/raid1/www/Hosts/bankrupt/TCREUR_Public/090812.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
Wednesday, August 12, 2009, Vol. 10, No. 158
Headlines
B E L G I U M
CHEMTURA CORP: Reaches Settlement With Solvay Chemicals
KBC BANK: S&P Cuts Junior Subordinated Debt Rating to 'CC'
D E N M A R K
ODENSE STEEL: To Cease Production, Maersk Says
E S T O N I A
* ESTONIA: Bankruptcies Down to 41 in July 2009
F R A N C E
THOMSON SA: Swap Traders Defer Credit Event Ruling
G E R M A N Y
ARCANDOR AG: Administrator to Present Insolvency Plan
CONTINENTAL AG: Two Executives to Quit; Eyes Venture with Magna
ENTRY FUNDING: Moody's Cuts Rating on Class F Notes to 'C'
ESCADA AG: Board to Meet Today to Discuss Insolvency Plan
HEIDELBERGCEMENT AG: Eyes Sale of Hanson UK Building-Products Unit
HYPO REAL: Posts EUR750MM 2Q09 Loss; Says Will Need More State Aid
VULCAN LTD: S&P Junks Ratings on Two Classes of Notes
G R E E C E
DRYSHIPS INC: Reaches Deal With WestLB on Waiver for US$71MM Debt
NEOCHIMIKI INDUSTRIAL: Carlyle In Dispute Over Share Buy-Back
TOP SHIPS: Discloses Covenant Waivers and Amendments to Loan Terms
TOP SHIPS: Posts US$15,949,000 Net Loss for June 30 Quarter
I R E L A N D
EUROCREDIT OPPORTUNITIES: Moody's Junks Rating on Class D Notes
I T A L Y
SIENA MORTGAGES: Moody's Assigns 'B3' Rating on Class C Notes
K Y R G Y Z S T A N
ERBOL PLUS: Court Names D. Kadinov as Insolvency Manager
SYSTEM OPERATING: Court Names J. Akybaev as Insolvency Manager
ULTRA BUSINESS: Court Names R. Duishembiyev as Insolvency Manager
WHITE STAR: Court Names M. Sulaimanov as Insolvency Manager
N E T H E R L A N D S
HAMLET I: Moody's Lowers Rating on EUR78MM Class B Notes to 'B3'
LYONDELL CHEMICAL: Parent Appoints Potter as Chief Fin'l Officer
VAN DER MOOLEN: Seeks Suspension of Payments on Weak Liquidity
N O R W A Y
TERRA SECURITIES: File Securities Fraud Action Against Citigroup
R U S S I A
CREDIT BANK: Fitch Assigns National Long-Term Rating on 06 Bonds
MDM BANK: Moody's Lifts Bank Financial Strength Rating to 'D'
MDM BANK: Fitch Gives 'BB-' Rating After URSA Bank Merger Deal
MDM BANK: S&P Assigns Counterparty Credit Ratings at 'B+/B'
S P A I N
SANTANDER FINANCIACION: S&P Lowers Rating on Class E Notes to 'D'
S W I T Z E R L A N D
AGENA FINANCE: Claims Filing Deadline is August 14
ANTRO GMBH: Creditors Must File Claims by August 14
BUMAR GMBH: Creditors Have Until August 14 to File Claims
EUGSTER GMBH: Creditors Must File Claims by August 14
KEY FINANCE: Claims Filing Deadline is August 14
KNAPP AG: Claims Filing Deadline is August 14
KONTICO TRADING: Claims Filing Period Ends August 14
KROSS FINANZ: Creditors Must File Claims by August 14
LISAG EDV-SERVICE: Creditors Must File Claims by August 14
MALBOSQUET AG: Claims Filing Deadline is August 14
MAX SHOENENBERG: Claims Filing Deadline is August 14
PLANEN + BAUEN: Claims Filing Deadline is August 14
PYROTECHNISCHE FABRIK: Claims Filing Deadline is August 14
RHONE-FER GMBH: Creditors Must File Claims by August 14
SUHP DATABASE: Claims Filing Deadline is August 14
TOQUE AG: Creditors Have Until August 14 to File Claims
TOROFX GMBH: Claims Filing Deadline is August 14
UBS AG: Settlement Talks Continue, Drafting Pact Needs More Time
UNITSOFT AG: Creditors Have Until August 14 to File Claims
U N I T E D K I N G D O M
BRITISH AIRWAYS: S&P Assigns 'BB' Rating on GBP350 Mil. Bonds
CATTLES PLC: Sells Invoice Finance Unit for GBP70 Million
CATTLES PLC: To Seek High Court Ruling on Priority of Payment
EUROSAIL PLC: Fitch Downgrades Ratings on Five Tranches to 'C'
GAGGIA UK: Closes Halifax Plant; On the Verge of Administration
IMO CARWASH: Judge Sanctions Debt Restructuring Plan
LADBROKES PLC: Net Income Down to GBP74.7 Mln in Second Qtr. 2009
LEHMAN BROTHERS: Stipulations on Return of Erroneous Transfers
LEHMAN BROTHERS: Creditors' Panel Hires R. Sheldon for U.K. Issues
MECOM GROUP: Posts EUR79.2 Mln Pre-Tax Loss in First Half 2009
NATIONAL EXPRESS: Deutsche Bahn Drops Out of Bidding
NORTHERN ROCK: Fitch Junks Rating on Tier 1 Debt Securities
RANK GROUP: Moody's Affirms Corporate Family Rating at 'B1'
SOUTHERN PACIFIC: S&P Cuts Ratings on Two Classes of Notes to 'B'
TATA MOTORS: Secures GBP75 Million Debt Facility for Jaguar
WHITE TOWER: CBRE to Assist in Asset Sales, Refinancing Efforts
WOOLWORTHS GROUP: BBC Wins Case Over Stake in 2Entertain
X X X X X X X X
* S&P Takes Rating Actions on 10 European CMBS Tranches
*********
=============
B E L G I U M
=============
CHEMTURA CORP: Reaches Settlement With Solvay Chemicals
-------------------------------------------------------
Chemtura Corp. and its affiliates the Court to approve a
settlement they entered into with Solvay S.A., Solvay Chemicals,
Inc. and Solvay America, Inc., which:
-- seeks to resolve a price fixing litigation among the
Parties in the District Court for the Eastern District of
Pennsylvania;
-- provides for the assumption of a supply agreement for the
purchase of hydrogen peroxide from Solvay and extends its
term through July 31, 2010; and
-- provides for the payment of attorneys' fees and costs to
the Debtors' counsel, Duane Morris LLP, relating to the
Litigation and amounting to US$599,788 in fees and US$1,037
in expenses.
Before the Petition Date, Solvay supplied the Debtors with
hydrogen peroxide pursuant to a certain Supply Agreement for
which the Debtors have not made payments, totaling US$225,000, for
products delivered prepetition. Accordingly, Solvay asserted
prepetition claims and served a reclamation notice pursuant to
Section 546(c)(1) of the Bankruptcy Code for approximately
US$180,000 worth of hydrogen peroxide, which comprises the
majority of the Prepetition Delivered Product.
Subsequently, the Debtors and Solvay engaged in arm's-length
negotiations to settle the issues between them.
To resolve their dispute, the Debtors agree to assume the
Hydrogen Peroxide Agreement between the Parties in exchange for
Solvay withdrawing its reclamation demand and supply the Debtors
with 6,292,000 lbs. of hydrogen peroxide at no cost. The Parties
agree that if the Debtors do not need that much product by
July 31, 2010, they can elect to receive a cash payment totaling
US$300,000.
In addition, Solvay will refund the Debtors US$542,241 for
invoices paid and will make an additional cash settlement payment
of US$475,758. In return for the Settlement Payments and the
other agreed considerations, the Debtors will dismiss claims
against Solvay with prejudice.
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
contends that in light of the risks and benefits associated with
the Reclamation Demand, the parties' Settlement is favorable to
the Debtors because valued at US$3,000,000, it represents an
amount which is significantly more than the Debtors would likely
have received from a Solvay class settlement.
About Chemtura Corp
Based in Middlebury, Connecticut, Chemtura Corporation (CEM) --
http://www.chemtura.com/-- with 2008 sales of US$3.5 billion, is
a global manufacturer and marketer of specialty chemicals, crop
protection products, and pool, spa and home care products.
Chemtura Corporation and 26 of its U.S. affiliates filed voluntary
petitions for relief under Chapter 11 on March 18, 2009 (Bankr.
S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at
Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel.
Wolfblock LLP serves as the Debtors' special counsel. The
Debtors' auditors and accountant are KPMG LLP; their investment
bankers are Lazard Freres & Co.; their strategic communications
advisors are Joele Frank, Wilkinson Brimmer Katcher; their
business advisors are Alvarez & Marsal LLC and Ray Dombrowski
serves as their chief restructuring officer; and their claims and
noticing agent is Kurtzman Carson Consultants LLC.
As of December 31, 2008, the Debtors had total assets of
US$3.06 billion and total debts of US$1.02 billion.
Bankruptcy Creditors' Service, Inc., publishes Chemtura
Bankruptcy News. The newsletter tracks the Chapter 11
proceedings undertaken by Chemtura Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
KBC BANK: S&P Cuts Junior Subordinated Debt Rating to 'CC'
----------------------------------------------------------
Standard & Poor's Ratings Services said that it has lowered to
'CC' from 'CCC' the junior subordinated debt rating on the
GBP525 million hybrid capital securities issued by Belgium bank
KBC Bank N.V. (A/Stable/A-1). S&P also placed on CreditWatch,
with negative implications, S&P's 'CCC' preferred stock rating on
KBC Bank Funding Trust II's EUR280 million instrument. In a
related action, S&P affirmed its 'CCC' debt ratings on KBC's other
hybrid instruments. This rating action does not affect the
counterparty credit ratings on KBC and related entities.
"The downgrade on the GBP525 million hybrid instrument follows the
KBC's announcement on August 6, 2009, that it will not pay the
next coupon due in December 2009 and that the EC had imposed an
embargo for the remainder of this year on all discretionary coupon
payments on hybrid securities that it has issued," said Standard &
Poor's credit analyst Elisabeth Grandin.
S&P lowered the rating on the instrument to 'CC' because S&P
believes that KBC will very likely suspend a coupon payment in
December 2009. Under S&P's criteria, S&P use the 'CC' category
for a company or an issue at substantial risk of default generally
within six months, especially when S&P is able to determine a
default date.
S&P will further lower the debt rating to 'C' on the very day the
payment on the coupon is missed. Under S&P's criteria, S&P use
the 'C' rating when coupon suspension is in accordance with terms
of a hybrid instrument.
Once KBC resumes payment on its GBP525 million hybrid instruments,
S&P would likely upgrade the debt rating, possibly to 'CCC', in
line with that on the bank's other hybrid instruments.
The bank also announced that it will pay the November coupons due
on two other junior subordinated instruments.
For the two remaining preferred stock instruments with coupon
payments due in 2010, S&P expects that by then the bank would have
an EC decision to clarify whether coupon payment is possible. The
'CCC' rating on these four hybrid capital instruments reflects
S&P's opinion of substantial risk of coupon deferral in the near
or medium term. While the risk this year differs for each
instrument, it remains elevated for all of them in 2010. That's
because nonpayment of the coupon could remain an EC condition for
state aid to KBC and for the bank's restructuring. S&P's view
also takes into account that KBC's first-quarter loss is likely to
have nearly wiped out the bank's distributable reserves for 2009.
In addition, S&P believes that KBC may not be able to rebuild its
distributable reserve in 2010.
The negative implications on the EUR280 million instrument reflect
the increasing risk of coupon suspension on the next coupon
payments due in September and December 2009. KBC reported that
payment remains subject to the outcome of discussions with the EC.
S&P believes that the discussion aims to clarify whether coupon
payment is discretionary or not.
Resolution of the CreditWatch depends on the outcome of EC
discussions.
"We will likely lower the rating to 'C' on September 30, 2009, if
the coupon is missed. Alternatively, S&P could affirm the 'CCC'
rating if the September coupon is paid," said Standard & Poor's
credit analyst Taos Fudji.
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D E N M A R K
=============
ODENSE STEEL: To Cease Production, Maersk Says
----------------------------------------------
Robert Wright at The Financial Times reports that Denmark's AP
Moller-Maersk said Odense Steel Shipyard, at Lindo on the Danish
island of Funen, will cease production once it has completed the
15 orders it currently held.
According to the FT, Maersk decided the loss-making yard was no
longer viable. The yard, the FT discloses, lost DKK562 million
(US$107 million) on DKK5.16 billion turnover in 2008.
The FT relates Lars-Erik Brenoe, Maersk's chairman, said on Monday
the shipyard could not win any more orders. "The board has
therefore decided to make it absolutely clear that Lindo will not
be building more vessels, once the contracted orders have been
delivered," the FT quoted Mr. Brenoe as saying.
The first 175 of the 2,700 existing employees will be made
redundant later this month, the FT states.
The yard, which opened in 1918 and moved to its present site in
1956, has played a key role in the development of the Maersk
Group, which operates the world's largest container-ship and
product-tanker fleets as well as substantial numbers of oil and
gas tankers.
=============
E S T O N I A
=============
* ESTONIA: Bankruptcies Down to 41 in July 2009
-----------------------------------------------
BNS, citing figures available from the Commercial Register,
reports that the number of bankruptcies in Estonia decreased in
July 2009.
According the report, the number of bankruptcies in July was 41,
compared with 33 in January, 36 in February, 52 in March, 44 in
April, 49 in May and 45 in June.
===========
F R A N C E
===========
THOMSON SA: Swap Traders Defer Credit Event Ruling
--------------------------------------------------
Abigail Moses at Bloomberg News, citing the International Swaps &
Derivatives Association, reports that credit-default swap traders
deferred a decision on whether contracts linked to Thomson SA
should be triggered by a so-called restructuring credit event.
According to Bloomberg, ISDA said on its Web site the traders will
meet again today, Aug. 12.
Bloomberg relates Commerzbank AG asked for the "credit event"
ruling after Thomson said it got permission to defer a US$72.5
million repayment on its 6.05% privately placed notes due this
year.
Citing data compiled by the Depository Trust & Clearing Corp.,
which runs a central registry that captures most trading,
Bloomberg discloses investors bought or sold nearly 5,000
contracts worth a net US$2 billion on Thomson debt as of July 31.
In an Aug. 10 report Bloomberg said an auction will be held to
determine the amount sellers of protection will pay if a committee
decides the contracts should be tripped.
"The probability of a credit event has increased because now we
know the company did not pay the private placements by the end of
the first half," Bloomberg quoted Juliano Torii, a credit
strategist at Societe Generale SA in London, as saying.
"Restructuring is a better argument to get the initial process
rolling."
About Thomson SA
France-based Thomson SA -- http://www.thomson.net/-- provides
technology, services, and systems to Media & Entertainment (M&E)
clients, including content creators, content distributors and
broadcasters. It has three principal operating divisions:
Services, Systems (previously Systems & Equipment) and Technology.
The remaining activities are regrouped in two additional segments:
Other and Corporate. The Services Division offers end-to-end
management of video-related services for its customers in the M&E
industries. Systems division plays a role in supplying hardware
and software technology for the M&E industries in the areas of
production, delivery, management, transmission, and access.
Technology division includes activities, such as corporate
research; Silicon Solutions: Integrated Circuit design and tuners,
and Software & Technology Solutions: video and audio security
solutions, and other technologies. In December 2008, the Company
sold its digital film equipment product line.
* * *
On Aug. 3, 2009, the Troubled Company Reporter-Europe reported
that Standard & Poor's Ratings Services said that its ratings on
French technology group Thomson S.A. (SD/--/SD) are not
immediately affected by the company's announcement on July 24,
2009, that it signed an agreement with a majority of its senior
lenders to restructure its balance sheet. The agreement,
involving primarily a debt-for-equity swap, is conditional on a
number of requirements. Upon implementation of a restructuring
agreement or the filing, if any, of legal proceedings -- whichever
occurs first -- S&P will revise all of S&P's ratings on Thomson to
'D' (default), in accordance with S&P's criteria. Once the
company emerges from reorganization or any legal proceedings, S&P
will reassess the ratings, taking into account the benefits
garnered through the reorganization process.
As reported in the Troubled Company Reporter-Europe on May 21,
2009, Moody's Investors Service changed to Ca/LD from Ca the
Probability of Default Rating for Thomson S.A. on the company's
failure to repay US$92.5 million private placements due on May 18,
2009 which the rating agency view constitutes a payment default.
=============
G E R M A N Y
=============
ARCANDOR AG: Administrator to Present Insolvency Plan
-----------------------------------------------------
Holger Elfes at Bloomberg News reports that Klaus Hubert Goerg,
Arcandor AG's admininstrator, will present his insolvency plan for
the company as early as this weekend.
"We have to present our rough plan in the second half of the month
the latest," Bloomberg quoted Thomas Schulz, a spokesman for
court-appointed insolvency administrator Klaus Hubert Goerg, as
saying.
Talks
Citing Financial Times Deutschland, Bloomberg discloses Arcandor
is talking to at least two groups who may buy a stake in the
Primondo mailorder business or Karstadt department stores.
According to Bloomberg, the FTD said Italian lender Mediobanca SpA
is involved with one of the groups.
