/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100224.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, February 24, 2010, Vol. 11, No. 038 Headlines F R A N C E TOTAL SA: To Sign Agreement with Unions Today to Avert Strike G E R M A N Y AFL EUROPE: Declares Insolvency Following Delivery Problems DEUTSCHE LUFTHANSA: Pilots Suspend Strike; Union Talks Resume GENERAL MOTORS: German States Seek More Opel Equity Injection G R E E C E HELLAS TELECOMMUNICATIONS: Moody's Withdraws 'C' Rating on Notes * GREECE: Swap Agreements May Have Helped Hide True Deficit I R E L A N D BANK OF IRELAND: Irish Government to Take 16% Direct Stake GOLD FORCE: Bought Out of Liquidation By Manguard IPOS GROUP: Bank of Scotland Seizes 40 Properties I T A L Y FIAT SPA: To Shut Down Six Italian Factories for Two Weeks N E T H E R L A N D S CENTRAL EUROPEAN MEDIA: To Acquire bTV Channel for US$400 Million GOODYEAR DUNLOP: Fitch Changes Outlook to Stable; Keeps B+ Rating R U S S I A ROSBANK OJSC: SocGen Deal Won't Affect S&P's 'BB+' Ratings UC RUSAL: To Increase Production By 3% This Year S P A I N * SPAIN: Banks May Have to Increase Bad Loan Provisions S W E D E N GENERAL MOTORS: Closes Deal to Sell Saab to Spyker T U R K E Y VESTEL ELEKTRONIK: S&P Gives Stable Outlook; Affirms 'B-' Rating * S&P Raises Counterparty Credit Ratings on Seven Turkish Banks U K R A I N E ARMA BANK: NBU Appoints Maryna Slavkina as Liquidator U N I T E D K I N G D O M ABBOT GROUP: S&P Keeps 'B-' Long-Term Corporate Credit Rating BRITISH AIRWAYS: Cabin Crew Votes In Favor of Strike BRITISH AIRWAYS: In Talks with Kingfisher Over Code Sharing Deal CHESTER ASSET: S&P Removes BB-Rated Notes From Watch Developing LANDSDOWNE VENTURE: Bought Out of Administration by Kelso Place LLOYDS BANKING: CEO Eric Daniels Waives GBP2.33 Mil. 2009 Bonus MANCHESTER WHOLESALE: BDO Blames Rival Business for Collapse UK RECEIVABLES 1: Fitch Lifts Ratings on Class C Notes From 'B' UK RECEIVABLES 2: Fitch Lifts Ratings on Class C Notes From 'B' * UK: Company Voluntary Arrangements to Rise in Popularity X X X X X X X X * Corporate Restructurings to Rise as Countries Recover ********* =========== F R A N C E =========== TOTAL SA: To Sign Agreement with Unions Today to Avert Strike ------------------------------------------------------------- Tara Patel at Bloomberg News reports that Total SA expects to sign an agreement with unions today, Feb. 24, to end a weeklong strike that's hobbled operations at its refineries in France. "I am confident the conditions are right so that work can resume very quickly," Bloomberg quoted Total's Human Resources Director Francois Viaud as saying in Paris yesterday after a day of talks. The Confederation Generale du Travail union also called for an end to the walkout, saying the final decision rests with workers, Bloomberg notes. Bloomberg recalls employees downed tools on Feb. 17 to protest the end of oil refining at Total's Flanders complex near Dunkirk and demand assurances on the future of its other French plants, which supply about 50 % of the nation's fuel. The strike has led to shortages at more than 250 filling stations in France, Bloomberg discloses. Bloomberg relates Total guaranteed yesterday that no French plants besides Flanders will be shut or sold in the next five years. According to Bloomberg, CGT union representative Charles Foulard said while Total confirmed plans to halt refining at the Dunkirk site, it has agreed to study all options including a possible restart ahead of a March 8 works-council meeting. "The CGT considers that the significant progress has created the conditions for the suspension of the strike," Mr. Foulard said in Paris, according to Bloomberg. "Total must know that if it doesn't keep its promises there will be another strike with fuel shortages." Total said round-table discussions on the future of Flanders, which was idled in September as the recession eroded fuel demand, will take place before the end of March, Bloomberg recounts. Total also guaranteed that workers at fuel depots already earmarked for sale could return to the company if the buyer goes bankrupt, Bloomberg notes citing the CGT's Mr. Foulard. TOTAL S.A. -- http://www.total.com/-- together with its subsidiaries and affiliates, is an integrated international oil and gas company. With operations in more than 130 countries, TOTAL engages in all aspects of the petroleum industry, including Upstream operations (oil and gas exploration, development and production, liquefied natural gas (LNG)) and Downstream operations (refining, marketing and the trading and shipping of crude oil and petroleum products). The company also produces base chemicals (petrochemicals and fertilizers) and specialty chemicals for the industrial and consumer markets. In addition, TOTAL has interests in the coal mining and power generation sectors, as well as a financial interest in Sanofi- Aventis. TOTAL's worldwide operations are conducted through three business segments: Upstream, Downstream and Chemicals. ============= G E R M A N Y ============= AFL EUROPE: Declares Insolvency Following Delivery Problems ----------------------------------------------------------- Anke Schroeter at Evertiq reports that AFL Europe GmbH has declared insolvency. Citing Suedwest Presse, Evertiq says difficulties with a delivery to automobile manufacturer Volkswagen, the company's main customer, triggered the insolvency. According to Evertiq, VW demanded compensation of around EUR90 million after the company failed to deliver on time due to a new production structure that had been implemented. Evertiq relates provisional insolvency administrator Volker Viniol told the newspaper that he will try to stabilize business activities and that the production units in Eastern Europe should be sold to strategic investors. "With a little bit of luck, we have a chance to save around half of the jobs at AFL Europe," Mr. Viniol told the newspaper, according to Evertiq. AFL Europe GmbH is a cable-harness specialist based in Frickenhausen, Germany. DEUTSCHE LUFTHANSA: Pilots Suspend Strike; Union Talks Resume ------------------------------------------------------------- BBC News reports that a strike by about 4,000 pilots at Deutsche Lufthansa AG has been suspended with union officials agreeing to resume negotiations. According to the report, the action -- which had been scheduled to run for four days -- was called off after less than 24 hours of delays and cancellations for passengers. The pilots had walked out at Lufthansa, Lufthansa Cargo and Germanwings over job security and pay issues, the report says. Cockpit has called for a 6.4% pay rise for pilots, more say in company decisions and commitments that pilots would keep their jobs when Lufthansa moves passengers to cheaper foreign affiliates, the report relates. The report notes the union said there will be no further action until at least March 9. The report relates a spokesman for the Cockpit union added the two sides had reached an agreement after a two-hour long hearing at a Frankfurt industrial court. The strike was officially lifted Monday midnight -- but it is not clear when services will return to normal, the report states. Lufthansa, the report discloses, feared the action could cost it about EUR25 million (GBP21.9 million; US$34 million) per day. Deutsche Lufthansa AG -- http://www.lufthansa.com-- is an aviation company with operations worldwide. It operates in five business segments: Passenger Transportation, Logistics, Maintenance, Repair and Overhaul (MRO), Information Technology (IT) services and Catering. On January 22, 2008, it acquired 19% of the shares in JetBlue Airways. In October 2008, Lufthansa established an Italian company called Lufthansa Italia as it mulls to make Milan based Malpensa airport its third hub after Frankfurt and Munich. In September 2009, Austrian Airlines AG was taken over by Deutsche Lufthansa AG. Austrian Airlines will therefore become part of the Lufthansa Group as of September 2009. * * * As reported in the Troubled Company Reporter-Europe on Sept. 7, 2009, Moody's Investors Service lowered the long-term and short- term issuer ratings of Deutsche Lufthansa AG to Ba1/Not-prime from Baa3/Prime-3. At the same time Moody's withdrew the long- term issuer rating and assigned a Corporate Family Rating and Probability of Default Rating at Ba1. Moody's said the outlook is stable. GENERAL MOTORS: German States Seek More Opel Equity Injection ------------------------------------------------------------- Gerrit Wiesmann and Daniel Schafer at The Financial Times report that Germany's regional states are pushing General Motors Co. to inject more equity into Opel as part of its restructuring plan. Matthias Machnig, economics minister for the state of Thuringia, told the FT on Monday: "Of course we will have to revisit the issue of GM's contribution to the plan." The FT relates the pressure for increased funding from GM follows a meeting to discuss the plan on Monday of a government loan committee made up of federal and state governments. According to the FT, several officials said on Monday the federal government has not yet adopted an official stance on the issue, but the regional states want GM to invest more than the EUR600 million it is currently proposing to inject. Those four regional states where Opel has plants also have a common understanding that GM will have to give better guarantees that any state aid does find its way back to the US, the FT says. The US carmaker has requested EUR1.5 billion in state aid from Germany, where Opel employs more than half of its 48,000 staff, the FT notes. As reported yesterday by the Troubled Company Reporter-Europe, Dow Jones Newswires said the German Economy Ministry is unconvinced about GM's restructuring plan for its European Opel and Vauxhall. According to Dow Jones, a ministry document said GM's plan "lacks reliable statements on equity capital . . . and on whether an insolvency of Opel [after 2013] can be ruled out with an adequate likelihood". Dow Jones said the magnitude of GM's financial contribution to the restructuring remains unclear as the plan provides "no detailed answer" in that respect. "GM shows its willingness to contribute EUR600 million. But this . . . has already been used to pay back the bridge loan and is not available for investments," the document said, according to Dow Jones. About General Motors General Motors Company -- http://www.gm.com/-- is one of the world's largest automakers, tracing its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM acquired its operations from General Motors Company, n/k/a Motors Liquidation Company, on July 10, 2009, pursuant to a sale under Section 363 of the Bankruptcy Code. Motors Liquidation or Old GM is the subject of a pending Chapter 11 reorganization case before the U.S. Bankruptcy Court for the Southern District of New York. At September 30, 2009, GM had US$107.45 billion in total assets against US$135.60 billion in total liabilities. About Motors Liquidation 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) =========== G R E E C E =========== HELLAS TELECOMMUNICATIONS: Moody's Withdraws 'C' Rating on Notes ---------------------------------------------------------------- Moody's Investors Service has withdrawn the C rating on the EUR960 million and US$275 million subordinated notes due 2015 