/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100305.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, March 5, 2010, Vol. 11, No. 045 Headlines F R A N C E GECINA SA: S&P Raises Long-Term Corporate Credit Rating to 'BB+' PEUGEOT CITROEN: Ends Equity Tie-Up Talks with Mitsubishi RENAULT SA: May Sell Non-Strategic Assets to Cut Debt Pile G E R M A N Y TITAN EUROPE: Moody's Reviews Low-B & Junk-Rated Notes TUI AG: To Invest US$60 Mil. In Mordashov Russian Joint Venture G R E E C E ALPHA BANK: Moody's Puts 'Ba1'-Rated Hybrid Debt on Review EFG EUROBANK: Moody's Puts 'Ba1' Hybrid Debt Rating on Review EMPORIKI BANK: Moody's Puts Debt Ratings on Review for Poss. Cut PIRAEUS BANK: Moody's Puts 'Ba1' Hybrid Debt Rating on Review * GREECE: Unveils New Austerity Measures; No Bailout Drawn Up H U N G A R Y * HUNGARY: Mandatory Liquidations Up 12% in February, Opten Says I T A L Y PARMALAT SPA: U.S. Court Dismisses Complaint Against BofA PARMALAT SPA: Hermes Seeks Final Settlement Approval K A Z A K H S T A N BTA BANK: Ukraine Court Acknowledges Bank Restructuring N E T H E R L A N D S FORTIS BANK: Moody's Reviews Ratings on Hybrid Securities INDOVER BANK: To Start Paying Creditor Claims Next Month R O M A N I A EVEREST FOODS: Shutters Piata Romana Restaurant in Bucharest IMAR: Shareholders to Decide Firm's Fate This Month PIC: Major Creditor Wants Receivers Replaced by PwC R U S S I A YUKOS OIL: Wants Russia to Pay US$98 Bil. in Human Rights Case S W I T Z E R L A N D CRYSTAL CREDIT: Moody's Cuts Rating EUR81 Mil. Notes to 'Caa2' U N I T E D K I N G D O M ASPIRE TRAINING: Court to Hear Winding-Up Petition on May 19 BRITISH AIRWAYS: CEO Says Cabin Crew Strike Won't Ground Airline CALA GROUP: Halts Commercial Property Investments Over Losses COMPANY HEALTH: In Administration; Andrew Stoneman On Board CRYSTAL PALACE: Paul Hart Named Manager FOUR SEASONS: Wants to Extend Maturity of GBP600 Million Bonds INEOS GROUP: Wants to Move Headquarters to Switzerland KEITH EVANS: In Administration; Harris Lipman On Board KSHOCOLAT LTD: Bon Bon Buys Assets, Brands From Administrators LM LOGISTICS: In Administration; Chantrey Vellacott On Board MANCHESTER UNITED: May Sever Ties with Goldman Sachs MATHIESONS: In Administration; Deloitte Seeks Buyer NORTEL NETWORKS: Wants to Enforce Stay on UK Pension Authorities PRECISION TRAINING: Court to Hear Winding-Up Petition on May 19 ROYAL BANK: BCP Files Suit Over Troubled Mortgage Assets Sale STANFORD INT'L: Liquidators Provide Update on Appeal Hearings SYNTEX LOGISTICS: In Administration; Chantrey Vellacott On Board UK GOLF: Mayfair Global Buys Hainault Forest Golf Complex VEDANTA RESOURCES: Upsized Offering Won't Affect Moody's Rating X X X X X X X X * BOOK REVIEW: Taking America - How We Got from the First Hostile ********* =========== F R A N C E =========== GECINA SA: S&P Raises Long-Term Corporate Credit Rating to 'BB+' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its long- term corporate credit rating on French property company Gecina to 'BB+' from 'BB-' and removed the rating from CreditWatch, where it was placed with positive implications on Feb. 19, 2010. At the same time, the 'B' short-term corporate credit and debt ratings on Gecina were affirmed. The outlook is positive. In addition, the debt rating on the unsecured bonds issued by Gecina was raised to 'BB+' from 'BB-' and removed from CreditWatch, where it was also placed with positive implications on Feb. 19, 2010. The recovery rating on the bonds is unchanged at '3', indicating S&P's expectation of meaningful (50%-70%) recovery in the event of a payment default. "The rating actions reflect S&P's opinion of Gecina's corporate governance improvements, financial flexibility, and visibility with regard to its future strategy," said Standard & Poor's credit analyst Amra Balic. "S&P believes that improvements in corporate governance over the past six months have helped to regain investors' confidence. These improvements are evidenced by increased financial flexibility through the refinancing of most of Gecina's 2011 maturities. S&P continues to view Gecina's business fundamentals as strong and in line with investment-grade peers. Nevertheless, the lack of visibility with regard to the evolution of Gecina's shareholding structure and need for the company to reestablish a track record in governance remain relative weaknesses. The ratings continue to be supported by Gecina's strong business risk profile, which is underpinned by the company's large and well-diversified rental portfolio of high-quality assets; and by the strong expertise of the company's property management team. In S&P's view, Gecina has made improvements in both its liquidity position and financial flexibility, including perceived stronger bank support. S&P also believe that the recent governance changes will provide greater stability for the company, albeit that there is still some uncertainty in terms of the shareholder structure. S&P could consider raising the rating to investment grade in the next six to 12 months if the company were to sustain its new governance improvements and demonstrate that it has started to implement its new strategy. Further rating upside could occur with clarification on the shareholder structure and greater-than- expected improvements in the real estate sector, both of which in S&P's view would have a positive impact on the company's credit metrics. And while S&P considers a negative rating action unlikely at this point, any return of any of the past governance issues could lead us to reconsider the rating or outlook. PEUGEOT CITROEN: Ends Equity Tie-Up Talks with Mitsubishi --------------------------------------------------------- Laurence Frost and Makiko Kitamura at Bloomberg News report that ended talks about an equity tie-up and said they'll concentrate on broadening their five-year partnership. "A capital alliance isn't realistic under the current operational environment," the carmakers said in a joint statement Wednesday, according to Bloomberg. Bloomberg relates Peugeot Chief Executive Officer Philippe Varin said the French company decided against buying a stake in Mitsubishi partly out of concern that the plan would damage its debt ratings. "I was always clear about our conditions," Bloomberg quoted Mr. Varin as saying in a press briefing at the Geneva car show. "In terms of our debt and our borrowing power, the priority has to remain our financial health." According to Bloomberg, buying a controlling stake in Mitsubishi would have stretched the finances of Europe's second-largest automaker, which had net debt of EUR1.99 billion (US$3 billion) as of Dec. 31 and bonds graded below investment level by Standard & Poor's and Fitch Ratings. Peugeot is rated BB+ by Standard & Poor's. PSA Peugeot Citroen S.A. -- http://www.psa-peugeot-citroen.com/ -- is a France-based manufacturer of passenger cars and light commercial vehicles. It produces vehicles under the Peugeot and Citroen brands. In addition to its automobile division, the Company includes Banque PSA Finance, which supports the sale of Peugeot and Citroen vehicles by financing new vehicle and replacement parts inventory for dealers and offering financing and related services to car buyers; Faurecia, an automotive equipment manufacturer focused on four component families: seats, vehicle interior, front end and exhaust systems; Gefco, which offers logistics services covering the entire supply chain, including overland, sea and air transport, industrial logistics, container management, vehicle preparation and distribution, and customs and value added tax (VAT) representation, and Peugeot Motocycles, which manufactures scooters and motorcycles. In 2008, PSA Peugeot Citroen S.A. sold over 3.2 million vehicles in 150 countries worldwide. RENAULT SA: May Sell Non-Strategic Assets to Cut Debt Pile ---------------------------------------------------------- David Pearson at Dow Jones Newswires reports that Carlos Ghosn, Renault SA's chief executive, said Wednesday Renault SA is reviewing assets to identify non-strategic ones that might be sold off to help reduce its debt burden. Dow Jones relates Mr. Ghosn told reporters at the Geneva Motor Show that he isn't about to decide on liquidating assets while valuations remain depressed. According to Dow Jones, Mr. Ghoshn said Renault had a debt load of EUR6 billion (US$8.2 billion) at the end of 2009, and wants to reduce the amount by at least half. Renault SA -- http://www.renault.com/-- is a France-based company primarily engaged in the manufacture of automobiles and related services. The Company has two main areas of business activity: the Automobile division, which handles the design, manufacture and marketing of passenger cars and commercial vehicles, under Renault, Renault Samsung Motors and Dacia brands, and the Sales Financing division, which provides financial and commercial services related to the Company's sales activities, and is comprised of RCI Banque and its subsidiaries. The Company operates worldwide via a group of subsidiaries and dependant companies, including wholly owned Renault SAS, 99.43%-owned Dacia, 44.3%-owned Nissan Motor and 20.7%-owned AB Volvo, among others. * * * Renault SA continues to carry long- and short-term corporate credit and debt ratings of 'BB/B' from Standards & Poor's Ratigns Services with stable outlook. The ratings were lowered to their current level from 'BBB-/ A-3' in June 2009. As reported by the Troubled Company Reporter-Europe on June 23, 2009, S&P said Renault's financial profile was already hit by the large increase in debt in 2008, and credit measures were weak compared with what S&P generally considers to be commensurate with a 'BBB-' rating. Now, however, in light of S&P's views on the future path of European auto demand, S&P believes that the company's financial metrics are likely to deteriorate further and will probably not return in the medium term to levels S&P considers consistent with the previous rating. "Our downgrade of Renault reflects our view that auto demand is likely to remain very low in Europe in 2010, due to the weak economic environment and the payback effect of the incentive schemes that several European countries have adopted to date in 2009," said Standard & Poor's credit analyst Barbara Castellano. "We believe these factors will continue to penalize Renault's profitability." ============= G E R M A N Y ============= TITAN EUROPE: Moody's Reviews Low-B & Junk-Rated Notes ------------------------------------------------------ Moody's Investors Service has placed on review for possible downgrade these classes of Notes issued by Titan Europe 2006-1 plc (amounts reflect initial outstandings): -- EUR433.76M A Commercial Mortgage Backed Floating Rate Notes due 2016, Aaa Placed Under Review for Possible Downgrade; previously on Mar 23, 2006 Definitive Rating Assigned Aaa -- EUR112.05M B Commercial Mortgage Backed Floating Rate Notes due 2016, Baa1 Placed Under Review for Possible Downgrade; previously on Oct 16, 2009 Downgraded to Baa1 -- EUR39.76M C Commercial Mortgage Backed Floating Rate Notes due 2016, B1 Placed Under Review for Possible Downgrade; previously on Oct 16, 2009 Downgraded to B1 -- EUR46.99M D Commercial Mortgage Backed Floating Rate Notes due 2016, Caa2 Placed Under Review for Possible Downgrade; previously on Oct 16, 2009 Downgraded to Caa2 -- EUR50.61M E Commercial Mortgage Backed Floating Rate Notes due 2016, Ca Placed Under Review for Possible Downgrade; previously on Oct 16, 2009 Downgraded to Ca Moody's does not rate the Class F, Class G, and Class H Notes issued by Titan Europe 2006-1 plc. The rating action takes Moody's updated central scenarios into account, as described in Moody's Special Report "Moody's Updates on Its Surveillance Approach for EMEA CMBS". 1) Transaction and Portfolio Overview Titan Europe 2006-1 plc closed in March 2006 and represents the securitization of initially ten commercial mortgage loans originated by Credit Suisse International. The loans were secured by first-ranking legal mortgages over 56 commercial properties located in Germany. The properties were predominantly mixed-use (45% of the original portfolio by underwriter market value) followed by office (28%), industrial warehouse (15%), hotel (8%) and retail (4%). Since closing of the transaction, five loans (47% of the initial portfolio balance), prepaid in full. In addition, there was one property disposal from the portfolio securing the Mangusta Loan. The prepayment proceeds were allocated 50% sequential and 50% pro- rata to the Notes. The remaining loans are not equally contributing to the portfolio: the largest loan (the Mangusta Loan) represents 34.2% of the current portfolio balance, while the smallest loan (the Nuremberg Retail Distribution Centre Loan, "Nuremberg Loan") represents 5.9%. The current loan Herfindahl index is 4.1 compared to 7.5 at closing, indicating a higher loan concentration after the prepayments. Following the property disposal and prepayments, the remaining five loans are secured by 26 properties. The property type composition of the portfolio has changed compared with closing with industrial warehouse currently contributing 31.3%, office 23.8%, mixed-use 20.8%, hotel 17.4% and other 6.7%. As of the last interest payment date in January 2010, out of the five remaining loans, both the Mangusta Loan and the KQ Warehouse Loan were subject to an event of default. The Mangusta loan (34.2% of the current portfolio balance) was transferred into special servicing in June 2008 due to insufficient reporting by the borrower and experienced a first payment shortfall on the April 2009 IPD. The KQ Warehouse Loan (23.0% of the current portfolio balance) appeared on the servicer's watchlist in July 2009 due to the insolvency of the tenants Karstadt Quelle AG and Karstadt Vermietungsgesellschaft mbH, which generate 100% of the property cash flows for the loan. In October 2009 the insolvency administrator of the tenants decided to liquidate the Quelle group and terminated the relevant leases. Consequently, no rental payment was received for the Jan 2010 IPD in relation to the Karstadt Quelle AG-let warehouse in Leipzig that makes up 95% of the scheduled rent. Only a limited amount of interest and principal payments were received by the borrower, hence the loan suffered a payment default. In October 2009, Moody's downgraded the Class B Notes from Aaa to Baa1, the Class C Notes from A1 to B1, the Class D Notes from Baa2 to Caa2 and the Class E Notes from Ba3 to Ca. The downgrade was driven by i) the adverse performance of the Mangusta Loan and the uncertainty surrounding the future performance of the KQ Warehouse Loan which together comprises approximately 57% of the current portfolio; (ii) the transaction's refinancing profile; (iii) the most recent performance of the German commercial property markets; and (iv) Moody's opinion about future property market performance. Following the default of the Mangusta Loan, the sequential payment trigger in the transaction has been hit; therefore, further proceeds from prepayments, balloon payments and recoveries will be allocated sequentially to the Notes. 