About Arcandor AG
Germany-based Arcandor AG (FRA:ARO) -- http://www.arcandor.com/--
formerly KarstadtQuelle AG, is a tourism and retail group. Its
three core business areas are tourism, mail order services and
department store retail. The Company's business areas are covered
by its three operating segments: Thomas Cook, Primondo and
Karstadt. Thomas Cook Group plc is a tour operator with
operations in Europe and North America, set up as a result of a
merger between MyTravel and Thomas Cook AG. It also operates the
e-commerce platform, Thomas Cook, supporting travel services.
Primondo has a portfolio of European universal and specialty mail
order companies, including the core brand Quelle. Karstadt
operates a range of department stores, such as cosmopolitan
stores, including KaDeWe (Kaufhaus des Westens), Karstadt
Oberpollinger and Alsterhaus; Karstadt brand department stores;
Karstadt sports department stores, offering sports goods in a
variety of retail outlets, and a portal, karstadt.de that offers
online shopping, among others.
As previously reported in the Troubled Company Reporter-Europe, on
June 9, 2009, Arcandor filed for bankruptcy protection after the
German government turned down its request for loan guarantees. On
June 8, 2009, the government rejected two applications for help by
the company, which employs 43,000 people. The retailer sought
loan guarantees of EUR650 million (US$904 million) from Germany's
Economy Fund program. It also sought a further EUR437 million
from a state-owned bank.
CONTINENTAL AG: Two Executives to Quit; Eyes Venture with Magna
---------------------------------------------------------------
James Wilson at The Financial Times reports that Rolf Koerfer,
chairman of Continental AG, is set to offer today to leave his
post as part of a compromise that will also lead to the removal of
Karl-Thomas Neumann, the company's chief executive.
According to the FT, Maria-Elisabeth Schaeffler, the owner of
Schaeffler KG, and her allies on Continental's supervisory board,
who were rebuffed last month when they tried to win support to
vote Mr. Neumann out of his role as chief executive, at a board
meeting, are ready to make a fresh attempt today. The FT says
their task will be easier than their previous effort, when they
needed the approval of two-thirds of directors. The FT notes
under corporate rules for Continental, the threshold for
acceptance has fallen to a simple majority of directors.
Citing people with knowledge of the situation, the FT discloses
Mr. Koerfer, chairman of the supervisory board, would agree to
resign his post to try to smooth feelings and cement support for
the replacement of Mr. Neumann.
Schaeffler, the FT states, wants Elmar Degenhart, its head of
automotive, to replace Mr. Neumann at Continental.
Capital Increase
On Aug. 6, 2009, the Troubled Company Reporter-Europe, citing
Reuters, reported that Mr. Neumann gathered enough support
among board directors to approve preparations for a capital
increase of up to EUR1.5 billion (US$2.1 billion), which
Schaeffler, Continental's main shareholder, could not afford to
subscribe to. BHF Bank analyst Aleksej Wunrau, as cited by
Reuters, said "Following the ... capital increase, Schaeffler's
stake in Continental will be diluted to below 75%, meaning the
loss of dominance. Conti will thus shake off the iron grip of its
debt-laden owner."
Schaeffler acquired its stake in Continental after launching a
hostile US$18 billion bid last July, ending up collecting more
shares than it could afford and lumbering itself with billions of
euros of debt. The German ball bearings manufacturer, which which
is laden with EUR11 billion in debt, now owns 49.9% of Continental
directly. Another 40% of shares it was tendered is parked with
banks.
Turbocharger Venture
Continental is in discussions with Magna International Inc. over a
venture to make turbochargers to tap growth in demand for more
fuel-efficient cars, Cornelius Rahn and Andreas Cremer at
Bloomberg News report citing four people familiar with the
situation.
Bloomberg relates two of the people said Magna, Canada's largest
auto components maker, and Hanover, Germany-based Continental
would each contribute half of about EUR150 million (US$215
million) in investments.
According to Bloomberg three of the people said progress on the
discussions has been hampered by Schaeffler, which is seeking to
become a partner without contributing capital.
Bloomberg says the Mr. Neuman advocates the turbocharger venture,
and negotiations may be halted if he is removed this week.
About Continental AG
Hanover, Germany-based Continental AG (OTC:CTTAY) --
http://www.conti-online.com/-- is an automotive industry
supplier. The Company focuses its activities on the development,
production and distribution of products that improve driving
safety, driving dynamics and ride comfort. It operates in six
divisions. Chassis and Safety provides active and passive driving
safety, safety and chassis sensor systems, as well as chassis
components. Powertrain focuses on engine systems, hybrid electric
drives, injection technology, and sensors and actuators, among
others. Interior manufactures information management modules and
wireless mobile devices. Passenger and Light Truck Tires provides
tires for passenger cars, motorcycles and bicycles. Commercial
Vehicle Tires offers tires for trucks, as well as industrial and
off-the-road vehicles. ContiTech specializes in the rubber and
plastics technology, offering parts, components and systems for
the automotive industry and other sectors. In January 2009,
Schaeffler KG acquired 49.9% interest in the Company.
* * *
As reported in the Troubled Company Reporter-Europe on Aug. 5,
2009, Fitch Ratings is maintaining Continental AG's Long-term
Issuer Default Rating and senior unsecured rating of 'BB' on
Rating Watch Negative. This follows Continental's announcement
that its board approved an increase in its capital base,
despite opposition from its majority shareholder, Schaeffler KG.
ENTRY FUNDING: Moody's Cuts Rating on Class F Notes to 'C'
----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of six
classes of notes issued by Entry Funding No. 1 Plc.
The transaction is a static cash flow CDO on an amortizing
portfolio of Certificates of Indebtedness (Schuldscheine)
originally issued by 244 German SME borrowers. The Certificates
of Indebtedness represent senior unsecured debt of the borrowers
with various maturity dates until the scheduled maturity date of
this transaction in September 2011.
The transaction has suffered EUR13.8 million of insolvencies and,
in addition, in relation to EUR15.8 million of assets principal
deficiency events have occurred (together approx. EUR29.6 millon
amounting to 10.5% of the portfolio). The internal ratings
assigned to the borrowers by the originator Landesbank Baden-
Württemberg are used to determine the default probabilities of the
borrowers in this transaction. These internal ratings are
converted to Moody's rating scale according to a mapping. The
internal ratings provided by LBBW are exhibiting deterioration
across the portfolio which is reflected in a substantial increase
in the Weighted Average Rating of the portfolio. After mapping to
Moody's rating scale EUR18.3 million of assets are rated in the
Caa range.
The portfolio has partially amortized and approximately
EUR282.2 million of portfolio assets remain outstanding,
representing exposure to 221 borrowers. This includes
EUR29.6 million, representing exposure to 18 borrowers, with
respect to which principal deficiency events have occurred. In
its analysis Moody's has considered the effect of potentially
depressed recovery rates in the current environment and has
incorporated the low expected recovery rates provided the investor
report for the insolvent borrowers. The senior class benefits
from the diversion of the available excess spread used to cure the
outstanding principal deficiency ledger. Approximately one-third
of Class A has already been redeemed from available funds to date
either by loan repayment or excess spread diversion.
The rating actions follow the watchlisting of this transaction on
13 March 2009 and reflect the credit deterioration of the
underlying portfolio as well as the application of revised and
updated key modelling parameter assumptions that Moody's uses to
rate and monitor ratings of CDOs exposed to corporate assets and
which are also being applied in its analysis of SME CDOs. Moody's
announced the changes to these assumptions in two press releases
titled "Moody's updates key assumptions for rating CLOs",
published on February 4, 2009 and "Moody's Updates its Key
Assumptions for Rating Corporate Synthetic CDOs," published on
January 15, 2009. The revisions affect default probability, which
has been stressed by 30%, as well as correlation, which is
reflected by a 5% minimum correlation and a new sector mapping
under the new correlation framework. Default probability and
correlation are key parameters in Moody's model for rating CDOs
exposed to corporate assets.
Moody's initially analyzed and continues to monitor this
transaction using primarily the methodology and its supplements
for cash flow CLOs as described in Moody's Special Reports and
press releases below:
-- Moody's Approach to Rating Collateralized Loan Obligations
(December 2008)
-- Moody's Approach to Rating CDOs of SMEs in Europe (February
2007)
-- Refining the ABS SME Approach (March 2009)
The transaction was modeled using CDOROM 2.5 to simulate default
times and recovery rates for each asset in the portfolio. The
output from the simulation was then used as an input in a cash
flow model which implements the sequential priorities of payment.
Baseline mean recovery assumptions of 40% were made for senior
unsecured debt in this portfolio. On a portion of the insolvent
assets recoveries near 0% have been assumed to reflect information
provided to Moody's in relation to these assets. The sensitivity
to the recovery assumption has been tested. Furthermore, various
stress scenarios were run, including stressing by one notch those
assets belonging to sectors which were viewed as particularly
vulnerable such as Automobile, Buildings and Real Estate, Finance,
Hotels, Motels, Inns and Gaming etc.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features and the potential for selection bias in the
portfolio. All information available to rating committees,
including macroeconomic forecasts, input from other Moody's
analytical groups, market factors, and judgments regarding the
nature and severity of credit stress on the transactions, may
influence the final rating decision.
The rating actions are:
Entry Funding No. 1 Plc:
-- Class A, Downgraded to Baa3; previously on 13 March 2009 Aaa
Placed Under Review for Possible Downgrade
-- Class B, Downgraded to Caa1; previously on 13 March 2009 Aa2
Placed Under Review for Possible Downgrade
-- Class C, Downgraded to Caa3; previously on 13 March 2009 A1
Placed Under Review for Possible Downgrade
-- Class D, Downgraded to Ca; previously on 13 March 2009 Baa1
Placed Under Review for Possible Downgrade
-- Class E, Downgraded to Ca; previously on 13 March 2009 Ba2
Placed Under Review for Possible Downgrade
-- Class F, Downgraded to C; previously on 13 March 2009 B2
Placed Under Review for Possible Downgrade
ESCADA AG: Board to Meet Today to Discuss Insolvency Plan
---------------------------------------------------------
Claudia Rach at Bloomberg News reports that Escada AG is holding a
board meeting today, Aug. 12, to discuss a plan to file for
insolvency after bondholders turned down its financial
restructuring proposal.
Bloomberg relates Escada said in a statement late Tuesday the
company will seek court protection after failing to win backing
from bondholders to swap old bonds for new notes and shares. The
company, Bloomberg discloses, offered bondholders EUR400 (US$566)
and 10 shares per EUR1,000 of debt. Bloomberg says only 46% of
bondholders backed the offer, short of the target of 80%. Without
their backing, Escada, as cited by Bloomberg, said it won't win
support from UniCredit SpA unit for a EUR13-million loan and can't
introduce a capital increase of at least EUR29 million already
backed by the company's main shareholders.
According to Bloomberg, Escada Chairman Reinhard Poellath told
Handelsblatt the company will make the insolvency filing
at a court in Munich tomorrow, Aug. 13. Escada's insolvency
affects more than 2,200 employees, Bloomberg states.
Bloomberg notes Escada said it will present its operational
restructuring plan to the preliminary insolvency administrator.
ESCADA AG -- http://www.escada.com/-- is a Germany-based fashion
group engaged in women's designer fashion. The Company is
structured into two segments: ESCADA and PRIMERA. Under its core
brand ESCADA, the Company sells women's designer fashions for
daytime, evening, business, leisure, wellness and special
occasions, as well as couture. The fashion range is supplemented
with accessories like handbags, shoes and small leather goods.
Fragrances, eyewear, kids wear and jewelry from licensed partners
are also sold under the ESCADA brand. The Company also offers the
ESCADA Sport product line with clothes and accesoires. Through
its wholly owned subsidiary, PRIMERA AG, the Company additionally
sells the mid-priced brands apriori, BiBA, cavita and Laurel. As
of October 31, 2008, ESCADA AG operated 182 own shops and 225
franchise shops in more than 60 countries. Its manufacture
capacities are mainly outsourced to partner operations, located in
Germany, Italy, Eastern Europe and Asia.
HEIDELBERGCEMENT AG: Eyes Sale of Hanson UK Building-Products Unit
------------------------------------------------------------------
Scott Hamilton at Bloomberg News reports that HeidelbergCement AG
plans to sell its Hanson U.K. building-products operation,
including the country's biggest supplier of clay bricks, to help
pay down debt.
According to Bloomberg, British units penciled for disposal this
year include paving business Formpave, cladding maker Structherm,
masonry provider Bath and Portland Stone and one selling pre-cast
concrete flooring.
Bloomberg relates spokesman David Weeks said potential buyers have
made inquiries after some units, though HeidelbergCement's sale of
Thermalite was postponed after failing to attract a high enough
bid for the aerated concrete-block business.
Hanson's U.K. brick businesses include Cradley Special Brick,
London Brick, Red Bank, as well as specialist wall contractor
Irvine-Whitlock. "The brick business will be sold as one unit,"
Bloomberg quoted Mr. Weeks as saying. "Nobody's going to buy it
in the current climate, not at a price which we think is
reasonable."
Hanson U.K.'s cement, aggregates and concrete operations will be
kept, Bloomberg notes.
HeidelbergCement, Bloomberg says, is selling units outside of its
cement, aggregate and concrete operations after running up debt
with the US$12 billion takeover of Hanson in 2007. Bloomberg data
shows the company faces EUR529 million in debt maturities next
year, and EUR8.8 billion in 2011.
About HeidelbergCement
Based in Heidelberg, Germany, HeidelbergCement AG (FRA:HEI) --
http://www.heidelbergcement.com/-- is a global producer of
cement, concrete and building materials. The Company's core
activities include the production and distribution of cement and
aggregates, the two raw materials for concrete. It is also
engaged in in the provision of such products as ready-mixed
concrete, as well as concrete products and elements. It divides
its activities into four group areas: Europe-Central Asia, North
America, Asia-Australia-Africa-Mediterranean and Group Services.
It divides its products into three lines: cement, aggregates and
concrete and building products. Its products include sand,
gravel, crushed stone, white cement, trass cement, masonry cement,
aquament and portland cement for hydraulic engineering, as well as
light, heavy and aerated concrete building blocks, pavers,
prefabricated ceilings and walls, prefabricated cellar units and
prefabricated sewage works units, among others. In 2007, the
Company took over Hanson Group.
* * *
The Troubled Company Reporter-Europe reported on July 10, 2009,
that Standard & Poor's Ratings Services said that it affirmed the
'CCC+' rating on the senior unsecured bonds issued by Germany-
based building materials group HeidelbergCement AG
(B-/Negative/B), and subsidiaries HeidelbergCement Finance B.V.,
Hanson Ltd., and Hanson Australia Funding Ltd. At the same time,
the bonds were removed from CreditWatch, where they were placed
with developing implications on June 24, 2009.
On June 24, 2009, the Troubled Company Reporter-Europe reported
that Fitch Ratings affirmed Germany-based HeidelbergCement AG's
Long-term Issuer Default rating at 'B' and removed the rating from
Rating Watch Negative. A Negative Outlook was assigned.
As reported in the Troubled Company Reporter-Europe on June 23,
2009, Moody's confirmed HeidelbergCement's B1 corporate family
rating and assigned a negative outlook. At the same time the
ratings of all bonds outstanding at HeidelbergCement and its
subsidiaries were downgraded to B3. The rating action was
prompted by HC's successful refinancing of its bank debt. The new
agreement includes clauses which place bondholders structurally
behind the bank lenders.
HYPO REAL: Posts EUR750MM 2Q09 Loss; Says Will Need More State Aid
------------------------------------------------------------------
Jann Bettinga and Oliver Suess at Bloomberg News report that Hypo
Real Estate Holding AG posted a net loss of EUR750 million
(US$1.08 billion) in the second quarter of 2009, compared with a
profit of EUR12 million a year earlier after setting aside more
money for risky loans.
According to Bloomberg, the company set aside EUR881 million
in provisions for doubtful loans in the quarter, up from
EUR37 million a year earlier.
Hypo Real Estate, Bloomberg discloses, received a total of EUR102
billion in credit lines and debt guarantees from the state and
financial institutions. Bloomberg relates the lender reiterated
Friday it needs more aid even after a EUR2.96-billion capital
infusion by the government was approved by investors in June.
Bloomberg says Germany's bank rescue fund, Soffin, which already
owns 90 percent of the company, plans to take full control in a
so-called squeeze-out.
The bank, as cited by Bloomberg said in a Web site presentation
earnings were burdened by EUR128 million in costs related to the
debt guarantees received as part of its bailout.
About Hypo Real Estate
Germany-based Hypo Real Estate Holding AG (FRA:HRXG) --
http://www.hyporealestate.com/-- is a German holding company for
the Hypo Real Estate Group. It is an international real estate
financing company, combining commercial real estate financing
products with investment banking. The Company divides its
operations into three business units: Commercial Real Estate,
which provides real estate financing on the international and
German market; Public Sector & Infrastructure Finance, and Capital
Markets & Asset Management. Hypo Real Estate Group operates
through a number of subsidiaries, including, among others, Hypo
Real Estate Bank International AG that focuses on Pfandbrief-based
commercial real estate financing in all international markets, and
offers large-volume investment banking and structured finance
transactions; Hypo Real Estate Bank AG that focuses on the
commercial real estate financing and refinancing business in
Germany, and DEPFA Bank plc in Dublin, Ireland, which is a
provider of public finance.
* * *
As reported in the Troubled Company Reporter-Europe on July 6,
2009, Fitch Ratings affirmed Hypo Real Estate Holding AG's
individual rating at 'F'.
VULCAN LTD: S&P Junks Ratings on Two Classes of Notes
-----------------------------------------------------
Standard & Poor's Ratings Services lowered and kept on CreditWatch
negative its credit ratings on the class F and G notes issued by
Vulcan (European Loan Conduit No. 28) Ltd.