of Hellas Telecommunications II S.a.r.l. The rating agency has also withdrawn both the Caa3 Corporate Family Rating and the Caa3/limited default Probability Default Rating of Hellas II. The rating action reflects Hellas II's current status as an insolvent company under UK Administration with no assets following the sale of its assets to Weather Finance III in November 2009 as part of the Hellas Telecommunication group's capital restructuring. Weather Finance III is the new holding company of Wind Hellas Telecommunications. Moody's also assigned a Caa1 CFR and a Caa1 Probability of Default Rating to Weather Finance III; upgraded to Caa1 from Caa2 the rating on the senior secured notes issued at Hellas Telecommunications (Luxembourg) V; and upgraded to Caa3 from Ca the rating on the senior notes issued at Hellas Telecommunications (Luxembourg) III. This concludes the review initiated by Moody's on August 27, 2009, following the company's announcement of the appointment of financial advisers to assist with the implementation of potential debt restructuring alternatives. The outlook on all ratings is negative. Together with the removal of the subordinated notes from the capital structure following the administration sale, the interest payments of circa EUR120 million on subordinated notes have been eliminated; therefore the company now has greater degree of cash flow flexibility to invest in its marketing/customer services and in its network coverage -- which, particularly in 3G, is falling behind -- and to restore its brand recognition. The Caa1 CFR, nevertheless, reflects Moody's view that the company's weak market positioning in a competitive environment and its declining usage in a very challenging macroeconomic environment in Greece are likely to cause a reduction in the company's EBITDA in 2010 despite ongoing cost-cutting measures. This, together with increasing capex investments to compensate its earlier under- investments will absorb part of the financial flexibility created. The Caa1 CFR also reflects (i) the execution risk relating to the delivery of Wind Hellas' business plan; (ii) the refinancing risk in 2012, and (iii) Moody's view that -- despite the reduced debt burden -- the company's leverage will remain above 6x in 2010. Moody's also cautions that in the event free cash flow generation capacity turning negative due to further deterioration in usage given a very challenging macroeconomic outlook, the company's scheduled RCF repayments (around EUR35 million in 2010 and EUR45 million in 2011) will not be adequately serviced by the existing liquidity which includes a cash injection of around EUR50.6 million from the new shareholders as part of the group's capital restructuring. The negative outlook reflects Moody's concerns, in light of the limited visibility, regarding the company's ability to comfortably remain in compliance with its revolving credit facility covenants (particularly the interest coverage covenant) to December 2010. The Caa1 rating on the EUR1.22 billion senior secured notes is at the same level with the CFR, whereas prior to the capital restructuring those notes had been one notch above the CFR. This change reflects the removal of a large amount of junior debt from the capital structure, which had previously more than offset the impact of the prior ranking of the EUR250 million super senior revolver. The last rating action on Hellas Telecommunications II was implemented on 18 November 2009 when Moody's downgraded the rating on the subordinated notes of Hellas Telecommunications II S.a.r.l. to C from Ca, and revised the company's Probability of Default Rating to Caa3/LD, which reflects the interest payment default on the company's subordinated notes due 2015. Wind Hellas Telecommunications is the second-largest fully integrated telecom operator in Greece, with mobile, fixed-line and internet service offerings. The company operates primarily under the "Wind", "Tellas" and "Q" brands. In the 12 months to September 2009, the company generated EUR1.138 billion (down 9.4% year-on-year) in revenues and EUR361.6 million (down 15.2% year- on-year) in Adjusted EBITDA (as reported by the company) on a consolidated basis. * GREECE: Swap Agreements May Have Helped Hide True Deficit ----------------------------------------------------------- Greece arranged swap agreements with about 15 securities firms and only some included payments from banks that may have helped hide the country's true deficit, Elisa Martinuzzi at Bloomberg News reports, citing a person with direct knowledge of the contracts. The person, as cited by Bloomberg, said the swaps that allowed Greece to receive payments upfront date from before 2008, when European Union regulators changed rules to limit the use of the contracts. The person spoke on condition of anonymity. According to Bloomberg, the person said Goldman Sachs Group Inc., which provided Greece with about US$1 billion in funding in a 2002 swap, may have arranged the biggest of the contracts. Bloomberg recalls the EU accounting watchdog ordered Greece last week to provide information on its swaps as it probes whether the country used derivatives to hide the extent of its budget deficit, and if other countries used them. Bloomberg relates the person said the 15 banks that have swap agreements with Greece are among the country's so-called primary dealers. Greece had 21 dealers last year, including Citigroup Inc., Barclays Plc and Morgan Stanley, Bloomberg discloses citing the country's central bank. A Greek government inquiry uncovered this month a series of swaps agreements that have allowed the government to defer interest payments to a later date, causing "long-term damage" to the country, Bloomberg recounts. Greece's central government debt totaled EUR298.5 billion (US$405 million) at the end of 2009, Bloomberg notes citing the Finance Ministry. ============= I R E L A N D ============= BANK OF IRELAND: Irish Government to Take 16% Direct Stake ---------------------------------------------------------- John Murray Brown at The Financial Times report that Ireland is taking a direct stake of close to 16% in Bank of Ireland. The FT relates the government announcement after markets closed on Friday followed an earlier decision by the European Commission to prevent those Irish banks receiving state aid from making cash distributions to bond holders. That resulted in Bank of Ireland bondholders imposing a "coupon stopper" preventing the bank from making any other debt distributions, including the EUR250 million (US$340 million) biannual coupon due this weekend on the government's EUR3.5 billion preference share investment, the FT says. The announcement comes as Bank of Ireland and the other four Irish financial institutions covered by the rescue plan prepare to transfer the largest of their impaired loans to the National Asset Management Agency, the government's bad bank which will take over legal responsibility for pursuing property developers and other errant borrowers, the FT notes. According to the FT, brokers estimate Bank of Ireland will need to raise between EUR2.2 billion and EUR2.4 billion to meet market expectations on capital levels. Half of that is expected to be raised through debt swaps and other liability management, the FT states. Rights Issue Citing the FT, the Troubled Company Reporter-Europe on Feb. 19, 2010, reported that Bank of Ireland has said it will change its year end, increasing speculation about an imminent rights issue to avoid having to take further government investment as it struggles to absorb large property loan write downs. The FT disclosed the bank, which had used a March 31 year end, said on Feb. 17 it would revert to a calendar year system, reporting the nine months results to December 31 in late March. The FT related Sebastian Orsi, banks analyst with Merrion Capital, a Dublin stockbroker, said the change "provides the flexibility to attempt a rights issue in the second quarter". According to the FT, part of any rights proceeds is likely to be used to buy back the government's preference shares, which if not redeemed within four years entitle the government to take a 25% stake. Headquartered in Dublin, Bank of Ireland -- http://www.bankofireland.com/-- provides a range of banking and other financial services. These include checking and deposit services, overdrafts, term loans, mortgages, business and corporate lending, international asset financing, leasing, installment credit, debt factoring, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, life assurance and pension and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. The Company organizes its businesses into Retail Republic of Ireland, Bank of Ireland Life, Capital Markets, UK Financial Services and Group Centre. It has operations throughout Ireland, the United Kingdom, Europe and the United States. * * * The Troubled Company Reporter-Europe on Jan. 22, 2010, reported that Fitch Ratings downgraded three of Ireland-based Bank of Ireland plc's tier 1 securities to 'CCC' from 'B' and removed them from Rating Watch Negative. As reported by the Troubled Company Reporter-Europe on Jan. 21, 2010 Moody's Investors Service downgraded the non-cumulative Tier 1 instruments issued directly and indirectly by Bank of Ireland to Caa1 (stable outlook) from B3 (negative outlook). The rating action follows the bank's announcement of January 19 that it will not pay the upcoming distribution on two non-cumulative perpetual preferred securities. The bank's cumulative Tier 1 securities and junior subordinated debt were affirmed at B1 (negative outlook) and Ba3 (negative outlook) respectively. The other ratings of the bank including the D BFSR, the A1 long-term bank deposit and senior debt rating, the A2 dated subordinated debt rating, the Ba3 junior subordinated debt rating, and the Aa1-rated government guaranteed debt were all unaffected. On Jan. 21, 2010 the Troubled Company Reporter-Europe reported that Standard & Poor's Ratings Services said that it lowered its ratings on deferrable capital instruments issued by Bank of Ireland (the trading name of the Governor and Company of the Bank of Ireland; A/Watch Neg/A-1) to 'CC' from 'CCC'. S&P lowered the ratings on all of BOI's rated Tier 1 and upper Tier 2 instruments to 'CC' as a result of BOI's stated intention to defer upcoming payments and also S&P's understanding that the hybrid instrument on which the next coupon payment is due -- the US$800 mil. perpetual preferred securities issued by BOI Capital Funding (No. 2) LP -- contains optional deferral language and also a dividend stopper clause. In S&P's view, the latter appears to require that nonpayment of coupons on this instrument triggers nonpayment on parity and junior instruments. S&P would lower the issue ratings to 'C' as coupon dates are passed. GOLD FORCE: Bought Out of Liquidation By Manguard ------------------------------------------------- Ian Kehoe at The Sunday Business Post Online reports that Manguard Plus has bought the trading assets of Gold Force Security out of liquidation, securing 120 jobs. The deal was agreed between Manguard and the liquidator of Gold Force, PricewaterhouseCoopers accountant Declan McDonald, the report says. The report relates the company has struggled in recent times, prompting its directors to ask the High Court to wind up the