2) Rating Rationale The rating actions follow events that occurred since Moody's last rating action with respect to the Mangusta and the KQ Warehouse Loan, in particular: (i) a further value decline reported for the property portfolio securing the Mangusta Loan as well as increased legal and property management concerns; and (ii) a significant value decline reported for the Leipzig property in the KQ Warehouse Loan according to a valuation as per February 2010. A new valuation for the Mangusta portfolio per October 2009 reports a property value of EUR86.45 million (translating into a 139.2% securitized LTV), a decline of further 35.5% compared to EUR134.1 million reported in Q3 2008 (Moody's trough value assessed in the October 2009 rating review was EUR 96 million). Furthermore, the initial German borrowing entities were dissolved, and their assets had accreted to an Austrian legal entity which is legally now the borrower under the loan. A German court opened preliminary insolvency proceedings against the new borrower based on the Centre of Main Interest concept. An insolvency administrator is now in charge of the new borrower. In its rating review, Moody's will analyze any potential legal considerations regarding the insolvency process. Moreover, Moody's will monitor how the insolvency administrator's workout strategy might impact recovery proceeds from the sale of the assets. Moody's is also concerned about the property management performance after the sponsor of the loan is apparently no longer willing to actively manage the properties. The new value of EUR26.713 million of the KQ Warehouse portfolio compares to a market value of EUR122.99 million reported in March 2006 (Moody's trough VPV assessed in the October 2009 rating review was EUR70 million). Based on last IPD loan balance, the new value translates into a 304% securitized LTV. Most of the value decline is due to the now predominantly vacant nature of the asset, combined with significant investments that is according to the valuer necessary to re-let the property. In its review, Moody's will analyze in detail the new valuation, especially in relation to re-letting prospects and associated costs. TUI AG: To Invest US$60 Mil. In Mordashov Russian Joint Venture --------------------------------------------------------------- Maria Ermakova and Paul Abelsky at Bloomberg News report that TUI AG and billionaire Alexei Mordashov said they'll invest US$60 million in their Russian venture over the next three years to gain a larger share of the market. The money will be spent on brand promotion and information technology, Bloomberg says, citing a joint statement released Tuesday. According to Bloomberg, TUI and Mr. Mordashov's S-Group said they expect to control about 10% of the Russian travel market this year. Bloomberg recalls Hanover-based TUI and S-Group agreed in April to form the venture to expand in the former Soviet Union. The partners each pledged to invest US$20 million in 2009, including the acquisitions of assets from Russian tour operator VKO Group, Moscow-based Mostravel and Ukrainian travel company Voyage Kiev, Bloomberg recounts. TUI AG -- http://www.tui-group.com/en/-- is a Germany-based company mainly engaged in the tourism sector, focusing on the markets of Central, Northern and Western Europe. TUI owns a network of travel agencies and tour operators, including air tours, Thomson, First Choice and TUI Deutschland. It also operates several airlines, including Corsairfly, Thomsonfly and First Choice Airways, among others. The Company is structured into three segments: TUI Travel, TUI Hotels and Resorts, and Cruises. TUI Travel comprises the Company's distribution, tour operating, airline and incoming activities and services over 30 million customers in 180 countries. The TUI Hotels and Resorts division offers a portfolio of 238 hotels, located in Spain, Greece, Egypt, France, Turkey, Tunisia, the Balearics and the Caribbean, among others. The Cruises sector comprises Hapag-Lloyd Kreuzfahrten GmbH and TUI Cruises which provide luxury cruises, and cruises within the German-speaking countries, respectively. * * * As reported in the Troubled Company Reporter-Europe on Sept. 21, 2009, Moody's Investors Service lowered the Corporate Family Rating and Probability of Default Rating of TUI AG to Caa1 from B3. At the same time, the unsecured rating and the subordinated rating were lowered from Caa1 to Caa2 and from Caa2 to Caa3, respectively. Moody's said the outlook is negative. =========== G R E E C E =========== ALPHA BANK: Moody's Puts 'Ba1'-Rated Hybrid Debt on Review ---------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the deposit and debt ratings of these five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade. Moody's says that these banks have been facing growing pressures on their financial performance and fundamental creditworthiness as a result of the economic slowdown in Greece as well as some of the South-Eastern European markets in which they also operate. Over the past year, business growth, particularly in Greece, has slowed and problem loan levels have increased. The sharp rise in loan loss provisioning requirements, coupled with rising funding costs, has been depressing bank profits. Volatility in the financial markets has also given rise to funding challenges and has led to an increased dependence on short-term market funding (primarily from the European Central Bank). Opportunities for the banks to secure favorable conditions in the interbank and wholesale markets have become more limited. Moody's believes, however, that Greek banks will continue to benefit from ECB funding until market confidence returns which, in turn, will allow them to access the capital markets more easily. The rating agency also notes that the banks' large deposit base continues to offer strong elements of stability. Deposits represent about 60% of the banks' total liabilities. Moody's rating review will consider the banks' most recent results and assess the impact of the increasingly adverse economic and financial market conditions on the banks' future performance. The rating agency notes that fiscal challenges at the national level may curtail economic growth in the foreseeable future. Moreover, Moody's says that a possible rise in unemployment and lower disposable income would likely place additional pressure on the banking sector's already weakened asset quality and profitability. However, the review will also consider the medium- and long-term economic benefits of the country's fiscal plan, which was updated with the introduction of additional measures. As part of the review process, Moody's intends to assess the country's capacity to support its banking system should solvency support be required. Moody's continues to believe that the likelihood of government support, if needed, is very high. The (A1) systemic support anchor, which is used to assign the supported deposit and debt ratings to Greek banks, is currently positioned one notch above the national government's debt rating. However, the weakening credit profile of the banking sector -- implying a growing potential need for support -- coupled with the financial challenges faced by the government, may introduce some constraints in the ability of the country to provide broad systemic support to its banking system. Greek banks currently benefit from an average two-notch rating uplift due to imputed systemic support. A lowering of the systemic support anchor could have an impact on the supported ratings of the above-mentioned five banks. Rating Impact on Affected Banks The specific ratings affected by the rating action are: National Bank of Greece All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank's strong domestic funding position. EFG Eurobank Ergasias SA All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Alpha Bank AE All ratings of Alpha Bank -- with the exception of government- guaranteed senior debt ratings which retain their A2 negative outlook rating -- and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Piraeus Bank SA All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Emporiki Bank of Greece SA The D BFSR is not affected by the rating action and retains a negative outlook. All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country's ability to support the banking system could lead to some adjustment to this bank's ratings, Moody's notes that Emporiki's ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA. In case of need, Moody's believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank. Four Other Rated Banks Unaffected The ratings of the other four Greek banks rated by Moody's namely, Agricultural Bank of Greece ( Baa1/Prime-2), Attica Bank (Ba1/Not- Prime), General Bank of Greece (Baa1/Prime-2) and Marfin Egnatia Bank (Baa1/Prime-2) are not affected by the announcement. Moody's notes that the weak stand-alone ratings (BFSRs) for these four banks already capture the heightened level of risks under its main scenario. Furthermore, their supported ratings would not be affected by a reassessment of the country's ability to support its banking system. In the case of General Bank of Greece and Marfin Egnatia Bank, the deposit ratings also confer elements of stability as a result of Moody's imbedded assumptions regarding the likelihood of extraordinary support from their foreign parents. Marfin Egnatia Bank's deposit ratings are expected to converge with those of its parent bank's -- Marfin Popular Bank Public Company Ltd -- once the absorption process, currently underway, is completed. The last rating actions on National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE and Piraeus Bank SA were implemented on February 17, 2010 when Moody's downgraded their hybrid securities following revisions to Moody's hybrids methodology. The last rating action on Emporiki Bank of Greece SA was implemented on December 22, 2009 when Moody's downgraded its BFSR, deposit and debt ratings. Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR112.2 billion at the end of September 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.3 billion at the end of September 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR68.8 billion at the end of September 2009. Headquartered in Athens, Greece, Piraeus Bank SA reported total assets of EUR52.3 billion at the end of December 2009. Headquartered in Athens, Greece, Emporiki Bank of Greece SA reported total assets of EUR28.4 billion at the end of December 2009. EFG EUROBANK: Moody's Puts 'Ba1' Hybrid Debt Rating on Review ---------------------------=--------------------------------- Moody's Investors Service has placed on review for possible downgrade the deposit and debt ratings of these five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade. Moody's says that these banks have been facing growing pressures on their financial performance and fundamental creditworthiness as a result of the economic slowdown in Greece as well as some of the South-Eastern European markets in which they also operate. Over the past year, business growth, particularly in Greece, has slowed and problem loan levels have increased. The sharp rise in loan loss provisioning requirements, coupled with rising funding costs, has been depressing bank profits. Volatility in the financial markets has also given rise to funding challenges and has led to an increased dependence on short-term market funding (primarily from the European Central Bank). Opportunities for the banks to secure favorable conditions in the interbank and wholesale markets have become more limited. Moody's believes, however, that Greek banks will continue to benefit from ECB funding until market confidence returns which, in turn, will allow them to access the capital markets more easily. The rating agency also notes that the banks' large deposit base continues to offer strong elements of stability. Deposits represent about 60% of the banks' total liabilities. Moody's rating review will consider the banks' most recent results and assess the impact of the increasingly adverse economic and financial market conditions on the banks' future performance. The rating agency notes that fiscal challenges at the national level may curtail economic growth in the foreseeable future. Moreover, Moody's says that a possible rise in unemployment and lower disposable income would likely place additional pressure on the banking sector's already weakened asset quality and profitability. However, the review will also consider the medium- and long-term economic benefits of the country's fiscal plan, which was updated with the introduction of additional measures. As part of the review process, Moody's intends to assess the country's capacity to support its banking system should solvency support be required. Moody's continues to believe that the likelihood of government support, if needed, is very high. The (A1) systemic support anchor, which is used to assign the supported deposit and debt ratings to Greek banks, is currently positioned one notch above the national government's debt rating. However, the weakening credit profile of the banking sector -- implying a growing potential need for support -- coupled with the financial challenges faced by the government, may introduce some constraints in the ability of the country to provide broad systemic support to its banking system. Greek banks currently benefit from an average two-notch rating uplift due to imputed systemic support. A lowering of the systemic support anchor could have an impact on the supported ratings of the above-mentioned five banks. Rating Impact on Affected Banks The specific ratings affected by the rating action are: National Bank of Greece All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank's strong domestic funding position. EFG Eurobank Ergasias SA All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Alpha Bank AE All ratings of Alpha Bank -- with the exception of government- guaranteed senior debt ratings which retain their A2 negative outlook rating -- and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Piraeus Bank SA All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Emporiki Bank of Greece SA The D BFSR is not affected by the rating action and retains a negative outlook. All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country's ability to support the banking system could lead to some adjustment to this bank's ratings, Moody's notes that Emporiki's ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA. In case of need, Moody's believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank. Four Other Rated Banks Unaffected The ratings of the other four Greek banks rated by Moody's namely, Agricultural Bank of Greece ( Baa1/Prime-2), Attica Bank (Ba1/Not- Prime), General Bank of Greece (Baa1/Prime-2) and Marfin Egnatia Bank (Baa1/Prime-2) are not affected by the announcement. Moody's notes that the weak stand-alone ratings (BFSRs) for these four banks already capture the heightened level of risks under its main scenario. Furthermore, their supported ratings would not be affected by a reassessment of the country's ability to support its banking system. In the case of General Bank of Greece and Marfin Egnatia Bank, the deposit ratings also confer elements of stability as a result of Moody's imbedded assumptions regarding the likelihood of extraordinary support from their foreign parents. Marfin Egnatia Bank's deposit ratings are expected to converge with those of its parent bank's -- Marfin Popular Bank Public Company Ltd -- once the absorption process, currently underway, is completed. The last rating actions on National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE and Piraeus Bank SA were implemented on February 17, 2010 when Moody's downgraded their hybrid securities following revisions to Moody's hybrids methodology. The last rating action on Emporiki Bank of Greece SA was implemented on December 22, 2009 when Moody's downgraded its BFSR, deposit and debt ratings. Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR112.2 billion at the end of September 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.3 billion at the end of September 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR68.8 billion at the end of September 2009. Headquartered in Athens, Greece, Piraeus Bank SA reported total assets of EUR52.3 billion at the end of December 2009. Headquartered in Athens, Greece, Emporiki Bank of Greece SA reported total assets of EUR28.4 billion at the end of December 2009. EMPORIKI BANK: Moody's Puts Debt Ratings on Review for Poss. Cut ---------------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the deposit and debt ratings of these five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade. Moody's says that these banks have been facing growing pressures on their financial performance and fundamental creditworthiness as a result of the economic slowdown in Greece as well as some of the South-Eastern European markets in which they also operate. Over the past year, business growth, particularly in Greece, has slowed and problem loan levels have increased. The sharp rise in loan loss provisioning requirements, coupled with rising funding costs, has been depressing bank profits. Volatility in the financial markets has also given rise to funding challenges and has led to an increased dependence on short-term market funding (primarily from the European Central Bank). Opportunities for the banks to secure favorable conditions in the interbank and wholesale markets have become more limited. Moody's believes, however, that Greek banks will continue to benefit from ECB funding until market confidence returns which, in turn, will allow them to access the capital markets more easily. The rating agency also notes that the banks' large deposit base continues to offer strong elements of stability. Deposits represent about 60% of the banks' total liabilities. Moody's rating review will consider the banks' most recent results and assess the impact of the increasingly adverse economic and financial market conditions on the banks' future performance. The rating agency notes that fiscal challenges at the national level may curtail economic growth in the foreseeable future. Moreover, Moody's says that a possible rise in unemployment and lower disposable income would likely place additional pressure on the banking sector's already weakened asset quality and profitability. However, the review will also consider the medium- and long-term economic benefits of the country's fiscal plan, which was updated with the introduction of additional measures. As part of the review process, Moody's intends to assess the country's capacity to support its banking system should solvency support be required. Moody's continues to believe that the likelihood of government support, if needed, is very high. The (A1) systemic support anchor, which is used to assign the supported deposit and debt ratings to Greek banks, is currently positioned one notch above the national government's debt rating. However, the weakening credit profile of the banking sector -- implying a growing potential need for support -- coupled with the financial challenges faced by the government, may introduce some constraints in the ability of the country to provide broad systemic support to its banking system. Greek banks currently benefit from an average two-notch rating uplift due to imputed systemic support. A lowering of the systemic support anchor could have an impact on the supported ratings of the above-mentioned five banks. Rating Impact on Affected Banks The specific ratings affected by the rating action are: National Bank of Greece All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank's strong domestic funding position. EFG Eurobank Ergasias SA All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Alpha Bank AE All ratings of Alpha Bank -- with the exception of government- guaranteed senior debt ratings which retain their A2 negative outlook rating -- and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Piraeus Bank SA All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Emporiki Bank of Greece SA The D BFSR is not affected by the rating action and retains a negative outlook. All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country's ability to support the banking system could lead to some adjustment to this bank's ratings, Moody's notes that Emporiki's ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA. In case of need, Moody's believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank. Four Other Rated Banks Unaffected The ratings of the other four Greek banks rated by Moody's namely, Agricultural Bank of Greece ( Baa1/Prime-2), Attica Bank (Ba1/Not- Prime), General Bank of Greece (Baa1/Prime-2) and Marfin Egnatia Bank (Baa1/Prime-2) are not affected by the announcement. Moody's notes that the weak stand-alone ratings (BFSRs) for these four banks already capture the heightened level of risks under its main scenario. Furthermore, their supported ratings would not be affected by a reassessment of the country's ability to support its banking system. In the case of General Bank of Greece and Marfin Egnatia Bank, the deposit ratings also confer elements of stability as a result of Moody's imbedded assumptions regarding the likelihood of extraordinary support from their foreign parents. Marfin Egnatia Bank's deposit ratings are expected to converge with those of its parent bank's -- Marfin Popular Bank Public Company Ltd -- once the absorption process, currently underway, is completed. The last rating actions on National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE and Piraeus Bank SA were implemented on February 17, 2010 when Moody's downgraded their hybrid securities following revisions to Moody's hybrids methodology. The last rating action on Emporiki Bank of Greece SA was implemented on December 22, 2009 when Moody's downgraded its BFSR, deposit and debt ratings. Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR112.2 billion at the end of September 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.3 billion at the end of September 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR68.8 billion at the end of September 2009. Headquartered in Athens, Greece, Piraeus Bank SA reported total assets of EUR52.3 billion at the end of December 2009. Headquartered in Athens, Greece, Emporiki Bank of Greece SA reported total assets of EUR28.4 billion at the end of December 2009. PIRAEUS BANK: Moody's Puts 'Ba1' Hybrid Debt Rating on Review ------------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade the deposit and debt ratings of these five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade. Moody's says that these banks have been facing growing pressures on their financial performance and fundamental creditworthiness as a result of the economic slowdown in Greece as well as some of the South-Eastern European markets in which they also operate. Over the past year, business growth, particularly in Greece, has slowed and problem loan levels have increased. The sharp rise in loan loss provisioning requirements, coupled with rising funding costs, has been depressing bank profits. Volatility in the financial markets has also given rise to funding challenges and has led to an increased dependence on short-term market funding (primarily from the European Central Bank). Opportunities for the banks to secure favorable conditions in the interbank and wholesale markets have become more limited. Moody's believes, however, that Greek banks will continue to benefit from ECB funding until market confidence returns which, in turn, will allow them to access the capital markets more easily. The rating agency also notes that the banks' large deposit base continues to offer strong elements of stability. Deposits represent about 60% of the banks' total liabilities. Moody's rating review will consider the banks' most recent results and assess the impact of the increasingly adverse economic and financial market conditions on the banks' future performance. The rating agency notes that fiscal challenges at the national level may curtail economic growth in the foreseeable future. Moreover, Moody's says that a possible rise in unemployment and lower disposable income would likely place additional pressure on the banking sector's already weakened asset quality and profitability. However, the review will also consider the medium- and long-term economic benefits of the country's fiscal plan, which was updated with the introduction of additional measures. As part of the review process, Moody's intends to assess the country's capacity to support its banking system should solvency support be required. Moody's continues to believe that the likelihood of government support, if needed, is very high. The (A1) systemic support anchor, which is used to assign the supported deposit and debt ratings to Greek banks, is currently positioned one notch above the national government's debt rating. However, the weakening credit profile of the banking sector -- implying a growing potential need for support -- coupled with the financial challenges faced by the government, may introduce some constraints in the ability of the country to provide broad systemic support to its banking system. Greek banks currently benefit from an average two-notch rating uplift due to imputed systemic support. A lowering of the systemic support anchor could have an impact on the supported ratings of the above-mentioned five banks. Rating Impact on Affected Banks The specific ratings affected by the rating action are: National Bank of Greece All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank's strong domestic funding position. EFG Eurobank Ergasias SA All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Alpha Bank AE All ratings of Alpha Bank -- with the exception of government- guaranteed senior debt ratings which retain their A2 negative outlook rating -- and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Piraeus Bank SA All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments. Emporiki Bank of Greece SA The D BFSR is not affected by the rating action and retains a negative outlook. All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country's ability to support the banking system could lead to some adjustment to this bank's ratings, Moody's notes that Emporiki's ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA. In case of need, Moody's believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank. Four Other Rated Banks Unaffected The ratings of the other four Greek banks rated by Moody's namely, Agricultural Bank of Greece ( Baa1/Prime-2), Attica Bank (Ba1/Not- Prime), General Bank of Greece (Baa1/Prime-2) and Marfin Egnatia Bank (Baa1/Prime-2) are not affected by the announcement. Moody's notes that the weak stand-alone ratings (BFSRs) for these four banks already capture the heightened level of risks under its main scenario. Furthermore, their supported ratings would not be affected by a reassessment of the country's ability to support its banking system. In the case of General Bank of Greece and Marfin Egnatia Bank, the deposit ratings also confer elements of stability as a result of Moody's imbedded assumptions regarding the likelihood of extraordinary support from their foreign parents. Marfin Egnatia Bank's deposit ratings are expected to converge with those of its parent bank's -- Marfin Popular Bank Public Company Ltd -- once the absorption process, currently underway, is completed. The last rating actions on National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE and Piraeus Bank SA were implemented on February 17, 2010 when Moody's downgraded their hybrid securities following revisions to Moody's hybrids methodology. The last rating action on Emporiki Bank of Greece SA was implemented on December 22, 2009 when Moody's downgraded its BFSR, deposit and debt ratings. Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR112.2 billion at the end of September 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.3 billion at the end of September 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR68.8 billion at the end of September 2009. Headquartered in Athens, Greece, Piraeus Bank SA reported total assets of EUR52.3 billion at the end of December 2009. Headquartered in Athens, Greece, Emporiki Bank of Greece SA reported total assets of EUR28.4 billion at the end of December 2009. * GREECE: Unveils New Austerity Measures; No Bailout Drawn Up ------------------------------------------------------------- Costas Paris and Alkman Granitsas at Dow Jones Newswires report that Greece delivered a new package of austerity measures on Wednesday. According to Dow Jones, Greece's latest set of spending cuts and tax increases aims to cut the country's gaping budget deficit by EUR4.8 billion (US$6.5 billion) or about 2% of gross domestic product, and follows pressure from the European Commission, the European Union's executive arm, which said last week that Greece's previously announced measures weren't tough enough. Dow Jones says the latest austerity measures include an increase of two percentage points in the top value-added tax rate, stepped- up levies on tobacco, alcohol and fuel, a one-year freeze on civil servants' pensions, and a 30% reduction in the two-month bonuses traditionally enjoyed by Greece's public-sector workers. Germany, Europe's biggest economy and the key to any financial assistance for Greece, called Greece's package a "clear signal" that Greece was determined to bring its finances under control-- but it also said no bailout was in the works, or immediately necessary, Dow Jones states. Greek Finance Minister George Papaconstantinou said in Athens that if Greece can't rule out turning to the International Monetary Fund for assistance if Greece needs help and euro-zone partners won't give it, Dow Jones discloses. Dow Jones notes Sarah Carlson, Moody's lead analyst for Greece cautioned that failure to implement the promises could result in a downgrade to Greece's credit rating, which currently stands at A2. Greece is under intense pressure from markets and its EU partners to slash its budget deficit, which hit 12.7% of gross domestic product in 2009, Dow Jones notes. The measures announced Wednesday, as well as spending cuts unveiled earlier in the year, come as the Papandreou government attempts to bring the budget gap down by four percentage points this year and to within the EU's 3%-of-GDP limit by 2012, Dow Jones relates. ============= H U N G A R Y ============= * HUNGARY: Mandatory Liquidations Up 12% in