These actions are due to S&P's expectation of note interest
shortfalls. S&P believes the first is likely to occur on the
August 2009 note interest payment date as a result of Vulcan
incurring special servicer fees.
Vulcan closed in August 2007 and is backed by a pool of 14 loans
secured against 81 commercial and residential properties located
across Europe. The current reported loan (and note) balance is
EUR989.945 million. The largest loan in the pool is the Tishman
German Office Portfolio (TGOP) loan which has a current balance of
EUR360.176 million and accounts for 36.4% of the loan pool.
Vulcan owns the senior-ranking portion of the TGOP loan.
Since closing, the TGOP whole-loan interest coverage ratio has
been equal to or less than 1.00x. Since closing, prefunded
reserves have covered interest shortfalls. S&P understands that
these reserves were exhausted on the February 2009 NIPD.
On May 13, the servicer reported a payment default on the senior-
ranking portion of the TGOP loan that Vulcan owns. Servicer
advancing covered the shortfall enabling Vulcan to fully pay the
interest due to all classes of notes on the May NIPD.
On May 27, the TGOP loan was transferred into special servicing as
a consequence of the payment default. The reported ICR for the
senior-ranking portion of the TGOP loan owned by Vulcan is 0.62x.
S&P understands that servicer advancing will cover future interest
shortfalls.
As a result of the transfer, Vulcan will be charged a special
servicing fee equal to 0.15% of the loan balance per year. S&P
estimate this equates to approximately EUR135,000 per quarter
based on the current loan balance.
The servicer has informed us that servicer advancing is not
available to cover special servicing fees. Furthermore, S&P
understands that the excess spread in the transaction that the
issuer pays as interest to the class X noteholders makes no
deduction for special servicing fees. S&P understands Vulcan will
not have sufficient funds to pay the special servicing fee.
Since the issuer pays special servicing fees senior to payments
due to the noteholders, S&P expects the junior classes of notes
will experience an interest shortfall on the August NIPD. S&P
expects these shortfalls to be recurring and there is no certainty
that the shortfalls can be recovered. S&P's ratings address
timely payment of interest and consequently S&P lowered the rating
on the class F and G notes to 'CCC-' in anticipation of the
interest shortfalls, even though under the terms and conditions of
the notes the missed interest payment can be deferred.
S&P also expects the class E notes to experience an interest
shortfall on the next NIPD. However, S&P considers this shortfall
falls under S&P's minor shortfall policy considering the expected
amount of shortfall relative to the outstanding principal balance
of the class E notes. Consequently, S&P has not taken any rating
action on the class E notes at this time.
Ratings List
Vulcan (European Loan Conduit No. 28) Ltd.
EUR1,076.415 Million Commercial Mortgage-Backed
Variable- and Floating-Rate Notes
Ratings Lowered and Remaining on Creditwatch Negative
Ratings
-------
Class To From
----- -- ----
F CCC-/Watch Neg BBB-/Watch Neg
G CCC-/Watch Neg BB/Watch Neg
===========
G R E E C E
===========
DRYSHIPS INC: Reaches Deal With WestLB on Waiver for US$71MM Debt
-----------------------------------------------------------------
DryShips Inc. has reached agreement with WestLB on waiver terms
for US$71 million of our outstanding debt. This agreement is
subject to customary documentation.
George Economou, Chairman and Chief Executive Officer, commented:
"We are delighted to have reached an agreement with West LB. This
facility covers 2 of our drybulk vessels. We continue to have
constructive discussions with the remainder of our banks who are
all very supportive of the company."
About DryShips Inc.
DryShips Inc., -- http://www.dryships.com/-- based in Athens,
Greece, is an owner and operator of drybulk carriers that operate
worldwide. As DryShips owns a fleet of 41 drybulk carriers
comprising 7 Capesize, 29 Panamax, 2 Supramax and 3 newbuilding
drybulk vessels with a combined deadweight tonnage of over 3.6
million tons, 2 ultra deep water semisubmersible drilling rigs and
4 ultra deep water newbuilding drillships. DryShips Inc.'s common
stock is listed on the NASDAQ Global Market where trades under the
symbol "DRYS."
NEOCHIMIKI INDUSTRIAL: Carlyle In Dispute Over Share Buy-Back
-------------------------------------------------------------
Martin Arnold and Kerin Hope at The Financial Times report that
Carlyle Group is locked in a dispute with Lavrentis Lavrentiadis,
one of Greece's richest entrepreneurs, over Neochimiki Industrial
and Commercial S.A.
Citing people familiar with the talks, the FT discloses
Mr. Lavrentiadis, formerly Neochimiki's largest shareholder and
chief executive, offered in June to buy back up to half the
company from Carlyle after its 2008 results fell well short of
projections. The FT relates the same people said the two sides
were far apart on the terms of any share buy-back.
According to the FT, the disagreement was apparently about "the
accuracy of earnings data" at the time of Carlyle's EUR749 million
(US$1.06 billion) buy-out of Neochimiki in May 2008. The FT
states Dresdner Kleinwort arranged a EUR550 million syndicated
loan for the buy-out, which was taken up by Greek banks, led by
Emporiki, National Bank of Greece, Piraeus Bank and two small
lenders, Millennium Bank and Proton Bank. Neochimiki, the FT
says, has been negotiating to restructure the loan, but some
creditors are skeptical about its prospects in the economic
downturn.
Carlyle, the FT says, has taken a big writedown on Neochimiki,
which made losses of EUR56.6 million in 2008.
Neochimiki Industrial and Commercial S.A., formerly known as
Neochimiki L.V. Lavrentiadis S.A., -- http://www.neochimiki-sa.gr/
-- is a Greece-based industrial and commercial enterprise. The
Company is primarily engaged in the production, packaging and
distribution of fertilizers, polymers, detergents and chemical raw
materials used in the cosmetic, food and drink, rubber, textiles
and dyes, adhesive, paint and varnish industries. Its facilities
in Greece comprise three factories and four logistic centers. The
Company has an international presence through its subsidiaries
located in Bulgaria, Serbia, Romania, Ukraine, Poland, Germany and
Cyprus. It is headquartered in Athens, Greece.
TOP SHIPS: Discloses Covenant Waivers and Amendments to Loan Terms
------------------------------------------------------------------
TOP Ships Inc. disclosed that it has received waivers and signed
amendments to loan agreements with all five of the Company's
lenders in relation to loan covenant breaches that took place as
of December 31, 2008. The only outstanding amendments are in
relation to:
(i) the bulker financing with DVB Bank, which agreement has
been in effect since April 2009, although the legal
documentation has been delayed; and
(ii) HSH financings, for which we have not yet managed to
lower the adjusted net worth covenant below US$125
million.
As of June 30, 2009, TOP Ships was in breach of other covenants
not previously waived, which relate to minimum liquidity, adjusted
net worth and asset values of product tankers with certain banks.
TOP Ships has received waivers and amended certain loan agreements
with the Royal Bank of Scotland and DVB, and TOP Ships is
currently in negotiations with other lenders in relation to
remaining breaches.
As of June 30, 2009, TOP Ships had total indebtedness under senior
secured credit facilities of US$404.7 million with its lenders,
RBS, HSH Nordbank, DVB, Alpha Bank, and Emporiki Bank, maturing
from 2013 through 2019.
TOP Ships expects its lenders will not demand payment of loans
before their maturity, provided that TOP Ships pay loan
installments and accumulated or accrued interest as they fall due
under the existing credit facilities.
If the Company is not able to obtain covenant waivers or
modifications for current covenant breaches or for covenant
breaches that may occur in future reporting periods, its lenders
may require the Company to post additional collateral, enhance its
equity and liquidity, increase its interest payments or pay down
its indebtedness to a level where it is in compliance with its
loan covenants, sell vessels, or they may accelerate its
indebtedness, which would impair the Company's ability to continue
to conduct its business. To further enhance its liquidity, the
Company may find it necessary to sell vessels at a time when
vessel prices are low, in which case it will recognize losses and
a reduction in its earnings, which could affect its ability to
raise additional capital necessary to comply with its loan
covenants or the additional lender requirements.
On July 27, 2009, TOP Ships entered into an unsecured bridge loan
financing facility with an unrelated party to cover working
capital requirements. The loan is of a principal amount of
EUR2.5 million -- roughly US$3.5 million at a conversion rate of
US$1.4 to EUR1 -- and has a term of three months.
On July 31, 2009, TOP Ships received waivers and amended its term
loan with RBS. On the same date, TOP Ships amended its US$80
million product tanker facility with DVB to reduce the minimum
liquidity required from US$20 million to US$5 million and to take
account of a bridge loan of US$12.5 million, also from DVB, used
in the financing of the delivery installment of the Hongbo. The
bridge loan has a term of one year and carries a margin of 6.0%.
In connection with this amendment and bridge loan, TOP Ships
issued 12,512,400 of common shares to Hongbo Shipping Company
Limited, who pledged these shares in favor of DVB. This pledge
was granted as security and must remain in an amount equal to 180%
of the outstanding bridge loan, which amount will be tested at the
end of each fiscal quarter.
On August 5, 2009, TOP Ships amended its loan with Emporiki and
received waivers until March 31, 2010, for breaches of the asset
maintenance clause and minimum leverage ratio, which is defined as
Total Liabilities divided by Total Assets adjusted to the fair
market value of vessels. These breaches occurred December 31,
2008.
Based in Athens, Greece, TOP Ships Inc., formerly known as TOP
Tankers Inc., is an international provider of worldwide seaborne
crude oil and petroleum products and drybulk transportation
services. The Company operates a combined tanker and drybulk
fleet.
TOP SHIPS: Posts US$15,949,000 Net Loss for June 30 Quarter
---------------------------------------------------------
TOP Ships Inc., for the three months ended June 30, 2009, reported
a net loss of US$15,949,000, or US$0.58 per share, compared with a
net loss of US$5,589,000, or US$0.22 per share, for the second
quarter of 2008. The results for the second quarter of 2009
include net expenses of US$11,786,000 relating to the termination
of leases. Excluding these expenses, the net loss becomes
US$4,163,000, or US$0.15 per share. Second quarter operating loss
was US$11,502,000 for 2009, compared with operating income of
US$7,078,000 for the corresponding period in 2008. Excluding net
expenses of US$11,786,000 relating to the termination of leases,
operating loss turns into an operating income of US$284,000.
Revenues for the second quarter of 2009 were US$28,636,000,
compared to US$76,687,000 recorded in the second quarter of 2008.
For the six months ended June 30, 2009, the Company reported a net
loss of US$14,579,000, or US$0.53 per share, compared with a net
loss of US$24,430,000, or US$1.07 per share, for the first half of
2008. Excluding the net expenses of US$11,786,000, relating to the
termination of leases, the net loss becomes US$2,793,000, or
US$0.10 per share. For the six months ended June 30, 2009,
operating loss was US$9,145,000 compared with operating income of
US$4,644,000 for the first half of 2008. Excluding net expenses
of US$11,786,000 relating to the termination of leases, operating
loss turns into an operating income of US$2,641,000. Revenues for
the six-month period ended June 30, 2009 were US$58,429,000,
compared to US$149,324,000 recorded in the first half of 2008.
Evangelos J. Pistiolis, President and Chief Executive Officer of
TOP Ships Inc., commented: "Despite our negative results, we are
happy to report that we have concluded two very important
milestones in the history of our company: the termination of our
last leases involving five old vessels and the completion of our
newbuilding program in a very tough financial environment.
In the current shipping and general economic environment, the
Company believes it is better positioned than many other companies
in the industry. TOP Ships also pointed out its current positive
characteristics:
-- No capital commitments.
-- Cash flow from operations is expected to be positive for
the full second half of 2009 and for the full year of
2010.
-- Very young fleet. The owned fleet is made up of 13
vessels; eight product tankers with an average age of less
than two years and five dry bulk vessels with an average
age of 8.4 years
-- 80% of the total ship days until the end of 2011 are under
Fixed employment, and the gross revenue of these charters
totals approximately US$200 million. Looking further
ahead, 73% of the total ship days until the end of 2012
are under fixed employment, and the gross revenue of these
charters totals approximately US$250 million.
"I would like to stress that our banks have been very supportive
to our plans and actions since the beginning of the year, which
can be proven from the fact that we have received waivers from all
five banks in relation to certain covenant breaches that occurred
on December 31, 2008," Mr. Pistiolis said.
As of June 30, 2009, the Company had US$719.4 million in total
assets and US$441.7 million in total liabilities.
Based in Athens, Greece, TOP Ships Inc., formerly known as TOP
Tankers Inc., is an international provider of worldwide seaborne
crude oil and petroleum products and drybulk transportation
services. The Company operates a combined tanker and drybulk
fleet.
=============
I R E L A N D
=============
EUROCREDIT OPPORTUNITIES: Moody's Junks Rating on Class D Notes
---------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of four
classes of notes issued by Eurocredit Opportunities Parallel
Funding I Limited.
This transaction is a managed high yield collateralized loan
obligation comprised predominantly of senior secured loan
obligations, senior unsecured loan obligations and mezzanine loans
primarily issued by companies located in Western Europe. The
Investment Manager is Intermediate Capital Managers Limited, a
wholly-owned subsidiary of Intermediate Capital Group PLC.
According to Moody's, the rating actions taken on the notes
reflect Moody's revised assumptions with respect to default
probability and the calculation of the Diversity Score as
described in the press release dated February 4, 2009, titled
"Moody's updates key assumptions for rating CLOs." These revised
assumptions have been applied to all corporate credits in the
underlying portfolio, the revised assumptions for the treatment of
ratings on "Review for Possible Downgrade", "Review for Possible
Upgrade", or with a "Negative Outlook" being applied to those
corporate credits that are publicly rated.
The rating actions are also a result of credit deterioration of
the underlying portfolio. This is observed in, among other
measures as per Trustee Report dated July 7, 2009, a decline in
the average credit rating as measured through the weighted average
rating factor (currently 2739), an increase in the proportion of
securities from issuers rated Caa1 and below (currently 6.3% of
the portfolio), and a failure of three Par Value tests (including
a deterioration of the Class B Par Value Test from 129.8% in June
2009 to 126.68% in July 2009). Moody's also performed a
sensitivity analysis, including amongst others, a further decline
in portfolio WARF quality combined with a decrease in the expected
recovery rates. Due to the impact of all the aforementioned
stresses, key model inputs used by Moody's in its analysis, such
as par, weighted average rating factor, and weighted average
recovery rate, may be different from trustee's reported numbers.
Moody's also notes that a material proportion of the collateral
pool consists of debt obligations whose credit quality has been
assessed through Moody's Credit Estimates. As credit estimates do
not carry credit indicators such as ratings reviews and outlooks,
a stress of a quarter notch-equivalent assumed downgrade was
applied to each of these estimates.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record, and
the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
Moody's initially analysed and continues to monitor this
transaction using primarily the methodology and its supplements
for cash flow CLOs as described in Moody's Special Reports and
press releases below:
-- Moody's Approach to Rating Collateralized Loan Obligations
(December 2008)
The rating actions are:
Eurocredit Opportunities Parallel Funding I Limited:
(1) EUR312,500,000 Class A Senior Secured Floating Rate Notes due
2019
-- Current Rating: Aa3
-- Prior Rating: Aaa
-- Prior Rating Date: 11 April 2008, assigned Aaa
(2) EUR10,000,000 Class B Senior Secured Deferrable Floating Rate
Notes due 2019
-- Current Rating: Baa2
-- Prior Rating: Aa2 on review for possible downgrade
-- Prior Rating Action Date: 4 March 2009, Aa2 put on review for
possible downgrade
(3) EUR8,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2019
-- Current Rating: Ba1
-- Prior Rating: A1 on review for possible downgrade
-- Prior Rating Action Date: 4 March 2009, A1 put on review for
possible downgrade
(4) EUR40,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2019
-- Current Rating: Caa1
-- Prior Rating: Baa3 on review for possible downgrade
-- Prior Rating Action Date: 4 March 2009, Baa3 put on review
for possible downgrade
=========
I T A L Y
=========
SIENA MORTGAGES: Moody's Assigns 'B3' Rating on Class C Notes
-------------------------------------------------------------
Moody's has assigned definitive ratings to these classes of notes
issued by Siena Mortgages 09-6 Srl:
-- Aaa to the EUR3,466,000,000 Series 2 Class A Residential
Mortgage Backed Floating Rate Notes due 2093
-- Baa3 to the EUR447,100,000 Series 2 Class B Residential
Mortgage Backed Floating Rate Notes due 2093
-- B3 to the EUR188,650,000 Series 2 Class C Residential
Mortgage Backed Floating Rate Notes due 2093
The EUR103,502,000 Series 2 Class D Residential Mortgage Backed
Variable Return Notes due 2093 are not rated.
The transaction represents the ninth securitization of Italian
residential mortgage loans originated by Banca Monte dei Paschi di
Siena S.p.A., rated A1/Prime-1 with stable outlook. The assets
supporting the Notes, which amount to around EUR4,101.8 million,
are prime mortgage loans secured on residential properties located
in Italy. The portfolio will be serviced by Banca Monte dei
Paschi di Siena S.p.A.
Notably, the deal structure includes a hedging mechanism by which
the SPV will pay the actually received interest collections on the
portfolio, while it will receive the Euribor due on the notes plus
100 bps on the performing portfolio, thus excluding delinquent and
defaulted receivables from the notional balance but including
loans that enjoy a temporary payment holiday. The swap is
provided by Banca Monte dei Paschi di Siena S.p.A.