business. Citing the company's most recent accounts, the report states the business had retained losses of EUR821,000 at the end of 2008, aftermaking a loss of about EUR290,000 during the year. Manguard, which is based in Newbridge, will take on most of the company's staff, as well as its portfolio of customers, the report discloses. The financial terms of the deal have not been disclosed, the report notes. Gold Force Security has offices in Dublin and Limerick, and provides security guards to a number of major companies, including Bank of Ireland, Lidl and Smyths toy store, according to the report. IPOS GROUP: Bank of Scotland Seizes 40 Properties ------------------------------------------------- Ian Kehoe at The Sunday Business Post Online reports that Bank of Scotland (Ireland) has seized up to 40 properties in an effort to reduce its exposure to Ipos. According to the report, the properties will continue to trade as independent pharmacies, but the bank will now effectively become the landlord. The bank has installed Paul McCann, a partner at Grant Thornton accountants, as receiver to a number of companies in the Ipos scheme, including Nish Property, Ipos Property Holding and Ipos 19 Property, the report discloses. The report recalls KPMG accountant Kieran Wallace was appointed liquidator to the three main holding companies in the scheme. During a series of creditors' meetings, it emerged that the businesses could leave a shortfall of as much as EUR240 million when they were wound up, the report notes. Mr. McCann, the report states, will manage the properties on behalf of the bank. A review of all the properties has been initiated to decide which assets will be retained, and which sites will be sold, the report relates. The report says the bank advanced more than EUR35 million to funds in the Ipos scheme, which were used to help pharmacists buy their own outlets. The scheme has struggled in light of the economic downturn, with many pharmacists unable to pay dividends or meet interest repayments, the report recounts. ========= I T A L Y ========= FIAT SPA: To Shut Down Six Italian Factories for Two Weeks ---------------------------------------------------------- BBC News reports that Fiat SpA is temporarily shutting six Italian factories for a fortnight. According to the report, the carmaker said the move was needed because the end of car scrappage schemes in Europe had led to "a collapse in orders". About half of Fiat's Italian car plant workers, some 30,000 people, will be affected, the report says. The plants concerned, which make cars rather than trucks and farm machinery, are in Rome, Turin, Naples and Sicily, the report discloses. Five of them are owned by Fiat and the sixth is a joint venture with Peugeot, the report notes. "Over the past year we have had various plant stoppages, but this is first time that all the plants have been closed at the same time for two weeks," the report quoted Fiat Group vice-president for communications Richard Gadeselli, as saying. "The car industry in the past used to stockpile new cars, but now we're only building to demand." About Fiat SpA Headquartered in Turin, Italy, Fiat SpA (BIT:F) -- http://www.fiatgroup.com/-- is principally engaged in the design, manufacture and sale of automobiles, trucks, wheel loaders, excavators, telehandlers, tractors and combine harvesters. Through its subsidiaries, Fiat operates mainly in five business areas: Automobiles, including sectors led by Maserati SpA, Ferrari SpA and Fiat Group Automobiles SpA, which design, produce and sell cars under the Fiat, Alfa Romeo, Lancia, Fiat Professional, Abarth, Ferrari and Maserati brands; Agricultural and Construction Equipment, which is led by Case New Holland Global NV; Trucks and Commercial Vehicles, which is led by Iveco SpA; Components and Production Systems, which includes the sectors led by Magneti Marelli Holding SpA, Teksid SpA, Comau SpA and Fiat Powertrain Technologies SpA, and Other Businesses, which includes the sectors led by Fiat Services SpA, a publishing house Editrice La Stampa SpA and an advertising agency Publikompass SpA. With operations in over 190 countries, the Group has 203 plants, 118 research centers, 633 companies and more than 198,000 employees. * * * Fiat S.p.A. continues to carry a Ba1 long-term rating from Moody's Investors Service with negative outlook. ===================== N E T H E R L A N D S ===================== CENTRAL EUROPEAN MEDIA: To Acquire bTV Channel for US$400 Million ----------------------------------------------------------------- Central European Media Enterprises Ltd. has entered into an agreement with News Corporation to acquire bTV, the free-to-air commercial television channel in Bulgaria, as well as the bTV Cinema and bTV Comedy cable channels and 74% of Radio Company C.J. OOD which operates several radio stations (the bTV Group). Total consideration, which is payable in cash, is US$400 million on a cash-free and debt-free basis. The consideration is subject to adjustment in the event that actual working capital at completion differs from an agreed level of target working capital. The transaction is subject to the approval of the Bulgarian Commission for the Protection of Competition and other customary closing conditions and is expected to complete in the second quarter of 2010. Adrian Sarbu, President and CEO of CME, commented: "The acquisition of bTV is the next step in repositioning CME after the sale of our Ukrainian operations. We are now focused on building a highly profitable vertically integrated media company operating in the EU and EU accession countries. bTV greatly complements our portfolio of broadcasting assets. I am confident that we will be able to bring Bulgarian viewers an enhanced TV offer and deliver significant value for our shareholders." In connection with this acquisition, CME will also enter into an agreement to acquire from Top Tone Holdings Limited its 20% interest in CME's Pro.BG business in consideration of a 6% interest in a newly created subsidiary that will hold the bTV business and Pro.BG businesses and the termination of the existing agreements in respect of the Pro.BG business. Top Tone Holdings will also have the right to acquire an additional 4% interest for a period of up to three years from closing. The closing is expected to be simultaneous with the completion of the acquisition of the bTV businesses. CME was advised by Deutsche Bank AG, London Branch on the acquisition of the bTV Group. About Central European Media Headquartered in Bermuda, Central European Media Enterprises Ltd. -- http://www.cetv-net.com/-- invests in, develops and operates commercial television channels in Central and Eastern Europe. At present, the Company has operations in Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic, Slovenia and Ukraine. The Company holds its assets through a series of Dutch and Netherlands Antilles holding companies. It has ownership interests in license companies and operating companies in each market in which it operates. Operations are conducted either by the license companies themselves or by separate operating companies. The Company generates revenues primarily through entering into agreements with advertisers, advertising agencies and sponsors to place advertising on air of the television channels that it operates. * * * As reported in the Troubled Company Reporter-Latin America on November 13, 2009, Standard & Poor's Ratings Services said it has lowered its long-term corporate credit rating on Bermuda-based emerging markets TV broadcaster Central European Media Enterprises Ltd. to 'B-' from 'B'. The outlook is negative. GOODYEAR DUNLOP: Fitch Changes Outlook to Stable; Keeps B+ Rating ----------------------------------------------------------------- Fitch Ratings has revised The Goodyear Tire & Rubber Company's and Goodyear Dunlop Tires Europe B.V.'s Rating Outlook to Stable from Negative. In addition, Fitch has affirmed GT's Issuer Default Rating and debt: GT -- IDR at 'B+'; -- US$1.5 billion first lien credit facility at 'BB+/RR1'; -- US$1.2 billion second lien term loan at 'BB+/RR1'; -- Senior unsecured debt at 'B/RR5'. GDTE -- EUR505 million European secured credit facilities at 'BB+/RR1'. The ratings cover approximately US$4.5 billion of outstanding debt as of Dec. 31, 2009. Fitch also expects to assign a rating of 'B/RR5' to GT's new 8.75% senior unsecured notes due in 2020 that are part of a pending exchange offer. The Outlook revision is based on GT's debt reduction (US$1.4 billion) in the fourth quarter 2009 (4Q'09), ended Dec. 31, 2009, Fitch's assessment that the downside risk to the company has moderated with improving end-markets, and an improved maturity schedule because of the pending debt exchange of US$650 million 2011 notes for 2020 notes. Fitch expects GT's profitability will improve in 2010, but free cash flow will likely be negative. Even though Fitch has stabilized the Outlook, other credit concerns remain including weak free cash flow, the underfunded pension position, high leverage, rising raw material costs in the second half of the year, relatively low margins, Venezuelan operating costs and risks, and unprofitable North American operations. The company's adequate liquidity position, cost reduction actions, global diversification and competitive new products support the company's ratings. GT reduced its debt by US$1.4 billion in the fourth quarter by repaying US$500 million of bonds that were due in December and fully repaying US$800 million that had been drawn on its domestic bank revolver. Combined with strong fourth-quarter EBITDA performance compared to last year driven by global volume gains, positive price/mix, cost savings and favorable currency, GT's debt-to-EBITDA ratio decreased to 5.3 times at 2009 year end from 11.6x in its third quarter. At the beginning of February GT announced plans to exchange all of its US$650 million 7.857% unsecured notes due 2011 for 8.75% notes due in 2020 in order to extend debt maturities. The company may issue up to US$702 million of the new senior unsecured 8.75% notes that will be guaranteed on a senior unsecured basis by certain GT subsidiaries; the old notes are not guaranteed by any GT subsidiary. The offer and consent solicitation expire March 2, 2010. GT has no bonds maturing in 2010, and if the company completes this exchange it will have US$325 million of remaining bonds due in 2011. GT's European and Domestic bank revolvers expire 2012 and 2013, respectively, followed by its US$1.2 billion second-lien bank term loan that matures in 2014. GDTE's EUR450 million pan-European accounts receivable securitization facility expires in 2015. Also in 2015, GT has a US$260 million bond maturity followed by 2016 when US$960 million of bonds that were issued in May 2009 mature. GT ended 2009 with a strong cash and liquidity position. Fitch calculates GT had a liquidity position of approximately US$3.2 billion, consisting of US$1.9 billion of cash and equivalents (including US$370 million of cash in Venezuela) and US$1.6 billion in aggregate domestic and European available revolvers, less US$224 million of short-term debt and US$114 million of current maturities of long-term debt. This represents a liquidity improvement of US$1.324 billion from GT's 2008 year end. GT has commented that it needs about US$1 billion