/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/090917.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, September 17, 2009, Vol. 10, No. 184 Headlines A U S T R I A D & W INDUSTRIESERVICE: Creditors Must File Claims by September 28 GRADWOHL & BONSTINGL: Creditors Must File Claims by September 28 LPL PERSONALLEASING: Creditors Must File Claims by September 22 MUS-TI BAU: Claims Filing Deadline is September 29 ORIESCHNIG GMBH: Creditors Must File Claims by September 21 C Z E C H R E P U B L I C PA EXPORT: Declared Insolvent by Prague Court SKYEUROPE AIRLINES: Receiver to Leave Post Amid Health Issues F I N L A N D * FINLAND: Commission Approves Capital Injection Scheme F R A N C E FCC PROUDREED: Fitch Cuts Rating on Classe E Notes to 'BB' G E R M A N Y ARCANDOR AG: To Transfer 1,800 Workers in Employment Company BAYERISCHE LANDESBANK: Fitch Affirms 'D/E' Individual Rating ESCADA AG: Insolvency Petition Cues Moody's to Withdraw Ratings GENERAL MOTORS: German Aid to Opel Must Respect EU Rules, EU Says HEIDELBERGCEMENT AG: Capital Increase Won't Affect Moody's Rating HSH NORDBANK: Fitch Keeps 'D/E' Individual Rating; IDR on RWN LANDESBANK BERLIN: Moody's Puts Final Ratings on Mortgage Bonds PAULMANN & CRONE: Declared Insolvent; Administrator Appointed RATIOPHARM GMBH: May Be Sold in Pieces to Repay Bank Loans WESTLB AG: Fitch Affirms 'E' Individual Rating; IDR on RWN G R E E C E FAGE DAIRY: Moody's Changes Outlook on 'B3' Rating to Stable I R E L A N D EUROCONNECT ISSUER: Fitch Puts 'BB'-Rated Class D Notes on RWN INDEPENDENT NEWS: Denis O'Brien Seeks to Block Rescue Plan RMF EURO: Moody's Confirms Rating on Class V Notes at 'Caa1' SIGMA-1 CLO: Fitch Cuts Rating on Class F Notes to 'B-' STANTON ABS: Moody's Cuts Rating on Class A-4 Notes to 'Ca' TALISMAN-1 FINANCE: Fitch Cuts Rating on Class G Notes to 'B' I T A L Y PARMALAT SPA: Bank of America Liable for Fraud, SPVs Say RISANAMENTO SPA: Board Resigns; Shareholders' Meeting Set Nov. 16 K A Z A K H S T A N ARU LLP: Creditors Must File Claims by September 24 ATAN AKTOBE: Creditors Must File Claims by September 24 KAPCHAGAI OIL: Creditors Must File Claims by September 24 R MEDIA: Creditors Must File Claims by September 24 SK AVIA: Creditors Must File Claims by September 24 K Y R G Y Z S T A N AUTO TRADE: Creditors Must File Claims by September 30 L U X E M B O U R G CRC BREEZE: S&P Downgrades Rating on EUR300 Mil. Bonds to 'BB' N E T H E R L A N D S CHEYNE CREDIT: Fitch Lowers Ratings on Two Tranches to 'BB' DALRADIAN EUROPEAN: Moody's Junks Ratings on Two Classes of Notes ING GROEP: Commission Extends Probe Into Illiquid Back-up Facility SKYLINE 2007: Fitch Puts 'BB'-Rated Class E Tranche on RWN P O L A N D DUDA SA: Court Approves Debt Restructuring Deal R O M A N I A MONDEX SIBIU: High Rents in Malls Blamed for Insolvency OLTCHIM SA: Debt-for-Equity Swap and State Guarantee Probed by EU R U S S I A ABDULINSKIY MEAT: Creditors Must File Claims by September 21 EN+ GROUP: Creditors Wants Owner to Pledge 10% of Rusal EVRAZ GROUP: Fitch Cuts Long-Term Issuer Default Rating to 'B+' LUZSKIY FORESTRY: Creditors Must File Claims by September 19 CONSTRUCTION MANAGEMENT: Creditors Must File Claims by Sept. 21 STROY-MOL CJSC: Creditors Must File Claims by September 21 S P A I N MADRID RMBS: Moody's Junks Ratings on Nine Classes of Notes TDA 27: S&P Puts 'BB-'-Rated Class E Notes on CreditWatch Negative S W E D E N GENERAL MOTORS: Saab Seeks Deal on Chinese Sales Networks SAAB AUTOMOBILE: Seeks Deal on Chinese Sales Networks Within Weeks SCANDINAVIAN CONSUMER: S&P Affirms 'BB' Ratings on Class E Notes S W I T Z E R L A N D AGROPESCO AG: Claims Filing Deadline is September 21 DATALEX GMBH: Claims Filing Deadline is September 21 EN ENERGIE: Claims Filing Deadline is September 21 GLANZMANN HEIZTECHNIK: Claims Filing Deadline is September 21 HANDYCENTER AARAU: Claims Filing Deadline is September 21 IMMOPESCO AG: Claims Filing Deadline is September 21 MOLETHERM LIZENZ: Claims Filing Deadline is September 21 MOLETHERM POOL: Claims Filing Deadline is September 21 U K R A I N E BASIS LLC: Creditors Must File Claims by September 20 CHERNOVTSY SUGAR: Creditors Must File Claims by September 20 DELOVOY SOYUZ: Creditors Must File Claims by September 20 GILEYA LLC: Creditors Must File Claims by September 20 INTERTECHBUD LLC: Creditors Must File Claims by September 20 NAFTOGAZ NJSC: Begins Debt Restructuring Talks OTTON LLC: Creditors Must File Claims by September 20 UNEX BANK: S&P Affirms 'CCC+' Counterparty Credit Ratings U N I T E D K I N G D O M JOHN MCGAVIGAN: In Administration; KPMG Appointed LUDGATE FUNDING: S&P Lowers Rating on Class S Notes to 'B-' NATIONAL BANK: Fitch Downgrades Individual Rating to 'D' NOVAE INSURANCE: Fitch Gives Negative Outlook; Holds 'BB+' Rating SPOT ON COMPUTERS: Creditors to Meet Today, Sept. 17 X X X X X X X X * IATA Predicts Worldwide Airline Losses of US$11 Billion in 2009 * Upcoming Meetings, Conferences and Seminars ********* ============= A U S T R I A ============= D & W INDUSTRIESERVICE: Creditors Must File Claims by September 28 ------------------------------------------------------------------ D & W Industrieservice GmbH will convene a meeting of its creditors for October 5, 2009 at 9:30 a.m. at: Land Court of Klagenfurt Meeting Room 225 Second Floor Klagenfurt Austria A court hearing for examination of the claims has been scheduled for October 5, 2009 at 9:30 a.m. at: Dr. Rudolf Denzel Moritschstrasse 1 9500 Villach Austria Tel: 04242/24915 Fax: 04242/24069 E-mail: office@denzel-patterer.at GRADWOHL & BONSTINGL: Creditors Must File Claims by September 28 ---------------------------------------------------------------- Gradwohl & Bonstingl OEG will convene a meeting of its creditors for September 28, 2009, at 9:00 a.m. at: Civil Court of Graz Room 205 Second Floor Graz Austria A court hearing for examination of the claims has been scheduled for October 13, 2009 at 9:00 a.m. at: Civil Court of Graz Room 205 Second Floor Graz Austria For further information, contact the company's administrator: Mag. Michael Schnalzer Bismarkstrasse 5 8280 Fuerstenfeld Austria Tel: 03382/52610 Fax: 03382/52331-16 E-mail: kbs@recht-so.at LPL PERSONALLEASING: Creditors Must File Claims by September 22 --------------------------------------------------------------- LPL Personalleasing GmbH will convene a meeting of its creditors for September 29, 2009, at 9:30 a.m. at: Land Court of Klagenfurt Meeting Room 225 Second Floor Klagenfurt Austria A court hearing for examination of the claims has been scheduled for September 29, 2009 at 9:30 a.m. at: Mag. Herbert Juri Bambergerstrasse 5/DG 9400 Wolfsberg Austria Tel: 04352/36 300 Fax: 04352/36300-6 E-mail: office@juri-schuster.at MUS-TI BAU: Claims Filing Deadline is September 29 -------------------------------------------------- Creditors of MUS-Ti Bau GmbH have until September 29, 2009, to file their proofs of claim. A court hearing for examination of the claims has been scheduled for October 13, 2009 at 10:45 a.m. For further information, contact the company's administrator: Dr. Katharina Widhalm-Budak Favoritenstrasse 22/12a 1040 Wien Austria Tel: 504 64 08 Fax: 504 64 08 22 E-mail: widhalm-budak@mitrecht.com ORIESCHNIG GMBH: Creditors Must File Claims by September 21 ----------------------------------------------------------- Orieschnig GmbH will convene a meeting of its creditors for September 29, 2009 at 9:00 a.m. at: Land Court of Klagenfurt Meeting room 225 Second floor Klagenfurt Austria A court hearing for examination of the claims has been scheduled for September 29, 2009 at 9:00 a.m. at: Dr. Siegfried Schueßler Kanalplatz 5 9400 Wolfsberg Austria Tel: 04352/51 6 44 Fax: 04352/52220 E-mail: ra.dr.schuessler@aon.at =========================== C Z E C H R E P U B L I C =========================== PA EXPORT: Declared Insolvent by Prague Court --------------------------------------------- CTK, citing the insolvency register, reports that the Municipal Court in Prague on Monday declared trading company PA Export, former Skodaexport, insolvent. The court named Vaclav Kulhavy as insolvency administrator, CTK discloses. CTK relates the company, which has debts of CZK879 million, has been in insolvency proceedings on the proposal of the Siemens Engineering company since mid-June. SKYEUROPE AIRLINES: Receiver to Leave Post Amid Health Issues ------------------------------------------------------------- CTK reports that Emil Cerevka will quit his post as receiver of SkyEurope Airlines, a.s., citing health problems. According to CTK, Mr. Cerevka's request will be decided on by a regional court in Bratislava. Mr. Cerevka, as cited by CTK, said bankruptcy proceedings at SkyEurope continue despite his announced departure. As reported in the Troubled Company Reporter-Europe on Sept. 10, 2009, the district court of Bratislava opened bankruptcy proceedings against SkyEurope. As reported in The Troubled Company Reporter-Europe, on Aug. 31 the airline filed for bankruptcy protection due to the lack of sufficient interim funding to finance ongoing operations. SkyEurope Airlines -- http://www.skyeurope.com/-- was a low-cost airline headquartered in Bratislava. The airline operated short- haul scheduled and charter passenger services. ============= F I N L A N D ============= * FINLAND: Commission Approves Capital Injection Scheme ------------------------------------------------------- The European Commission has approved under EC Treaty state aid rules a Finnish support scheme to stabilize financial markets by providing capital injections to eligible financial institutions. The Commission found the measure to be in line with its Guidance Communications on state aid to overcome the financial crisis. In particular, the Commission considers that the measure constitutes an adequate means to remedy a serious disturbance of the Finnish economy and is as such in line with Article 87.3.b of the EC Treaty. In particular, the scheme is non-discriminatory, limited in time and scope and provides safeguards to minimize distortions of competition. Competition Commissioner Neelie Kroes said: "The Finnish recapitalisation scheme is an effective means to secure banks' capital base and to finance the real economy, while at the same time limiting distortions of competition". On May 29, 2009, Finland notified the draft measure, which is aimed at strengthening the solvency of deposit banks in Finland to allow them to ensure proper financing of the economy and to better cope with expected financial difficulties. Under the scheme the Finnish State would subscribe non-cumulative and unsecured subordinated loan instruments issued by eligible banks up to 1/4 of the required amount of their own funds. The subordinated loans would be reimbursed after three years and upon the approval of the Financial Supervisory Authority. The scheme's overall budget is capped at EUR4 billion. Only solvent banks would be allowed to enter it. The scheme contains elements of state aid but foresees various safeguards aimed at ensuring that the state intervention is proportionate, limited to what is necessary to stimulate interbank lending and adequate to reach this goal, in accordance with the EU state aid rules, as laid down in the Commission's guidance documents. In particular, the scheme provides for non-discriminatory access as it will be open to all solvent Finnish deposit banks, including Finnish subsidiaries of foreign banks. It is limited in time and scope, as both its global budget and amount per institution are capped. To benefit from the recapitalisation participating banks are required to pay a market-oriented fee, in line with recommendations from the European Central Bank. Moreover, the scheme foresees substantial behavioural commitments for the participating institutions regarding executive pay and shares buy back. In light of these commitments and conditions, the Commission concluded that the scheme would be an adequate means to restore confidence on Finnish financial markets. The strict safeguards will ensure that the state support is limited to what is necessary to stabilize the Finnish financial sector and that negative spill- over effects are minimized. =========== F R A N C E =========== FCC PROUDREED: Fitch Cuts Rating on Classe E Notes to 'BB' ---------------------------------------------------------- Fitch Ratings has downgraded FCC Proudreed Properties 2005's class C to E notes as detailed below. The Class A and B notes have been affirmed. The Outlook on Class B notes has been revised to Negative from Stable. The rating action is: -- EUR223.8 million Class A (FR0010247577): affirmed at 'AAA'; Outlook Stable -- EUR56.8 million Class B (FR0010247585): affirmed at 'AA'; Outlook revised to Negative from Stable -- EUR28.4 million Class C (FR0010247593): downgraded to 'A' from 'AA; Outlook Negative EUR28.4 million Class D (FR0010247601): downgraded to 'BBB' from 'A'; Outlook Negative EUR28.4 million Class E (FR0010247619): downgraded to 'BB' from 'BBB'; Outlook Negative Fitch considers the two loans, the Paris Properties loan (72.4% of the portfolio) and the Proudreed France loan (27.6%) to be of comparable quality and to have been similarly affected by deteriorating market conditions. Compared to the most recent valuation in December 2008, Fitch estimates that the portfolio is likely to have suffered a weighted-average market value decline (MVD) of 23%, resulting in a WA Fitch loan-to-value ratio of 73%. This compares to the WA reported LTV of 56.3%, as of the August interest payment date. Both the Paris Properties loan (82 properties) and the Proudreed loan (34 properties) are secured by a majority of industrial assets of a reasonable quality and have strong historical interest coverage ratios (5.04x and 2.49x respectively). Although there is diversity of tenants, the lease income profile of the two portfolios is rather more concentrated, with the largest tenant in both portfolios, ND Logistics, a non-rated tenant, accounting for 14% and 17% of in place rent in the two loans, respectively. In addition to this, the WA term to lease break for the two loans is 2.3 years and 2.4 years respectively, which could place a strain on collateral income and, consequently, complicate a potential refinancing at loan maturity if significant leases are not renewed. The loans do not benefit from any scheduled amortization and are scheduled to mature in August 2014. The final legal maturity is in August 2017. Fitch will continue to monitor the performance of the transaction. ============= G E R M A N Y ============= ARCANDOR AG: To Transfer 1,800 Workers in Employment Company ------------------------------------------------------------ Holger Elfes at Bloomberg News reports that Arcandor AG's catalog- sales unit Quelle AG agreed with the Bavarian state government to place 1,800 workers into a so-called employment company. Bloomberg relates Thomas Gruber, a spokesman for the Bavarian government, said in a telephone interview yesterday a quarter of Quelle's staff in Bavaria will transfer to the new body as of October 1. According to Bloomberg, the workers will be entitled to full pay while they seek another job. Sale Bloomberg discloses Arcandor's insolvency administrator Klaus Hubert Goerg said he asked Bankhaus Metzler to seek buyers for Quelle. Mr. Goerg, as cited by Bloomberg, said he will reduce Quelle's mail-order chain to 1,000 stores from 1,450 and close all 109 Quelle electronics centers, cutting 3,700 jobs -- about a third of the total workforce. Factoring On Sept. 15, 2009, the Troubled Company Reporter-Europe, citing Reuters, reported that Quelle has secured financing until the end of the year. Reuters disclosed Arcandor's insolvency administrator and creditor banks came to an agreement for Quelle's factoring, in which banks pay the company upfront for accounts receivable from customers. Insolvency Proceedings On Sept. 2, 2009, the Troubled Company Reporter-Europe, Citing Bloomberg News, reported that a local court in Essen formally opened insolvency proceedings for the Arcandor on Sept. 1. Bloomberg disclosed the proceedings started for the Arcandor holding company and for 14 units, including the Karstadt department-store chain and Primondo mail-order division. As 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. 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. BAYERISCHE LANDESBANK: Fitch Affirms 'D/E' Individual Rating ---------------------------------------------------------- Fitch Ratings placed the Long-term Issuer Default Ratings of Bayerische Landesbank, HSH Nordbank, Landesbank Baden- Wuerttemberg, Landesbank Saar and WestLB AG on Rating Watch Negative. In addition, the Short-term IDRs of BayernLB, WestLB, LBBW and SaarLB were placed on RWN as well as the Support Rating Floors of all five banks. The five banks' IDRs remain at their Support Rating Floors and are based on Fitch's view of the extent to which the respective German regional governments would provide support in case of need. Any ownership change could reduce the likelihood of state support for the banks, compounding the effects of the gradual expiration of the vast majority of grandfathered guaranteed debt up until 2015. However, Fitch anticipates that state support will still remain strong enough for all of the Landesbanks, with the possible exception of WestLB, to remain within the single 'A' range ('A-', 'A' or 'A+') in the foreseeable future. The RWN reflect the possibility of ownership change and a related diminution in the importance of these banks to their regional state owners. BayernLB, HSH, LBBW and WestLB have received substantial support from their owners in the form of capital injections and guarantees after they suffered a material impact from the financial crisis. For the first three banks, these support measures are currently subject to a review and approval process by the European Commission (EC), which is expected to communicate its decision in the coming months. A downgrade of these banks' IDRs is likely if the EC's conditions include a change in ownership. WestLB's state aid has already been approved by the EC with conditions imposed, specifically the change of ownership until the end of 2011. While the RWN on BayernLB, HSH, LBBW and SaarLB will be reviewed by Fitch, as the EC's decisions on each of HSH, BayernLB and LBBW are announced, WestLB's RWN will remain pending until details of its future ownership structure become clear -- in 2011 at the latest. The RWN on SaarLB's IDRs reflects the pressures on its 75.1% parent BayernLB to restructure. Fitch believes that the sustainability of all Landesbanken's business models will continue to rely on direct or indirect state ownership and/or institutional support from the savings banks in the medium term, as the agency will outline in an upcoming report. Even in a stabilised economic environment, the combination of the Landesbanken's weak stand-alone quality and reliance on wholesale funding sources will likely prevent them from funding their (even reduced) balance sheets on competitive terms on their own merits, depending on their various sources of funding. Therefore, developments in the restructuring processes of BayernLB, HSH and LBBW may result in negative rating actions for each bank over a longer period of time after the EC's decisions on the respective banks. However, Fitch notes that the pressure on these Landesbanken's IDRs could ease if there are clear signs that a change of ownership structure is neither given as a condition of approving state aid by the EC nor likely to arise willingly by the owners. More certainty in this respect is unlikely before there are more tangible signs that the economic crisis, and accompanying deterioration of asset quality, is nearing its end. HSH has suffered most from the global financial and economic crisis. It has received comprehensive support measures from its state owners and has initiated an ambitious restructuring process. This increases the uncertainty about the bank's ability to manage the restoration of a viable business model post-restructuring. HSH's majority owners, the relatively small regional states of Hamburg (HH) and Schleswig-Holstein (SH), went to great lengths to rescue their Landesbank, constraining their own financial flexibility as a result. The local savings banks, HSH's minority owners, largely disengaged themselves by not participating in the latest capital increase. Fitch remains confident of the ability of both states to provide support if needed, as underlined by their 'AAA' ratings. However, if the EC were to order the sale of