/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/090220.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, February 20, 2009, Vol. 10, No. 36 Headlines A U S T R I A 3D PHOTO: Claims Registration Period Ends March 4 A & K Hatzigmoser: Claims Registration Period Ends March 4 ALLITEM LLC: Claims Registration Period Ends March 4 DALLINGAIR LLC: Claims Registration Period Ends March 2 LEOPOLDSTRASSE 17 LLC: Claims Registration Period Ends March 4 G E R M A N Y AD IMCO: Claims Registration Period Ends March 1 CONSULTING FUER ENERGIE: Claims Registration Period Ends March 19 ECO-SOLAR GMBH: Claims Registration Period Ends March 25 GENERAL MOTORS: Eyes US$1.2 Billion Cost Reductions in Europe HEAT MEZZANINE: Fitch Junks Ratings on EUR30.8 Mil. Notes MEDIA & MARKETING: Claims Registration Period Ends March 10 QIMONDA AG: Works Council Believes a Buyer Will Be Found QIMONDA AG: U.S. Unit Fails to Complete Severance Payments * GERMANY: Gets EU Okay to Reduce Interest Rates to Boost Economy G R E E C E DRYSHIPS INC: Moving in Right Direction, Says Lender I R E L A N D ANGLO IRISH: EC Raises No Objections to Change of Ownership I T A L Y CORDUSIO RMBS: Fitch Puts 'BB'-Rated Class E 2007 Notes on RWN K A Z A K H S T A N ATYRAU-SHELF LLP: Creditors Must File Claims by March 20 ELECTRO IMPEX: Creditors Must File Claims by March 27 JEL DOR: Creditors Must File Claims by March 27 PMK-49 LLP: Creditors Must File Claims by March 20 SAK-2008 LLP: Creditors Must File Claims by March 20 STROY LES LLP: Creditors Must File Claims by March 27 STROYKA-2006 LLP: Creditors Must File Claims by March 27 SUN SYSTEM LLP: Creditors Must File Claims by March 20 TRANS SERVICE SRK: Creditors Must File Claims by March 27 TRANS-SERVICE TGO: Creditors Must File Claims by March 27 K Y R G Y Z S T A N ENERGO STROY: Creditors Must File Claims by March 13 L I T H U A N I A BITE LIETUVA: S&P Cuts Corporate Credit Rating to 'CC' L U X E M B O U R G MILLICOM INTERNATIONAL: S&P Withdraws 'BB' Corporate Credit Rating N E T H E R L A N D S PANGAEA ABS: Fitch Junks Ratings on Three Classes of 2007-1 Notes R U S S I A BELMYASO OAO: To Be Liquidated; Shareholders' Meeting Set March 24 BELOYARSKIY CONSTRUCTION: Creditors Must File Claims by April 6 BORETSKIY LES-PROM-KHOZ: Claims Deadline on March 15 CONSTRUCTION MATERIALS: Karelia Bankruptcy Hearing Set May 13 FIRE-PROOF MATERIALS: Creditors Must File Claims by March 15 ROST-STROY-INVEST LLC: Bankruptcy Hearing Set June 9 TEKHNO-STROM-DOR-STROY LLC: Bankruptcy Hearing Set July 30 TEKHNOLOGII LESA: Creditors Must File Claims by March 15 TRUBCHEVSKIY LES-KHOZ SUE: April 14 Set as Claims Filing Deadline VOKHTOGA-LES LLC: Creditors Must File Claims by March 15 VTOR-CHER-MET CJSC: Creditors Must File Claims by March 15 * RUSSIA: January Unemployment Rate Highest in 4 Years S P A I N AYT COLATERALES: Fitch Assigns 'B' Rating on EUR10.5 Mil. Notes TDA PASTOR: S&P Cuts Rating on Class C Notes to 'B' S W I T Z E R L A N D ABC NAILSTORE: Creditors Must File Proofs of Claim by Feb. 26 EXELEXI JSC: Deadline to File Proofs of Claim Set Feb. 26 FACTUM JSC: Creditors Have Until Feb. 26 to File Claims HEGEMO JSC: Proofs of Claim Filing Deadline is Feb. 26 IDEEART LLC: Creditors' Proofs of Claim Due by Feb. 26 MS LOUNGE: Feb. 26 Set as Deadline to File Claims T.N.A. MUNAJ: Creditors Must File Proofs of Claim by Feb. 26 UBS AG: U.S. Wants Firm to Disclose Swiss Bank Account Records UBS AG: Agrees to Pay US$200 Million to Settle U.S. SEC Charges T U R K E Y ANADOLU EFES: Fitch Affirms Issuer Default Rating at 'BB' U K R A I N E IMAGE PRO: Creditors Must File Claims by March 1 MACHINEBUILDING SUMYSILMACH: Court Starts Bankruptcy Procedure SHEPROS LLC: Creditors Must File Claims by March 4 TECHNOSPHERE LLC: Creditors Must File Claims by March 1 ZVENIGORODKA AGRICULTURAL: Creditors Must File Claims by March 1 U N I T E D K I N G D O M BUCHANAN ARMS: Appoints Joint Administrators from KPMG CARTER BROTHERS: Names Joint Administrators from PKF CHEVLER PACKAGING: Goes Into Administration LIMEHOUSE DEVELOPMENTS: Taps Joint Administrators from BDO GLOBE PUB: S&P Downgrades Rating on Class B Notes to 'BB+' J BLACKBURN: In Administration; KPMG Appointed MACK-LINE LTD: Appoints Joint Administrators from BDO MARDAYNE ESTATES: Names Joint Administrators from BDO STANTON MBS: Fitch Cuts Rating on EUR10 Mil. Notes to 'BB-' WARNER ESTATE: Calls In Rothschild to Advise on Debt Restructuring XSMG LTD: Taps Joint Administrators from KPMG ZAVVI UK: Ceases Trading; 446 Jobs Axed * UK: Business Failures Up 30% in 2008, Experian Says * UK: R3 Sees 11 More High Street Brand Insolvencies in 2009 * EC Assesses Stability & Convergence Programs of 6 Member States * EC Assesses Stability & Convergence Programs of 11 Member States * BOOK REVIEW: Corporate Recovery - Managing Cos. in Distress ********* ============= A U S T R I A ============= 3D PHOTO: Claims Registration Period Ends March 4 ------------------------------------------------- Creditors owed money by JSC 3D Photo (FN 294812y) have until March 4, 2009, to file written proofs of claim to the court- appointed estate administrator: Dr. Matthias Schmidt Dr. Karl Lueger-Ring 12 1010 Wien Austria Tel: 01/533 16 95 Fax: 01/535 56 86 E-mail: schmidt@preslmayr.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:30 a.m. on March 18, 2009, for the examination of claims at: Land Court of Korneuburg (119) Room 204 Korneuburg Austria Headquartered in Schwechat, Austria, the Debtor declared bankruptcy on Jan. 19, 2009, (Bankr. Case No. 36 S 12/09w). A & K Hatzigmoser: Claims Registration Period Ends March 4 ---------------------------------------------------------- Creditors owed money by LLC A. & K. Hatzigmoser (FN 79597f) have until March 4, 2009, to file written proofs of claim to the court- appointed estate administrator: Dr. Robert Klein Spiegelgasse 10 1010 Wien Austria Tel: 01/513 99 39 Fax: 01/513 99 39 30 E-mail: klein@lawcenter.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 11:00 a.m. on March 18, 2009, for the examination of claims at: Land Court of Korneuburg (119) Room 204 Korneuburg Austria Headquartered in Bruck an der Leitha, Austria, the Debtor declared bankruptcy on Jan. 19, 2009, (Bankr. Case No. 36 S 11/09y). ALLITEM LLC: Claims Registration Period Ends March 4 ---------------------------------------------------- Creditors owed money by LLC Allitem have until March 4, 2009, to file written proofs of claim to the court-appointed estate administrator: Katharina Twaroch-Nowak Gusshausstrasse 23 1040 Wien Austria 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 10:30 a.m. on March 18, 2009, for the examination of claims at: Land Court of Vienna (007) Room 1606 Vienna Austria Headquartered in Wien, Austria, the Debtor declared bankruptcy on Jan. 16, 2009, (Bankr. Case No. 4 S 4/09d). DALLINGAIR LLC: Claims Registration Period Ends March 2 ------------------------------------------------------- Creditors owed money by LLC DallingAir (FN 281480t) have until March 2, 2009, to file written proofs of claim to the court- appointed estate administrator: Christian Breit Parkgasse 11 4910 Ried im Innkreis Austria Tel: 07752 / 876 760 Fax: 07752 / 876 76 17 E-mail: christian.breit@aon.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:20 a.m. on March 11, 2009, for the examination of claims at: Land Court of Ried im Innkreis Hall 101 Ried im Innkreis Austria Headquartered in Eberschwang, Austria, the Debtor declared bankruptcy on Jan. 21, 2009, (Bankr. Case No. 17 S 4/09h). LEOPOLDSTRASSE 17 LLC: Claims Registration Period Ends March 4 -------------------------------------------------------------- Creditors owed money by LLC Leopoldstrasse 17 (FN 244271y) have until March 4, 2009, to file written proofs of claim to the court- appointed estate administrator: Dr. Ferdinand Bruckner Schubertstrasse 10/3/5/9 2100 Korneuburg Austria Tel: 02262/72 9 39 Fax: 02262/729 39 15 E-mail: bruckner@raedrb-drz.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 11:30 a.m. on March 18, 2009, for the examination of claims at: Land Court of Korneuburg (119) Room 204 Korneuburg Austria Headquartered in Stockerau, Austria, the Debtor declared bankruptcy on Jan. 20, 2009, (Bankr. Case No. 36 S 13/09t). ============= G E R M A N Y ============= AD IMCO: Claims Registration Period Ends March 1 ------------------------------------------------ Creditors of AD imco GmbH have until March 1, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 9:25 a.m. on April 1, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Cologne Room 1240 Luxemburger Strasse 101 50939 Cologne Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Ruediger Werres Friesenplatz 17 a 50672 Koeln Germany Tel: 0221/95 14 46 – 20 Fax: +4922195144690 The District Court opened bankruptcy proceedings against the company on Feb. 3, 2009. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: AD imco GmbH Marzellenstr. 23 50668 Koeln Germany Attn: Dieter Hanke, Manager Rolshover St. 174 51105 Koeln Germany CONSULTING FUER ENERGIE: Claims Registration Period Ends March 19 ----------------------------------------------------------------- Creditors of Consulting fuer Energie and Umwelttechnik GmbH have until March 19, 2009, to register their claims with court- appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 10:00 a.m. on April 30, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Dresden Hall D131 Olbrichtplatz 1 01099 Dresden Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Christian Heintze Kesselsdorfer Strasse 14 01159 Dresden Germany Website: www.brockdorff.net The District Court opened bankruptcy proceedings against the company on Feb. 9, 2009. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Consulting fuer Energie and Umwelttechnik GmbH Attn: Kerstin Gollas, Manager Hermann-Loens-Str. 13a 01328 Dresden Germany ECO-SOLAR GMBH: Claims Registration Period Ends March 25 -------------------------------------------------------- Creditors of ECO-Solar GmbH have until March 25, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 11.00 a.m. on April 22, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Dessau-Rosslau Hall 121 Willy-Lohmann-Str. 33 Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Christian Heintze, LL.M. Ferdinand-von-Schill-Strasse 7 06844 Dessau-Rosslau Germany Tel: 0340/8507697 Fax: 0340/8507698 E-mail: dessau@brockdorff.net The District Court opened bankruptcy proceedings against the company on Feb. 6, 2009. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: ECO-Solar GmbH Augustenstrasse 42 06366 Koethen Germany Attn:: Falk Herrmann, Manager Teichstrasse 1 06773 Gossa OT Schmerz Germany GENERAL MOTORS: Eyes US$1.2 Billion Cost Reductions in Europe ------------------------------------------------------------- General Motors Corp. in a Feb. 17 release said it has accelerated restructuring plans for its European operations. According to GM, Europe is a highly competitive environment that is unprofitable for many vehicle manufacturers, and has a relatively costly restructuring environment. GM said it has engaged its European labor partners to achieve US$1.2 billion in cost reductions, which include several possible closures or spinoffs of manufacturing facilities in high cost locations. In addition, GM is restructuring its sales organization to become more brand focused and better optimize its advertising. GM disclosed it is also in discussions with the German government for operating and balance sheet support. GM noted a sustainable strategy for its European operations may include support from partnerships with the German government and/or other European governments. The company expects to resolve solvency issues for its European operations prior to March 31, 2009. Viability Plan General Motors presented the United States Department of Treasury with an updated plan that details the company's long term viability. The plan, which provides a comprehensive review of key aspects of GM's restructuring, is the first of two status reports required by the loan agreement signed by GM and the U.S. Treasury on Dec. 31, 2008. The plan submitted Tuesday, Feb. 17, addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the turnaround plan that was submitted to the U.S. government on Dec. 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value (NPV). The plan also details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM's viability plan actions result in a projected GM North America (GMNA) earnings before interest and taxes (EBIT) breakeven point of 11.5-12.0 million units in the U.S., compared to the 12.5-13.0 million unit range indicated in the Dec. 2, 2008 plan. The operating and balance sheet improvements outlined in GM's viability plan are forecasted to result in a significant enterprise value and positive net present value, positive adjusted EBIT in 2010 and positive operating cash flow for its North American operations in the same year. Overall adjusted operating cash flows are expected to approach breakeven levels in 2011, and improve to more than US$6 billion in the 2012-2014 period, reflecting both the full effect of GM's global restructuring initiatives and recovering industry volumes. GM's need for government support was driven by the global financial market crisis, dramatically weaker economy and the resulting precipitous decline in vehicle demand. These conditions have impacted the entire auto industry, which in the U.S. is down approximately 40 percent from its peak in 2005, to the lowest per capita sales rate in 50 years. Though the impact has been most severe in the U.S. and Western Europe, automakers around the world are reporting large losses, with many seeking government assistance to weather the downturn. Following the steep decline in U.S. industry sales in December 2008 and January 2009, GM responded by further lowering its forecast for 2009 U.S. industry sales to 10.5 million units (57.5 million units globally) for viability planning purposes. These industry planning volumes are more conservative than those being used by most other industry sources. "The U.S. and global auto industries are facing times of unprecedented challenge," said GM Chairman and CEO Rick Wagoner. "These conditions dictate that we must take very tough actions to accelerate GM's restructuring efforts. We've made a lot of progress since the plan we submitted on December 2, 2008, and we have more to do before March 31. The plan we delivered today [Tuesday] to the U.S. Treasury is aggressive but achievable. It provides a clear pathway for GM that continues to support American manufacturing and technology innovation, which are vital to the future of our nation's economy." About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. HEAT MEZZANINE: Fitch Junks Ratings on EUR30.8 Mil. Notes --------------------------------------------------------- Fitch Ratings has downgraded the ratings of H.E.A.T Mezzanine S.A. Compartment 2's notes, due April 2014, and removed them from Rating Watch Negative: -- EUR195,223,333 class A notes (ISIN: XS0251292883): downgraded to 'B' from 'AAA'; removed from RWN -- EUR30,800,000 class B notes (ISIN: XS02512933261): downgraded to 'CCC' from 'A+'; removed from RWN Fitch has simultaneously withdrawn the rating on H.E.A.T Mezzanine S.A. Compartment 2's class A notes. The transaction is a cash securitization of subordinated loans to German small and medium-sized enterprises. The notes were placed on RWN on July 10 2008 to reflect the potential for downgrades due to the new Global Rating Criteria for Corporate CDOs. The downgrades announced are driven by a substantial deterioration in the portfolio rather than the updated rating criteria. The current performing notional asset value is less than the notional value of the class A and B notes. It is theoretically possible that this shortfall will be healed before the notes mature due to the application of excess spread which would amortize the notes. However, Fitch believes that further defaults in the portfolio are likely and that there is a real possibility that excess spread will not be sufficient to prevent the class B notes defaulting. The significant deterioration of the portfolio means scenario- based analysis is the most suitable way of determining whether the rated notes are in line with the agency's rating definitions. The scenario analysis tested how robust the rated notes were against individual obligor defaults. The class B noteholders can withstand the default of five average loan exposures or the two largest obligors. The class A noteholders can withstand the default of nine average loan exposures or the four largest obligors. The portfolio now contains 38 performing obligors. Six obligors have defaulted and three have repaid since closing. The largest performing exposure accounts for 5.6% of the outstanding portfolio amount and the top three exposures for 16.6% of the portfolio. The recovery rates on all the defaulted companies are expected to be low and Fitch has assumed zero recovery rates given the mezzanine nature of the obligations. MEDIA & MARKETING: Claims Registration Period Ends March 10 ----------------------------------------------------------- Creditors of Media & Marketing GmbH have until March 10, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 10.30 a.m. on April 22, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Nuernberg Meeting Hall 152/I Flaschenhofstr. 35 Nuremberg Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Alexander Bergfeld Peuntgasse 3 90402 Nuremberg Germany The District Court opened bankruptcy proceedings against the company on Feb. 6, 2009. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Media & Marketing GmbH Attn: Wolfgang Apel, Manager Harrichstrasse 5 90408 Nuremberg Germany QIMONDA AG: Works Council Believes a Buyer Will Be Found -------------------------------------------------------- Frances Robinson at Bloomberg News reports that Qimonda AG supervisory board member Lothar Armbrecht said Tuesday it is confident that insolvency lawyer Michael Jaffe will find an investor for the company. The report relates according to Mr. Ambrecht, who sits in the company's works council, Qimonda has a month to find an investor as Mr. Jaffe needs to report to the court in Munich, where it filed for protection from creditors on Jan. 23. Mr. Ambrecht, as cited by the report, said potential investors may wait until the end of this time to come forward. He noted the insolvency lawyer is keen to find an investor for the company as a whole and not just its over 20,000 patents, the report adds. According to the report, Mr. Ambrecht expects a recovery in dynamic random access memory prices from 2010. The report recalls Qimonda has been hit by a 54 percent fall in the price of a benchmark 512 megabit DRAM memory-chip during the past year, sending its share price down 97%. Works Council Seeks Help In a Feb. 18 report, Reuters disclosed Qimonda's works council called on German Chancellor Agela Merkel to help rescue the ailing company. The report recounted Martin Welzel, head of the works council at Qimonda's plant in Dresden, said in a letter on Wednesday "Act now, dear Mrs Chancellor, so that technological dominance in semiconductors in Germany and Europe will not be lost." Mr. Welzel said Germany and Europe need to work quickly to find and investor for the company, stressing time was limited, the report stated. As reported in the Troubled Company Reporter, Qimonda filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. Their goal is to reorganize the companies as part of the ongoing restructuring program. According to Bloomberg News, Qimonda filed for insolvency after a plan announced in December for a loan of EUR325 million (US$418 million) from the German state of Saxony, Infineon Technologies AG, Europe's second-largest maker of semiconductors, and an unidentified Portuguese bank wasn't completed in time. About Qimonda Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. QIMONDA AG: U.S. Unit Fails to Complete Severance Payments ---------------------------------------------------------- Emily C. Dooley at Richmond Times-Dispatch reports that Qimonda North America, a unit of Germany's Qimonda AG, is unlikely to make future severance payments to laid-off employees. The report relates in an e-mail statement sent Wednesday, Qimonda North America President and Chief Financial Officer Miriam Martinez said the company was not able to meet payroll and make severance payments while still saving its cash. Ms. Martinez confirmed in the e-mail that a "number of former employees" did not get their Feb. 13 severance checks as expected, the report discloses. The report however notes it is unclear how many people have not received their promised severance payments. According to the report, the severance payments affect employees who were told in October that Qimonda would idle its 200- millimeter wafer manufacturing plant by March. The report discloses only employees of 200 mm plant were offered severance. The report states former employees will have to file a lawsuit in state court to recover the money owed to them. Citing David D. Schein, president and general counsel for Claremont Management Group Inc., a human-resources consulting firm in Midlothian, the report says the lawsuit could prompt Qimonda North America and Qimonda Richmond into filing for bankruptcy. "If a business is not in bankruptcy, it has to pay whatever it's agreed to pay," the report quoted David D. Schein, president and general counsel for Claremont Management Group Inc., a human- resources consulting firm in Midlothian, as saying. "I'm going to be very surprised if Qimonda does not file for bankruptcy in the United Sates in the next few weeks." As reported in the Troubled Company Reporter, Qimonda AG filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. Their goal is to reorganize the companies as part of the ongoing restructuring program. According to Bloomberg News, Qimonda filed for insolvency after a plan announced in December for a loan of EUR325 million (US$418 million) from the German state of Saxony, Infineon Technologies AG, Europe's second-largest maker of semiconductors, and an unidentified Portuguese bank wasn't completed in time. Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. * GERMANY: Gets EU Okay to Reduce Interest Rates to Boost Economy ----------------------------------------------------------------- The European Commission has authorised under EC Treaty rules on state aid a German scheme aimed at providing relief to companies encountering financing difficulties as a result of the credit squeeze in the current economic crisis. The scheme allows authorities at federal, regional and local level, including public development banks, to grant aid in the form of reduced interest rates on loans concluded by December 31, 2010. The scheme meets the conditions of the Commission's Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis, because it is limited in time, respects the relevant thresholds and applies only to companies that were not in difficulty on July 1, 2008. It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a Member State. Competition Commissioner Neelie Kroes said "The measure offers a significant reduction in the cost of loans, which is an effective way of encouraging business investment and economic recovery, without unduly distorting competition." The German authorities designed the scheme on the basis of the rules laid down in the Commission's Temporary Framework on state aid to the real economy during the crisis and in particular the conditions for aid in the form of subsidized interest rates. The low rates will be available for loans contracted no later than December 31, 2010, but only on interest payments up to December 31, 2012. After that date firms will have to pay market rates. The scheme does not apply to firms that were already in difficulty on July 1, 2008 (i.e. before the credit crunch). The scheme is the fourth German measure authorized under the Temporary Framework: it follows a EUR15 billion German loan program ("KFW-Sonderprogramm 2009") and a framework scheme ("Bundesregelung Kleinbeihilfen") allowing to provide aid of up to EUR500,000 per undertaking to firms in need. =========== G R E E C E =========== DRYSHIPS INC: Moving in Right Direction, Says Lender ---------------------------------------------------- DryShips Inc. is "moving in the right direction" after renegotiating loan terms with Nordea Bank Finland Plc, the lender said, according to Bloomberg News. "With present developments I think they are doing fine," Ulf Andersson, head of shipping and offshore at the bank's London branch, said by phone on February 17, according to Bloomberg. Further renegotiations are unlikely if ship-rental prices stay at present levels, he said. DryShips (NASDAQ:DRYS) said in a February 9 Form 6-K filing with the U.S. Securities and Exchange Commission that it has reached preliminary agreement with Nordea Bank Finland Plc to obtain a covenant waiver in connection with the US$800.0 million Primelead facility, which was used to partially finance the acquisition of Ocean Rig ASA. The outstanding loan amount under the facility is US$650.0 million. In accordance with the main terms of the waiver: (i) the Company will pay a restructuring fee of 0.15% on the outstanding loan amount under the facility plus an amount equal to 1.00% per annum on the loan outstanding for the period from January 9, 2009 until the Effective Date of the waiver agreement; (ii) US$75.0 million of principal repayment due February 2009 will be postponed until May 2009; (iii) the margin on the facility will increase by 1.00% to 3.125% per annum; and (iv) regular principal payments will resume as of August 2009. In addition, among other things, lender consent will be required for the acquisition of DrillShip Hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below US$375.0 million. The waiver agreement Effective Date will not exceed August 12, 2009, at which time the Company expects to be in compliance with the restructured loan covenants. The agreement is preliminary and is subject to formal approvals by the Company and the syndicate banks (Nordea Bank Finland Plc, DnB NOR Bank ASA and HSH Nordbank AG). DryShips disclosed the covenant violations on January 28. "Our loan agreements require that we maintain loan to value ratios ranging from 120% to 200% of the total amount outstanding under the relevant agreement. The current low drybulk charter rates and drybulk vessel values have affected our ability to comply with these covenants. In addition, if the value of our vessels deteriorates significantly, we may have to record an impairment adjustment to our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital. We have received notices from certain of our lenders that we are not in compliance with our loan to value covenants and we are currently in discussions with these and other lenders for waivers and amendments of certain financial and other covenants contained in our loan agreements." About DryShips Inc. DryShips Inc. -- http://www.dryships.com-- based in Greece, is an owner and operator of drybulk carriers that operate worldwide. As of the day of this release, DryShips owns a fleet of 43 drybulk carriers comprising 7 Capesize, 29 Panamax, 2 Supramax and 5 newbuilding drybulk vessels with a combined deadweight tonnage of over 3.4 million tons, 2 ultra deep water semisubmersible drilling rigs and 2 ultra deep water newbuilding drillships. DryShips Inc.'s common stock is listed on the NASDAQ Global Market where trades under the symbol "DRYS." ============= I R E L A N D ============= ANGLO IRISH: EC Raises No Objections to Change of Ownership ----------------------------------------------------------- The European Commission has raised no objections, under EC Treaty State aid rules, to the change of ownership of Anglo Irish Bank. The Irish authorities notified the taking into public ownership of Anglo Irish Bank for reasons of legal certainty. The Commission considers that the act of nationalization as such involves no aid. Moreover, no further aid is being granted to Anglo Irish Bank beyond the guarantees already in place under the Irish guarantee scheme, approved by the European Commission on October 13, 2008. The Irish Government has committed to notify any possible state aid measures that it may wish to grant in future. In the context of the current global financial crisis and recent disclosures regarding lapses to Anglo Irish Bank's corporate governance practices, which together undermined the financial position of the bank, the Irish Government decided to take Anglo Irish Bank into public ownership on January 21, 2009. For purposes of legal certainty, the Irish authorities notified the change of ownership of Anglo Irish Bank to the European Commission. The European Commission considers that the purchase of existing shares and the takeover of assets, when these are not accompanied by a capital injection, assumption of liabilities or other state measures, do not favor the financial institution, inasmuch as they amount to a mere change of ownership. Therefore, they do not constitute state aid. Moreover, no further aid is being granted to Anglo Irish beyond the guarantees already in place under the Irish guarantee scheme, approved by the European Commission on October 13, 2008. The Commission takes note of the fact that the Irish Government has committed to notify any possible State aid measures that it may wish to grant in future. It will examine any future possible aid in accordance with the principle of neutrality as regards property ownership (Article 295 of the EC Treaty). About Anglo Irish Bank Headquartered in Dublin, Ireland, Anglo Irish Bank Corporation plc -- http://www.angloirishbank.ie/-- operates in three core areas: Business Lending, Treasury and Wealth Management. * * * As reported in the TCR-Europe on Jan. 23, 2009, Standard & Poor's Ratings Services said that it lowered its ratings on GBP300 million 6.25% Tier 1 preference shares issued by Anglo Irish Bank Corp. Ltd. (previously a public limited company; A-/Watch Neg/A-1) to 'D' from 'B'. At the same time, the 'B' issue ratings on these preference shares were removed from CreditWatch, where they had been placed with negative implications on Sept. 30, 2008. The 'B' issue ratings on Anglo's other undated perpetual instruments are unchanged. On Jan. 21, 2009, the TCR-Europe reported that Moody's Investors Service had downgraded the long-term bank deposit rating and senior unsecured debt rating of Anglo Irish Bank Corporation to A2 from A1, concluding the review on these ratings initiated in October 2008. The bank's Prime-1 short-term bank deposit and debt ratings were affirmed. Anglo Irish Bank's BFSR was downgraded to E+ (mapping to a baseline credit assessment of B2), from C+ (baseline credit assessment equivalent of A2), on review for possible downgrade. ========= I T A L Y ========= CORDUSIO RMBS: Fitch Puts 'BB'-Rated Class E 2007 Notes on RWN -------------------------------------------------------------- Fitch Ratings has placed two tranches of Cordusio RMBS Securitization S.r.l. - Series 2007 (Cordusio 4) on Rating Watch negative and affirmed the transaction's other tranches. Cordusio 4 is backed by loans originated by UniCredit Banca SpA issued in May 2007. At the same time, the agency has taken various rating actions with respect to Cordusio RMBS S.r.l, Cordusio RMBS 2 S.r.l, and Cordusio RMBS 3 - UBCasa 1 S.r.l. Cordusio 1 and 2 are backed by loans originated by UniCredit Banca SpA issued in May 2005 and July 2006 respectively. Cordusio 3 is backed by loans originated by Banca per la Casa SpA issued in November 2006. A full rating breakdown follows: Cordusio RMBS S.r.l (Cordusio 1): -- Class A2 (ISIN IT0003844948): affirmed at 'AAA'; Outlook Stable -- Class B (ISIN IT0003844955): upgraded to 'AA+' from 'AA'; Outlook Positive -- Class C (ISIN IT0003844963): affirmed at 'BBB'; Outlook Stable -- Class A1 (IT0003844930): paid in full in June 2007 Cordusio RMBS 2 S.r.l (Cordusio 2): -- Class A2 (ISIN IT0004087174): affirmed at 'AAA'; Outlook Stable -- Class B (ISIN IT0004087182): affirmed at 'AA'; Outlook revised to Positive from Stable -- Class C (ISIN IT0004087190): affirmed at 'BBB+'; Outlook Stable -- Class A1 (ISIN IT0004087158): paid in full in March 2008 Cordusio RMBS 3 - UBCasa 1 S.r.l (Cordusio 3): -- Class A2 (ISIN IT0004144892): affirmed at 'AAA'; Outlook Stable -- Class B (ISIN IT0004144900): affirmed at 'AA'; Outlook Stable -- Class C (ISIN IT0004144934): affirmed at 'A+'; Outlook Stable -- Class D (ISIN IT0004144959): affirmed at 'BBB+'; Outlook revised to Negative from Stable -- Class A1 (ISIN IT0004144884): paid in full in December 2008 Cordusio RMBS Securitization S.r.l. - Series 2007 (Cordusio 4): -- Class A2 (IT0004231236): affirmed at 'AAA'; Outlook Stable -- Class A3 (IT0004231244): affirmed at 'AAA'; Outlook Stable -- Class B (IT0004231285): affirmed at 'AA'; Outlook Stable -- Class C (IT0004231293): affirmed at 'A'; Outlook Stable -- Class D (IT0004231301) 'BBB' placed on Rating Watch Negative -- Class E (IT0004231319) 'BB' placed on Rating Watch Negative -- Class A1 (IT0004231210): paid in full in December 2008 The placing of two Cordusio 4 tranches on RWN and the revision of the outlook of class D notes of Cordusio 3 to Negative from Stable reflect higher-than-expected defaults in the transactions. Defaulted loans are written off using available excess spread. Because the ExS of Cordusio 4 is declining, the ability of the transaction to clear period defaults has reduced, resulting in a reserve fund draw at the latest payment date. The RF declined to EUR2.6 million from EUR6.3 million. The transaction had a lock- out period that ended in December 2008; thereafter the ExS should increase as the carry cost created by the retained amounts disappears. Fitch expects to resolve the RWN following the next two IPDs, when further performance data will provide more clarity to the evolution of the ExS and defaults. Further reserve fund draws, driven by continued defaults are likely to result in negative rating action. The RF of Cordusio 3 is at its required level, but the existing high level of defaults and increasing arrears are creating pressure on the ExS, increasing the probabilities of the RF to draw in the next quarters. Cordusio 1 and 2's arrears and defaults are within expectations and their current loan to value has decreased standing of 38.95% and 45.51%, respectively. Furthermore, as they are very seasoned deals, the sequential pay-down of the notes caused their credit enhancement to grow, triggering the upgrade of the class B of Cordusio 1 and the Outlook revision to Positive from Stable of the class B of Cordusio 2 The lock-out period that existed in all four deals is a common feature of Italian RMBS transactions. Withholding tax is applied to the proceeds of notes that are redeemed during the initial 18- month period. The lock-out period has ended in all transactions: Cordusio 1 in December 2006, Cordusio 2 in March 2008, Cordusio 3 in June 2008, and Cordusio 4 in December 2008. Defaulted loans are classified as loans being in arrears for at least 360 days or "in sofferenza" by the servicer. At the same time of seasoning, Cordusio 1 and 2 have a lower level of defaults than Cordusio 3 and 4. The latest available investor report, the defaulted loans as a percentage of current collateral are 0.68%, 0.43%, 0.99% and 0.40% for Cordusio 1, 2, 3 and 4, respectively. Fitch has employed its credit cover multiple methodology in reviewing the deals to assess the level of credit support available to each class of notes. Rating Outlooks for European structured finance tranches provide forward-looking information to the market. An Outlook indicates the likely direction of any rating change over a one- to two-year period. =================== K A Z A K H S T A N =================== ATYRAU-SHELF LLP: Creditors Must File Claims by March 20 -------------------------------------------------------- The Specialized Inter-Regional Economic Court of Atyrau has declared LLP Atyrau-Shelf insolvent. Creditors have until March 20, 2009, to submit written proofs of claim to: Abai St. 10a Atyrau Atyrau Kazakhstan The court is located at: The Specialized Inter-Regional Economic Court of Atyrau Satpaev St. 3 Atyrau Kazakhstan ELECTRO IMPEX: Creditors Must File Claims by March 27 ----------------------------------------------------- LLP Electro Impex Ltd. has declared insolvency. Creditors have until March 27, 2009, to submit written proofs of claim to: Aiteke bi St. 88-13 Almaty Kazakhstan JEL DOR: Creditors Must File Claims by March 27 ----------------------------------------------- LLP Jel Dor Stroy-Shar has declared insolvency. Creditors have until March 27, 2009, to submit written proofs of claim to: Pridepovskaya St. 5 Ust-Kamenogorsk East Kazakhstan Kazakhstan PMK-49 LLP: Creditors Must File Claims by March 20 -------------------------------------------------- The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP PMK-49 insolvent. Creditors have until March 20, 2009, to submit written proofs of claim to: The Specialized Inter-Regional Economic Court of South Kazakhstan Tynybaev St. 42 Shymkent South Kazakhstan Kazakhstan SAK-2008 LLP: Creditors Must File Claims by March 20 ---------------------------------------------------- The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP SAK-2008 insolvent. Creditors have until March 20, 2009, to submit written proofs of claim to: Ilyaev St. 24 Shymkent South Kazakhstan Kazakhstan The court is located at: The Specialized Inter-Regional Economic Court of South Kazakhstan Tynybaev St. 42 Shymkent South Kazakhstan Kazakhstan STROY LES LLP: Creditors Must File Claims by March 27 ----------------------------------------------------- LLP STROY LES has declared insolvency. Creditors have until March 27, 2009, to submit written proofs of claim to: Kievskaya St. 26-54 110000 Kostanai Kostanai Kazakhstan STROYKA-2006 LLP: Creditors Must File Claims by March 27 -------------------------------------------------------- The Specialized Inter-Regional Economic Court of Karaganda has declared LLP Stroyka-2006 insolvent. Creditors have until March 27, 2009, to submit written proofs of claim to: The Specialized Inter-Regional Economic Court of Karaganda Alalykin St. 9 Karaganda Kazakhstan SUN SYSTEM LLP: Creditors Must File Claims by March 20 ------------------------------------------------------ The Specialized Inter-Regional Economic Court of Almaty has declared LLP Sun System insolvent. Creditors have until March 20, 2009, to submit written proofs of claim to: Room 319 Tole Bi St. 295 Almaty Kazakhstan The court is located at: The Specialized Inter-Regional Economic Court of Almaty Baizakov St. 273b Almaty Kazakhstan TRANS SERVICE SRK: Creditors Must File Claims by March 27 --------------------------------------------------------- LLP Trans Service SRK has declared insolvency. Creditors have until March 27, 2009, to submit written proofs of claim to: Sovetskaya St. 119/2 151000 Tayinsha Tayinshynsky district North Kazakhstan Kazakhstan TRANS-SERVICE TGO: Creditors Must File Claims by March 27 --------------------------------------------------------- LLP Trans-Service TGO Ltd. has declared insolvency. Creditors have until March 27, 2009, to submit written proofs of claim to: Aksham St. Sholakkorgan Suzaksky district South Kazakhstan Kazakhstan =================== K Y R G Y Z S T A N =================== ENERGO STROY: Creditors Must File Claims by March 13 ---------------------------------------------------- LLC Construction Company Energo Stroy Service has declared insolvency. Creditors have until March 13, 2009, to submit written proofs of claims to: LLC Construction Company Energo Stroy Service Abdrahmanov St. 281 Bishkek Kyrgyzstan ================= L I T H U A N I A ================= BITE LIETUVA: S&P Cuts Corporate Credit Rating to 'CC' ------------------------------------------------------ Standard & Poor's Ratings Services said it lowered to 'CC' from 'CCC-' its long-term corporate credit rating on Lithuania- headquartered mobile telecommunications operator UAB Bite Lietuva and its 100% owner Bité Finance International B.V. The outlook is negative. At the same time, S&P lowered the rating on Bite Finance International B.V.'s EUR190 million senior secured notes to 'CC' from 'CCC-' and affirmed the 'C' rating on the EUR110 million subordinated notes. The downgrade reflects the EUR38.5 million below par notes exchange offering by the company for the EUR110 million notes. The offer will be financed through the provision of additional equity from the group's current shareholders led by Mid Europa Partners. "Standard & Poor's views the exchange offer as distressed because the exchange value offered is well below par (35 euro cents on the euro) and the noteholders do not have a realistic alternative to be repaid in full," said Standard & Poor's credit analyst Helen O'Toole. "We will lower the corporate credit rating on Bite to 'SD' (selective default) and the affected issue rating to 'D' upon completion of the exchange offer. At the same time, the rating on the senior secured notes is likely to remain at 'CC', assuming adequate continuing servicing," said Ms. O'Toole. "If the exchange offer is successful, Standard & Poor's believes Bité is likely to initially extinguish a maximum of EUR50 million of its subordinated debt," said Ms. O'Toole. According to the documentation of Bite's senior revolving credit facility, if more than EUR50 million of either the senior secured or subordinated debt is repaid, then the EUR30 million RCF should be repaid pro rata. S&P understands that Bite will likely seek a waiver in the intercreditor agreement in order to extinguish the full EUR110 million of subordinated debt, without triggering repayment of the RCF, but this has not been requested or granted to date. In S&P's view, the future reduction in Bite's debt would lead to an improvement in its leverage and would ease pressure on its consolidated leverage covenant relating to the group's RCF. On the assumption that EUR50 million of subordinated debt will be extinguished, if the transaction had occurred at Dec. 31, 2008, it would have resulted in reported debt to EBITDA of about 7.7x. On the same basis, if the EUR110 million notes are fully extinguished, the reported debt to EBITDA ratio for the same period would improve to about 6.0x. The exchange offer will lead to more operational flexibility as the group's annual interest cost will decrease by approximately EUR10 million annually or in the remaining months of 2009. In the mean time, in S&P's opinion, Bite is likely to continue to meet its interest payments on its subordinated and senior secured debt. The negative outlook reflects the fact that Bite's rating will be lowered to 'SD' on completion of the exchange offer. Following completion of the exchange offer and extinction of an initial EUR50 million of the subordinated notes, based on the current information, it is likely that the rating will be upgraded to the 'CCC' category. Any upgrade, however, will follow a review of the group's revised capital structure, including the benefits realized if the offering is successful, the group's liquidity position, and actual and projected operating performance. =================== L U X E M B O U R G =================== MILLICOM INTERNATIONAL: S&P Withdraws 'BB' Corporate Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it has withdrawn its 'BB' long-term corporate credit rating on Luxembourg-based mobile communications group Millicom International Cellular S.A. The 'BB' senior unsecured debt rating and '3' recovery rating on Millicom's bonds were also withdrawn. At Dec. 31, 2008, Millicom had about US$453 million of outstanding rated bonds, which mature on Dec. 1, 2013. The rating withdrawal, which has been agreed with Millicom's management, results from Millicom's refusal to provide relevant information to Standard & Poor's regarding Millicom's local debt indentures (estimated to be US$1.7 billion at year-end 2008 compared with US$453 million of bonds located at the holding company level) despite repeated requests. S&P believes that such information is material for the credit analysis of Millicom and its bonds. The importance of obtaining such information has increased as Millicom's gross debt located at operating subsidiary level had increased to about US$1.7 billion at year-end 2008, versus about US$1.2 billion at the end of 2007, in line with Millicom's strategy of raising funding at the local level. In addition, Millicom's liquidity has somewhat weakened over the last quarter, mainly as the result of the US$510 million Amnet acquisition in the second half of 2008. Also, while Millicom's operating performance continued to be solid in the fourth quarter of 2008, it is S&P's view that the negative impact on its businesses and liquidity of the spreading and deepening recession in Western countries may increase over the next few quarters. S&P understand that an unremedied covenant breach or payment default could trigger the repayment of a substantial part of Millicom's US$2.2 billion of debt, including high-yield bonds. Without adequate and detailed information, S&P is not in a position to maintain Millicom's ratings. ===================== N E T H E R L A N D S ===================== PANGAEA ABS: Fitch Junks Ratings on Three Classes of 2007-1 Notes ----------------------------------------------------------------- Fitch Ratings has downgraded seven classes of Pangaea ABS 2007-1 B.V. notes, removed the notes from Rating Watch Negative, and assigned a Stable Outlook to three of the notes as detailed below. -- EUR216,116,899 class A floating-rate notes (ISIN XS0287257280) downgraded to 'BBB' from 'AAA'; removed from RWN; assigned a Stable Outlook -- EUR16 million class B floating-rate notes (ISIN XS0287266356) downgraded to 'BBB-' (BBB minus) from 'AAA'; removed from RWN; assigned a Stable Outlook -- EUR18 million class C floating-rate notes (ISIN XS0287267677) downgraded to 'BB' from 'AA'; removed from RWN; assigned a Stable Outlook -- EUR22 million class D floating-rate notes (ISIN XS0287268642) downgraded to 'CCC' from 'A'; removed from RWN -- EUR16 million class E floating-rate notes (ISIN XS0287271604) downgraded to 'CC' from 'BBB-' (BBB minus); removed from RWN -- EUR5 million class F floating-rate notes (ISIN XS0287272164) downgraded to 'C' from 'BB-' (BB minus); removed from RWN -- EUR4,407,587 class S1 combination notes (ISIN XS0289328394) downgraded to 'CCC' from 'A'; removed from RWN The downgrades reflect Fitch's view on the credit risk of the rated tranches following the release of the agency's revised Structured Finance CDO rating criteria on December 16, 2008, as well as credit deterioration to the collateral pool that has occurred since the review in October 2008. The application of the new SF CDO rating criteria incorporates Fitch's view on industry and vintage concentration risks and the propensity for low recoveries upon default, particularly for thin tranches. Although the application of the new criteria has significantly impacted the transaction's ratings, credit deterioration in the portfolio and the default of five portfolio assets linked to Lehman Brothers in September 2008 has particularly affected the junior tranches. As per the trustee report dated December 15, 2008, the portfolio contains 96 performing assets from 86 obligors, with the largest exposure accounting for approximately 2.5% of the outstanding portfolio amount, and the three largest obligors accounting for 7.4% of the outstanding portfolio amount. The largest single industry is CMBS with 37% of the portfolio volume. The two largest vintages are 2006 and 2007, making up 50% and 46% of the portfolio respectively, while the three largest country concentrations are the UK, Germany and the Netherlands representing 22%, 20% and 20% of the portfolio respectively. In conducting its analysis, Fitch makes a three notch downward adjustment for any names on RWN for default analysis in its Portfolio Credit Model. On an adjusted basis approximately 26% of the assets are treated as sub-investment grade. The weighted average portfolio quality is 'BBB-' (BBB minus) and 3% of the portfolio is on RWN. Four assets making up 4% of the portfolio are currently rated 'CCC+' and below on an unadjusted basis. Two of these assets belong to one transaction which comprises hedge fund investments. Fitch expects these positions to default with no recovery. The other two assets are UK RMBS transactions, each with counterparty exposure to Lehman Brothers. For all four assets Fitch deems a default likely and recoveries in case of default as limited, reflected in the Distressed Recovery ratings of 'DR6' for the US SF CDO and 'DR5' and 'DR2' for the UK RMBS tranches respectively. While the downgrade of the senior notes is driven by Fitch's revised criteria, the downgrade of the junior notes is linked to the transaction's actual performance. As a result of the default of five portfolio assets in September 2008, the Class D, E and F over-collateralization tests are failing and interest will continue to be diverted away from the junior notes to amortize the class A notes. Currently, Class E and F as well as the combination notes are deferring interest. In Fitch's view, these two junior notes are likely to be cut off from interest flows for some time, making the likelihood of full recovery increasingly remote. Pangaea is a securitization of mainly European structured finance securities with the total note issuance of EUR305.3 million invested in a EUR298.6 million portfolio. The portfolio is actively managed by Investec Principal Finance. =========== R U S S I A =========== BELMYASO OAO: To Be Liquidated; Shareholders' Meeting Set March 24 ------------------------------------------------------------------ The board of directors of ??? "Belmyaso" will hold an extraordinary shareholders' meeting on March 24 to discuss the proposed voluntary liquidation of the Russian meat company, kommersant.ru reports. The report discloses Belmyaso's net loss in the first half of 2008 soared to RUR44.5 million from RUR20.3 million for the same period in 2008, while the company's revenue for January–June 2007 dropped to RUR196.7 million from RUR388.6 million for the same period last year. BELOYARSKIY CONSTRUCTION: Creditors Must File Claims by April 6 --------------------------------------------------------------- Creditors of LLC Beloyarskiy Construction Structures Plant (TIN 6609010260, PSRN 1036600430261) have until April 6, 2009, to submit proofs of claims to: V. Rud'ko Insolvency Manager Post User Box 518 620000 yekaterinburg Russia The Arbitration Court of Sverdlovskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. A60–12763/2008-S11. The Debtor can be reached at: LLC Beloyarskiy Construction Structures Plant Post User Box 151 Zarechnyy 624250 Sverdlovskaya Russia BORETSKIY LES-PROM-KHOZ: Claims Deadline on March 15 ---------------------------------------------------- Creditors of LLC Boretskiy-Les-Prom-Khoz (TIN 910003818, PSRN 102290127018) (Forestry) have until March 15, 2009, to submit proofs of claims to: N. Stepanov Temporary Insolvency Manager Office 254 Building 1 Gaydara St. 4 163000 Arkhangelsk Russia The Arbitration Court of Arkhangelskaya will convene at 2:50 p.m. on Jul.3, 2009, to hear bankruptcy supervision procedure. The case is docketed under Case No. A05–14888/2008. The Debtor can be reached at: LLC Boretskiy-Les-Prom-Khoz Office 49 Building 1 Dobrolyubova St. 1 163012 Arkhangelsk Russia CONSTRUCTION MATERIALS: Karelia Bankruptcy Hearing Set May 13 ------------------------------------------------------------- The Arbitration Court of Karelia will convene at 10:40 a.m. on May 13, 2009, to hear bankruptcy supervision procedure on LLC Construction Materials Production. The case is docketed under Case No. A26–7914/2008. The Temporary Insolvency Manager is: I. Belov Post User Box 84 Petrozavodsk 185005 Karelia Russia The Debtor can be reached at: LLC Construction Materials Production Vetlechebnaya St. 1 Kondopoga 186200 Karelia Russia FIRE-PROOF MATERIALS: Creditors Must File Claims by March 15 ------------------------------------------------------------ Creditors of LLC Fire-Proof Materials Plant have until March 15, 2009, to submit proofs of claims to: S. Khizhnenko Temporary Insolvency Manager Sovetskaya St. 77 Partizanskoe Partizanskiy 663540 Krasnoyarskiy Russia The Arbitration Court of Krasnoyarskiy will convene at 2:00 p.m. on April 23, 2009, to hear bankruptcy supervision procedure. The case is docketed under Case No. AAA-17203/2008. The Debtor can be reached at: LLC Fire-Proof Materials Plant Gorkogo St. 33 Uyar 663520 Krasnoyarskiy Russia ROST-STROY-INVEST LLC: Bankruptcy Hearing Set June 9 ---------------------------------------------------- The Arbitration Court of Vladimirskaya will convene at 2:30 a.m. on June 9, 2009, to hear bankruptcy supervision procedure on LLC Rost-Stroy-Invest (TIN 3327324658, PSRN 1033301802038). The case is docketed under Case No. A11–12448/2008-A1–263A/33B. The Temporary Insolvency Manager is: N. Mikulina Post User Box 105 600017 Vladimir Russia The Debtor can be reached at: LLC Rost-Stroy-Invest Office 481 Studenaya Gora St. 36 600001 Vladimir Russia TEKHNO-STROM-DOR-STROY LLC: Bankruptcy Hearing Set July 30 ---------------------------------------------------------- The Arbitration Court of Saint-Petersburg will convene at 11:00 a.m. on July 30, 2009, to hear bankruptcy proceedings on LLC Tekhno-Strom-Dor-Stroy (TIN 7825447064, PSRN 1037800025834) (Construction). The case is docketed under Case No. A56– 27548/2008. The Insolvency Manager is: A. Boravchenkov Post User Box 131 191119 Saint-Petersburg Russia The Debtor can be reached at: LLC Tekhno-Strom-Dor-Story Ivana Chernykh St. 20 198095 Saint-Petersburg Russia TEKHNOLOGII LESA: Creditors Must File Claims by March 15 -------------------------------------------------------- Creditors of LLC Tekhnologii Lesa (TIN 6714026990) (Woodwork and Timber Industry) have until March 15, 2009, to submit proofs of claims to: L. Belokon' Insolvency Manager Sovetskaya St. 4 440026 Penza Russia The Arbitration Court of Smolenskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. A62–2658/2008. The Court is located at: The Arbitration Court of Smolenskaya Gagarina St. 46 214001 Smolensk Russia The Debtor can be reached at: LLC Tekhnologii Lesa 3-ya Pesochnaya St. 5 Glushchenki Smolenskiy Smolenskaya Russia TRUBCHEVSKIY LES-KHOZ SUE: April 14 Set as Claims Filing Deadline ----------------------------------------------------------------- Creditors of SUE Trubchevskiy Les-Khoz (TIN 3252005411) (Forestry) have until April 14, 2009, to submit proofs of claims to: V. Ivanov Insolvency Manager Zvenigorodskoe Shosse 3 123022 Moscow Russia Tel: (495) 228–60–28. The Arbitration Court of Bryanskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. A09–4754/2008–32. The Debtor can be reached at: SUE Trubchevskiy Les-Khoz Lenina St. 58 Trubchevsk 242220 Bryanskaya Russia VOKHTOGA-LES LLC: Creditors Must File Claims by March 15 -------------------------------------------------------- Creditors of LLC Vokhtoga-Les (Lumbering) have until March 15, 2009, to submit proofs of claims to: A. Kapitonova Insolvency Manager Molodezhnaya St. 1a Nepotyagovo Vologodskiy 160510 Vologodskaya Russia The Arbitration