of cash to meet working capital needs and overseas funding requirements through its operating cycle. Much of GT's cash holdings (55%) are outside the United States. GT's US$1.5 billion U.S. bank revolver is subject to a borrowing base which decreased the availability of the facility by US$114 million at year-end 2009. The facility also had US$494 million of letters of credit against it at year end, which cannot exceed US$800 million. The domestic facility could become subject to an interest coverage covenant (2.0x) if the sum of the company's domestic cash and availability under the revolving facility are less than US$150 million. GDTE's EUR505 million first-lien credit facility due 2012 is fully available less US$14 million of LOCs against it. This facility is subject to a covenant that requires GDTE's consolidated Net Debt (net of cash and certain availability under the U.S. revolver) to Consolidated EBITDA not to exceed 3.0x. Fitch estimates that GT will have negative free cash flow in 2010 due to increased capital expenditures, material pension contributions, and working capital usage as the company rebuilds its inventory. Capital expenditures are likely to be in the range of US$1 billion to US$1.1 billion up from US$746 million in 2009. The increase is related to GT's efforts to support low-cost manufacturing including the construction of a new plant in China and expansion of a facility in Chile. Working capital is expected to increase at least US$200 million after the company reduced its inventory by US$1.1 billion last year. Additional cash uses in 2010 include cash interest expense between US$350 million-375 million and cash charges related to restructuring which Fitch estimates at over US$100 million. Pension contributions will continue to be a significant use of cash at GT in 2010 and beyond. GT's global pension funds remain deeply underfunded (US$2.55 billion underfunded in 2009 versus US$2.75 billion underfunded in 2008, or 63.9% funded at the end of 2009 compared to 57.6% in 2008). GT contributed US$371 million to its global pension plans in 2009, but this amount would have been greater without short-term funding relief provided by the IRS. GT estimates that pension contributions in 2010 will be in the US$275 million to US$325 million range, but that 2011 contributions could spike to as much as US$575 million absent additional pension relief legislation in the U.S. Last year Venezuela contributed a significant portion of Latin America Tire's sales and operating income. The devaluation of the bolivar fuerte and weak economic conditions are expected to adversely impact Latin American Tire's operating results in 2010 by US$50 million to US$75 million as compared to 2009. Venezuelan currency fluctuations going forward are reported in earnings effective January 2010 due to highly inflationary accounting now required for the country. As a result, GT is expected to take a US$150 million charge in its current quarter related to the re- measurement of its balance sheet, net of tax. For the 4Q'09, GT's revenue increased 7.3% from the prior year period reflecting improved global volume gains and favorable currency translation. Unit volumes increased 7.8% or 3.1 million units in the period. The company had segment operating income of US$249 million in 4Q'09 compared to a loss of US$159 million in the year-ago quarter. The 2009 quarter benefited from US$358 million in lower raw material costs. GT's 2009 full-year revenue decreased 16.3% or US$3.2 billion to US$16.3 billion compared to 2008 primarily as a result of tire unit volumes declining 9.5% in the period and a reduction in sales in other tire-related business. Segment operating income was US$372 million compared to US$804 million in 2008. This reflects weak industry demand, increased under-absorbed fixed costs and reduced operating income from other tire-related businesses. Improved price/mix and lower raw material costs had a favorable impact on segment operating income in 2009. Fitch calculates that GT's EBITDA margin in 2009 was 5.3%. Fitch's forecasts for GT assume higher revenues and modestly higher margins in 2010. Benefits of GT's cost-reduction programs should help offset expected raw materials pressures in the second half of this year. GT has announced a new US$1 billion cost- saving target between 2010 and 2012 mainly driven by reduction of high-cost capacity, lower unabsorbed fixed costs and increased low-cost sourcing after completing a four-year US$2.5 billion four-point cost savings program in 2009. However, higher EBITDA in 2010 will likely be less than interest payments and capital expenditures, and GT will not benefit in 2010 from the significant working capital source of cash that it achieved in 2009. The 'RR1' recovery ratings for GT's first-lien and second-lien bank debt reflect Fitch's expectation of substantial recovery in a distressed scenario (91% to 100%), supporting higher ratings relative to the IDRs. GT's unsecured debt has been assigned an 'RR5' representing 11% to 30% recovery in a distressed scenario. Collateral for GT's domestic first-lien and second-lien bank facilities includes U.S. and Canadian trade receivables, inventory, mortgages on U.S. headquarters and certain manufacturing facilities, GT's trademark, the pledge of domestic and 65% of certain foreign subsidiary stock (except GDTE), and substantially all other assets. The GDTE senior secured credit facilities are secured by virtually all assets of GDTE and its subsidiaries in the United Kingdom, Luxembourg, France and Germany, plus the stock of GDTE's principal subsidiaries. Collateral excludes accounts receivable used in the EUR450 million Pan-European receivables facility or other securitization programs. =========== R U S S I A =========== ROSBANK OJSC: SocGen Deal Won't Affect S&P's 'BB+' Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Russia-Based Rosbank OJSC JSCB (BB+/Negative/B; Russia National Scale ruAA+) are not immediately affected by the announcement made on Feb. 18, 2010, that the Societe Generale (A+/Stable/A-1) group and Russia-based investment company Interros (not rated) agreed to combine Rosbank with several Russian SocGen subsidiaries. Rosbank and Banque Societe Generale Vostok (universal bank; not rated) will be merged, although they will maintain two separate brands, while Rusfinance Bank (consumer credit; not rated) and DeltaCredit Bank (mortgages; not rated) will become 100% subsidiaries of the merged bank. The ratings on Rosbank reflect the significant systemwide risks that persist in the Russian banking sector. However, S&P believes that Rosbank's strategically important status within the SocGen group, and its platform and visibility in Russia partially mitigate these negative factors. Reflecting implicit support from SocGen, which will hold an 81.5% stake in the merged bank, the long-term rating on Rosbank incorporates a three-notch uplift above the bank's stand-alone credit profile. The merged bank and its subsidiaries will become the fifth-largest lender in Russia, will operate a 750-strong branch network, and will employ 30,000 staff. S&P expects the legal merger to be completed in 2011; however, in S&P's opinion, the full synergies will take longer to materialize. UC RUSAL: To Increase Production By 3% This Year ------------------------------------------------ Xiao Yu at Bloomberg News reports that United Co. Rusal will increase output this year, having seen "the first signs of a recovery" after the global recession. According to Bloomberg, the company said Monday in a statement to the Hong Kong exchange production will increase 3% this year compared with 2009. "We are seeing the first signs of a recovery in demand as more countries emerge from recession," Bloomberg quoted Oleg Deripaska, chief executive officer of Rusal, as saying in the statement. Citing Bloomberg News, the Troubled Company Reporter-Europe reported Rusal shares began trading in Hong Kong on Jan. 27. Bloomberg disclosed the company booked net proceeds of HK$16.7 billion (US$2.1 billion) selling shares at HK$10.80 each in Hong Kong's first initial public offering of 2010. The IPO was delayed at least twice by regulators and restricted to wealthy and corporate investors on concern about its US$14.9 billion of debt, Bloomberg noted. RUSAL -- http://www.rusal.com/-- is among the world's top aluminum producers, along with Rio Tinto Alcan and Alcoa. Formed in 2000 from various parts of the old Soviet state apparatus, RUSAL produces about 4 million tons of aluminum, 11 million tons of alumina, and 6 million tons of bauxite. Its aluminum business include packaging and foil operations in addition to a network of smelters. Those Soviet spare parts were significantly augmented in 2007 when the company merged with fellow Russian aluminum producer Sual and Glencore's alumina unit. RUSAL is majority owned by Board member Oleg Deripaska, who had owned the company completely prior to the merger. ========= S P A I N ========= * SPAIN: Banks May Have to Increase Bad Loan Provisions ------------------------------------------------------- Victor Mallet at The Financial Times reports that the Bank of Spain is expected to increase the provisions it demands of Spanish lenders to cover property bought from struggling real estate developers. Citing financial sources and bank analysts, the FT says the central bank's move would further dent bank profits already hit by economic recession. The FT recalls in November, the central bank raised its provisioning requirement from 10% of the property's value to 20% for real estate held more than a year, and is now expected to raise it to 30%. The central bank has yet to notify lenders formally, the FT notes. "No decision has been taken yet," the FT quoted the Bank of Spain as saying on Monday. The FT says a flurry of recent debt-for-assets and debt-for-equity swaps -- involving developers including Colonial, Reyal Urbis and Metrovacesa -- has deepened the skepticism of analysts and investors about the true bad loan positions of Spanish lenders. Total exposure to developers is EUR324 billion, the FT discloses. =========== S W E D E N =========== GENERAL MOTORS: Closes Deal to Sell Saab to Spyker -------------------------------------------------- General Motors and Spyker Cars NV on Tuesday said they have finalized a deal for Spyker to purchase Saab Automobile AB. GM said going forward, Saab and Spyker will operate under the Spyker (AMS:SPYKR) umbrella, and Spyker will assume responsibility for Saab operations. The previously announced wind down of Saab operations has ended. "This transaction represents the successful outcome of months of hard work and intense negotiations, all aimed at securing a sustainable future for this unique brand, and we are pleased with the positive outcome," said John Smith, GM vice president for corporate planning and alliances. "This is a great day for Saab employees, dealers and suppliers, and a great day for millions of Saab customers and fans worldwide." "Throughout negotiations over the past year, GM has worked with many parties, including governments and investors, to find a solution for Saab," said Nick Reilly, president, GM Europe. "I'm very pleased that we could come to a positive conclusion, one that presents a viable future for Saab and preserves jobs in Sweden and elsewhere." According to the