HSH, the regional public sector may not insist on retaining a substantial stake in HSH. WestLB had required state support even prior to the current crisis. As such its restructuring process is ahead of its peers. It was the first to ring-fence a considerable volume of troubled and non-core assets into a segregated run-off portfolio. It is also the only Landesbank that has announced its intention to use the bad bank scheme recently adopted by the federal parliament. The EC has completed its review of the state aid received and imposed an ownership change by end-2011. Fitch believes that, in view of the enduring recessionary environment and protracted sale endeavours, uncertainty will continue, potentially further unsettling potential clients and long-term debt investors. This may reduce the bank's chances of emerging as a strong going concern, making it unlikely that WestLB's owners will manage to attract interest from a majority private investor. BayernLB and, to a lesser extent, LBBW, might also face stringent restructuring requirements and ownership changes. Even if pressure for these does not come from the EC this time around, a renewed need for capital injections, although currently not expected, from the owner states cannot be fully excluded, due to the two banks' considerable loan portfolios and potential for mounting credit losses. This, or the potential implementation of a bad bank model, would in turn trigger a new review by the EC, increasing the risk of ownership change. However, the stronger franchises held by the two south German banks may enable them to achieve faster recoveries, reducing the probability that they would need renewed support. Fitch also expects BayernLB's and LBBW's core franchises to remain important to their respective regional governments even after any potential sale or merger (full or partial) with another Landesbank. Bayern LB and LBBW's IDRs are unlikely to fall below 'A-' in the foreseeable future, due to the superior financial flexibility of their regional governments, Bavaria and Baden-Wuerttemberg, as well as the strategic relevance of these banks for their states. SaarLB has not received any state support and therefore is not undergoing any restructuring or compensatory demands from the EC although it may be indirectly affected by the EC approval of state aid for BayernLB. In addition, a change in its ownership structure is possible in the near term, with the state of Saarland planning to take up some of BayernLB's stake. The rating actions follow a comprehensive review of the German Landesbank sector, in which Fitch has investigated the key parameters that will influence the strength of external support in the foreseeable future. These include the severity of shortcomings exposed by the current adverse economic conditions; the amount of external support needed and received since the outbreak of the crisis; the suitability of the restructuring processes to address the key issues faced by the banks; the sustainability of their resulting business models; and (in most cases still awaited) compensatory measures imposed by the EC in return for the state help received. The conclusions of the review will be published in an upcoming report. The rating actions taken are: Bayerische Landesbank -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN HSH Nordbank AG -- Long-term IDR 'A' placed on RWN -- Short-term IDR affirmed at 'F1' -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A' placed on RWN Landesbank Baden-Wuerttemberg -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'C/D' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN Landesbank Saar -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: 'C'; RWN -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN WestLB AG -- Long-term IDR 'A-' placed on RWN -- Short-term IDR 'F1' placed on RWN -- Individual rating: affirmed at 'E' -- Support rating '1' placed on RWN -- Support Rating Floor 'A-' placed on RWN ESCADA AG: Insolvency Petition Cues Moody's to Withdraw Ratings --------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of ESCADA AG following the company's decision to file an insolvency petition with the Municipal Court of Munich, on August 13, 2009. These ratings are withdrawn: * Corporate Family Rating of Ca * Probability of Default Rating of D * Senior unsecured rating on the EUR200 million notes due 2012 of Ca The last rating action on ESCADA was on August 14, 2009, when Moody's downgraded the company's Probability of Default Rating to D from Ca following the company's insolvency petition. ESCADA, headquartered in Munich, is one of the leading European manufacturers and distributors of ready-to-wear high-end apparel for women. In the financial year ended 31 October 2008, the company reported consolidated sales of EUR582 million and EBITDA of EUR8.2 million. GENERAL MOTORS: German Aid to Opel Must Respect EU Rules, EU Says ----------------------------------------------------------------- Matthew Newman at Bloomberg News reports that EU Competition Commissioner Neelie Kroes told Flemish regional leader Kris Peeters that German plans to provide loan guarantees to General Motors Co.'s Opel unit must respect EU rules that outlaw making aid conditional on protecting jobs. Bloomberg relates the EU's competition commissioner met the Flemish leader following concerns that a sale of Opel to Magna International Inc. would shift jobs to Germany from plants in Belgium, Spain and the U.K. According to Bloomberg, Mr. Peeters said Ms. Kroes "underlined that it's very important that the examination will be very severe and that economic elements are the only elements that can be in this dossier and when there are political elements that there will be a very strong and very clear conclusion." European heads of government and state may discuss the Opel situation at a meeting in Brussels today, Sept. 17, Bloomberg notes. As reported in the Troubled Company Reporter-Europe on Sept. 15, 2009, the EU's competition commissioner warned Germany against any "protectionist motives" in its support plan for GM's Opel unit as the carmaker's new owner announced plans to cut about 10,500 jobs. Ms. Kroes, as cited by Bloomberg, said no job or investment conditions are allowed to be tied to the aid by the government of German Chancellor Angela Merkel, who is seeking re-election in two weeks. Bloomberg disclosed Germany must submit its restructuring plan for GM's Opel unit to the European Commission. According to Bloomberg, the commission said it hasn't been formally notified of Germany's plan to provide Opel with EUR3 billion (US$4.38 billion) in loan guarantees. "Such conditions would create unacceptable distortions in the internal market and could trigger a subsidy race which would significantly damage the European economy in the present delicate moment," Bloomberg quoted Ms. Kroes as saying. "We will be scrutinizing the process very carefully to make sure it is based on commercial considerations." Sale John Reed at The Financial Times reports GM chief executive Fritz Henderson defended his decision to sell 55% of Opel to Magna and Sberbank and and secure EUR1.5 billion (US$2.2 billion) of German bridge financing. Mr. Henderson, as cited by the FT, said that while the sale had "hurt" Opel's image among its European customers, Opel would otherwise have had to file for insolvency in May as GM itself was preparing its US bankruptcy filing. Mr. Henderson confirmed Magna's plans to cut 10,500 jobs or about a fifth of Opel's workforce in Europe. GM's plant in Antwerp was "at risk" of being shut down, Mr. Henderson confirmed, although no final decision had been taken to close it, the FT notes. The FT relates Mr. Henderson said the sale would see final agreements signed by early next month, but could take until year end to close -- up to a month longer than the end of November deadline GM set last week. Job Cuts Suzzy Jagger at The Times reports Tony Woodley, the joint general secretary of Unite, warned Tuesday that the fate of the Vauxhall workforce was by no means certain. The trade union leader, as cited by the Times, said: "As of right now, there are no long-term commitments for either Ellesmere Port or Luton. If we listen to what Magna has actually said, it has committed to nothing beyond 2013." Nikki Tait and Stanley Pignal at The Financial Times reports senior Spanish government officials met union representatives from Opel and regional politicians in Madrid yesterday to work out the next move against plans to cut output at the Figueruelas plant near the northern city of Zaragoza. Unions called for a protest rally on Saturday against a possible 1,700 job losses, the FT relates. Links Daniel Schafer and Bernard Simon at The Financial Times report Magna’s plans to take a majority stake in Opel triggered a backlash on Tuesday when German carmakers Volkswagen and BMW voiced unease over the deal and warned that they would review links with the Canadian car parts supplier. According to the FT, Ferdinand Piech, VW chairman, said that Europe's largest carmaker would consider shifting business to other car parts makers. "We as a group do not like it when our suppliers become our rivals," the FT quoted the grandson of Ferdinand Porsche as saying. Friedrich Eichiner, BMW chief financial officer, voiced similar concerns. Mr. Eichiner, as cited by the FT, said "Magna has always been a strong supplier for us. But Magna will now become a competitor. This is a new situation, which we will have to assess. We will not put into question any running contracts with Magna. But where we see conflicts of interests we might in the future decide against Magna." The group's executives will meet customers in Europe and Asia during the next few weeks to try to allay concerns about the parts maker's proposed stake in Opel, the FT notes. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HEIDELBERGCEMENT AG: Capital Increase Won't Affect Moody's Rating ----------------------------------------------------------------- Fitch Ratings said that there will be no immediate rating impact on Germany-based HeidelbergCement AG's Long-term Issuer Default rating of 'B' following HC's announcement on 13 September of a planned capital increase. The Outlook is Negative and HC's and subsidiary Hanson plc's senior unsecured debt remains at 'CCC'. The Recovery Rating on the senior unsecured debt is 'RR6', reflecting poor recovery prospects in the event of a default, in light of high total debt levels and over 55% of total debt being secured. HC's Short-term IDR remains at 'B'. "While a capital increase would be positive for HeidelbergCement's creditors, there is no certainty that the effort will be successful as the offering is not underwritten," says Elisabetta Zorzi, Senior Director in Fitch's Corporate group. "Further, major refinancing risk persists with banks benefitting from a security package, complicating HeidelbergCement's access to new funding." HC plans to increase share capital by 50% through the issuance of 62.5 million new shares against cash contributions, in a private placement with institutional investors. No price has been set. The total proceeds will be used to partly repay the company's existing indebtedness. This exercise is part of management's effort to restore HC's credit profile through measures including asset disposals and capital increase. In June 2009 HC obtained a EUR8.7bn secured syndicated loan agreement with maturity on 15 December 2011, mitigating the refinancing risk of the EUR5bn Hanson term B acquisition loan that had maturity in May 2010. Fitch will monitor developments and assess the impact on HC's credit profile following the settlement date expected on 9 October 2009. Positive rating pressure could occur depending on the amount of cash raised. HC has also announced that concurrently with the placement of the new shares from the capital increase, up to 62.5 million existing shares held by the majority shareholder, the Merckle family and related entities as well as certain banks that hold shares in the company, will also be placed with institutional investors. The final amount to be placed is presently uncertain and will determine the extent of dilution of the current majority shareholder which, due to its own financial constraints, has weighed negatively on HC's credit profile. The Negative Outlook reflects Fitch's view that the proposed capital increase might not be sufficient to achieve material debt reduction and that HC's credit metrics will continue to be stretched. Sizable asset disposals are likely to be challenging in the coming 12 months given continuing difficult financial market conditions. The agency also views the concentration of the debt maturity profile in December 2011 as a key rating risk, especially in view of the complex creditor inter-relationship arising from the presence of secured lenders. In this context, access to debt capital markets may prove challenging. Fitch's latest forecasts for HC include a potential mid-teen percentage point decline in revenue in 2009 and a flat performance in 2010, as well as deteriorating EBITDA margins in 2009 before a slight recovery in 2010. Under this scenario expected lower cash flow from operations is likely to result in only slightly positive free cash flow compared to a five-year average of 4% free cash flow/revenue. Like other global building materials players, HC's Q209 results continued to be negatively impacted by weak trading conditions stemming from the global economic crisis. Revenue of EUR5.4bn in H109 was down 23% compared with H108, due to negative trading conditions in eastern Europe and central Asia, as well as Spain, the UK, Turkey, and North America. HC's operating EBITDA margin declined to 8.5 % in H109 from 13% in H108 due to a significant worsening of profitability in Europe and North America. While cost cutting and efficiency measures have been implemented, HC expects a decline in operating income in 2009 as a result of the prevailing global downturn. HSH NORDBANK: Fitch Keeps 'D/E' Individual Rating; IDR on RWN ------------------------------------------------------------- Fitch Ratings placed the Long-term Issuer Default Ratings of Bayerische Landesbank, HSH Nordbank, Landesbank Baden- Wuerttemberg, Landesbank Saar and WestLB AG on Rating Watch Negative. In addition, the Short-term IDRs of BayernLB, WestLB, LBBW and SaarLB were placed on RWN as well as the Support Rating Floors of all five banks. The five banks' IDRs remain at their Support Rating Floors and are based on Fitch's view of the extent to which the respective German regional governments would provide support in case of need. Any ownership change could reduce the likelihood of state support for the banks, compounding the effects of the gradual expiration of the vast majority of grandfathered guaranteed debt up until 2015. However, Fitch anticipates that state support will still remain strong enough for all of the Landesbanks, with the possible exception of WestLB, to remain within the single 'A' range ('A-', 'A' or 'A+') in the foreseeable future. The RWN reflect the possibility of ownership change and a related diminution in the importance of these banks to their regional state owners. BayernLB, HSH, LBBW and WestLB have received substantial support from their owners in the form of capital injections and guarantees after they suffered a material impact from the financial crisis. For the first three banks, these support measures are currently subject to a review and approval process by the European Commission (EC), which is expected to communicate its decision in the coming months. A downgrade of these banks' IDRs is likely if the EC's conditions include a change in ownership. WestLB's state aid has already been approved by the EC with conditions imposed, specifically the change of ownership until the end of 2011. While the RWN on BayernLB, HSH, LBBW and SaarLB will be reviewed by Fitch, as the EC's decisions on each of HSH, BayernLB and LBBW are announced, WestLB's RWN will remain pending until details of its future ownership structure become clear -- in 2011 at the latest. The RWN on SaarLB's IDRs reflects the pressures on its 75.1% parent BayernLB to restructure. Fitch believes that the sustainability of all Landesbanken's business models will continue to rely on direct or indirect state ownership and/or institutional support from the savings banks in the medium term, as the agency will outline in an upcoming report. Even in a stabilised economic environment, the combination of the Landesbanken's weak stand-alone quality and reliance on wholesale funding sources will likely prevent them from funding their (even reduced) balance sheets on competitive terms on their own merits, depending on their various sources of funding. Therefore, developments in the restructuring processes of BayernLB, HSH and LBBW may result in negative rating actions for each bank over a longer period of time after the EC's decisions on the respective banks. However, Fitch notes that the pressure on these Landesbanken's IDRs could ease if there are clear signs that a change of ownership structure is neither given as a condition of approving state aid by the EC nor likely to arise willingly by the owners. More certainty in this respect is unlikely before there are more tangible signs that the economic crisis, and accompanying deterioration of asset quality, is nearing its end. HSH has suffered most from the global financial and economic crisis. It has received comprehensive support measures from its state owners and has initiated an ambitious restructuring process. This increases the uncertainty about the bank's ability to manage the restoration of a viable business model post-restructuring. HSH's majority owners, the relatively small regional states of Hamburg (HH) and Schleswig-Holstein (SH), went to great lengths to rescue their Landesbank, constraining their own financial flexibility as a result. The local savings banks, HSH's minority owners, largely disengaged themselves by not participating in the latest capital increase. Fitch remains confident of the ability of both states to provide support if needed, as underlined by their 'AAA' ratings. However, if the EC were to order the sale of HSH, the regional public sector may not insist on retaining a substantial stake in HSH. WestLB had required state support even prior to the current crisis. As such its restructuring process is ahead of its peers. It was the first to ring-fence a considerable volume of troubled and non-core assets into a segregated run-off portfolio. It is also the only Landesbank that has announced its intention to use the bad bank scheme recently adopted by the federal parliament. The EC has completed its review of the state aid received and imposed an ownership change by end-2011. Fitch believes that, in view of the enduring recessionary environment and protracted sale endeavours, uncertainty will continue, potentially further unsettling potential clients and long-term debt investors. This may reduce the bank's chances of emerging as a strong going concern, making it unlikely that WestLB's owners will manage to attract interest from a majority private investor. BayernLB and, to a lesser extent, LBBW, might also face stringent restructuring requirements and ownership changes. Even if pressure for these does not come from the EC this time around, a renewed need for capital injections, although currently not expected, from the owner states cannot be fully excluded, due to the two banks' considerable loan portfolios and potential for mounting credit losses. This, or the potential implementation of a bad bank model, would in turn trigger a new review by the EC, increasing the risk of ownership change. However, the stronger franchises held by the two south German banks may enable them to achieve faster recoveries, reducing the probability that they would need renewed support. Fitch also expects BayernLB's and LBBW's core franchises to remain important to their respective regional governments even after any potential sale or merger (full or partial) with another Landesbank. Bayern LB and LBBW's IDRs are unlikely to fall below 'A-' in the foreseeable future, due to the superior financial flexibility of their regional governments, Bavaria and Baden-Wuerttemberg, as well as the strategic relevance of these banks for their states. SaarLB has not received any state support and therefore is not undergoing any restructuring or compensatory demands from the EC although it may be indirectly affected by the EC approval of state aid for BayernLB. In addition, a change