February, Opten Says ---------------------------------------------------------------- MTI-Econews, citing company information provider Opten, reports that mandatory and voluntary liquidation procedures were started against more companies in Hungary in February compared to the same month a year earlier. Opten told MTI on Wednesday the number of mandatory liquidation procedures started in February reached 1,216, 12% more than in the same month a year earlier, while the number of voluntary liquidations climbed 11% to 1,374. ========= I T A L Y ========= PARMALAT SPA: U.S. Court Dismisses Complaint Against BofA --------------------------------------------------------- Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York dismissed the complaint filed by Food Holdings Limited and Dairy Holdings Limited against Bank of America Corp., Bank of America, N.A., and Banc of America Securities, LLC, which case is consolidated in Parmalat S.p.A.'s multidistrict litigation. In his 57-page opinion, Judge Kaplan related that the case had its genesis in the desire of Parmalat to raise money by selling a minority of the stock of its Brazilian subsidiary, Parmalat Administracao, at a time when that stock could not be sold in equity markets. BofA conceived of and Parmalat engaged in a pair of matched transactions that were intended to provide off-balance sheet debt financing to bridge the gap until the Parmalat Brazil stock could be sold on attractive terms. BofA arranged for the creation of two special purpose entities, FHL and DHL that would exist only on paper and only for the purpose of completing the transaction. The SPEs would (i) borrow US$300 million from institutional investors, and (ii) buy the Parmalat Brazil stock from Parmalat Brazil for US$300 million. The debt eventually was to have been repaid with the proceeds of the sale by the SPEs of the Parmalat Brazil stock. To make the SPEs' notes salable, BofA recommended and Parmalat provided two additional sources of funds to pay the debt in the event the Parmalat Brazil stock could not be sold at a price sufficient to satisfy the notes. Thus, the ability of the institutional investors to be repaid depended upon any one of three conditions being satisfied: (1) the successful sale of the SPEs' Parmalat Brazil stock for at least US$300 million, (2) the performance by Parmalat Capital Finance Limited of its obligations under a "put" option, or (3) Parmalat's performance of its guarantee of PCFL's obligation. In the end, none of these conditions was satisfied because the structure failed. The institutional investors, chief among them BofA, which had bought US$165 million of the notes, were left holding the bag, Judge Kaplan noted. "In hindsight, the reasons for this debacle are plain. Even when the deal closed, the likelihood that the Parmalat Brazil stock was worth or, in any reasonable time frame, likely to be worth $300 million was uncertain at best. The only apparently solid sources of funds to repay the debt issued by the SPEs were the PCFL put and the Parmalat guarantee," Judge Kaplan said. "But Parmalat and its entire organization, including PCFL, collapsed in December 2003 upon the discovery of a massive fraud," he added. This case is particularly interesting because the plaintiffs are the SPEs created by BofA, who claim that they were defrauded and otherwise wronged by the entity that created them and that held a majority of the debt they issued, Judge Kaplan noted. The SPEs argue that they would not have bought the overvalued Parmalat Brazil stock in the first place if they had known the truth regarding Parmalat Brazil and BofA's internal assessments of the deal. SPEs formed to engage in structured finance transactions, like FHL and DHL, have no past, no future, and no employees, Judge Kaplan explained. They are creatures of the financial services companies that cause their creation. They are phantoms, endowed by law with legal personality but having no real existence, he added. He maintained that the questions whether the SPEs could have been deceived or whether they would have acted differently if only one or another piece of information had been fully and fairly disclosed therefore arise in a context rather different from that of the usual fraud or breach of fiduciary duty case. "In the last analysis, I conclude that BofA did not commit fraud because it lacked culpable intent. In the particular circumstances of this case, however, BofA owed the SPEs fiduciary duties and breached them by failing to disclose all material facts," Judge Kaplan opined. "But the SPEs were not injured because they never considered the business merits of this deal in the first place and would have gone forward regardless of any other or additional disclosures by BofA," he continued. The conclusion, however, Judge Kaplan submitted, would be almost inconceivable if the controversy had arisen between substantial and responsible companies. Judge Kaplan went on to explain that the SPE "directors," who nominally approved the deal, were hired by BofA for a fee, and made no serious business judgment as to the desirability of the deal from the SPEs' standpoint. The SPE directors were engaged to vote "yes," and they did. "This they would have done even if the allegedly concealed information had been disclosed to them. Hence, there is no causal relationship between BofA's breach of fiduciary duty and any injury suffered by the SPEs," Judge Kaplan opined. FHL and DHL's unjust enrichment claim fails for the independent reason that valid agreements cover the subject matter that gives rise to the alleged enrichment, Judge Kaplan further explained, among other things. He noted that BofA's relationship with FHL and DHL and its obligations as arranger are governed by the transaction agreements, including the management and note purchase agreements. Hence, FHL and DHL's claim for unjust enrichment must be dismissed. In another filing, Judge Kaplan ordered the substitution of two pages of his opinion with new pages due to certain corrections. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The Company's U.S. operations filed for Chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on December 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On January 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presided over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: Hermes Seeks Final Settlement Approval ---------------------------------------------------- Lead Plaintiffs Hermes Focus Asset Management Europe Limited, Cattolica Partecipazioni, S.p.A., Capital & Finance Asset Management, Societe Moderne des Terrassements Parisiens and Solotrat notify the Court and parties-in-interest that they will ask the U.S. District Court for the Southern District of New York on March 8, 2010, for final approval of their proposed settlements with Defendants Deloitte Touche Tohmatsu, Deloitte & Touche LLP, James Copeland, Grant Thornton International, Grant Thornton International Limited, Grant Thornton LLP, Grant Thornton S.p.A. The Lead Plaintiffs also file an accompanying memorandum of law, a declaration by Aaron Waugh, and a joint declaration of Lisa M. Mezzetti, James J. Sabella and Robert M. Roseman in support of their request. James J. Sabella, Esq., at Grant & Eisenhofer P.A., in New York, asserts that the Settlements, which the Court addressed in its order dated November 24, 2009, are fair and in the best interests of investors, who were damaged by the fraudulent conduct that led to the collapse of Parmalat Finanziaria S.p.A. and its affiliates. The Settlements provide for payment of a total of US$15 million. Specifically, the Deloitte Settlement provides for a settlement amount of US$8.5 million, and the Grant Thornton Settlement provides for a settlement amount of US$6.5 million. The Settlement Stipulations provides for the release of claims against, inter alia, the Deloitte and Grant Thornton Defendants and their member firms. Consistent with the Court's decision on the motion for class certification, the settlement funds will be paid, pursuant to the Plan of Allocation, to domestic purchasers, who purchased or otherwise acquired Parmalat equity securities between January 5, 1999, and December 18, 2003, inclusive. As the Court is aware, Mr. Sabella notes, there were several prior settlements in the multidistrict litigation. Previously, Banca Nazionale del Lavoro S.p.A. paid US$25 million to settle claims against it, Credit Suisse Group and related defendants paid US$25 million to settle claims against them, and Parmalat S.p.A. paid 10.5 million shares of Parmalat S.p.A. to settle claims against it, which shares sold in the market for approximately US$26 million. He asserts that those settlements were all granted final approval by the Court. Thus, he says, combined with the prior settlements, the Settlements with the Auditor Defendants brings the total recovery in the case to just over $90 million. In connection with Lead Plaintiffs' motion for a preliminary order, the Court approved a notice plan, including publishing the notice in The Wall Street Journal, on the PR Newswire and the Businesswire, and mailing the notice to Class members, who could be reasonably identified. The Court's Preliminary Order directed the Lead Plaintiffs to commence the notice plan by December 10, 2009. Mr. Sabella informs the Court that the Lead Plaintiffs have complied with the notice requirements. The Notices described the terms of the Settlements and provided Class Members an opportunity to request exclusion from the Settlement Class by February 1, 2010, or to object to the Settlements by February 15. As of February 26, he discloses, no objections have been received. He adds that the Class' reaction to the Settlements also supports approval. In connection with the Settlements, Class Counsel Grant & Eisenhofer P.A.; Cohen, Milstein, Sellers & Toll, PLLC; and Spector Roseman Kodroff & Willis, P.C., also ask the Court, pursuant to Rule 23(h) of the Federal Rules of Civil Procedure, to award them (i) attorneys' fees in the amount of 18.5% of the Gross Settlement Fund, and (ii) reimbursement of expenses amounting to $161,857. Parties Seal Briefs In a letter addressed to Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York, Linda T. Coberly, Esq., at Winston & Strawn LLP, in Chicago, Illinois, says that she writes on behalf of the parties in the cases involving Grant Thornton International and Grant Thornton LLP in the multidistrict litigation concerning the record underlying the Court's opinion and judgment in the cases. She reminds the Court that the summary judgment briefing in the cases began with the compilation of extensive draft joint statements of disputed and undisputed facts under Rule 56.1 of the Local Civil Rules of the District Court for the Southern District of New York, prepared at the Court's direction over the course of several months. Summary judgment briefing, then, followed in stages, concluding with the issue of in pari delicto, which the Court found dispositive. Although the Court received both hard copies and electronic versions of the Rule 56.1 statements concerning in pari delicto, the evidence underlying those statements was submitted to the Court only in electronic "ibrief" format, prepared for the Court's convenience. The ibrief was submitted to the Chambers under seal along with the briefing but inadvertently was not also formally filed under seal with the Clerk of the Court, as the vicarious liability ibrief had been. Dr. Enrico Bondi and Parmalat Capital Finance Limited have asked that a joint corrective sealed filing of the in pari delicto ibrief be made to complete the sealed vault index record for their appeals. Ms. Coberly says that the Grant Thornton defendants have no objection to the proposal. Accordingly, Ms. Coberly, on behalf of the Grant Thornton defendants, Dr. Bondi and the other parties, asks that the in pari delicto ibrief be filed in the vault and remain under seal. In the interest of completeness, the parties make the same request with regard to the ibrief submitted to the Court in respect to that certain "Daubert motion concerning the four Italian experts." Ms. Coberly assures Judge Kaplan that Grant Thornton International, Bank of America, Dr. Bondi, and Parmalat Capital all agree with the proposal. Judge Kaplan approved the proposal, provided that counsel will furnish another copy of the ibrief for filing. The Court reserves the right to unseal any or all of the sealed materials. * * * In accordance with the Court's directive, James L. Bernard, Esq., at Stroock & Stroock & Lavan, LLP, in New York, relates that they attempted to file under seal with the Clerk of the Court two DVDs containing copies of the electronic ibriefs. Mr. Bernard is Grant Thornton's counsel. The Clerk, however, said that even though the Court previously were able to accept those filings, it can no longer accept filings in DVD format without a directive from the Court. Accordingly, Grant Thornton sought and obtained a Court order directing the Clerk to accept the DVDs. Grant Thornton subsequently filed under seal the ibriefs. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The Company's U.S. operations filed for Chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on December 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On January 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presided over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. =================== K A Z A K H S T A N =================== BTA BANK: Ukraine Court Acknowledges Bank Restructuring ------------------------------------------------------- BTA Bank said the decision of the Almaty special financial court dated October 16, 2009 on bank restructuring was acknowledged as legitimate in Ukraine. A corresponding decision was made by the Kiev-based Solomensk regional court on February 17, 2010 and came into effect February 23, 2010. The decision is based on provisions of "Convention on legal aid and legal relations on civil, domestic and criminal cases", signed October 7, 2002 in Chisinau, Moldova, between ten countries -- CIS members. BTA Bank said it is consistently working to legally protect its assets located in foreign jurisdictions from any actions of the third parties that may affect successful completion of the restructuring process. On February 5, 2010 the bank appealed to the US Insolvency Court under jurisdiction of the South district of the State of New-York to acknowledge the restructuring process legitimate in the USA. The appeal is being considered with the USA Court. BTA Bank informed the Supreme Court of England and Wales on December 18, 2009 acknowledged the restructuring process legitimate in England and Wales. The debt is being restructured in accordance with the Kazakhstan legislation as at 2009. On October 16, 2009 the Almaty special financial court acknowledged the restructuring application of the bank as reasonable and complying with the Kazakhstan legislation. On December 7, 2009 in London BTA Bank and the Creditors' Committee signed an agreement on the main commercial terms of financial debt restructuring of the bank. About BTA Bank BTA Bank AO (BTA Bank JSC), formerly Bank TuranAlem AO -- http://bta.kz/-- is a Kazakhstan-based financial institution, which is involved in the provision of banking and financial products for private and corporate clients. The BTA Group is one of the leading banking groups in the Commonwealth of Independent States and has affiliated banks in Russia, Ukraine, Belarus, Georgia, Armenia, Kyrgyzstan and Turkey. In addition, the Bank maintains representative offices in Russia, Ukraine, China, the United Arab Emirates and the United Kingdom. The Bank has no branch or agency in the United States, and its primary assets in the United States consist of balances in accounts with correspondent banks in New York City. As of November 30, 2009, the Bank employed 5,043 people inside and four people outside Kazakhstan. It has no employees in the United States. Most of the Bank's assets, and nearly all its tangible assets, are located in Kazakhstan. As reported by the Troubled Company Reporter on Feb. 5, 2010, JSC BTA Bank, also known as BTA Bank of Kazakhstan, filed for Chapter 15 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10- 10638), listing more than US$1 billion in both assets and debt. BTA Bank has asked the Bankruptcy Court in Manhattan to enter an order recognizing the voluntary judicial restructuring proceeding that was initiated by the bank in the Specialized Financial Court of Almaty City in Kazakhstan and opened pursuant to an Oct. 16, 2009 decision of the Financial Court, as a foreign main proceeding pursuant to 11 U.S.C. Secs. 1515 and 1517. BTA Bank is represented in the Chapter 15 proceedings by: Abraham L. Zylberberg, Esq. Evan C. Hollander, Esq. Richard A. Graham, Esq. WHITE & CASE LLP 1155 Avenue of the Americas New York, New York 10036-2787 Telephone: (212) 819-8200 Facsimile: (212) 354-8113 ===================== N E T H E R L A N D S ===================== FORTIS BANK: Moody's Reviews Ratings on Hybrid Securities --------------------------------------------------------- Moody's Investors Service concluded its review on the ratings of certain Fortis Bank Nederland and Fortis Capital Company hybrid securities, in line with its revised Guidelines for Rating Bank Hybrids and Subordinated Debt published in November 2009. The rating outlook for FBN and its subsidiaries is negative and all other ratings on FBN and its subsidiaries are unchanged. Prior to the global financial crisis, Moody's had incorporated into its ratings an assumption that support provided by national governments and central banks to shore up a troubled bank would, to some extent, benefit the subordinated debt holders as well as the senior creditors. The systemic support for these instruments has not been forthcoming in many cases. The revised methodology largely removes previous assumptions of systemic support, resulting in the rating action. In addition, the revised methodology generally widens the notching on a hybrid's rating that is based on the instrument's features. Rating Action in Detail The starting point in Moody's revised approach to rating hybrid securities is the Adjusted Baseline Credit Assessment (Adjusted BCA). The Adjusted BCA reflects the bank's standalone credit strength, including parental and/or cooperative support, if applicable. The Adjusted BCA excludes systemic support. The Adjusted BCA is Baa1 for FBN and is the same as the BCA as parental and/or cooperative support does not apply. These hybrid securities of FBN are affected: * EUR2 billion 8.75% non-cumulative Mandatory Convertible Securities (ISIN: XS0328920862) jointly issued by Fortis Bank Nederland (Holding) N.V., Fortis Holdings (now Fortis Group) and Fortis Bank SA/NV were upgraded to Ba1 from B2. The upgrade reflects the increased likelihood that all coupons will be paid prior to the mandatory conversion into shares of Fortis Holdings on December 7, 2010. FBN is currently awaiting the outcome of ongoing discussions between the Dutch Ministry of Finance and the European Commission on the state aid packages granted to Dutch banks. As such, Moody's has rated its hybrid securities on an expected loss basis. However, the terms of the MCS include an optional deferral trigger that is tied to the non- payment of dividends on Fortis Holdings' ordinary shares. FBN decided not to use the optional deferral trigger and paid the coupon of the instrument on June 7, 2009 and again on December 7, 2009. Moody's views these as positive developments. Furthermore, Fortis Group has stated their intention to resume payment of a dividend for the 2009 financial year. Given that there is a 12 month look back period for 'optional coupon deferral' FBN will not be allowed to skip coupon payments on the MCS as the payment of a dividend by Fortis Group will trigger the coupon pusher. As such, the probability of coupons being skipped prior to conversion under Moody's expected loss approach is now very low, resulting in an upgrade of the rating to Ba1. Junior subordinated debt under the EUR 40 billion EMTN note program updated as of November 2009 was downgraded from A2 to A3, one notch above the adjusted BCA. The bank's EMTN program allows for the issuance of junior subordinated debt. However, FBN has currently no outstanding junior subordinated debt issued under this program. Moody's notes that the EMTN program has restricted deferral options where a coupon skip is tied to the breach of a weak trigger, in this case the solvency of the bank. The probability of the trigger being breached is remote unless the bank is close to liquidation or is being restructured outside of a liquidation. In such cases, Moody's views the likelihood of government support to be high therefore reducing the likelihood of a trigger being breached. In liquidation the notes have a junior subordinated claim. Consequently, positioning the rating above the adjusted BCA implies some level of systemic support. This hybrid security of Fortis Capital Company (FCC - a wholly- owned issuing vehicle of FBN) were affected: -- 6.25% Non-cumulative Non-voting Class A Series 1 Preference Shares (the Class A1 Preference Shares) (ISIN: GB0057047275) were downgraded to Baa3 from A3, two notches below FBN's Adjusted BCA. Moody's notes that these securities benefit from support agreements that are in place with Fortis Bank SA/NV, which was acquired by BNP Paribas. There is also a support agreement in place with Fortis N.V. the Holding company of the Fortis Holdings. Under the terms of the transaction, should any of the entities providing support pay dividends on any of their capital stock this would trigger a requirement to pay dividends on the Class A1 Preference Shares. Furthermore, should the issuer have insufficient distributable reserves, the issuer will call upon the support agreements in order to satisfy the requirement to pay dividends. Fortis Holdings have publically stated their intention to resume paying dividends for fiscal year 2009. As such, given these support agreements and dividend pusher features of this security Moody's views the likelihood of non payment of coupons is lower than in a typical state aid EL scenario, particularly given the fact that two of the support agreement parties are now owned by a significantly stronger financial institution in BNP Paribas. The last rating action on Fortis Bank Nederland was on November 18, 2009, when Moody's placed under review for possible downgrade the hybrid instruments issued by FBN and FCC. Headquartered in Amsterdam, FBN had total assets of EUR199 billion and reported shareholders' equity of EUR3.3 billion as of June 30, 2009. INDOVER BANK: To Start Paying Creditor Claims Next Month -------------------------------------------------------- Aditya Suharmoko at The Jakarta Post reports that Bank Indonesia has said that its subsidiary Indonesische Overzeese Bank N.V. (Indover) will pay creditor claims at the fastest next month. The report relates BI Deputy Governor Ardhayadi Mitroatmodjo said BI had met Indover's liquidator, which said the claims could be disbursed in the next one or two months. "Each creditor of Indover's Netherlands branch will receive 47 percent of total claims," Ardhayadi said last week after a meeting with the House of Representatives' commission XI overseeing financial affairs, according to the report. The amount of claims is based on the total assets of Indover as priced and realized at auction, the report says. Hong Kong Meanwhile, Ardhayadi said creditors of Indover's Hong Kong branch will receive 100% of claims as the total assets sold via auctions there were priced at more than 100%, the report notes. The report recalls Indover was declared bankrupt by a Dutch court in December 2008 after suffering a liquidity shortage, which prompted the court to freeze the bank's assets on Oct. 6, 2008. BI sought to save Indover via a proposed 545.65 million (US$743.23 million) bailout, but the House of Representatives refused to approve this, the report recounts. About Bank Indonesia Bank Sentral Republik Indonesia -- http://www.bi.go.id/-- was created by a new Central Bank Act, the UU No. 23/1999 on Bank Indonesia, enacted on May 17, 1999. The Act confers it the status and position as an independent state institution and freedom from interference by the Government or any other external parties. About Indover Bank A specialized wholesale bank active in trade finance, Indover Bank is fully owned by the Indonesian central bank, Bank Indonesia. Indover Bank is based in Amsterdam, has a branch in Hamburg, wholly owned subsidiaries in Hong Kong and Singapore, and a representative office in Jakarta. ============= R O M A N I A ============= EVEREST FOODS: Shutters Piata Romana Restaurant in Bucharest ------------------------------------------------------------ Cristina Stoian at Ziarul Financiar reports that Everest Foods has decided to close its Piata Romana fast-food restaurant in Bucharest. The report recalls Everest filed for insolvency late last year under pressures coming from its main creditor and owner of the space, Metropolitan Leasing. "The value of debts to the 14 lenders stands at 500,000 euros, with the biggest sums to be returned to the owner of Metropolitan Leasing space, with which the firm has had a rental contract," the representatives of Manta sI Asociatii SPRL, the court-appointed administrator in charge of the company's internal reorganization said, according to the report. "The company is in talks for various solutions to continue its operations. They'll either reach an agreement with the owners of the current space to cut the area, as rents are very high, or they will find another space to open a new restaurant," the report quoted the administrator as saying. Citing the Finance Ministry, the report discloses in 2008, Everest Foods reported EUR1.24-million turnover and EUR100,000 losses, having 44 employees. IMAR: Shareholders to Decide Firm's Fate This Month --------------------------------------------------- Ioana David at Ziarul Financiar reports that shareholders of Imar will decide at the end of this month whether to dissolve the company or not. The report recalls the company's General Meeting of Shareholders in December decided the "preventive" dissolution. "It would have been much easier for us to file for insolvency, but this was irreversible," the report quoted Mauro Frola, general manager of the company, as saying. Imar has continued to operate after December, though at a much smaller scale than in previous years, the report states. "Imar is facing trouble, a situation we hope we'll overcome, though. The market plummeted last year. Operations will be downsized. We're trying to pay out our debts, but Imar will not die," Mr. Frola said, according to the report. Citing Finance Ministry data, the report discloses Imar in 2008 posted total debts of RON9 million (EUR2.4 million). The report notes Mr. Frola said the company's problems worsened last spring, when it practically received no orders. Imar is a furniture manufacturer based in Arad. PIC: Major Creditor Wants Receivers Replaced by PwC --------------------------------------------------- Mihaela Popescu at Ziarul Financiar reports that BCR, one of the creditors most exposed to the insolvency of retailer Pic requested that the current receivers of the company be replaced by PwC, the biggest audit and consultancy firm on the Romanian market. BCR and Banca Transilvania are Pic's biggest creditors, the report notes. The retailer held by brothers Ilie and Cornel Penescu owes approximately EUR30 million to several banks, the reports says, citing data provided by the retailer's representatives. "BCR proposed to have the receivers replaced with PwC, probably because this is the biggest auditor on the market and has a lot of expertise in this field," the report quoted Mr. Penescu as saying. According to the report, the court-appointed receivers are three individual insolvency firms based in Arges. Their replacement with PwC can only be done by the court, the report notes. The report recalls the first meeting of Pic's creditors was held last week, but the reorganization plan of the retailer that the shareholders and current receivers proposed has not been approved yet. Last year, before filing for insolvency, the Penescu brothers turned to PwC consultants for help in finding an emergency loan to save the hypermarket network, the report recounts. =========== R U S S I A =========== YUKOS OIL: Wants Russia to Pay US$98 Bil. in Human Rights Case -------------------------------------------------------------- Heather Smith at Bloomberg News reports that former management of Yukos Oil Co. will ask the European Court of Human Rights in Strasbourg, France, to order Russia to pay them US$98 billion over what they claim were illegal tax probes that led to the company's liquidation. Citing court documents, Bloomberg says Yukos lawyers will tell the court that the company's rights to fair hearings and property protection were violated by the audits and tax assessments for 2000 and 2001. Bloomberg recalls Yukos's main assets, now owned by state-run OAO Rosneft, were seized and auctioned off by the government to settle more than US$30 billion of tax claims. According to Bloomberg, Yukos, which originally applied to the court in 2004, asked for the reparations under the human rights convention's "just satisfaction" article for taxes and penalties, as well as losses following the 2007 bankruptcy auctions. The court, which agreed to hear the case in January 2009, postponed hearings twice due to the "unavailability" of Russian officials, Bloomberg recounts. "The only way there can be just satisfaction is to come to an independent court," Bloomberg quoted Claire Davidson, an outside spokeswoman for Yukos at Gardant Communications in London, as saying. "The former management of Yukos is acting on behalf of all shareholders, damaged parties like employees and creditors." Ms. Davidson, as cited by Bloomberg, said about 115,000 people lost their jobs due to the affair. Yukos Oil Co. was once Russia's largest oil producer. ===================== S W I T Z E R L A N D ===================== CRYSTAL CREDIT: Moody's Cuts Rating EUR81 Mil. Notes to 'Caa2' -------------------------------------------------------------- Moody's Investors Service has taken these rating actions on notes issued by Crystal Credit Ltd: -- The EUR108 million Class 2005-A Principal at Risk Variable Rate Notes due