Financial Times' John Reed and Andrew Ward, the deal, which Spyker and GM agreed in principle in January, will save 3,400 jobs at Saab's operations in Sweden and more at its 1,100 dealers. The FT recalls the Swedish carmaker had been in administration since February 2009, when GM said it planned to sell or wind it down as it prepared to file for bankruptcy protection in the U.S. Spyke, the FT says, is paying US$74 million in cash for the assets and GM will also receive US$326 million of shares in the new Saab- Spyker company in return for emergency financing injected into Saab by the US carmaker over the past year. An initial US$50 million payment was due on completion of the deal with a further US$24 million to be paid in July, the FT discloses. The FT notes in addition to the sum payable to GM, Spyker says it has secured the US$1 billion it says will be needed to return Saab to profitability by 2012, including a EUR400 million loan from the European Investment Bank, guaranteed by the Swedish government. Most of the remainder would come from the funds committed by GM to help keep Saab afloat before the deal, the FT states. About General Motors General Motors Company -- http://www.gm.com/-- is one of the world's largest automakers, tracing its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM acquired its operations from General Motors Company, n/k/a Motors Liquidation Company, on July 10, 2009, pursuant to a sale under Section 363 of the Bankruptcy Code. Motors Liquidation or Old GM is the subject of a pending Chapter 11 reorganization case before the U.S. Bankruptcy Court for the Southern District of New York. At September 30, 2009, GM had US$107.45 billion in total assets against US$135.60 billion in total liabilities. About Motors Liquidation 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) =========== T U R K E Y =========== VESTEL ELEKTRONIK: S&P Gives Stable Outlook; Affirms 'B-' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said it revised to stable from negative its outlook on Turkish brown and white goods manufacturer Vestel Elektronik Sanayi Ve Ticaret A.S. At the same time, S&P affirmed the 'B-' long-term corporate credit rating on Vestel. S&P also affirmed the 'B-' issue rating on Vestel subsidiary Vestel Electronics Finance Ltd.'s US$225 million notes due May 2012. The '4' recovery rating on these notes remains unchanged. "The outlook revision reflects S&P's belief that Vestel's covenant headroom at Dec. 31, 2009, remained adequate, after a sizable increase as of June 30, 2009, versus the tight year-end 2008 level," said Standard & Poor's credit analyst Patrice Cochelin. "In S&P's opinion, these improvements in turn reflect the demonstrated support from Vestel's main shareholder, Mr. Ahmet Zorlu, through a Turkish lira 160 million equity increase in 2009, and Vestel's recently improved profitability." Still, the rating remains constrained by what S&P sees as Vestel's high reliance on various forms of short-term funding; high leverage; volatile operating performance, partly reflecting uneven macroeconomic conditions in Turkey and foreign exchange rate swings; and weak and recently negative cash generation. These weaknesses are only partially mitigated, in S&P's view, by the company's cost-efficient manufacturing and rising market share in the EU TV market after weathering the challenging transition to flat-screen TVs. At Sept. 30, 2009, Vestel reported gross consolidated debt of US$589 million. "The stable outlook reflects S&P's expectation that Vestel will likely unwind some of its working capital built up over 2009 to meaningfully improve free cash flow in 2010, and will allocate free cash flow primarily to debt reduction. The outlook also factors in the maintenance of covenant headroom of at least 15%- 20% for the next calculation dates," said Mr. Cochelin. The ratings could experience downward pressure in particular if S&P see that covenant headroom weakens or cash flow generation does not improve in line with S&P's expectations. Ratings upside could in S&P's view come from Vestel's steady reduction of its gross debt, particularly short-term debt, and the maintenance of adequate financial covenant headroom, among others. * S&P Raises Counterparty Credit Ratings on Seven Turkish Banks --------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its counterparty credit ratings on these seven Turkish financial institutions. Albaraka Turk Katilim Bankasi AS HSBC Bank A.S. Garanti Finansal Kiralama A.S. T�rkiye Garanti Bankasi A.S. T�rkiye Is Bankasi A.S. T�rkiye Vakiflar Bankasi T.A.O. Yapi ve Kredi Bankasi A.S. The rating actions follow the upgrade of the sovereign, the Republic of Turkey (foreign currency BB/Positive/B, local currency, BB+/Positive/B), reflecting S&P's view of the Turkish government's improving economic policy flexibility as a result of its strong track record in steadily reducing the debt burden over the past decade. It also reflects S&P's opinion of the success of Turkey's regulatory institutions in preserving the solidity of the financial sector, despite external adversity. S&P considers that improvements in the banking sector have also helped Turkey maintain better access to global financial markets compared with many peer banking systems. The ratings reflect S&P's opinion that these banks are well positioned to benefit from an improvement in their operating environment, which should help reduce their credit and funding risks as well as creating business growth opportunities. In S&P's view, the impact of the recent economic slowdown on Turkish banks has been very limited due to their resilience, built up over a decade of reform following the severe 2001 financial and economic crisis. Although S&P sees scope for further deterioration in asset quality due to delayed effects following the economic slowdown, these are expected to remain manageable, and are already incorporated in current ratings. Although benefits reaped from the reducing interest rate environment are not expected to continue, the latter enabled Turkish banks to improve their financial performance in 2009, with system net profits increasing by almost 50%. In S&P's view, growing business volumes under the current improving economic climate could help sustain banks' good performance going forward. S&P believes good levels of capitalization and adequate funding provide these banks with the financial flexibility to grow their business. Most banks have access to a strong customer deposit base and have continued to successfully access foreign markets to refinance their wholesale debt. Turkish banks' financial performance and fundamentals will likely remain highly correlated with sovereign creditworthiness through, among other things, their significant holdings of government securities and exposure to the domestic economic and financial environment. S&P expects ongoing pressure from asset quality associated with the economic slowdown, although this should remain manageable. The positive outlook on these financial institutions mirrors that on Turkey. The ratings on the banks could gain positive momentum if Turkey succeeds in putting public finances on a sustained path of fiscal consolidation, as this would create a more supportive environment. Conversely, if confidence or the domestic economic environment deteriorates more than S&P expects, it may put additional pressure on banks' asset quality and financial performance, putting pressure on their ratings. Ratings List Upgraded; Ratings Affirmed Albaraka Turk Katilim Bankasi AS Counterparty credit rating To From -- ---- BB/Positive/B BB-/Stable/B Long-term Turkey national scale rating To From -- ---- trAA- trA+ Short-term Turkey national scale rating To From -- ---- trA-1 trA-1 Certificates of deposit To From -- ---- BB/B BB-/B Garanti Finansal Kiralama A.S. Counterparty credit rating To From -- ---- BB/Positive/B BB-/Stable/B HSBC Bank A.S. Counterparty credit rating To From -- ---- BB+/Positive/B BB/Stable/B Long-term Turkey national scale rating To From -- ---- trAA+ trAA+ Short-term Turkey national scale rating To From -- ---- trA-1 trA-1 Certificates of deposit To From -- ---- BB+/B BB/B T�rkiye Garanti Bankasi A.S. Counterparty credit rating To From -- ---- BB/Positive/-- BB-/Stable/-- Certificates of deposit To From -- ---- BB BB- T�rkiye Is Bankasi A.S. Counterparty credit rating To From -- ---- BB/Positive/B BB-/Stable/B Long-term Turkey national scale rating To From -- ---- trAA trA+ Short-term Turkey national scale rating To From -- ---- trA-1 trA-1 Certificates of deposit To From -- ---- BB/B BB-/B T�rkiye Vakiflar Bankasi T.A.O. Counterparty credit rating To From -- ---- BB/Positive/B BB-/Stable/B Certificates of deposit To From -- ---- BB/B BB-/B Long-term Turkey national scale rating To From -- ---- trAA trA+ Short-term Turkey national scale rating To From -- ---- trA-1 trA-1 Yapi ve Kredi Bankasi A.S. Counterparty credit rating To From -- ---- BB/Positive/B BB-/Stable/B Certificates of deposit To From -- ---- BB/B BB-/B Long-term Turkey national scale rating To From -- ---- trAA trA+ Short-term Turkey national scale rating To From -- ---- trA-1 trA-1 ============= U K R A I N E ============= ARMA BANK: NBU Appoints Maryna Slavkina as Liquidator ----------------------------------------------------- Interfax-Ukraine, citing a source in the banking sector, reports that the National Bank of Ukraine has appointed Maryna Slavkina as liquidator of Arma Bank. Interfax-Ukraine's source said "NBU resolution No. 79 dated February 19, 2010, withdraws [the bank's] license as of February 22 and launches the liquidation procedure at Arma Bank". According to Interfax-Ukraine, central bank representatives repeatedly claimed that investors were interested in the bank, but no agreements on the bank were struck. Arma Bank, founded in 2003, was 166th among 179 Ukrainian banks in terms of overall assets (UAH122 million) as of January 1, 2010, according to the NBU. The bank is based in Kyiv. =========================== U N I T E D K I N G D O M =========================== ABBOT GROUP: S&P Keeps 'B-' Long-Term Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said that it is keeping its 'B-' long-term corporate credit ratings on U.K.