Court of Vologodskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. Al3–10354/2008. The Debtor can be reached at: LLC Vokhtoga-Les Kolkhoznaya St. 30 Vokhtoga 162040 Vologodskaya Russia VTOR-CHER-MET CJSC: Creditors Must File Claims by March 15 ---------------------------------------------------------- Creditors of CJSC Vtor-Cher-Met (TIN 3448023510; PSRN 1023404364015) (Ferrous and Non-Ferrous Metal Scrap) have until March 15, 2009, to submit proofs of claims to: I. Zaytsev Insolvency Manager Post User Box 79 119607 Moscow Russia The Arbitration Court of Volgogradskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. A12–19234/08-s55. The Debtor can be reached at: CJSC Vtor-Cher-Met Shillera St. 46 Krasnoarmeyskiy 400022 Volgograd Russia * RUSSIA: January Unemployment Rate Highest in 4 Years ------------------------------------------------------ Alex Nicholson at Bloomberg News reports Russia's unemployment rate rose to 8.1 percent in January, the highest since March 2005. The total number of unemployed rose by 300,000 in the month to 6.1 million people, or 8.1 percent of the working population, the news agency says citing Moscow-based Federal Statistics Service in an e-mailed statement. According to the report, Russia's industrial output fell 16 percent in January as capital investment dropped 15.5 percent, the biggest decline since December 1998. The average monthly wage fell an annual 9.1 percent in January to 15,200 rubles (US$418.42), the biggest drop since August 1999 when they fell 30.7 percent, the report discloses. Disposable income fell 6.7 percent, the statistics service said as cited by Bloomberg News. Rising unemployment is the "biggest problem" and the "biggest pain" for Russia as it goes through its worst economic crisis in a decade, Bloomberg News cited President Dmitry Medvedev as saying in an interview on state television on Feb. 15. The report relates the Russian government, which on Feb. 18 forecast a 2009 economic contraction of 2.2 percent, will spend RUR44 billion (US$1.3 billion) to create new jobs and "significant funds" will be devoted to retraining programs. ========= S P A I N ========= AYT COLATERALES: Fitch Assigns 'B' Rating on EUR10.5 Mil. Notes --------------------------------------------------------------- Fitch Ratings has assigned AyT Colaterales Global Empresas FTA's Series AyT Colaterales Global Empresas Caja Granada I notes, totaling EUR175 million, due in September 2037, final ratings: -- EUR135.6 million class A: 'AAA'; Outlook Stable -- EUR18.4 million class B: 'A'; Outlook Stable -- EUR10.5 million class C: 'BBB-' (BBB minus); Outlook Stable -- EUR10.5 million class D: 'B'; Outlook Stable The ratings address the payment of interest on the notes according to the terms and conditions of the documentation, subject to a deferral trigger for the class B, C, and D notes, as well as the repayment of principal by legal maturity. According to the AyT Colaterales Empresas transaction documents, the legal final maturity date of the program, applicable to all the series of notes issued and to be issued in the future, is defined as three years after the longest scheduled maturity date of the program. The transaction is a cash flow securitization of a EUR175 million static pool of secured and unsecured loans granted by Caja General de Ahorros de Granada (Caja Granada, rated 'A-'(A minus)/Negative/'F2'), a Spanish savings bank, to small- and medium-sized Spanish enterprises. The pool consists of 1,289 loans to SME companies with a strong concentration in the province of Granada (c. 59% of collateral value), in the Andalucia region (totaling c. 93% of collateral value), the bank's home region. AyT Colaterales Caja Granada I is the first standalone SME securitization transaction to be brought to the market by Caja Granada, and it is the fourth series issued by AyT Colaterales Empresas. AyT Colaterales Empresas is a securitization fund incorporated in December 2007 to issue a number of independent series of notes collateralized by SME loans by up to 37 different Spanish financial institutions. The maximum overall size of AyT Colaterales Empresas is limited to EUR3 billion. The issuer is legally represented and managed by Ahorro y Titulizacion, S.A., S.G.F.T. (the Sociedad Gestora), a special-purpose management company with limited liability incorporated under the laws of Spain. The ratings on the notes are based on the quality of the collateral, the underwriting and servicing of the loans, available credit enhancement, the characteristics and integrity of the transaction's legal and financial structure and the Sociedad Gestora's administrative capabilities. The ratings incorporate Fitch's most up-to-date view of Spanish SME credit risk (see the July 29, 2007 commentary). As announced in a separate November 6, 2007 commentary, entitled "Fitch Clarifies Position on New Issue CDO Ratings", the agency is reviewing its rating methodology and model assumptions for all new issue SME CDO ratings. Fitch is reassessing its analyitical views, which could impact existing ratings, including the ratings assigned to the securities in this announcement. TDA PASTOR: S&P Cuts Rating on Class C Notes to 'B' --------------------------------------------------- Standard & Poor's Ratings Services has taken various rating actions on the notes issued by TDA Pastor Consumo 1, FTA. Specifically, S&P lowered and kept on CreditWatch negative the ratings on the class A and B notes, and lowered and placed on CreditWatch negative the ratings on the class C notes. The rating actions are the result of deteriorating collateral performance leading to: Increased delinquency levels putting pressure on the transaction's cash flows as a result of the swap mechanism in the transaction; andDefault levels over the medium term being higher than previously anticipated. As of the December 2008 interest payment date, the volume of loans in arrears for less than 90 days past due accounted for 23.77% of the pool balance. Under the total return swap mechanism in the transaction, the issuer pays all interest received from any collections during the quarter (potentially including any collections from loans in arrears) and receives interest equivalent to the weighted-average coupon on the notes, plus 2.5%, calculated on a notional equal to the performing balance of the assets. Consequently, the high level of technical arrears is now resulting in a material mismatch in payments paid from and received by the issuer. S&P notes that loans in arrears for more than 90 days have grown substantially since closing, and currently represent 3.25% of the pool balance. Early termination of the revolving period occurred on the July IPD when this ratio rose above 2.25%. Loans are defined as defaulted after 18 months; given the limited seasoning of this transaction, which closed in April 2007, the cumulative balance currently only represents 25 bps of the initial balance. However, S&P expects defaulted loans to increase significantly over the near term as delinquent loans roll into default. S&P's analysis took into the account the increase in credit enhancement available to each class of notes due to pool amortization. However, in S&P's view, the increase in credit enhancement was insufficient to maintain the original ratings that S&P assigned. The CreditWatch negative placements are pending further observation of the volatility of short-term arrears over the next quarter, and roll-rates of longer-term arrears into defaults. Classes A and B had previously reflected S&P's concerns relating to Banco Pastor participating as swap counterparty in this transaction (see article below). However, S&P's analysis now assumes that Banco Pastor will remain in the transaction or that the swap will be replaced on similar terms. Ratings List TDA Pastor Consumo 1, Fondo de Titulizacion de Activos EUR300 Million Floating-Rate Notes Ratings Lowered and Kept on Creditwatch Negative Rating ------ Class To From ----- -- ---- A AA/Watch Neg AAA/Watch Neg B A/Watch Neg AA/Watch Neg Ratings Lowered And Placed on Creditwatch Negative Rating ------ Class To From ----- -- ---- C B/Watch Neg BBB- ===================== S W I T Z E R L A N D ===================== ABC NAILSTORE: Creditors Must File Proofs of Claim by Feb. 26 ------------------------------------------------------------- Creditors owed money by LLC ABC Nailstore Switzerland are requested to file their proofs of claim by Feb. 26, 2009, to: Georg Ledermann Liquidator Langfeldweg 3 2504 Biel Switzerland The company is currently undergoing liquidation in Biel. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Dec. 17, 2008. EXELEXI JSC: Deadline to File Proofs of Claim Set Feb. 26 --------------------------------------------------------- Creditors owed money by JSC Exelexi are requested to file their proofs of claim by Feb. 26, 2009, to: David Kanzig Liquidator Advocacy Thouvenin Rechtsanwalte Klausstrasse 33 8034 Zurich Switzerland The company is currently undergoing liquidation in Zurich. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Aug. 5, 2008. FACTUM JSC: Creditors Have Until Feb. 26 to File Claims ------------------------------------------------------- Creditors owed money by JSC Factum are requested to file their proofs of claim by Feb. 26, 2009, to: Junkholzweg 6 2545 Selzach Switzerland The company is currently undergoing liquidation in Selzach. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Jan. 8, 2009. HEGEMO JSC: Proofs of Claim Filing Deadline is Feb. 26 ------------------------------------------------------ Creditors owed money by JSC Hegemo are requested to file their proofs of claim by Feb. 26, 2009, to: Barbara Schlegel Wangserstrasse 46 8887 Mels Switzerland The company is currently undergoing liquidation in Buchs SG. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Dec. 10, 2008. IDEEART LLC: Creditors' Proofs of Claim Due by Feb. 26 ------------------------------------------------------ Creditors owed money by LLC IdeeArt are requested to file their proofs of claim by Feb. 26, 2009, to: Gert Harries Liquidator Beckenmoosstrasse 28 5330 Bad Zurzach Switzerland The company is currently undergoing liquidation in Bad Zurzach AG. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Nov. 24, 2008. MS LOUNGE: Feb. 26 Set as Deadline to File Claims ------------------------------------------------- Creditors owed money by LLC MS Lounge are requested to file their proofs of claim by Feb. 26, 2009, to: Martin Krieg Liquidator In der Hoh 32 8604 Volketswil Switzerland The company is currently undergoing liquidation in Alpnach. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Dec. 9, 2008. T.N.A. MUNAJ: Creditors Must File Proofs of Claim by Feb. 26 ------------------------------------------------------------ Creditors owed money by JSC T.N.A. Munaj are requested to file their proofs of claim by Feb. 26, 2009, to: Walter Suter Liquidator Sinserstrasse 116 6330 Cham Switzerland The company is currently undergoing liquidation in Cham. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Dec. 18, 2008. UBS AG: U.S. Wants Firm to Disclose Swiss Bank Account Records -------------------------------------------------------------- The U.S. government has filed a lawsuit in Miami against Swiss bank UBS AG, the Justice Department said yesterday in a statement. The lawsuit asks the court to order the international bank to disclose to the Internal Revenue Service (IRS) the identities of the bank's U.S. customers with secret Swiss accounts. According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of the tax laws. The government alleges in the lawsuit that of those 52,000 secret accounts, about 20,000 contained securities and about 32,000 contained cash. According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about US$14.8 billion in assets. Court documents allege that U.S. citizens failed to report and pay U.S. income taxes on income earned in those secret accounts. According to the lawsuit, Swiss-based bankers actively marketed UBS's services to wealthy U.S. customers within the United States. UBS documents filed with the lawsuit show that UBS bankers came to the United States to meet with U.S. clients nearly 4,000 times per year, in violation of U.S. law. According to court documents, the government alleges that UBS trained its bankers to avoid detection by U.S. authorities. Court documents further assert that many U.S. contacts occurred through UBS-sponsored sporting and cultural events, designed to appeal to extremely wealthy Americans. The lawsuit alleges that UBS engaged in cross-border securities transactions in the United States that it knew violated U.S. security laws. The lawsuit also alleges that UBS helped hundreds of U.S. taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under U.S. tax laws. "At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division. "It is time for those who are trying to hide from the IRS to rethink their actions. The Department of Justice is committed to do all that it can to aid the IRS in locating those who would seek to hide behind secret accounts and in holding them accountable under the federal tax laws." "We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes," said IRS Commissioner Doug Shulman. "As Commissioner, I am committed to bringing to bear the full arsenal of IRS resources to pursue egregious offshore tax abuse. International tax issues are a top priority, and we will continue to aggressively pursue people hiding assets offshore. For people who are hiding money offshore, this serves as a wake-up call that they need to get right with their government. Taxpayers should talk to a tax professional and come forward under our voluntary disclosure process. Having the IRS find you could mean a much heavier price than coming forward on your own." UBS Says Requested Information Protected by Swiss Financial Privacy Laws UBS "expected" the civil action and said it has substantial defenses to the enforcement of the John Doe summons and intends to vigorously contest the enforcement of the summons in the civil proceeding, as is permitted under the terms of the Deferred Prosecution Agreement entered into on February 18. "Objections to the enforcement of the IRS summons are based upon U.S. law, the terms of UBS's Qualified Intermediary Agreement with the IRS, Swiss financial privacy and other laws, and the principles of international comity that require U.S. courts to take into account foreign laws," the Swiss bank said in a February 19 statement. "The IRS's John Doe summons seeks information regarding a substantial number of undisclosed accounts maintained by U.S. persons at UBS in Switzerland, whose information is protected from disclosure by Swiss financial privacy laws," the UBS statement added. Net Loss Widens As reported in the Troubled Company Reporter-Europe on Feb. 11, 2009, UBS's net loss for full-year 2008 widened to CHF19,697 million from of CHF5,247 million in the prior year. Net losses from continuing operations totaled CHF19,327 million, compared with losses of CHF5,111 million in the prior year. UBS attributed the losses to negative revenues in its fixed income, currencies and commodities (FICC) area. For the 2008 fourth quarter, UBS incurred a net loss of CHF8,100 million, down from a net profit of CHF296 million. Net loss from continuing operations was CHF7,997 million compared with a profit of CHF433 million. The Investment Bank recorded a pre-tax loss of CHF7,483 million, compared with a pre-tax loss of CHF2,748 million in the prior quarter. This result was primarily due to trading losses, losses on exposures to monolines and impairment charges taken against leveraged finance commitments. An own credit charge of CHF1,616 million was recorded by the Investment Bank in fourth quarter 2008, mainly due to redemptions and repurchases of UBS debt during this period. More Job Cuts UBS said it will further reduce its headcount to 15,000 by the end of the year. UBS's personnel numbers reduced to 77,783 on December 31, 2008, down by 1,782 from September 30, 2008, with most staff reductions at its investment banking unit. About UBS AG Based in Zurich, Switzerland, UBS AG (VTX:UBSN) -- http://www.ubs.com/-- is a global provider of financial services for wealthy clients. UBS's financial businesses are organized on a worldwide basis into three Business Groups and the Corporate Center. Global Wealth Management & Business Banking consists of three segments: Wealth Management International & Switzerland, Wealth Management US and Business Banking Switzerland. The Business Groups Investment Bank and Global Asset Management constitute one segment each. The Industrial Holdings segment holds all industrial operations controlled by the Group. Global Asset Management provides investment products and services to institutional investors and wholesale intermediaries around the globe. The Investment Bank operates globally as a client-driven investment banking and securities firm. The Industrial Holdings segment comprises the non-financial businesses of UBS, including the private equity business, which primarily invests UBS and third-party funds in unlisted companies. UBS AG: Agrees to Pay US$200 Million to Settle U.S. SEC Charges --------------------------------------------------------------- The U.S. Securities and Exchange Commission said it filed Feb. 18 an enforcement action against UBS AG, charging the firm with acting as an unregistered broker-dealer and investment adviser. The SEC's complaint, filed in the U.S. District Court for the District of Columbia, alleges that UBS's conduct facilitated the ability of certain U.S. clients to maintain undisclosed accounts in Switzerland and other foreign countries, which enabled those clients to avoid paying taxes related to the assets in those accounts. UBS agreed to settle the SEC's charges by consenting to the issuance of a final judgment that permanently enjoins UBS and orders it to disgorge US$200 million. In connection with a related criminal investigation, UBS has entered into a deferred prosecution agreement with the Department of Justice pursuant to which UBS will pay an additional US$180 million in disgorgement, as well as US$400 million in tax-related payments. "The broker-dealer and investment adviser registration provisions provide important protections for investors. UBS avoided compliance with U.S. securities laws for many years, at the same time they were engaged in other illegal conduct, which makes this one of the most egregious