in its ownership structure is possible in the near term, with the state of Saarland planning to take up some of BayernLB's stake. The rating actions follow a comprehensive review of the German Landesbank sector, in which Fitch has investigated the key parameters that will influence the strength of external support in the foreseeable future. These include the severity of shortcomings exposed by the current adverse economic conditions; the amount of external support needed and received since the outbreak of the crisis; the suitability of the restructuring processes to address the key issues faced by the banks; the sustainability of their resulting business models; and (in most cases still awaited) compensatory measures imposed by the EC in return for the state help received. The conclusions of the review will be published in an upcoming report. The rating actions taken are: Bayerische Landesbank -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN HSH Nordbank AG -- Long-term IDR 'A' placed on RWN -- Short-term IDR affirmed at 'F1' -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A' placed on RWN Landesbank Baden-Wuerttemberg -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'C/D' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN Landesbank Saar -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: 'C'; RWN -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN WestLB AG -- Long-term IDR 'A-' placed on RWN -- Short-term IDR 'F1' placed on RWN -- Individual rating: affirmed at 'E' -- Support rating '1' placed on RWN -- Support Rating Floor 'A-' placed on RWN LANDESBANK BERLIN: Moody's Puts Final Ratings on Mortgage Bonds --------------------------------------------------------------- Moody's has assigned definitive long-term ratings of Aaa to the issuance of the second Series of mortgage covered bonds by Landesbank Berlin AG (rated A1/Prime-1/D+) under LBB's "Daheim Nr. 1" covered bond program. This covered bond program has been established in Germany under the general German law, in contrast to other German covered bonds which rely on specific legislation (the Pfandbrief Act). Euro 20 million Series 2 matures in September 2019 and bears a fixed coupon. Series 2 is backed by a secured loan granted to a German savings bank (the borrower) -- following the "Funding Alternative" under the program. This loan is in turn backed by a residential mortgage loan portfolio that was originated by the borrower. The Covered Bond investors benefit from both the credit strength of LBB and the rights of security in respect of the Cover Pool. The Cover Pool is supported by: a) Direct recourse to the borrower through the pledge of a secured loan for the benefit of the noteholders and; b) A pool of residential loans originated by the borrower if the borrower fails to meet its obligations under the secured loan agreement; The program has been structured using techniques designed to ensure that the Cover Pool is ring-fenced in the event of Issuer insolvency. The program has been established under general German law, in contrast to many other European covered bonds which rely on specific legislation. The Issuer has incorporated a number of securitization techniques in this program, which has enabled it to create a covered bond that has similar characteristics to covered bonds backed by a specific legal framework. Structured features included in Series 2, which mitigate credit risks found in many covered bonds that rely on specific covered bond legislation, include a built-in extension to the maturity of the notes (thus mitigating refinancing risk) and, the matching of the maturities of the pledged secured loan with those of the notes (thus mitigating market and refinancing risks). Moody's has assigned a Timely Payment Indicator of "Probable" to the Covered Bonds. As is the case with other covered bonds, Moody's considers the transaction to be linked to the credit strength of the Issuer, particularly from a default probability perspective. Should the Issuer credit strength deteriorate, all other things being equal the rating of the Covered Bonds could be expected to come under pressure. In case of deterioration of the Issuer rating or the pool quality, the Issuer would have the ability, but not the obligation, to increase the over-collateralization in the Cover Pool. Failure to increase the level of over-collateralization under these circumstances could lead to negative rating actions. The rating assigned by Moody's addresses the expected loss posed to investors. 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 yield to investors. PAULMANN & CRONE: Declared Insolvent; Administrator Appointed ------------------------------------------------------------- Plasteurope reports that a court declared German automotive supplier Paulmann & Crone insolvent on September 1, 2009. The report relates court appointed Andreas Grund at Dr. Andres & Scheider as administrator. The business will continue to operate until December 31, 2009, the report says. Headquartered in Luedenscheid, Germany, Paulmann & Crone -- http://www.paulmann-crone.de/-- is an automotive parts supplier. RATIOPHARM GMBH: May Be Sold in Pieces to Repay Bank Loans ---------------------------------------------------------- Germany's Merckle family may have to sell generic-drug maker Ratiopharm GmbH in pieces to raise as much as EUR3 billion (US$4.4 billion) to pay off bank loans, Aaron Kirchfeld at Bloomberg News reports, citing three people familiar with the plan. According to Bloomberg, the people, who declined to be identified because the plans aren't public, said Ratiopharm lenders Commerzbank AG and Royal Bank of Scotland Group Plc, which are managing the sale, are considering taking bids for the drugmaker's four main business units alongside offers for the entire company after they send out sale documents as early as this month. Bloomberg relates Ratiopharm spokesman Markus Braun said preparations for the sale process aren't finished and decisions on the form and timing are scheduled to be made this week, after which VEM and Ratiopharm will notify the public and employees. Bloomberg notes the people said the Ratiopharm German drug brand, a second, smaller German brand, the BioGenerix unit and Ratiopharm's Canadian business may be sold individually to try to maximize the proceeds from the sale. Headquartered in Ulm, Germany, Ratiopharm GmbH -- http://www.ratiopharm.com/-- engages in the development, manufacture, and sale of generic products. WESTLB AG: Fitch Affirms 'E' Individual Rating; IDR on RWN ---------------------------------------------------------- Fitch Ratings placed the Long-term Issuer Default Ratings of Bayerische Landesbank, HSH Nordbank, Landesbank Baden- Wuerttemberg, Landesbank Saar and WestLB AG on Rating Watch Negative. In addition, the Short-term IDRs of BayernLB, WestLB, LBBW and SaarLB were placed on RWN as well as the Support Rating Floors of all five banks. The five banks' IDRs remain at their Support Rating Floors and are based on Fitch's view of the extent to which the respective German regional governments would provide support in case of need. Any ownership change could reduce the likelihood of state support for the banks, compounding the effects of the gradual expiration of the vast majority of grandfathered guaranteed debt up until 2015. However, Fitch anticipates that state support will still remain strong enough for all of the Landesbanks, with the possible exception of WestLB, to remain within the single 'A' range ('A-', 'A' or 'A+') in the foreseeable future. The RWN reflect the possibility of ownership change and a related diminution in the importance of these banks to their regional state owners. BayernLB, HSH, LBBW and WestLB have received substantial support from their owners in the form of capital injections and guarantees after they suffered a material impact from the financial crisis. For the first three banks, these support measures are currently subject to a review and approval process by the European Commission (EC), which is expected to communicate its decision in the coming months. A downgrade of these banks' IDRs is likely if the EC's conditions include a change in ownership. WestLB's state aid has already been approved by the EC with conditions imposed, specifically the change of ownership until the end of 2011. While the RWN on BayernLB, HSH, LBBW and SaarLB will be reviewed by Fitch, as the EC's decisions on each of HSH, BayernLB and LBBW are announced, WestLB's RWN will remain pending until details of its future ownership structure become clear -- in 2011 at the latest. The RWN on SaarLB's IDRs reflects the pressures on its 75.1% parent BayernLB to restructure. Fitch believes that the sustainability of all Landesbanken's business models will continue to rely on direct or indirect state ownership and/or institutional support from the savings banks in the medium term, as the agency will outline in an upcoming report. Even in a stabilised economic environment, the combination of the Landesbanken's weak stand-alone quality and reliance on wholesale funding sources will likely prevent them from funding their (even reduced) balance sheets on competitive terms on their own merits, depending on their various sources of funding. Therefore, developments in the restructuring processes of BayernLB, HSH and LBBW may result in negative rating actions for each bank over a longer period of time after the EC's decisions on the respective banks. However, Fitch notes that the pressure on these Landesbanken's IDRs could ease if there are clear signs that a change of ownership structure is neither given as a condition of approving state aid by the EC nor likely to arise willingly by the owners. More certainty in this respect is unlikely before there are more tangible signs that the economic crisis, and accompanying deterioration of asset quality, is nearing its end. HSH has suffered most from the global financial and economic crisis. It has received comprehensive support measures from its state owners and has initiated an ambitious restructuring process. This increases the uncertainty about the bank's ability to manage the restoration of a viable business model post-restructuring. HSH's majority owners, the relatively small regional states of Hamburg (HH) and Schleswig-Holstein (SH), went to great lengths to rescue their Landesbank, constraining their own financial flexibility as a result. The local savings banks, HSH's minority owners, largely disengaged themselves by not participating in the latest capital increase. Fitch remains confident of the ability of both states to provide support if needed, as underlined by their 'AAA' ratings. However, if the EC were to order the sale of HSH, the regional public sector may not insist on retaining a substantial stake in HSH. WestLB had required state support even prior to the current crisis. As such its restructuring process is ahead of its peers. It was the first to ring-fence a considerable volume of troubled and non-core assets into a segregated run-off portfolio. It is also the only Landesbank that has announced its intention to use the bad bank scheme recently adopted by the federal parliament. The EC has completed its review of the state aid received and imposed an ownership change by end-2011. Fitch believes that, in view of the enduring recessionary environment and protracted sale endeavours, uncertainty will continue, potentially further unsettling potential clients and long-term debt investors. This may reduce the bank's chances of emerging as a strong going concern, making it unlikely that WestLB's owners will manage to attract interest from a majority private investor. BayernLB and, to a lesser extent, LBBW, might also face stringent restructuring requirements and ownership changes. Even if pressure for these does not come from the EC this time around, a renewed need for capital injections, although currently not expected, from the owner states cannot be fully excluded, due to the two banks' considerable loan portfolios and potential for mounting credit losses. This, or the potential implementation of a bad bank model, would in turn trigger a new review by the EC, increasing the risk of ownership change. However, the stronger franchises held by the two south German banks may enable them to achieve faster recoveries, reducing the probability that they would need renewed support. Fitch also expects BayernLB's and LBBW's core franchises to remain important to their respective regional governments even after any potential sale or merger (full or partial) with another Landesbank. Bayern LB and LBBW's IDRs are unlikely to fall below 'A-' in the foreseeable future, due to the superior financial flexibility of their regional governments, Bavaria and Baden-Wuerttemberg, as well as the strategic relevance of these banks for their states. SaarLB has not received any state support and therefore is not undergoing any restructuring or compensatory demands from the EC although it may be indirectly affected by the EC approval of state aid for BayernLB. In addition, a change in its ownership structure is possible in the near term, with the state of Saarland planning to take up some of BayernLB's stake. The rating actions follow a comprehensive review of the German Landesbank sector, in which Fitch has investigated the key parameters that will influence the strength of external support in the foreseeable future. These include the severity of shortcomings exposed by the current adverse economic conditions; the amount of external support needed and received since the outbreak of the crisis; the suitability of the restructuring processes to address the key issues faced by the banks; the sustainability of their resulting business models; and (in most cases still awaited) compensatory measures imposed by the EC in return for the state help received. The conclusions of the review will be published in an upcoming report. The rating actions taken are: Bayerische Landesbank -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN HSH Nordbank AG -- Long-term IDR 'A' placed on RWN -- Short-term IDR affirmed at 'F1' -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '1' -- Support Rating Floor 'A' placed on RWN Landesbank Baden-Wuerttemberg -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: affirmed at 'C/D' -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN Landesbank Saar -- Long-term IDR 'A+' placed on RWN -- Short-term IDR 'F1+' placed on RWN -- Individual rating: 'C'; RWN -- Support rating: affirmed at '1' -- Support Rating Floor 'A+' placed on RWN WestLB AG -- Long-term IDR 'A-' placed on RWN -- Short-term IDR 'F1' placed on RWN -- Individual rating: affirmed at 'E' -- Support rating '1' placed on RWN -- Support Rating Floor 'A-' placed on RWN =========== G R E E C E =========== FAGE DAIRY: Moody's Changes Outlook on 'B3' Rating to Stable ------------------------------------------------------------ Moody's Investors Service has changed the outlook on the B3 corporate family rating and B3 senior unsecured rating of Fage Dairy Industry S.A. to stable from negative. "Fage has strengthened its position within the B3 rating category in recent quarters and its operating performance has shown resilience despite the difficult market conditions in its core markets," said Stefano del Zompo, lead analyst for Fage at Moody's. For the first six months of 2009, Fage reported an operating profit of approximately EUR12 million, up from a loss of EUR5 million for the same period last year. Moody's recognises that the profit improvement was achieved on the back of cost savings stemming from the U.S. plant and divestment from the loss- making cheese businesses -- actions that have mitigated the cost of continued intensive promotional activities in Greece. The company further benefited from reduced milk prices. The stabilization of the company's outlook also reflects an improved liquidity position. The company's on-balance-sheet cash was in excess of EUR36.4 million as of June 2009, up from EUR21.8 million at YE2008. The increase was mainly the result of higher profitability and reduced capital expenditures after the completion of the US plant. Free cash flow generation and on- balance-sheet cash, together with availability of around EUR8 million under the receivable facility and EUR2 million under the company's committed credit facility, are expected to be sufficient to fund around EUR6.5 million in debt amortization scheduled for 2009 and capital expenditures of around EUR24 million for the next twelve months. However, Moody's notes that without a significant increase in profitability and cash flow generation the company might find it difficult to make the large debt payments scheduled in 2011 and in 2012 and then again in 2015 when the Notes will be due. The stable outlook reflects Moody's expectation that Fage will maintain its improved performance in the medium term despite challenging domestic and international markets. Any upgrade of the rating would require Fage to sustain an EBITDA margin above 10% leading to a Debt to EBITDA ratio below 6.0x. Conversely, Moody's could consider changing the outlook back to negative if credit metrics declined as a result of a weaker operational performance such that the operating margin reverted to the low single-digit range and Debt to EBITDA increased above 6.5x. Moody's last rating action was implemented on April 1, 2008, when Moody's downgraded Fage's ratings and probability of default to B3 from B2. Headquartered in Athens, Fage is one of the leading dairy companies in Greece, with activities in the yoghurt, refrigerated milk and packaged cheese segments. It has also developed its activities in the US, the UK and Italy. For the first six months of 2009, Fage reported consolidated net sales of approximately EUR159 million and operating profit of around EUR12 million. ============= I R E L A N D ============= EUROCONNECT ISSUER: Fitch Puts 'BB'-Rated Class D Notes on RWN -------------------------------------------------------------- Fitch Ratings has placed EuroConnect Issuer LC 2007-1 Ltd.'s notes, due March 2028, on Rating Watch Negative: -- EUR310.35 million class A secured notes (ISIN: XS0311810898): 'AAA'; placed on RWN -- EUR93.1 million class B secured notes (ISIN: XS0311811862): 'A+'; placed on RWN -- EUR62.1 million class C secured notes (ISIN: XS0311813306): 'BBB'; placed on RWN -- EUR68.3 million class D secured notes (ISIN: XS0311814536): 'BB'; placed on RWN The rating action reflects the effect of Fitch's updated Global Rating Criteria for Corporate CDOs (published in April 2008) on the notable obligor concentration, the negative credit migration in the portfolio since closing in August 2007, and the agency's expectation that the portfolio will experience increasing defaults and delinquencies. These negative performance factors have outweighed the increase in the credit enhancement level of each rated tranche following the portfolio amortization after the transaction became static in July 2008. As the arranger has informed Fitch of upcoming changes to the transaction within the next few months, the notes have been placed on Rating Watch Negative until the timely completion of the planned restructuring. The resolution of the RWN will incorporate any changes made to the portfolio or the transaction along with additional portfolio migration. The arranger is expected to complete the restructuring of the transaction over the next few months. If there are no significant changes prior to the resolution of the RWN, the notes will likely be downgraded as indicated below: -- Class A notes likely to be downgraded to the 'A' rating category -- Class B notes likely to be downgraded to the 'BBB' rating category -- Class C notes likely to be downgraded to the 'BB' rating category -- Class D notes likely to be downgraded to the 'B' rating category The transaction is a partially-funded synthetic collateralized debt obligation referencing a predominantly European portfolio of senior unsecured obligations of medium and large corporate entities originated and credit-assessed by Bayerische Hypo- und Vereinsbank AG, UniCredit Bank Austria AG (formerly Bank Austria Creditanstalt AG, BA-CA) and UniCredit Corporate Banking (formerly UniCredit Banca d'Impresa, UBI). Per the latest pool cut as of July 2009, the proportion of loans with sub-investment grade ratings based on the initial mapping of the banks' internal ratings to Fitch's IDR scale has more than doubled to 31.9% from 12.5%, excluding defaulted assets. The exposure to the largest obligor and top 10 