-based oil services company Abbot Group Ltd. and related entity Turbo Alpha Ltd. on CreditWatch where they were placed with negative implications on Nov. 16, 2009, on concerns about ongoing covenant compliance. The recovery ratings of '3' on Turbo Alpha's senior secured bank facilities are unchanged. "The continuing CreditWatch placement reflects S&P's understanding that Abbot Group's majority owner, First Reserve (not rated), is considering various actions to support the group's credit profile and that discussions to amend the group's covenants are underway," said Standard & Poor's credit analyst Paul Watters. "In S&P's view, covenant risk remains high, albeit S&P understand that Abbot was in compliance with its covenants at year-end 2009." The covenants become gradually stricter in 2010 and if they are not reset S&P expects a breach, perhaps even as early as the end of the second quarter. Furthermore, S&P also expect that the group's performance will continue to be under pressure in 2010 and 2011 from lower recontracting rates as all three of the company's jack-up rigs come off contract later in the year. Despite expected pressure on pricing, S&P expects utilization rates to stay firm, benefiting from the improved oil price levels. Consequently, without tangible support from the owners and a covenant reset S&P believes a downgrade to the 'CCC' category is likely. Our current assessment is that Abbot Group's 2010 EBITDA could decline toward the lower end of the $260 million-$280 million range from $309 million in 2009. These factors in significantly lower jack-up day-rates but also the full-year benefit of cost reductions implemented last year. The group's EBITDA is likely be held back in 2011 by the full-year impact of lower jack-up rig- rates, but some organic growth will, in S&P's view, return thereafter. Under these assumptions, S&P believes that Abbot Group's high leverage is unsustainable without some ownership support. At year-end 2009, according to the group, the covenant test for total net debt to EBITDA stood at 5.7x and this will fall to 5.1x by the end of 2010. According to management, total net debt to EBITDA was 5.38x at year-end 2009. S&P understands from management that cash flow remained positive in the fourth quarter of 2009 and that free operating cash flow was around $89 million in full-year 2009. This was achieved primarily through a significant reduction in working capital (notably receivables) in the fourth quarter, some of which may reverse in 2010. Near-term debt maturities in the coming years remain very low and are adequately covered by available liquidity. S&P aims to resolve the CreditWatch placement in the coming two months, when Abbot Group and its lenders have completed their discussions on the group's financial covenants and once the extent of likely owner support becomes more definitive. "Although S&P expects the negotiations to be successful, if their success were to be called into question S&P would likely lower the rating to the 'CCC' category," said Mr. Watters. "Moreover, a forced restructuring that resulted in any impairment for either senior or mezzanine lenders would result in us moving the corporate credit ratings to 'D' in line with S&P's methodology for distressed debt restructurings." BRITISH AIRWAYS: Cabin Crew Votes In Favor of Strike ---------------------------------------------------- Steven Rothwell and Tony Czuczka at Bloomberg News report that British Airways Plc's 12,000 cabin crew voted in favor of a walkout in a dispute over staffing levels. According to Bloomberg, the Unite union on Monday said almost 81% of those voting at BA backed a stoppage, with the turnout at 79%. Bloomberg says under U.K. law, any action must begin within a month and could start next week. Bloomberg relates British Airways, which last suffered a strike in 1997, said the outcome of the month-long crew poll was "disappointing" and that most employees would have voted before the legality of the staffing changes was established in court last week. BA Chief Executive Officer Willie Walsh is at loggerheads with flight attendants after cutting crew levels without union agreement, Bloomberg discloses. The carrier aims to trim costs after posting a GBP245-million (US$379 million) loss in the nine months ended Dec. 31, Bloomberg notes. A strike could cost GBP25 million a day, Bloomberg says citing John Strickland of JLS Consulting Ltd. As reported yesterday by the Troubled Company Reporter-Europe, the Financial Times said Unite lost in its legal bid to reverse cuts to cabin crew costs. The FT disclosed Judge Sir Christopher Holland threw out the Unite claim on the grounds that the company's policy to keep cabin crew number at certain levels was an aspiration rather than a legally binding contractual commitment. The High Court ruling -- in which the judge questioned whether the court case was helpful in resolving the disagreement -- was BA's second legal victory over Unite after blocking the union's threat of a strike over Christmas, the FT noted. About British Airways Headquartered in Harmondsworth, England, British Airways Plc, along with its subsidiaries, (LON:BAY) -- http://www.ba.com/-- is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The Company's principal place of business is Heathrow. It also operates a worldwide air cargo business, in conjunction with its scheduled passenger services. The Company operates international scheduled airline route networks together with its codeshare and franchise partners, and flies to more than 300 destinations worldwide. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company carried more than 33 million passengers. It carried 777,000 tons of cargo to destinations in Europe, the Americas and throughout the world. In July 2008, the Company's subsidiary, BA European Limited (trading as OpenSkies), acquired the French airline, L'Avion. * * * As reported in the Troubled Company Reporter-Europe on Nov. 12, 2009, Moody's Investors Service placed the Ba3 Corporate Family and Probability of Default Ratings of British Airways plc and the senior unsecured and subordinate ratings of B1 and B2 under review for possible downgrade. Moody's said the rating action reflects the continued weakening in profitability in the first half of FY2010 (to September 2009), with an operating loss of GBP111 million reported versus a profit of GBP140 million a year earlier (post restructuring charges), and Moody's view that losses in FY2010 will likely be higher than in FY2009. This comes in spite of lower operating costs, notably for fuel, as demand in the industry remains very depressed, while the company has successfully reduced its employee and selling costs. Reported net debt remained constant during the period, partly benefiting from a positive exchange rate impact, although Moody's debt metrics also incorporate the full value of the convertible notes issued in August 2009. BRITISH AIRWAYS: In Talks with Kingfisher Over Code Sharing Deal ---------------------------------------------------------------- Kingfisher Airlines Chairman and CEO Vijay Mallya is negotiating an arrangement with British Airways that would allow Europe's second-largest carrier to book its passengers on Kingfisher flights within India, The Economic Times reports. The report says that, if the deal pushes through, it would be the first such agreement between a private Indian carrier and a foreign airline for domestic routes. According to the report, Kingfisher will soon seek the regulatory approval from India's civil aviation authorities, if the talks prove successful. "Kingfisher has enquired about the possibility of code-sharing with British Airways on domestic routes. It is, however, yet to formally write to us on this," the report quoted a civil aviation ministry official as saying. The report, citing a Kingfisher spokesperson, relates that the airline is in talks with international carriers without naming any. "We are in discussion with a few airlines on possible code- sharing and we have made informal inquiries with the ministry of civil aviation," the spokesperson told ET. British Airways said it would not comment on speculation. "We talk to a variety of airlines and don't comment on rumour and speculation," BA spokesperson in Delhi told ET. About Kingfisher Headquartered in Mumbai, India, Kingfisher Airlines -- http://www.flykingfisher.com/-- formerly known as Deccan Aviation Ltd., serves about 35 domestic destinations with a fleet of more than 40 aircraft, including Airbus jets and ATR 72 turboprops. It maintains bases in major cities such as Delhi and Mumbai. Kingfisher Airlines is a unit of UB Holdings, best known for its United Breweries unit, and the carrier shares the Kingfisher brand with a popular Indian beer. UB Holdings also owns a stake in another domestic carrier, Air Deccan, whose operations it combined with Kingfisher Airlines in mid-2008. Kingfisher Airlines began flying in 2005. About British Airways Headquartered in Harmondsworth, England, British Airways Plc, along with its subsidiaries, (LON:BAY) -- http://www.ba.com/-- is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The Company's principal place of business is Heathrow. It also operates a worldwide air cargo business, in conjunction with its scheduled passenger services. The Company operates international scheduled airline route networks together with its codeshare and franchise partners, and flies to more than 300 destinations worldwide. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company carried more than 33 million passengers. It carried 777,000 tons of cargo to destinations in Europe, the Americas and throughout the world. In July 2008, the Company's subsidiary, BA European Limited (trading as OpenSkies), acquired the French airline, L'Avion. * * * As reported in the Troubled Company Reporter-Europe on Nov. 12, 2009, Moody's Investors Service placed the Ba3 Corporate Family and Probability of Default Ratings of British Airways plc and the senior unsecured and subordinate ratings of B1 and B2 under review for possible downgrade. Moody's said the rating action reflects the continued weakening in profitability in the first half of FY2010 (to September 2009), with an operating loss of GBP111 million reported versus a profit of GBP140 million a year earlier (post restructuring charges), and Moody's view that losses in FY2010 will likely be higher than in FY2009. This comes in spite of lower operating costs, notably for fuel, as demand in the industry remains very depressed, while the company has successfully reduced its employee and selling costs. Reported net debt remained constant during the period, partly benefiting from a positive exchange rate impact, although Moody's debt metrics also incorporate the full value of the convertible notes issued in August 2009. CHESTER ASSET: S&P Removes BB-Rated Notes From Watch Developing --------------------------------------------------------------- Standard & Poor's Ratings Services removed from CreditWatch negative and affirmed its credit ratings on the class A notes issued by various Chester Asset Receivables Dealings PLC (Cards Trust I and Trust II). At the same time S&P raised and removed from CreditWatch developing classes B and C issued in various Chester Asset Receivables Dealings PLC transactions (Cards Trust I and Trust II). The rating actions follow the issuance of unrated subordinated series from each Trust to provide support for all classes of notes from the outstanding series. Series 2009-A provides support for the series from cards Trust 1, series 2009-1 provides support to the linked series issued from Cards Trust 2, and series 2009-2 provides support to the delinked issuances from Cards Trust 2. The new series are sized at 20.4% of the outstanding series that they support, and will redeem in line with the amortization of the reference series. The rating actions take in to account the worsening performance of the trusts since the CreditWatch placements, and S&P's revised base cases reflect this. For Cards 1, S&P has increased its charge-off base case to 14.0% from 11.5%, increased its yield base case to 20.0% from 18.0%, and decreased its payment rate base case to 9.5% from 10.5%. For Cards 2, S&P has increased its charge-off base case to 15.0% from 12.0%, increased its yield base case to 20.0% from 17.0%, and decreased its payment rate base case to 11.0% from 12.5% S&P lowered the ratings on classes B and C for Cards Trust I on April 15, 2009 to 'BBB+' from 'A', and to 'BB+' from 'BBB', respectively. S&P lowered the ratings on classes B and C for Cards Trust II on April 15, 2009 to 'BBB' from 'A', and to 'BB' from 'BBB', respectively. These ratings actions followed deterioration in performance of the assets backing both Trusts. S&P will publish a transaction update on these transactions in due course. Cards Trust I and Cards Trust II are master trusts backed by credit card receivables originated by MBNA Bank Europe. Ratings List Ratings Removed From Creditwatch Developing and Raised Chester Asset Receivables Dealings No.11 PLC GBP60 Million And EUR730 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- B A BBB+/Watch Dev C BBB BB+/Watch Dev Chester Asset Receivables Dealings No.12 PLC GBP300 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- B A BBB+/Watch Dev C BBB BB+/Watch Dev Chester Asset Receivables Dealings 2001-B PLC GBP250 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- B A BBB/Watch Dev C BBB BB/Watch Dev Chester Asset Receivables Dealings 2003-B PLC GBP250 Million Fixed and Floating-Rate Asset-Backed Notes Rating ------ Class To From ----- -- ---- B A BBB/Watch Dev C BBB BB/Watch Dev Chester Asset Receivables Dealings 2003-C PLC EUR706 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- B A BBB/Watch Dev C BBB BB/Watch Dev Chester Asset Receivables Dealings 2004-1 PLC GBP500 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- B A BBB/Watch Dev C BBB BB/Watch Dev Chester Asset Receivables Dealings Issuer Ltd. EUR175 Million Asset Backed Floating Rate Notes Series 2004-C1 Rating ------ Class To From ----- -- ---- C1 BBB BB/Watch Dev Chester Asset Receivables Dealings Issuer Ltd. GBP70 Million Asset Backed Floating Rate Notes Series 2006-C1 Rating ------ Class To From ----- -- ---- C1 BBB BB/Watch Dev Chester Asset Receivables Dealings Issuer Ltd. EUR125 Million Asset Backed Floating Rate Notes Series 2004-B1 Rating ------ Class To From ----- -- ---- B1 A BBB/Watch Dev Chester Asset Receivables Dealings Issuer Ltd. GBP50 Million Asset Backed Floating Rate Notes Series 2006-B1 Rating ------ Class To From ----- -- ---- B1 A BBB/Watch Dev Ratings Removed From Creditwatch Negative And Affirmed Chester Asset Receivables Dealings No.11 PLC GBP60 Million and EUR730 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings No.12 PLC GBP300 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings 2001-B PLC GBP250 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings 2003-B PLC GBP250 Million Fixed And Floating Rate Asset Backed Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings 2003-C PLC EUR706 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings 2004-1 PLC GBP500 Million Asset Backed Floating Rate Notes Rating ------ Class To From ----- -- ---- A AAA AAA/Watch Neg Chester Asset Receivables Dealings Issuer Ltd. GBP300 Million Asset Backed Floating Rate Notes Series 2004-A1 Rating ------ Class To From ----- -- ---- A1 AAA AAA/Watch Neg Chester Asset Receivables Dealings Issuer Ltd. GBP250 Million Asset Backed Floating Rate Notes Series 2006-A1 Rating ------ Class To From ----- -- ---- A1 AAA AAA/Watch Neg Chester Asset Receivables Dealings Issuer Ltd. EUR350 Million Asset Backed Floating Rate Notes Series 2008-A1 Rating ------ Class To From ----- -- ---- A1 AAA AAA/Watch Neg Chester Asset Receivables Dealings Issuer Ltd. GBP300 Million Asset Backed Floating Rate Notes Series 2008-A2 Rating ------ Class To From ----- -- ---- A2 AAA AAA/Watch Neg LANDSDOWNE VENTURE: Bought Out of Administration by Kelso Place --------------------------------------------------------------- Hannah Kuchler at The Financial Times reports that Landsdowne Venture Group, the owner of Red Instructor Training and Red Driving School, has been bought out of administration by private equity firm Kelso Place Asset Management. The FT notes Kelso Place refused to say how much it paid for Landsdowne except that it was in the "significant single-digit millions". According to the FT, the buyout by Kelso Place will save 400 jobs at LVG. The private equity firm financed the acquisition with its new GBP100 million "special situations" fund that was created in December to rescue businesses with cash flow problems, the FT discloses. As reported by the Troubled Company Reporter-Europe, Andrew Stoneman and Paul Clark, partners at MCR, were appointed joint administrators of LVG Limited on February 16, 2010. It is one of the UK's largest driving instructor training colleges and third largest driving school. The Company's head office is located in Brighton, with its principal activities carried out under the RED Brand. This includes RED Instructor Training, RED Driving School and RED Fleet Training. Andrew Stoneman, Partner, MCR, stated "most recent financial reports indicate the business has been quite a healthy and profitable operation. It only entered administration due to a lack of funding and investment." LLOYDS BANKING: CEO Eric Daniels Waives GBP2.33 Mil. 2009 Bonus --------------------------------------------------------------- Patrick Jenkins and Kate Burgess at The Financial Times report that Eric Daniels, chief executive of Lloyds Banking Group, on Monday waived his right to a GBP2.33 million bonus for 2009. According to the FT, Lloyds said its board had authorized Mr. Daniels' annual bonus in recognition of the "significant" progress the bank had made to rehabilitate itself following its rescue of HBOS but praised his decision to forgo the pay-out. Citing bankers and advisers, the FT says Lloyds came under little pressure from investors over the annual bonus or from the government, which owns 41% of the bank, The FT notes the bank remains locked in negotiations with investors over plans to increase the potential value of Mr. Daniels' long-term awards by more than a third. According to the FT, shareholders said Sir Win Bischoff, Lloyds' chairman, is seeking backing to increase the maximum value of Mr. Daniels' long-term incentive plan from a maximum 200% of salary to 275%, or GBP2.85 million. About Lloyds Banking Group PLC Lloyds Banking Group PLC, formerly Lloyds TSB Group plc, (LON:LLOY) -- http://www.lloydsbankinggroup.com/-- is a United Kingdom-based financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in three divisions: UK Retail Banking, Insurance and Investments, and Wholesale and International Banking. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision. The Company also operates an international banking business with a global footprint in 40 countries. Services are offered through a number of brands, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham & Gloucester. On January 16, 2009, Lloyds Banking Group plc acquired HBOS plc. * * * As reported by the Troubled Company Reporter-Europe on Nov. 25, 2009, Moody's took rating actions on certain hybrid and junior subordinated capital instruments of Lloyds Banking Group. The actions incorporate the European Commission requirement for Lloyds to skip coupons from January 31, 2010 to January 30, 2012 on those hybrid instruments where the terms allow for such a coupon skip. This requirement was part of Lloyds' restructuring plan formally approved by the EC on November 18, 2009. The changes to some of the ratings also incorporate Moody's revised methodology for hybrids and subordinated debt. Non-cumulative preference shares/ preferred securities May Pay -- affirmed at B3, outlook changed to negative -- List A: Non-cumulative preference shares/ preferred securities Must Pay -- upgraded from B3 to Ba2/Ba3 (negative outlook) -- List B: Cumulative preferred securities May Pay -- confirmed at Ba2 (negative outlook) -- List C: Cumulative preferred securities Must Pay -- upgraded to Ba1 (negative outlook) -- List D: Junior subordinated debt May Pay -- downgraded to Ba2 (negative outlook) -- List E: Junior subordinated debt Must Pay -- confirmed at Ba1 / downgraded to Ba2 (negative outlook) -- List F: All ratings have a negative outlook. MANCHESTER WHOLESALE: BDO Blames Rival Business for Collapse ------------------------------------------------------------ James Chapelard at Crain's Manchester Business reports that poor credit control, the economic climate and former employees setting up a rival flower distributor contributed to the collapse of Manchester Wholesale Flowers Ltd. Crain's recalls MWFL was placed into administrative receivership in November 2009, resulting in the loss of 18 jobs. BDO served as administrator, Crain's discloses. Crain's relates the administrators said in their report five ex-employees setting up a rival business in 2007 ate up a "substantial proportion" of turnover, which fell from GBP5.39 million in 2006 to GBP3.9 million in the year to January 31, 2009. Problems were further compounded by bad debts totaling GBP437,000 during 2008 and 2009, Crain's notes. According to Crain's, NatWest is unlikely to recover all of the GBP1.1 million it was owed while unsecured creditors owed GBP900,000 will not see any dividend. BDO, as cited by Crain's, said it had not been looking to sell the business as a going concern, but was disposing of assets including a 20,000 sq ft warehouse. "As the company has ceased to trade and owing to the nature of the company's business, there is a minimal realizable stock," Ms. Pye said in her report, according to Crain's. "There was no viable business and no possibility of trading within the insolvency procedure." Manchester Flowers Ltd. sold flowers, plants and sundries from its warehouse at New Smithfield Market to florists, undertakers and restaurants, mainly in the North West, according to Crain's Manchester Business. UK RECEIVABLES 1: Fitch Lifts Ratings on Class C Notes From 'B' --------------------------------------------------------------- Fitch Ratings has upgraded the UK Receivables Trust 1 class B and C notes and affirmed the class A notes. Fitch has simultaneously removed all notes from Rating Watch Negative, and assigned Stable Outlooks to the class A notes and Positive Outlooks to the class B and C notes. The issuance of a subordinated note has increased credit enhancement levels to 30%, 26% and 20.4% for the class A to C notes respectively. The new unrated 2009-A series (GBP204.9m) has been subscribed to by the originator, MBNA Europe Bank Limited (rated 'A+'/'F1+'/Outlook Stable), to support the existing notes. The 2009-A note provides support by purchasing defaulted credit card receivables from the receivables trust, thereby reducing the allocation of defaulted receivables to the transaction's other notes. The UKRT 1 series do not feature an interest-sharing mechanism. Under the transaction documents, for the purpose of the cash trapping and early amortization triggers, excess spread levels for each series will be calculated on the basis that no purchase of defaulted receivables has occurred. Specifically, if the three- month average excess spread level for any series, excluding the purchase of defaulted receivables, is below zero, the relevant series shall enter early amortization. Fitch highlights that the credit enhancement provided by the additional issuance is not specific to individual series and can be depleted during the revolving period if individual series experience negative excess spread prior to the purchase of defaulted receivables. However, these concerns are largely mitigated by the