The expected portfolio loss of 2.5% and the MILAN Aaa Credit
Enhancement of 10.6% serve as input parameters for Moody's cash
flow and tranching model, which is based on a probabilistic
lognormal distribution as described in the report "The Lognormal
Method Applied to ABS Analysis", published in September 2000. The
relatively high, for Italian RMBS , expected loss number, reflects
the poorer than average performance of loans originated by the
bank, as evidenced in the vintage default data that Moody's has
received from the originator.
Despite the pool having a weighted average LTV which is in line
with other Italian RMBS transactions, the Milan Aaa CE is slightly
higher than the average, primarily because of: (i) the audit
revealed that there were several errors in the data-tape provided
to Moody's. Most errors were found in the property valuations
where around 25% of the values in the data tape was not conforming
with the paper files or the paper file was completely missing,
(ii) the high number of borrowers for which the employment type
has not been classified (88.9%), and finally (iii) the fact that
no data has been received on how long the client has been current
on his mortgage loan. These factors were addressed in Moody's
MILAN assessment.
The V Score for this transaction is Low/Medium, which is in line
with the V score assigned for the Italian RMBS sector. V Scores
are a relative assessment of the quality of available credit
information and of the degree of dependence on various assumptions
used in determining the rating. High variability in key
assumptions could expose a rating to more likelihood of rating
changes. The V-Score has been assigned accordingly to the report
"V-Scores and Parameter Sensitivities in the Major EMEA RMBS
Sectors" published in April 2009.
The definitive ratings address the expected loss posed to
investors by the legal final maturity. The structure allows for
timely payment of interest and ultimate payment of principal at
par on or before the legal final maturity date. Moody's ratings
address only the credit risks associated with the transaction.
Other non-credit risks have not been addressed but may have a
significant effect on the yield to investors.
===================
K Y R G Y Z S T A N
===================
ERBOL PLUS: Court Names D. Kadinov as Insolvency Manager
--------------------------------------------------------
The Inter-District Court of Bishkek for Economic Issues appointed
D. Kadinov as insolvency manager for LLC Erbol Plus on June 1,
2009. He can be reached at:
D. Kadinov
Tolstoy Str. 2a
Bishkek
Kyrgyzstan
Tel: (0-772) 51-27-79
The court commenced bankruptcy proceedings against the company
after finding it insolvent. The case is docketed under
Case No. ED-563/09 M??5.
SYSTEM OPERATING: Court Names J. Akybaev as Insolvency Manager
--------------------------------------------------------------
The Inter-District Court of Bishkek for Economic Issues appointed
J. Akybaev as insolvency manager for LLC System Operating and
Services on May 24, 2009. He can be reached at:
J. Akybaev
Moskovskaya Str. 151
Room 108
Bishkek
Kyrgyzstan
Tel: (0-773) 11-37-00
The court commenced bankruptcy proceedings against the company
after finding it insolvent. The case is docketed under
Case No. ED-411/05 M??9.
ULTRA BUSINESS: Court Names R. Duishembiyev as Insolvency Manager
-----------------------------------------------------------------
The Inter-District Court of Bishkek for Economic Issues appointed
R. Duishembiyev as insolvency manager for LLC Ultra Business on
June 16, 2009. He can be reached at:
R. Duishembiyev
Tolstoy Str. 2a
Bishkek
Kyrgyzstan
Tel: (0-555) 40-59-40
The court commenced bankruptcy proceedings against the company
after finding it insolvent. The case is docketed under
Case No. ED-568/09 M??2.
WHITE STAR: Court Names M. Sulaimanov as Insolvency Manager
-----------------------------------------------------------
The Inter-District Court of Bishkek for Economic Issues appointed
M. Sulaimanov as insolvency manager for LLC White Star on June 11,
2009. He can be reached at:
M. Sulaimanov
Moskovskaya Str. 151, room 108
Bishkek
Kyrgyzstan
Tel: (0-773) 11-41-92
The court commenced bankruptcy proceedings against the company
after finding it insolvent. The case is docketed under
Case No. ED-565/09 M??3.
=====================
N E T H E R L A N D S
=====================
HAMLET I: Moody's Lowers Rating on EUR78MM Class B Notes to 'B3'
----------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of two
classes of notes and withdrawn the rating of the Class Q
Combination Notes issued by Hamlet I Leveraged Loan Fund B.V.
This transaction is a managed cash leveraged loan collateralized
loan obligation with exposure to predominantly European senior
secured loans, senior unsecured loans, mezzanine loans and high
yield debt securities.
According to Moody's, the rating actions taken on the notes, other
than the Class Q Combination Notes, reflect Moody's revised
assumptions with respect to default probability and the
calculation of the Diversity Score as described in the press
release dated February 4, 2009, titled "Moody's updates key
assumptions for rating CLOs." These revised assumptions have been
applied to all corporate credits in the underlying portfolio, the
revised assumptions for the treatment of ratings on "Review for
Possible Downgrade", "Review for Possible Upgrade", or with a
"Negative Outlook" being applied to those corporate credits that
are publicly rated.
The rating actions are also a result of credit deterioration of
the underlying portfolio. This is observed in, among other
measures as per trustee report dated 5 June 2009, a decline in the
average credit rating as measured through the weighted average
rating factor (currently 2600), an increase in the proportion of
securities from issuers rated Caa1 and below (currently 11.81% of
the portfolio). Moody's also performed a sensitivity analysis,
including amongst others, a further decline in portfolio WARF
quality combined with a decrease in the expected recovery rates.
Moody's also notes that a material proportion of the collateral
pool consists of debt obligations whose credit quality has been
assessed through Moody's Credit Estimates. As credit estimates do
not carry credit indicators such as ratings reviews and outlooks,
a stress of a quarter notch-equivalent assumed downgrade was
applied to each of these estimates.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record, and
the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
The Class Q Combination Notes have been split back into their
original components so the rating has been withdrawn.
Moody's initially analyzed and continues to monitor this
transaction using primarily the methodology and its supplements
for cash flow CLOs as described in Moody's Special Reports and
press releases below:
-- Moody's Approach to Rating Collateralized Loan Obligations
(December 2008)
The rating actions are:
-- EUR222,000,000 Class A Senior Secured Floating Rate Notes due
2020, Downgraded to A2; previously on April 07, 2005 Aaa
Rated
-- EUR78,000,000 Class B Subordinated Notes due 2020, Downgraded
to B3; previously on March 04, 2009 Baa3 Placed Under Review
for Possible Downgrade
-- EUR12,000,000 Class Q Combination Notes due 2020, Withdrawn;
previously on March 04, 2009 Baa2 Placed Under Review for
Possible Downgrade
LYONDELL CHEMICAL: Parent Appoints Potter as Chief Fin'l Officer
----------------------------------------------------------------
LyondellBasell Industries announced that its Supervisory Board has
named Kent Potter as Chief Financial Officer, effective August 1.
Mr. Potter will succeed Alan Bigman who will be offered an
opportunity to continue assisting in the company's Chapter 11
restructuring activities.
"Kent is a highly respected finance executive, and his experience
as chief financial officer for two of the world's largest
chemicals and energy companies makes him ideally suited to this
role," said Jim Gallogly, CEO of LyondellBasell. "I am delighted
that he will be joining our leadership team to help build
LyondellBasell's future."
"LyondellBasell has the potential to be an elite participant in
the chemical industry, and I am excited to be joining the company
at this critical time," said Mr. Potter. "I look forward to
working with the finance team and the entire leadership group
to continue to focus on improving results and emerging from
Chapter 11 protection."
Mr. Potter most recently was a consultant in the petrochemicals
sector and formerly was the Chief Financial Officer of TNK-BP,
Russia's second largest oil company. He was previously Senior
Vice President and Chief Financial Officer for Chevron Phillips
Chemical Company from 2000 to July 2003 and served as a member of
Chevron Phillips Chemical Company's Board of Directors.
Prior to his time with Chevron Phillips, Mr. Potter had spent 27
years with Chevron. During this time, he held financial
management positions in all areas of Chevron's operations. These
included Finance Director for Chevron's North Sea operations, CFO
of Chevron's mining company, CFO of Tengizchevroil in Kazakhstan
and CFO of Chevron Overseas Petroleum (Chevron's international
E&P operations).
Mr. Potter served on the Advisory Board of the Haas Graduate
School of Business (UC, Berkeley) and formerly was a member of the
Supervisory Board of LyondellBasell Industries.
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. On January 6, 2009,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code to facilitate a restructuring of the company's
debts. The case is In re Lyondell Chemical Company, et al.,
Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell
entities, including Equistar Chemicals, LP, Lyondell Chemical
Company, Millennium Chemicals Inc., and Wyatt Industries, Inc.
filed for Chapter 11. In May 2009, one of the cases was dismissed
-- Case No. 09-10068 -- because it is duplicative of Case No. 09-
10040 relating to Debtor Glidden Latin America Holdings.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total USUS$19.34 billion
as of the bankruptcy filing date.
Lyondell has obtained approximately US$8 billion in DIP financing
to fund continuing operations. The DIP financing includes two
credit agreements: a US$6.5 billion term loan, which comprises a
US$3.25 billion in new loans and a US$3.25 billion roll-up of
existing loans; and a US$1.57 billion asset-backed lending
facility.
Luxembourg-based LyondellBasell Industries AF S.C.A. and another
affiliate were voluntarily added to Lyondell Chemical's
reorganization filing under Chapter 11 on April 24, 2009, in order
to seek protection against claims by certain financial and U.S.
trade creditors. On May 8, 2009, LyondellBasell Industries added
13 non-operating entities to Lyondell Chemical Company's
reorganization filing under Chapter 11 of the U.S. Bankruptcy
Code. All of the entities are U.S. companies and were added to
the original Chapter 11 filing for administrative purposes. The
filings will have no impact on current business or operations as
none of the entities manufactures or sells products.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
VAN DER MOOLEN: Seeks Suspension of Payments on Weak Liquidity
--------------------------------------------------------------
Jurjen van de Pol and Martijn van der Starre at Bloomberg News
report that Van der Moolen Holding NV obtained a suspension of
payments requested from an Amsterdam court because of a "very weak
liquidity position".
According to Bloomberg, Van der Moolen said it sought suspension
of payments because of slumping revenue, costs related to moving
offices, and EUR30 million (US$42.6 million) of treasury share
purchases in 2008 that had a "too severe" impact on its reserves.
The company, Bloomberg discloses, posted a loss of EUR8.7 million
in the first half of the year, while sales plunged 73% from a year
earlier.
Bloomberg notes Van der Moolen said no suspension of payments was
sought for any of its subsidiaries. The company, as cited by
Bloomberg, said the court appointed two administrators.
Bloomberg relates Van der Moolen, which has been operating without
a chief executive officer or management board, said "serious
consideration" is being given to selling parts of the company.
Van der Moolen was suspended in Amsterdam trading Monday on
instructions from Dutch securities regulator AFM, Bloomberg
recounts. Bloomberg says the shares have dropped 76% in the past
12 months, giving Van der Moolen a market value of EUR52 million.
Headquartered in Amsterdam, Netherlands, Van der Moolen Holding
N.V. -- http://www.vandermoolen.com/-- is an international
securities trading and brokerage firm that specializes in
providing low-cost liquidity in markets worldwide. Its business
is to make money on financial markets, as a broker and proprietary
trader in securities, futures, derivatives indexes and exchange
traded funds.
===========
N O R W A Y
===========
TERRA SECURITIES: File Securities Fraud Action Against Citigroup
----------------------------------------------------------------
The Bankruptcy Estate of Terra Securities ASA and seven Norwegian
municipalities commenced an action on Monday in New York seeking
more than US$200 million from Citigroup for violations of the
United States securities laws.
The lawsuit contends that Citigroup misled Terra and the
municipalities in 2007 and thereby induced the municipalities into
purchasing notes linked to a "tender option bond" fund purportedly
managed by Citigroup. TOB funds involve leveraged investments in
United States municipal bonds. Ultimately, the municipalities
lost roughly US$90 million to Citigroup, and Terra, a Norwegian
securities firm, suffered additional losses when it was forced
into bankruptcy.
The case was filed in the United States District Court for the
Southern District of New York and names as defendants Citigroup,
Inc., Citigroup Global Markets, Inc. and Citigroup Alternative
Investments LLC. Kasowitz, Benson, Torres & Friedman LLP
represents Terra and the Norwegian municipalities of Bremanger,
Hattfjelldal, Hemnes, Kvinesdal, Narvik, Rana and Vik.
"Citigroup's marketing materials contained misleading statistics
that concealed from both Terra and the municipalities the
significant risk inherent in the fund-linked notes," said Jon
Skjorshammer, the court-appointed administrator of Terra from the
Norwegian law firm Selmer & Co. "Moreover, Citigroup specifically
directed Terra to present these deceptive materials to the
municipalities. We believe we have substantial claims against
these defendants, and we intend to pursue them fully."
According to the lawsuit, Citigroup, through Terra, marketed and
sold to the municipalities over US$115 million in notes linked to
the TOB fund in May and June 2007. In deciding to purchase the
notes, the municipalities contend they relied on Citigroup's
solicitation materials, which allegedly contained statistical data
that falsely represented the TOB fund was properly hedged against
volatility when in fact it was not. By August 2007, the value of
the TOB fund was falling, and in September 2007, the
municipalities were required to post additional collateral. As a
result of Citigroup's misrepresentations, the municipalities lost
most of their original investment by May 2008, and Terra filed for
bankruptcy in November 2007.
The lawsuit contends that the deceptive materials provided to
Terra for presentation to the municipalities were prepared in New
York by Citigroup Global Markets and Citigroup Alternative
Investments. The materials and their general disclaimers made no
adequate reference to the significant credit risk underlying the
fund's strategy, presenting it instead as a low-risk arbitrage
opportunity, according to the lawsuit.
About Citigroup Inc.
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com/-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. At June 30, 2009, Citigroup had
total assets of US$1.84 trillion and total liabilities of
US$1.69 trillion.
As reported in the Troubled Company Reporter on November 25, 2008,
the U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
roughly US$306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup issued preferred shares to the Treasury and
FDIC. The Federal Reserve agreed to backstop residual risk in the
asset pool through a non-recourse loan.
Citigroup is one of the banks that, according to results of the
government's stress test, need more capital.
===========
R U S S I A
===========
CREDIT BANK: Fitch Assigns National Long-Term Rating on 06 Bonds
----------------------------------------------------------------
Fitch Ratings has assigned Russia-based Credit Bank of Moscow's
upcoming three-year RUB2 billion bond Series 06 a National Long-
term rating of 'BBB-(rus)'. The bonds benefit from a guarantee
from CBM's sole shareholder, OOO Concern Rossium. CBM is rated
Long-term Issuer Default 'B' with Negative Outlook, Short-term IDR
'B', Individual 'D', Support '5' and National Long-term 'BBB-
(rus)', also with Negative Outlook.
The bank's obligations under the issue will rank at least equally
with the claims of other senior unsecured creditors of CBM, save
those preferred by relevant legislation. Under Russian law, the
claims of retail depositors rank above those of other senior
unsecured creditors. At end-H109, retail deposits accounted for
38% of CBM's total liabilities, according to the bank's accounts
prepared under Russian Accounting Standards.
CBM was the 55th-largest Russian bank by assets at end-2008 and
its core business is to provide banking services to trading
companies and retail customers, in the Moscow region. The bank is
fully owned by Roman Avdeev, who also serves as the bank's
President. Mr Avdeev also owns the Rossium group, which has
interests in the real estate, agriculture, timber and textile
industries.
In Fitch's rating criteria, a bank's standalone risk is reflected
in Fitch's Individual ratings and the prospect of external support
is reflected in Fitch's Support ratings. Collectively these
ratings drive Fitch's Long- and Short-term IDRs.
MDM BANK: Moody's Lifts Bank Financial Strength Rating to 'D'
-------------------------------------------------------------
Moody's Investors Service has upgraded to D from D- the bank
financial strength rating of MDM Bank (formerly URSA Bank), which
was created on August 7, 2009 by the merger of two large Russian
financial institutions, MDM Bank ("pre-merger MDM") and URSA Bank.
Moody's also upgraded the merged MDM's long-term global local
currency deposit ratings to Ba2 from Ba3, while affirming the
bank's Not Prime short-term deposit ratings. The merged MDM's
foreign currency debt ratings were upgraded to Ba2 from Ba3 (for
senior unsecured debt) and to Ba3 from B1 (for subordinated debt).
Concurrently, Moody's Interfax Rating Agency assigned a long-term
National Scale Rating of Aa2.ru to the merged MDM. Moscow-based
Moody's Interfax is majority owned by Moody's.
Simultaneously, Moody's downgraded the BFSR and long-term global
foreign currency deposit ratings of the pre-merger MDM to D and
Ba2, respectively, from D+ and Ba1. The pre-merger MDM's
D/Ba2/Not Prime ratings will be withdrawn, as the bank is now
consolidated into the merged MDM (formerly URSA).
Following the merger, URSA was renamed MDM and assumed all the
obligations of the pre-merger MDM. Moody's downgraded the pre-
merger MDM's debt ratings to Ba2 from Ba1 (for senior unsecured
debt) and to Ba3 from Ba2 (for subordinated debt), reflecting the
combined financial strength of the merged entity. As the pre-
merger MDM's debt remains outstanding, Moody's will continue to
rate these debt instruments.
The outlook on all the global scale ratings is negative, while the
NSR carries no specific outlook.
The D BFSR of the merged MDM is one notch lower than the BFSR on
the pre-merger MDM, and one notch higher than that of URSA.
Moody's believes that the financial risk profile of the newly
established bank is weaker than that of the pre-merger MDM, while
it is stronger than that of URSA. The rating agency expects the
forthcoming consolidation and operational integration to further
challenge the combined entity's financial fundamentals, which have
already been weakened during the protracted economic downturn. In
the longer term, Moody's views as favorable the potential benefits
of the commercial synergy between the corporate pre-merger MDM and
the retail-oriented URSA, although those synergies may take some
time to materialize.
The D BFSR assigned to the merged MDM translates into a Baseline
Credit Assessment of Ba2 and is underpinned by the bank's: (i)
post-merger position as Russia's second-largest privately owned
bank by assets and shareholders' equity; (ii) combined expertise
in servicing Russia's largest companies and retail banking; (iii)
widespread distribution network; (iv) sound corporate governance
and risk management practices; (v) historically adequate
efficiency and recurring earnings power relative to that of peers;
and (vi) relatively good capitalization.
At the same time, the BFSR is constrained by: (i) the challenging
macroeconomic environment in Russia, which has increased credit,
liquidity and market risks; (ii) the still-high concentration of
the bank's customer funding base; (iii) the bank's notable
reliance on wholesale market funding, which brings about
refinancing issues; and (iv) weakening asset quality, which exerts
negative pressure on bottom-line profitability and capitalization.
Moody's believes that these weaknesses may be exacerbated during
the operational integration of the merged institutions.
Following the significant deterioration of the economic
environment in Russia, the banks' combined problem loans increased
to 8.2% of total gross loans as of April 1, 2009 from 4.9% at
YE2008. The merged MDM's capital cushion is relatively robust,
with a Tier 1 ratio of 15.3% and a total capital adequacy ratio of
17.4% (according to Basel I) at April 1, 2009, which is higher
compared to peers'; however, if asset quality metrics approach the
level anticipated by Moody's worst case stress-test scenario for
the Russian banking sector, the bank's capital adequacy may
closely approach the minimum required levels thus making its loss
absorption capacity weaker.
Both merged banks relied significantly on wholesale market
funding. Both experienced noticeable pressure on their funding
bases in Q4 2008 on the back of the outflow of customer deposits.
Pre-merger MDM maintained a stronger liquidity cushion, while URSA
was more exposed to refinancing risks. The combined entity
benefits from a more balanced liquidity position, with the liquid
assets maintained at a quarter of the total assets. Both pre-
merger MDM and URSA used to tap liquidity provided by the Central
Bank of Russia, but these funds have now been fully repaid. The
merged MDM continues to enjoy a committed facility limit provided
by the CBR of an amount exceeding its total capital.
The merged MDM's Ba2 debt and deposit ratings are based on its BCA
of Ba2 and do not incorporate any probability of systemic support
from the Russian government. Moody's acknowledges that the merged
MDM is now the second-largest privately owned bank in Russia;
however, its market position is only moderate due to the dominance
of state-owned banks. The bank's combined share of system-wide
retail deposits was just 1.0% as of the end of 2008.
The negative outlook on the merged MDM's ratings reflects Moody's
medium-term expectations that the bank's financial fundamentals
will be adversely affected by both the overall hostile economic
environment and the challenges related to post-merger integration.
Moody's previous rating actions on both the pre-merger MDM and
URSA were implemented on 4 December 2008 when the rating agency
changed the outlook on the pre-merger MDM's global scale ratings
to negative from stable, while simultaneously changing the outlook
on URSA's global scale ratings to positive from stable following
the announcement by the shareholders of the two institutions'
intention to merge.
Headquartered in the city of Novosibirsk, the Russian Federation,
the merged MDM ranks 11th by total assets among all Russian banks
and second among privately owned institutions. As per the IFRS
pro-forma statements, at Q1 2009 the merged banks reported
combined consolidated assets of RUB511.6 billion (US$15.0 billion)
and combined shareholders' equity of RUB69.6 billion
(US$2.0 billion). The combined net income of the merged
institutions for Q1 2009 made up RUB469 million (US$13.8 million).
MDM BANK: Fitch Gives 'BB-' Rating After URSA Bank Merger Deal
--------------------------------------------------------------
Fitch Ratings has rated MDM Bank at 'BB-' with a Negative Outlook,
following the completion of its merger with URSA Bank. The
ratings and Outlook of the post-merger bank are the same as those
of the pre-merger MDM Bank.
The ratings of the new MDM Bank reflect its capacity to absorb a
significant level of loan impairment, its now greater regional and
product diversification and notable franchise, and the bank's
relatively good risk management and governance. The ratings are
also supported by the stated readiness of the main shareholders to
contribute additional equity, if required. Fitch further notes
that MDM would be one of the most likely potential private bank
recipients of government capital support, in case of need.
However, MDM's ratings are constrained by risks related to the
ongoing and significant worsening of asset quality. Loans overdue
by 90 days or more rose to an estimated 8.2% of pre-merger MDM's
and URSA's combined IFRS loan books at end-Q109 (end-2008: 4.9%),
while restructured loans were also significant 6%. (Fitch
understands that restructuring is only undertaken with relatively
creditworthy borrowers who should be able to meet revised payment
schedules.) Particular areas of credit risk are the notable share
of lending to retail customers which represented an estimated 33%
of the combined IFRS loan book at end-Q109, with close to half of
this unsecured, and exposures to companies in the troubled real
estate and construction sectors (15%). However, Fitch notes that
the latter is now lower than at the pre-merger MDM (end-Q109 22%),
as are the level of foreign currency lending (now 34%) and loan
concentrations (combined top 20 borrowers accounting for around
0.6x IFRS equity at end-Q109). The relatively high level of
wholesale funding maturing in the medium term also weighs on the
merged bank's credit profile: about 36% of combined end-H109 local
GAAP liabilities were funded internationally, although near-term
refinancing needs are moderate, with foreign debt maturing to end-
June 2010 equal to about 24% of local GAAP liabilities.
With an estimated 10.9% reserves/gross loans ratio and 16.5%
regulatory capital ratio for the combined end-H109 under the local
GAAP balance sheet, Fitch considers loss absorption capacity to
still be significant and estimates that the reserves/loans ratio
could have risen to 20% at end-H109 before the capital ratio for
the combined bank would have fallen to the minimum 10% level.
Reported pre-impairment profit also remains healthy, and both
majority owner Sergey Popov and some of the bank's minority
shareholders have confirmed to Fitch their readiness and ability
to contribute new equity in case of need.
Asset quality dynamics and the timeliness of capital support
measures are likely to determine movements in the bank's ratings
in the near term.
"If credit loss expectations continue to increase without timely
contribution of new equity from shareholders, then a downgrade is
likely," said Alexei Kechko, Director, Fitch's Financial
Institutions group in Moscow. "However, if loan impairment ratios
start to level off while loss absorption capacity continues to be
bolstered by pre-impairment earnings, then downward rating
pressure will ease."
The new MDM Bank would have been Russia's 11th-largest bank by
assets and 7th-largest by equity at end-H109. The merged bank is
well diversified across corporate, SME and retail business lines
with operations across Russia. Sergey Popov holds a 54.1% stake
in the merged bank and CEO Igor Kim holds 10.5%. Minority
shareholders include the International Finance Corporation and the
European Bank for Reconstruction and Development.
The merger between MDM and URSA was completed by MDM being merged
into URSA, with the old MDM formally being liquidated, and the
surviving URSA being renamed MDM Bank. The transaction was
structured in this way because of outstanding preference shares at
URSA which remain in the share capital of the merged bank. Due to
the transaction structure, Fitch has affirmed and withdrawn the
ratings of the old MDM, and upgraded and affirmed the ratings of
URSA (now renamed MDM Bank).
The rating actions are:
URSA Bank (renamed MDM Bank)
-- Long-term IDR: upgraded to 'BB-' from 'B+'; off Rating Watch
Positive; assigned Negative Outlook
-- Short-term IDR: affirmed at 'B'
-- Individual Rating: affirmed at 'D'
-- Support Rating: upgraded to '4' from '5'; off Rating Watch
Positive
-- Support Rating Floor: upgraded to 'B' from 'B-'; off Rating
Watch Positive
-- National Long-term Rating: assigned at 'A+(rus)', Negative
Outlook
-- Senior unsecured debt of pre-merger MDM: affirmed at 'BB-'
-- Senior unsecured debt of pre-merger URSA: upgraded to 'BB-'
from 'B+'; off Rating Watch Positive; Recovery Rating 'RR4'
withdrawn
-- Subordinated debt of pre-merger MDM: affirmed at 'B+'
MDM Bank (liquidated):
-- Long-term IDR: affirmed at 'BB-', Negative Outlook, rating
withdrawn
-- Short-term IDR: affirmed at 'B', rating withdrawn
-- Individual Rating: affirmed at 'D', rating withdrawn
-- Support Rating: affirmed at '4', rating withdrawn
-- Support Rating Floor: affirmed at 'B', rating withdrawn
-- National Long-term Rating: affirmed at 'A+(rus)', Negative
Outlook, rating withdrawn
MDM BANK: S&P Assigns Counterparty Credit Ratings at 'B+/B'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
'B+/B' counterparty credit ratings to the renamed Russia-based MDM
Bank--the legal entity emanating from the merger of MDM Bank and
URSA Bank (not rated). The outlook is stable. At the same time,
S&P lowered its long-term counterparty credit rating on the pre-
merger MDM Bank to 'B+' from 'BB-', affirmed the 'B' short-term
rating, and subsequently withdrew both ratings. S&P also
transferred the ratings on the debt securities of the pre-merger
MDM Bank to the merged entity. At the time of the withdrawal, the
outlook was stable. Furthermore, the long-term rating on the pre-
merger MDM Bank was removed from CreditWatch, where it had
originally been placed with negative implications on December 2,
2008.
"The rating actions reflect the announcement of the merger of MDM
Bank and URSA Bank, creating the merged bank, which will maintain
the MDM Bank name," said Standard & Poor's credit analyst Sergey
Dementiev.
There are high execution risks stemming from this transaction,
which have weakened MDM's credit profile and put pressure on its
liquidity due to the higher risk profile of URSA Bank. The
integration of both institutions on URSA's banking platform will
be a challenging task and is not expected to be complete until
March 2011 at the earliest.
The ratings reflect MDM's stand-alone credit profile and do not
include any uplift for prospective extraordinary external support
from the government.
With total assets of US$13 billion, 350 points of sale, and a
solid client base, MDM is now Russia's second-largest privately-
owned financial institution by assets.
The heightened systemic risks in the Russian economy have led to
the merged bank's significant loan impairment. Nonperforming
loans (NPLs, not including restructured loans) are likely to
exceed 14% by end-2009. The need for additional loan loss
provisions to adequately cover NPLs is likely to lead to a
significant net loss being reported for 2009.
"The stable outlook balances the merged entity's high credit and
liquidity risks with its good commercial position as the second-
largest privately-owned financial institution by assets, as well
as the commitment of shareholders to inject new capital if
required," added Mr. Dementiev.
S&P is unlikely to raise the ratings on the bank unless the bank
returns to profit and materially improves capitalization. At the
same time, S&P would lower the ratings if credit and liquidity
risks become out of control, the bank's financial and business
profiles deteriorate by a significant degree, and the shareholders
do not provide capital to support the bank's loss absorption
capacity.
=========
S P A I N
=========
SANTANDER FINANCIACION: S&P Lowers Rating on Class E Notes to 'D'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'D' its credit
rating on the class E notes issued by Fondo de Titulizacion de
Activos Santander Financiacion 1. At the same time, S&P lowered
and removed from CreditWatch negative S&P's ratings on the class C
and D notes. S&P affirmed all other ratings.
The rating on the class E notes is in default following the
issuer's failure to meet timely interest payments at the July
payment date.
The transaction is structured so that principal shortfalls
breaching certain levels can cause interest to be diverted from
junior to the most senior notes. At the July payment date, the
reported EUR21.6 million principal deficit breached the
EUR13.3 million threshold beyond which the issuer defers interest
due on the class E notes. Consequently, this event triggered the
deferral of the interest payment on these notes. S&P notes that
trigger level deferring interest on the class D notes is
EUR50.3 million.
The downgrade on the class C and D notes therefore follow S&P's
updated risk assessment of the increased likelihood of nonpayment
of interest, which is due to rising principal deficiency levels
that the transaction has accumulated over the past two payment
dates. The downgrades further reflect S&P's view of the default
risk in the residual portfolio.
While the level of loans in arrears for more than 90 days fell
slightly to 6.12% in July (from 6.87% in April), this was largely
due to severely delinquent loans classified as now being in
default. Gross cumulative defaults have reached 5.02% of the
original balance. The transaction features a structural mechanism
that traps excess spread to provide for defaults, which resulted
in the cash reserve being fully drawn by the April payment date.
In S&P's opinion, if defaulted loans continue to rise in line with
their recent levels of growth, deferral of interest on the class D
notes may occur as early as in two payment dates time.
The notes, issued in 2006, are backed by a portfolio of Spanish
consumer loans originated by Banco Santander S.A. (AA/Negative/A-
1+).
Ratings List
Fondo de Titulizacion de Activos Santander Financiacion 1
EUR1,914.3 Million Asset-Backed Floating-Rate Notes
Ratings Lowered
Ratings
-------
Class To From
----- -- ----
E D CCC
Ratings Lowered and Removed From CreditWatch Negative
Ratings
-------
Class To From
----- -- ----
C A- A/Watch Neg
D CCC BB/Watch Neg
Ratings Affirmed
Class Rating
----- ------
A AAA
B AA
F D
=====================
S W I T Z E R L A N D
=====================
AGENA FINANCE: Claims Filing Deadline is August 14
--------------------------------------------------
Creditors of Agena Finance AG Panama are requested to file their
proofs of claim by August 14, 2009, to:
Holenstein Rechtsanwälte AG
Utoquai 29/31
8008 Zurich
Switzerland
The company is currently undergoing liquidation in Zurich. The
decision about liquidation was accepted at the office of Financial
Market Supervision of Swiss Confederation on May 11, 2009.
ANTRO GMBH: Creditors Must File Claims by August 14
---------------------------------------------------
Creditors of ANTRO GmbH are requested to file their proofs of
claim by August 14, 2009, to:
ANTRO GmbH
Blickensdorferstrasse 2
6312 Steinhausen
Switzerland
The company is currently undergoing liquidation in Steinhausen.
The decision about liquidation was accepted at a shareholders'
meeting held on June 16, 2009.
BUMAR GMBH: Creditors Have Until August 14 to File Claims
---------------------------------------------------------
Creditors of Bumar GmbH are requested to file their proofs of
claim by August 14, 2009, to:
Dr. Egbert Wilms
Liquidator
Holbeinstrasse 31
8032 Zurich
Switzerland
The company is currently undergoing liquidation in Zurich. The
decision about liquidation was accepted at an extraordinary
shareholders' meeting held on June 26, 2009.
EUGSTER GMBH: Creditors Must File Claims by August 14
-----------------------------------------------------
Creditors of Eugster GmbH are requested to file their proofs of
claim by August 14, 2009, to:
Eugster Simon
Liquidator
Augstinergasse 31
9004 St. Gallen
Switzerland
The company is currently undergoing liquidation in St. Gallen.
The decision about liquidation was accepted at a shareholders'
meeting held on June 23, 2009.
KEY FINANCE: Claims Filing Deadline is August 14
------------------------------------------------
Creditors of Key Finance Holding (Switzerland) AG are requested to
file their proofs of claim by August 14, 2009, to:
Dr. Patrick Nuetzi
Grabenstrasse 42
6301 Zug
Switzerland
The company is currently undergoing liquidation in Zug. The
decision about liquidation was accepted at an extraordinary
general meeting held on May 26, 2009.
KNAPP AG: Claims Filing Deadline is August 14
---------------------------------------------
Creditors of Knapp AG are requested to file their proofs of claim
by August 14, 2009, to:
Rolf Knapp
Liquidator
Berghofstrasse 9
8918 Unterlunkhofen
Switzerland
The company is currently undergoing liquidation in Unterlunkhofen.
The decision about liquidation was accepted at a general meeting
held on June 17, 2009.
KONTICO TRADING: Claims Filing Period Ends August 14
----------------------------------------------------
Creditors of KONTICO Trading AG are requested to file their proofs
of claim by August 14, 2009, to:
Stefan Koller
Liquidator
Gotthardstrasse 3
6300 Zug
Switzerland
The company is currently undergoing liquidation in Zug. The
decision about liquidation was accepted at an extraordinary
general meeting held on May 19, 2009.
KROSS FINANZ: Creditors Must File Claims by August 14
-----------------------------------------------------
Creditors of Kross Finanz AG are requested to file their proofs of
claim by August 14, 2009, to:
Stefan Ruedisueli
Kirchstrasse 42
8807 Freienbach
Switzerland
The company is currently undergoing liquidation in Baar. The
decision about liquidation was accepted at a general meeting held
on June 10, 2009.
LISAG EDV-SERVICE: Creditors Must File Claims by August 14
----------------------------------------------------------
Creditors of Lisag EDV-Service AG are requested to file their
proofs of claim by August 14, 2009, to:
Peter W. Erhart and Claudia D. Erhart
Liquidators
Hauptstrasse 44
4153 Reinach
Switzerland
The company is currently undergoing liquidation in Reinach BL.
The decision about liquidation was accepted at a general meeting
held on June 29, 2009.