June 30 2012, Downgraded to B3 from Ba1, previously on 25 January 2010 placed on review for possible downgrade. -- The EUR81 million Class 2005-B Principal at Risk Variable Rate Notes due June 30, 2012, Downgraded to Caa2 from Caa1, previously on 25 January 2010 placed on review for possible downgrade. The rating action concludes the review started on January 25, 2010. The review was prompted by the continued increase in the reported aggregate losses and provisions from the cedent insurers. During the review period Moody's has examined the available data and found that, while the expected case is unchanged from January's projections, the uncertainty levels around the exposure to future losses are too high to sustain the current ratings of the class A and B notes. Moody's current projections place the expected aggregate losses at approximately EUR735 million for the underwriting years 2006, 2007 and 2008. These are unchanged from the projections announced in January 2010 and constitute an increase of EUR15 million over the rating agency's estimates in August 2009 and 35M over estimates in April 2009. Under current projections, it is expected that the Class C Notes will experience a total loss, and the Class B Notes will experience a loss of approximately 7.5%. The uncertainty levels around these projections result from the long loss development times and delays in reporting inherent to this asset class. Whilst it is possible to form a view on the default rates of the underlying risk, it is difficult to accurately quantify how and when these will feed through the underlying insurance policies and re-insurance treaties. This is due to a number of factors including: 1. The time lag between the dispatch of goods by a policy holder, their arrival at the purchaser and the expiry of credit terms; 2. The time lag between the start of negotiation over missed payments and ultimate claim by the policy holder; 3. Delays in reporting of losses between the policy holder and the insurer, and between the insurer and Swiss Re; and, 4. Uncertainty over the ability of the Insurer to manage down their exposure to risky names, sectors or geographies. These factors combine to create a situation where it is difficult to assess the remaining exposure of the transaction to losses. The highly leveraged nature of this asset type also means that a moderate increase in default rates could result in a material increase in loss ratios, even if exposures had run off significantly. Losses may be mitigated by the cedents' ability to manage down critical exposures but Moody's does not have clear insight into this process. Moody's does not believe this level of uncertainty is appropriate at the ratings currently assigned to the Class A and B Notes, resulting in the rating action. The transaction transfers credit risk on a mezzanine tranche of a pro-rata share of Swiss Re's trade credit re-insurance business (Swiss Re retains a 10% minimum share). The transaction is structured around the ratio of ceded losses to the gross premium received by Swiss Re from cedent insurers. The issuer will pay a protection amount to Swiss Re if the aggregate losses for underwriting years 2006, 2007 and 2008 exceed EUR 666M. This protection amount will be drawn from the proceeds of the sale of the Notes, which, otherwise will be repaid to Note holders at the transactions maturity. The various attachment points, as a ratio of claims and reserves to gross premium are: Class A: 90%, Class B: 81%, Class C: 74% =========================== U N I T E D K I N G D O M =========================== ASPIRE TRAINING: Court to Hear Winding-Up Petition on May 19 ------------------------------------------------------------ Petitions to wind up two companies that offered NVQ training courses were presented to the High Court on February 18, 2010. This follows an investigation carried out by Company Investigations of the Insolvency Service under Section 447 of the Companies Act 1985 (as amended). Precision Training UK Ltd. and Aspire Training and Assessment Ltd., received training fees from more than 1,000 students and their sponsors, a large number of students being from outside the UK. Precision was based at a main office in Burnham, Berkshire, and operated nationwide. The role of the provisional liquidator is to protect assets in the possession or under the control of the companies pending the determination of the petitions. The provisional liquidator also has the power to investigate the affairs of the companies insofar as it is necessary to protect assets including any third party or trust monies or assets in the possession of or under the control of the companies. The cases are now subject to High Court action and no further information will be made available until the petitions are heard in the High Court on May 19, 2010. The registered office of Precision Training UK Ltd. is at 60 62 High Street, Burnham, Berkshire, SL1 7JT, which is the former trading address of that company. The registered office of Aspire Training and Assessment Ltd. is at 889 Harrow Road, Sudbury, Middlesex, HA0 2RH. The petitions were presented under s124A of the Insolvency Act 1986. The Official Receiver was appointed as provisional liquidator of the companies on February 18, 2010. BRITISH AIRWAYS: CEO Says Cabin Crew Strike Won't Ground Airline ---------------------------------------------------------------- Pilita Clark at The Financial Times reports that Willie Walsh, British Airways' chief executive, has issued a bold warning to its cabin crew that "a strike will not ground" the airline. The FT relates Mr. Walsh told the staff on Wednesday the airline would have trained 1,000 volunteer crew by next week and had nearly 6,000 volunteers in total. That meant all BA's flights from London City airport, all long-distance routes from Gatwick and about half short-haul flights from that airport would be protected, the FT says. According to the FT, at Heathrow, "a substantial proportion" of long-haul flights and "a good number" of short-distance flights would continue with the help of chartered aircraft with crews from UK and European-based airlines. The FT recalls a large majority of BA's nearly 12,000 cabin crew voted for industrial action in a ballot that closed last week but their Unite union has so far failed to announce any strike dates. 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. CALA GROUP: Halts Commercial Property Investments Over Losses ------------------------------------------------------------- Perry Gourley at The Scotsman reports that Cala Group is ending new investments in the commercial property market to focus on its core homes business after racking up further heavy losses. According to the report, the group, which struck a debt-for-equity deal with Bank of Scotland in December to secure its future, said Wednesday that it had reluctantly decided not to invest further capital in its Cala Properties commercial property arm, citing "trading conditions and recovery prospects" in the market. The company will also not invest in any new projects through Cala Finance, which offers funding to other residential developers, the report says. It will close the division once all existing developments have been completed, the report notes. The group posted a pre-tax loss of GBP33.9 million in the year to June 30, 2009, following a loss of GBP266.1 million in the previous year, which included exceptional costs after write-down provisions for land and goodwill, the report discloses. According to the report, the company said despite signs of improvement in the housing market, it expected to remain loss- making in the current year "before the prospect of returning to profit" in 2010-11. The debt-for-equity swap saw loans converted into new preference shares and provided fresh borrowing facilities through to June 2013, the report recalls. CALA Group Limited -- http://www.cala.co.uk/-- is a privately- owned residential and commercial property developers in the UK. COMPANY HEALTH: In Administration; Andrew Stoneman On Board ----------------------------------------------------------- Jason Godefroy and Andrew Stoneman, Recovery & Reorganisation partners of MCR, have been appointed as the joint administrators of Company Health Group Plc. The Company had expected to enter into a contract with a third party for the sale of the Company's operating subsidiaries this week subject to resolving the outstanding winding up petition ahead of the court hearing of the petition on February 26, 2010. On February 24, 2010, Iain Mackinnon, on behalf of the Petitioners, agreed to a settlement proposal which would have allowed the Company to proceed with the proposed sale of the operating subsidiaries. However, on February 25, 2010, agreement to the settlement was withdrawn resulting in the withdrawal of the Prospective Purchaser from the proposed sale and which left the Board with no alternative but to appoint administrators. Trading in the Company's ordinary shares on the AIM Market of the London Stock Exchange has been suspended since June last year. The listing of its shares on AIM will now be cancelled. Company Health Group plc -- http://www.companyhealthgroup.com/-- is a United-Kingdom-based holding company. The Company, through its subsidiaries, is engaged in occupational health recruitment and services, physiotherapy and ergonomic services, and collection of medical evidence for the life assurance industry. The Company's subsidiaries include DTC Group Ltd, Milligan & Hill Ltd, Cheviot Artus Ltd, Diagnostic Technologies Corporation Ltd and Company Health Ltd. CRYSTAL PALACE: Paul Hart Named Manager --------------------------------------- Peter-Joseph Hegarty at Bloomberg News reports that Crystal Palace named Paul Hart as manager, succeeding Neil Warnock. Mr. Hart left QPR in January after five games in charge, Bloomberg relates. According to Bloomberg, Palace stands 21st in the 24-team Championship, one place above the relegation zone, after suffering a 10-point penalty for going into administration. As reported by the Troubled Company Reporter-Europe on Jan. 28, 2010, Crystal Palace went into administration after running into financial problems. According to The Times, the club has debts estimated at GBP30 million. London-based Crystal Palace Football Club -- http://www.cpfc.premiumtv.co.uk/-- plays in the English League. The team, also known as the "Eagles" represents a borough of London called Croydon. It was founded in 1905 by workers at the Crystal Palace, a wrought iron and glass building originally erected in the Hyde Park area of London to house the Great Exhibition of 1851 (the first in a series of World's Fair exhibitions). The Crystal Palace Football Club moved to its current stadium Selhurt Park in 1924. Chairman Simon Jordan took over the club in 2000, ending Crystal Palace's stint with bankruptcy. FOUR SEASONS: Wants to Extend Maturity of GBP600 Million Bonds -------------------------------------------------------------- Anousha Sakoui at The Financial Times reports that Four Seasons Healthcare may seek fresh talks with creditors after a group of creditors threatened to block an attempt to renegotiate the terms of its debts. The FT says the company wants to extend the maturity of a GBP600 million securitization, two series of bonds issued as part of an earlier refinancing, until at least 2013 to give it breathing space, but it requires the consent of 75% of the holders of each of the two classes of bonds. The bonds are secured against a loan, which is in turn secured against the company's assets and comes due for repayment in September, the FT discloses. Citing people with knowledge of the situation, the FT notes a group representing 25% of the most senior ranking of bonds have written to the company via their lawyers saying they would oppose such a move and want to be repaid. The bonds are not due for repayment until 2013, but unless the loan is extended or refinanced, a so-called special servicer would intervene once again to negotiate a solution, the FT states. "Our preference is to extend the loan, we see that is the most efficient way to deal with our outstanding debt," the FT quoted Pete Calveley, chief executive of Four Seasons, as saying. "We want to identify noteholders and get them into a room to get an idea of exactly who will and won't consent and discuss what could be done to improve the terms of the bonds so that they do consent to a maturity extension." Four Seasons recently hired Gleacher Shacklock to advise them on the matter, the FT relates. Four Seasons Health Care -- http://www.fshc.co.uk/-- is one of the largest care home (nursing home) operators in the UK. The company runs some 300 nursing homes, and its Huntercombe division operates about eight specialized health care centers (which provide mental health and rehabilitation services) in England, Scotland, North Ireland, and the Isle of Man. Allianz Capital Partners, the private equity arm of Allianz Group, acquired the company from Alchemy Partners for GBP775 million in 2004. INEOS GROUP: Wants to Move Headquarters to Switzerland ------------------------------------------------------ Anousha Sakoui at The Financial Times reports that Ineos asked lenders on Wednesday for permission to move its headquarters and tax residence to Switzerland to save up to EUR450 million (US$680 million) in the next four years, money that would have otherwise been paid in tax to the UK. The FT notes the move is subject to an internal review and requires approval from two-thirds of lenders. According to the FT, Ineos said the savings would support future investment in skills, plants and technology, considered by the company to be critical to growth. Citing debt information service CapitalStructure, the FT says the company has debts of just more than EUR7 billion. About INEOS Group INEOS Group is a diversified chemical company consisting of several businesses. Product lines include ethylene oxide-based specialty and intermediate chemicals, fluorochemicals used as refrigerants and propellants, and phenol and acetate products. INEOS Chlor makes chlor-alkali chemicals, and INEOS Films and Compounds manufactures PVC and PET films. INEOS Group was formed in 1998 after a management buyout led by CEO Jim Ratcliffe, who controls the group. Mr. Ratcliffe has placed INEOS among the world's top chemical companies (with ExxonMobil, Dow, and BASF) through his many and varied acquisitions. * * * As reported by the Troubled Company Reporter-Europe on Aug. 03, 2009, Moody's Investors Service affirmed the Caa2 Corporate Family Rating of Ineos Group Holdings plc and upgraded the underlying Probability of Default rating to Caa1 from Caa2 and the ratings assigned to its senior notes to Caa3 from Ca. Moody's said the outlook on the ratings is stable. KEITH EVANS: In Administration; Harris Lipman On Board ------------------------------------------------------ Cardiff-based insolvency practitioners Harris Lipman have been appointed as administrators at a Bridgend-based furniture manufacturer, which has worked on projects as diverse as the Welsh Assembly Building, the Millennium Stadium and Cardiff Airport. Keith Evans Contract Furnishers Ltd. specializes in manufacturing and fitting bespoke interiors for hotels, bars and restaurants