relative similarity in excess spread levels between the different series of notes and the continued application of the three-month average excess spread trigger to all series. The increased credit enhancement levels, recent stabilization of the charge-off rates, declining delinquency levels and modest reductions in the percentage of receivables subject to debt management plans support the Stable Outlooks assigned to class A notes and the Positive Outlooks assigned to the class B and C notes of UKRT 1. However, Fitch notes that a significant future deterioration in these performance metrics, relative to the current levels, would likely lead to negative rating actions. Fitch also notes that MBNA has elected to apply a 5% discount to the price of credit card receivables assigned to the trust from 22 February 2010 to 31 October 2010. The discounted portion of the purchased receivables will be applied by the trust as interest collections, therefore temporarily increasing yield and excess spread. From 1 July 2010 onwards the discount percentage will be stepped down by 1% each month. The step down will limit the likelihood of a sudden drop in excess spread levels. The decision by MBNA to exercise the discount option will reduce the likelihood of the excess spread early amortization trigger being breached during the discounting period, specified above. Fitch has evaluated the level of additional enhancement by testing different stressed amortization scenarios in line with the agency's US Credit Card ABS Rating Criteria. The rating actions are: Series 2001-1 (CARDS 11) -- Class A EUR730m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B GBP20m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C GBP40m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive Series 2001-2 (CARDS 12) -- Class A GBP264m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B GBP12m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C GBP24m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive UK RECEIVABLES 2: Fitch Lifts Ratings on Class C Notes From 'B' --------------------------------------------------------------- Fitch Ratings has affirmed the class A notes of UK Receivables Trust 2 and upgraded the transaction's class B and C notes. Fitch has simultaneously removed all note classes from Rating Watch Negative, and assigned Stable Outlooks to the class A notes and Positive Outlooks to the class B and C notes. The issuance of two subordinated notes has increased credit enhancement levels to 30.0%, 26.0% and 20.4% for the class A to C notes respectively. The new unrated 2009-1 series (GBP385.3 million) and unrated 2009-2 series (GBP368.3 million) have been subscribed to by the originator, MBNA Europe Bank Limited (rated 'A+'/'F1+'/Outlook Stable), to support the notes issued by the linked and delinked structures respectively. The 2009-1 note provides support by purchasing defaulted credit card receivables from the receivables trust, thereby reducing the allocation of defaulted receivables to the transaction's other notes. The linked series do not feature an interest sharing mechanism. The 2009-2 note provides support both via the default purchase mechanism and as a result of the socialized waterfall that is applied to the delinked structure. Under the transaction documents, for the purpose of the cash trapping and early amortization triggers, excess spread levels for each series will be calculated on the basis that no purchase of defaulted receivables has occurred. Specifically, if the three month average excess spread level for any series, excluding the purchase of defaulted receivables, is below zero, the relevant series shall enter regulated amortization. Fitch highlights that the credit enhancement provided by the additional issuance is not specific to individual series and can be depleted during the revolving period if individual series experience negative excess spread prior to the purchase of defaulted receivables. However, these concerns are largely mitigated by the relative similarity in excess spread levels between the different series of notes and the continued application of the three month average excess spread trigger to all series. The increased credit enhancement levels, recent stabilization of the charge-off rates, declining delinquency levels and modest reductions in the percentage of receivables subject to debt management plans support the Stable Outlooks assigned to class A notes and the Positive Outlooks assigned to the class B and C notes of UKRT 2. However, Fitch notes that a significant future deterioration in these performance metrics, relative to the current levels, would likely lead to negative rating actions. Fitch also notes that MBNA has elected to apply a 5% discount to the price of credit card receivables assigned to the trust from 22 February 2010 to 31 October 2010. The discounted portion of the purchased receivables will be applied by the trust as interest collections, therefore temporarily increasing yield and excess spread. From 1 July 2010 onwards the discount percentage will be stepped down by 1% each month. The step down will limit the likelihood of a sudden drop in excess spread levels. The decision by MBNA to exercise the discount option will reduce the likelihood of the excess spread early amortization trigger being breached during the discounting period, specified above. With respect to the 2003-B and 2003-C series, Fitch notes the participation of US-based swap counterparties, namely JP Morgan Chase Bank NA (rated 'AA-'/'F1+'/Outlook Stable) and HSBC Bank USA NA (rated 'AA'/'F1+'/Outlook Stable) respectively. Therefore these series remain subject to ongoing review with respect to the possible priority of any termination payment payable in the event of a default of the swap counterparty. Fitch has evaluated the level of additional enhancement by testing different stressed amortization scenarios in line with the agency's US Credit Card ABS Rating Criteria. The rating actions are: UKRT 2 Linked (2009-1 Reference Series) Series 2001-B -- Class A GBP220m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B GBP12.5m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C GBP17.5m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive Series 2003-B -- Class A GBP220m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B GBP12.5m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C GBP17.5m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive Series 2003-C -- Class A EUR621m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B EUR35.5m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C EUR49.5 notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive Series 2004-1 -- Class A GBP440m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- Class B GBP25m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- Class C GBP35m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive UKRT 2 Delinked (2009-2 Referenced Series) -- 2004-A1 GBP300m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- 2004-B1 EUR125m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- 2004-C1 EUR175.0m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive -- 2006-A1 GBP250m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- 2006-B1 GBP50m notes: upgraded to 'A+' from 'A'; removed from RWN; assigned Outlook Positive -- 2006-C1 GBP70m notes: upgraded to 'BBB' from 'B'; removed from RWN; assigned Outlook Positive -- 2008-A1 EUR350m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable -- 2008-A2 GBP300m notes: affirmed at 'AAA'; removed from RWN; assigned Outlook Stable * UK: Company Voluntary Arrangements to Rise in Popularity ---------------------------------------------------------- Anousha Sakoui at The Financial Times reports that restructuring specialists expect the popularity of company voluntary arrangements to rise after a recent legal decision concerning the administration of Nortel Networks UK. Citing Ian McDonald, head of restructuring at Mayer Brown, the FT notes the case confirmed that companies in administration which utilize leasehold premises must pay the full rent due as an administration expense, making traditional trading administrations potentially less attractive. According to the FT, Mike Jervis, a partner at PwC Business Recovery Services, said, "Managing businesses with large numbers of outlets in traditional insolvency processes such as administration will become more difficult if the recent Nortel judgment on rent is upheld." A CVA is a structure under UK insolvency laws that allows a company to negotiate a plan to restructure its unsecured debts with, for example, landlords or suppliers, the FT discloses. Better Option "The wind has changed. Creditors might now approve a CVA when they might not have in the past," the FT quoted John Alexander, insolvency practitioner from Carter Backer Winter, as saying. "They perhaps realize that a CVA might be a better option than putting tenants into liquidation or administration. HMRC is also being more supportive of CVAs where they have confidence in the management team." The FT notes Mr. Alexander said, however, that CVAs can only work for viable businesses. Mr. Alexander, as cited by the FT, said "They need to generate profits in order both to invest for growth and pay off their debts." =============== X X X X X X X X =============== * Corporate Restructurings to Rise as Countries Recover ------------------------------------------------------- Anousha Sakoui at the Financial Times reports that while countries have been emerging from recession and markets have recovered from the lows that followed the collapse of Lehman Brothers, 2010 could pose the greatest challenge for companies. The FT notes typically, more companies go into restructuring as countries come out of recession. According to the FT, Graham Rusling, managing director of the business support arm of Barclays, believes the second half of 2010 will be busier for restructuring specialists. "Experience tells us that businesses are more vulnerable coming out of than going into recession. Larger businesses appear to be faring better at present; it is smaller and medium-sized businesses that are finding life tough," the FT quoted Mr. Rusling as saying. The FT says one of the principle drivers is expected to be a weaker than hoped for economic recovery and the withdrawal of government support programs. Citing Matthew Prest, managing director at Moelis & Co., the FT says while the market uncertainty of the past 12 months has made lenders put off restructurings, the number of debt-to-equity swaps is likely to increase. Restructuring professionals expect to see increased activity in the commercial real estate sector, with a number of real estate backed financings expected default in 2010, the FT states. Andrew MacCallum, managing director, Alvarez & Marsal, highlighted automotive, manufacturing, chemical and retail as the sectors that will see high numbers of restructurings, the FT discloses. Mr. MacCallum, as cited by the FT, said operational restructuring will be needed and that 2010 could be a worse year than 2009. Workers unions are likely to be much more involved in corporate restructurings, adding a new layer of complexity, the FT notes. ********* 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 2010. 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 * * *