MALBOSQUET AG: Claims Filing Deadline is August 14
----------------------------------------------------
Creditors of Malbosquet AG are requested to file their proofs of
claim by August 14, 2009, to:
Malbosquet AG
Wiesentalstrasse 126
7006 Chur
Switzerland
The company is currently undergoing liquidation in Chur. The
decision about liquidation was accepted at an extraordinary
general meeting held on June 12, 2009.
MAX SHOENENBERG: Claims Filing Deadline is August 14
----------------------------------------------------
Creditors of Max Schoenenberg + Partner AG are requested to file
their proofs of claim by August 14, 2009, to:
Max Schoenenberg + Partner AG
Fellenbergstrasse 289
8047 Zurich
Switzerland
The company is currently undergoing liquidation in Zurich. The
decision about liquidation was accepted at an extraordinary
general meeting held on June 18, 2009.
PLANEN + BAUEN: Claims Filing Deadline is August 14
---------------------------------------------------
Creditors of Planen + Bauen Engadin St. Moritz AG are requested to
file their proofs of claim by August 14, 2009, to:
Malloth Holzbau AG
Via Sent 2
7500 St. Moritz
Switzerland
The company is currently undergoing liquidation in St. Moritz.
The decision about liquidation was accepted at a general meeting
held on June 26, 2009.
PYROTECHNISCHE FABRIK: Claims Filing Deadline is August 14
------------------------------------------------------------------
Creditors of Pyrotechnische Fabrik Mueller AG are requested to
file their proofs of claim by August 14, 2009, to:
Ruedi H. Moesli
Santisstrasse 4
8280 Kreuzlingen
Switzerland
The company is currently undergoing liquidation in Kreuzlingen.
The decision about liquidation was accepted at an extraordinary
general meeting held on May 19, 2009.
RHONE-FER GMBH: Creditors Must File Claims by August 14
-------------------------------------------------------
Creditors of Rhone-fer GmbH are requested to file their proofs of
claim by August 14, 2009, to:
Berta Wenger
Hauptstrasse
3937 Baltschieder
Switzerland
The company is currently undergoing liquidation in Visp. The
decision about liquidation was accepted at a shareholders' meeting
held on June 29, 2009.
SUHP DATABASE: Claims Filing Deadline is August 14
--------------------------------------------------
Creditors of SUHP Database Marketing GmbH are requested to file
their proofs of claim by August 14, 2009, to:
Zeynel Akguel Wicki
Liquidator
Hochstrasse 178
8330 Pfaffikon
Switzerland
The company is currently undergoing liquidation in Pfaffikon. The
decision about liquidation was accepted at an extraordinary
shareholders' meeting held on June 10, 2009.
TOQUE AG: Creditors Have Until August 14 to File Claims
-------------------------------------------------------
Creditors of Toque AG are requested to file their proofs of claim
by August 14, 2009, to:
Ottilia Glanzmann-Vogel
Liquidator
Cherliweg 1
4614 Hagendorf
Switzerland
The company is currently undergoing liquidation in Wangen bei
lten. The decision about liquidation was accepted at an
extraordinary general meeting held on June 27, 2009.
TOROFX GMBH: Claims Filing Deadline is August 14
------------------------------------------------
Creditors of ToroFX GmbH are requested to file their proofs of
claim by August 14, 2009, to:
FISCOM Consulting GmbH
Haldenstrasse 5
6342 Baar
Switzerland
The company is currently undergoing liquidation in Baar. The
decision about liquidation was accepted at an extraordinary
shareholders' meeting held on June 12, 2009.
UBS AG: Settlement Talks Continue, Drafting Pact Needs More Time
----------------------------------------------------------------
Carrick Mollenkamp at The Wall Street Journal reports that UBS AG
and the U.S. and Swiss governments are continuing settlement
talks, as the parties try to structure a deal that will likely
result in UBS handing over client information on thousands of
accounts tied to U.S. citizens.
As reported by the Troubled Company Reporter on August 3, 2009,
UBS, along with the Swiss government, reached a settlement
agreement with U.S. authorities regarding a tax-evasion probe.
The Journal relates that a final round of negotiations the past
week was aimed at completing the settlement with the Justice
Department. Katharina Bart at The Journal reports that the talks
were reportedly stalled over when and how Switzerland transfers
client-account data, which is protected by strict bank-secrecy
laws.
UBS clients' lawyers, according to The Journal, said that the
delays are partly tied to the extent the Internal Revenue Service
will be allowed to pursue claims against at other Swiss bank
clients.
The Journal says that department attorney Stuart Gibson told the
court on Friday that more time is needed.
Switzerland's justice department said in a statement, "We will
continue to strive for a solution which is in the interests of
both countries."
The Journal states that a teleconference is scheduled for
Wednesday to update U.S. District Judge Alan Gold, who is
overseeing the case.
Katharina Bart at The Journal reports that the Swiss cabinet held
an extraordinary meeting on UBS's problems with U.S. tax
authorities.
Switzerland could be trying to make arrangements ensuring any
concessions made to U.S. authorities as part of a settlement can
be met, which might include a faster administrative process for
handing over the date to the IRS, The Journal states, citing
analysts.
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.
As reported in the Troubled Company Reporter-Europe, UBS has
amassed more than US$53 billion in writedowns and losses since the
credit crisis began. The bank expects to post a loss in the
second quarter of 2009. The bank's net loss for full-year 2008
widened to CHF19.697 billion from of CHF5.247 million in the prior
year. Net losses from continuing operations totaled
CHF19.327 billion, compared with losses of CHF5.111 billion 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 billion,
down from a net profit of CHF296 million. Net loss from
continuing operations was CHF7.997 billion compared with a profit
of CHF433 million. The Investment Bank recorded a pre-tax loss of
CHF7.483 billion, compared with a pre-tax loss of CHF2.748 billion
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 billion was recorded by the Investment Bank in fourth
quarter 2008, mainly due to redemptions and repurchases of UBS
debt during this period.
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.
UNITSOFT AG: Creditors Have Until August 14 to File Claims
----------------------------------------------------------
Creditors of UnitSoft AG are requested to file their proofs of
claim by August 14, 2009 to:
UnitSoft AG
Flurstrasse 30
8048 Zurich
Switzerland
The company is currently undergoing liquidation in Zurich. The
decision about liquidation was accepted at an extraordinary
general meeting held on May 25, 2009.
===========================
U N I T E D K I N G D O M
===========================
BRITISH AIRWAYS: S&P Assigns 'BB' Rating on GBP350 Mil. Bonds
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'BB' debt rating to the proposed GBP350 million senior unsecured
convertible bonds to be issued by U.K.—based airline British
Airways PLC (BA; BB/Negative/--).
At the same time, a recovery rating of '4' was assigned to this
debt, indicating Standard & Poor's expectation of average (30%-
50%) recovery for creditors in the event of a payment default.
It is S&P's understanding that these notes will be unsecured and
rank equally with the rated GBP250 million notes. The rating of
this convertible bond is subject to satisfactory review of final
documentation.
Recovery Analysis
S&P has valued the business as a going concern, given S&P's
assessment of BA's leading market position among European airlines
and S&P's assessment that the business would retain more value as
an operating entity. In S&P's hypothetical scenario, a default
would most likely result from operational underperformance as well
as a weakening in both liquidity reserves and operating cash flow
generation. S&P's default scenario assumes that the group would
voluntarily restructure if it foresaw cash balances falling below
a minimum threshold.
Recovery prospects for unsecured noteholders reflect the estimated
value available and accessible to the creditors, and are
underpinned by BA's unpledged asset base. Nevertheless, the vast
majority of the group's debt is secured over fleet assets, while
bondholders' claims are restricted to a much smaller pool of
unpledged assets. S&P's estimate of the stressed enterprise value
of BA's unencumbered assets (including the aircraft incorporated
into the guarantee structure for the pension liabilities) is about
GBP2.3 billion. This includes a conservative realizable value
assumed for landing rights.
Recovery expectations are sensitive to the size of other claims,
such as pension liabilities and their effective ranking in a
restructuring process.
The recovery rating on the bonds is based on the current capital
structure, which could change materially on the path to default.
Any change in the group's capital structure -- such as additional
secured debt ranking ahead of the notes or the grant of additional
security to existing or new bank facility providers -- could
affect the outcome, thereby reducing recovery prospects for
unsecured bondholders.
CATTLES PLC: Sells Invoice Finance Unit for GBP70 Million
---------------------------------------------------------
Simon Bowers at guardian.co.uk reports that Cattles plc has agreed
to sell its subsidiary Cattles Invoice Financing to London-based
private equity house AnaCap for GBP70 million to repay debts.
According to the report, after transaction costs and repayment of
inter-company loans, the sale of CIF to AnaCap will generate about
GBP8.4 million-GBP2 million less than the unit's net asset value.
Cattles is thought to have about GBP2.6 billion of loans and bonds
outstanding, the report discloses.
Cattles plc -- http://www.cattles.co.uk/-- is a financial
services company specializing in providing consumer credit to non-
standard customers in United Kingdom. The Company also provides
debt recovery services to external clients and its consumer credit
business, and working capital finance for small- and medium-sized
businesses. It also has a car retail operation, which is an
introducer of hire purchase customers to its consumer credit
business. Its business divisions include Welcome Financial
Services, The Lewis Group and Cattles Invoice Finance. Welcome
Financial Services consists of three businesses: Welcome Finance,
Shopacheck and Welcome Car Finance. Shopacheck provides short-
term home collected loans to some 260,000 customers through 52
branches. The Lewis Group provides debt recovery and
investigation services, serving both external clients and Welcome
Financial Services. In September 2007, it announced the
acquisition of a debt portfolio of United Kingdom credit card,
loan and overdraft receivables.
* * *
As reported in the Troubled Company Reporter-Europe on July 10,
2009, Fitch Ratings downgraded Cattles plc's Long-term Issuer
Default Rating to 'RD' from 'CC'. Fitch simultaneously
downgraded Cattles' Short-term IDR to 'RD' from 'C'. The
company's senior unsecured bonds' Long-term rating was
affirmed at 'C' with a Recovery Rating of 'RR5'.
CATTLES PLC: To Seek High Court Ruling on Priority of Payment
-------------------------------------------------------------
Lorraine Turner at Reuters reports that Cattles plc said Tuesday
it will go to the High Court to determine whether its bondholders
or bank lenders to its unit Welcome Finance have first call on its
assets.
Reuters says uncertainty around the repayment of loans and bonds
has forced the company to seek clarification in the High court.
According to Reuters, bondholders are demanding immediate
repayment of GBP400 million of debt which had been due to mature
in 2017.
Reuters relates Cattles is in talks with lenders to agree a formal
standstill agreement after extending the maturity of the GBP500
million banking facilities until the end of the year. The
company, Reuters discloses, is saddled with GBP700 million (US$1.2
billion) of bad debts after accounting issues and poor impairment
provisioning.
Cattles plc -- http://www.cattles.co.uk/-- is a financial
services company specializing in providing consumer credit to non-
standard customers in United Kingdom. The Company also provides
debt recovery services to external clients and its consumer credit
business, and working capital finance for small- and medium-sized
businesses. It also has a car retail operation, which is an
introducer of hire purchase customers to its consumer credit
business. Its business divisions include Welcome Financial
Services, The Lewis Group and Cattles Invoice Finance. Welcome
Financial Services consists of three businesses: Welcome Finance,
Shopacheck and Welcome Car Finance. Shopacheck provides short-
term home collected loans to some 260,000 customers through 52
branches. The Lewis Group provides debt recovery and
investigation services, serving both external clients and Welcome
Financial Services. In September 2007, it announced the
acquisition of a debt portfolio of United Kingdom credit card,
loan and overdraft receivables.
* * *
As reported in the Troubled Company Reporter-Europe on July 10,
2009, Fitch Ratings downgraded Cattles plc's Long-term Issuer
Default Rating to 'RD' from 'CC'. Fitch simultaneously
downgraded Cattles' Short-term IDR to 'RD' from 'C'. The
company's senior unsecured bonds' Long-term rating was
affirmed at 'C' with a Recovery Rating of 'RR5'.
EUROSAIL PLC: Fitch Downgrades Ratings on Five Tranches to 'C'
--------------------------------------------------------------
Fitch Ratings has downgraded 32 tranches and affirmed 38 tranches
covering the six Eurosail 2006 series, Eurosail 2007-1 NC plc and
Eurosail 2007-2 NP plc non-conforming RMBS transactions. The
downgrades were predominantly caused by the deteriorating
performance of the deals in the current negative economic
environment.
Fitch notes that arrears have levelled off across all six
transactions, both in terms of the percentage of the outstanding
balance and the volume of new arrears. The agency believes this
is being driven by the reduction in UK interest rates which has
improved mortgage repayment affordability. Furthermore, the
latest quarter has seen a surge in collection rates. The average
collection rate prior to the June 2009 interest payment date was
95%, but the latest reports show an increase to an average of 115%
across the six transactions. In Fitch's view this is the largest
positive performance factor of the six transactions.
However, other performance indicators continue to deteriorate.
With the exception of Eurosail 2007-2 which currently has a fully
funded reserve fund, the remaining transactions have seen large
reserve fund draws, which in the case of Eurosail 2006-3 and
Eurosail 2007-1 have been fully utilized, leading to the
allocation of losses to the principal deficiency ledgers (PDL) of
the most junior notes. This has reduced the available credit
enhancement to the junior notes of these two transactions.
All six transactions have seen a rising level of sold
repossessions, resulting in an increase in period losses.
Simultaneously, the weighted-average loss severities (WALS) being
realized on sold repossessions have been increasing. The latest
period WALS range from 30.1% (Eurosail 2006-4) to 37.5% (Eurosail
2006-2). Fitch expects WALS to increase as the transactions
season, as less desirable property is sold, and as the full effect
of house price declines impacts the transactions. The increasing
losses are compressing the level of gross excess spread generated
each quarter which is impacting negatively on the size of the
reserve fund draws.
The current level of repossessions reduced in the last quarter in
all six transactions. In Fitch's opinion the active management of
the repossession book by the servicer, Capstone, is a positive for
the transactions as it limits future negative exposure to a
volatile housing market. Although the continued sale of
repossessed properties is putting significant pressure on
transaction cash flows, Fitch believes this is preferable to
holding onto properties too long in a falling market. However,
the agency expects that repossession levels will rise as the
affects of increased unemployment take effect. Therefore, keeping
the repossession book as small as possible will be beneficial in
the long term.
Additionally, the transactions continue to see prepayment rates
fall to well below Fitch's expectations, likely driven by the lack
of refinancing opportunities available in the current market.
This in turn is expected to result in higher levels of
repossessions, as troubled borrowers who would previously have
refinanced will now remain in the pool, increasing the possibility
of default.