cases of its kind," said Scott W. Friestad, Deputy Director of the SEC's Division of Enforcement. As alleged in the SEC's complaint, from at least 1999 through 2008, UBS acted as an unregistered broker-dealer and investment adviser to thousands of U.S. persons and offshore entities with United States citizens as beneficial owners. UBS had at least 11,000 to 14,000 of such clients and held billions of dollars of assets for them. The U.S. cross-border business provided UBS with revenues of US$120 million to US$140 million per year. The SEC also alleges that UBS conducted that cross-border business largely through client advisers located primarily in Switzerland, who were not associated with a registered broker-dealer or investment adviser. These client advisers traveled to the U.S., on average, two to three times per year on trips that generally varied in duration from one to three weeks. In many instances, the client advisers attended exclusive events such as art shows, yachting events, and sporting events that were often sponsored by UBS, for the purpose of soliciting and communicating with United States cross-border clients. UBS also used other U.S. jurisdictional means such as telephones, facsimiles, mail and e- mail to provide securities services to its U.S. cross-border clients. The SEC further alleges that UBS was aware that it was required to be registered with the SEC. UBS took action to conceal its use of U.S. jurisdictional means to provide securities services. Among other things, client advisers typically traveled to the U.S. with encrypted laptop computers that they used to provide account- related information, to show marketing materials for securities products, and occasionally to communicate orders for securities transactions to UBS in Switzerland. Client advisers also received training on how to avoid detection by U.S. authorities of their activities in the U.S. As charged in the SEC's complaint, as a result of its conduct, UBS violated Section 15(a) of the Securities Exchange Act of 1934 and Section 203(a) of the Investment Advisers Act of 1940. To settle these charges, UBS has consented to the entry of a final judgment that (1) permanently enjoins UBS from further violation of those provisions; (2) orders it to pay US$200 million in disgorgement, to be paid together with an additional US$180 million in disgorgement that will be paid as part of a settlement of a related criminal investigation; and (3) orders UBS to comply with its undertakings to terminate its U.S. cross-border business and to retain an independent consultant to conduct an examination of UBS's termination of the business. The SEC said its investigation is ongoing. About UBS AG Based in Zurich, Switzerland, UBS AG (VTX:UBSN) -- http://www.ubs.com/-- is a global provider of financial services for wealthy clients. UBS's financial businesses are organized on a worldwide basis into three Business Groups and the Corporate Center. Global Wealth Management & Business Banking consists of three segments: Wealth Management International & Switzerland, Wealth Management US and Business Banking Switzerland. The Business Groups Investment Bank and Global Asset Management constitute one segment each. The Industrial Holdings segment holds all industrial operations controlled by the Group. Global Asset Management provides investment products and services to institutional investors and wholesale intermediaries around the globe. The Investment Bank operates globally as a client-driven investment banking and securities firm. The Industrial Holdings segment comprises the non-financial businesses of UBS, including the private equity business, which primarily invests UBS and third-party funds in unlisted companies. =========== T U R K E Y =========== ANADOLU EFES: Fitch Affirms Issuer Default Rating at 'BB' --------------------------------------------------------- Fitch Ratings has taken various rating actions with respect to Turkish brewer Anadolu Efes Biracilik ve Malt Sanayii A.S. (Efes): -- Long-term foreign currency Issuer Default Rating: affirmed at 'BB'; Outlook remains Stable -- Long-term local currency IDR: affirmed at 'BB+'; Outlook revised to Negative from Stable -- National Long Term Rating: affirmed at 'AA+ (tur)'; Outlook revised to Negative from Stable -- The company's Long-term foreign currency IDR of 'BB' is constrained by Turkey's Country Ceiling. "The change of Outlook reflects Fitch's concerns about the exposure of Efes's leverage to the deteriorating consumer environment and to the weakness of the currencies in which it operates, as well as a moderate degree of refinancing risk," said Giulio Lombardi, Senior Director in Fitch's European Leisure and Consumer Products Group. In affirming the ratings, Fitch has taken into account Efes's virtually unchallenged leadership position in the Turkish beer market (over 85% share) and its ability, through stable cash flow, to support its 70%-owned international subsidiary, Efes Breweries International, during its past expansion and within the current challenging environment. Turkey's beer market has grown consistently in volume at a compounded annual growth rate of almost 6% over 2001-2008. Efes is a profitable and well-managed regional brewer. It focuses on the Eastern European beer markets and has also benefited from a proven ability to adjust to macroeconomic downturns such as the crisis that struck Turkey in 2000-2001. Fitch expects Turkey and Russia, the key contributors to Efes' EBITDA (accounting for approximately 70% and 20% of FY08 EBITDA respectively), to suffer a contraction of GDP and impaired consumer confidence and disposable income during 2009 and possibly beyond. Additionally, the agency notes that the majority of Efes' debt is denominated in USD, which has significantly appreciated against the Turkish lira (YTL) and the Russian rouble. Efes's Net Debt/EBITDA was 1.2x at FYE07. The agency estimates that this measure could rise marginally at FYE08 as a result of the investment program and the acquisitions conducted by EBI and because of adverse currency movements. According to various scenarios conducted by the agency, Fitch believes that Efes's leverage could either remain at this level for FYE09 or deteriorate closer to 2.0x - a level that could be incompatible with the current local currency IDR of 'BB+'. Fitch includes two put options for the purchase of minority stakes by EBI in assessing Efes's debt. However, the agency excludes Efes's 50.3% share of Coca Cola Icecek's (CCI; 'BB'/Stable) borrowings and profits from its leverage ratio as The Coca-Cola Company Inc. ('A+'/Stable) maintains veto rights on important business and financial decisions of CCI. Almost half of the gross debt of the company's beer operations (estimated at under US$1 billion as of FYE08) is due in 2009, with another approximately US$100 million due in 2010. There is therefore a certain degree of refinancing risk for 2009 and 2010. The debt, which, is mostly at the level of EBI, includes a US$300 million syndicated facility guaranteed by the parent Anadolu Efes as well as drawings under short term, uncommitted lines. Refinancing risk is mitigated by the large cash balances held both by Anadolu Efes and by EBI at FYE08 as well as by cash flow generation. Fitch therefore believes that the company's risk of refinancing its debt should be manageable. In affirming Efes's ratings, Fitch has taken some comfort from the company's past performance when Turkey's economic output contracted and it expects much of the possible adverse effects on Efes's FY09 cash flow to be mitigated by the current decline in raw material prices and by a scaling down of group capex. ============= U K R A I N E ============= IMAGE PRO: Creditors Must File Claims by March 1 ------------------------------------------------ Creditors of LLC Image Pro Ltd. (EDRPOU 35253217) have until March 1, 2009, to submit proofs of claim to the Insolvency Manager LLC Sted. The Economic Court of Kiev has begun bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No 49/15-?. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy street 44-b 01030, Kiev Ukraine The Debtor can be reached at: LLC Image Pro Ltd. Melnikov St. 12 04050 Kiev Ukraine MACHINEBUILDING SUMYSILMACH: Court Starts Bankruptcy Procedure -------------------------------------------------------------- The Economic Court of Sumy has begun bankruptcy supervision procedure on OJSC Sumy Plant of Agricultural Machinebuilding Sumysilmach (EDRPOU 00901588). The Temporary Insolvency Manager is: Arbitral manager O. Maliovany Sumy and Kiev divisions St. 24/2 40024 Sumy Ukraine The Court is located at: The Economic Court of Sumy Shevchenko Avenue 18/1 40011 Sumy Ukraine The Debtor can be reached at: OJSC Sumy Plant OF Agricultural Machinebuilding Sumysilmach Kharkov St. 6 40024 Sumy Ukraine SHEPROS LLC: Creditors Must File Claims by March 4 -------------------------------------------------- Creditors of LLC SHEPROS (EDRPOU 31310889) have until March 4, 2009, to submit proofs of claim to Insolvency Manager I. Gusar The Economic Court of Kiev has begun bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No 15/28-?. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy street 44-b 01030, Kiev Ukraine The Debtor can be reached at: LLC SHEPROS Magnitogorskaya St. 1A 02094 Kiev Ukraine TECHNOSPHERE LLC: Creditors Must File Claims by March 1 ------------------------------------------------------- Creditors of LLC Technosphere (EDRPOU 24093609) have until March 1, 2009, to submit proofs of claim to: State tax inspection in Pechersky Insolvency manager Leskovaya St. 2 Kiev Ukraine The Economic Court of Kiev has begun bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No 15/686-?. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy street 44-b 01030, Kiev Ukraine The Debtor can be reached at: LLC TECHNOSPHERE Leskovaya St. 2 01011 Kiev Ukraine ZVENIGORODKA AGRICULTURAL: Creditors Must File Claims by March 1 ---------------------------------------------------------------- Creditors of OJSC Zvenigorodka Agricultural Machine-Technological Station (EDRPOU 30257002) have until March 1, 2009, to submit proofs of claim to: Arbitral manager V. Yatchuk Insolvency Manager Paris Commune St. 104 Russkaya Poliana 19602 Cherkassy Ukraine The Economic Court of Cherkassy has begun bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No 14/2823. The Court is located at: The Economic Court of Cherkassy Shevchenko boulevard 307 18000 Cherkassy Ukraine The Debtor can be reached at: OJSC Zvenigorodka Agricultural Machine-Technological Station Ozernaya Zvenigorodka 20226 Cherkassy Ukraine =========================== U N I T E D K I N G D O M =========================== BUCHANAN ARMS: Appoints Joint Administrators from KPMG ------------------------------------------------------ Gerard Anthony Friar and Blair Carnegie Nimmo of KPMG LLP were appointed joint administrators of Buchanan Arms Management Ltd. on Jan. 29, 2009. The company can be reached at: Buchanan Arms Management Ltd. 220 The Vale London NW11 8SR England CARTER BROTHERS: Names Joint Administrators from PKF ---------------------------------------------------- Kerry Franchina Bailey and Jonathan David Newell of PKF (UK) LLP were appointed joint administrators of Carter Brothers Transport Ltd. on Feb. 3, 2009. The company can be reached at: Carter Brothers Transport Ltd. 20 Silica Road Amington Industrial Estate Amington Tamworth Staffordshire B77 4DT England CHEVLER PACKAGING: Goes Into Administration ------------------------------------------- Liz Wells at packagingnews.co.uk reports that Chevler Packaging has gone into administration. The company called in administrator Richard Hawes from Deloitte on Feb. 10, the report relates. The report recalls in February 2007, the company shut down its cartonboard operations after failing to find a buyer. Based in Buckinghamshire, Chevler Packaging manufactures plastic and paper packaging, the report discloses. LIMEHOUSE DEVELOPMENTS: Taps Joint Administrators from BDO ---------------------------------------------------------- Shay Bannon and Martha H Thompson of BDO Stoy Hayward LLP were appointed joint administrators of London & Limehouse Developments Ltd. on Feb. 3, 2009. The company can be reached through BDO Stoy Hayward LLP at: 55 Baker Street London W1U 7EU England GLOBE PUB: S&P Downgrades Rating on Class B Notes to 'BB+' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its ratings on the notes issued by Globe Pub Issuer PLC following its review of the transaction's performance and recent meeting with the management team. The rating actions follow Globe Tenanted Pub Company Ltd.'s (Globe Borrower's) weaker-than-expected results in the quarter that ended Nov. 29, 2008, after an already weak performance in previous quarters. It also reflects S&P's lowering of the business risk assessment and subsequent revised cash flow stresses under S&P's rating scenarios. In S&P's opinion, Globe Borrower's operating cash flow and profitability are likely to deteriorate further in the current difficult retail environment characterized by weaker consumer spending. Globe Borrower has been hit harder than its rated peers, mainly due to its weak food offering and a lower-quality estate. Drink sales declines in Globe Borrower pubs are running higher than the industry average, with a 15% decline in beer barrelage sold compared with a 9% industry average and well above those seen in other securitized transactions. In S&P's opinion, this is because Globe Borrower has not benefited from the drinks volumes brought in by diners. S&P does not foresee any improvement in Globe Borrower's operating environment in the short term. In S&P's opinion, the risks embedded in this transaction are no longer commensurate with an investment-grade rating. As a result of an EBITDA decline, the debt-service coverage ratio fell to 1.26x in the quarter ending November 2008—this was below the 1.35x trigger, leading to the requirement of an "independent consultant" to be appointed under the terms of the transaction. S&P also believes it is likely that in the next financial quarter Globe Borrower will breach its financial covenant, which, if not cured, would lead to a borrower event of default. As of Q2 2009, the key ratios remained onside. However, S&P has noticed that in particular the rolling two-quarter EBITDA ratio was precipitously close to breach, at 1.26x versus a covenant of 1.25x. S&P further notes that if the DSCR was calculated quarterly it would have been 1.20x for the last quarter. Given the present stressed operating environment, it is S&P's view that the operating performance in this transaction will continue to deteriorate in the short to medium term. As such, it is also S&P's belief that there is a high likelihood that this covenant will be breached in Q3 2009. It should, however, be noted that a borrower event of default is not the same as an issuer event of default. S&P's analysis already contemplates the noteholders' ability to indirectly take control of the securitized pubs and operate them through a replacement operator, notwithstanding the insolvency of the original borrower. As such, S&P's rating rates through insolvency of the borrower. If an unremedied breach persists, a borrower event of default is deemed to have occurred. In this case an administrative receiver is expected to be appointed at the borrower level to manage the business. In S&P's opinion, there are incentives for the administrative receiver to operate the securitized assets, despite the very weak performance. Globe Borrower's securitized estate is still cash-generative, having generated about GBP1 million of cash in the last quarter, helped by positive working-capital movements. Ratings List Globe Pub Issuer PLC GBP257 Million Fixed- and Floating-Rate Asset-Backed Notes Ratings Lowered and Removed from CreditWatch Negative Rating ------ Class To From ----- -- ---- A1[1] BB BBB+/Watch Neg B1[1] B BB+/Watch Neg [1] Subject to a step-up fee from September 2013 (for the class B1 notes) and September 2021 (for the class A1 notes). As part of Standard & Poor's analysis, the step-up fee was modeled fully subordinate to the payments on the class A1 and B1 notes and not rated. J BLACKBURN: In Administration; KPMG Appointed ---------------------------------------------- Paul Flint and Brian Green of KPMG's Restructuring practice were appointed as joint administrators to J Blackburn Ltd, a printing and direct mail business on February 16, 2009, and on February 18, 2009 sold part of the company to the management team. The Leeds based business, which trades as Blackburns, employed approximately 300 people across both divisions. The company, which has an annual turnover of GBP30 million, was making trading losses which resulted in cashflow problems and the appointment of administrators. The direct mail part of the business has been bought out of administration by the management team led by joint managing directors, Andrew Cowman and Nick Atkinson, in a deal that will protect 151 jobs. The administrators have had to make 114 redundancies in the printing operation however, and are trading it on a limited basis, with 33 employees, and are keen to talk to any party that may have an interest in the business and assets. Paul Flint, joint administrator and KPMG Restructuring director, said: "I am very pleased to have achieved a sale that preserves a good number of jobs in a difficult market while of course it is disappointing that some redundancies were unavoidable. This sale allows the management team to trade the direct mail part of the company, giving the business and its employees the prospect of future prosperity." MACK-LINE LTD: Appoints Joint Administrators from BDO ----------------------------------------------------- Simon Girling and Graham Randall of BDO Stoy Hayward LLP were appointed joint administrators of Mack-Line Ltd. on Feb. 3, 2009. The company can be reached through BDO Stoy Hayward LLP at: One Victoria Street Bristol BS1 6AA England MARDAYNE ESTATES: Names Joint Administrators from BDO ----------------------------------------------------- Dermot Justin Power and Patrick A. Lannagan of BDO Stoy Hayward LLP were appointed joint administrators of Mardayne Estates Ltd. on Feb. 6, 2009. The company can be reached through BDO Stoy Hayward LLP at: Commercial Buildings 11-15 Cross Street Manchester M2 1BD England STANTON MBS: Fitch Cuts Rating on EUR10 Mil. Notes to 'BB-' ----------------------------------------------------------- Fitch