borrowers has increased to 3.6% and 24.1% of the portfolio notional, respectively, compared to 1.8% and 12.7%, respectively, at closing. The portfolio is concentrated in Austria (38%), Italy (20%) and Germany (15%). Given the current economic climate in the eurozone, Fitch expects defaults and delinquencies to increase from their currently low levels. Cumulative defaults have already risen since April 2009 to represent 0.8% of the initial portfolio balance, whilst the current delinquency rate (loans overdue by more than 30 days) was 0.14% as of July 2009. As of July 2009, the portfolio consisted of 630 loans to 390 obligor groups and the balance has decreased by 47% since closing to EUR3,290 million excluding defaulted assets. The originating banks, also the servicers, use their internal credit rating systems to assess the loans. Fitch has reviewed the banks' internal rating systems and mapped the internal rating categories to Fitch's IDR scale at closing of the transaction. The note issuance proceeds remain as cash deposits at Bayerische Hypo- und Vereinsbank AG ('A+'/'F1+'/Stable), Unicredit Bank Austria AG ('A'/'F1'/Stable) and UniCredit S.P.A. (formerly UniCredito Italiano S.P.A., rated 'A'/'F1'/Negative). INDEPENDENT NEWS: Denis O'Brien Seeks to Block Rescue Plan ---------------------------------------------------------- Dan Sabbagh at Times Online reports that Denis O'Brien, who holds a 26% stake in Independent News & Media plc, called for an extraordinary meeting to prevent the board from issuing new shares without shareholder consent. According to Times Online, the current rescue plans would see IN&M's bondholders issued with new shares as part-payment for their GBP200 million of outstanding, diluting Mr. O'Brien to about 13%. On Sept. 15, 2009, the Troubled Company Reporter-Europe, citing The Financial Times, reports that IN&M is considering giving its bondholders 45% of the company's equity to extinguish part of their debt. Citing people with knowledge of the plan, the FT disclosed the plan, which has yet to be agreed by the company, lenders and two key shareholders, would avoid the need for shareholder approval because the share issue has already been authorized. According to the FT, talks between IN&M and its creditors are now focused on how much bond debt will be exchanged for the 45% stake and how much to raise in a rights offering to repay the balance of the EUR200 million (GBP171 million) bond debt that IN&M failed to repay in May. About Independent News & Media Headquartered in Dublin, Ireland, Independent News & Media PLC (ISE:IPD) -- http://www.inmplc.com/-- is engaged in printing and publishing of metropolitan, national, provincial and regional newspapers in Australia, India, Ireland, New Zealand, South Africa and the United Kingdom. It also has radio operations in Australia and New Zealand, and outdoor advertising operations in Australia, New Zealand, South-East Asia and across Africa. The Company also has online operations across each of its principal markets. The Company has three business segments: printing, publishing, online and distribution of newspapers and magazines and commercial printing; radio, and outdoor advertising. INM publishes over 200 newspaper and magazine titles, delivering a combined weekly circulation of over 32 million copies with a weekly audience of over 100 million consumers. In March 2008, it acquired The Sligo Champion. During the year ended December 31, 2007, the Company acquired the remaining 50% interest in Toowoomba Newspapers Pty Ltd. RMF EURO: Moody's Confirms Rating on Class V Notes at 'Caa1' ------------------------------------------------------------ Moody's Investors Service has taken these rating actions on notes issued by RMF EURO CDO V Plc. The Combination Note P (principal only) and the Combination Note Q (principal and interest) remain Aaa due to the protection provided by associated OAT strips. -- EUR275,000,000 Class I Senior Secured Floating Rate Notes due 2023, Downgraded to Aa1; previously on April 5, 2007 Definitive Rating Assigned Aaa -- EUR110,000,000 Revolving Facility due 2023, Downgraded to Aa1; previously on April 5, 2007 Definitive Rating Assigned Aaa -- EUR48,900,000 Class II Senior Secured Floating Rate Notes due 2023, Downgraded to A2; previously on March 4, 2009 Aa2 Placed Under Review for Possible Downgrade -- EUR20,800,000 Class III Deferrable Mezzanine Floating Rate Notes due 2023, Confirmed at Baa3; previously on March 17, 2009 Downgraded to Baa3 and Remained On Review for Possible Downgrade -- EUR33,000,000 Class IV Deferrable Mezzanine Floating Rate Notes due 2023, Upgraded to Ba3; previously on March 17, 2009 Downgraded to B1 and Remained On Review for Possible Downgrade -- EUR17,100,000 Class V Deferrable Mezzanine Floating Rate Notes due 2023, Confirmed at Caa1; previously on March 17, 2009 Downgraded to Caa1 and Remained On Review for Possible Downgrade -- EUR6,000,000 Class R Combination Notes due 2023-2, Downgraded to Baa3; previously on March 4, 2009 A3 Placed Under Review for Possible Downgrade This transaction is a managed high yield collateralized loan obligation with exposure to predominantly European senior secured loans, as well as some mezzanine and high yield bonds. The rating actions 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. 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. According to Moody's, the rating actions taken on the notes are also a result of credit deterioration of the underlying portfolio. This is observed through a decline in the average credit rating as measured through the portfolio weighted average rating factor 'WARF' (currently 2893), an increase in the amount of defaulted securities (currently 5% of the portfolio), an increase in the proportion of securities from issuers rated Caa1 and below (currently 16.7% of the portfolio), and a failure of all but the senior par value tests. These measures were taken from the recent trustee report dated August 10, 2009. Moody's notes that the upgrade action has incorporated the aforementioned stresses as well as credit deterioration in the underlying portfolio. However, the action reflect updated analysis indicating that the impact of these factors on the ratings of these notes is not as negative as previously assessed during Stage I of the deal review in March. The current conclusions stem from comprehensive deal-level analysis completed during Stage II of the ongoing CLO surveillance review, which included an in-depth assessment of results from Moody's quantitative CLO rating model along with an examination of deal- specific qualitative factors. By way of comparison, during Stage I Moody's took rating actions that were largely the result of a parameter-based approach (see press release dated March 4, 2009, titled "Moody's puts all but senior-most CLO tranches on review for downgrade"). In addition to the quantitative factors that are explicitly modelled, 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. SIGMA-1 CLO: Fitch Cuts Rating on Class F Notes to 'B-' ------------------------------------------------------- Fitch Ratings has downgraded SIGMA-1 CLO 2007 Ltd.'s six classes of notes and assigned Outlooks and Loss Severity Ratings: -- EUR0.5 million class A secured FRN (ISIN: XS0313508672): downgraded to 'BBB' from 'AAA'; Outlook Stable, LS-5 -- EUR6.15 million class B secured FRN (ISIN: XS0313508755): downgraded to 'BBB' from 'AA+'; Outlook Stable, LS-5 -- EUR17.6 million class C secured FRN (ISIN: XS0313508839): downgraded to 'BB' from 'A+', Outlook Negative, LS-5 -- EUR6.8 million class D secured FRN (ISIN: XS0313509134): downgraded to 'BB' from 'A-', Outlook Negative, LS-5 -- EUR15.45 million class E secured FRN (ISIN: XS0313509480): downgraded to 'B' from 'BBB', Outlook Negative, LS-5 -- EUR19.8 million class F secured FRN (ISIN: XS0313509647): downgraded to 'B-' from 'BB'; Outlook Negative, LS-5 The downgrades reflect the effect of Fitch's updated 'Global Rating Criteria for Corporate CDOs' on the notable obligor concentration, the negative credit migration in the portfolio since closing in July 2007, and Fitch's expectation of rising defaults and delinquencies. The transaction is a partially-funded revolving synthetic collateralized loans obligation referencing a predominantly German portfolio of senior unsecured obligations of medium and large corporate entities originated and credit-assessed by the former Dresdner Bank AG which was recently acquired by Commerzbank AG. As of 31 May 2009, the proportion of loans to borrowers assessed '8' and worse on the internal rating scale of the former Dresdner Bank AG has risen to 21.4% (excluding defaulted assets) from 11.9% at closing in July 2007. The exposure to the largest obligor and top 10 borrowers has increased to 1.7% and 12.9% of the portfolio notional, respectively, compared to 0.8% and 7.2%, respectively, at closing. The largest country concentration is in Germany (89.1%), whereas the largest industry concentration is in the industrial and manufacturing sector (21.5%). Given the unfavorable economic conditions in Germany, Fitch expects defaults and delinquencies to increase from the currently low levels. In this transaction, cumulative defaults as a percentage of the initial portfolio balance were 0.3%, whilst the current delinquency rate (loans overdue by more than 30 days) was 0.1% as of June 2009. The transaction features a three-year replenishment period ending in June 2010, subject to the eligibility and replenishment criteria, which include the Fitch Vector test, a weighted average life covenant, as well as country-specific and rating-dependent debtor group concentration limits. Due to the breach of one replenishment criterion the pool has not been replenished since May 2009. This has resulted in the reduction of 11% of the portfolio balance. Additionally, the debtor group concentration limit is currently breached. However, the portfolio can be replenished up to the initial balance should the replenishment conditions be fulfilled again. According to the June 2009 investor report, the portfolio balance stood at EUR1,954.4 million (excluding defaulted assets) and consisted of 1,211 loans to 566 obligor groups. The former Dresdner Bank AG, as the originator and servicer, uses its internal credit rating system to assess the loans. Fitch has reviewed the bank's internal rating system and mapped the internal rating categories to Fitch's IDR scale at the closing of the transaction. The note issuance proceeds remain as cash deposits at Commerzbank AG (formerly Dresdner Bank), rated at 'A+'/'F1+'/Outlook Stable. Class A and B's Stable Outlooks reflect their ability to withstand Fitch's stress scenarios. The Negative Outlooks assigned to the remaining four classes reflect their relatively lower credit enhancement levels which make them more vulnerable to potential negative asset migration risk and defaults. STANTON ABS: Moody's Cuts Rating on Class A-4 Notes to 'Ca' ----------------------------------------------------------- Moody's Investors Service has taken these rating actions on notes issued by Stanton ABS I p.l.c. Issuer: Stanton ABS I p.l.c. -- EUR232,000,000 Class A-1 Notes due 2096 Notes (Currently EUR191,025,071 outstanding), Downgraded to Ba1; previously on Jun 11, 2009 Aa3 Placed Under Review for Possible Downgrade -- EUR23,000,000 Class A-2 Notes due 2096 Notes, Downgraded to B3; previously on Jun 11, 2009 Baa3 Placed Under Review for Possible Downgrade -- EUR12,500,000 Class A-3 Notes due 2096 Notes, Downgraded to Caa3; previously on Jun 11, 2009 Ba3 Placed Under Review for Possible Downgrade -- EUR12,500,000 Class A-4 Deferrable Interest Notes due 2096 Notes, Downgraded to Ca; previously on Jun 11, 2009 Caa2 Placed Under Review for Possible Downgrade The transaction is a managed cashflow CDO backed mainly by global ABS, RMBS, CMBS, CLO and other CDO assets. The event of default that occurred on June 2, 2009, as reported by the trustee, due to a failure of the Class A-3 overcollateralization ratio to be greater than or equal to 96% is no longer continuing, but the ratio remains low: the Class A-3 overcollateralization ratio was 96.43% as of August 28, 2009. For the purpose of calculating the numerator of the overcollateralization test, assets rated below Baa3 are carried at a rating-based haircut and a further deterioration of the credit quality of the portfolio could potentially trigger another event of default. According to Moody's, the rating actions taken on the notes are a result of credit deterioration of the underlying portfolio. This is observed through a decline in the average credit rating as measured by the portfolio weighted average rating factor 'WARF' (currently 1079), an increase in the amount of defaulted securities (currently 4.36% of the portfolio), an increase in the proportion of securities from issuers rated Caa1 and below excluding defaulted assets (currently 4.17% of the portfolio). Currently interest payments on Class A-4 and below are all deferring and par coverage tests are all failing. This portfolio also has a 15.70% concentration on European CLOs which are all currently under review for further downgrade, with equivalent weighted average rating of B3. These measures were taken from the recent trustee report dated August 28, 2009. Moody's also performed a number of sensitivity analyses, including consideration of a further decline in portfolio WARF quality. In addition to the quantitative factors that are explicitly modelled, 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. 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. TALISMAN-1 FINANCE: Fitch Cuts Rating on Class G Notes to 'B' ------------------------------------------------------------- Fitch Ratings has downgraded four classes of Talisman-1 Finance Plc's commercial mortgage-backed notes, due 2012, and affirmed three tranches: -- EUR64.2 million class A (XS0220377906) affirmed at 'AAA'; Outlook Stable -- EUR28.6 million class B (XS0220378896) affirmed at 'AAA'; Outlook Stable -- EUR28.6 million class C (XS0220379274) affirmed at 'AA'; Outlook Stable -- EUR27.5 million class D (XS0220379514) downgraded to 'BBB' from 'BBB+'; Outlook Negative -- EUR3.1 million class E (XS0220379787) downgraded to 'BBB-' from 'BBB'; Outlook Negative -- EUR5.3 million class F (XS0220380017) downgraded to 'BB' from 'BB+'; Outlook Negative -- EUR7.0 million class G (XS0220380363) downgraded to 'B' from 'BB'; Outlook Negative The downgrade of the junior classes reflects the uncertainty surrounding upcoming loan maturities and, to a lesser extent, the impact of the downturn in the European commercial real estate market on the two remaining loans in the portfolio. The Prime Commercial loan, the largest loan in the portfolio at 85.1%, matures in January 2010. The balloon risk is exacerbated by the presence of a B-note which increases overall leverage and is likely to complicate a potential re-financing. The Alpha Real Estate loan (14.9%) matures in April 2010. The legal final maturity of the transaction is in January 2014, and in Fitch's view, this should provide the servicer with sufficient time to work out the loans if they should fail to refinance. The Prime Commercial loan is secured by two secondary quality shopping centres located near Hamburg and Cologne in Germany, respectively. Based on a re-valuation of the properties conducted in December 2008, it is reported that there has been a decline of 3% in overall asset value since December 2004. Given that almost a year has passed since the re-valuation of the properties, in Fitch's opinion the collateral will have suffered a further decline of approximately 14%. Despite the strong income performance, Fitch believes that the secondary nature of the two properties and the high leverage of the B-note (Fitch estimates a whole loan LTV of 96%) create uncertainty surrounding the potential refinancing of the Prime loan, which has been factored into the agency's analysis. The Alpha Real Estate loan is secured by a well-located retail centre in Berlin and a portfolio of residential units located in Munster, in the Lower Saxony region of Germany. The loan will have slightly amortized to a reported exit LTV of 71.8% by April 2010, compared with its current LTV of 72.8% based on November 2004 valuations. Fitch estimates that a re-valuation under current market conditions would result in a market value decline (MVD) of 13%, implying a Fitch exit LTV of 82.2%. In light of the increased Fitch LTV, a successful refinancing at maturity could prove difficult. Fitch will continue to monitor the performance of the transaction. ========= I T A L Y ========= PARMALAT SPA: Bank of America Liable for Fraud, SPVs Say -------------------------------------------------------- U.S. District Judge Lewis Kaplan on September 14 began trial on the lawsuit commenced by Food Holdings Ltd. and Dairy Holdings Ltd. against Bank of America Corp. Food Holdings and Dairy Holdings Ltd. were two special purpose entities created by BofA. Their liquidators have sued the bank, claiming that it knew of the Parmalat fraud and should be forced to pay hundreds of millions of dollars in notes to Parmalat investors that the vehicles issued. Parmalat went bankrupt after revealing that a EUR3.95 billion account at Bank of America didn't exist. Bank of America should be held liable for the 2003 collapse of Parmalat, lawyers for the two Cayman Island entities told U.S. District Judge Lewis Kaplan September 14, at the start of a US$500 million civil trial, Bloomberg News said. Liquidators for two special purpose vehicles created by Bank of America -- Food Holdings Ltd. and Dairy Holdings Ltd. -- later sued the bank, claiming it knew of the Parmalat fraud and should be forced to pay hundreds of millions of dollars in notes to Parmalat investors that the vehicles issued. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The Company's U.S. operations filed for Chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on December 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On January 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. RISANAMENTO SPA: Board Resigns; Shareholders' Meeting Set Nov. 16 ----------------------------------------------------------------- Chris Staiti and Armorel Kenna at Bloomberg News report that Risanamento SpA said its board has resigned. According to Bloomberg News, the directors called a shareholders' meeting for Nov. 16 to appoint a new board. Restructuring Plan As reported in the Troubled Company Reporter-Europe on Sept. 10, 2009, Bloomberg News, citing daily Il Sole 24 Ore, said Risanamento submitted a restructuring plan to a Milan court. Bloomberg disclosed Il Sole said the plan, backed by 60% of the real estate company's creditors, includes a EUR150-million (US$218 million) capital increase, the conversion of EUR350 million of debt and the sale of assets, excluding property in New York and Paris. Risanamento was ordered to come up with the plan in response to a prosecutor's statement in July that the real- estate company had failed. About Risanamento SpA Headquartered in Milan, Italy, Risanamento SpA -- http://www.risanamentospa.it/-- is a company engaged in the real estate sector. It is part of the Zunino Group. Its main activities are real estate investments, real estate promotion and development. The Company provides its services through numerous subsidiaries and associated companies, such as Milano Santa Giulia SpA, Etoile ST. Florentin Sarl, Risanamento Europe Sarl and RI Investimenti Srl. Risanamento operates in the real estate promotion and development, and real estate investments sectors. The Company's main projects are the creation of the new Milano Santa Giulia district, and the redevelopment of the former Falck area in Sesto San Giovanni. =================== K A Z A K H S T A N =================== ARU LLP: Creditors Must File Claims by September 24 --------------------------------------------------- Creditors of LLP Trade-Manufacturing Company Aru have until September 24, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Kostanai Baitursynov Str. 70 Kostanai Kazakhstan The Specialized Inter-Regional Economic Court of Kostanai commenced bankruptcy proceedings against the company on July 8, 2009. ATAN AKTOBE: Creditors Must File Claims by September 24 ------------------------------------------------------- Creditors of LLP Atan Aktobe have until September 24, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Aktube Satpaev Str. 16 Aktobe Aktube Kazakhstan The court commenced bankruptcy proceedings against the company on July 3, 2009. KAPCHAGAI OIL: Creditors Must File Claims by September 24 --------------------------------------------------------- Creditors of LLP Kapchagai Oil have until September 24, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Almaty Tauelsyzdyk Str. 53 Taldykorgan Almaty Kazakhstan Tel: 8 701 255 64-22 The court commenced bankruptcy proceedings against the company on June 1, 2009 after finding it insolvent. R MEDIA: Creditors Must File Claims by September 24 --------------------------------------------------- Creditors of LLP R Media have until September 24, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Almaty Baizakov Str. 273b Almaty Kazakhstan The court commenced bankruptcy proceedings against the company on June 29, 2009. SK AVIA: Creditors Must File Claims by September 24 --------------------------------------------------- Creditors of LLP SK Avia have until September 24, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Almaty Baizakov Str. 273b Almaty Kazakhstan The court commenced bankruptcy proceedings against the company on June 19, 2009. =================== K Y R G Y Z S T A N =================== AUTO TRADE: Creditors Must File Claims by September 30 ------------------------------------------------------ Foreign LLC Auto Trade is currently undergoing liquidation. Creditors have until September 30, 2009, to submit proofs of claim to: Inquiries can be addressed to (0-555) 38-16-48, (0-773) 00-27-61. =================== L U X E M B O U R G =================== CRC BREEZE: S&P Downgrades Rating on EUR300 Mil. Bonds to 'BB' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered to 'BB' from 'BB+' its long-term debt rating on the EUR300 million class A secured bond due 2026 issued by CRC Breeze Finance S.A. The '2' recovery rating on this bond is not affected. The long-term 'CC' debt rating on the EUR50 million class B secured bond issued by Breeze Two and due 2016 is also unaffected. The outlook on the class A and class B notes is negative. "The downgrade of the class A notes reflects S&P's view that the operational and financial performance of the Breeze Two portfolio consistently underperforms compared with S&P's original expectations," said Standard & Poor's credit analyst Timon Binder. S&P understands that Breeze Two has commissioned a new wind study by independent experts to measure the actual performance of the portfolio. S&P assumes that this new wind study and the revenue projections it derives will lead to significantly lower cash flows and therefore lower senior debt service cover ratios (DSCR) than currently projected. S&P expects to receive an updated financial model from Breeze Two by year-end. However, based on the preliminary projections of the management and S&P's own estimates, S&P believes that the senior DSCRs are not consistent with a 'BB+' rating. Furthermore, management currently expects that it will have to partially use the A-note debt service reserve account in November and that EUR2.48 million of the B-note payments will be deferred. According to the bond documentation, deferred B-note payments are repaid before replenishment of the A-DSRA. Based on S&P's preliminary revenue assumptions, S&P assume that the EUR13.3 million in the A-DSRA might not be fully funded for more than 18 months, which will impair Breeze Two's liquidity situation. Breeze Two, a Luxembourg-based special-purpose vehicle, used the proceeds of its debt issues to make a loan to Breeze Two Energy GmbH & Co. KG and Eoliennes Suroit SNC. Breeze Two Energy is a German limited partnership company, and Eoliennes Suroit is a French unlimited liability partnership. Each has been formed for the purpose of acquiring, constructing, owning, and operating a portfolio of 39 wind farms with a nameplate capacity of 305 megawatts in Germany (Breeze Two Energy) and 27 MW in France (Eoliennes Suroit). The outlook is negative reflecting the uncertainty regarding the operating and financial performance of the project over the next months. "Following receipt of additional information on current operational issues, of the new expert wind study, and an updated financial model from Breeze Two's management, S&P may lower the rating by several notches," said Mr. Binder. "Furthermore, S&P may lower the rating if S&P don't have more visibility on operating issues". ===================== N E T H E R L A N D S ===================== CHEYNE CREDIT: Fitch Lowers Ratings on Two Tranches to 'BB' ----------------------------------------------------------- Fitch Ratings has affirmed four tranches of Cheyne Credit Opportunity CDO 1 B.V.'s notes, downgraded two tranches, and removed three tranches from Rating Watch Negative. The agency has assigned Loss Severity ratings to all six tranches. The rating actions are: -- EUR538 million class IA F (ISIN: XS0246347016): affirmed at 'AAA'; Outlook Stable; assigned a Loss Severity Rating of LS-2 -- EUR138 million class IB (ISIN: XS0243224911): affirmed at 'AAA'; Outlook Stable; assigned a Loss Severity Rating of LS-4 -- EUR40 million class II (ISIN: XS0243225215): affirmed at 'AA'; Outlook Stable; assigned a Loss Severity Rating of LS-5 -- EUR40 million class III (ISIN: XS0243225488): affirmed at 'A'; off RWN; assigned a Negative Outlook; assigned a Loss Severity Rating of LS-5 -- EUR60 million class IV (ISIN: XS0243225728): downgraded to 'BB' from 'BBB'; off RWN; assigned a Negative Outlook; assigned a Loss Severity Rating of LS-5 -- EUR30 million class V (ISIN: XS0243226296): downgraded to 'B' from 'BB'; off RWN; assigned a Negative Outlook; assigned a Loss Severity Rating of LS-5 The rating actions reflect the recent clustering of leveraged loan defaults and increasing 'CCC'-rated asset exposure in the portfolio. To date, the transaction has suffered seven defaults. The cumulative default rate represents 13.1% of the target par amount of the transaction. In addition, 20.5% of the portfolio now consists of 'CCC+' or lower rated obligors. As a result of negative portfolio migration, all over-collateralization tests are now breached. The credit enhancement of the class IV and class V notes are no longer deemed consistent with a 'BBB' and 'BB' rating definitions respectively, which is why Fitch has downgraded those classes to 'BB' and 'B' respectively. The performance of the two downgraded tranches is highly dependent on portfolio recovery prospects. Although some credit protection still remains for the downgraded notes, Fitch's long term outlook remains negative. The affirmations of the class I, II, and III notes reflect the robust CE driven by OC and excess spread. Fitch notes that the transaction was initially assumed to have a portfolio consisting of 45% of second liens and mezzanine loans in aggregate, or up to 20% of mezzanine loans (the maximum allowed levels according to the transaction documentation). Due to higher initial loss expectations, the initial CE was higher relative to other European CLOs which have stricter limits on second liens and mezzanine loans. The current portfolio contains 2% of mezzanine loans and 15% of second lien loans which is noticeably lower than the allowed limits. Fitch also notes that the transaction considers defaulted assets at zero value rather than the market value or the agency's recovery estimates for the purpose of calculating OC tests. Since the portfolio has started to deteriorate, collateral coverage tests have been breached. This is beneficial to the senior notes as the transaction continues to capture excess spread to redeem the senior notes. At the last payment date in August 2009, 2.5% of the original notional of the class IA F note had been redeemed as the OC tests were breached. However, the more subordinated notes are cut-off from cash flow and there is an increasing likelihood that no interest payment will be made to the class IV and V tranches for an extended period of time. DALRADIAN EUROPEAN: Moody's Junks Ratings on Two Classes of Notes ----------------------------------------------------------------- Moody's Investors Service has taken these rating actions on notes issued by Dalradian European CLO II B.V. The Class A-1 and the Variable Funding Notes remain Aaa mainly due to the current over collateralisation. Issuer: Dalradian European CLO II B.V. -- Class A2 Senior Secured Floating Rate Notes due 2022, Downgraded to Aa2; previously on March 4, 2009 Aaa Placed Under Review for Possible Downgrade -- Class B Deferrable Secured Floating Rate Notes due 2022, Downgraded to Baa1; previously on March 4, 2009 Aa2 Placed Under Review for Possible Downgrade -- Class C Deferrable Secured Floating Rate Notes due 2022, Downgraded to Ba2; previously on March 19, 2009 Downgraded to Baa3 and Remained On Review for Possible Downgrade -- Class D Deferrable Secured Floating Rate Notes due 2022, Downgraded to Caa1; previously on March 19, 2009 Downgraded to B1 and Remained On Review for Possible Downgrade -- Class E Deferrable Secured Floating Rate Notes due 2022, Downgraded to Ca; previously on March 19, 2009 Downgraded to Caa1 and Remained On Review for Possible Downgrade -- Class P Combination Notes due 2022, Downgraded to Ba2; previously on March 4, 2009 A3 Placed Under Review for Possible Downgrade -- Class T Combination Notes due 2022, Downgraded to Ca; previously on Mar 4, 2009 B2 Placed Under Review for Possible Downgrade -- Class W Combination Notes due 2022, Downgraded to Ba3; previously on Mar 4, 2009 Baa1 Placed Under Review for Possible Downgrade This transaction is a managed high yield collateralized loan obligation with exposure to predominantly European senior secured loans, as well as some mezzanine and second lien loan exposure. The rating actions 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. 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. According to Moody's, the rating actions taken on the notes are also a result of credit deterioration of the underlying portfolio. This is observed through a decline in the average credit rating as measured through the portfolio weighted average rating factor 'WARF' (currently 2754), an increase in the amount of defaulted securities (currently 11% of the portfolio), an increase in the proportion of securities from issuers rated Caa1 and below (currently 10.8% of the portfolio), and a failure of all but the senior par value tests. These measures were taken from the recent trustee report dated July 31, 2009. Moody's also performed a number of sensitivity analyses, including consideration of a further decline in portfolio WARF quality. 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. In addition to the quantitative factors that are explicitly modelled, 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. ING GROEP: Commission Extends Probe Into Illiquid Back-up Facility ------------------------------------------------------------------ The European Commission has extended, under EC Treaty state aid rules, its investigation of the illiquid asset back-up facility provided by the Dutch State to the financial group ING. The Commission has also extended its temporary clearance of the measure until the assessment of the measure is finalized. The Commission initially authorized the measure for six months for reasons of financial stability on March 31, while opening an in- depth investigation to analyse the complex measure in light of the Commission's Impaired Assets Communication. On the basis of the information provided so far, the Commission has doubts as to the compatibility of the measure with the Impaired Assets Communication, in particular as regards valuation and burden sharing. This decision is without prejudice to the final outcome of the investigation. Competition Commissioner Neelie Kroes said: "The Commission supports Member States' efforts to stabilize financial markets by dealing with banks' impaired assets. However, state aid in the form of impaired asset relief has to be properly remunerated and should not give undue advantages to banks. It is therefore extending its investigation to explore further with the Dutch authorities whether this is compatible with the Commission's state aid rules on impaired asset relief. We look forward to continuing our constructive dialogue with the Dutch authorities and I am confident that we will arrive at a satisfactory outcome." ING is a Dutch-based financial institution offer ing banking, insurance and asset management services to over 85 million clients in more than 40 countries. With a workforce of about 125,000 people and a balance sheet of EUR1,332 billion at the end of 2008 it is one of the biggest financial institutions in the world. In January 2009, the Dutch State and ING implemented a so-called illiquid assets back-up facility for a portfolio of US$39 billion (EUR30 billion) par value worth of US residential mortgage-backed securities , mostly backed by so-called Alt-A mortgage loans. Under the transaction, the Dutch State buys the right to receive future cash flows on 80% of the above-mentioned portfolio, . The Commission has assessed the measure under its guidance Communication on the treatment of asset relief measures. Taking account of input from external experts, the Commission considers that the valuation seems at this stage not conservative enough. In addition, the Commission found that a significant proportion of securities were valued above purchase price. Therefore, the Commission continues to have doubts that the price paid by the Dutch Government, equivalent to a transfer price of 90% of the face value, is justified. Should the Dutch authorities not be in a position to address the Commission's concerns in a convincing manner, the Commission's final decision on the compatibility of the facility with EU state aid rules would have to require increasing the remuneration of the Dutch State. Background The Impaired Asset Communication leaves the methods and design for impaired asset relief measures to Member States, but defines impaired asset relief as all measures whereby a bank is dispensed from the need for severe downward value adjustments and/or from increasing capital requirements triggered by severe rating downgrades. The guidance document was designed to ensure that foreseeable losses were disclosed and that impaired assets were valued properly with the help of an independent expert using an acceptable valuation methodology. The aim of the valuation is to establish the real economic value of the illiquid assets, which may be significantly above the market value. The guidance Communication requires that measures designed to protect banks against illiquidity arising from impaired assets are accompanied by adequate burden sharing and remuneration. In March 2009, following an initial assessment of the complex measure for ING, the Commission decided for reasons of financial stability not to raise objections for a period of six months. However, as some conditions required by the Impaired Assets Communication needed further in-depth analysis, in particular regarding valuation, the Commission decided to open an in-depth investigation. Headquartered in Amsterdam, the Netherlands, ING Groep N.V. -- http://www.ing.com/-- is a global financial institution offering banking, investments, life insurance and retirement services. The Company serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. ING has six business lines: Insurance Europe, Insurance Americas, Insurance Asia/Pacific, Wholesale Banking, Retail Banking and ING Direct. In July 2008, the Company completed the acquisition of CitiStreet LLC, a retirement plan and benefit service and administration company in United States. In November 2008, ING Groep N.V. increased its stake in joint venture Billington Holdings PLC from 50% to 100%. In February 2009, the Company announced that it closed the sale of its Taiwanese life insurance business to Fubon Financial Holding Co. Ltd. In April 2009, the Company sold its non-state pension fund business and its holding company in Russia to Aviva plc. SKYLINE 2007: Fitch Puts 'BB'-Rated Class E Tranche on RWN ---------------------------------------------------------- Fitch Ratings has placed five tranches of Skyline 2007 B.V. on Rating Watch Negative. The rating actions reflect Fitch's updated view on the credit risk of the rated tranches following the release of its new rating Criteria for European Granular Corporate Balance-Sheet Securitisations on July 23, 2009. The transaction's performance has been stable. However, given Fitch's revised view of obligor and sector concentration, and of the current credit quality of the portfolio, the credit enhancement levels listed below are not sufficient to support the current ratings of the tranches being placed on RWN. If there are no significant changes to the transaction prior to the resolution of the RWN, the tranches will likely be downgraded to the rating categories indicated below. -- Class A due July 2043: 'AAA'; placed on RWN; CE 16.15% (could be downgraded to 'A') -- Class B due July 2043: 'AA'; placed on RWN; CE 10.75% (could be downgraded to 'BBB') -- Class C due July 2043: 'A'; placed on RWN; CE 6.30%; (could be downgraded to 'BB') -- Class D due July 2043: 'BBB'; placed on RWN; CE 2.25%; (could be downgraded to 'B') -- Class E due July 2043: 'BB'; placed on RWN; CE 0.80%; (could be downgraded to 'CCC') Skyline 2007 B.V. is a special purpose vehicle incorporated under the laws of the Netherlands. The issuer purchased a portfolio of loans originated by FGH Bank N.V., a wholly-owned subsidiary of Rabobank Group (rated 'AA+'/'F1+'/Outlook Stable) for a total amount of EUR3 billion at the outset. The transaction is revolving until five years have elapsed since closing (until 2012). The main replenishment criteria is based on internal rating limits, single obligor concentration limits, maximum weighted-average life covenants, minimum debt service coverage ratio and interest coverage ratio levels, maximum loan- to-value ratio and regional and property type limits. The current portfolio consists of 648 obligors which are secured by more than 5,000 properties in the Netherlands. =========== P O L A N D =========== DUDA SA: Court Approves Debt Restructuring Deal ----------------------------------------------- Maciej Martewicz at Bloomberg News reports that a court approved the debt restructuring deal Polski Koncern Miesny Duda SA agreed on with its creditors in July. Polski Koncern Miesny DUDA SA (PKM DUDA) -- http://www.zmduda.pl/ -- is a Poland-based company active in the meat processing industry. The Company focuses on the red meat production. Its main line of business is purchasing and slaughtering of pigs and cattle, as well as butchery services. Apart from sides of pork and quarters of beef, the range of products includes cuts of pork and beef, culinary meat, pluck and fats. As a complement to its production and trading activities, the Company offers services with regard to the freezing, storage and transport of foodstuffs that require specialist refrigeration facilities. PKM DUDA is a parent company within a group comprising approximately 30 companies in Poland, Ukraine and Germany. ============= R O M A N I A ============= MONDEX SIBIU: High Rents in Malls Blamed for Insolvency ------------------------------------------------------- Laurentiu Cotu at Ziarul Financiar reports that representatives of Relco Active, the administrator of Mondex Sibiu, blamed the high rents paid for stores in mall-type commercial spaces or commercial galleries in Romania for the company's insolvency. According to ZF, with a 100-store network, the broadest in Romania, Mondex paid over EUR2 million to retail space owners every year. ZF notes against an EUR11-million turnover, rents account for around 20% in Mondex' sales, almost 5% above what consultants say the optimal threshold for a store should be. "We'll close 20-30 Mondex stores, where shopping gallery or mall owners will not cut rents, and we'll shift to other retail spaces. We'll give up the first Mondex stores in a matter of days. We'll focus on Bucharest more as it's a solvent market and we'll boost exports," ZF quoted Relco Active representatives as saying. ZF recalls Mondex shareholders filed for insolvency with the Sibiu Court of Law, as the company was in default, having accumulated debts of around RON700,000 (over EUR166,000) since April until now, not including banking loans. Citing Finance Ministry data, ZF discloses Mondex had total debts of above RON54.5 million (around EUR13 million) in December 2008. In 2008, the firm reported turnover worth RON40.8 million (EUR11.6 million) and profit of RON71,000 (EUR17,000). ZF relates Relco