triple the number of those poised for potential upgrades, a trend that has progressed for roughly 15 months. "Despite materialized downgrades, the housing and financial sectors continue to show the highest downgrade risk, indicative of further rating actions if credit conditions continue to deteriorate," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. Geographically, the U.S. continues to top the list of potential bond downgrades, with roughly one-quarter of current ratings showing downside risk. By rating designation, 'B' rated companies have the greatest potential for downgrades, with 148 companies (19% of the total). Globally, of the 786 issuers at risk for downgrades, 81% are rated speculative grade ('BB+' or below). * BOOK REVIEW: Crafting Solutions for Troubled Businesses: A Disciplined Approach to Diagnosing and Confronting Management Challenges ---------------------------------------------------------- Authors: Stephen J. Hopkins and S. Douglas Hopkins Publisher: Beard Books Hardcover: 316 pages List Price: US$74.95 Own your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt Crafting Solutions for Troubled Businesses: A Disciplined Approach to Diagnosing and Confronting Management Challenges, by Stephen J. Hopkins and S. Douglas Hopkins, will change the way you think about the problems of businesses in distress. The book will be of great value to turnaround management practitioners, lenders facing loan covenant defaults, Board Members of struggling companies who need a basis for evaluating and assisting their management to realistically confront problems, and private equity firm management facing problems with portfolio companies or seeking to identify turnaround investment opportunities. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* 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. Pius Xerxes V. Tovilla, Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda, Joy A. Agravante, Marie Therese V. Profetana and Peter A. Chapman, Editors. Copyright 2008. 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$625 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 * * *