and has worked on contracts throughout the UK and Europe. It numbers among its clients some of the biggest companies in the hotel and leisure industry, including Marriot, Hilton, Wetherspoons, KFC and Pizza Hut. It has been trading since 1959, but has recently suffered a drop- off in business with no significant orders over the eight-week period which led to the administrators being called in on February 22. A notice of intention to appoint Administrators was issued by the company directors on February 12, and around 48 employees were also made redundant on that date. Harris Lipman partners John Cullen and Freddy Khalastchi have been appointed as joint administrators and will be considering offers for the business assets from any interested parties. Mr. Cullen said, "The company received a few queries from potential customers towards the end, but these were for orders six months down the line, and the company just did not have the cash flow to survive in the meantime. "As a result, the directors took the swift decision to take insolvency advice before any significant creditor pressure. I am hopeful that we will be able to find a buyer for the business assets over the coming weeks." KSHOCOLAT LTD: Bon Bon Buys Assets, Brands From Administrators -------------------------------------------------------------- Bon Bon Buddies Ltd., Europe's leading character-licensed novelty confectionery and biscuit company, has acquired certain assets and intellectual property of Kshocolat Ltd. and Brand 1602 Chocolate Ltd. from the administrators, RSM Tenon, for an undisclosed sum. The Kshocolat and Hot Choc brands encompass a range of premium boxed chocolates and confectionery, chocolate bars and drinking chocolate, with award-winning contemporary designs. These luxury products sell in UK premium retailers including John Lewis, Harvey Nichols, House of Fraser and Waitrose and enjoy a strong international presence in more than 20 export markets. Bon Bon Buddies will now invest in the brands to further develop the existing product range, build the brand profile and increase distribution. By maximizing the marketing and market opportunities for Kshocolat and Hot Choc, Bon Bon Buddies plans to further enhance and complement its successful confectionery portfolio. Chris Howarth, Managing Director of Bon Bon Buddies, said: "We are delighted to have completed this excellent acquisition against strong competition. The Kshocolat and Hot Choc brands will allow us to extend our market presence into the premium chocolate market in the UK and Europe with this exciting premium confectionery range." Tom MacLennan, Head of Recovery at RSM Tenon in Scotland added: "Kschocolat is a very strong brand with enormous potential for further growth. We are delighted that Bon Bon Buddies, which has a major presence and outstanding reputation in the confectionary market, has acquired the brand and will now take it to the next stage of development. We wish Bon Bon Buddies every success with their plans for the future of the brand." Metis Partners advised RSM Tenon with the identification and packaging of the Kshocolat and Hot Choc intellectual property and intangible assets. Stephen Robertson, Director of Metis Partners, said: "Even in the current market, this deal illustrates that there is still considerable interest in intangible assets, particularly for strong brands such as Kshocolat and Hot Choc." LM LOGISTICS: In Administration; Chantrey Vellacott On Board ------------------------------------------------------------ Dominic Perry at RoadTransport.com reports that LM Logistics and Syntex Logistics, two related Felixstowe-based transport firms, have been forced into administration by the firm providing their invoice discounting facilities. According to the report, the running of both operations was handed over to accountancy firm Chantrey Vellacott on February 26, which is looking to sell both businesses. Logistics was already operating under a Company Voluntary Arrangement but "cashflow issues" have brought on the administration, the report says citing director Tony Barnes. Syntex is a container haulier while LM Logistics specializes in forwarding and logistics services; between them they are licensed for just over 80 vehicles. MANCHESTER UNITED: May Sever Ties with Goldman Sachs ---------------------------------------------------- Roger Blitz and Anousha Sakoui at The Financial Times report that the Glazer family, owners of Manchester United, are considering ending their relationship with Goldman Sachs because of the role of Jim O'Neill, the bank's chief economist, in efforts to take the club off their hands. According to the FT, Mr. O'Neill, a lifelong United supporter and former board member, is spearheading the "Red Knights" group of financiers who met in London this week over a proposal to buy the club for a sum in excess of GBP1 billion. Citing people with knowledge of the situation, the FT says Joel Glazer, the family member most involved in United, called Lloyd Blankfein, the bank's chairman and chief executive, following comments by Mr. O'Neill to a Bloomberg reporter in January in the wake of the club's GBP500 million bond issue. The FT recounts Mr. O'Neill, who is well known to United manager Sir Alex Ferguson and chief executive David Gill, was quoted as saying: "There's too much leverage going on with Man United. It's not a good thing. I'm not a buyer of the bond. I value my long- term support for Man United better than anything else." The FT relates one person close the situation said the family is now making clear that Mr. O'Neill's actions have jeopardized the chances of the club putting more corporate finance work with Goldman Sachs, which was one of syndicate of banks helping the club with its recent bond issue. The FT notes Goldman Sachs declined to comment, while Mr. O'Neill stressed Tuesday night he was acting in a "personal capacity". Manchester United Limited -- http://www.manutd.com/-- operates Manchester United Football Club, one of the most popular and successful soccer teams in the world. Man U is currently the top soccer team the UK's Premier League, boasting 18 championships and 11 FA Cup titles. Manchester United generates revenue primarily through ticket sales at venerable Old Trafford stadium, as well as through broadcasting rights and sales of Red Devils merchandise. Man U was founded as Newton Heath in 1878 before changing its name in 1902. It is owned by American tycoon Malcolm Glazer, whose holdings include the Tampa Bay Buccaneers NFL team and a majority stake in Zapata. MATHIESONS: In Administration; Deloitte Seeks Buyer --------------------------------------------------- Tanya Thompson at The Scotsman reports that Mathiesons has gone into administration, putting more than 350 jobs at risk. The report relates a spokeswoman for accountants Deloitte, who are handling the administration, said Wednesday night the firm would continue trading while attempts were made to find a buyer. There are no plans for redundancies at this stage, the report notes. According to the report, in a statement, Deloitte said that Mathiesons, which has previously had revenues of GBP9 million a year, had been "unable to support an over-burdened cost base". The business was put up for sale early in 2010 but the deal could not be completed, the report states. "The business has been loss-making for quite a while, the report quoted John Reid, from Deloitte, as saying. "It's a question of ensuring there is sufficient volume going through the bakery to ensure profitability." Mathiesons is a bakery based in Stirlingshire. The company makes a range of products from cakes and pastries to savories. It was established in Falkirk in 1872, according to The Scotsman. NORTEL NETWORKS: Wants to Enforce Stay on UK Pension Authorities ---------------------------------------------------------------- Nortel Networks Inc. and its affiliated debtors sought and obtained a ruling from the U.S. Bankruptcy Court for the District of Delaware that would block two U.K. pension authorities from participating in an administrative case pursued by the U.K. pensions regulator to recover as much as GBP2.1 billion from the Debtors. In a February 26, 2010 ruling, Bankruptcy Judge Kevin Gross ordered the enforcement of the automatic stay against Nortel Networks UK Pension Trust Limited and The Board of the Pension Protection Fund. The Bankruptcy Court held that (i) participation of the UK Pension Authorities in the U.K. administrative proceeding will be a violation of the automatic stay and that (ii) sanctions will be meted out on the U.K. Pension Authorities should they participate. The Bankruptcy Court also held that the U.K. administrative proceeding initiated by the U.K. Pensions Regulator is "deemed void and of no force or effect" on NNI and its U.S. debtor affiliates. The Nortel Networks UK Pension Trust Limited is the trustee of Nortel Networks UK Limited's pension plan program. The PPF is a U.K. statutory body established under the U.K. Pensions Act of 2004. The commencement of NNUK's administration proceedings in the U.K. led to an "assessment period" where the PPF worked with the NNUK Pension Trustee to determine the funding position of the NNUK Pension Plan. The NNUK Pension Trustee and the PPF jointly filed proofs of claim in the U.S. Nortel Debtors ' Chapter 11 cases in connection with the NNUK Pension Plan that was allegedly left underfunded after NNUK filed for bankruptcy. The U.K. Pension Claim alleges that the NNUK Pension Plan is underfunded by as much as GBP2.1 billion or approximately US$3.1 billion. The alleged shortfall in the funding of the NNUK Pension Plan prompted the U.K. Pensions Regulator to issue a warning notice on the Debtors in January 2010, initiating an administrative proceeding whose purpose was to determine whether a financial support direction should be issued on Nortel entities that are connected with NNUK. A Financial Support Direction or FSD is a direction issued to an employer or an entity connected with that employer to secure financial support for a pension plan. Securing a FSD would allow the U.K. Pensions Regulator to make a claim on the far-flung assets of Nortel Entities, The Financial Times points out. Without the FSD, the U.K. Regulator could only assert a claim on NNUK's assets. Counsel to the Debtors, Delaware-based Morris Nichols Arsht & Tunnell LLP, and the Official Committee of Unsecured Creditors asserted that the U.K. Pension Claim should be appropriately determined by the Bankruptcy Court only, emphasizing that the NNUK Pension Trustee and the PPF submitted to the Bankruptcy Court's jurisdiction when they filed their proofs of claim against the Debtors under Chapter 11. The PPF and the NNUK Pension Trustee defended their action by saying that the U.K. administrative proceeding would only determine any claim against the Debtors and thus, would not violate the automatic stay. The U.K. Pension Authorities also argued that NNUK Pension Trustee ought to participate in the U.K. administrative proceeding because any money recovered would be payable to it, among other reasons. The U.K. Pension Authorities also asserted that the Debtors did not make any contribution to the NNUK Pension Plan between 1991 and 2002, preferring to put aside money for other purposes "at the expense of the pension plan and its members." They further noted that U.K.-based Nortel employees had contributed more than US$150 million during the same period, according to a February 28, 2010 report by The Ottawa Citizen. In a related development, Canada-based Nortel Networks Corp. and Ernst & Young Inc., the firm appointed to monitor the assets of NNC and four of its Canadian affiliates, asked the Ontario Superior Court of Justice to direct them to refrain from participating in the U.K. administrative proceeding. Under its 38th Monitor Report, Ernst & Young contended that the U.K. administrative proceeding violates the stay granted by the Canadian Court through its initial order as well as circumvents the Canadian Court-approved claims process. The Canadian Court, which was suppose to hear the Debtors' Enforcement Motion on February 26, has not yet issued a ruling as of press time. The Bankruptcy Court and the Canadian Court are working in tandem on Nortel's Chapter 11 and insolvency cases. According to a report by The Financial Times, the matter on the Nortel Pension Claim is seen to have important implications on the ability of the U.K. Pensions Regulator to recover amounts for scheme members or for the PPF, which covers a portion of underfunded benefits, from related companies outside the U.K. "This case hinges on whether the U.K. regulator's powers are recognized by the Canadian courts," The Financial Times quoted John Ralfe, an independent pensions adviser, as saying. The U.K. Regulator won a similar case three years ago in the U.S. in respect of the U.K. scheme of Sea Containers, but the law in Canada has not yet been tested, the report notes. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for the Company's customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10164). Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of US$11.6 billion and consolidated liabilities of US$11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) PRECISION TRAINING: Court to Hear Winding-Up Petition on May 19 --------------------------------------------------------------- Petitions to wind up two companies that offered NVQ training courses were presented to the High Court on February 18, 2010. This follows an investigation carried out by Company Investigations of the Insolvency Service under Section 447 of the Companies Act 1985 (as amended). Precision Training UK Ltd. and Aspire Training and Assessment Ltd., received training fees from more than 1,000 students and their sponsors, a large number of students being from outside the UK. Precision was based at a main office in Burnham, Berkshire, and operated nationwide. The role of the provisional liquidator is to protect assets in the possession or under the control of the companies pending the determination of the petitions. The provisional liquidator also has the power to investigate the affairs of the companies insofar as it is necessary to protect assets including any third party or trust monies or assets in the possession of or under the control of the companies. The cases are now subject to High Court action and no further information will be made available until the petitions are heard in the High Court on May 19, 2010. The registered office of Precision Training UK Ltd. is at 60 62 High Street, Burnham, Berkshire, SL1 7JT, which is the former trading address of that company. The registered office of Aspire Training and Assessment Ltd. is at 889 Harrow Road, Sudbury, Middlesex, HA0 2RH. The petitions were presented under s124A of the Insolvency Act 1986. The Official Receiver was appointed as provisional liquidator of the companies on February 18, 2010. ROYAL BANK: BCP Files Suit Over Troubled Mortgage Assets Sale ------------------------------------------------------------- Jonathan Stempel at Reuters reports that BCP Voyager Master Fund SPC Ltd. on Wednesday filed a lawsuit in New York state supreme court in Manhattan against Royal Bank of Scotland Group plc, accusing the British bank of breaching an agreement to give it an exclusive right to buy troubled mortgage assets and related insurance policies. Reuters relates the lawsuit by BCP, a fund set up by BroadStreet Group LLC, said that RBS gave it an exclusive right to pay US$202 million for a pool of assets known as Cairn II and take over related insurance policies issued by Ambac Financial Group Inc. According to Reuters, the complaint said RBS used the offer as a basis for direct talks with Ambac, resulting in a December 2009 agreement under which the bond insurer took back the insurance policies that the Cayman Islands-based fund wanted to buy. "RBS circumvented the fund, and used the fund's offer to purchase the CDOs, the underlying assets and the insurance policies to solicit offers for those assets and others from Ambac as part of an overall transaction," the lawsuit said, according to Reuters. "The fund has been injured financially." Reuters notes the complaint said damages could exceed US$150 million "in value over the payment term of the Cairn II assets." The fund is also seeking at least US$50 million in punitive damages, Reuters states. The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed its entire interest in Global Voice Group Ltd. * * * As reported by the Troubled Company Reporter-Europe on Dec. 22, 2009, Fitch Ratings upgraded The Royal Bank of Scotland Group's (RBS Group) and The Royal Bank of Scotland's Individual Ratings to 'D/E' from 'E' and removed the Rating Watch Positive. The upgrade of the Individual Ratings reflects improvements in the group's capital combined with some progress in restructuring the balance sheet. STANFORD INT'L: Liquidators Provide Update on Appeal Hearings ------------------------------------------------------------- The Joint Liquidators of Stanford International Bank Ltd., Nigel Hamilton-Smith and Peter Wastell of Vantis Business Recovery Services, provided an update in respect of the Antigua-based bank. Following the appointment of the Joint Liquidators of SIBL in April 2009, SIB assets of roughly US$100 million have since been located in the UK. To gain control of these assets, the Joint Liquidators sought formal recognition of their appointment and, on July 3, 2009, the High Court of Justice in England & Wales issued a judgment in their favor that the Centre of Main Interest of SIBL is Antigua and Barbuda and that the Joint Liquidators should be recognized as the office holders to whom the assets of SIB in the UK should be entrusted. The Joint Liquidators also issued a further appeal to seek discharge of the Criminal Restraint Order obtained by the UK Serious Fraud Office on behalf of the US Department of Justice. They requested the control of the funds so that they can be distributed to depositors and creditors, rather than retained with a view to making them available to the DOJ. The appeal hearing, which also included a hearing to deal with the US receiver's appeal against the order of the High Court of July 3, 2009, took place between November 16 to 20, 2009, and judgment in respect of the two appeals was made on February 25, 2010: -- The first appeal was made by the U.S. Receiver, Ralph Janvey, against the decision of the UK High Court which found that the Centre of Main Interest of SIB was Antigua, and not the United States of America. Mr. Janvey also appealed the decision that the Joint Liquidators should be recognized as the office holders to whom assets of SIB in the UK should be entrusted. The UK Court of Appeal upheld both decisions made on July 3, 2009 and denied Mr. Janvey his appeal. -- The second appeal dealt with the Joint Liquidators' application to discharge the Criminal Restraint Order which had been obtained by the UK SFO on behalf of the DOJ. The Court of Appeal has decided that the restraint order should remain in place. The Joint Liquidators have concluded that a decision to keep the restraint in place should be appealed to the Supreme Court, as the restraint will only further delay the release of funds to depositors and creditors. This is due to the restraint requiring the funds to remain frozen until the criminal proceedings in the US have been concluded, which may not occur until 2011 at the earliest. The Joint Liquidators further consider that the remittance of funds to the DOJ will only provide further confusion and concern for SIB depositors and creditors particularly given circa 9,000 investors who have registered their claims with the Joint Liquidators. Separately, a decision from the financial regulator in Switzerland is awaited on whether the Joint Liquidators or the US receiver should have control of SIB assets located in Switzerland. The Group said it remains confident that outstanding time costs will be recovered in due course but the various legal actions means that timing is uncertain. Commenting on the judgment, Mr. Hamilton-Smith said, "We are pleased that the UK Court of Appeal has found in our favor that the Centre of Main Interest of SIB is Antigua, and therefore the Joint Liquidators should be recognized as the office holders to whom assets of SIB in the UK should be entrusted. "In respect of assets in Antigua and Barbuda, substantial land assets have been identified and are therefore under the control of the Joint Liquidators. We are working closely with the Antiguan Government to gain the requisite planning and environmental consents to enable these properties to be fully marketed and sold. It is disappointing that the second appeal decision found that the Criminal Restraint Order should remain in place in respect of the cash assets of SIB and that the decision will have to be appealed at the Supreme Court." About Stanford International Bank Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. On February 16, 2009, the United States District Court for the Northern District of Texas, Dallas Division, signed an order appointing Ralph Janvey as receiver for all the assets and records of Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management, LLC, Robert Allen Stanford, James M. Davis and Laura Pendergest-Holt and of all entities they own or control. The February 16 order, as amended March 12, 2009, directs the Receiver to, among other things, take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate. The U.S. Securities and Exchange Commission, on Feb. 17, charged before the U.S. District Court in Dallas, Texas, Mr. Stanford and three of his companies for orchestrating a fraudulent, multi- billion dollar investment scheme centering on an US$8 billion Certificate of Deposit program. A criminal case was pursued against him in June before the U.S. District Court in Houston, Texas. Mr. Stanford pleaded not guilty to 21 charges of multi-billion dollar fraud, money-laundering and obstruction of justice. Assistant Attorney General Lanny Breuer, as cited by Agence France-Presse News, said in a 57-page indictment that Mr. Stanford could face up to 250 years in prison if convicted on all charges. Mr. Stanford surrendered to U.S. authorities after a warrant was issued for his arrest on the criminal charges. The criminal case is U.S. v. Stanford, H-09-342, U.S. District Court, Southern District of Texas (Houston). The civil case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas). SYNTEX LOGISTICS: In Administration; Chantrey Vellacott On Board ---------------------------------------------------------------- Dominic Perry at RoadTransport.com reports that LM Logistics and Syntex Logistics, two related Felixstowe-based transport firms, have been forced into administration by the firm providing their invoice discounting facilities. According to the report, the running of both operations was handed over to accountancy firm Chantrey Vellacott on February 26, which is looking to sell both businesses. Logistics was already operating under a Company Voluntary Arrangement but "cashflow issues" have brought on the administration, the report says citing director Tony Barnes. Syntex is a container haulier while LM Logistics specializes in forwarding and logistics services; between them they are licensed for just over 80 vehicles. UK GOLF: Mayfair Global Buys Hainault Forest Golf Complex --------------------------------------------------------- Mayfair Global Limited acquired Hainault Forest Golf Complex, part of UK Golf Group Limited (the Group), on February 26, 2010. UK Golf Group and its subsidiaries entered into administration on January 14, 2010. Jason Baker and Geoff Rowley, Client Partners at Vantis Business Recovery Services, a division of Vantis, the UK accounting, tax and business advisory group, were appointed as Joint Administrators. UK Golf Group operates in the South East and owns three golf clubs, namely Garon Park Golf Complex, Hainault Forest Golf Complex and Stockley Park Golf Course. The business achieved a turnover of GBP6.5 million in its last financial year and, immediately prior to administration, employed 108 people. Commenting on the sale, Jason Baker said: "We were able to implement a trading-on strategy for the Group which has led to the disposal of Hainault Forest Golf Complex and should, in due course, lead to the disposal of the Groups other golf courses. We remain in dialogue with prospective purchasers of the golf clubs that form the remaining parts of the Group. Interested parties are invited to contact us for further details." VEDANTA RESOURCES: Upsized Offering Won't Affect Moody's Rating --------------------------------------------------------------- Moody's Investors Service says that Vedanta Resources plc's announcement that it has raised US$805 million through a convertible bond offering due 2017 has no impact on the company's ratings or outlook. Vedanta has a Ba1 corporate family rating and Ba2 senior unsecured rating, both with stable outlook. "Through this CB offering, Vedanta will replenish the low cash balance at the holding company level that resulted from the redemption of bond debt in February 2010," said Ivan Palacios, a Moody's AVP/Analyst. "Although the offering improves the group's overall liquidity, particularly at the holding company level, it also leaves the absolute debt level of US$8.1 billion reported in December 2009 essentially unchanged. Therefore, the impact on Vedanta's financial profile is marginal, and the CB offering has no immediate impact on the company's rating or outlook," adds Palacios, also lead analyst for the company. In February 2010, Vedanta redeemed US$1,146 million of bond debt using its existing cash resources, including US$546 million of its US$725 million 4.60% convertible bonds due 2026 and US$600 million of its 6.625% bonds due 2010. The size of the offering may be increased up to US$78 million. The CBs will mature in 2017, although there are investor put options on April 29, 2013 and March 30, 2015. Moody's last rating action with regard to Vedanta was taken on June 17, 2009, when the company's Ba1 corporate family and Ba2 senior unsecured ratings were affirmed, with stable outlooks. Headquartered in London, Vedanta Resources plc is a metals and mining company focusing on integrated zinc, aluminum, copper, and iron ore mining, and commercial power generation. Its operations are located mainly in India. It is listed on the London Stock Exchange and is 59.88%-owned by Volcan Investments Ltd. =============== X X X X X X X X =============== * BOOK REVIEW: Taking America - How We Got from the First Hostile Takeover to Megamergers, Corporate Raiding and Scandal ----------------------------------------------------------------- Author: Jeff Madrick Publisher: BeardBooks Softcover: 310 pages Review by Henry Berry As the subtitle reveals, Taking America connotes the indiscriminate buying up of the nation's assets of large corporations by investment bankers, insider stock traders, arbitrageurs, and the like. This occurred in the mid-1970s, when low stock prices made many large corporations attractive as takeover targets. At the time, they were not ready for what was going to hit them. This was the business era when the term "hostile takeover" came into use. Ivan Boesky, Carl Icahn, and T. Boone Pickens became household names for their inconceivable, bold attempts to buy out corporations. In doing so, they would stand to make hundreds of millions of dollars as the stock of the acquired company rose. But in most cases, such a stock rise would come at the cost of breaking up the newly-acquired company by selling off its most prized and valuable operations and assets or by drastically reducing its work force to save on wage and benefits costs. In many ways, this wave of buyouts and mergers fundamentally changed the way corporations did business; and it changed the way corporations were seen by businesspersons and the public. Corporations came to be seen not mainly as businesses relating to a particular business sector or making a particular product or product line. Such considerations as operations and growth within a particular or closely-related sector, employee security, and long-term strategic planning were swept aside by the single-minded aim of using a corporation's cash and other assets as leverage to takeover vulnerable, and often unsuspecting, corporations for quick, huge profit. Running a corporation became like playing the stock market. Madrick's Taking America was originally published in 1987, just after this wave of takeovers and mergers waned. But it waned not from any restoration of rationality or temperance, but mainly from having succeeded so well. There were scarcely any big companies worth taking over left after the takeover frenzy, as it was described by many. Madrick follows this unprecedented, transformational takeover spree occurring over the decade of the mid 1970s to the mid 1980s mainly by following the activities of the key individuals driving it, and as much as possible getting into their thinking, the scheming, and the strategies. Most of the participants in the takeover movement who are referred to in this book were interviewed by the author. Most of the book's content is based on these interviews. Other recognizable names in the author's long listing of individuals he interviewed are Peter Drucker, Richard Cheney, Robert Rubin, and Felix Rohatyn. Looking back over this period, Madrick sees a takeover movement that lost touch with business's first principles. These principles take into consideration broad economic well-being for employees and the public, not quickly-gained riches for a few. Although Boesky and others were heavily fined or imprisoned for illegal conduct, their view of business and business activity was taken in by the business field. The "dot-com bubble" of the 1990's, when many young entrepreneurs in the field of computer technology tried to create businesses with the hope of soon being taken over by larger companies, is one instance of the legacy of this takeover era. The Enron approach to business is another; as are the business activities, particularly the financial legerdemain, of WestCom, Tyco, and Adelphia, to name a few. In Taking America, Madrick sheds much light on the origins of widespread problems in today's business world. ********* 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-Fernandez, 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 * * *