The rating actions are:
Eurosail 2006-1 plc
-- Class A2c (ISIN XS0253567720) affirmed at 'AA+'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class B1a (ISIN XS0253569007) downgraded to 'A' from 'AA';
Outlook Stable; assigned Loss Severity Rating 'LS-3'
-- Class B1c (ISIN XS0253571243) downgraded to 'A' from 'AA';
Outlook Stable; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0253572050) downgraded to 'BB' from 'BBB';
Outlook Negative; assigned Loss Severity Rating 'LS-4'
-- Class C1c (ISIN XS0253573298) downgraded to 'BB' from 'BBB';
Outlook Negative; assigned Loss Severity Rating 'LS-4'
-- Class D1a (ISIN XS0253573611) affirmed at 'CCC'; Recovery
Rating revised to 'RR4' from 'RR3'
-- Class D1c (ISIN XS0253574932) affirmed at 'CCC'; Recovery
Rating revised to 'RR4' from 'RR3'
-- Class E (ISIN XS0253576630) affirmed at 'CC'; Recovery Rating
revised to 'RR6' from 'RR5'
Eurosail 2006-2BL PLC
-- Class A2c (ISIN XS0266235612) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class B1a (ISIN XS0266238715) downgraded to 'A' from 'AA';
Outlook Stable; assigned Loss Severity Rating 'LS-3'
-- Class B1b (ISIN XS0266244440) downgraded to 'A' from 'AA';
Outlook Stable; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0266246817): downgraded to 'BB' from 'A-';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class C1c (ISIN XS0266250413): downgraded to 'BB' from 'A-';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class D1a (ISIN XS0266252625): downgraded to 'CCC' from 'B';
assigned Recovery Rating 'RR2'
-- Class D1c (ISIN XS0266256709): downgraded to 'CCC' from 'B';
assigned Recovery Rating 'RR2'
-- Class E1c (ISIN XS0266258317): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class F1c (ISIN XS0266260560): affirmed at 'CC'; assigned
Recovery Rating 'RR6'
Eurosail 2006-3 NC Plc
-- Class A2b (ISIN XS0271943200) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A2c (ISIN XS0271944356) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A3a (ISIN XS0271944604) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A3c (ISIN XS0271945833) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A3c DAC (ISIN XS0272142828) affirmed at 'AAA'; Outlook
Stable
-- Class B1a (ISIN XS0271946054) affirmed at 'A'; Outlook
Negative ; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0271946484): downgraded to 'B' from 'BB';
Outlook Negative; assigned Loss Severity Rating 'LS-4'
-- Class C1c (ISIN XS0271946641): downgraded to 'B' from 'BB';
Outlook Negative; assigned Loss Severity Rating 'LS-4'
-- Class D1a (ISIN XS0271946724): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class D1c (ISIN XS0271947029): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class E1c (ISIN XS0271947375): downgraded to 'C' from 'CC';
assigned Recovery Rating 'RR6'
-- Class ETc (ISIN XS0271947458): downgraded to 'C' from 'CC';
assigned Recovery Rating 'RR6'
-- Class FTc (ISIN XS0271947706): affirmed at 'C'; assigned
Recovery Rating 'RR6'
Eurosail 2006-4NP Plc
-- Class A2c (ISIN XS0274210755): affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A3a (ISIN XS0275909934): affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A3c (ISIN XS0275917796): affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class M1a (ISIN XS0275920071): affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-3'
-- Class M1c (ISIN XS0275921715): affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-3'
-- Class B1a (ISIN XS0274201507): downgraded to 'A' from 'AA-';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0274203891): downgraded to 'BB' from 'BBB';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class C1c (ISIN XS0274213692): downgraded to 'BB' from 'BBB';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class D1a (ISIN XS0274204196): downgraded to 'CCC' from 'B';
assigned Recovery Rating 'RR2'
-- Class D1c (ISIN XS0274214310): downgraded to 'CCC' from 'B';
assigned Recovery Rating 'RR2'
-- Class E1c (ISIN XS0274216018): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
Eurosail UK 2007-1 NC Plc:
-- Class A2a (ISIN XS0284931267): affirmed at 'AA+'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A2c (ISIN XS0284945564): affirmed at 'AA+'; Outlook
Stable; assigned Loss Severity Rating 'LS-2'
-- Class A3a (ISIN XS0284931853): affirmed at 'AA+'; Outlook
Negative; assigned Loss Severity Rating 'LS-2'
-- Class A3c (ISIN XS0284999496): affirmed at 'AA+'; Outlook
Negative; assigned Loss Severity Rating 'LS-2'
-- Class A3c DAC (ISIN XS0285007182): affirmed at 'AAA'; Outlook
Stable
-- Class B1a (ISIN XS0284932315): downgraded to 'BBB' from 'A';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class B1c (ISIN XS0284947263): downgraded to 'BBB' from 'A';
Outlook Negative; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0284933719): downgraded to 'CCC' from 'BB';
assigned Recovery Rating 'RR2'
-- Class D1a (ISIN XS0284935094): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class D1c (ISIN XS0284950994): downgraded to 'CC' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class DTc (ISIN XS0284954988): downgraded to 'C' from 'CCC';
assigned Recovery Rating 'RR5'
-- Class E1c (ISIN XS0284956330): downgraded to 'C' from 'CC';
assigned Recovery Rating 'RR6'
-- Class ETc (ISIN XS0284957064): downgraded to 'C' from 'CC';
assigned Recovery Rating 'RR6'
-- Class FTc (ISIN XS0284958542): affirmed at 'C'; assigned
Recovery Rating 'RR6'
Eurosail-UK 2007-2 NP PLC
-- Class A1a (ISIN XS0291411261) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A1c (ISIN XS0291416658) affirmed at AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A2a (ISIN XS0291420171) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A2c (ISIN XS0291422466) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A3a (ISIN XS0291422623) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class A3c (ISIN XS0291423605) affirmed at 'AAA'; Outlook
Stable; assigned Loss Severity Rating 'LS-1'
-- Class M1a (ISIN XS0291424165) affirmed at 'AAA'; Outlook
Negative; assigned Loss Severity Rating 'LS-3'
-- Class M1c (ISIN XS0291426889) affirmed at 'AAA'; Outlook
Negative; assigned Loss Severity Rating 'LS-3'
-- Class B1a (ISIN XS0291433158) affirmed at 'A'; Outlook
Negative; assigned Loss Severity Rating 'LS-3'
-- Class B1c (ISIN XS0291434123) affirmed at 'A'; Outlook
Negative; assigned Loss Severity Rating 'LS-3'
-- Class C1a (ISIN XS0291436250) downgraded to 'BB' from 'BBB';
Outlook Negative; assigned Loss Severity Rating 'LS-4'
-- Class D1a (ISIN XS0291441417) affirmed at 'CCC'; assigned
Recovery Rating 'RR2'
-- Class D1c (ISIN XS0291442498) affirmed at 'CCC'; assigned
Recovery Rating 'RR2'
-- Class E1c (ISIN XS0291443892) affirmed at 'CC'; assigned
Recovery Rating 'RR5'
-- Class ETc (ISIN XS0291443629) affirmed at 'C'; assigned
Recovery Rating 'RR5'
GAGGIA UK: Closes Halifax Plant; On the Verge of Administration
---------------------------------------------------------------
Colin Drury at Evening Courier reports that luxury coffee machine
maker Gaggia UK has closed a Halifax factory, resulting in the
loss of more than 30 jobs.
Evening Courier relates the company on Friday night appeared to be
on the verge of administration. According to Evening Courier, the
phones at the Halifax firm were not being answered, while a
recorded message on the company's sales line said the firm was no
longer taking orders and would contact customers with details
about existing repairs.
Evening Courier notes it was reported accountancy firm RSM Bentley
Jennison was on standby to act as administrator.
IMO CARWASH: Judge Sanctions Debt Restructuring Plan
----------------------------------------------------
Anousha Sakoui at The Financial Times reports that Lord Justice
George Mann has sanctioned IMO Carwash Ltd.'s plan to renegotiate
its debts.
The FT relates Lord Justice Mann on Tuesday sanctioned a scheme
under which senior lenders to IMO -- which include HBOS and US
distressed debt investor Angelo Gordon -- take over the company in
exchange for writing off debt claims. The scheme wipes out junior
creditors' claims. James Lumley at Bloomberg News reports that
court documents show the senior debt is about GBP313 million and
the junior, or mezzanine, debt totals about GBP119 million.
According to Bloomberg, the debts stem from a 2006 leveraged
buyout of the company.
The FT says the plan proposed by the company, being advised by
Rothschild and law firm Latham Watkins, needs only 75% of senior
creditors to approve it and for the court to sanction it. Citing
court documents, Bloomberg notes the restructuring is backed by
the company and the senior creditors.
According to Bloomberg, lawyers for the mezzanine creditors fought
the plan, which leaves them with "worthless" claims against the
predecessor company. Bloomberg relates Richard Tett, an
insolvency lawyer at Freshfields Bruckhaus Deringer, said in an
interview by opposing the plan, the mezzanine creditors were
"essentially asking for a free ride". Bloomberg notes Mr. Tett
said junior lenders generally may have to be prepared to expend
more money to protect their investments. The mezzanine lenders
aren't prepared to take on the same risk as senior lenders,
Bloomberg quoted Lord Justice Mann as saying. If they were, they
would "buy out the senior debt and take over the arrangement."
The case, the FT states, centers on a dispute among creditors over
whether IMO should be restructured on its value today or on some
potential future value on which junior creditors would make a
recovery. Mr. Tett, as cited by the FT, said by sanctioning the
schemes, the judge decided that companies should be valued at
their present value tested on a going-concern basis. The FT says
on some estimates, IMO is believed to be worth less today than its
senior debt value.
IMO Car Wash Group -- http://www.imocarwash.com/-- is the world's
largest car wash company, washing over 30 million cars each year
across 14 countries. IMO operates over 930 sites, including more
than 330 in the United Kingdom trading as arc Clean Car Centres,
and over 345 sites in Germany. IMO Car Wash was acquired by The
Carlyle Group in March 2006.
LADBROKES PLC: Net Income Down to GBP74.7 Mln in Second Qtr. 2009
-----------------------------------------------------------------
David Altaner at Bloomberg News reports that Ladbrokes Plc's net
income for the six months ended June 30 dropped to GBP74.7 million
(US$126 million) from GBP94 million in the same period a year
earlier.
According to Bloomberg, operating profit dropped 21% to GBP20.8
million at Ladbroke's Internet-gambling sites, while net Internet
revenue fell 2.3% GBP84.6 million.
Bloomberg relates Ladbrokes Chief Executive Officer Christopher
Bell said in a conference call the company will move its online
sports-betting to Gibraltar by the year end to save about GBP7
million (US$11.9 million) in tax and levy annually.
Ladbrokes plc -- http://www.ladbrokesplc.com/-- is a betting and
gaming company. The Company operates in five segments. The
United Kingdom Retail segment comprises betting activities in the
shop estate in Great Britain. The Other European Retail segment
comprises all activities connected with the Ireland, Belgium and
Italy shop estates. The eGaming segment comprises betting and
gaming activities from online operations. The Telephone Betting
segment comprises activities relating to bets taken on the
telephone. The Other segment comprises international development
operations and the start up of its Spanish joint venture. As of
December 31, 2008, Ladbrokes plc had approximately 8,800 betting
shops in Great Britain. On February 4, 2008, the Company acquired
100% of Agenzie Scommesse SRL, a betting company in Italy.
Ladbrokes.com is a primary betting and gaming Websites with over
725,000 active customers betting in 13 languages and 18
currencies.
* * *
As reported in the Troubled Company Reporter-Europe on June 16,
2009, Fitch Ratings downgraded UK-based betting operator Ladbrokes
PLC's Long-term Issuer Default Rating to 'BB+' from 'BBB-' and its
Short-term IDR to 'B' from 'F3'. Fitch said the Outlook for the
Long-term IDR is Stable.
LEHMAN BROTHERS: Stipulations on Return of Erroneous Transfers
--------------------------------------------------------------
Lehman Brothers Holdings Inc. and JPMorgan Chase Bank, N.A.,
sought and obtained the Court's approval of a stipulation
requiring LBHI to immediately return US$1,385,000 to JPMorgan.
The
amount was erroneously wired to LBHI (UK) at Bank of America
account number 6550161536. JPMorgan has informed LBHI that the
Transfer was made in error and has asked for a return of the
Misdirected Funds. Following receipt from JPM of information
concerning the Transfer, and having conducted an internal review
and investigation, LBHI has determined that the Misdirected Funds
should be returned to JPM.
Meanwhile, James Giddens, trustee for Lehman Brothers Inc.,
obtained the Court's approval of the stipulations he entered into
with these parties concerning the return of funds erroneously
transferred to LBI's bank accounts:
Parties Amount
------- -----------
RCG Endeavour LLC US$4,589,104
Florence Mildred Terry Ttee US$110,000
Cadbury PLC GBP54,533
Paradise Enterprises Limited US$130,000
Mr. Giddens is awaiting the Court's approval of the stipulation
he entered into with James and Ann Marie Corner JTWROS to return
US$150,000.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition
listed US$639 billion in assets and US$613 billion in debts,
effectively making the firm's bankruptcy filing the largest in
U.S. history. Several other affiliates followed thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the
U.S. District Court for the Southern District of New York, entered
an order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI
The Bankruptcy Court has approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for
US$1.75 billion. Nomura Holdings Inc., the largest brokerage
house in Japan, purchased LBHI's operations in Europe for
US$2 plus the retention of most of employees. Nomura also bought
Lehman's operations in the Asia Pacific for US$225 million.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers International
(Europe) on September 15, 2008. The joint administrators have
been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33
billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Creditors' Panel Hires R. Sheldon for U.K. Issues
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in Lehman Brothers
Holdings Inc.'s cases seeks permission from the U.S. Bankruptcy
Court for the Southern District of New York to employ Richard
Sheldon, Esq., as its special counsel effective June 23, 2009.
The Creditors' Committee taps Mr. Sheldon in connection with the
litigation claims filed in the U.K. High Court of Justice
Perpetual Trustee Company Ltd. and Belmont Park Investments Pty
Ltd. against BNY Corporate Trustee Services Ltd. The claims seek
to foreclose the collateral held in trust by BNY, which secures
Lehman Brothers Special Financing Inc.'s interest in a credit
default swap with Saphir Finance plc. and two other companies.
As special counsel, Mr. Sheldon is tasked to:
(1) advise the Creditors' Committee with respect to all
aspects of English law that are relevant to the
litigations and similar cases that may be filed;
(2) advise the Creditors' Committee with respect to any claims
and defenses that may be available to LBSF under English
law concerning the litigation claims, or other claims
that may be filed in connection with the so-called Dante
Programme, a 2002 investment program structured and
marketed by Lehman Brothers International Europe;
(3) represent the Creditors' Committee's interests in the
litigations or similar cases that may be filed; and
(4) perform other legal services.
Mr. Sheldon will be paid of his services at an hourly rate which
will be subject to a discount, and will be reimbursed of his
expenses. His current discounted hourly rate, in pounds
sterling, is GBP650 per hour and is subject to a 15% value-added
tax.
In an affidavit, Mr. Sheldon, Esq., a member of chambers of 3-4
South Square, Gray's Inn, assures the Court that he does not have
connection with the Debtors and their creditors, and does not
represent any interest adverse to the Creditors' Committee.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offered a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo were complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed
US$639 billion in assets and US$613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
September 16 (Case No. 08-13600). Several other affiliates
followed thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on September 22 reached an
agreement to purchased Lehman Brothers Holdings, Inc.'s operations
in Europe and the Middle East less than 24 hours after it reached
a deal to buy Lehman's operations in the Asia Pacific for
US$225 million. Nomura paid only US$2 for Lehman's
investment banking and equities businesses in Europe, but agreed
to retain most of Lehman's employees.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of
JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc.
reported about JPY3.4 trillion (US$33 billion) in liabilities in
its petition. Akio Katsuragi, a former Morgan Stanley executive,
runs Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
MECOM GROUP: Posts EUR79.2 Mln Pre-Tax Loss in First Half 2009
--------------------------------------------------------------
Rowena Mason at Telegraph.co.uk reports that Mecom Group plc
posted a EUR79.2 million pre-tax loss for the six months to the
end of June, compared with a EUR20.6 million loss last year.
According to the report, the group is accelerating cost-cutting
measures after a 22% fall in advertising revenue to EUR750 million
(GBP640 million).
The group, the report discloses, cut its net debt to EUR379
million from EUR703 million, after disposing of Norwegian and
German newspapers.
The report recalls the group launched a deeply discounted GBP142
million rights issue earlier this year, after months of talks with
lenders about breaching a banking covenant.
About Mecom Group plc
Headquartered in London, Mecom Group plc -- http://www.mecom.co.uk
-- is engaged in the acquisition and operation of newspaper
publishing and content businesses in Europe. The company owns
over 300 titles in its five divisions, with operations in the
Netherlands, Denmark, Norway, Germany and Poland, together
publishing approximately 30 million copies a week.
NATIONAL EXPRESS: Deutsche Bahn Drops Out of Bidding
----------------------------------------------------
Gill Plimmer at The Financial Times reports that Deutsche Bahn,
the owner of Chiltern Railways, has ruled itself out of bidding
for National Express Group plc.
The FT relates Adrian Shooter, chief executive of Chiltern
Railways, said Deutsche Bahn would consider entering the
competition to tender for rail franchises as they come up but
would not seek to buy National Express assets, such as its bus
business. According to the FT, the state-owned German operator
is, however, bidding for the contract to run the Tyne and Wear
Metro, which is due for a GBP300 million upgrade.
Loss
On Aug. 4, 2009, the Troubled Company Reporter-Europe, citing
Telegraph.co.uk, said National Express made a pre-tax loss of
GBP48.1 million in the first six months of 2009, down from a
profit of GBP52.4 million last year, after taking a GBP54.7
million hit from its forced exit from the East Coast mainline
franchise, which is being taken back into government hands.
According to Telegraph.co.uk, National Express -- which said it
had lost GBP20 million on the London to Edinburgh rail route this
year -- indicated it will axe its interim dividend to save cash
and reduce debt. According to Telegraph.co.uk, the company's debt
is GBP977.5 million, having been reduced by GBP200 million in the
past six months. Telegraph.co.uk said the accounts declared that
while the directors are confident of renegotiating covenant
obligations with lenders, "covenant compliance remains dependent
on actions which are yet to be delivered". In light of this the
accounts warn that "underlying implementation risks represent a
material uncertainty that may cast significant doubt upon the
group's ability to continue as a going concern", Telegraph.co.uk
noted.
National Express Group PLC -- http://www.nationalexpressgroup.com/
-- is the holding company of the National Express Group of
companies. Its subsidiary companies provide mass passenger
transport services in the United Kingdom and overseas. The
Company's segments comprise: UK Bus; UK Coach; UK Trains; North
American Bus; European Coach and Bus, and Central functions. Its
subsidiaries include Tayside Public Transport Co Limited, Durham
School Services LP, Stock Transportation Limited, Dabliu
Consulting SLU, Tury Express SA, General Tecnica Industrial SLU
and Continental Auto SLU. In June 2009, the Company announced the
completion of the sale of Travel London, its London bus business,
to NedRailways Limited, a subsidiary of NS Dutch Railways.
NORTHERN ROCK: Fitch Junks Rating on Tier 1 Debt Securities
-----------------------------------------------------------
Fitch Ratings has maintained Northern Rock's Long-term Issuer
Default Rating of 'A-' on Rating Watch Evolving. Fitch has
simultaneously downgraded NR's Lower Tier 2 debt securities to
'B-' from 'B+', downgraded its Upper Tier 2 debt securities to
'CCC' from 'B' and downgraded its Tier 1 debt securities to 'CC'
from 'B-'. The agency has maintained the Lower Tier 2 securities
on Rating Watch Negative. The Upper Tier 2 and Tier 1 securities
have been removed from RWN.
The downgrading of the Lower Tier 2, the Upper Tier 2 and Tier 1
debt securities reflects Fitch's opinion that, after the loss of
GBP740 million reported by NR for H109, it is increasingly
probable that the coupons on these securities will be deferred.