Active representatives stated, "[f]rom talks held with special administrator Calin Bogdan Vircolacu, the company will sell none of its assets". They also said they will draw up a final list of receivables by January 2010 and plan to pay all accumulated debts, ZF notes. Mondex Sibiu is the largest hosiery manufacturer in Romania. OLTCHIM SA: Debt-for-Equity Swap and State Guarantee Probed by EU ----------------------------------------------------------------- The European Commission has opened a formal investigation under EC Treaty state aid rules into Romania's plans to grant a EUR135 million debt-to-equity swap and a EUR339.2 million state guarantee for chemical producer Oltchim. The Commission has doubts whether the planned measures are in line with the state aid rules and in particular, whether a private operator would have accepted to make available such measures. The opening of the in-depth inquiry gives interested parties an opportunity to comment on the measures. It does not prejudge the outcome of the procedure. Competition Commissioner Neelie Kroes said: "The Commission must verify whether the measures planned for Oltchim would entail state aid, and if so whether such measures would not give rise to excessive distortions of competition." On July 17, 2009 Romania notified to the Commission two support measures in favour of SA Oltchim Ramnicu Valcea, one of the largest petrochemical companies in Romania and in South-East Europe. The Romanian State is the majority shareholder in the company. Under EU state aid rules, interventions by public authorities in companies carrying out economic activities can be considered free of aid if they are made on terms that a private player operating under market conditions would have accepted (the market economy investor principle). The first measure involves a debt-to-equity swap of public debt amounting to around EUR135 million. The public debt stems from the triggering of state guarantees on non-performed commercial loans contracted before 2000. The Commission questioned why Romania did not impose any interest on the public debt, in particular since its EU accession on January 1, 2007, as Romania should have applied the EC Treaty in its entirety as of that date. The second measure is a state guarantee amounting to EUR339.2 million (covering 80% of a commercial loan of EUR424 million), to be used for investments necessary for the implementation of the company's development plan. Romania considers that the planned measures do not confer an advantage to the beneficiary, because the support given by the State to Oltchim in its quality of main shareholder and main creditor respectively is comparable to what a private market operator would choose to do in similar circumstances. At this stage, given the long history of the debt, the current situation of the company and the magnitude of the further risk exposure of the state, the Commission doubts that a private investor and a private creditor would have accepted to grant the two measures. Oltchim SA -- http://www.oltchim.ro/-- is a Romania-based company, which is mainly active in the chemicals industry. It is divided into five business units: chlor-alkali, petrochemical, chemical, technical and construction materials. Its product range encompasses inorganic products, such as caustic soda, chlorine, hydrochloric acid, hydrogen peroxide; macromolecular products, such as polyvinyl chloride, polyetherspolyols, and synthesis organic products, including oxo alcohols, chlorinated products, phthalic anhydride and dioctyl phthalate. The Company also produces pesticides, door and window frames, celluloid and thermo- isolating boards, as well as alimentary products, such as vegetables and fruits cans, beverages, eggs, forages, fodders, poultry and pork meat. Its subsidiaries include Oltchim Medical Products SRL, Oltchim GmbH, Sistemplast SA, Oltchim Italia and Oltchim Fundatia. It distributes its products nationally and internationally. As of December 31, 2008, A.V.A.S. holds a 53.26% stake in Oltchim SA. =========== R U S S I A =========== ABDULINSKIY MEAT: Creditors Must File Claims by September 21 ------------------------------------------------------------ Creditors of OJSC Abdulinskiy Meat Processing Factory (TIN 5601002509, PSRN 1035600250070, RVC 560101001) have until September 21, 2009, to submit proofs of claims to: G. Chayka Temporary Insolvency Manager Pushkinskaya Str. 30 460000 Orenburg Russia The Arbitration Court of Orenburgskaya commenced bankruptcy supervision procedure. The case is docketed under Case No.?47– 969/2009. The Debtor can be reached at: OJSC Abdulinskiy Meat Processing Factory Sovetskaya Str. 314 Abdulino 461743 Orenburgdskaya Russia EN+ GROUP: Creditors Wants Owner to Pledge 10% of Rusal ------------------------------------------------------- Ilya Khrennikov at Bloomberg News, citing Vedomosti, reports that creditors of En+ Group Ltd. asked Russian billionaire Oleg Deripaska, the energy company's owner, to pledge 10% of United Co. Rusal as a condition of reorganizing US$1 billion of loans. According to Bloomberg, the newspaper said in July, En+ reached a preliminary agreement with banks to extend these loans until 2013 and plans to sign final documents soon. As reported in the Troubled Company Reporter-Europe on July 30, 2009, Bloomberg News said En+ lenders include the Royal Bank of Scotland Group Plc., Deutsche Bank AG, Raiffersen Zentralbank Oesterreich AG and Natixis. Based in Moscow, En+ Group Ltd. -- http://www.enplus.ru/en/-- is an energy-related company. The company also holds power, coal- mining and oil businesses. It owns a controlling interest in United Company RUSAL. EVRAZ GROUP: Fitch Cuts Long-Term Issuer Default Rating to 'B+' --------------------------------------------------------------- Fitch Ratings has downgraded Russia-based metals and mining company Evraz Group SA's Long-term Issuer Default Rating and senior unsecured rating to 'B+' from 'BB-'. The ratings remain on Rating Watch Negative. The Short-term IDR is affirmed at 'B'. The Recovery Rating for the senior unsecured debt is 'RR4'. Fitch has also downgraded and withdrawn Mastercroft Limited's Long-term IDR from 'BB-' to 'B+' at RWN and affirmed and withdrawn Mastercroft's Short-term IDR 'B'. This follows the repayment of Evraz Securities SA's US$300 million 10.875% bonds which matured on 3 August 2009. The bonds were guaranteed by Mastercroft. The downgrade reflects Fitch's expectations of further significant negative impact from the current global recession on Evraz's operating performance and credit metrics in 2009 and 2010. Evraz's weak financial and operational performance in H109 resulted in a consolidated EBITDAR margin of 10% (H108: 35%), which is below the agency's forecast of 15%. Evraz's performance in H109 was impacted by a 28% yoy reduction of sales volume and more than 40% reduction of prices for semi-finished products and long products, the company's key products in Russia. Delayed restocking at key markets such as Europe and U.S., and high operating costs in US and Europe resulted in an almost 0% EBITDAR margin at Evraz's international operations. This is compared to an EBITDAR margin of 18% for its CIS steel operations. Fitch now does not expect that Evraz will be able to regain a "through-the-cycle" credit profile consistent with a 'BB' rating category within 18-24 months of the trough of the current recession. Fitch notes that Evraz is mostly exposed to sales of long products to the construction industry and exporting of semi- finished products. The agency expects a slow recovery in long product prices and volumes in H209 and 2010, reflecting the lack of new projects and difficult financial position of real estate/development companies. The downside of exporting semi- finished products is low margins, low sales stability due to spot selling and protectionist measures, and weakening demand from key export markets such as China due to increased stock piling. Therefore, despite capacity utilization rates having risen for the group's operations to more than 90% in Russia and 80% in the US, current and expected low prices for key products for the rest of 2009 and 2010, and the company's limited ability to further reduce operating costs will keep consolidated EBITDAR margin at low levels. Under Fitch's updated scenario, which assumes a 5%-8% increase in revenue in H209 in comparison to H109, a 10% increase in revenue in 2010 and unit costs remaining at Q209 levels, Fitch now expects Evraz to report EBITDAR of around US$1.1 billion-1.3 billion in 2009 (versus US$2.2bn in the previous Fitch forecast) and an EBITDAR margin of 11%-13% (20%), and EBITDAR of around US$2.1 billion-2.3s billion in 2010 (US$3.1 billion-3.3 billion). Due to the company's weak operational and financial performance, its gross and net leverage is expected to reach 6.2x-6.4x and 5.8x-6x respectively. This will exceed the company's current covenanted level. The RWN continues to reflect uncertainty regarding the outcome of negotiations with lenders in respect of the expected covenant breaches under its various facilities at the testing date in Q110. If unresolved, this could also constitute a cross default under Evraz's other debt instruments. As of end-H109, Evraz had gross debt of US$8.5 billion, cash of US$678 million and committed revolving facilities of US$563 million, plus the US$965 million proceeds of new equity and convertible bond issues and free cash flow for the rest of 2009 of US$0.1 billion-0.3 billion (as forecasted by Fitch). The equity and convertible bond proceeds have mostly been used to repay over US$900m of short-term debt, bringing the overall amount of debt coming due in H209 and H110 to US$2.9 billion as at 1 September 2009 (according to company estimates). Out of this, the company expects to extend and refinance US$2bn decreasing the net repayment in H209 to US$900 million. Fitch is concerned about Evraz's liquidity in 2010 as its debt maturities (approximately 30% of total debt) peak in that year. With Evraz's free cash flow in 2010 expected to be US$1 billion-1.2 billion, liquidity is heavily dependent on the company's ability to roll-over maturing debt and attract new financing to meet its debt obligations. Fitch expects to resolve the RWN within the next six months. LUZSKIY FORESTRY: Creditors Must File Claims by September 19 ------------------------------------------------------------ Creditors of LLC Luzskiy Forestry (TIN 5077022260, PSRN 1085077000865) have until September 19, 2009, to submit proofs of claims to: A. Galin Insolvency Manager Post User Box 14 165300 Kotlas Russia The Arbitration Court of Moskovskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?41–27438/08. The Debtor can be reached at: LLC Luzskiy Forestry Artelnaya Street Sharapova Okhota Serpukhovskiy 142256 Moskovskaya Russia CONSTRUCTION MANAGEMENT: Creditors Must File Claims by Sept. 21 --------------------------------------------------------------- Creditors of LLC Construction Management No. 39 (TIN 7817306334, PSRN 5067847028134) have until September 21, 2009, to submit proofs of claims to: A. Rodin Temporary Insolvency Manager Post User Box 7 124683 Moscow Russia The Arbitration Court of Saint-Petersburg commenced bankruptcy supervision procedure. The case is docketed under Case No. ?56– 18791/2009. The Debtor can be reached at: LLC Construction Management No. 39 Tverskaya Str. 32A/2H Kolpino 196655 Saint-Petersburg Russia STROY-MOL CJSC: Creditors Must File Claims by September 21 ---------------------------------------------------------- Creditors of CJSC Stroy-Mol (TIN 7716176777, PSRN 1027739661113) (Construction) have until September 21, 2009, to submit proofs of claims to: Yu.Makarova Temporary Insolvency Manager Post User Box 128 109125 Moscow Russia The Arbitration Court of Moscow commenced bankruptcy supervision procedure. The case is docketed under Case No. ?40–27450/09–88- 70B. The Debtor can be reached at: CJSC Stroy-Mol Vereskovaya Str. 8 Moscow Russia ========= S P A I N ========= MADRID RMBS: Moody's Junks Ratings on Nine Classes of Notes ----------------------------------------------------------- Moody's Investors Service has downgraded the ratings of: -- all the notes issued by Madrid RMBS I, FTA (Madrid RMBS I) -- all the notes issued by Madrid RMBS II, FTA (Madrid RMBS II), except the most senior outstanding A2 notes, which maintain a Aaa rating -- all the notes issued by Madrid RMBS III, FTA (Madrid RMBS III) -- Last rating action date for Madrid RMBS I, Madrid RMBS II and Madrid RMBS III: 5 June 2009 The rating action was prompted by the prolonged deterioration and worse-than-expected performance of the collateral backing the notes. The downgrades also reflect Moody's negative sector outlook for Spanish RMBS and the weakening of the macro-economic environment in Spain, including the expected increase in unemployment rates projected for 2009 and 2010. Madrid RMSB I, II, and III closed in November 2006, December 2006 and July 2007 respectively. The transactions are backed by portfolios of first-ranking mortgage loans originated by Caja Madrid (A1/P-1) and secured on residential properties located in Spain. Pool balances at closing were EUR2 billion, EUR1.8 billion and EUR3.0 billion in Madrid RMBS I, II and III respectively. At closing the collateral consisted of loans with loan-to-value ratios over 80%. These high LTV loans represent over 94% of the outstanding pool balance in all three transactions as of June 2009. The pools are concentrated in the region of Madrid, representing 70%, 67% and 56% of current pool balance in Madrid RMBS I, II, and III respectively. A significant share of the securitized mortgage loans has been originated via regulated brokers, representing about 50% of current pool balance in all three transactions at the end of June 2009. Currently, between 37% and 40% of the portfolio balance in the three Madrid RMBS transactions corresponds to loans granted to non-Spanish nationals. Concentrations of loans originated via regulated brokers and loans granted to non-Spanish nationals are among the risk characteristics that result in higher credit enhancement requirement for a given rating under Moody's updated methodology for rating Spanish RMBS. Moody's had already taken action on the three deals in November 2008. The asset performance has continued to deteriorate so much that the transactions are currently performing outside of Moody's revised expectations as of the latest review. Moody's observed that cumulative write-offs (loans either being declared as defaulted by the originator or being overdue for more than 6 months) have increased between two to five times since Moody's last rating review, when cumulative write-offs stood at 3.19%, 4.64% and 2.98% in Madrid RMBS I, II and III respectively (data as of end of September 2008). The cumulative write-offs are currently equal to 11.4%, 13.3% and 13.2% of the original portfolio balance in Madrid RMBS I, II and III respectively (data as of end of July 2009). The 90+ delinquencies (excluding outstanding write-offs) correspond to approximately 4.15%, 4.33% and 4.67% of the current portfolio balance in Madrid I, II and III respectively. Moody's performed a loan-by-loan analysis of all delinquent and written-off loans in the three Madrid RMBS. This analysis highlighted that loans originated to non-Spanish borrowers have a significantly greater write-off rate than loans originated to Spanish nationals. In Madrid II and III, the write-off rate for loans granted to non-Spanish national (calculated as the written- off loan amount divided by original pool balance of loans originated to non-Spanish borrowers) is between 6 to 7 times the write-off rates of loans granted to Spaniards. Coincidently, loans originated via regulated brokers are experiencing significantly higher write-offs than loans originated by Caja Madrid's branches. The write-off rate of broker originated loans is about 3 times higher that the write-off rate of mortgage loans originated by Caja Madrid. This analysis also highlighted that loans in negative equity (i.e. loan where the outstanding debt is exceeding the indexed property value according to Moody's estimations) show a write-off rate between 1.5-2 times higher than the write-off rate of loans which are not in negative equity. In Madrid RMBS I, about 18% of the mortgage pool is currently in negative equity, compared to 15% in Madrid RMBS II and 30% in Madrid RMBS III. The rapidly increasing levels of delinquent and written-off loans have resulted in the full depletion of the reserve funds and build-up in unpaid Principal Deficiencies Ledgers in all three Madrid RMBS transactions. According to the latest investor cash flow statements released in late August, unpaid PDLs currently stand at EUR43.1 million, EUR52.1 million and EUR145.2 million. Unpaid PDLs currently exceed the size of the Class E notes in Madrid I, and the Class E and D in Madrid RMBS II and III. Moody's anticipates that the weakening of the economic conditions will continue to cause high arrears and write-offs. Available funds in both transactions will ultimately increase as recoveries from written-off loans are collected. However, the pace at which loans are moving from arrears into write-offs suggests that current unpaid PDLs will not be completely cured. The amortization of the mezzanine and junior notes is likely to remain sequential as a consequence of the breach of pro-rata amortization triggers. Additionally, the increase in the volume of loans being written-off has resulted in the breach of the interest deferral triggers in Madrid RMBS II and Madrid RMBS III. Interest deferral triggers on junior notes in Madrid RMBS I have not been breached at this stage. Interest payments on the Class E in Madrid RMBS II and Class E and D in Madrid RMBS III were diverted to pay down senior notes as of the last interest payment date. Moody's has revised its loss expectation for Madrid RMBS I, II and III to reflect the collateral performance to date as well as Moody's negative outlook for the Spanish housing market, in the context of a weakening macro-economic environment. Following an updated loan-by-loan analysis, and on the basis of the performance experienced by the portfolio so far, Moody's has updated the portfolio's expected loss assumption from a range of 2.4%-3.0% to 7% of original balance in Madrid RMBS I and II and 8% of original balance in Madrid RMBS III. Moody's has also assessed loan-by- loan information for the outstanding portfolios to determine the credit support consistent with target rating levels and the volatility of the distribution of future losses. As a result, Moody's has revised its MILAN Aaa credit enhancement (MILAN Aaa CE) assumptions to 22% for all three Madrid RMBS transactions. The loss expectation and the Milan Aaa CE are the two key parameters used by Moody's to calibrate its loss distribution curve, which is one of the core inputs in the cash-flow model it uses to rate RMBS transactions. The current available credit enhancement for the Aaa classes (including subordination and reserve fund and taking into consideration the amount of unpaid PDLs) is equal to 12.1%, 11.2% and 6.0% in, respectively Madrid RMBS I, II, and III as at the latest investor cash flow statements released in August. In Madrid RMBS II and III, Class A2 and A3 amortize sequentially. However, sequential amortization reverts to pro-rata if the outstanding amount of loans more than six months in arrears exceeds 25% of the original notes balance. The ratio of written- off loan balance to the original notes balance is currently at 7.9% and 9.4% in Madrid RMBS II and Madrid RMBS III respectively. Moody's considers the risk of breaching this trigger in Madrid RMBS III to be no longer commensurate with a Aaa rating. Given the higher seasoning and relatively better credit performance of Madrid RMBS II collateral, Moody's expects Class A2 to be repaid in priority to Class A3 in most of the default scenarios, and therefore maintains Aaa rating for the Class A2. Moody's ratings address the expected loss posed to investors by the legal final maturity of the notes. Moody's ratings address only the credit risks associated with the transaction. Other risks have not been addressed, but may have a significant effect on yield to investors. List Of Detailed Rating Actions Issuer: MADRID RMBS I, FONDO DE TITULIZACION DE ACTIVOS -- EUR1340M A2 Certificate, Downgraded to A1; previously on June 5, 2009 Aa1 Placed Under Review for Possible Downgrade -- EUR70M B Certificate, Downgraded to Ba1; previously