Ratings has downgraded four classes of Stanton MBS I plc's notes, and affirmed the class A1 notes. The agency has removed all five classes from Rating Watch Negative, and assigned a Stable Outlook to the notes as detailed below. -- EUR139.9 million class A1 (ISIN XS0202635040): affirmed at 'AAA'; removed from RWN; assigned a Stable Outlook -- EUR27.5 million class A2 (ISIN XS0202637418): downgraded to 'A' from 'AAA'; removed from RWN; assigned a Stable Outlook -- EUR15 million class B (ISIN XS0202637848): downgraded to 'BBB' from 'AA'; removed from RWN; assigned a Stable Outlook -- EUR12 million class C (ISIN XS0202638499): downgraded to 'BBB-' (BBB minus) from 'A'; removed from RWN; assigned a Stable Outlook -- EUR10 million class D (ISIN XS0202639208): downgraded to 'BB-' (BB minus) from 'BBB'; removed from RWN; assigned a Stable Outlook The downgrades reflect Fitch's view on the credit risk of the rated tranches following the release of the agency's revised Structured Finance CDO rating criteria on December 16, 2008, as well as credit deterioration to the collateral pool. Stanton MBS I is a securitization of European structured finance assets with a total note issuance of EUR297.3 million. The application of the new SF CDO rating criteria incorporates Fitch's view on industry and vintage concentration risks and the propensity for low recoveries upon default, particularly for thin tranches. While the class B, C and D overcollateralization tests were failing prior to the February 2009 payment date, the waterfall payments have resulted in the class B and C OC tests being cured and the class A1 notes consequently being de- leveraged, with principal outstanding declining to EUR139.9 million from EUR213.5 million. The downgrades of classes A2, B, C and D were all driven by Fitch's revised criteria. The affirmation of the class A1 notes was as a result of the aforementioned de-leveraging: at EUR139.9 million the A1 notes are significantly overcollateralized by the EUR 221.5 million of assets; furthermore breakeven analysis indicates that the notes could withstand the default of the 23 riskiest issuers. In conducting its analysis, Fitch made a three-notch downward adjustment for any names on RWN under the default analysis of its Portfolio Credit Model. On an adjusted basis approximately 78.7% of the assets are treated as sub-investment grade. The weighted average portfolio quality is 'BBB-'(BBB minus)/'BB+' and 3.4% of the portfolio is on RWN by rating driver. There are no defaulted assets currently, but one asset representing 1.6% of the portfolio is rated at 'CCC'. As per the trustee report dated January 28, 2009, the portfolio contains 76 assets from 65 obligors, with the largest obligor accounting for approximately 4.8% of the outstanding portfolio, and the three largest obligors accounting for 11.1% of the outstanding portfolio amount. The largest single asset class is RMBS with 63.5% of the portfolio volume. The two largest vintages are 2004 and 2006 making up 31.1% and 23.7% of the portfolio respectively, while the four largest country concentrations are the United Kingdom, the Netherlands, Italy and Germany making up 33.3%, 23.8%, 13.8% and 11.9% of the portfolio respectively. The portfolio is actively managed by Cambridge Place Investment Management LLP, a specialist investment manager, focused on asset- backed securities and related instruments. WARNER ESTATE: Calls In Rothschild to Advise on Debt Restructuring ------------------------------------------------------------------ Graham Ruddick at The Daily Telegraph reports that Warner Estate Holdings plc has called in Rothschild to consider a restructuring of its debts amid concerns that it could breach banking covenants. The update sent the company's shares down 3 - or 13pc - to 20.5p on Tuesday, Feb. 17, the report relates. Warner, as cited by the report, said Rothschild will "assist in the discussions with its lenders" and "advise the board on the most appropriate capital structure for the group". The company added "Discussions continue with each lender on a range of options to resolve valuation-related covenant issues and the board will provide further information on progress in due course." Commercial Property Values The Daily Telegraph recalls seven months ago the company was forced to renegotiate its banking covenants, blaming the rapid fall in commercial property values. In a Feb. 17 release, Warner said that since Sept. 30, and in line with the overall trend in the UK property investment market, it has continued to experience further declines in the value of its property portfolio. The company noted this has further increased the pressure on its valuation related banking covenants. According to the company, the significant fall in interest rates has had a material impact on the interest rate hedging of its facilities. The company said these hedges, when "marked to market" as at Dec. 31, 2008, were GBP20.8 million "out of the money" as against the Sept. 30 net liability of GBP2 million. The company disclosed GBP75 million of hedging, representing GBP14.8 million of the GB20.8 million liability, has been cancelled for just under GBP12 million, to be settled on May 29, 2009. Falling interest rates, combined with the cancellation of these hedges, have reduced its average cost of debt to 3.94% (September 2008: 4.71%), the company said. Net Debt According to the report, the company reduced its debt from GBP349 million to GBP323 million in the final quarter of 2008 through property disposals. The company's largest lenders are Royal Bank of Scotland and HBOS, the report states. About Warner Estate Headquartered in London, Warner Estate Holdings plc – http://www.warnerestate.co.uk–- is engaged in property investment together with the management of properties in the United Kingdom. XSMG LTD: Taps Joint Administrators from KPMG --------------------------------------------- Myles Antony Halley and David John Standish of KPMG LLP were appointed joint administrators of XSMG Ltd. on Feb. 9, 2009. The company can be reached at: XSMG Ltd. Navigation House Berthon Shipyard Bath Road Lymington Hants SO41 3YL England ZAVVI UK: Ceases Trading; 446 Jobs Axed ---------------------------------------- The joint administrators from Ernst & Young said that a further 360 zavvi jobs are expected to be saved following sale agreements reached with HMV Music Limited and Head Entertainment LLP, with effect from 10pm on February 17, 2009. Tom Jack, joint administrator of zavvi UK, commented "This is a fantastic result for the employees and customers of the stores concerned." "Another five stores have been sold to HMV, meaning 111 employees will transfer across to HMV immediately and over the course of the next two weeks these zavvi stores will be rebranded as HMV. In total, HMV has purchased 19 stores in the UK and Ireland securing jobs for 380 employees." Mr. Jack added "Five stores (160 employees) have also been sold to Head Entertainment LLP, with a further three stores (89 employees) expected to complete by February 20, 2009. This would ensure the transfer in total of another 249 jobs in a deal that also includes the sale of all remaining zavvi Limited stock." Head, a business led by Les Whitfield and former zavvi Chief Executive Simon Douglas, is expected to continue to trade the stores using the stock purchased in this deal and from other sources going forward. The sale of all remaining stock means that zavvi trading will now cease, resulting in the closure of the remaining zavvi stores by February 20, 2009 and the loss of 446 jobs. Mr. Jack said "I would like to thank all of zavvi's staff and customers for their commitment and continued support for the business throughout the Administration. While it has not been possible to secure a sale of the business as a going concern, we are delighted to have been able to secure continued employment for 629 zavvi employees." The joint administrators were advised by DLA Piper, Manchester. Tom Jack, Simon Allport and Alan Hudson of Ernst & Young LLP were appointed joint administrators of zavvi UK on December 24, 2008, with the exception of zavvi Entertainment Group Limited which entered administration on January 13, 2009. On December 30, 2008, David Hughes of Ernst & Young was appointed provisional liquidator of Zavvi Ireland. * UK: Business Failures Up 30% in 2008, Experian Says ----------------------------------------------------- Experian, the global information services company, published its insolvency data for 2008 on February 10. Its analysis shows that there were 23,879 business failures over the 12 months to the end of December 2008, representing a 30% increase on 2007. In terms of cities, London and Birmingham were the UK's insolvency hotspots in the final quarter of the year with 1,221 and 381 businesses respectively failing in the two cities. The latest Insolvency Report and Distress Index from Experian's Business Information division highlights that from October to the end of December 2008, 7,238 businesses failed. This represents a 52% increase compared to Q4 2007, which saw 4,751 failures. Tony Pullen, Managing Director of Experian's Business Information division, commented: "Relying on sparse financial information and out of date accounts to make business-critical decisions could have devastating consequences for organizations. More than 65 firms failed every day in 2008 and this underlines why it is vital that organizations use real-time data insight to determine whether or not to do business with a company. "We recommend that companies use this valuable information to their advantage as an early warning system to alert them to customers or suppliers heading into difficulties. Warning signs can include a major reduction in share capital, late filing of accounts through to adverse notices, such as County Court Judgements. We also advise clients to use payment performance data to identify companies' payment patterns and worsening payment trends, which are strong indicators of reduced cashflow, which can then lead to possible insolvency. This level of insight will not only indicate whether a customer is likely to pay, but also when – a powerful tool in today's climate." Sector Analysis Of the 34 sectors monitored, 25 saw increases in insolvencies in 2008, compared to just nine over the course of 2007. Only five sectors – Oil, Plastics & Rubber, Printing Paper & Packaging, Pharmaceuticals and Insurance – did not see an increase in the final quarter of the year compared to the same period in 2007. The Property sector was significantly impacted in 2008. It saw the highest increase in the number of insolvencies over the year – an additional 1,233 on top of 2007's figure bringing the year's total to 1,935 (an increase of 176%). Failures in the Business Services sector increased by 1,156 during 2008 to reach 5,412 – representing an increase of 27%. The third highest increase in failures came in the Building & Construction sector, with 2,391 firms failing, up 28% on 2007's figure. Regional Overview All 14 regions monitored by Experian saw an increase in insolvencies in Q4 2008 compared to Q4 2007 and also during 2008 versus 2007. While the South East saw the highest number of failures in 2008, with 4,990 firms going under (up by 794 or 19%), it was the North West that saw the biggest leap in failures. Almost 1,000 more businesses failed in the region in 2008 compared to 2007 - up by 41% to 3,437 failures from 2,441. Scotland experienced both the lowest percentage and actual increase in insolvencies in 2008 compared to 2007. Over the year, there were 983 corporate failures, 101 more than in 2007 and an increase of 12%. The UK's major cities – London, Birmingham, Manchester and Leeds - led the rankings for the number of insolvencies in the final quarter of the year. Only three cities – Liverpool, Derby and Oxford – experienced a decline in the number of business failures in Q4 2008 compared to Q4 2007. Types of Insolvency 2008 saw a 143% increase in receiverships compared to the previous year, a clear sign of the caution in the banking sector and the fact that they are quicker to call in debt. Voluntary liquidations are still the most common type of business failure. In 2008 some 11,255 businesses were put into liquidation by their shareholders, representing an increase of 24%. * UK: R3 Sees 11 More High Street Brand Insolvencies in 2009 ------------------------------------------------------------ R3, the insolvency trade body, said insolvency practitioners in England and Wales predict that even after the recent flurry of high street insolvencies, including household names like Woolworths and Whittards, there will be eleven more to come in the next three months alone. The R3 survey of its members, who include 97% of all licensed insolvency practitioners in the UK, was conducted in January by polling company ComRes. The results show that the high street brand insolvencies are part of the growing number of corporate insolvencies which practitioners expect to see peak at 19,796 in 2009. This is a 26% increase on predictions insolvency practitioners made for 2008. Nick O'Reilly, R3 President, explained: "Our survey shows that UK insolvency practitioners believe that we have not yet seen the worst. An overwhelming majority of insolvency practitioners believe that this downturn will be deeper than the 1990s recession; over two thirds think this one will last longer, and three quarters think more businesses will close this time around." "There will always be a number of businesses which are not viable for reasons unrelated to the economy. But the number one reason that insolvency practitioners gave for the increase in corporate insolvencies was the economic downturn, followed by a change in banks' lending practices. This shows we are set to lose businesses which otherwise might not have been vulnerable; with every business loss there is a loss of the "core" of the business, not just physical assets but intellectual property as well. Rebuilding these businesses could take a very long time." However it is not all bad news. The respondents to the survey believe that the numbers of corporate insolvencies will peak in 2009 with a slightly lower total of 19,202 insolvencies predicted for 2010. Over two thirds of respondents believe that the economy will recover in 2010-2011. * EC Assesses Stability & Convergence Programs of 6 Member States ----------------------------------------------------------------- The European Commission on Wednesday, February 18, examined the updated Stability and Convergence Programmes (SCPs) of Ireland, Greece, Spain, France, Latvia and Malta. Against the background of the ongoing sharp economic downturn, budgetary positions are estimated to have deteriorated markedly in 2008 and to continue deteriorating in 2009 in Ireland, Spain, France and Latvia. In Spain and France this also reflects significant economic stimulus packages adopted in line with the European Recovery Plan that called for timely, targeted and temporary fiscal measures in Member States with fiscal room for maneuver. Ireland and Malta have taken a number of measures to support the economy as part of a broader consolidation effort, which seems adequate in light of the macro-fiscal and competitiveness challenges in these countries. Greece has not adopted fiscal stimulus measures, an adequate posture in view of still positive growth and its high debt and large economic imbalances. Latvia also refrained from adopting short-term fiscal stimulus measures given the need to re- balance its economy and restore investor confidence. As all six countries had a budget deficit of more than 3% in 2008, the Commission also adopted reports under the corrective arm of the Stability and Growth Pact. In accordance with Article 104.3 of the Treaty, the reports analyse the reasons for the breach of the 3% reference value, taking due regard of the economic background and other relevant factors. The Commission examined another 11 SCPs Wednesday, but in all cases the budgetary position remains within the limits of the Pact. "As a result of the sharp global financial and economic crisis EU public finances are under stress. The crisis brought about a decline in tax revenues and a rise in expenditure (e.g. in unemployment benefits). Public finances deteriorated further as many Member States adopted fiscal measures to support demand and job creation this year, as recommended by the Commission and the Council in the European Recovery Plan. The application of the revised Stability and Growth Pact will help return to sound and sustainable public finances once the recession is over and growth resumes. Our analysis shows that fiscal stimulus measures were adopted across the EU mostly by countries with a budgetary margin of maneuver and/or with low debt or external imbalances. The measures are also generally timely, targeted and temporary. However for the Member States where the general government deficit climbed above the 3% reference value in 2008, the Commission today [Wednesday] adopted excessive deficit reports. Exceptional circumstances are considered where appropriate. In all other cases the Commission will use the full flexibility imbedded in the revised Stability and Growth Pact when considering the next steps under the excessive deficit procedure in the weeks to come", said Economic and Monetary Affairs Commissioner Joaquín Almunia. Ireland After more than a decade of strong economic growth, Ireland is now going through a severe recession. The downturn was caused by the financial crisis, the sharp correction in the housing market and the recession in Ireland's main trading partners, the US and the UK. These developments have led to a very sharp deterioration of Ireland's public finances, with the government balance going from a small surplus in 2007 to an estimated deficit of 6.3% of GDP in 2008 and widening to 9.5% in 2009. The Irish Stability Programme envisages a progressive reduction of the deficit to below the 3% of GDP reference value in 2013, assuming a recovery of economic activity after 2010. The measures adopted by the government can be regarded as welcome and adequate given the high deficit and a sharply increasing debt position (to above the 60% reference value from 2010) and are in line with the European Recovery Plan. But the growth scenario is somewhat optimistic and the consolidation measures presently lack detail. Further risks stem from the measures in place to