/raid1/www/Hosts/bankrupt/TCREUR_Public/100319.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 19, 2010, Vol. 11, No. 055
Headlines
C R O A T I A
* CROATIA: Mulls Bankruptcy for Shipyards, Jutarnji Says
C Y P R U S
REMEDIAL CYPRUS: Support Vessels Up for Auction on April 12
G E R M A N Y
ALERIS INT'L: Deutschland Files Schedules of Assets & Debts
DELBRUECK BETHMANN: Global View Investors Face Large Losses
ESCADA AG: Buyer Wants Sale Order Enforced on NY Store Landlord
FLEET STREET: Sidley Restructures EUR1.13-Bil. CMBS Notes
PORSCHE AUTOMOBIL: Posts Operating Profit; Reduces Debt Pile
G R E E C E
MARFIN INVESTMENT: S&P Gives Neg. Outlook; Affirms 'BB/B' Rating
I R E L A N D
AER LINGUS: United Airlines' Pilots Protest Outsourcing Deal
INDEPENDENT NEWS: OFT Clears Lebedev's Acquisition of Newspapers
I T A L Y
GRUPPO DELTA: May Look for Another Buyer for Some Assets
MARIELLA BURANI: Court Says Can Be Granted Bankruptcy Protection
N E T H E R L A N D S
LYONDELLBASELL INDUSTRIES: Moody's Puts 'B1' Corp. Family Rating
LYONDELL CHEMICAL: Receives Nod for Lender Litigation Settlement
LYONDELL CHEMICAL: U.S. Court OKs Equity Commitment Agreement
LYONDELL CHEMICAL: U.S. Court OKs Reorganization Plan Outline
SMILE SECURITISATION: S&P Affirms Ratings on Various Classes
S E R B I A & M O N T E N E G R O
JAT AIRWAYS: To Borrow EUR51.5 Mil. to Restructure Fleet
S P A I N
AYT ANDALUCIA: Moody's Assigns (P)'B2' Rating on Series D Notes
* SPAIN: Banks May Have to Set More Bad Debt Provisions
* SPAIN: Prime Minister Calls for Faster Consolidation of Banks
U N I T E D K I N G D O M
BRITISH AIRWAYS: Union Wants Stand-Ins Cleared Ahead of Strike
BRITISH AIRWAYS: Moody's Cuts Corporate Family Rating to 'B1'
ETHEL AUSTIN: 81 Stores to Cease Trading
INEOS GROUP: Agrees to Refinance EUR1 Bil. of Senior Term Debt
LEHMAN BROTHERS: UK Regulators Ask E&Y to Produce Papers
OCTAGON HEALTHCARE: S&P Gives Positive Outlook; Keeps 'BB+' Rating
PORTSMOUTH FOOTBALL: Tax Office Won't Challenge Administration
STOCKPORT FOOTBALL CLUB: Fails to Reach Conclusion on Melrose Sale
VIRGIN MEDIA: S&P Assigns 'BB' Rating on GBP2 Bil. Senior Loan
X X X X X X X X
* Deutsche Bank Chief Says Banks Failed to Judge Risks in Crisis
* BOOK REVIEW: Corporate Recovery - Managing Companies in Distress
*********
=============
C R O A T I A
=============
* CROATIA: Mulls Bankruptcy for Shipyards, Jutarnji Says
--------------------------------------------------------
Boris Cerni at Bloomberg News reports that Jutarnji List, citing
Economy Minister Djuro Popijac, said Croatia is considering
bankruptcy for its shipyards if the second round of efforts to
sell the unprofitable businesses fail.
According to Bloomberg, the Zagreb-based newspaper said the
Croatian official wrote a letter to the European Union Competition
Commissioner Joaquin Almunia, saying "all options will be on the
table, including the start of bankruptcy proceedings" if the bid
to offer six shipyards to investors fail.
===========
C Y P R U S
===========
REMEDIAL CYPRUS: Support Vessels Up for Auction on April 12
-----------------------------------------------------------
Bill Rochelle at Bloomberg News reports that Remedial (Cyprus)
Public Co. will hold an auction for two elevated support vessels
for the offshore oil and gas industry on April 12 where secured
bondholders would start the bidding. For other parties to
participate in the auction, initial bids must be sent April 9.
The hearing for approval of the sale is to occur on April 22.
Absent a higher offer, secured bondholders owed US$230 million
will purchase the vessels in exchange for US$120 million in debt
plus whatever is outstanding on the US$5 million post-bankruptcy
loan. The bondholders will also pay costs to cure contract
defaults.
About Remedial (Cyprus)
Based in Limassol, Cyprus, Remedial (Cyprus) Public Company owns
and operates self-propelled jack up rigs called Elevating Support
Vessels. The vessels facilitate offshore well intervention
activities and work-over services.
Remedial (Cyprus) Public Company Ltd. -- dba Brufani
Shipmanagement Limited and Remedial Cyprus Limited -- filed for
Chapter 11 bankruptcy protection on February 17, 2010 (Bankr.
S.D.N.Y. Case No. 10-10782). Kenneth A. Rosen, Esq., at
Lowenstein Sandler, P.C., assists the Company in its restructuring
effort. The Company estimated its assets and debts at
US$100,000,001 to US$500,000,000.
=============
G E R M A N Y
=============
ALERIS INT'L: Deutschland Files Schedules of Assets & Debts
-----------------------------------------------------------
A. Real Property None
B. Personal Property
B.1 Cash on hand 0
B.2 Bank Accounts
Deutsche Bank (US$954)
Key Bank N.A. 9,500
B.3 Security Deposits 0
B.4 Household goods 0
B.5 Collectibles 0
B.6 Wearing apparel 0
B.7 Furs and Jewelry 0
B.8 Firearms and other equipment 0
B.9 Interests in Insurance Policies 0
B.10 Annuities 0
B.11 Interests in an education IRA 0
B.12 Interests in IRA, ERISA or other Pension Plans 0
B.13 Business Interests and stocks
Investment in Aleris Aluminum GmbH 630,360,707
Investment in Aleris D. Vierte Verwaltungs 17,895
Investment in Aleris D. Beteilig Duffel GmbH 35,790
Investment in Aleris Holdings Belgium BVBA 311,297,084
B.14 Interests in partnerships
Investments in Aleris D. Vier GmbH & Co. KG 36,973,142
B.15 Government and Corporate Bonds 0
B.16 Accounts Receivable
Deductible VAT 95,142
Other Receivables 995,561
Receivables to be charged 389
Receivable from Corus For 2006 Taxes 1,732,000
A/V-Wallersheim 19,729
B.17 Alimony 0
B.18 Other Liquidated Debts 6,866,180
B.19 Equitable or Future Interests 0
B.20 Interests in estate of a debt benefit plan 0
B.21 Other Contingent & Unliquidated claims 0
B.22 Patents and other intellectual property 0
B.23 Licenses, franchises, and other intangibles
Debt Costs Accumulated Amortization (14,510,494)
Debt Costs 23,489,043
B.24 Customer lists or other compilations 0
B.25 Vehicles 0
B.26 Boats, motors, and accessories 0
B.27 Aircraft and accessories 0
B.28 Office equipment, furnishings and supplies 0
B.29 Machinery 0
B.30 Inventory 0
B.31 Animals 0
B.32 Crops 0
B.33 Farming Equipments and implements 0
B.34 Farm supplies, chemicals, and feed 0
B.35 Other Personal Property
Other prepaid expenses 100,000
LN Receivable C-Pool GVG Obj. Wallersheim 3,519,442
LN Receivable C-Pool Al. Recyc. Holding B.V. 47
LN Receivable C-Pool Aluminum GmbH 57,264,000
Manual IC With Aluminum GmbH 13,608,439
Receivable IC From Aleris Ohio Mgmt 3,430,070
TOTAL SCHEDULED ASSETS US$1,075,302,711
========================================================
C. Property Claimed as Exempt None
D. Secured Claim
Deutsche Bank AG New York Branch 386,319,267
Deutsche Bank AG New York Branch 20,594,872
E. Unsecured Priority Claims 0
F. Unsecured Non-priority Claims
Aleris International Inc. 8,786,815
Aleris Aluminum Duffel BVBA 186,899,236
Aleris Hylite B.V. 1,439,625
Aleris Aluminum Koblenz GmbH 140,386
Aleris Gibraltar Limited 329,694,381
Aleris Recycling Holding BV 60,843
Aleris Holdings Belgium BVBA 3,649
Aleris Deutschland Vier GmbH Co.KG 2,325,686
TOTAL SCHEDULED LIABILITIES US$936,264,760
========================================================
Statement of Financial Affairs
Aleris Deutschland Holding GmbH tells the Court that it earned
income from operation of business within two years before the
Petition Date:
Amount Source
------ ------
(US$53,533,948) 2009 Net Income
(US$58,895,128) 2008 Net Income
(US$45,671,226) 2007 Net Income
The Debtor relates that it made payments to creditors within 90
days immediately preceding the Petition Date, a list of which is
available for free at:
http://bankrupt.com/misc/Aleris_GmbH3b.pdf
The Debtor also made payments to creditors who were insiders:
Insider Date Amount Paid
------- -------- -----------
Aleris Gibraltar 03/17/09 EUR4,405,121
Aleris Gibraltar 05/26/09 EUR4,405,121
Aleris Gibraltar 08/26/09 EUR4,405,121
Aleris Gibraltar 11/23/09 EUR4,405,121
About Aleris International
Aleris International, Inc., produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of December 31,
2008, the Debtors had total assets of US$4,168,700,000; and total
debts of US$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
DELBRUECK BETHMANN: Global View Investors Face Large Losses
-----------------------------------------------------------
Chris Bryant at The Financial Times reports that around 10,000
retail clients of Delbrueck Bethmann Maffei Fonds Invest face
large potential losses on their investment in a EUR208 million
(US$286 million) fund called Global View.
According to the FT, DBM Fonds Invest created the fund in 2006 to
help finance big wheel projects in Beijing, Berlin and Orlando,
Florida but none has yet been completed.
The FT says Bavaria's HypoVereinsbank, which provided project
financing for the Beijing wheel terminated its loan in January and
called in an administrator.
In a letter obtained by the FT, DBM Fonds Invest warned investors
that in the worse case scenario they faced a "complete writedown"
of their EUR80 million investment in the Beijing holding company.
The FT relates hundreds of investors -- each of whom parted with
at least EUR10,000 to buy an equity share in the wheels' profits -
-- are now seeking compensation, claiming that they were not
properly advised of the risks by distributors of the fund, who
include Deutsche Bank.
ESCADA AG: Buyer Wants Sale Order Enforced on NY Store Landlord
---------------------------------------------------------------
netDockets reports that ESCADA US Subco, LLC, which acquired
substantially all of the assets of ESCADA (USA) Inc., asks the
U.S. Bankruptcy Court for the Southern District of New York to
enforce a court order approving the asset sale and stop the
landlord of ESCADA's flagship New York City store from taking
certain actions with respect to the store or an outstanding letter
of credit.
netDockets relates that landlord 717 GFC LLC has asserted that a
guaranty provided by Subco's parent company, ESCADA Luxembourg,
S.a.r.l., is inadequate and, as a result, Subco is in default of
the lease. netDockets says it appears that the landlord is
considering:
-- terminating the lease for the flagship store, located at
717 Fifth Avenue in New York City,
-- drawing on an Irrevocable Standby Letter of Credit dated
January 15, 2010, issued by Deutsche Bank in favor of the
landlord on behalf of the purchaser, or
-- commencing a holdover proceeding in New York Civil Court.
According to netDockets, Subco asserts that the landlord's
position constitutes an impermissible collateral attack on the
Bankruptcy Court's January 7, 2010 order which approved the sale
of the assets and the assignment of the flagship store's lease to
ESCADA US Subco. netDockets says Subco contends that the order
specifically addressed the issue of whether landlords were
adequately assured of the purchaser's future performance and
included a finding that "[a]ll entities, including without
limitation governmental units, that have not objected to the Sale
Motion are deemed now to have consented to the relief sought by
the Sale Motion and the transactions contemplated therein."
netDockets relates that Subco told the Court the landlord failed
to file any pleadings before the Sale Hearing challenging the
adequacy of the replacement guarantee to be provided by ESCADA
Luxembourg or timely appeal the Sale Order. However, Subco said
the landlord sent a notice of default less than two weeks
following the closing of the sale. That notice asserted a default
on the basis that an existing guaranty from ESCADA AG prior to the
sale had not been replaced. Subco provided replacement guaranty
from ESCADA Luxembourg, but the landlord provided a second notice
of default on February 12 asserting that the replacement guaranty
failed to cure the default. The second notice also stated that
the purchaser was required to cure the default by March 1. While
that period was consensually extended to March 15, the landlord
refused a request by Subco to further extend the period last
Friday, netDockets says.
According to netDockets, the landlord believes that the situation
between Subco and the landlord has changed significantly since the
Sale Hearing. netDockets relates that the landlord appears to
have expected that the existing lease would be rejected by the
Debtor and a new lease would be negotiated with Subco. netDockets
reports that according to the landlord, negotiations between the
landlord and Subco "have not been able to agree upon terms" which
resulted in the assumption and assignment of the existing lease.
netDockets also relates that the landlord appears to have new
concerns regarding the financial wherewithal of ESCADA Luxembourg.
netDockets also relates that Subco told the Court the landlord
intends to terminate the Fifth Avenue Lease on five-days' notice
immediately following the close of Subco's alleged "cure" period
on March 15, 2010, and may attempt to draw on the Letter of Credit
due to the purported inadequacy of the Replacement Guarantee.
About Escada AG
The ESCADA Group -- http://www.escada.com/-- is an international
fashion group for women's apparel and accessories, which is active
on the international luxury goods market. It has pursued a course
of steady expansion since its founding in 1976 by Margaretha and
Wolfgang Ley and today has 182 own shops and 225 franchise
shops/corners in more than 60 countries.
As of August 10, 2009, the Escada Group operated 176 owned stores
and so-called shop in shops, of which 26 owned stores are located
in the United States and operated by Escada (USA) Inc. and 2
stores are planned to be opened in the United States before year
end. Escada Group products are also sold in 163 stores worldwide
which are operated by franchisees. Escada Group had total assets
of EUR322.2 million against total liabilities of EUR338.9 million
as of April 30, 2009.
Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on
August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). Judge Stuart
M. Bernstein handles the case. O'Melveny & Myers LLP has been
tapped as bankruptcy counsel. Kurtzman Carson Consultants serves
as claims and notice agent. Escada US listed US$50 million to
US$100 million in assets and US$100 million to US$500 million in
debts in its petition.
Bankruptcy Creditors' Service, Inc., publishes Escada USA
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Escada USA, and the insolvency proceedings of ESCADA AG and its
units. (http://bankrupt.com/newsstand/or 215/945-7000)
FLEET STREET: Sidley Restructures EUR1.13-Bil. CMBS Notes
---------------------------------------------------------
Structured Finance News reports that Sidley Austin's London-based
international finance group restructured approximately EUR3.5
billion (US$4.8 billion) of debt including around EUR1.13 billion
of CMBS notes issued by Fleet Street Finance Two.
The report says the transaction is the first CMBS securitization
in Germany to be fundamentally restructured and is one of the
largest and most complex restructurings in the German market.
According to the report, the principal reason for the
restructuring was the sole underlying tenant, Karstadt, going into
bankruptcy in Germany.
The restructuring included an extension of the maturity of the
various classes of bonds issued in the CMBS by Fleet Street
Finance Two and an increase in the coupon payable to certain
classes of bondholders, the report discloses.
"The restructuring of the CMBS Notes could pave the way for the
renegotiation of billions of euros of complex property
financings," the report quoted Sidley Austin as saying in a
statement. "Many investors in CMBS have struggled to restructure
these complex financings as the property backing them has
plummeted in value."
Fleet Street Finance Two Plc is a single-borrower securitization
backed by a portfolio of department stores located throughout
Germany, all of which are leased to Arcandor AG's subsidiaries
Karstadt and Quelle GmbH. In September 2009 Arcandor AG and its
subsidiaries, Karstadt and Quelle, commenced formal insolvency
proceedings. While the outcome of the proceedings regarding
Karstadt remains unclear, the insolvency administrator decided to
liquidate Quelle.
PORSCHE AUTOMOBIL: Posts Operating Profit; Reduces Debt Pile
------------------------------------------------------------
Daniel Schafer at The Financial Times reports that Porsche
Automobil Holding SE, which is to be taken over by Volkswagen in
2011, said on Wednesday it had made an operating profit of EUR329
million (US$452.5 million) in its sports car business in the first
half of the year which began on July 1.
According to the FT, people close to the situation said the
operating profit in the first half of this year had only missed
last year's first-half level by several million euros.
The FT notes the carmaker also managed to reduce its heavy debt
load.
The FT recalls Porsche sold half of its sports car business to VW
in December to prevent the family-owned carmaker from being
crushed by its large debt load. The FT relates the carmaker said
it had used most of the proceeds from the EUR3.9 billion sale to
pay back debt, reducing its net debt from about EUR10 billion a
year earlier to EUR6.1 billion at the end of January.
The carmaker plans a EUR5 billion capital increase in the first
half of 2011, aimed at further reducing its debt ahead of the
merger with VW, the FT says.
Headquartered in Stuttgart, Germany, Porsche Automobil Holding SE
-- http://www.porsche-se.com/-- is a holding company engaged in
the car manufacture industry. The Company's core products are
sports cars and all-terrain vehicles. The Porsche sports car
range includes the Boxster, the Cayman, the 911 and the Carrera
GT. The Boxster and the Boxster S are contemporary
reinterpretations of the Company's original roadsters, the 356/1
and the 550 Spyder. There are several varieties of the 911,
representing the model's continuous evolution. The Carrera GT has
the race-derived chassis construction and minimum weight. The
Company's all-terrain models, Cayenne, Cayenne S, Cayenne Turbo
and Cayenne Turbo S are balanced, four-wheel drive vehicles for
on-road and off-road use. Porsche Automobil Holding SE also
offers financing services, spare parts and accessories for new and
classic models, as well as an approved used car service.
===========
G R E E C E
===========
MARFIN INVESTMENT: S&P Gives Neg. Outlook; Affirms 'BB/B' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Greece-based Marfin Investment Group Holdings S.A. to
negative from stable. At the same time, the 'BB/B' long- and
short-term counterparty credit ratings on MIG were affirmed.
"The outlook revision reflects S&P's assessment of MIG's relative
business risk in light of the weak Greek economy to which MIG's
investment portfolio is heavily exposed," said Standard & Poor's
credit analyst Nigel Greenwood.
The ratings on MIG reflect S&P's view of its relatively weak
business profile. This reflects MIG's investment portfolio, whose
diversity, liquidity, and asset quality are fairly weak in S&P's
view, and which is predominantly exposed to a weakened Greek
economic environment. This has implications for the earnings
performance of several of MIG's portfolio companies and their
valuations. Offsetting these points, however, are S&P's
expectations that MIG's net cash profile will likely persist and
that its debt maturity profile is good, and its opinion that MIG's
strategic approach is fairly conservative.
The negative outlook reflects S&P's view of the downside risk to
portfolio valuations and operating performance by a number of
portfolio companies as a result of the weak Greek economy. S&P
could lower the ratings if MIG moves to a modest net debt position
as a result of a combination of further investment in its existing
portfolio and negative cash flows. The current ratings on MIG
incorporate S&P's tolerance of net debt to portfolio value of up
to 25%, although S&P expects the company to operate at much lower
levels on an ongoing basis. The outlook could be revised to
stable if MIG's portfolio demonstrates resilience through 2010 and
its conservative financial gearing persists.
=============
I R E L A N D
=============
AER LINGUS: United Airlines' Pilots Protest Outsourcing Deal
------------------------------------------------------------
Dow Jones Newswires' Ann Keeton reports that pilots at UAL Corp.'s
United Airlines protested over the airline's outsourcing deal with
Ireland's Aer Lingus Group PLC, which will be launched next week.
According to Dow Jones, United's pilots were joined on a picket
line Wednesday by counterparts from five other carriers in a show
of growing solidarity within their ranks world-wide.
Dow Jones relates Aer Lingus will operate a new service between
Madrid and Dulles International Airport in partnership with
United. The partners will share the costs and revenue from the
service. The service will be the only one between the U.S. and
the European Union run by an airline not based in either country
of origin, as allowed by the trans-Atlantic open-skies pact.
According to the report, United spokeswoman Megan McCarthy said
the venture with Aer Lingus will create 125 U.S. jobs, including
baggage handlers at Dulles. "We do not consider this to be
outsourcing, since we would not have had this business if we
didn't form the joint venture," she said, according to Dow Jones.
Dow Jones notes Aer Lingus plans to lay off hundreds of staff as
part of its restructuring.
According to Dow Jones, Lufthansa pilots were among the 200
gathered outside the Chicago headquarters of UAL Corp. They were
joined by pilots from alliance partner Continental Airlines Inc.,
as well as Delta Air Lines Inc. and two regional carriers, Mesa
Air Group and Colgan Air, a unit of Pinnacle Airlines Corp., the
report relates.
Dow Jones says the head of United's pilots' association revealed
that it had sent a representative to Germany to provide support
during a recent work stoppage by alliance partner Deutsche
Lufthansa AG.
About UAL Corporation
Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) --
http://www.united.com/-- is the holding company for United
Airlines, Inc. United Airlines is the world's second largest air
carrier. The airline flies to Brazil, Korea and Germany.
The company filed for Chapter 11 protection on Dec. 9, 2002
(Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen,
Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven
R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in
their restructuring efforts. Fruman Jacobson, Esq., at
Sonnenschein Nath & Rosenthal LLP represented the Official
Committee of Unsecured Creditors. Judge Eugene R. Wedoff
confirmed a reorganization plan for United on Jan. 20, 2006. The
Company emerged from bankruptcy on Feb. 1, 2006. (United Airlines
Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
UAL Corp. carries a 'Caa1' probability of default rating from
Moody's, 'B-' long term foreign issuer credit rating from Standard
& Poor's, and 'CCC' long term issuer default rating from Fitch.
About Aer Lingus Group Plc
Aer Lingus Group Plc and its subsidiaries --
http://www.aerlingus.com/-- operates as a low fares Irish airline
primarily providing passenger and cargo transportation services
from Ireland to the United Kingdom and Europe (short haul) and
also to the United states (long haul). The Company is primarily
organized into two segments: passenger, which includes revenues
and costs relating to the carriage of passengers, and cargo, which
relates to the revenues and costs from the transportation of
cargo. During the year ended December 31, 2008, three group
companies (Seres Limited, Duneast Limited and Crodley Limited)
were put into liquidation and dissolved.
INDEPENDENT NEWS: OFT Clears Lebedev's Acquisition of Newspapers
----------------------------------------------------------------
Alexi Mostrous at Times Online reports that the Office of Fair
Trading ruled that Alexander Lebedev's proposed acquisition of
Independent News & Media's loss-making titles The Independent and
The Independent on Sunday would raise no competition issues.
According to the report, discussions between the parties continue
and are believed to be focused around issues including the Dublin-
based group's printing contract with Trinity Mirror, which would
cost more than GBP15 million to break.
The report relates a spokesman for the OFT said that the
acquisition did not constitute a "relevant merger situation"
because the turnover of the Independent and the Independent on
Sunday was less than GBP70 million and the combined market share
of The Independent and the Evening Standard, which is 75% owned by
Mr. Lebedev, was less than 25%.
Citing the Financial Times, the Troubled Company Reporter-Europe
on Nov. 12, 2009, reported INM secured approval of a proposed
debt-for-equity swap refinancing from bondholders. The FT
disclosed the plan involves the exchange of EUR123 million (US$184
million, GBP110 million) of bonds for a 46% stake in the new
company. According to the FT, under the plan approved by
bondholders, existing IN&M shareholders would be diluted to around
52%.
About Independent News & Media
Headquartered in Dublin, Ireland, Independent News & Media PLC
(ISE:IPD) -- http://www.inmplc.com/-- is engaged in printing and
publishing of metropolitan, national, provincial and regional
newspapers in Australia, India, Ireland, New Zealand, South Africa
and the United Kingdom. It also has radio operations in Australia
and New Zealand, and outdoor advertising operations in Australia,
New Zealand, South-East Asia and across Africa. The Company also
has online operations across each of its principal markets. The
Company has three business segments: printing, publishing, online
and distribution of newspapers and magazines and commercial
printing; radio, and outdoor advertising. INM publishes over 200
newspaper and magazine titles, delivering a combined weekly
circulation of over 32 million copies with a weekly audience of
over 100 million consumers. In March 2008, it acquired The Sligo
Champion. During the year ended December 31, 2007, the Company
acquired the remaining 50% interest in Toowoomba Newspapers Pty
Ltd.
=========
I T A L Y
=========
GRUPPO DELTA: May Look for Another Buyer for Some Assets
--------------------------------------------------------
Gilles Castonguay at Dow Jones Newswires reports that Cassa di
Risparmio della Repubblica di San Marino SpA, Gruppo Delta's
majority owner, said Tuesday it is ready to look for another buyer
for some of its assets if Intesa Sanpaolo SpA loses interest.
According to Dow Jones, Delta, which has EUR3.5 billion of debt,
is under administration and the sale of part of its assets is part
of an effort to rescue it.
Dow Jones says the assets up for sale include bank Sedici Banca,
insurer Bentos Assicurazioni and two distribution networks for
consumer credit products called Carirete and RetePlus.
Dow Jones recalls business tabloid MF said earlier Tuesday that
Intesa, Italy's biggest retail bank, had called off talks to buy
the assets.
Without citing its sources, MF said Intesa was concerned at
possible legal risks it could incur if Delta were to go bankrupt,
Dow Jones notes.
Gruppo Delta is a consumer credit company. Carisp owns 80% of the
company.
MARIELLA BURANI: Court Says Can Be Granted Bankruptcy Protection
----------------------------------------------------------------
Chiara Vasarri at Dow Jones Newswires reports that an Italian
court ruled Wednesday that Mariella Burani Fashion Group is
insolvent and can be granted bankruptcy protection.
According to Dow Jones, a person with knowledge of the situation
said the court, based in the northern city of Reggio Emilia, has
also appointed a business accountant, Francesco Ruscigno, as the
commissioner who will have to evaluate the economic situation of
the company.
Dow Jones Mr. Ruscigno will have 30 days to present a detailed
report on the company to the Industry Ministry. After that, a
second hearing at the Reggio Emilia court will decide whether the
company, which is laden with EUR600 million in debt, can enter
bankruptcy protection or not, Dow Jones notes.
Mariella Burani Fashion Group SpA -- http://www.mariellaburani.it/
-- is an Italy-based company, operating in the fashion market. It
designs, produces and distributes a range of apparel, knitwear,
leather accessories, jewelry and footwear. The Company divides
its operation into four divisions: Clothing Division, Leather
Division, Digital Fashion and Fashion Jewellery. The Company's
brand portfolio comprises the Company's own brands, such as
Mariella Burani, Rene Lezard, Amuleti J, Blossom Burani, Ter et
Bantine, Braccialini, FrancescoBiasia, Baldinini, Coccinelle,
Sebastian, Facco Gioielli, Valente, Rosato and Calgaro, among
others, and the licensed brands: Vivienne Westwood (Anglomania),
Emmanuel Ungaro (Fuchsia), Alviero Martini, Thierry Mugler
(Mugler), Patrizia Pepe (bimbo), Missoni, Warner Bros, Miss Sixty,
Sweet Years, Gherardini e John Galliano, among others. Among the
subsidiaries there are: Mariella Burani Retail Srl, Antichi
Pelletteri SpA, Coccinelle Store France SA and Mandarina Duck
Gmbh.
=====================
N E T H E R L A N D S
=====================
LYONDELLBASELL INDUSTRIES: Moody's Puts 'B1' Corp. Family Rating
----------------------------------------------------------------
Moody's Investors Service has assigned a B1 Corporate Family
Rating and a Speculative Grade Liquidity rating of SGL-2 to
LyondellBasell Industries N.V., as well as prospective ratings for
debt to be issued by Lyondell Chemical Company -- Ba3 -- on a
US$1 billion first lien term loan and a US$2.25 billion first lien
seven year notes plus a B3 rating on US$3.25 billion of third lien
eight year roll-up notes. Proceeds from this debt plus a
US$2.8 billion rights issue will be used to refinance the existing
Debtor-in-Possession debt, fund liabilities required by its
bankruptcy court approved Plan of Reorganization and provide a
roughly US$2 billion initial cash balance upon emergence from
bankruptcy. These ratings assume that the final documentation for
the rated debt will be consistent with term sheets and drafts
provided to Moody's. The rating outlook is stable.
The bankruptcy court has set April 15, 2010, as the deadline for
voting on the POR and participating in the rights offering. The
confirmation hearing for the POR is currently scheduled for
April 23, 2010. LBI will emerge from bankruptcy subsequent to the
confirmation hearing.
"The approved plan of reorganization will remove roughly 90% of
LyondellBasell's prior debt and provide access to over US$3
billion of liquidity, ensuring that it will have the resources
necessary to further rationalize capacity and make the necessary
investments to improve its cost structure over the next several
years," stated John Rogers Senior Vice President at Moody's.
LyondellBasell's B1 CFR reflects its limited leverage, large size,
significant vertical integration, operational diversity, leading
market positions in key commodities, stable licensing and catalyst
business, and a management team with a good track record in the
petrochemical industry. It also reflects the strong credit
metrics for the B1 rating with Total Debt/EBITDA of less than 5.0x
and Retained Cash Flow/Total Debt in the low-to-mid teens (these
metrics reflect Moody's Global Standard Adjustments to Financial
Statements, which add roughly US$3 billion in additional debt and
nearly US$360 million to EBITDA).
LBI and its affiliates are one of the top five largest global
producers of ethylene, propylene, polyolefins, propylene oxide and
related derivatives. It also has a leading global position in
polyolefin technology licensing. LBI is the global leader in
polypropylene (PP) production and technology licensing; it also
has a leading share of the PP catalyst market. LBI also has two
refineries with a total capacity of 373,000 barrels/day of
capacity, which provide feedstocks to certain of its ethylene
crackers.
LBI's ratings are tempered by Moody's view of the need for further
rationalization of capacity, especially in Europe, exposure to
volatile petrochemical feedstocks and the negative impact of new
international capacity coming on-line over the next two years.
Management has already announced investments to improve the cost
position of its US ethylene crackers to enable more efficient
utilization of lighter feedstocks, as well as actions to improve
its cost position in Europe.
The stable outlook reflects Moody's expectation that management
will continue to focus on improving its global cost position and
increasing free cash flow. Additionally, it assumes that
management's financial policies will be conservative and that the
board will be truly independent subsequent to its emergence from
bankruptcy. Currently representatives from Apollo Management,
Access Industries and Ares Capital management constitute a
majority of the board of directors (five of nine) and will likely
remain so until the company's debut on the NYSE, which requires
independent directors to constitute a majority of the board
LBI could significantly exceed Moody's projections for 2010, given
the strength of olefin and polyolefin margins in the first
quarter, as well as the modest improvement in the Maya -- WTI
spread, which should benefit its Houston refinery. If LBI were to
maintain Total Debt/EBITDA of less than 4.5x and RCF/Total Debt of
close to 15%, Moody's would consider a positive outlook or the
appropriateness of a higher rating. However, if Total Debt/EBITDA
were to rise above 6.0x, Moody's could change the outlook to
negative.
The SGL-2 rating reflects the company's strong liquidity with a
cash balance that is expected to be above US$1.8 billion and an
undrawn US$1.75 billion asset based revolving credit facility.
The ABL expires in 2013 and has no covenants unless availability
falls below certain thresholds (assumed to be roughly US$300
million initially). The SGL-2 also reflects the fact that final
drafts of the agreements along with the financial covenants were
not yet available. Upon receipt of final documentation, Moody's
will determine if a higher designation is appropriate. A European
subsidiary of LBI will also have access to a Euro450 million
accounts receivable program, however this replaces an existing
facility and is expected to be nearly fully drawn.
The Ba3 rating on the first lien term loan and notes reflects
their security in the U.S. assets of LCC, as well as guarantees
from all domestic operating subsidiaries and LBI. The B3 rating
on the third lien notes, reflects its subordination to a
substantial amount of first lien debt and potential debt at
international subsidiaries.
Ratings assigned:
LyondellBasell Industries N.V. (Guarantor of the rated debt)
* Corporate Family Rating at B1
* Probability of Default Rating at B1
* Speculative Grade Liquidity Rating of SGL-2
Lyondell Chemical Company
* US$1.0 billion Guaranteed Senior Secured 1st lien term loan due
2016 at Ba3 (LGD 3/37%)
* US$2.25 billion Guaranteed Senior Secured 1st lien notes due
2017 at Ba3 (LGD 3/37%)
* US$3.25 billion Guaranteed Senior Secured 3rd lien notes due
2018 at B3 (LGD 5/88%)
This is Moody's initial rating action for LyondellBassell
Industries N.V. Moody's had rated its predecessor company,
LyondellBasell AF SCA Holding Ltd until July 8, 2009; its ratings
were withdrawn due to its default on the vast majority of its
debt.
LyondellBasell Industries N.V. is one of the world's largest
independent petrochemicals companies. LBI is a leading
manufacturer of olefins, polyolefins, propylene oxide and related
derivatives; it also has a large global licensing and catalyst
business (primarily related to polyolefins production
technologies). LBI also has two refineries with a total capacity
of over 370 thousand barrels per day. LBI had revenues of roughly
US$31 billion for the last four quarters ending December 31, 2009.
LYONDELL CHEMICAL: Receives Nod for Lender Litigation Settlement
----------------------------------------------------------------
Lyondell Chemical Co. and its units and the Official Committee of
Unsecured Creditors received approval from the U.S. Bankruptcy
Court of a revised Lender Litigation Settlement they entered into
with:
(i) Financing Party Defendants consisting of Citibank, N.A.;
Citibank International plc; and Citigroup Global
Markets Inc.; Goldman Sachs Credit Partners, L.P. and
Goldman Sachs International;, Merrill, Lynch, Pierce,
Fenner & Smith and Merrill Lynch Capital Corporation; ABN
AMRO Inc. and The Royal Bank of Scotland, N.V., f/k/a ABN
Amro Bank N.V.; UBS Securities LLC and UBS Loan Finance
LLC; LeverageSource III S.a.r.l.; Ares Management LLC;
Bank of Scotland, DZ Bank AG; Kolberg Kravis Roberts & Co.
(Fixed Income) LLC and UBS AG;
(ii) Wilmington Trust Company as trustee for 8.375% senior
notes due 2015 in the principal amounts of US$615 million
and EUR500 million issued pursuant to a 2015 Notes
Indenture; and
(iii) an ad hoc group of 2015 Noteholders composed of Arrowgrass
Master Fund Ltd.; Arrowgrass Distressed Opportunities Fund
Limited; Basso Credit Opportunities Holding Fund Ltd.;
Basso Fund Ltd.; Basso Multi-Strategy Holding Fund Ltd.;
Columbus Hill Partners, L.P.; Columbus Hill Overseas,
Ltd.; CQS Directional Opportunities Master Fund Limited;
Kivu Investment Fund Limited; Mariner LDC; Caspian Capital
Partners, LP; Caspian Select Credit Master Fund, Ltd.; CVI
GVF (Lux) Master S.a.r.l.; Fortelus Special Situations
Master Fund Ltd., and Panton Master Fund, L.P.
The Debtors and Creditors Committee note that their request
supersedes the original Lender Litigation Settlement Motion dated
December 24, 2009; the Creditors Committee's objection; and the
Debtors' reply with respect to the Lender Litigation Settlement.
Counsel to the Debtors, George A. Davis, Esq., at Cadwalader,
Wickersham & Taft LLP, in New York, relates that the Revised
Settlement resolves all claims brought by the Creditors Committee
in an action against the Financing Party Defendants as a result
of a December 20, 2007 merger of Lyondell Chemical Company and
Basell AF S.C.A. The Revised Settlement will provide eligible
unsecured creditors with a significant guaranteed recovery and
the opportunity to capture substantial additional recovery
through future litigation against the defendants in the Committee
Action who are not party to the Revised Settlement and other
matters, he notes.
Mr. Davis discloses that the Debtors, the Creditors Committee,
the Financing Party Defendants, Wilmington Trust Company, and the
2015 Notes Ad Hoc Group engaged in extensive further negotiations
and have made substantial progress toward resolution of the few
issues that remained open at the time the Revised Settlement was
announced on February 16, 2010. All major terms of the
settlement appear to have been resolved and the parties are very
close to execution of definitive documentation for the settlement
agreement, he says. Until that definitive documentation is
finalized, however, the parties to the Revised Settlement reserve
all rights as to both the agreement and related proposed order,
he relates.
The salient terms of the Revised Settlement are:
(a) dismissal of all claims asserted against the Financing
Party Defendants and Secured Lenders in the Committee
Action and in the complaint in intervention of Bank of New
York Mellon, and releases of these claims;
(b) dismissal of all claims asserted by Wilmington Trust in
the adversary proceeding against LyondellBasell Industries
AF S.C.A.;
(c) US$450 million in settlement consideration, to be
distributed on the effective date of any plan of
reorganization to holders of General Unsecured Claims
against Debtors that are subject to the Financing Party
Defendants' secured or unsecured claims, including to
holders of 2015 Notes Claims. The US$450 million consists
of (i) US$300 million in cash, and (ii) US$150 million in
Class A Shares of New Topco, funded by a US$75 million
reduction in the equity to be received by each of the
Senior Secured Claim class and the Bridge Loan Claim class
under the Debtors' Third Amended Joint Plan of
Reorganization;
(d) contribution to the Debtors' estates of the Financing
Party Defendants' right to enforce all subordination and
turnover provisions against the 2015 Noteholders pursuant
to a December 20, 2007 Intercreditor Agreement;
(e) discontinuance by the Debtors of claims asserted pursuant
to Section 544 of the Bankruptcy Code in the Committee
Action against former shareholders of pre-Merger Lyondell
except for those claims against Access Industries and the
director defendants in the Committee Action and
abandonment by the Debtors of their rights to further
pursue these claims.
(f) a provision in the Amended Plan, for contribution by
holders of General Unsecured Claims, the deficiency claims
of the Secured Lenders and 2015 Notes Claims to a
"Creditor Trust" of the state law claims of these holders
for the avoidance of prepetition transfers by the Debtors;
that Trust will be established for purposes of prosecution
of the state law avoidance claims and distribution of
proceeds of the claims;
(g) transfer of (i) all remaining claims asserted in the
Committee Action, and (ii) certain preference actions, to
a "Litigation Trust" to be established under the Amended
Plan for the purposes of prosecution and distribution of
proceeds;
(h) an order barring claims for contribution against settling
defendants in the Committee Action and related provisions
for the reduction of judgments against defendants who are
not party to the Revised Settlement;
(i) the agreement by holders of deficiency claims on account
of Senior Secured Claims and Bridge Loan Claims that
recoveries on account of these claims from settlement
consideration are possible only from recoveries obtained
by the Creditor Trust and the Litigation Trust, in the
aggregate, in excess of the amounts needed to satisfy
General Unsecured Claims and 2015 Notes Claims in full;
(j) the grant of US$20 million by the Debtors to fund the
Creditor Trust and the Litigation Trust;
(k) payment, as allowed administrative expenses, of certain
fees and expenses of Wilmington Trust and the 2015 Notes
Ad Hoc Group;
(l) continued payment and reimbursement of the expenses of the
prepetition agents;
(m) indemnification of Deutsche Bank Trust Company as
administrative agent under a Senior Secured Credit
Agreement with the Debtors and Merrill Lynch Capital
Corporation for actions taken to effectuate the
transactions contemplated by the Revised Settlement;
(n) elimination of the US$250,000 limitation imposed by the DIP
Financing Order upon the payment of the fees and expenses
of the Creditors Committee in connection with
investigating and prosecuting the claims asserted in the
Committee Action, which will be payable subject to the
compensation procedures established in the Debtors'
Chapter 11 cases;
(o) support, by the Creditors Committee, Wilmington Trust, and
the 2015 Notes Ad Hoc Group, of the Amended Plan or any
other plan proposed by the Debtors that is consistent with
the Revised Settlement; and
(p) withdrawal of any and all pending objections to the
Amended Plan, its related disclosure statement, and the
Debtors' motion to approve the Equity Commitment Agreement
by the Creditors Committee, Wilmington Trust and the 2015
Notes Ad Hoc Group subject to refiling only in the event
the order approving the Revised Settlement is vacated,
reversed, modified or amended prior to the date of payment
of the US$450 million under the Revised Settlement.
Parties Objected
In separate filings, ConocoPhillips Company and an ad hoc
committee of claimants under a December 20, 2007 Bridge Loan
Agreement with the Debtors oppose the Debtors' revised lender
litigation settlement with the Official Committee of Unsecured
Creditors, the Financing Party Defendants, Wilmington Trust
Company and a 2015 Noteholders ad hoc group.
ConocoPhillips contends that certain provisions of the Revised
Settlement (i) would dramatically alter creditor rights and (ii)
were not included in the original Lender Litigation Settlement.
Specifically, ConocoPhillips points out that the Revised
Settlement would:
(a) render a substantive consolidation of unsecured creditors
and a disallowance of all guaranty and indemnity claims
held by unsecured creditors; and
(b) dictate other provisions in the Debtors' Third Amended
Joint Plan of Reorganization that would negatively
impact creditors, including:
-- litigation and distribution procedures that would
impact creditor distributions and the conduct of
litigation;
-- dilution of unsecured creditors through allowance of
more than US$1.3 billion in noteholder claims; and
-- approval of US$16 million in professional fees without an
opportunity for creditors and parties-in-interest to
review these fees.
FCCD Ltd.; FCCO Ltd.; and Cerberus Series Four Holdings, LLC,
make up the Ad Hoc Committee of Bridge Loan Claimants. The
Bridge Loan Claimants' counsel, Shalom L. Kohn, Esq., at Sidley
Austin LLP, in New York, counsel to the Bridge Loan Claimants,
explains that the Revised Settlement was negotiated between the
Financing Party Defendants and five institutions which arranged
the second-lien Bridge Loans. Parties -- including the Bridge
Loan Claimants -- that obtained their Bridge Loan positions by
assignment from the Arranger Bridge Lenders are not parties to the
Revised Settlement. The Bridge Loan Claimants asked the Court
that any order approving the Revised Settlement should clarify
that it will not operate to prejudice the rights of the Bridge
Loan Claimants or any other party which was not a party to the
Revised Settlement.
In response, counsel to the Debtors, Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP, New York, asserts that the
Bridge Loan Claimants assert incorrectly that the subordination
rights belong individually to each of the Bridge Lenders. In this
context, parties holding over 85% of the Bridge Debt have signed
the Revised Settlement under which they obligate themselves to
instruct Wilmington Trust as indenture under the 2015 Notes to
assign the subordination rights to the Debtors, he says.
As to ConocoPhillips' objections, Mr. Ellenberg clarifies that
the Revised Settlement does not substantively consolidate
debtors, instead it creates a pot of assets to be shared by all
general unsecured creditors of the Debtors that were subject to
claims or liens attacked in the action commenced by the Creditors
Committee against the Debtors' prepetition lenders and directors.
Moreover, there is nothing in the Bankruptcy Code that precludes
a pro rata distribution of the settlement fund to all affected
general unsecured creditors, or to make that distribution on the
basis of single claims, without regard to guaranty claims, he
points out. ConocoPhillips asserts a primary claim against
Basell USA and a guaranty claim against LyondellBasell Industries
AF S.C.A. but for the Revised Settlement, ConocoPhillips might
have received US$0 recovery on its claims, he notes.
* * *
Judge Gerber approved the Revised Settlement on March 11, 2010, in
its entirety and all of its terms are incorporate by reference in
the order. Objections to the Revised Settlement not previously
withdrawn, waived or settled, and all reservations of rights were
overruled.
A full-text copy of the fully-executed Revised Settlement is
available for free at:
http://bankrupt.com/misc/Lyondell_FullyExecRevSettlmnt.pdf
"The settlement is overwhelmingly in the best interests of the
estate," Judge Gerber was quoted as saying at March 11, 2010
hearing on the Revised Settlement, Reuters disclosed.
Any objections to the original lender litigation settlement
Will be suspended as of March 11, 2010, and on the date that
US$450 million in settlement consideration, to be distributed
on the effective date of any plan of reorganization to holders
of General Unsecured Claims against Debtors that are subject
to the Financing Party Defendants' secured or unsecured claims,
including to holders of 2015 Notes Claims will be deemed
withdrawn, Judge Gerber ruled.
In overruling ConocoPhillips and the Bridge Loan Claimants'
objection to the Revised Settlement, Judge Gerber commented that
these parties are trying to "cherry-pick" what they did not like,
while reserving their ability to avail themselves of parts of any
bankruptcy resolution they preferred, Reuters said. Judge Gerber
pointed out that ConocoPhillips might raise its objection to
confirmation of the 3rd Amended Plan, not the settlement, Reuters
adds.
A full-text copy of the Revised Settlement Order dated March 11,
2010, is available for free at:
http://bankrupt.com/misc/Lyondell_Mar11RevSettlmntOrd.pdf
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. On January 6, 2009,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code to facilitate a restructuring of the company's
debts. The case is In re Lyondell Chemical Company, et al.,
Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell
entities, including Equistar Chemicals, LP, Lyondell Chemical
Company, Millennium Chemicals Inc., and Wyatt Industries, Inc.
filed for Chapter 11. In May 2009, one of the cases was dismissed
-- Case No. 09-10068 -- because it is duplicative of Case No. 09-
10040 relating to Debtor Glidden Latin America Holdings.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total US$19.34 billion as
of the bankruptcy filing date.
Lyondell has obtained approximately US$8 billion in DIP financing
to fund continuing operations. The DIP financing includes two
credit agreements: a US$6.5 billion term loan, which comprises a
US$3.25 billion in new loans and a US$3.25 billion roll-up of
existing loans; and a US$1.57 billion asset-backed lending
facility.
LyondellBasell Industries AF S.C.A. and another affiliate were
voluntarily added to Lyondell Chemical's reorganization filing
under Chapter 11 on April 24, 2009, in order to seek protection
against claims by certain financial and U.S. trade creditors. On
May 8, 2009, LyondellBasell Industries added 13 non-operating
entities to Lyondell Chemical Company's reorganization filing
under Chapter 11 of the U.S. Bankruptcy Code. All of the entities
are U.S. companies and were added to the original Chapter 11
filing for administrative purposes.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: U.S. Court OKs Equity Commitment Agreement
-------------------------------------------------------------
U.S. Bankruptcy Judge Robert Gerber approved Lyondell Chemical
Co.'s equity commitment agreement with LeverageSource (Delaware),
LLC, an affiliate of Apollo Management VII, L.P., AI LBI
Investment, LLC, an affiliate of Access Industries, Inc., and Ares
Corporate Opportunities Fund III, L.P., as rights offering
sponsors on March 11, 2010.
The salient terms of the ECA are:
(a) Certain secured creditors, which debt will be converted into
a substantial majority of the Class A ordinary shares of
LyondellBasell Industries, N.V., or "New TopCo" that will be
distributed under the Second Amended Joint Plan of
Reorganization, will be offered the opportunity to purchase
up to their pro rata share of 240,339,302 Class B Shares of
New TopCo, subject to reduction, and 23,562,677 additional
Class B Shares will be purchased by the Rights Offering
Sponsors, both at a purchase price of US$10.61 per share. Any
shares not purchased by the Eligible Creditors in the Rights
Offering will be sold to the Rights Offering Sponsors or
their affiliates. The total new capital to be raised
through the Rights Offering totals US$2.8 billion.
(b) In consideration of the Backstop Commitment and to
compensate the Rights Offering Sponsors for undertaking the
risk and committing to purchase all US$2.8 billion of equity
should the need arise, the Debtors will pay the Rights
Offering Sponsors a fee of US$69,750,000, to be distributed to
the Rights Offering Sponsors on the effective date of the
Plan. The Backstop Fee is equal to approximately 2.5% of
the total Backstop Commitment of the Rights Offering
Sponsors.
(c) The Debtors will reimburse or pay, as the case may be, up to
US$17 million of the fees and expenses reasonably incurred by
the Rights Offering Sponsors with respect to the Rights
Offering, including the reasonable fees and expenses of
counsel and other professionals for the Rights Offering
Sponsors and the reasonable fees and expenses of any other
professionals retained by Rights Offering Sponsors, with the
approval of the Debtors.
(d) Prior to the effective date of the Plan, the Eligible
Creditors' rights to subscribe for Class B Shares will be
automatically transferred in connection with a transfer of a
claim with respect to which rights are granted as of the
record date for the Rights Offering. The rights will not be
transferable separately from a Rights Claim. The Debtors
will seek to obtain a Bankruptcy Court order that prohibits
direct or indirect transfers of rights, including:
(i) derivatives, options, swaps, pledges, forward sales
or other transactions in which any Person receives
the right to own or acquire a right, a Rights Claim
or a Class B Share; any current or future interest in
any right, Rights Claim or a Class B Share or the
right to receive any economic benefit with respect to
any right, Rights Claim or a Class B Share other than
through a sale of a Rights Claim together with the
rights related; and
(ii) any direct or indirect transfer of a Rights Claim,
whether through a direct transfer or through a
derivative, option, swap, pledge, forward sale or
other transaction, in which the transferor would
retain, directly or indirectly, any related rights,
Class A Shares or Class B Shares or have the right,
directly or indirectly, to acquire or own any current
or future interest in any related rights, Class A
Shares or Class B Shares or economic benefit in
respect of any related rights, Class A Shares or
Class B Shares.
(e) The Debtors will indemnify the Rights Offering Sponsors,
their affiliates and directors, from and against any and all
losses, claims, damages, liabilities and reasonable
expenses, joint or several, to which any Indemnified Party
may become subject arising out of any claim, challenge,
litigation, investigation or proceeding with respect to the
Rights Offering, the ECA, the Backstop Commitment, or the
transactions specifically contemplated until the earlier of
the termination date of the ECA or the effective date of the
Plan.
(f) The ECA will terminate automatically if a court finds in a
final, nonappealable order that the ECA is unenforceable.
The Rights Offering Sponsors and LyondellBasell Industries
AF S.C.A. both have the right to terminate the ECA under
certain conditions, including, if the transactions
contemplated by the ECA have not occurred by June 3, 2010;
if the Debtors' Chapter 11 cases are dismissed or converted
to cases under Chapter 7 of the Bankruptcy Code; or if the
Debtors, LBI or New TopCo makes a public announcement,
enters into an agreement, or files any pleading or document
with the Court in support of a competing transaction for an
equity investment. In addition, only the Rights Offering
Sponsors may terminate the ECA if certain other conditions
are not met, including, if the Court has not entered an
order approving the ECA Motion by February 8, 2010; if the
Court has not entered an order approving the Disclosure
Statement by April 6, 2010; or if the Court has not entered
an order confirming the Plan by May 20, 2010.
Under certain circumstances, in the event the ECA is
terminated, the Rights Offering Sponsors may be entitled to
an additional payment of US$50,000,000, in the aggregate, if
LBI subsequently consummates a competing transaction. The
Termination Fee, which is equal to approximately 1.79% of
the total Backstop Commitment of the Rights Offering
Sponsors, is not payable if the competing transaction, or
other alternative transaction, is with Reliance Industries
Limited.
(g) Closing of the transactions contemplated by the ECA are
subject to customary closing conditions, including receipt
of appropriate regulatory approvals. The Debtors do not
anticipate any difficulties obtaining these approvals.
(h) The effectiveness of the ECA is subject to Bankruptcy Court
approval.
All objections to the ECA Motion, if any, that have not been
withdrawn, waived or settled, and all reservation of rights are
overruled, Judge Gerber held.
The Debtors are authorized and directed to pay to the Rights
Offering Sponsors, in full, in cash and in accordance with the
ECA, a backstop fee and the reasonable costs and expenses
incurred by the Rights Offering Sponsors, and if and
when it becomes payable, a termination fee, without further
filing with or order of the Court.
The fees and expenses to be paid by the Debtors pursuant to the
ECA are approved as reasonable and accorded the status of
administrative expense claims pursuant to Section 503(b)(1) of
the Bankruptcy Code.
Judge Gerber ruled that direct and indirect transfers of rights,
in which the transferor would retain, directly or indirectly, any
related rights, Class A Shares or Class B Shares or otherwise
have the right, directly or indirectly, to acquire or own any
current or future interest in any related rights, Class A Shares
or Class B Shares or economic benefit in respect of any related
rights, Class A Shares or Class B Shares are prohibited.
However, if a transferor who held a Rights Claim as of the record
date for the Rights Offering has transferred that Rights Claim
together with the related rights, that transferor will not be in
violation of the order so long as, immediately after the
effective date of the Debtors' Third Amended Joint Plan of
Reorganization, it transfers to the transferee of the Rights
Claim (i) any and all Class B Shares issued with respect to any
validly exercised rights and (ii) any and all Class A Shares
issued with respect of that Rights Claim.
The Debtors are authorized to provide and perform the indemnities
set forth in the ECA. Moreover, the Rights Offering Sponsors are
granted all rights and remedies provided to them under the ECA.
A full-text copy of the ECA Order dated March 11, 2010, is
available for free at:
http://bankrupt.com/misc/Lyondell_Mar11ECAOrd.pdf
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. On January 6, 2009,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code to facilitate a restructuring of the company's
debts. The case is In re Lyondell Chemical Company, et al.,
Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell
entities, including Equistar Chemicals, LP, Lyondell Chemical
Company, Millennium Chemicals Inc., and Wyatt Industries, Inc.
filed for Chapter 11. In May 2009, one of the cases was dismissed
-- Case No. 09-10068 -- because it is duplicative of Case No. 09-
10040 relating to Debtor Glidden Latin America Holdings.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total US$19.34 billion as
of the bankruptcy filing date.
Lyondell has obtained approximately US$8 billion in DIP financing
to fund continuing operations. The DIP financing includes two
credit agreements: a US$6.5 billion term loan, which comprises a
US$3.25 billion in new loans and a US$3.25 billion roll-up of
existing loans; and a US$1.57 billion asset-backed lending
facility.
LyondellBasell Industries AF S.C.A. and another affiliate were
voluntarily added to Lyondell Chemical's reorganization filing
under Chapter 11 on April 24, 2009, in order to seek protection
against claims by certain financial and U.S. trade creditors. On
May 8, 2009, LyondellBasell Industries added 13 non-operating
entities to Lyondell Chemical Company's reorganization filing
under Chapter 11 of the U.S. Bankruptcy Code. All of the entities
are U.S. companies and were added to the original Chapter 11
filing for administrative purposes.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: U.S. Court OKs Reorganization Plan Outline
-------------------------------------------------------------
Judge Robert E. Gerber of the United States Bankruptcy Court for
the Southern District of New York approved on March 11, 2010, the
Disclosure Statement accompanying Lyondell Chemical Company and
its debtor-affiliates' Third Amended Joint Plan of Reorganization
dated March 10, 2010.
The ruling came at the end of a seven-hour hearing, according to
Tiffany Kary of Bloomberg News. The Disclosure Statement hearing
was previously scheduled for March 8, but was moved to March 11.
Judge Gerber ruled that the 3rd Amended Disclosure Statement
contains "adequate information" within the meaning of Section 1125
of the Bankruptcy Code that would enable creditors to vote on
whether to accept or reject the Plan.
"[T]he existing disclosure is satisfactory," Judge Gerber held,
overruling objections from a group of lenders that included
affiliates of hedge fund Fortress Investment Group LLC and
Cerberus Partners LP, both based in New York, Bloomberg reports.
The group, which called itself the Ad Hoc Committee of Bridge Loan
Claimants, insisted that the Debtors provide an explanation of the
precipitous drop in enterprise value of the reorganized company
from the valuation prepared by Duff& Phelps in January 2009 to the
current valuation in the Third Amended Plan of Reorganization.
"This alleged drop set out in the Disclosure Statement for the
Second Amended Joint Plan of Reorganization was swift and
dramatic, however, there is no discussion of the Duff & Phelps
valuation in the 3rd Amended Disclosure Statement," Shalom L.
Kohn, Esq., at Sidley Austin LLP, in New York, counsel to the
group, argued. Mr. Kohn added that projections relied upon in the
Third Disclosure Statement have proven to be dramatically
incorrect.
Judge Gerber, however, pointed out that the group was improperly
using the Disclosure Statement hearing to pursue "trading agendas"
and demanded that the group disclose its equity, debt, or short
positions in the company.
Judge Gerber said the group could pursue their challenge to
Lyondell's valuation at a later hearing over final confirmation of
the plan, to be held April 23, 2010. Objections to the
confirmation must be in writing; state the name of the objecting
party; specify the basis of any objection and served so as to be
actually received no later than 4:00 p.m. on April 14, 2010.
All other objections to the 3rd Amended Disclosure Statement not
otherwise settled or withdrawn are overruled, the Court held.
A full-text copy of the Disclosure Statement Order entered on
March 11, 2010, is available for free at:
http://bankrupt.com/misc/Lyondell_Mar11DSOrder.pdf
Third Amended Plan Modifications
Prior to entry of the Disclosure Statement Order, the Debtors
filed with the Court:
(a) an interim draft copy of the Disclosure Statement
filed on March 8, 2010, accompanying the Debtors' Third
Amended Plan, as modified on March 6, 2010; and
(b) a further revised draft of the Disclosure Statement,
accompanying the Third Amended Plan, both filed on March
10, 2010.
To recall, the Debtors filed a 3rd Amended Plan on February 16,
2010, as an exhibit to the Debtors' settlement agreement with The
Bank of New York Mellon and the Bank of New York Mellon Trust
Company, N.A. Subsequently, the Debtors submitted a modified
Third Amended Plan on March 6, 2010, as an exhibit to the Debtors'
revised lender litigation settlement with the Official Committee
of Unsecured Creditors, Wilmington Trust Company, the Financing
Party Defendants and a 2015 Noteholders ad hoc group.
The Financing Party Defendants is composed of Citibank, N.A.;
Citibank International plc; and Citigroup Global Markets Inc.;
Goldman Sachs Credit Partners, L.P. and Goldman Sachs
International; Merrill, Lynch, Pierce, Fenner & Smith and Merrill
Lynch Capital Corporation; ABN AMRO Inc. and The Royal Bank of
Scotland, N.V., f/k/a ABN Amro Bank N.V.; UBS Securities LLC and
UBS Loan Finance LLC; LeverageSource III S.a.r.l.; Ares
Management LLC; Bank of Scotland, DZ Bank AG; Kolberg Kravis
Roberts & Co. (Fixed Income) LLC and UBS AG.
Wilmington Trust Company is the trustee for 8.375% senior notes
due 2015 in the principal amounts of US$615 million and
EUR500 million issued pursuant to a 2015 Notes Indenture.
The ad hoc group of 2015 Noteholders is composed of Arrowgrass
Master Fund Ltd.; Arrowgrass Distressed Opportunities Fund
Limited; Basso Credit Opportunities Holding Fund Ltd.; Basso Fund
Ltd.; Basso Multi-Strategy Holding Fund Ltd.; Columbus Hill
Partners, L.P.; Columbus Hill Overseas, Ltd.; CQS Directional
Opportunities Master Fund Limited; Kivu Investment Fund Limited;
Mariner LDC; Caspian Capital Partners, LP; Caspian Select Credit
Master Fund, Ltd.; CVI GVF (Lux) Master S.a.r.l.; Fortelus
Special Situations Master Fund Ltd., and Panton Master Fund, L.P.
March 8 Disclosure Statement
Counsel to the Debtors, Andrew M. Troop, Esq., at Cadwalader,
Wickersham & Taft LLP, in New York, relates that the interim draft
of the 3rd Amended Disclosure Statement was provided to assist
parties-in-interest on March 8, 2010, as they prepared for the
hearing on the Disclosure Statement that was scheduled for
March 11. The interim draft reflected resolutions on formal and
information objections that were filed against the 2nd Amended
Disclosure Statement.
Specifically, the 3rd Amended Disclosure Statement contains
detailed information about Reliance Industries, Ltd.'s offer for
LyondellBasell's assets, a modified claims recovery and amended
financial disclosures.
Reliance Bid
In line with the Reliance bid, Mr. Troop disclosed that during
the three months after receipt of Reliance's expression of
interest, the Debtors afforded Reliance the opportunity to
undertake an extensive due diligence review of LyondellBasell.
Among others, LyondellBasell and its advisors: dedicated three
days of management time for face-to-face presentations and
question and answer sessions and participated in many other
meetings and telephone calls with Reliance and its advisors.
After receiving feedback from the financial advisors to some of
LyondellBasell's large creditors and having had the opportunity
to review the Debtors' First Amended Plan of Reorganization and
related Disclosure Statement, Reliance submitted another non-
binding proposal on December 18, 2009.
The December 18 Proposal permitted creditors to receive a greater
economic ownership interest in the Reorganized LyondellBasell
than was possible under its original proposal, and incorporated
certain elements of the Debtors' reorganization plan, including a
backstopped rights offering, Mr. Troop notes. The December 18
Proposal, however, did not provide a better transaction for the
Debtors' estates constituents as a whole or a more confirmable
plan of reorganization for these cases than the Plan, he points
out. Thus, on February 7, 2010, the Debtors' financial advisors
requested that Reliance provide its final and best proposal by
February 19, 2010.
In response to the Debtors' February 7 letter, Reliance delivered
a further non-binding expression of interest on February 21,
2010, which increased the purchase price for Reliance's direct
equity investment in LyondellBasell and, under certain
alternatives, provided a limited fund from which creditors could
elect to "cash out" some, or depending on the amount of holders
so electing, all of their holdings, he explains. The February 21
Proposal, however:
* did not assure a higher overall value for LyondellBasell
than that upon which the Plan is based;
* continued to provide Reliance with effective control over
LyondellBasell, even if it owned only minority position and
did not pay a premium;
* continued to rely on future profit opportunities to support
any meaningful economic difference from the current Plan in
terms of value to be received by creditors; it did not put
any Reliance assets at risk should a transaction be pursued
and fail; and
* did not compensate the Debtors' estates for delay and
associated costs.
After the Debtors' Management Board and independent Supervisory
Board members analyzed the February 21 Proposal, the Debtors
concluded that it is not higher and better than the Plan and,
thus, did not warrant deviation from the Plan and assuming
associated execution risk, Mr. Troop told the Bankruptcy Court.
Aside from the Reliance bid, the additional disclosures under the
3rd Amended Disclosure Statement are:
* On the Effective Date, Lyondell will issue new warrants.
* Several governmental entities brought about 44 lawsuits
against certain LyondellBasell entities, including Lyondell
and Equistar Chemicals, LP, alleging that the gasoline
additive MTBE has contaminated drinking water resources.
in various state and federal courts. Of the 44 lawsuits, 25
were recently settled for de minimis consideration. The
lawsuits are not subject to the automatic stay under the
"governmental entity" exception and are, thus, being
actively litigated. The Plaintiffs in the State Court
Actions also filed claims in the Bankruptcy Court. Certain
LyondellBasell entities have obtained outright dismissal
from several of the prior cases without payment of any
settlement and have settled other cases for less than
one-tenth of one percent of the total money paid by the
defendants. Although the State Court Actions are going
forward, any claims that arise from those proceedings are
prepetition, General Unsecured Claims in the Debtors'
Chapter 11 Cases.
* Houston Refining, LP filed an unfair labor practice charge
with the National Labor Relations Board seeking to compel
the United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied, Industrial and Service Workers International
Union's signature of an extension of a collective bargaining
agreement through January 30, 2012. The NLRB Regional
Director dismissed the charge, ruling that the union and
Houston Refining did not achieve "a meeting of the minds."
Houston Refining appealed to the NLRB General Counsel, who
affirmed there was "no meeting of the minds" and further
ruled that there is no 2009-2012 CBA. The Union disagreed
with Houston Refining's representations with respect to the
status of the collective bargaining agreement and the
meaning of the NLRB's determinations. The Union and Houston
Refining executed a memorandum of agreement on January 20,
2010, which provides that the new collective bargaining
agreement becomes effective on January 20, 2010, and expires
on January 31, 2012.
* The Internal Revenue Service filed proofs of claim against
the Debtors, alleging unsecured priority tax claims for the
tax years 2005 through 2008 aggregating US$258,525,763. As a
result of an ongoing audit of the relevant tax years, the
IRS has agreed to reduce the amount of the IRS Claim to
US$113,466,520. The Debtors are contesting the full amount of
the IRS Claim. The Debtors also assert tax refunds and
credits for of US$183,676,015, which the IRS is reviewing as
part of its ongoing audit of the Debtors.
Modified Claims Recovery
The 3rd Amended Disclosure Statement also reflects modified
estimated aggregate claim amounts and recoveries for the classes
of claims:
Estimated
Class/Designation Recovery Claim Amt
----------------- --------- ------------
-- Administrative 100% US$165 mil. to US$244 mil.
-- DIP New Money 100% US$2.168 mil.
Claims and DIP
ABL claims
-- Priority Tax 100% US$4.5 mil. to US$15 mil.
Claims
1 Priority Non- 100% US$0.3 mil. to US$0.8 mil.
Tax Claims
2 Secured Tax 100% US$10 mil. to US$16 mil.
Claims
4 Senior Secured 72%, plus US$9.45 bil.
Claims any excess
recoveries
5 Bridge Loan 6.3%, plus US$8.297 bil.
Claims any excess
Recoveries
6 Other Secured 100% US$232 mil. to US$320 mil.
Claims
7-A General Unsecured 16.8%, plus US$700 mil. to US$1.11 bil.
Claims against the any recovery
Non-Schedule III from the
Obligor Debtors Litigation
Trust and Creditor
Trust
7-B General Unsecured 0 to 100% US$1.1 bil. to US$1.53 bil.
Claims against Non-
Obligor Debtors
7-C General Unsecured [__%] US$96 mil. to US$186 mil.
Claims and Senior/
Bridge Guarantee
Claims against
Millennium Specialty
Chemicals, Millennium
Petrochemicals Inc. and
Millennium Us Op Co. LLC
7-D General Unsecured [__%] US$259 mil. to US$291 mil.
Claims and Senior/
Bridge Deficiency
Claims against
Schedule III
Obligor Debtors
8 2015 Notes Claims 16.8%, plus US$1.351 bil.
any recovery from
the Litigation Trust
and Creditor Trust
14 Equity Interests in N/A US$0
Debtors, other than
Debtors LyondellBasell
Finance Company;
LyondellBasell AF GP,
and LyondellBasell
Industries AF S.C.A.
Non-Schedule III Obligor Debtors are Debtors that are not Schedule
III Obligor Debtors. A list of Schedule III Obligor Debtors is
available for free at:
http://bankrupt.com/misc/Lyondell_SchedIIIObligorDebtors.pdf
A list of sub-classes under Class 7-B is available for free at:
http://bankrupt.com/misc/Lyondell_Class7BSubclasses.pdf
Amended Financial Disclosures
Under the March 8 Disclosure Statement
Based on an amended liquidation analysis, the Debtors revised the
estimated recovery of these classes in the event of a Chapter 7
liquidation of the Debtors:
Estimated Recovery
Class Description under Chap. 7 Liquidation
----- ----------- -------------------------
3 DIP Roll-Up Claims 41%
4 Senior Secured Claims 8%
7-A General Unsecured Claims 16.8%
Against the Non-Schedule III
Obligor Debtors
7-C General Unsecured Claims 24.7%
Against MSC and MPI ?
7-C General Unsecured Claims 16.8%
Against MPCO
7-D General Unsecured Claims 16.8%
Against Schedule III Obligor
Debtors
8 2015 Notes Claims 16.8%
A full-text copy of the Liquidation Analysis is available for free
at:
http://bankrupt.com/misc/Lyondell_AmLiquidationAnalysis.pdf
Evercore Group L.L.C. has amended its analysis of the estimated
reorganization enterprise values of LyondellBasell,
LyondellBasell's U.S. businesses, LyondellBasell's non-U.S.
businesses, the F&F Business, and the Acetyls Business. The
Debtors' Reorganization Valuation Analysis assumes an effective
date of April 30, 2010, and the date of the valuations is as of
April 30, 2010.
Under the amended reorganization valuation analysis, the range of
the total reorganization value for consolidated LyondellBasell is
increased at US$14.20 billion to US$16.20 billion, with a midpoint
of US$15.20 billion, compared to a US$13.50 billion to US$15.50
billion, with a midpoint of US$14.50 billion in the Second Amended
Disclosure Statement.
In addition, LyondellBasell Industries N.V., referred to as
New Topco's implied total reorganization equity value has an
increased range of US$9.03 billion to US$11.03 billion, with a
midpoint of US$10.03 billion, compared to US$7.97 billion to
US$9.97 billion, with a midpoint of US$8.97 billion set forth in
the Second Amended Disclosure Statement. After deducting a
range of estimated reorganization value for the New Warrants
of about US$85 million to US$117 million with a midpoint of
US$101 million, the implied reorganization equity value of New
Topco will range from US$8.95 billion to US$10.91 billion, with a
midpoint of US$9.94 billion. The Second Amended Disclosure
Statement valued the New Warrants from US$85 million to
US$117 million with a midpoint of US$82 million. Similarly, the
implied reorganization equity value under the Second Amended
Disclosure Statement ranged from US$7.90 billion to US$9.87
billion, with a midpoint of US$9.94 billion.
The implied reorganization equity value of New Topco assumes
that the Effective Date has occurred and that the US$2.55 billion
Rights Offering and a US$250 million Private Sale have been
consummated. After taking into account the issuance of New
Common Stock in connection with the US$2.55 billion Rights
Offering and the US$250 million Private Sale, each Purchase Price,
Evercore estimates the potential per share price based on the
implied reorganization equity value will range from US$15.87 to
US$19.35, with a midpoint of US$17.61, in contrast to the US$14.01
to US$17.51 range set forth in the Second Amended Disclosure
Statement.
A full-text copy of the Total Enterprise Value of LyondellBasell
is available for free at:
http://bankrupt.com/misc/Lyondell_ValuationAnalysis.pdf
The Debtors also disclosed their amended estimates of the future
performance of the Reorganized Debtors and non-Debtors on an
aggregate basis, for the next five years, and the 10 years
thereafter. A full-text copy of the Amended Projections is
available for free at:
http://bankrupt.com/misc/Lyondell_AmFinlProjections.pdf
The Debtors estimate that New Topco will issue about 158 million
Class A shares in exchange for the transfer to its possession of
the LBHBV shares. A summary of New Topco's direct issuance of
stock is available for free at:
http://bankrupt.com/misc/Lyondell_TopcoStockIssuance.pdf
March 10 Plan
The March 10 3rd Amended Plan, on the other hand, contains certain
disclosures and changes, modified claims treatment and comparative
analyses.
The additional disclosures are:
(1) The Debtors added a term in the Revised Settlement stating
that in settlement of all issues related to 7.625% senior
unsecured notes of Millennium America Inc. due 2026 in the
principal amount of US$241 million, subject to satisfaction
of certain "Millennium Notes Plan Conditions," the holders
of the Millennium Notes Claims will receive, on the
effective date, distributions in an amount equal to
US$85.420 million, which will be provided 50% in Cash and
50% in Class A shares. The Millennium Notes Plan
Conditions, subject to the Revised Settlement are:
(a) all funds managed by Aurelius Capital Management, LP
and Appaloosa Management LP have executed plan support
agreements by March 11, 2010, and these agreements have
not been breached or terminated by a Specified
Millennium Noteholder:
(b) Law Debenture Trust Company of New York as trustee for
the holders of the Millennium Notes has not objected
to or appealed the approval of the Revised Settlement;
(c) Law Debenture has not objected to confirmation of the
3rd Amended Plan or appealed the order confirming
the 3rd Plan; and
(d) Law Debenture has taken no further action, directly or
indirectly, to prosecute its motion to seek standing
to pursue claims that the Debtors' estates may have
relating the granting by certain obligor Debtors of
guarantees to Wilmington Trust.
(2) Although the Debtors and the U.S. Environmental Protection
Agency and state environmental agencies have negotiated a
settlement in principle of various environmental issues as
contemplated under a Environmental Custodial Trust in the
3rd Amended Plan, if the Debtors and the EPA and state
environmental agencies are unable to reach a definitive
settlement, or are unable to obtain requisite approvals of
any settlement prior to the Plan confirmation hearing, the
Debtors reserve their right to take any or all of these
steps:
(a) contribute some or all of the wind-up funds that the
Reorganizing Debtors will contribute to a Millennium
Custodial Trust to "Schedule III Debtors," or the
amount of the funds to individual Schedule III
Debtors, as the Bankruptcy Court may approve, in
exchange for releases of liability from the Schedule
III Debtors as contemplated by the 3rd Amended Plan;
(b) seek Bankruptcy Court approval of the Environmental
Custodial Trust and the releases of liability to be
provided in connection with the creation and approval
of the Environmental Custodial Trust over the
objection of the EPA and state environmental agencies;
(c) seek confirmation of the 3rd Amended Plan with the
subsequent approval of the settlement being a
condition to the Effective Date; or
(d) convert the Chapter 11 cases of some or all of the
Schedule III Debtors to cases under Chapter 7.
(3) With respect to a Litigation Trust, the 3rd Amended Plan
provides that to the extent the Debtors obtain net
recoveries from any Preference Claims prior to the
Effective Date, these net recoveries will be allocated in
this manner:
(i) 90% to be held by the Debtors, not subject to any
lien, claim or any equitable interest of the
Debtors, for the benefit of holders of Allowed
General Unsecured Claims, and
(ii) 10% to the Debtors for the benefit of their estates.
(4) The 3rd Amended Plan provides that to the extent the
interests in the Litigation Trust and Creditor Trust are
deemed to be "securities," the issuance of these interests
under the Plan are exempt, pursuant to Section 1145 of the
Bankruptcy Code, from registration under the Securities
Act, and any applicable state and local laws requiring
registration of securities.
(5) To the extent that any Insurance Policy or Insurance
Agreement provides or may provide coverage for claims
relating to a July 18, 2008, crane collapse at the
Debtors' oil refinery in Houston, Texas for which the
automatic stay has been modified pursuant to a stipulation
filed March 10, 2009, to pursue and liquidate outside of
the Bankruptcy Court or for which proofs of claim have
been timely and validly filed, nothing in the 3rd Amended
Disclosure Statement, the 3rd Amended Plan, a Plan
Supplement, a Confirmation Order or any other order of
the Bankruptcy Court will have the effect of discharging,
or otherwise impairing the rights of any holder of
any Crane Accident Claims to prosecute those Crane
Accident Claims against the Debtors to judgment or
settlement in an appropriate court and assert claims for
coverage under or against the Debtors' Insurance Policies
and Insurance Agreements and to recover on account of any
claims from the Debtors' Insurance Policies and Insurance
Agreements.
(6) To the extent the Millennium Notes Plan Conditions
have been satisfied, the form and substance of the
(i) confirmation order, (ii) the confirmed Plan and
(iii) a final order approving the Revised Settlement
is subject to Law Debenture's satisfaction;
(7) Under the Debtors' Reorganization Valuation Analysis,
Evercore changed the midpoint of the implied
reorganization equity value of the New Warrants from
US$9.94 billion to US$9.93 billion.
(8) Under the amended liquidation analysis, Class 7-C General
Unsecured Claims against MSC will recover 18.3%, Class 7-C
General Unsecured Claims against MPI will recover 23.8%
and Class 8 Notes Claims will recover 0 to 15.7% of their
claims. A full-text copy of the revised liquidation
analysis is available for free at:
http://bankrupt.com/misc/Lyondell_AmLiqAnalysis.pdf
Modified Claims Treatment
The March 10 3rd Amended Plan amends the estimated recovery and
treatment of certain classes of claims:
(A) The estimated recovery of Class 4 Senior Secured Claims is
reduced to 66.1 to 77.2%.
(B) In addition to receiving Class A shares in the aggregate of
US$195 million, holders of Class 7-C General Unsecured Claims
and Senior/Bridge Guarantee Claims against MPI will receive
Class A shares valued at US$57.6 million, and holders of
Allowed General Unsecured Claims against MSC will receive
Class A shares valued at US$4.4 million in light of a
settlement of the intercompany claims between Millennium
America Inc. and MPI and between Millennium America Inc. and
MSC, provided that the maximum value distributable to
holders of Allowed General Unsecured Claims against MPCO
will be US$0, against MPI will be US$213,935,341 and against
MSC
will be US$71,578,926. The estimated recovery percentages for
holders of Class 7-C Claims is available for free at:
http://bankrupt.com/misc/Lyondell_Class7CAmEstRec.pdf
(B) Holders of Class 7-D General Unsecured Claims and
Senior/Bridge Deficiency Claims Against Schedule III Obligor
Debtors will receive on the Effective Date, distributions in
an amount equal to US$85.420 million, which will be provided
50% in Cash and 50% in Class A Shares. The estimated
recovery percentages for holders of Class 7-D Claims is
available for free at:
http://bankrupt.com/misc/Lyondell_Class7DAmEstRec.pdf
(C) Estimated recovery of Class 8 2015 Notes Claims is reduced
from 16.8% to 15.7%. Moreover, a US$15 million in cash under
the Revised Settlement otherwise allocated to the 2015
Claims will be distributed to holders of the Millennium
Notes Claims in settlement of the Millennium Standing
Motion.
Comparative Analyses
In connection with the hearing to approve the DIP Financing,
Duff & Phelps prepared total enterprise valuation analyses for
LBI and certain of its subsidiaries on January 6, 2009. The
D&P Analyses included a valuation range for LBI of US$17.6 billion
to US$20.8 billion with a midpoint of US$19.2 billion, Mr. Troop
notes. He explains that a precise comparison of the D&P Analyses
and the valuation analyses prepared by Evercore for LyondellBasell
is challenging due to factors, including different (i) valuation
dates, (ii) business plan projection periods, (iii) application
of various aspects of the selected peer group public company
trading methodology and the discounted cash flow valuation
methodology, and (iv) judgments applied to the results
of these analyses.
Nonetheless, to facilitate a comparison of some of the key
factors distinguishing the valuation conclusions reached by Duff
& Phelps and Evercore in the analyses, two comparative analyses
have been prepared -- (I) a Comparative Selected Peer Group
Public Company Trading Methodology Analysis and (II) a
Comparative Discounted Cash Flow Methodology Analysis. Mr. Troop
says that the Comparative Analyses illustrate that differences in
business plan projections are the primary cause of the difference
in the conclusions associated with the D&P Analyses and the
Evercore Analyses.
A full-text copy of the Comparative Analyses is available for free
at http://bankrupt.com/misc/Lyondell_ComparativeAnalyses.pdf
Full-text copies of the March 10 3rd Amended Plan and Disclosure
Statement are available for free at:
http://bankrupt.com/misc/Lyondell_Mar103rdAmPlan.pdf
http://bankrupt.com/misc/Lyondell_3rdAmDS.pdf
http://bankrupt.com/misc/Lyondell_Mar103rdAmDS.pdf
Blacklined versions of the Disclosure Statement are available for
free at:
http://bankrupt.com/misc/Lyondell_Mar103rdAmPlan_blacklined.pdf
http://bankrupt.com/misc/Lyondell_3rdAmDS_blacklined.pdf
http://bankrupt.com/misc/Lyondell_Mar103rdAmDS_blacklined.pdf
Solicitation Schedule
In light of the approval of the Disclosure Statement for the
Debtors' Third Amended Joint Plan of Reorganization, Judge Gerber
also authorized the solicitation of votes for the 3rd Amended Plan
in accordance with approved plan solicitation procedures and
schedule.
Judge Gerber fixed March 11, 2010, as the record date for the
purpose of determining (i) the creditors who are entitled to vote
on the 3rd Amended Plan and (ii) in the case of non-voting
classes, the creditors and interest holders who are entitled to
receive a Notice of Non-Voting Status.
The Court authorized the Debtors to mail solicitation packages,
which include the approved Disclosure Statement, a copy of the
Disclosure Statement Order, and plan support letters.
The Solicitation Packages will be mailed no later than March 17.
All Ballots must be properly delivered to Financial Balloting
Group, the Debtors' ballot solicitation and tabulation agent,
Financial Balloting Group by (i) first-class mail, either in the
return envelope provided with each Ballot, or to the address
indicated, (ii) overnight courier, or (iii) personal delivery so
that they are received by FBG no later than 4:00 p.m. on
April 15, 2010.
DS Objections
Counsel to the Debtors, George A. Davis, Esq., at Cadwalader,
Wickersham & Taft LLP, in New York, informs the Court that of the
19 formal objections and two joinders to the Disclosure Statement
accompanying their Third Amended Joint Plan of Reorganization, 14
of these objections were resolved, while seven objections remain
unresolved.
A summary chart that identifies each objection and the Debtors'
responses to each is available for free at:
http://bankrupt.com/misc/Lyondell_DSObjsStatus.pdf
With respect to the unresolved Disclosure Statement objections,
the Debtors have modified or added language to their Disclosure
Statement to address each objection.
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. On January 6, 2009,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code to facilitate a restructuring of the company's
debts. The case is In re Lyondell Chemical Company, et al.,
Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell
entities, including Equistar Chemicals, LP, Lyondell Chemical
Company, Millennium Chemicals Inc., and Wyatt Industries, Inc.
filed for Chapter 11. In May 2009, one of the cases was dismissed
-- Case No. 09-10068 -- because it is duplicative of Case No. 09-
10040 relating to Debtor Glidden Latin America Holdings.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total US$19.34 billion as
of the bankruptcy filing date.
Lyondell has obtained approximately US$8 billion in DIP financing
to fund continuing operations. The DIP financing includes two
credit agreements: a US$6.5 billion term loan, which comprises a
US$3.25 billion in new loans and a US$3.25 billion roll-up of
existing loans; and a US$1.57 billion asset-backed lending
facility.
LyondellBasell Industries AF S.C.A. and another affiliate were
voluntarily added to Lyondell Chemical's reorganization filing
under Chapter 11 on April 24, 2009, in order to seek protection
against claims by certain financial and U.S. trade creditors. On
May 8, 2009, LyondellBasell Industries added 13 non-operating
entities to Lyondell Chemical Company's reorganization filing
under Chapter 11 of the U.S. Bankruptcy Code. All of the entities
are U.S. companies and were added to the original Chapter 11
filing for administrative purposes.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
SMILE SECURITISATION: S&P Affirms Ratings on Various Classes
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
SMILE Securitisation Company 2007 B.V.'s class A to E notes.
The affirmations follow a review of the performance of the
portfolio underlying the SMILE 2007 transaction, and a cash flow
analysis. Since closing in January 2007, the transaction has
amortized significantly: 54.5% of the original portfolio remained
as of December 2009.
Since closing in February 2007, the transaction has experienced
cumulative defaults of EUR46 million -- 0.94% of the original
balance -- including EUR4.5 million of foreclosed defaults. Over
the same period, the transaction has accumulated excess spread in
its reserve account. As of December 2009, this balance was
EUR14.6 million -- 0.55% of the outstanding notes.
The amortization of the notes and the build-up of the reserve
account have increased the credit enhancement available to the
rated notes across the capital structure. In S&P's view, the
transaction is currently performing within its stressed default
assumptions and, given the risk characteristics of the residual
collateral, the available credit enhancement is adequate to
sustain the current ratings.
SMILE 2007 is ABN AMRO Bank N.V.'s third collateralized loan
obligation of Dutch small to midsize enterprises. ABN AMRO Bank
originated the transaction in January 2007 to achieve economic and
regulatory capital relief through the transfer of risk associated
with a pool of loans to Dutch SMEs.
Ratings List
SMILE Securitisation Company 2007 B.V.
EUR4.907 Billion Asset-Backed Floating-Rate Notes
Ratings Affirmed
Class Rating
----- ------
A AAA
B AA
C A
D BBB
E BB-
=====================================
S E R B I A & M O N T E N E G R O
=====================================
JAT AIRWAYS: To Borrow EUR51.5 Mil. to Restructure Fleet
--------------------------------------------------------
Aleksandar Vasovic at Reuters reports that JAT Airways CEO Srdjan
Radovanovic said on Tuesday the airline plans to borrow EUR51.5
million (US$70.4 million) for the restructuring and renewal of its
ageing fleet.
According to Reuters, the carrier will borrow another US$3.5
million to lease two Boeing 737-700 aircraft. The renewal of the
fleet of 16 ageing Boeing 737-300, Boeing 737-400 and ATR 72-200
aircraft is expected to be completed this year, Reuters says.
Restructuring
Reuters relates Radovanovic told a news conference although, JAT
Airways posted a EUR16.5 million loss in 2009, the company hopes
to restructure and attract a strategic partner, likely Turkish
Airlines.
JAT, which in 2009 shed about 30% of its workforce amid the
economic crisis, is seeking EUR49 million (US$67.2 million) for
restructuring and the overhaul of five jet engines.
"We have received state guarantees and by April we will pick a
lender," Reuters quoted Mr. Radovanovic as saying. "These should
be long-term loans with good interest rates and grace periods."
The CEO, as cited by Reuters, said since the start of the Yugoslav
wars in 1991, JAT has lost a cumulative total of about EUR180
million.
JAT Airways -- http://www.jat.com/-- is the national airline of
Serbia and the former national carrier of Yugoslavia, based at
Belgrade Nikola Tesla Airport. It operates scheduled domestic,
regional and international services to 30 destinations in Europe,
North Africa and the Middle East, as well as charters and wet
leases.
=========
S P A I N
=========
AYT ANDALUCIA: Moody's Assigns (P)'B2' Rating on Series D Notes
---------------------------------------------------------------
Moody's Investors Service has assigned these provisional (P)
ratings to the notes to be Issued by Spanish Securitisation Fund
AyT ANDALUCIA FTEMPRESA CAJAMAR, FTA
-- (P) Aaa to the EUR45,000,000 Series A notes.
-- (P) Aaa to the EUR179,000,000 Series A(G) notes.
-- (P) Aa1 to the EUR27,500,000 Series B notes.
-- (P) Baa1 to the EUR27,500,000 Series C notes.
-- (P) B2 to the EUR21,000,000 Series D notes.
The AyT ANDALUCIA FTEMPRESA CAJAMAR, FTA transaction is a cash
securitisation of loan contracts granted and serviced by Cajamar
Caja Rural, Sociedad Cooperativa de Credito (A3/P-2). The
transaction comes after the concession by the regional government
of Andalusia (Junta de Andalucia) of a guarantee for Series A(G).
The provisional pool of underlying assets was, as of February
2010, composed of a portfolio of 5,141 contracts granted to
obligors located in Spain. The loans and credits were originated
between 1998 and 2009, with a weighted average seasoning of 1.6
years and a weighted average remaining life of 9.5. Around 60% of
the outstanding of the portfolio is secured by first-lien mortgage
guarantees over different types of properties. Geographically,
the pool is mostly concentrated in Andalusia (60%). At closing,
there will be a maximum of 5% of the pool in arrears up to 30
days.
According to Moody's, this transaction benefits from several
credit strengths, such as a strong swap agreement provided by CECA
(Aa3/P-1) guaranteeing an excess spread of 0.47% and a relatively
limited exposure to real estate as only 14% of the portfolio is in
the building and real estate sector (according to Moody's industry
classification) with no loans granted to real estate developers.
However, Moody's notes that the transaction features a number of
credit weaknesses, including a relatively high Regional
concentration as 60% of the portfolio is concentrated in the
Andalusia region (with 45% only in the province of Almeria) and
grace period options on 10% of the loans in the portfolio. .
These characteristics, amongst others, were reflected in Moody's
analysis and provisional ratings, where several simulations tested
the available credit enhancement and 10% reserve fund to cover
potential shortfalls in interest or principal envisioned in the
transaction structure.
As part of Moody's quantitative assessment, a mean default rate of
14% with a coefficient of variation of 50% and a stochastic mean
recovery rate of 50% were the main input parameters for Moody's
cash-flow model ABSROM.
Moody's initially analyzed and will monitor this transaction using
the rating methodology for EMEA SME ABS transactions as described
in the Rating Methodology reports "Refining the ABS SME Approach:
Moody's Probability of Default assumptions in the rating analysis
of granular Small and Mid-sized Enterprise portfolios in EMEA",
March 2009 and "Moody's Approach to Rating Granular SME
Transactions in Europe, Middle East and Africa", June 2007.
Moody's analysis focused primarily on (i) an evaluation of the
underlying portfolio of loans; (ii) historical performance
information and other statistical information; (iii) the credit
enhancement provided by the pool spread, the cash reserve and the
subordination of the notes; and (iv) the legal and structural
integrity of the transaction.
The ratings address the expected loss posed to investors by the
legal final maturity of the notes (December 2051). In Moody's
opinion, the structure allows for timely payment of interest and
ultimate payment of principal on Series A, A(G), B, C and D at par
on or before the rated final legal maturity date. Moody's ratings
address only the credit risks associated with the transaction.
Other non-credit risks have not been addressed, but may have a
significant effect on yield to investors.
Investors should note that the Series A(G) also benefits from the
guarantee of Junta de Andalucia (Aa2) for interest and principal
payments. Nevertheless, the expected loss associated with Series
A(G) notes is consistent with a Aaa rating at issuance regardless
of the guarantee.
The V Score for this transaction is Medium/High same as the
Medium/High score assigned for the Spanish ABS sector. The
breakdown for this transaction indicates a better score in
"Issuer/Sponsor/Originator's Historical Performance Variability"
as Cajamar's previous SME transactions shows a lower default rate
than the Spanish market average and, even during the current
economic crises, performance volatility has also been lower market
average; however the score on "Back-up Servicer Arrangement" is
weaker than average, as no appointment of back up servicer has
been set up at loss of Baa3.
Moody's issues provisional ratings in advance of the final sale of
securities, and these ratings only reflect Moody's preliminary
credit opinions regarding the transaction. Upon a conclusive
review of the final pool of assets and the final documentation,
Moody's will endeavor to assign a definitive rating to the notes.
A definitive rating, if any, may differ from a provisional rating.
Date of previous rating action: no previous rating action.
* SPAIN: Banks May Have to Set More Bad Debt Provisions
-------------------------------------------------------
The Financial Times reports that Jose Maria Roldan, the Spanish
central bank's director-general for regulation, issued a warning
this week about the financial system's EUR445 billion (US$612
billion) exposure to the domestic property and construction
sectors.
According to the FT, bad loans in that part of the economy had
already reached 9.6% of the total and would almost certainly rise
further, while a further 14% of credits were "substandard".
The FT relates Mr. Roldan said in a speech it was "very probable"
that Spanish lenders would have to set aside yet more bad debt
provisions this year.
Spanish bankers, analysts and those involved in the restructuring
of the financial system say the underlying level of non-performing
assets is certainly higher than the official numbers, especially
among small and mid-sized cajas heavily exposed to property, the
FT notes.
Instead of writing off bad debts, both Spanish and foreign lenders
have tended to carry out asset swaps by buying real estate, taking
control of property developers and extending loan maturities to
protect borrowers from arrears or bankruptcy, the FT relates.
* SPAIN: Prime Minister Calls for Faster Consolidation of Banks
---------------------------------------------------------------
Victor Mallet at The Financial Times reports that Elena Salgado,
the Spanish finance minister, joined the calls on Wednesday for
faster consolidation of the country's weaker savings banks,
admitting in the process that up to a third of lending
institutions could face "solvency problems".
The FT notes bank analysts and credit rating agencies predict
severe financial difficulties as early as this year for those
cajas that are heavily exposed to Spain's collapsed real estate
bubble and that fail to agree merger terms with stronger partners.
Citing official data from the Bank of Spain, the FT says bad loan
ratios of the cajas appear to have reached a collective plateau at
just over 5% of assets, but the true figure is much higher if
lenders' debt-for-asset swaps and property repossessions are
counted.
The FT recalls Miguel Angel Fernandez Ordonez, Bank of Spain
governor, called last year for a third of the 45 cajas to be
absorbed by stronger institutions. But he has been frustrated by
the slow progress and the reluctance of autonomous regional
governments to abandon their hold on the cajas, the FT recounts.
===========================
U N I T E D K I N G D O M
===========================
BRITISH AIRWAYS: Union Wants Stand-Ins Cleared Ahead of Strike
--------------------------------------------------------------
Pilita Clark at The Financial Times reports that Unite has
demanded that the government investigate how well British Airways
plc has vetted the 1,000 volunteer cabin crew due to replace
strikers in any walkout.
According to the FT, Unite has written to Lord Adonis, the
transport secretary, urging him to make BA prove all steps have
been taken to ensure the "fast-tracked stand-ins" have cleared
national security checks in the UK and the airline's destination
countries.
The FT says the union claimed it had learnt that strike-breaking
crew would board flights as paying passengers and only start
working as crew once in the air, thereby avoiding working visas.
A BA spokesman said this was not the case and all proper visas and
security vetting had been carried out, the FT notes.
Jim Pickard at The Financial Times reports that Prime Minister
Gordon Brown said he had spoken to both BA's management and Unite,
the union behind the strikes, in an attempt to find a resolution.
The FT relates Mr. Brown said he believed that the basis of a
workable agreement had been on the table last Thursday and could
still be resurrected to avert the action.
As reported by the Troubled Company Reporter-Europe on March 17,
2010, the FT said Unite, Britain's biggest trade union, offered on
Monday night to suspend a BA strike that would hit 30,000
passengers a day from Saturday, March 20. The FT disclosed the
union said it would look at calling off the walkout if the airline
reinstated a settlement proposal withdrawn last week. According
to the FT, BA offered last week to restore 184 of the cabin crew
positions it planned to cut, a number that fell far short of the
700 demanded by the union. It withdrew the offer after the union
announced strike dates, the FT noted.
On March 16, 2010, the Troubled Company Reporter-Europe, citing
the FT, reported that the union will carry out strikes for three
days from March 20 and four days from March 27.
About British Airways
Headquartered in Harmondsworth, England, British Airways Plc,
along with its subsidiaries, (LON:BAY) -- http://www.ba.com/-- is
engaged in the operation of international and domestic scheduled
air services for the carriage of passengers, freight and mail and
the provision of ancillary services. The Company's principal
place of business is Heathrow. It also operates a worldwide air
cargo business, in conjunction with its scheduled passenger
services. The Company operates international scheduled airline
route networks together with its codeshare and franchise partners,
and flies to more than 300 destinations worldwide. During the
fiscal year ended March 31, 2009 (fiscal 2009), the Company
carried more than 33 million passengers. It carried 777,000 tons
of cargo to destinations in Europe, the Americas and throughout
the world. In July 2008, the Company's subsidiary, BA European
Limited (trading as OpenSkies), acquired the French airline,
L'Avion.
* * *
As reported in the Troubled Company Reporter-Europe on Nov. 12,
2009, Moody's Investors Service placed the Ba3 Corporate Family
and Probability of Default Ratings of British Airways plc and the
senior unsecured and subordinate ratings of B1 and B2 under review
for possible downgrade. Moody's said the rating action reflects
the continued weakening in profitability in the first half of
FY2010 (to September 2009), with an operating loss of GBP111
million reported versus a profit of GBP140 million a year earlier
(post restructuring charges), and Moody's view that losses in
FY2010 will likely be higher than in FY2009. This comes in spite
of lower operating costs, notably for fuel, as demand in the
industry remains very depressed, while the company has
successfully reduced its employee and selling costs. Reported net
debt remained constant during the period, partly benefiting from a
positive exchange rate impact, although Moody's debt metrics also
incorporate the full value of the convertible notes issued in
August 2009.
BRITISH AIRWAYS: Moody's Cuts Corporate Family Rating to 'B1'
-------------------------------------------------------------
Moody's has lowered to B1 from Ba3 the Corporate Family and
Probability of Default Ratings of British Airways plc; and the
senior unsecured and subordinate ratings to B2 and B3,
respectively. The outlook is stable. This concludes the review
that was initiated on November 10, 2009.
The rating action reflects Moody's view that credit metrics will
not be commensurate with the previous rating category in the
medium term. Moody's expect furthermore that metrics will be
burdened in the foreseeable future by the company's significant
pension deficit, which was at GBP2.6 billion for the APS and NAPS
schemes combined as of September 2009 (under IAS). Moody's
nevertheless understand that under the current agreement with the
trade unions, the cash contributions to these deficits will be
frozen at GBP330 million per year for three years, subject to
approval by the Pensions Regulator and the trustees.
BA's liquidity remains satisfactory, with a balance of cash and
equivalents of GBP1.6 billion as of December 2009, GBP456 million
of general facilities, and GBP2 billion of committed aircraft
facilities. Moody's note, in addition, the company's commitment
to retain a minimum cash balance of GBP1 billion, as well as the
intention to reduce capital expenditure this year to
GBP525 million (from GBP712 million in FY09).
The stable outlook factors in Moody's expectation that although
metrics are deemed weak for the current rating, industry demand is
likely to improve earnings and metrics in 2010, and to mitigate or
counter-balance ongoing operating risks. For example Moody's
recognize that any strike action, or adverse developments in fuel
costs, could negatively impact earnings and credit metrics
potentially into FY2011. At the same time, Moody's further
believe that BA's own cost cutting initiatives should benefit
metrics over the medium term, notably in terms of staff numbers
and capacity cuts. For the current rating Moody's would expect
gross leverage to trend below 6.5x in coming quarters. Given that
2009 was likely a trough for earnings, any negative pressure on
the rating at this time would likely be the result of concerns
about liquidity. Conversely, positive rating pressure could occur
if industry conditions enabled gross leverage to fall below 6x on
a continued basis with satisfactory liquidity.
We continue to view the proposed merger with Iberia as a positive
development for both airlines, although Moody's believe that the
financial impact will be longer-term. As such, while the impact
for BA might over time be positive, this is offset in the nearer-
term by the expected weakness in credit metrics in coming
quarters.
The last rating action for British Airways was implemented on
November 10, 2009, when all ratings were placed under review for
possible downgrade.
British Airways, based in Harmondsworth, United Kingdom, is
Europe's third largest airline carrier with over 33 million
passengers in FY2009 (to March 31), and flying to over 150
destinations world-wide with a fleet of 245 aircraft at year-end.
In FY2009 the company reported revenues and an operating loss
(before restructuring) of GBP9 billion and GBP142 million,
respectively.
ETHEL AUSTIN: 81 Stores to Cease Trading
----------------------------------------
MCR, the administrators of value clothing retailer Ethel Austin
and its sister company Au Naturale, has confirmed that a further
81 stores will cease to trade in the next 3 to 4 weeks. This
follows the closure of 124 stores last month.
Most of the 81 stores will cease trading by the end of March and a
total of 696 positions are likely to be made redundant.
There has also been a further 56 redundancies announced Wednesday
at the Head Offices in Knowsley.
Geoff Bouchier, joint administrator and Partner of MCR, stated:
"It is a difficult retail climate and until such time as any sale
of the businesses can be completed, cost cutting measures need to
be taken to allow the businesses to trade on in the short term."
"There are still opportunities for a purchaser of the businesses
to come forward," Mr. Bouchier added.
INEOS GROUP: Agrees to Refinance EUR1 Bil. of Senior Term Debt
--------------------------------------------------------------
John O'Doherty at The Financial Times reports that Ineos has
agreed to refinance about EUR1 billion of its senior term debt by
issuing bonds with a maturity of five years.
According to the FT, the EUR1 billion refinancing -- which depends
on the consent of its senior lenders and holders of high yield
bonds -- represents about 14% of Ineos' net debt.
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, Ineos Group Holdings plc continues to carry a Caa2 corporate
family rating, a Caa1 probability of default rating and a Caa3
rating on senior notes from Moody's Investors Service with stable
outlook.
LEHMAN BROTHERS: UK Regulators Ask E&Y to Produce Papers
--------------------------------------------------------
The Financial Reporting Council, which oversees corporate
reporting rules in the United Kingdom, demanded Ernst & Young LLP
to hand over documents detailing its role in the demise of Lehman
Brothers Holdings Inc., according to a March 15 report by The
Guardian.
The move came after Ernst & Young, which has served as Lehman's
auditor, was accused of professional malpractice in a report
published by a bankruptcy court-appointed examiner who made an
investigation into the bankruptcy filing of Lehman.
The 2,200-page report showed that Lehman used accounting
techniques known as "repos," which are artificial sale and buy-
back deals, and was able to hide US$50 billion or GBP32 billion of
debts from regulators despite checks by Ernst & Young.
The U.K. Regulators demanded the audit firm to provide
information on trades that allegedly enabled Lehman to disguise
risky debt structures, The Guardian reported.
"Following the publication of the recent report on Lehman, the
FRC is ascertaining the facts on how the repo transactions were
accounted for and audited in the U.K. in order to determine any
implications," the regulator said. "To that end, we have asked
Ernst & Young to provide further information in relation to what
happened in the U.K."
In a statement, Ernst & Young said that a thorough internal
review of its practice showed it did nothing wrong. A spokesman
for the firm blamed Lehman's bankruptcy to a series of
unprecedented adverse events in the financial markets, according
to a March 13 report by Times Online.
"Our last audit of the company was for the fiscal year ending
November 30, 2007. Our opinion indicated that Lehman's financial
statements for that year were fairly presented in accordance with
Generally Accepted Accounting Principles (GAAP), and we remain of
that view," the spokesman said.
Linklaters, a U.K.-based law firm, is also under fire after it
allegedly aided the transfer of funds by giving opinions to
Lehman that the repo transactions were legal under English law.
A spokesman for Linklaters confirmed that the firm gave its legal
opinion on several transactions but said it was not aware of any
"facts or circumstances that would justify any criticism," Times
Online reported.
"The examiner who did not contact the firm during his
investigations does not criticize those opinions or say or
suggest that they were wrong or improper," the spokesman said.
Deep-Rooted Reform
In light of the findings of the examiner's report, some financial
experts called on regulators to clean up the audit industry and
to clamp down on risky practices in the financial sector, The
Guardian reported.
Michael Fallon, who is deputy chairman of the U.K. treasury
select committee, said a fresh approach that gives a more
realistic picture of bank finances and not one that disguises
risky practices is needed. Meanwhile, Lord Oakeshott, Liberal
Democrat treasury spokesman, urged the government to commission a
fundamental review.
Prem Sikka, a professor of accounting at Essex University, warned
that the crisis could repeat itself without deep-rooted reform.
"The report into the collapse of Lehmans is indicative of a
deeper malaise. We rely on the discretion of eminent firms of
auditors and lawyers that are paid millions of pounds for their
efforts but that discretion is too often abused," The Guardian
quoted him as saying.
George Osborne, Conservative Treasury spokesman, expressed
disappointment that the Financial Services Authority failed to
spot the true scale of the problems at Lehman. He said that
FSA's failure to intervene before Lehman collapsed was proof that
U.K.'s financial regulatory system needed a thorough shake-up,
The Guardian reported.
Possible Charges
Former Lehman directors and their U.K. advisers could face a
series of civil and criminal charges following the publication of
the examiner's report, according to a March 14 report by
Independent.
U.S. legal experts said Dick Fuld, and other Lehman directors
could be pursued by the Securities and Exchange Commission for
civil charges of securities fraud and by government enforcement
for criminal charges.
The SEC could pursue civil charges if the financial statements
were false and if the directors could be prosecuted under the
2002 Sarbanes-Oxley Act, Independent reported.
The Act requires the chief executive and the chief financial
officer to certify that the financial statements comply with all
applicable statutes and rules.
One U.S. lawyer also said that criminal charges could be filed if
Mr. Fuld and Lehman's three chief financial officers during 2007
and 2008 knew of the effect of the repo transactions, according
to the report.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition
listed US$639 billion in assets and US$613 billion in debts,
effectively making the firm's bankruptcy filing the largest in
U.S. history. Several other affiliates followed thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the
U.S. District Court for the Southern District of New York, entered
an order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI
The Bankruptcy Court has approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for
US$1.75 billion. Nomura Holdings Inc., the largest brokerage
house in Japan, purchased LBHI's operations in Europe for US$2
plus the retention of most of employees. Nomura also
bought Lehman's operations in the Asia Pacific for US$225 million.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers International
(Europe) on September 15, 2008. The joint administrators have
been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
Lehman Brothers Japan Inc. reported about JPY3.4 trillion
(US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other insolvency
and bankruptcy proceedings undertaken by its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
OCTAGON HEALTHCARE: S&P Gives Positive Outlook; Keeps 'BB+' Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised the
outlook on its long-term underlying rating on the senior secured
GBP341.33 million bonds (including GBP35 million in variation
bonds) issued by special-purpose vehicle Octagon Healthcare
Funding PLC to positive from negative. At the same time, the
long-term SPUR on the bonds was affirmed at 'BB+'.
The bonds have an unconditional and irrevocable guarantee of
payment of scheduled interest and principal from Assured Guaranty
(Europe) Ltd. (AGE; AAA/Negative/--, formerly Financial Security
Assurance {U.K.} Ltd.). Under Standard & Poor's criteria, a
rating on monoline-insured debt reflects the higher of the rating
on the monoline and SPUR. Therefore, the long-term debt rating on
the bonds is AAA/Negative.
The recovery rating on the instrument is unchanged at '1',
reflecting S&P's expectation of very high (90%-100%) recovery in
the event of a payment default.
OHF is a special-purpose vehicle set up in 2003 to issue bonds and
lend the proceeds to Octagon Healthcare Ltd., the project company
handling the construction and operations of Norfolk and Norwich
University hospital in Norwich, England, including the provision
of certain maintenance and nonclinical services.
"The outlook revision and affirmation reflect S&P's view of the
anticipated strengthening of the project's financial profile,"
said Standard & Poor's credit analyst Beata Sperling-Tyler.
"This, S&P believe, is demonstrated by the increase in the annual
debt service coverage ratio to a forecast minimum of 1.15x
(between June 2010 and December 2011, and between December 2019
and December 2023) from the minimum 1.12x forecast in last year's
financial model. The average ADSCR is currently forecast at
1.35x.
"S&P note that the improved minimum ADSCR is achieved as a result
of the implementation of two reserving mechanisms, which S&P
understand are allowed under the project documentation. They
operate by depositing additional cash into the maintenance reserve
account and releasing it in periods where the ADSCR requires
additional cash to maintain the revised 1.15x target level.
The current minimum ADSCR reflects the revised financial policy of
the project's shareholders, which S&P still consider to be
aggressive, even though S&P anticipate that they will retain
additional cash within the project. The shareholders have stated
their intention of setting distributions at a level that would
enable the above-mentioned reserving mechanisms to be employed,
and the minimum ADSCR of 1.15x to be achieved. As the ADSCR is
already at its lowest between June 2010 and Dec 2010, both
mechanisms will operate during this period.
The positive outlook on the SPUR reflects S&P's view that the
shareholders will limit their distributions so as to support the
maintenance of the minimum ADSCR. S&P also anticipate that the
good operational performance of the project will continue.
S&P could raise the rating if the track record of the minimum
ADSCR were to be maintained at the stated level over the next two
years.
On the other hand, S&P could revise the outlook or lower the
rating if, for example, increased sponsors' distributions were to
result in a lower minimum ADSCR.
PORTSMOUTH FOOTBALL: Tax Office Won't Challenge Administration
--------------------------------------------------------------
The U.K.'s tax office won't oppose Portsmouth Football Club's
request for bankruptcy protection, James Lumley at Bloomberg News
reports, citing government lawyer Gregory Mitchell.
Bloomberg relates Mr. Mitchell told Justice Kim Lewison at a
hearing at the High Court in London Tuesday morning tax officials
are satisfied with information they received from Portpin Ltd.,
team owner Balram Chainrai's company.
According to Bloomberg, Mr. Mitchell said tax officials FA have
also met with the club's administrators and accept they are
independent.
"The continuation of this administration offers the best chance of
this club surviving and there being a return for unsecured
creditors," Bloomberg quoted Mr. Mitchell as saying.
Bloomberg notes Mr. Mitchell said Portpin has given Portsmouth a
loan of GBP16.5 million (US$25 million). The money was
transferred to a law firm who has been using it to pay off
creditors "for the benefit of the club," Mr. Mitchell said,
according to Bloomberg. Mr. Mitchell, as cited by Bloomberg, said
he has received proof of this from the law firm.
As reported by the Troubled Company Reporter-Europe, Bloomberg
News said Portsmouth on Feb. 26 became the first team in England's
Premier League to go into administration after U.K. authorities
tried to force its closure over unpaid tax of GBP12.1 million.
Portsmouth Football Club Ltd. -- http://www.portsmouthfc.co.uk/--
operates Portsmouth FC, a professional soccer team that plays in
the English Premier League. Established in 1898, the club boasts
two FA Cups, its last in 2008, and two first division
championships. Portsmouth FC's home ground is at Fratton Park;
the football team is known to supporters as Pompey. Dubai
businessman Sulaiman Al-Fahim purchased the club from Alexandre
Gaydamak in 2009. A French businessman of Russian decent,
Gaydamak had controlled Portsmouth Football Club since 2006.
STOCKPORT FOOTBALL CLUB: Fails to Reach Conclusion on Melrose Sale
------------------------------------------------------------------
The administrators of Stockport County Association Football Club
Limited have provided an update to the case:
"We have been informed by the Football League that at the Board
meeting held [Tues]day it was not possible to reach a conclusion
regarding the attempted purchase of the Club by the Melrose
Consortium due to there being a number of unresolved matters. We
have not been informed as to the nature of these queries but are
seeking further information.
We will continue to work with both the Consortium and the Football
League to try and resolve any outstanding matters to their
satisfaction, however given that approval has yet to be given
after a number of recent attempts, it is far from certain as to
whether the Consortium will be successful in their bid to acquire
the Club. Consequently, we continue to actively seek interest
from other parties and would emphasize that any such parties
should notify us of their interest as quickly as possible in order
to safeguard against the Club's closure."
Stockport County Association Football Club Limited entered into
administration on April 30, 2009, with the appointment of John
Titley and Paul Reeves, Directors at Leonard Curtis, as Joint
Administrators.
VIRGIN MEDIA: S&P Assigns 'BB' Rating on GBP2 Bil. Senior Loan
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'BB'
debt rating to the proposed GBP2.0 billion senior secured
facilities to be borrowed by Virgin Media Investment Holdings Ltd.
(not rated) and other subsidiaries of U.K.-based
telecommunications provider Virgin Media Inc. (B+/Stable/--). The
facilities consist of a GBP1.0 billion amortizing term loan A, up
to GBP750 million of term loan B, and a GBP250 million revolving
credit facility.
At the same time, S&P assigned a recovery rating of '1' to this
debt, indicating S&P's expectation of very high (90%-100%)
recovery for creditors in the event of a payment default. S&P
anticipate that the new facilities will share broadly the same
guarantees and security package granted to the existing senior
secured credit facilities at VMIH level.
The rating on the new facilities is two notches higher than S&P's
corporate credit rating on VMI. It is based on preliminary
information and is subject to S&P's satisfactory review of final
documentation. In the event of any changes to the amount or terms
of the debt, the recovery and issue ratings might be subject to
further review. Importantly, it is S&P's understanding that the
proceeds from the proposed issuance will be used to fully repay
VMIH's outstanding secured bank facilities maturing up to 2012-
2013 (including the GBP300 million junior lien facility).
Recovery Analysis
S&P has valued the group on a going-concern basis, based on VMI's
leading market position in the U.K., its established network
assets, and its valuable customer base. S&P believes that a
default would most likely result from excessive leverage following
operating underperformance. At the hypothetical point of default
(assumed in 2014) S&P value the group at about GBP4.4 billion.
Before this transaction, in S&P's hypothetical path to default S&P
had assumed that the maturing debt in 2012 (senior secured credit
facilities) and 2013 (GBP300 million junior lien facility) would
be refinanced with new debt instruments with the same terms and
conditions.
The proposed bank debt issuance, if successful, will simplify the
capital structure (removing the junior lien debt, which did not
benefit from a second-ranking claim on the senior security
package) and will increase the amount of senior secured debt
outstanding.
Despite the annual amortization requirement for the term loan A,
S&P projects a slight increase in outstanding senior secured debt
at its hypothetical point of default, although numerical coverage
for the group's various debt instruments remains broadly in line
with S&P's previous analysis.
Ratings List
New Rating
Virgin Media Investment Holdings Ltd.
Senior Secured
GBP2.0 bil (proposed) facilities BB
Recovery Rating 1
===============
X X X X X X X X
===============
* Deutsche Bank Chief Says Banks Failed to Judge Risks in Crisis
----------------------------------------------------------------
Aaron Kirchfeld at Bloomberg News reports that Deutsche Bank Chief
Executive Officer said at spoke at a conference at the Center for
Financial Studies in Frankfurt on Wednesday Josef Ackermann said
banks failed to judge risks in the financial crisis.
* BOOK REVIEW: Corporate Recovery - Managing Companies in Distress
------------------------------------------------------------------
Authors: Stuart Slatter and David Lovett
Publisher: Beard Books
Softcover: 352 pages
List Price: US$34.95
Review by Henry Berry
According to the authors, "turnaround management is everyday
management." There are no miraculous remedies for bringing a
company out of its troubles; no formulas to apply that will
guarantee recovery. Management has to be alert and flexible to
adapt to ever-changing business conditions both outside and within
a company.
Although turnaround management (or "crisis management" as the
authors also call it) is often regarded as a specialized type of
management or a gifted set of management skills, Slatter and
Lovett argue that any good manager should have the skills to be
able to move his or her company toward recovery. Managers often
fail because they do not recognize or acknowledge the warning
signs of a crisis, not because they lacked the relevant management
skills.
Corporate Recovery does not teach managers how to become "crisis
managers." While the book does provide guidance on what
management skills are required if a company slips into a crisis,
for the most part the authors take a broader view. Crisis
management involves applying traditional management techniques in
an environment where the patient is seriously ill, both cash and
time are in short supply, and rapid recovery is required. The
authors suggest that these same skills are necessary when a
company has been acquired and is inevitably undergoing some
changes, improvement of short-time financial performance is
sought, and a company is trying to head off a crisis rather than
pull itself out of one.
The authors give attention to both external and internal factors
and their interrelationship. The reader is taken chapter by
chapter through all of the stages of distress in a company, from
early warning signs through pervasive problems to moving onto
solid ground and emerging from a turnaround. The book does not
offer merely an academic analysis of the distinguishing factors of
each stage. The authors provide relevant, effective action for
each stage of distress. Different stages require different
actions. Under circumstances of distress, the enthusiasm and
morale that are signs of a healthy company in normal times cannot
fix the causes of the problems. Ordinary leadership skills such
as setting a good example and inspiring loyalty will not effect a
turnaround. Fundamental in a successful turnaround is the actions
taken by a company's key decisionmakers. Only they are in a
position to make the crucial decisions that can bring an
organization out of distress.
Corporate Recovery is an incomparable guide for managers of
companies in distress. The book brings clarity to what is often a
clouded, disturbing, and stressful situation, even for the most
experienced decisionmakers. This book can help an organization's
decisionmakers ward off or minimize hazards to its well being.
For ones who find themselves already in worrisome crisis
situations, it can be an invaluable handbook, no matter what stage
of the crisis.
Slatter is founding member of the Society of Turnaround
Professionals. He works with corporations on turnarounds and
provides training for managers and executives. Lovett has
extensive experience in turnarounds and heads his own firm helping
companies improve their operations and financial performance and
restore or increase corporate value.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine
C. Tumanda-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 * * *