After the bank's planned division into two legal entities, which
is expected to take place after the European Commission has
approved the UK state aid package, the securities will be held by
AssetCo. Fitch considers it more probable that management will
want to retain earnings within AssetCo for the benefit of senior
debt holders, including the UK Treasury, rather than pay coupons
on subordinated debt. The board of directors has discretion over
whether to defer the Upper Tier 2 and Tier 1 debt securities'
coupons, whilst it would be necessary to amend the contractual
terms of the Lower Tier 2 debt securities in order for their
coupons to be deferred. Fitch notes that the position of AssetCo,
a going concern being wound down, would be substantially similar
to the case of Bradford & Bingley where the terms of the Lower
Tier 2 debt securities were changed by statutory instrument to
prevent payment of capital and interest until its obligations to
the Financial Services Compensation Scheme had been met in full.
The rating actions affecting NR are:
-- Long-term Issuer Default 'A-'; maintained on Rating Watch
Evolving (RWE)
-- Senior unsecured debt 'A-'; maintained on Rating Watch
Evolving (RWE)
-- Short-term IDR affirmed at 'F1+'
-- Individual Rating affirmed at 'F'
-- Support Rating '1'; maintained on RWN
-- Support Rating Floor 'A-'; maintained on RWE
-- Lower Tier 2 subordinated debt downgraded to 'B-' from 'B+';
maintained on Rating Watch Negative
-- Upper Tier 2 subordinated debt downgraded to 'CCC' from 'B';
removed from RWN
-- Tier 1 securities downgraded to 'CC' from 'B-'; removed from
RWN
RANK GROUP: Moody's Affirms Corporate Family Rating at 'B1'
-----------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family rating
on Rank Group plc, and changed the outlook to stable from
negative.
The stabilization of the rating outlook incorporates the progress
that Rank has made towards stabilizing its operational
performance, combined with its stated commitment to continue
reducing leverage. This was evidenced in its half-year results
for the six months ending June 30, 2009. Despite the weak
economic environment, the company reported slightly higher revenue
and lower net debt, and expects to maintain greater capital
investment in 2009 than in 2008.
The improved operational performance has been led by Grosvenor
Casinos. Revenue in this division -- which provides 40% of group
revenue -- rose by 4%, and operating profit by 18% (both on a
restated basis), driven by the success of the G Casino format and
an 8% increase in customer visits. Rank continues to forecast
group capital expenditure of GBP35 to GBP40 million in 2009, up
from GBP28 million in 2008, with the increase primarily in
projects to grow the G Casino brand.
Net reported debt of GBP208 million at June 30, 2009 was down from
GBP273 million at June 30, 2008. This was primarily due to the
GBP59 million VAT refund on interval bingo received in November
2008, although Rank also generated some modest positive free cash
flow in the first half of 2009. Reported net debt/Ebitda was
about 2.5x at June 30, 2009 (equivalent to about 5.3x LTM gross
adjusted debt/Ebitdar -- incorporating Rank's operating leases -
down from 6.1x at the end of 2008); and Rank intends to reduce
leverage further in view of the uncertain economic and credit
environment.
Despite these improvements, other parts of the group continue to
show weaknesses. In particular, attendances at Mecca Bingo --
which provides 44% of group revenue -- continue to decline in
continuation of a long-term trend. Although the revenue impact is
currently being offset by increased spend per head, reversal of
this trend is important for material improvement of Rank's credit
profile. Rank's smaller divisions also have ongoing difficulties
-- with the Spanish bingo business, Top Rank Espana, suffering
from the weak Spanish economy; and reduced revenue in the Blue
Square sports betting business. Rank is attempting to address
these challenges with various senior management changes and a more
focused marketing approach, although material improvements may
take some time to be evidenced.
Rank's credit profile also continues to be impacted by
uncertainties regarding taxation. The overall UK taxation
environment for gaming remains volatile, as evidenced by the
unexpected increase in bingo and other gaming taxation announced
in the 2009 Budget. Rank has reported that the annualized impact
of this increase on operating profit will be about GBP 9 million.
The increases also reinforce the vulnerability of the gaming
sector as a relatively easy target at a time of straitened
Government finances. A further risk relates to the ongoing
Government consultation -- scheduled to conclude in October 2009 -
in relation to tax changes on gaming machines. Although the
Government has indicated that these are intended to be revenue
neutral, different businesses are likely to be impacted in
different ways.
Despite the UK High Court upholding Rank's VAT claim on interval
bingo in June 2009, the UK tax authorities continue to appeal the
case. Rank is also making other VAT claims, including
GBP26 million on slot machines. In Moody's view, although a
successful conclusion of all these claims could result in material
benefit to Rank, the legal processes are likely to continue for a
number of years. Furthermore the reversal of any judgment,
previously favorable to Rank, could require the company to refund
payments to the Government in a relatively short timeframe.
Nevertheless the company's liquidity profile is appropriate for
the rating level. Following the repayment of the convertible bond
in January 2009, the next debt maturities are the GBP150 million
bank term loan and GBP250 million revolving credit facilities,
which are both due in April 2012. About GBP170 million of the
revolver is undrawn, with GBP54 million cash at June 30, 2009; and
Rank should continue to generate modest free cash flow in the
absence of dividend payments, despite higher capital investment.
Rank has stated that dividend payments will remain suspended until
there is an improvement in trading conditions and the market
outlook.
Moody's also notes that about 40% of Rank's shares are held by two
companies. The B1 rating does not incorporate the impact of any
change in control or capital structure of Rank related to future
shareholder changes.
The last credit rating announcement for Rank Group Finance plc was
on June 4, 2008, when the corporate family rating was confirmed at
B1, with a negative outlook.
Headquartered in Maidenhead, England, Rank is a predominantly UK
gaming group with interests in casinos, bingo, and interactive
gaming. For the six months to June 30, 2009, Rank reported
revenues of around GBP266 million.
SOUTHERN PACIFIC: S&P Cuts Ratings on Two Classes of Notes to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on classes D and E issued
by Southern Pacific Securities 05-2 PLC. At the same time, S&P
affirmed its ratings on classes A, B, and C.
The actions follow S&P's credit and cash flow review of the most
recent information S&P received for this transaction. S&P's
analysis showed a further weakening of the collateral performance,
and a generally increasing negative trend in key performance
indicators.
On the last interest payment date, the issuer drew GBP233,043 from
the reserve fund, following a reserve fund draw of GBP112,126 on
the March IPD. The reserve is currently 86.46% of the required
amount. The most recent reserve fund draw was largely due to
higher losses, which have increased by 45 basis points since the
March IPD to 2.43% of the initial balance. S&P is concerned about
the continuing rise in arrears, even though the servicer has
apparently been able to manage repossession levels, which had been
increasing in recent periods but fell on the last two IPDs from
11.53% in December 2008 to 8.73% in June 2009.
90+ day delinquencies had risen to 31.83% by the June IPD, the
15th payment date since closing. This is well above S&P's
nonconforming index for transactions of this seasoning; it is
currently 13.79% of the current balance for loans 90+ days in
arrears, and 2.21% of current balance for repossessions.
S&P will continue to monitor the transaction's performance,
particularly regarding long-term arrears, future repossessions,
losses, and loss severities.
Ratings List
Southern Pacific Securities 05-2 PLC
GBP310.75 Million, EUR145.8 Million,
and US$205 Million Mortgage-Backed Floating-Rate Notes
Ratings Lowered and Removed From Creditwatch Negative
Rating
------
Class To From
----- -- ----
D1a BBB- BBB/Watch Neg
E1c B BB/Watch Neg
E2c B BB/Watch Neg
Ratings Affirmed
Class Rating
----- ------
A2c AAA
B1a AA
B1c AA
C1a A
C1c A
TATA MOTORS: Secures GBP75 Million Debt Facility for Jaguar
-----------------------------------------------------------
Pankaj Doval at Times of India reports that Tata Motors Ltd. has
secured a debt facility of GBP75 million for its Jaguar and Land
Rover (JLR) operations.
Citing officials at JLR, the report discloses the three-year loan
has been extended by Burdale Financial, a member of the Bank of
Ireland Group. According to the report, the loan has been secured
against inventories of Land Rover's parts and accessories and
receivables in UK and US.
The report notes Don Hume, director, corporate and government
affairs for the brands, clarified that the financing facility with
Burdale does not form part of JLR's applications to the UK
Government's Automotive Assistance program, for which negotiations
are still on.
About Tata Motors
India's largest automobile company, Tata Motors Limited --
http://www.tatamotors.com/-- is mainly engaged in the business
of automobile products consisting of all types of commercial and
passenger vehicles, including financing of the vehicles sold by
the company. The company's operating segments consists of
Automotive and Others. In addition to its automotive products,
it offers construction equipment, engineering solutions and
software operations. TML is listed on the Bombay Stock
Exchange, the National Stock Exchange of India and New York
Stock Exchange. It was ultimately 33.4% owned by the Tata Group
as of December 2007.
Tata Motors has operations in Russia and the United Kingdom.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
March 27, 2009, Standard & Poor's Ratings Services lowered its
corporate credit rating on India-based automaker Tata Motors Ltd.
to 'B+' from 'BB-'. The rating remains on CreditWatch with
negative implications, where it was placed on Dec. 12, 2008. At
the same time, S&P lowered its issue rating on the company's
senior unsecured notes to 'B+' from 'BB-' and also kept the rating
on CreditWatch with negative implications.
S&P said the rating action follows material deterioration in Tata
Motors' cash flows and related metrics on a consolidated basis,
derived from an adverse operating environment, which, combined
with significantly high debt levels, will affect its credit
protection measures beyond those consistent with a 'BB' rating
category.
On June 4, 2009, Moody's Investors Service affirmed the B3
corporate family rating of Tata Motors Ltd. The outlook on the
rating is changed to stable from negative.
WHITE TOWER: CBRE to Assist in Asset Sales, Refinancing Efforts
---------------------------------------------------------------
Elena Moya at guardian.co.uk reports that CB Richard Ellis, a
property services company, has been appointed to take charge of a
GBP1.45 billion loan issued by Simon Halabi's holding company
White Tower, replacing Hatfield Philips.
According to the report, properties backing the loan are now
valued at GBP929 million from GBP1.8 billion in October 2006. The
properties, most of them in the City of London, include the
PMorgan headquarters and the Aviva Tower, the report notes.
CBRE, the report says, has the task of selling or refinancing the
properties to repay investors.
The report relates holders of so-called class B notes -- which get
paid after class A following a default -- led the revolt to oust
the previous loan manager, Hatfield Philips.
As reported in the Troubled Company Reporter-Europe on July 30,
2009, Bloomberg News said the underlying loan backing the notes
was canceled on July 15 after White Tower failed to remedy a
default caused by a decline in the real estate securing the debt.
WOOLWORTHS GROUP: BBC Wins Case Over Stake in 2Entertain
--------------------------------------------------------
Anousha Sakoui, Tim Bradshaw and Maija Palmer at The Financial
Times report that BBC Worldwide, the BBC's commercial arm, has won
a court case against the administrators of Woolworths Group plc
over the value of their 2Entertain joint venture.
The FT relates the case centers on a dispute about whether a
licensing agreement between BBCW and 2Entertain terminated on
Woolworths' insolvency, and on BBCW's right to buy Woolworths’
stake in 2Entertain.
According to the FT, the decision at the High Court in London is
likely to face an appeal by Deloitte, the administrators, who are
fighting to maximize the value of Woolworths' stake on behalf of
its creditors, including pensioners. Citing people familiar with
the situation, the FT discloses the dispute might not be resolved
until next year.
BBCW owns 60% of 2Entertain, which publishes DVDs, while
Woolworths owns the balance. The FT recalls BBCW was prepared to
pay more than GBP100 million for Woolworths' stake just before the
retailer collapsed into administration.
As reported in the Troubled Company Reporter-Europe, on Jan. 27,
2009, the High Court granted an application that an order of
administration be made in respect of Woolworths Group plc. As
announced on Nov. 27, 2008, the termination of the group's
discussions for the sale of its retail business led to the
administration of its two major subsidiaries, Woolworths plc and
Entertainment UK Ltd. Accordingly, Neville Kahn, Daniel
Butters and Nicholas Dargan were appointed as joint administrators
to both companies on that date. The joint administrators were
also appointed as administrators to the group.
About Woolworths Group plc
Headquartered in London, England, Woolworths Group plc (LON:WLW)
-- http://www.woolworthsgroupplc.com/-- is a general merchandise
retailer, and entertainment wholesaler and publisher. The
Company's business is divided into Retail, and Entertainment
Wholesale and Publishing segments. Woolworths, Streets Online
Limited, WMS Card Services Limited and Flogistics Limited are
included within the Retail segment, with Entertainment UK Limited,
Disc Distribution Limited and 2entertain Limited being the
constituents of Entertainment Wholesale and Publishing segment.
The stores comprise Woolworths outlets located in small towns and
city suburbs, targeted at meeting basic everyday shopping
requirements, as well as larger stores located on shopping streets
in regional shopping centers. The product offer covers toys,
children's clothing, events, confectionery, home and
entertainment, and larger stores include a range of home and
children's clothing.
===============
X X X X X X X X
===============
* S&P Takes Rating Actions on 10 European CMBS Tranches
-------------------------------------------------------
Standard & Poor's Ratings Services has taken rating actions on 10
European commercial mortgage-backed securitization tranches across
six transactions.
Specifically, S&P:
* Lowered and kept on CreditWatch negative S&P's ratings on class
F issued by Windermere VII CMBS PLC, class F issued by
Windermere X CMBS Ltd., class E issued by Windermere XI CMBS
PLC, and class F issued by Windermere XIV CMBS Ltd.;
* Removed from CreditWatch negative S&P's ratings on the classes
A1, A2, and X issued by Windermere IX CMBS (Multifamily) S.A.
and classes A, B, and X issued by Windermere X CMBS Ltd.; and
* Reviewed and kept unchanged the rating on class E issued by
Windermere VIII CMBS PLC and class C issued by Windermere IX
CMBS (Multifamily).
The ratings on the notes in these transactions were originally
placed on CreditWatch negative on September, 17, 2008, following
the insolvency of Lehman Brothers Holdings Inc. and related
entities. In these transactions Lehman entities acted as
derivatives counterparty and security/facility agent.
The Lehman entities have now been replaced as derivatives
counterparty by:
* HSBC Bank PLC (AA/Stable/A-1+) for Windermere VII CMBS,
Windermere VIII CMBS, and Windermere XIV CMBS;
* Credit Suisse International (A+/Stable/A-1) for Windermere IX
CMBS (Multifamily) and Windermere XI CMBS; and
* The Royal Bank of Scotland PLC (A+/Stable/A-1) for Windermere X
CMBS.
Arrangements to replace the Lehman entities in their capacity as
security/facility agent by other entities are progressing.
In view of the derivatives counterparty replacement in Windermere
IX CMBS (Multifamily) and Windermere X CMBS, S&P has removed from
CreditWatch negative the ratings on the class A1, A2 and X notes
in Windermere IX CMBS (Multifamily) and the class A, B and X notes
in Windermere X CMBS. All other notes in these transactions
remain on CreditWatch negative for credit reasons.
S&P understands that the issuer will bear the cost of replacing
the Lehman entities in their capacity as security or facility
agent across the transactions (in whole or in part). S&P note
that the timing of the costs is uncertain and that it is unclear
whether liquidity will be available to cover these costs. S&P
also note that the estimated costs vary across the transactions.
For the transactions in which S&P is lowering ratings on the most
junior notes, S&P consider that the estimated costs are of such a
magnitude as to potentially cause a shortfall in interest or
principal in excess of 1% of the outstanding note balance.
Accordingly, the ratings on these classes have been lowered to
'B-'.
The rating on Windermere VIII CMBS's class E notes remains
unchanged as they currently reflect the increased risk of higher
costs.
With the exception of classes A1, A2, and X issued by Windermere
IX CMBS (Multifamily) and classes A, B, and X issued by Windermere
X CMBS, all the notes in these transactions will remain on
CreditWatch negative due to credit reasons, which were not
examined as part of this review.
Ratings List
Ratings Lowered and Remaining on Creditwatch Negative
Windermere VII CMBS PLC
EUR782.25 Million Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
F B-/Watch Neg BB/Watch Neg
Windermere X CMBS Ltd.
EUR1.497 Billion Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
F B-/Watch Neg BB/Watch Neg
Windermere XI CMBS PLC
GBP707.767 Million Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
E B-/Watch Neg B/Watch Neg
Windermere XIV CMBS Ltd.
EUR1.12 Billion Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
F B-/Watch Neg B/Watch Neg
Ratings Removed From Creditwatch Negative
Windermere IX CMBS (Multifamily) S.A.
EUR1,300.15 Million Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
A1 AAA AAA/Watch Neg
A2 AAA AAA/Watch Neg
X AAA AAA/Watch Neg
Windermere X CMBS Ltd.
EUR1.497 Billion Commercial Mortgage-Backed Floating-Rate Notes
Rating
------
Class To From
----- -- ----
A AAA AAA/Watch Neg
B AAA AAA/Watch Neg
X AAA AAA/Watch Neg
Ratings Unchanged
Windermere VIII CMBS PLC
GBP1,037.79 Million Commercial Mortgage-Backed Floating-Rate Notes
Class Rating
----- ------
E CCC/Watch Neg
Windermere IX CMBS (Multifamily) S.A.
EUR1,300.15 Million Commercial Mortgage-Backed Floating-Rate Notes
Class Rating
----- ------
C A/Watch Neg
*********
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 USUS$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, Joy A. Agravante, and Peter A. Chapman, Editors.
Copyright 2009. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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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 * * *