support the financial sector, in particular bank guarantees and, concerning the debt ratio, the possibility of further capital injections or nationalizations of banks. In view of the Commission assessment, Ireland is invited to (i) limit the widening of the deficit in 2009 and specify and rigorously implement a substantial broad-based fiscal consolidation program for 2010 and beyond; (ii) in order to limit risks to the adjustment, strengthen the binding nature of the medium-term budgetary framework as well as closely monitor adherence to the budgetary targets throughout the year; (iii) in view of the significant projected increase in age-related expenditure, and also of the increase in debt albeit from a low level expected over the program period, improve the long-term sustainability of public finances by implementing further pension reform measures in addition to pursuing fiscal consolidation. As the deficit in Ireland reached 6.3% in 2008, thus exceeding the 3% reference value, the Commission also adopted a report under 104.3 of the EU Treaty which lays down an excessive deficit procedure (EDP). This is because while the excess over the reference value can be qualified as exceptional, it is not close to the reference value and it is not temporary. At 40.6% of GDP in 2008, general government gross debt remains below the 60% of GDP reference value but is expected to exceed that value from 2010. Greece Greece has experienced strong economic growth at 4% per year over the current decade. In 2008 its GDP grew well above the euro area average and in 2009 it was still seen in positive territory in the Commission's January forecasts. However, domestic and external macroeconomic imbalances have widened considerably, which has led to very high public and foreign debt. The ongoing global economic and financial crisis is taking its toll on the economy and putting pressure on the debt burden. The budget deficit exceeded 3% in 2007 and 2008 and, according to the Greek Stability Programme, it will reach 3.7% in 2009 before falling to 3.2% of GDP in 2010 and 2.6% by 2011. Greece has no room for fiscal impulse given its very high debt and current account imbalance. It has not adopted a stimulus package. The consolidation strategy in 2010 and 2011, outlined in the Programme, relies on expenditure restraint and to a lesser extent on increasing tax revenues, but the plans currently lack in detail on concrete measures. In view of the Commission assessment, Greece is invited to: (i) strengthen substantially the fiscal consolidation path already in 2009, especially if economic conditions turn out better than expected in the program, through well-specified permanent measures curbing current expenditure, including a prudent public sector wage policy, thereby contributing to necessary reduction in the debt-to-GDP ratio; (ii) ensure that fiscal consolidation measures are also geared towards enhancing the quality of public finances, within the framework of a comprehensive reform program, in the light of the necessary adjustment of the economy, with a view to recovering competitiveness losses and addressing the existing external imbalances; (iii) implement swiftly the policies to reform the tax administration and improve the functioning of the budgetary process by increasing its transparency, spelling out the budgetary strategy within a longer time perspective and set up mechanisms to monitor, control and improve the efficiency of primary current expenditure; (iv) in view of the mounting level of debt and the projected increase in age-related expenditure, improve the long-term sustainability of public finances, by continuing the on-going reforms in the healthcare and pension system. The deficit exceeded 3% in 2007 and the general government debt stood at 94.8% of GDP that year, according to the data notified by the Greek authorities in October 2008 and validated by Eurostat, confirmed also in the January 2009 update of the Stability Programme. Therefore, the Commission adopted a report under Article 104.3 of the Treaty, which marks the start of the EDP. According to the Commission's January forecast, the deficit net of one-offs attained 3.6% of GDP in 2008 (or 3.4% of GDP including one-offs). The excess over the 3% reference value is not temporary. The excess over the 3% reference value is also not exceptional, as it does not result from a severe economic downturn in the sense of the Treaty and the Stability and Growth Pact. Spain Spain is undergoing a sharp contraction of economic activity as a result of the global economic and financial crisis and a severe correction in the housing sector, both taking their toll on public finances and on employment. Since the first half of 2008, the Spanish authorities have also adopted various discretionary measures to stimulate economic activity, in line with the EU Recovery Plan, including tax cuts and investment projects, amounting to 2 1/4% of GDP in 2009, as well as a series of structural reforms. In 2008, for the first time in several years, Spain is estimated by the Commission and in its Stability Programme sent mid January to have recorded a budget deficit estimated at 3.4% of GDP. The program puts the figure this year at -5.8% before a gradual fall to below 4% in 2011. However, the favorable macroeconomic assumptions may imply a lower contribution of economic growth to fiscal consolidation than envisaged and the adjustment path is not fully backed up with concrete measures, except for the discontinuation of the 2009 stimulus package. In this context, a careful assessment of the budgetary impact of discretionary measures will be crucial to ensure the improvement of the medium- term budgetary position, as well as of the long-term sustainability of public finances. Public debt, which had been reduced to 36.2% of GDP in 2007, is expected to grow to above 50% in 2010. Based on this evaluation, the Commission proposes three policy invitations for Spain, which focus on: (i) Implement the measures in line with the EERP as planned, while avoiding a further deterioration of public finances in 2009, and carry out with determination the planned structural adjustment in 2010 and beyond, backing it up with measures, and strengthening the pace of budgetary consolidation if cyclical conditions are better than projected, (ii) In view of the ongoing fiscal deterioration and of the projected impact of ageing on government expenditure, iImprove the long-term sustainability of public finances by implementing the adopted measures aimed at curbing the increase in age-related expenditure; (iii) Ensure that fiscal consolidation measures are also geared towards enhancing the quality of the public finances as planned in the light of the needed adjustment of the economy to address existing imbalances. In parallel with its assessment of the program, the Commission is adopting a report under Article 104.3 of the Treaty – on the basis of the breach of the 3% of GDP reference value in 2008. While the deficit remained close to the 3% reference value, the deficit cannot be said to be the result of a severe economic downturn as GDP growth was still positive (over 1%). The excess over the 3% is also not temporary as, according to the program, it will remain above that level until 2011. France The global financial and economic crisis has also significantly reduced economic growth in France in 2008 and the economy is set to contract by a level close to the euro area average in 2009. In response, the French government unveiled in December a recovery plan amounting to 1.3% of GDP, which will increase the deficit by 0.8% of GDP in 2009 and 0.1% of GDP in 2010. The plan can be considered as targeted, timely and temporary and in line with the EU Recovery Plan. The French budget deficit is estimated to have reached 3.2% in 2008, according to recent government information sent to the Commission and to increase to 4.4% in 2009 before falling to below 3% in 2011, according to the new projections. The higher figures rely on the same macroeconomic scenario as notified at the end of December. The program foresees a consolidation of public finances through a restrictive stance, especially in 2010. Risks are linked in particular to the markedly favorable macroeconomic assumptions and the current uncertain environment, but they also reflect the high deficits recorded when economic conditions were more favorable. In view of the above assessment, France is invited to (i) implement in 2009 the measures in line with the EU Recovery Plan as planned while maintaining the objective of avoiding a further deterioration of public finances; (ii) implement the planned structural adjustment in 2010 and strengthen the pace of budgetary consolidation once the economy recovers, in order to ensure that the deficit is brought rapidly below the reference value thereby setting the debt to GDP ratio on a declining path; (iii) further improve expenditure rules by making them binding to all government tiers, reinforcing their monitoring and enforcement mechanisms and taking additional measures in the context of the General Review of Public Policies. Implement the structural reform program in particular as regards the sustainability of the pension system. The Commission has also adopted a report in application of the Stability and Growth Pact for France. This is because, although the deficit in 2008 is likely to have been close to the 3% reference value, it does not result from exceptional circumstances in the sense of the Treaty and the Stability and Growth Pact, and is not temporary as it is expected to remain above 3% in the following two years. Latvia Latvia is currently in a severe economic downturn following years of above-potential economic growth. The global financial crisis has amplified the shock of the reversal of Latvia's own lending and house price boom by tightening credit availability and conditions, which in turn reinforced the steep decline of domestic demand. The fiscal targets presented in the Convergence Programme are in line with those in the country's economic stabilization plan, adopted in December, which foresees tax increases and expenditure cuts and is supported by international financial assistance (EUR7.5 billion in total of which EUR3.1 billion from the EU). Having exceeded 3% of GDP in 2008, the program targets general government deficits of around 5% in 2009 and 2010, before falling below 3% in 2011. In view of the above assessment, the commitments made in the framework of international financial assistance and also given the need to ensure sustainable convergence and a smooth participation in ERM II, Latvia is invited to: (i) submit to Parliament by the end of March 2009 the details of the supplementary budget adopted on December 12, 2008; take further measures if needed to achieve the targeted general government deficit in 2009 and continue the targeted fiscal consolidation thereafter; (ii) rigorously implement public sector nominal wage reductions to facilitate the alignment of whole-economy wages with productivity, thereby improving cost competitiveness; (iii) strengthen fiscal governance and transparency, by improving the medium-term budgetary framework and reinforcing spending controls, and strengthen financial market regulation and supervision; (iv) strengthen the supply side of the economy by wide-ranging structural reforms and by making efficient use of available EU structural funds. In parallel with its assessment of the program, the Commission is adopting a report under Article 104.3 of the Treaty. While the deficit is expected to have been close to the reference value in 2008, the excess over the reference value cannot be considered temporary as it would widen in 2009 and remain well above 3% of GDP in 2010. The general government debt, while still below the 60% reference value, is projected on a rapidly growing trend, increasing fourfold from less than 10% in 2007 to 45.4% of GDP in 2010. Malta Against a backdrop of weakening economic growth, the budget deficit is estimated to have reached 3.3% in 2008, according to the Stability Programme submitted early December (3.5% according to the Commission's January forecast). But the program and the Commission also envisage a return to budgetary consolidation from 2009 onwards. The measures adopted by the government in response to the downturn are in line with the EU Recovery Plan and can be regarded as adequate given the deficit and debt ratios as well as the competitiveness challenge. However, there are risks to the achievement of the deficit and debt targets over the program period stemming from the favorable macroeconomic scenario, the reliance on volatile revenue, the possibility of expenditure slippages and the lack of information on the consolidation measures in the outer years. The debt ratio is targeted to fall gradually over the program period to below the 60% but is subject to the risks mentioned above. In view of the Commission assessment, Malta is invited to (i) resume fiscal consolidation as envisaged in the program and ensure that the general government debt ratio is reduced accordingly, by spelling out the measures underlying the planned consolidation in the outer years; (ii) strengthen the medium-term budgetary framework and enhance the efficiency and effectiveness of public spending, including by accelerating the design and implementation of a comprehensive healthcare reform. As the 2008 deficit is above the reference value, the Commission also adopted a report under the excessive deficit procedure. It concludes that, although the 2008 deficit remains close to the reference value and the planned excess can be considered temporary, the excess cannot be qualified as exceptional within the meaning of the Treaty and the Stability and Growth Pact as it reflects specific expenditure decisions rather than the impact of the economic downturn. However, on balance the examination of all the relevant factors seems positive. * EC Assesses Stability & Convergence Programs of 11 Member States ------------------------------------------------------------------ The European Commission on Wednesday, February 18, examined the updated Stability and Convergence Programmes of 17 EU countries including Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Hungary, the Netherlands, Poland, Sweden, Finland and the United Kingdom. These assessments are seen against the background of a sharp economic slowdown. A majority of the countries concerned (the Czech Republic, Denmark, Germany, the Netherlands, Poland, Sweden, Finland and the United Kingdom) have adopted fiscal stimulus measures in 2009 to cope with the economic crisis, in line with the Economic Recovery Plan proposed by the Commission and endorsed by EU leaders. In the UK, the expansionary measures coupled with the adverse impact of the downturn have significantly weakened the country's budgetary position. Hungary has made considerable progress to put its public finances on a sounder footing and needs to sustain this effort to secure investor confidence. Similarly, in Bulgaria and Estonia, the fiscal policy stance is appropriately geared towards diminishing macro-economic imbalances. "We are going through a very serious crisis that is taking its toll on public finances. Fortunately, many countries have entered the crisis with public finances in a solid position, allowing them to the respond to the European Council's call for stimulus measures in 2009. Implemented swiftly and effectively, these measures should help to create, together with the bank rescue plans and the significant easing of monetary policy, the conditions for a gradual recovery in the second half of the year. If in 2010, as we believe, economic activity gathers momentum, fiscal policy needs to revert to a consolidation path. This is also important for Member States which are in a relatively favorable position in order to avoid a permanent deterioration in the sustainability of their public finances. In this context it is important that the Stability and Growth Pact remains the framework within which the Commission and the Council advices Member States on their conduct of fiscal policy ", said Economic and Monetary Affairs Commissioner Joaquín Almunia . Bulgaria The program's medium-term budgetary strategy aims at maintaining a sound budgetary position reflected in the high targeted general government surpluses of 3% of GDP throughout the program period (2008-2001). GDP growth has been high in Bulgaria at over 6% per year since 2003, accompanied by a widening external deficit and high inflation. As the impact of the global economic slowdown and financial crisis unfolds, Bulgaria faces the challenge of sustaining growth while addressing the existing macroeconomic imbalances through maintaining tight fiscal and income policies. Bulgaria's fiscal policy is geared towards maintaining investor confidence and preserving macro-economic stability. The government's focus on structural measures to strengthen the economy's resilience also represents a timely and adequate response to the current economic outlook. In view of the above assessment and also given the need to ensure sustainable convergence, Bulgaria is invited to: (i) continue maintaining a sound fiscal position by restraining expenditure growth, with a view to help contain existing external imbalances and counteract possible revenue shortfalls; (ii) contain public sector wage growth in order to contribute to overall wage moderation and improve competitiveness; and (iii) further strengthen the efficiency of public spending, in particular through full implementation of program budgeting, reinforced administrative capacity and reforming the areas of labor and product markets, education and healthcare, in order to increase productivity and reduce the external deficit. The Czech Republic Starting from relatively low government deficit and debt levels, the program targets a general government deficit of 1.6% and 1.5% of GDP in 2009 and 2010 respectively, based on favorable growth assumptions. Against the background of the recent improvement in public finances, the Czech Republic adopted a sizeable fiscal stimulus package. This package is in line with the EU Recovery Plan, in being timely and well-target to sectors of the economy likely to be most severely affected by the slowdown. It will be important to reverse them once economic conditions improve. While pension and health care reforms have been introduced that will reduce expenditure, concerns remain regarding long term fiscal sustainability due to a rapidly ageing population. In view of the Commission assessment, and also given the need to ensure sustainable convergence, the Czech Republic is invited to: (i) implement the measures in line with the EERP as planned.; (ii) reverse the adverse budgetary impact of the fiscal stimulus once the economy recovers and back-up the budgetary strategy with specific measures for reducing expenditure in 2010-2011 and (iii) continue with the necessary pension and health care reforms, given the projected increase in age-related expenditures, in order to improve the long-term sustainability of public finances. Denmark After a period of strong economic activity and sizaable budgetary surpluses, Denmark's economic slowdown in 2008 was rapid and pronounced, as the cyclical downturn has been exacerbated by the global economic and financial crisis. At the current juncture and given the comfortable fiscal position, the overall fiscal stance is considered adequate in view of the discretionary fiscal expansion in 2009 and the relatively strong automatic stabilizers at play. The government debt has been nearly halved in the present decade to a low of 26.3% of GDP in 2007, thanks to high budgetary surpluses benefiting from a strong fiscal framework. In view of the Commission assessment, Denmark is invited to (i) implement the planned measures in line with the European Recovery Plan and (ii) identify the required structural reform measures to achieve its budgetary targets in the outer years of the program. Finland After GDP growth above potential in 2006 and 2007 (4.9% and 4.2% respectively), the Finnish economy decelerated rapidly in 2008 and is expected to be negative this year. The Finnish Programme submitted mid December still envisaged GDP growth of 0.6 % in 2009, but this appears optimistic given the deteriorated outlook in the past months. The fundamentals of the Finnish economy are sound, though, with a significant surplus in both the current account and the public finances. Thanks to a prudent fiscal policy in the good times, Finland is expected to continue recording surpluses in general government finances during the program period although they could turn less important than projected. The program envisages a large fiscal stimulus over 2009 and 2010, complemented by new measures announced in January. This appears appropriate, provided that action will also be taken to ensure fiscal retrenchment once the economic crisis abates in order to preserve the long term sustainability of the public finances. The public debt is expected to increase somewhat from an estimated figure of less than 33% in 2008. In view of the Commission assessment, Finland is invited to: (i) implement the measures in line with the Recovery Plan and; (ii) reverse the adverse budgetary impact of the fiscal stimulus measures once the economy recovers in order to preserve the long- term sustainability of public finances. Germany After successfully reaching a close-to-balance budget in 2007 and 2008, Germany faces a deterioration in its public finances due to overall worsened economic situation and as a result of the steps undertaken to counter the sharp slowdown caused by the global economic and financial crisis. The Stability Programme completed at the end of January, foresees a budget deficit of 3% of GDP in 2009 and 4% of GDP in 2010. Budgetary consolidation would be resumed after 2010 with the deficit falling to 2½% in 2012. Given the sharp deterioration in the global economy and distress in the financial sector, the budgetary strategy is subject to downside risks. Using the room of maneuver afforded by the budgetary consolidation during the good times, Germany adopted a sizeable fiscal stimulus package between the autumn 2008 and January 2009 in line with the EU Recovery Plan. The stimulus focuses on income support, public and private investment, access to financing, avoiding lay-offs, improving qualifications and providing measures that support the automotive industry. It is a timely and targeted response to the economic crisis, commensurate with the scale of the downturn. But it is also important to ensure a return to a credible fiscal consolidation path once the economy recovers. In this sense, the envisaged new constitutional rule limiting federal government structural deficits to 0.35% of GDP and the debt repayment schedule are important steps. Given increasing public debt, recent ad hoc changes to the pension adjustment formula and uncertainty as to the impact of the health-care reform, preserving the achievements made to improve long-term sustainability is critical. Therefore, Germany is invited to (i) implement the measures in line with the Recovery Plan as planned and reverse the budgetary impact of the fiscal stimulus measures in order to support budgetary consolidation once the economy recovers; (ii) strengthen the institutional fiscal framework by implementing the new budgetary rule as currently envisaged in order to underpin the necessary consolidation course after 2010; (iii) give renewed attention to measures strengthening the long-term sustainability of public finances and ensure that the deviation from the pension adjustment formula in 2008 is reversed as envisaged. Estonia After many years of strong growth, Estonia is experiencing a severe downturn. The global financial crisis and weakening external demand have added to the reversal of the cycle and speeded up the contraction of the economy. While external and internal imbalances are now clearly subsiding, the loss of cost competitiveness accumulated over the years of wage growth well in excess of productivity growth hinders an orderly economic adjustment. Following the updated Convergence Programme's submission in early December, more recently-announced measures aim at keeping the general government deficit below 3% of GDP. The expenditure cuts, which include a reduction of the public sector wage bill, are intended to support the adjustment process and strengthen the competitiveness of the economy. This is a welcome development that anticipates the policy invitations put forward by the Commission. Recent modernization of the labor law is also a timely step to improve the responsiveness of labor market. The Estonian authorities should now ensure that these measures are implemented. In view of the Commission assessment and also given the need to ensure sustainable convergence and a smooth participation in ERM II, Estonia is invited to: (i) strengthen the consolidation of public finances in the short term to keep the general government deficit below 3% of GDP and take necessary measures to underpin the consolidation in the medium term; (ii) implement prudent public sector wage policies to support the adjustment of the economy and to strengthen competitiveness; (iii) reinforce the medium-term budgetary framework, particularly by improving expenditure planning and efficiency. Hungary In spite of distinct improvements in its high imbalances, including the reduction in its budget deficit from 9.3% in 2006 to below 3½% in 2008, Hungary has been particularly exposed to the financial crisis due to still high levels of government and external debt. Thus, to restore investor confidence Hungary adopted a policy of further fiscal adjustment and tighter deficit targets. The updated Convergence Programme submitted in December is based on the economic policy program adopted by the government in response to the financial crisis and supported by international financial assistance, including a EUR6.5 billion loan from the European Union. The program foresees a continuation of the front-loaded budgetary consolidation strategy, with another important reduction in 2009 to 2.6% of GDP. Thereafter, it plans a more moderate progress towards a deficit of 2.2% in 2011. In view of the recent substantially deteriorated macroeconomic outlook and the related budgetary risks, the government adopted on February 15 an additional corrective package of 0.7% of GDP and slightly revised its 2009 deficit target upwards. The sustainability of public finances hinges on the continuation of structural reforms, as recently announced, to the extent that they increase long-term growth, help meet budgetary targets, and reduce the country's vulnerabilities. Given this assessment, Hungary is invited, (i) in view of the risks, maintain adequate buffers, take the necessary measures to keep the budget deficit below 3% of GDP and ensure that adequate progress in budgetary consolidation is made, thereby setting the debt-to-GDP ratio on a declining path towards the 60% of GDP threshold. (ii) ensure full implementation of the fiscal responsibility law and continue the expenditure moderation through additional structural reforms and strengthen financial market regulation and supervision. Finally, (iii) Hungary is invited to further improve the long-term sustainability of public finances namely through a continuation of the reforms in the pension system. The Netherlands Economic activity is expected to decrease sharply in 2009, as the Netherlands is set to be severely hit by the sharp fall in world trade and the financial crisis. The Stability Programme submitted in November and updated on December 18 aimed at achieving and maintaining stable budgetary surplus between 2008 and 2011, but this scenario is subject to risks linked to the evolution of economic growth and gas prices as well as the risks associated with the sizeable guarantees given to the financial sector. However, and despite the increase in the public debt to 57% of GDP at the end of 2008 (due to the rescue plans to the financial sector), the main challenges lie in addressing the low confidence in the financial sector and supporting investment. The Dutch government adopted two support packages, in November 2008 and January 2009, aimed at fostering private investment, protecting employment and improving credit supply. The measures are in line with the European Recovery Plan (timely, temporary and targeted), but their budgetary impact is rather limited. In view of this assessment, the Netherlands is invited to implement measures in line with the European Recovery Plan. Poland Poland's strong GDP growth is expected to slow markedly in 2009 mainly due to the impact of the global financial crisis, through the deterioration in global trade flows, the slowdown in FDI activity and the limited availability of external financing. The updated Convergence Programme sent at the end of December targets a general government deficit of 2½% of GDP in 2009, based on rather favorable growth assumptions. Further ahead, the program targets a budget deficit of 2.3% of GDP in 2010 based on expenditure restraint about which there is presently little information. Poland is planning adequate fiscal stimulus measures, some of which are not temporary, which will stimulate both aggregate demand in the short term and strengthen the supply side of the Polish economy in a longer term. In line with the European Recovery Plan, the fiscal stimulus measures adopted by Poland mostly contemplate increased public investment in infrastructure as well as some cuts in income taxes which reduce the tax wedge. In view of the Commission assessment and also given the need to ensure sustainable convergence, Poland is invited to: (i) implement the stimulus measures in line with the Recovery Plan as planned, while ensuring that the deficit remains below 3% of GDP in 2009; (ii) back up the budgetary strategy with specific deficit-reducing measures for 2010 and 2011; (iii) reinforce the budgetary framework through better control over expenditure, including the swift implementation of the amended public finance act and performance budgeting. Sweden After a prolonged period of relatively strong economic growth, Sweden is experiencing a sharp economic slowdown, which will negatively affect its budget balance this year. However, the medium-term budgetary position of Sweden is sound. Large surpluses in good times have created space to allow fiscal policy to play an active role in the current downturn, not only by boosting demand in the short term but also by strengthening the economy's long-term growth potential. The fiscal stance has appropriately become expansionary in 2009. However, there are short-term risks to the fiscal balance, and there is a need to strengthen the fiscal framework to ensure that the government balance improves once the economy picks up again. In view of the Commission assessment, Sweden is invited to (i) implement the measures in response to the EERP as planned; (ii) reverse the adverse budgetary impact of the fiscal stimulus measures once the economy recovers. The United Kingdom The United Kingdom's convergence program update, submitted on December 18, confirms a rapid deterioration in the UK's budgetary position that has considerably strained the sustainability of its public finances. The probably significantly weaker-than-envisaged outlook in the near term also entails the risk of higher government deficits throughout the program period. Following the rapid worsening in the macroeconomic situation, the government deficit is estimated in the program at 5 1/2% of GDP in 2008/09 and is forecast to peak at 8.2% in 2009/10. The budgetary projections include the cost of the fiscal stimulus package announced in November 2008. As recommended in the EU Recovery Plan, the stimulus package is temporary and timely, with measures targeted towards supporting domestic demand in 2009. However, taking into account the probability of a worse-than-expected deterioration in the budgetary position in the near term and the heightened risks to fiscal sustainability, there is need for a more ambitious consolidation effort in the medium term. After the expansionary fiscal measures in 2009/10, the UK authorities plan some consolidation from 2010/11 onwards, but there are risks to the achievement of this consolidation and the deficit in 2013/14 would still be above 3% of GDP. Improvements would depend on a significant economic recovery as well as the achievement of spending targets. The debt ratio, which was close to 40% of GDP in 2007/08, is now expected to rise to almost 70% of GDP by the end of the program period. In view of the Commission assessment, the United Kingdom is invited to (i) proceed in financial year 2009/10 with the stimulus measures consistent with the European Recovery Plan while avoiding any further deterioration of public finances; (ii) strengthen the pace of budgetary consolidation from 2010/11 onwards to ensure a rapid correction of the excessive deficit; (iii) define a fiscal framework consistent with an improvement of the long-term sustainability of its public finances. * BOOK REVIEW: Corporate Recovery - Managing Cos. in Distress ------------------------------------------------------------- Authors: Stuart Slatter and David Lovett Publisher: Beard Books Softcover: 352 pages List Price: US$34.95 Review by Henry Berry According to the authors, "turnaround management is everyday management." There are no miraculous remedies for bringing a company out of its troubles; no formulas to apply that will guarantee recovery. Management has to be alert and flexible to adapt to ever-changing business conditions both outside and within a company. Although turnaround management (or "crisis management" as the authors also call it) is often regarded as a specialized type of management or a gifted set of management skills, Slatter and Lovett argue that any good manager should have the skills to be able to move his or her company toward recovery. Managers often fail because they do not recognize or acknowledge the warning signs of a crisis, not because they lacked the relevant management skills. Corporate Recovery does not teach managers how to become "crisis managers." While the book does provide guidance on what management skills are required if a company slips into a crisis, for the most part the authors take a broader view. Crisis management involves applying traditional management techniques in an environment where the patient is seriously ill, both cash and time are in short supply, and rapid recovery is required. The authors suggest that these same skills are necessary when a company has been acquired and is inevitably undergoing some changes, improvement of short-time financial performance is sought, and a company is trying to head off a crisis rather than pull itself out of one. The authors give attention to both external and internal factors and their interrelationship. The reader is taken chapter by chapter through all of the stages of distress in a company, from early warning signs through pervasive problems to moving onto solid ground and emerging from a turnaround. The book does not offer merely an academic analysis of the distinguishing factors of each stage. The authors provide relevant, effective action for each stage of distress. Different stages require different actions. Under circumstances of distress, the enthusiasm and morale that are signs of a healthy company in normal times cannot fix the causes of the problems. Ordinary leadership skills such as setting a good example and inspiring loyalty will not effect a turnaround. Fundamental in a successful turnaround is the actions taken by a company's key decisionmakers. Only they are in a position to make the crucial decisions that can bring an organization out of distress. Corporate Recovery is an incomparable guide for managers of companies in distress. The book brings clarity to what is often a clouded, disturbing, and stressful situation, even for the most experienced decisionmakers. This book can help an organization's decisionmakers ward off or minimize hazards to its well being. For ones who find themselves already in worrisome crisis situations, it can be an invaluable handbook, no matter what stage of the crisis. Slatter is founding member of the Society of Turnaround Professionals. He works with corporations on turnarounds and provides training for managers and executives. Lovett has extensive experience in turnarounds and heads his own firm helping companies improve their operations and financial performance and restore or increase corporate value. ********* 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. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda, Pius Xerxes V. Tovilla, Joy A. Agravante, Marie Therese V. Profetana and Peter A. Chapman, Editors. Copyright 2009. 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 * * *