on June 5, 2009 A1 Placed Under Review for Possible Downgrade -- EUR75M C Certificate, Downgraded to Caa2; previously on June 5, 2009 Baa2 Placed Under Review for Possible Downgrade -- EUR34M D Certificate, Downgraded to C; previously on June 5, 2009 Ba2 Placed Under Review for Possible Downgrade -- EUR21M E Certificate, Downgraded to C; previously on June 5, 2009 B1 Placed Under Review for Possible Downgrade Issuer: Madrid RMBS II Fondo de Titulizacion de Activos -- EUR936M A2 Certificate, Confirmed to Aaa; previously on June 5, 2009 Aaa Placed Under Review for Possible Downgrade -- EUR270M A3 Certificate, Downgraded to A1; previously on June 5, 2009 Aa2 Placed Under Review for Possible Downgrade -- EUR63M B Certificate, Downgraded to Ba1; previously on June 5, 2009 A2 Placed Under Review for Possible Downgrade -- EUR67.5M C Certificate, Downgraded to Caa2; previously on June 5, 2009 Baa2 Placed Under Review for Possible Downgrade -- EUR30.6M D Certificate, Downgraded to C; previously on June 5, 2009 Ba3 Placed Under Review for Possible Downgrade -- EUR18.9M E Certificate, Downgraded to C; previously on June 5, 2009 B3 Placed Under Review for Possible Downgrade Issuer: Madrid RMBS III FONDO DE TITULIZACION DE ACTIVOS -- EUR1575M A2 Certificate, Downgraded to Aa2; previously on June 5, 2009 Aaa Placed Under Review for Possible Downgrade -- EUR497M A3 Certificate, Downgraded to A3; previously on June 5, 2009 Aa2 Placed Under Review for Possible Downgrade -- EUR55.5M B Certificate, Downgraded to B1; previously on June 5, 2009 A2 Placed Under Review for Possible Downgrade -- EUR90M C Certificate, Downgraded to Ca; previously on June 5, 2009 Baa2 Placed Under Review for Possible Downgrade -- EUR72M D Certificate, Downgraded to C; previously on June 5, 2009 Ba2 Placed Under Review for Possible Downgrade -- EUR52.5M E Certificate, Downgraded to C; previously on June 5, 2009 B3 Placed Under Review for Possible Downgrade TDA 27: S&P Puts 'BB-'-Rated Class E Notes on CreditWatch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services placed on CreditWatch negative its credit ratings on the class B, C, D, and E notes issued by TDA 27, Fondo de Titulizacion de Activos. The ratings on the class A1, A2, A3, F, and NAS-IO notes are unaffected. S&P's credit analysis, based on the most recent transaction information S&P has received, showed a continuous deterioration of the performance of the underlying collateral. This has increased the likelihood of negative rating actions on the affected classes. In particular, if gross cumulative defaults reach a trigger level whereby interest might be deferred (set as a percentage of the initial pool balance), the interest on the subordinated classes of notes will be paid only after amortization of the senior classes. As of the end of July, gross cumulative defaults as a percentage of the initial pool balance were 1.99%. This level has increased significantly over the past few interest payment dates. At the end of 2008, gross cumulative defaults represented 0.74% of the initial collateral balance. The deferral of interest triggers on classes B, C, D, and E are set at gross cumulative default levels of 11.40%, 8.60%, 5.50%, and 4.20%, respectively. S&P observe that the current level of 90+ day delinquencies, plus gross cumulative defaults as a percentage of the initial collateral balance, is 5.53%. S&P has consequently placed its ratings on these classes on CreditWatch negative, while S&P assesses any increased likelihood of these levels being breached. In addition, S&P notes that the reserve fund has nearly depleted due to defaults and low levels of available excess spread. After the June IPD, the reserve fund had reduced to only 0.16% of the outstanding collateral balance. S&P believes that a large proportion of severe delinquencies may default, causing further draws. Available credit enhancement may then become insufficient to maintain the current ratings. While S&P has seen limited recoveries to date, due to the length of the foreclosure period in the Spanish jurisdiction, S&P believes that the risk of interest deferrals will drive any ratings movements on subordinated classes of notes over the near to medium term. The originators of this transaction are four Spanish financial entities: Caixa d'Estalvis de Terrassa, Caja General de Ahorros de Granada, Caja Vital Kutxa, and Union de Credito para la Financiacion Mobiliaria e Inmobiliaria, Credifimo, E.F.C., S.A.U. (Credifimo). The loans were mainly originated in Andalucia, Catalonia, and Madrid. Ratings List TDA 27, Fondo de Titulizacion de Activos EUR930.0 Million Residential Mortgage-Backed Floating-Rate and EUR0.6 Million Floating-Rate Notes Ratings Placed on Creditwatch Negative Rating ------ Class To From ----- -- ---- B AA/Watch Neg AA C A/Watch Neg A D BBB-/Watch Neg BBB- E BB-/Watch Neg BB- =========== S W E D E N =========== GENERAL MOTORS: Saab Seeks Deal on Chinese Sales Networks --------------------------------------------------------- Cornelius Rahn at Bloomberg News reports that Saab Automobile, the carmaker being sold by General Motors Co., aims to reach an agreement with Beijing Automotive Industry Holding Co. on sales networks in China within weeks. According to Bloomberg, Christian von Koenigsegg, founder of Koenigsegg Automotive AB, which is leading a group of investors in a takeover of Trollhaettan-based Saab, said he doesn't expect GM to impose restrictions on Saab's sales in China similar to those facing GM's Opel unit. Bloomberg relates Mr. von Koenigsegg said Tuesday in an interview at the Frankfurt Motor Show GM is "open to the idea to make it work" for Saab. "We are in the process of finding an agreement within the next few weeks," Bloomberg quoted Mr. von Koenigsegg as saying. Bloomberg recalls Koenigsegg Group said last week Saab plans to use Beijing Automotive's sales network to sell its sedans and station wagons, and will share technology with the Chinese manufacturer. Saab Chief Executive Officer Jan-Aake Jonsson, as cited by Bloomberg, said at a news conference in Frankfurt Tuesday "Beijing Automotive is an opportunity for us to establish ourselves in the Chinese market with their experience." On Sept. 10, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported Beijing Automotive joined Koenigsegg Group's offer to buy Saab from GM. Bloomberg disclosed Koenigsegg Group said in a statement Beijing Automotive will take a minority stake in the team bidding for Saab and help the unprofitable GM division find opportunities to expand in China. Citing Saab Chief Executive Officer Jan-Aake Jonsson, Bloomberg notes the bidding team of Koenigsegg and investor Augie Fabela II for the Swedish manufacturer, and GM are working through the "final pieces" of a transaction, and the purchase should be completed by Oct. 31. Creditor Protection The Troubled Company Reporter Europe, citing Bloomberg News, reported on Feb. 23, 2009, Saab filed for protection from creditors after parent GM said it will cut ties with the Swedish carmaker following two decades of losses. The Trollhaettan, Sweden-based company filed for reorganization with a Swedish district court to separate itself from GM and bring resources back to Sweden. On June 25, 2009, Troubled Company Reporter, citing The Wall Street Journal, reported creditors of Saab approved the automakers' proposal for settling its debts by paying a quarter of what it originally owed. Saab proposed to settle its debts by paying 25% of about US$1.34 billion it owed to more than 600 creditors, including auto suppliers and the Swedish government. The vast majority of the debt, almost SEK10 billion, was owed to GM. About Saab Automobile Saab Automobile AB -- http://www.saab.com/-- is a wholly owned subsidiary of General Motors. With an annual production of up to 126,000 cars, Saab's current models include the 9-3 (available as a convertible or sport sedan), the luxury 9-5 sedan (also available in a sport wagon), and the seven-passenger 9-7X SUV. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SAAB AUTOMOBILE: Seeks Deal on Chinese Sales Networks Within Weeks ------------------------------------------------------------------ Cornelius Rahn at Bloomberg News reports that Saab Automobile, the carmaker being sold by General Motors Co., aims to reach an agreement with Beijing Automotive Industry Holding Co. on sales networks in China within weeks. According to Bloomberg, Christian von Koenigsegg, founder of Koenigsegg Automotive AB, which is leading a group of investors in a takeover of Trollhaettan-based Saab, said he doesn't expect GM to impose restrictions on Saab's sales in China similar to those facing GM's Opel unit. Bloomberg relates Mr. von Koenigsegg said Tuesday in an interview at the Frankfurt Motor Show GM is "open to the idea to make it work" for Saab. "We are in the process of finding an agreement within the next few weeks," Bloomberg quoted Mr. von Koenigsegg as saying. Bloomber recalls Koenigsegg Group said last week Saab plans to use Beijing Automotive's sales network to sell its sedans and station wagons, and will share technology with the Chinese manufacturer. Saab Chief Executive Officer Jan-Aake Jonsson, as cited by Bloomberg, said at a news conference in Frankfurt Tuesday "Beijing Automotive is an opportunity for us to establish ourselves in the Chinese market with their experience." On Sept. 10, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported Beijing Automotive joined Koenigsegg Group's offer to buy Saab from GM. Bloomberg disclosed Koenigsegg Group said in a statement Beijing Automotive will take a minority stake in the team bidding for Saab and help the unprofitable GM division find opportunities to expand in China. Citing Saab Chief Executive Officer Jan-Aake Jonsson, Bloomberg notes the bidding team of Koenigsegg and investor Augie Fabela II for the Swedish manufacturer, and GM are working through the "final pieces" of a transaction, and the purchase should be completed by Oct. 31. Creditor Protection The Troubled Company Reporter Europe, citing Bloomberg News, reported on Feb. 23, 2009, Saab filed for protection from creditors after parent GM said it will cut ties with the Swedish carmaker following two decades of losses. The Trollhaettan, Sweden-based company filed for reorganization with a Swedish district court to separate itself from GM and bring resources back to Sweden. On June 25, 2009, Troubled Company Reporter, citing The Wall Street Journal, reported creditors of Saab approved the automakers' proposal for settling its debts by paying a quarter of what it originally owed. Saab proposed to settle its debts by paying 25% of about US$1.34 billion it owed to more than 600 creditors, including auto suppliers and the Swedish government. The vast majority of the debt, almost SEK10 billion, was owed to GM. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Saab Automobile Saab Automobile AB -- http://www.saab.com-- is a wholly owned subsidiary of General Motors. With an annual production of up to 126,000 cars, Saab's current models include the 9-3 (available as a convertible or sport sedan), the luxury 9-5 sedan (also available in a sport wagon), and the seven-passenger 9-7X SUV. SCANDINAVIAN CONSUMER: S&P Affirms 'BB' Ratings on Class E Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings on classes A to E issued by Scandinavian Consumer Loans Ltd. The level of credit enhancement available to all classes of notes has increased because of class A amortization and the increased balance of the dynamic cash reserve. The credit support has increased to 48.0%, 37.0%, 32.2%, and 6.8% for classes A, B, C, and D from 34.5%, 26.5%, 23.0%, and 4.5% at closing, respectively. During the revolving period, the class A and E notes are subject to targeted amortization, using principal and interest receipts from the loans to repay class A and E, respectively. The class E notes are backed by excess spread only. The cash reserve was funded at closing from the class E note issuance proceeds, and is replenished through interest collections. The purpose of the cash reserve is to cover both interest shortfalls and principal losses arising in the transaction. The reserve fund balance depends on the interest on the loans in the portfolio and the amount of the portfolio that is in arrears, subject to a floor of 4.5% (EUR7.55 million) of the initial balance of the rated notes excluding (class E). The balance of this reserve is now EUR8.30 million. There are some trigger metrics in place that stop the revolving period and start the sequential amortization of the notes, when breached. The revolving period can resume once the breach is cured. One of these triggers is the three-month rolling average of the annualized net default rate being higher than 2.5%. This trigger has been breached three times during the last five months. The rate of loans delinquent by more than one and less than six months, on the other hand, has so far been consistently below the 5.0% trigger level, having been equal to 1.0% on average since closing. All the loans that are delinquent by more than five months are written off. All the losses have so far been cured using excess spread. The level of annualized excess spread available after curing the losses has been equal to around 7.0% on average since closing. Given the performance of the collateral to date and the level of credit support available to the notes, S&P affirm its ratings on the notes. This EUR175.7 million transaction, which closed in July 2006, is backed by a pool of Scandinavian unsecured personal loans originated by Nordax Finans AB. The structure features a five- year revolving period, during which the originator can sell new loans to the issuer. The issuer then adds these to the collateral portfolio. The revolving period ends in June 2011. Ratings List Scandinavian Consumer Loans Ltd. EUR175.7 Million Asset-Backed Floating-Rate Notes Ratings Affirmed Class Rating ----- ------ A AAA B AA C A D BBB E BB ===================== S W I T Z E R L A N D ===================== AGROPESCO AG: Claims Filing Deadline is September 21 ---------------------------------------------------- Creditors of Agropesco AG are requested to file their proofs of claim by September 21, 2009, to: Thomas Mayer Liquidator Marktplatz 4 9004 St. Gallen Switzerland The company is currently undergoing liquidation in St. Gallen. The decision about liquidation was accepted at an extraordinary general meeting held on June 29, 2009. DATALEX GMBH: Claims Filing Deadline is September 21 ---------------------------------------------------- Creditors of Datalex GmbH are requested to file their proofs of claim by September 21, 2009, to: Dr. Alexander Frei Gumprechtsstrasse 42 6376 Emmetten Switzerland The company is currently undergoing liquidation in Stansstad NW. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on June 19, 2009. EN ENERGIE: Claims Filing Deadline is September 21 -------------------------------------------------- Creditors of EN Energie AG are requested to file their proofs of claim by September 21, 2009, to: Roland Haesler Hauptstrasse 135 4313 Moehlin Switzerland The company is currently undergoing liquidation in Frenkendorf. The decision about liquidation was accepted at an extraordinary general meeting held on June 19, 2009. GLANZMANN HEIZTECHNIK: Claims Filing Deadline is September 21 ------------------------------------------------------------- Creditors of Glanzmann Heiztechnik AG are requested to file their proofs of claim by September 21, 2009, to: Roland Haesler Hauptstrasse 135 4313 Moehlin Switzerland The company is currently undergoing liquidation in Basel. The decision about liquidation was accepted at an extraordinary general meeting held on June 19, 2009. HANDYCENTER AARAU: Claims Filing Deadline is September 21 --------------------------------------------------------- Creditors of Handycenter Aarau GmbH are requested to file their proofs of claim by September 21, 2009, to: Reto Hunziker, Notar Hauptstrasse 49, Mail box: 494 5734 Reinach Switzerland The company is currently undergoing liquidation in Aarau. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on June 26, 2009. IMMOPESCO AG: Claims Filing Deadline is September 21 ---------------------------------------------------- Creditors of Immopesco AG are requested to file their proofs of claim by September 21, 2009, to: Thomas Mayer Liquidator Marktplatz 4 9004 St. Gallen Switzerland The company is currently undergoing liquidation in St. Gallen. The decision about liquidation was accepted at an extraordinary general meeting held on June 29, 2009. MOLETHERM LIZENZ: Claims Filing Deadline is September 21 -------------------------------------------------------- Creditors of Moletherm Lizenz und Vertrieb AG are requested to file their proofs of claim by September 21, 2009, to: Audiba Wirtschaftsberatung AG Kirchacherstrasse 9 8608 Bubikon Switzerland The company is currently undergoing liquidation in Solothurn. The decision about liquidation was accepted at a general meeting held on May 13, 2009. MOLETHERM POOL: Claims Filing Deadline is September 21 ------------------------------------------------------ Creditors of Moletherm Pool AG are requested to file their proofs of claim by September 21, 2009, to: Audiba Wirtschaftsberatung AG Kirchacherstrasse 9 8608 Bubikon Switzerland The company is currently undergoing liquidation in Solothurn. The decision about liquidation was accepted at a general meeting held on May 13, 2009. ============= U K R A I N E ============= BASIS LLC: Creditors Must File Claims by September 20 ----------------------------------------------------- Creditors of LLC Company Basis (code EDRPOU 33946829) have until September 20, 2009, to submit proofs of claim to: I. Kapeliushny Insolvency Manager Post Office Box 53 03037 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company on August 3, 2009. The case is docketed under Case No. 44/419-b. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy Str. 44-b 01030 Kiev Ukraine The Debtor can be reached at: LLC Company Basis P. Pestel Str. 11 01135 Kiev Ukraine CHERNOVTSY SUGAR: Creditors Must File Claims by September 20 ------------------------------------------------------------ Creditors of CJSC Chernovtsy Sugar (code EDRPOU 32554359) have until September 20, 2009, to submit proofs of claim to: S. Liaschenko Insolvency Manager Post Office Box 1784 49027 Dnepropetrovsk Ukraine The Economic Court of Dnepropetrovsk commenced bankruptcy proceedings against the company on June 25, 2009. The case is docketed under Case No. B15/196-09. The Court is located at: The Economic Court of Dnepropetrovsk Kujbishev Str. 1a 49600 Dnepropetrovsk Ukraine The Debtor can be reached at: CJSC Chernovtsy Sugar Loman Str. 19 49000 Dnepropetrovsk Ukraine DELOVOY SOYUZ: Creditors Must File Claims by September 20 --------------------------------------------------------- Creditors of LLC Company Delovoy Soyuz (code EDRPOU 33946525) have until September 20, 2009, to submit proofs of claim to: I. Kapeliushny Insolvency Manager Post Office Box 53 03037 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company on August 4, 2009. The case is docketed under Case No. 44/415-b. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy Str. 44-b 01030 Kiev Ukraine The Debtor can be reached at: LLC Company Delovoy Soyuz P. Pestel Str. 11 01135 Kiev Ukraine GILEYA LLC: Creditors Must File Claims by September 20 ------------------------------------------------------ Creditors of LLC Production and Trading Firm Gileya (code EDRPOU 31638454) have until September 20, 2009, to submit proofs of claim to: A. Sibal Insolvency Manager P. Doroshenko Str. 61/5 79000 Lvov Ukraine The Economic Court of Lvov commenced bankruptcy proceedings against the company. The case is docketed under Case No. 2/14. The Court is located at: The Economic Court of Lvov Lichakovskaya Str. 128 79010 Lvov Ukraine The Debtor can be reached at: LLC Production and Trading Firm Gileya Malchitsy Yavorovsky 81077 Lvov Ukraine INTERTECHBUD LLC: Creditors Must File Claims by September 20 ------------------------------------------------------------ Creditors of LLC Building Company Intertechbud (code EDRPOU 35223732) have until September 20, 2009, to submit proofs of claim to: A. Chabak Insolvency Manager Kuybishev str. 20A Borzna 16400 Chernigov Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company on August 10, 2009. The case is docketed under Case No. 23/314-b. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy Str. 44-b 01030 Kiev Ukraine The Debtor can be reached at: LLC Building Company Intertechbud Bulgakov Str. 16 03134 Kiev Ukraine NAFTOGAZ NJSC: Begins Debt Restructuring Talks ---------------------------------------------- Halia Pavliva at Bloomberg News reports that NJSC Naftogaz of Ukraine is to begin talks with creditors aimed at restructuring debt including US$500 million of Eurobonds due this month. Bloomberg relates Naftogaz said in an e-mailed statement Monday the company will hold negotiations this week with bilateral creditors and work on a restructuring proposal. According to Bloomberg, citing "sources familiar" with the discussions, Kaan Nazli, director of New York-based Medley Global Advisors LCC wrote in a note to clients the company may offer to pay annual interest of 9.5% on extended-maturity debt, compared with 8.125% on Loan Participation Notes due Sept. 30. About NJSC Naftogaz of Ukraine Headquartered in Kiev, Ukraine, NJSC Naftogaz of Ukraine (also known as NAK Naftogaz Ukrainy) -- http://www.naftogaz.com/-- is a vertically integrated oil and gas company engaged in full cycle of operations in gas and oil field exploration and development, production and exploratory drilling, gas and oil transport and storage, supply of natural gas and LPG to consumers. * * * As reported in the Troubled Company Reporter-Europe on Aug. 11, 2009, Moody's Investors Service downgraded to Caa2 from Caa1 the foreign currency corporate family rating, and probability of default and debt ratings of NJSC Naftogaz of Ukraine while also placing the ratings on review for possible downgrade. The rating action reflects Moody's concerns that recent statements by government representatives that Naftogaz has been directed to enter into debt renegotiations with foreign creditors shortly before the scheduled maturity of the company's US$500 million notes on September 30 suggests that the probability of extraordinary government support to prevent a default should now be classified in the low rather than medium category. OTTON LLC: Creditors Must File Claims by September 20 ----------------------------------------------------- Creditors of LLC Otton (code EDRPOU 32657745) have until September 20, 2009, to submit proofs of claim to: I. Kapeliushny Insolvency Manager Post Office Box 53 03037 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company on August 3, 2009. The case is docketed under Case No. 44/418-b. The Court is located at: The Economic Court of Kiev B. Hmelnitskiy Str. 44-b 01030 Kiev Ukraine The Debtor can be reached at: LLC Otton M. Vasilenko Str. 7-A 03124 Kiev Ukraine UNEX BANK: S&P Affirms 'CCC+' Counterparty Credit Ratings --------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'CCC+' long-term and 'C' short-term counterparty credit ratings and its 'uaB' Ukraine national scale rating on Ukraine-based UNEX BANK. The ratings were subsequently withdrawn at the bank's request. The outlook at the time of the withdrawal was negative. At the moment of withdrawal the bank had no rated debt outstanding. =========================== U N I T E D K I N G D O M =========================== JOHN MCGAVIGAN: In Administration; KPMG Appointed ------------------------------------------------- Blair Nimmo and Tony Friar of KPMG Restructuring were appointed as Joint Administrators of John McGavigan Limited on September 14, 2009, at the request of the Company's directors. McGavigan, which has a turnover of approximately GBP9 million, manufactures, assembles and supplies decorative panels (such as dashboards, speedometers and temperature gauges) and other interior design products for the automotive sector. McGavigan was incorporated in 1922 and has a long trading history and well established name in its sector. Its headquarters and manufacturing facility are located in Bishopbriggs, Glasgow. McGavigan employs 135 people. McGavigan has been affected by the overall declining demand in the automotive industry where volumes have reduced substantially in recent times. McGavigan, which is part of the US based Advanced Decorative Systems Inc group, explored several opportunities to restructure, sell or refinance the business, but these were not successful. The Administrators are allowing the business to continue to trade whilst marketing the business and assets for sale as a going concern. In the meantime, it has proven necessary to streamline the cost base to reflect current trading levels. Accordingly, it is with regret that 11 redundancies have been implemented immediately following the appointment. Blair Nimmo, Joint Administrator and Head of Restructuring for KPMG in Scotland said: "McGavigan is a well established Company and a key supplier to many Tier 1 manufacturers in the automotive sector. We hope to continue working with the Company's suppliers, customers and its experienced workforce while a sale of the business is pursued. Any interested parties should contact the Joint Administrators as soon as possible." LUDGATE FUNDING: S&P Lowers Rating on Class S Notes to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on the classes M, B, C, D, E, and S notes series 2007-FF1 issued by Ludgate Funding PLC. S&P affirmed all other classes of notes in this transaction. The downgrades are due to the recent decline in U.K. house prices and S&P's expectation of higher average losses for loans on properties that are repossessed. S&P has seen higher loss severities in most U.K. RMBS transactions. While repossessions have fallen to 2.13% from 2.47% in April 2009, the average loss severity is high at 35.05%. Furthermore, cumulative principal losses currently represent 0.35% of the original collateral balance. According to the July 2009 investor report, the reserve fund was drawn on again and is now at 29% of the required amount. S&P understands that the Bank of England base rate (BBR) reduction to 0.5% has lowered borrowers' monthly payments, which has increased collection rates in this transaction. However, S&P expects further reserve fund draws as repossessed properties are sold and further losses are realized. Across the U.K. RMBS market, S&P has witnessed an increase in basis risk. However, unlike Ludgate 2006-FF1, the Ludgate 2007- FF1 transaction includes a basis swap to hedge against differences between the BBR received from the floating-rate loans and the LIBOR due on the notes. Ludgate 2007-FF1 is a U.K. residential mortgage-backed securities transaction. At closing, approximately 53.5% of the pool was buy- to-let loans. Ratings List Ludgate Funding PLC GBP253.85 Million, EUR197.2 Million, And $55.00 Million Mortgage-Backed Floating-Rate Notes And GBP2.3 Million Excess-Spread Backed Floating-Rate Notes Series 2007-FF1 Ratings Lowered and Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- Ma AA+ AAA/Watch Neg Mb AA+ AAA/Watch Neg Bb A+ AA/Watch Neg Cb BBB A/Watch Neg Da BB BBB/Watch Neg Db BB BBB/Watch Neg E B BB/Watch Neg S B- B/Watch Neg Ratings Affirmed Class Rating ----- ------ A1a AAA A1b AAA A1c AAA A2a AAA A2b AAA MERCs AAA NATIONAL BANK: Fitch Downgrades Individual Rating to 'D' -------------------------------------------------------- Fitch Ratings has affirmed London-based National Bank of Egypt UK's Long-term Issuer Default Rating at 'BB+' with a Stable Outlook. The agency has affirmed the bank's Short-term IDR of 'B' and Support Rating of '3'. At the same time, Fitch has downgraded NBE UK's Individual Rating to 'D' from 'C/D'. NBE UK's IDRs and Support Rating reflect the moderate probability of support that would flow to the bank, ultimately from the Egyptian authorities, via its 100% owner, National Bank of Egypt (NBE, rated 'BB+'/Stable Outlook), and are aligned with those of NBE and Egypt's sovereign rating ('BB+'/Stable Outlook). The downgrade of NBE UK's Individual Rating reflects the increase in the level of the bank's impairments during FY09, which are expected to result in a net loss for the period. Impaired assets include loans, floating rate notes and interbank placements. The bulk of the impaired exposure is to Icelandic banks, but also includes exposure to financial institutions based in other markets. Following the global financial crisis and economic slowdown, NBE UK has revised its strategy. Management's primary focus is on improving the credit quality of its assets and maintaining good liquidity. Cash flows from maturing assets are being invested in 'AAA'-rated government securities or government guaranteed instruments. As a result, the credit quality of NBE UK's assets has improved, with 80% of the balance sheet rated investment grade at end-August 2009 (end-June 2008: 72%). Nevertheless, some further deterioration of asset quality could occur. NBE UK has maintained high liquidity, which is reflected in the large proportion of interbank assets and of marketable securities on its balance sheet. At end-June 2009, the bank remained adequately capitalized. NBE UK's main areas of activity are in the wholesale money market business and the provision of trade finance facilities, primarily to Egyptian banks. 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. NOVAE INSURANCE: Fitch Gives Negative Outlook; Holds 'BB+' Rating ----------------------------------------------------------------- Fitch Ratings has changed the Outlook on UK-based Novae Insurance Company Limited to Negative from Stable. Its Insurer Financial Strength rating is affirmed at 'A-'. At the same time the agency has revised the Outlook on Novae Group plc's Long-term Issuer Default Rating to Negative from Stable. Novae's Long-term IDR is affirmed at 'BBB' and the GBP100 million subordinated notes at 'BB+'. NICL is an FSA-regulated UK insurance company and a wholly owned subsidiary of Novae. The Outlook revision reflects Novae's recent poor operating performance and Fitch's expectation that near-term earnings will continue to be weak. The agency believes that downside earnings risk exists from a higher than average level of claims activity across certain business lines, and from the prospect of reduced investment income, an element that has formed a prominent part of past profitability. The rating affirmation reflects Novae's strong capital position, prudent investment strategy and robust liquidity position. Fitch notes that the risk of adverse reserve development from US liability lines, which significantly impaired historical operating performance, appears to have subsided. Fitch continues to view Novae's ability to demonstrate stability in its reserving as a key rating driver. Novae achieved solid gross written premium growth to GBP349 million at FYE08, a y-o-y increase of 4.8%, while reporting a 13.5% rise in net income to GBP37.1 million (GBP24.2 million excluding non-monetary foreign exchange). However, softer pricing and an increase in claims activity impacted the technical result, reflected in a worsened combined ratio of 105.8% (2007: 99.1%). Results for H109 exhibited further weakness where, despite GWP increasing 18.4% to GBP220.3 million, Novae reported a net loss of GBP10.5 million (H108: profit of GBP15.4 million) which included a GBP16.4 million negative impact from non-monetary foreign exchange, with aviation and credit losses resulting in the combined ratio deteriorating to 112.2% (H108: 98.7%), although the agency notes that it would have been 90.4% excluding these two lines. While the aviation losses suffered in H109 are most probably exceptional, the impact of recessionary conditions on other lines, notably UK credit, remains a concern. Fitch maintains a favorable view of Novae's prudent investment approach and notes the positive results generated by the insurer's investments, which returned GBP50 million or 5.1% in 2008 (2007: GBP46.8 million or 5.2%). The agency notes the high percentage of the insurer's recent operating earnings that have been generated by investment income and believes that sustaining such returns in the near-term is unlikely (H109 investment income was GBP10.9 million representing an annualized return of 2.02%), placing further downward pressure on earnings. Novae is seeking to improve investment returns, predominantly through increasing exposure to corporate bonds. Fitch remains cautious as to how successful the revised investment approach will prove to be, recognizing the increased risk inherent in this asset class, but views positively the maintenance of an investment grade requirement for all invested assets, which should help to reduce default risk within the portfolio. Novae's capital position is considered to be strong and provides considerable support to the current ratings. However, the continued growth of Novae's premium base and the formation of Novae Re are expected to place some pressure on the insurer's capital strength. The group continues to manage its capital base closely, completing the early repurchase of GBP30 million (nominal value) of subordinated notes in May 2009. Fitch believes that Novae has no current requirement to raise additional external funds and notes that the additional capital required to establish Novae Re will be funded by a letter of credit and internal sources. SPOT ON COMPUTERS: Creditors to Meet Today, Sept. 17 ---------------------------------------------------- Sam Trendall at CRN reports that a meeting of Spot on Computers' creditors will take place today, Sept. 17, at the office of insolvency specialist Mistry Associates. CRN recalls the Mancunian firm was incorporated in 1996 and, by the turn of the century, was posting annual revenues of more than GBP10 million. Citing an industry source, CRN discloses the firm was not adaptive enough with its business model in later years. =============== X X X X X X X X =============== * IATA Predicts Worldwide Airline Losses of US$11 Billion in 2009 ----------------------------------------------------------------- The International Air Transport Association said September 15 a revised global financial forecast predicting airline losses totaling US$11 billion in 2009. This is US$2 billion worse than the previously projected US$9 billion loss due to rising fuel prices and exceptionally weak yields. Industry revenues for the year are expected to fall by US$80 billion (15%) to US$455 billion compared with 2008 levels. IATA also revised its loss estimates for 2008 from a loss of US$10.4 billion to a loss of US$16.8 billion. This revision reflects restatements and clarification of the accounting treatment of very large revaluations to goodwill and fuel hedges. IATA industry profit figures strip-out such extra-ordinary items which are not realized in cash terms. "The bottom line of this crisis -- with combined 2008-9 losses at US$27.8 billion -- is larger than the impact of 9/11," said Giovanni Bisignani, IATA's Director General and CEO. Industry losses for 2001-2002 were US$24.3 billion. "This is not a short- term shock. US$80 billion will disappear from the industry's top line. That 15% of lost revenue will take years to recover. Conserving cash, careful capacity management and cutting costs are the keys to survival. The global economic storm may be abating, but airlines have not yet found safe harbor. The crisis continues," said Mr. Bisignani. Three main factors are driving the expected losses: * Demand: Passenger traffic is expected to decline by 4.0% and cargo by 14% for 2009 (compared to declines of 8.0% and 17% respectively in the June forecast). By July, cargo demand was -11.3% and passenger demand was -2.9%. While both are improvements over the lows of -23.2% for cargo (January) and -11.1% for passenger (March), both markets remain weak. * Yield: Yields are expected to fall 12% for passenger and 15% for cargo, compared to declines of 7% and 11% respectively in the June forecast. The fall in passenger yield is led by the 20% drop in demand for premium travel. Cargo utilization remains at less than 50% despite the removal of 227 freighters from the global fleet. There is little hope for an early recovery in yields in either the passenger or cargo markets. * Fuel: Spot oil prices have been driven up sharply in anticipation of improved economic conditions. Oil is now expected to average US$61 per barrel (Brent) for the year (up from US$56 per barrel in the June forecast). This will add US$9 billion in cost for a total expected fuel bill of US$115 billion. "The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot. Rising costs and falling yields have squeezed airline cash flows. The sharp decline in yields will leave a lasting mark on the industry's structure. And revenues are not likely to return to 2008 levels until 2012 at the earliest," said Mr. Bisignani. "With cash flows substantially down over the first half of the year, the situation is critical. Larger carriers have built-up cash reserves of US$15 billion -- a war chest that is warding off a major cash crisis. But the outlook for small and medium sized carriers -- with limited options to raise cash -- is much more severe," said Mr. Bisignani. The regional picture is varied: * North American carriers are expected to post losses of US$2.6 billion, more than double the previously forecast loss of US$1.0 billion. Early resizing of capacity matched the slump in demand. But yields remain weak and recovery in travel demand is being held back by high levels of debt and unemployment. * European carriers are expected to post the largest losses, US$3.8 billion. This is also more than double the previously forecast US$1.8 billion loss. Key long-haul markets were hit by the world trade collapse and delays in relaxing slot regulations prevented a timely reduction in capacity. * Asia-Pacific carriers will post losses of US$3.6 billion, similar to the US$3.3 billion previously forecast. Worst hit by the recession and fuel hedging losses at the end of 2008, the region's carriers are the first to benefit from reviving Asian economic growth and the modest restocking of inventories in the West. * Latin American carriers are expected to break even, an improvement from the previously forecast loss of US$0.9 billion and the best performance among the regions. Airlines in this region are benefiting from more robust economies and less of the consumer debt headwind seen in North America. * Middle East carriers will also see an improved outlook, from a loss of US$1.5 billion to a loss of US$0.5 billion. Airlines continue to gain long-haul market share with expanded capacity and hub connectivity. The weakness of economic recovery, however, could mean continued excess capacity and further losses. * The outlook for Africa's carriers is unchanged with an expected loss of US$0.5 billion. In spite of many economies on the continent continuing to grow during the global recession, African airlines were not able to benefit and lost market share. Further losses are expected in this region next year. "This is not an airline-only crisis. There is less cash coming into the industry and the entire value chain must be prepared for change. All our business partners -- including airports, air navigation service providers, global distribution systems -- must be prepared to cut costs and improve efficiencies. Some airports have delivered cost reductions, but not in line with the magnitude of the changes to the industry cash flow," said Mr. Bisignani. "Governments need a wake-up call to create a policy framework that supports a competitive air transport sector capable of driving economic expansion. But European governments are fixated on using environment as an excuse to squeeze more taxes out of the industry. And the US is not moving fast enough to deliver the critical advantages to competitiveness that NextGen air traffic management will bring," said Mr. Bisignani. "We don't want bailouts. But we need governments to look more seriously at this sector by (1) investing in efficient infrastructure, (2) replacing the proliferation of environmental taxes with a global solution for the environment and (3) giving airlines normal commercial freedoms to merge where it makes sense and to access markets and global capital like any other business," said Mr. Bisignani. 2010 IATA expects losses to continue into 2010 with the industry expected to report a US$3.8 billion net loss. This is based on a limited revival of growth in traffic volumes of 3.2% for passenger and 5% for cargo; very little increase in yields of 1.1% for passenger and 0.9% for cargo and oil at US$72 per barrel. IATA (International Air Transport Association) represents some 230 airlines comprising 93% of scheduled international air traffic. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 7-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda, 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *