/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100618.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, June 18, 2010, Vol. 11, No. 119 Headlines B U L G A R I A BULGARIAN AMERICAN: S&P Cuts Counterparty Credit Rating to 'B+' F R A N C E LE MONDE: France Telecom to Bid with SFA PAR for 65% Stake REMY COINTREAU: To Meet with Investors to Propose Junk-Bond Sale G E R M A N Y GENERAL MOTORS: Withdraws State Aid Requests for Opel-Vauxhall PHOENIX GROUP: Close to Securing EUR3.6-Bil. in Financing PRIMACOM AG: Unit Secures EUR30 Mil. in Liquidity From Lenders WILHELM KARMANN: Vorwerk Renews Interest in Roof Business G R E E C E HELLENIC SECURITISATION: Moody's Cuts Rating on Notes to 'Ba1' I R E L A N D ARGON CAPITAL: S&P Withdraws Ratings on Two European CDO Tranches CONWAY PARTNERSHIP: Court to Rule on Summary Judgment Today CREDIT-LINKED ENHANCED: S&P Downgrades Rating on CDO Notes to 'D' DONAL RIGNEY: Bank of Scotland Secures EUR1.5MM Summary Judgment EVANWOOD DEV'T: Court Enters EUR34.57MM Summary Judgment Order FUTURE PRINT: Faces Closure; 110 Jobs Affected MTS INTERNATIONAL: S&P Assigns 'BB' Rating on US$750 Mil. Notes MURRAYS RENT-A-CAR: Pays EUR1.56 Million in Tax Settlement I T A L Y FIAT SPA: Fiom Union Balks at Labor Demands at Pomigliano Plant N E T H E R L A N D S SILVER BIRCH: Moody's Cuts Rating on Class E Notes to 'Caa3' R O M A N I A * Fitch Affirms 'B+' Rating on Romanian Metro Area of Oradea R U S S I A ALFA-BANK OJSC: S&P Affirms 'B+' Counterparty Credit Rating MOBILE TELESYSTEMS: Raises US$750 Mil. in Dollar-Bond Sale MOBILE TELESYSTEMS: Moody's Puts 'Ba2' Rating on US$750 Mil. Notes S P A I N CAJA SAN FERNANDO: S&P Junks Rating on Class A1 Notes From 'BB' MEDIAPRODUCCION SL: Soccer Rights Row Prompts Bankruptcy Filing * SPAIN: To Publish Results of Stress Tests on Banks * SPAIN: Risk Premium on 10-Year Bonds Rises to Decade High U N I T E D K I N G D O M BRITISH AIRWAYS: Talks With Cabin Crew Union Collapse HIGHGATE & DAVENPORTS: In Liquidation; 18 Jobs Affected ROYAL BANK: Raises GBP100-Mil. From Pakistan, UAE Units Sale * UK: Launches Review That May Trigger Bank Break-Ups * UK: Creditors to Be Hit as Insolvency Service Shuts IT System X X X X X X X X * S&P Takes Various Rating Actions on 16 European CDO Tranches * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ********* =============== B U L G A R I A =============== BULGARIAN AMERICAN: S&P Cuts Counterparty Credit Rating to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its long- term counterparty credit rating on Bulgaria-based Bulgarian American Credit Bank to 'B+' from 'BB-'. At the same time, S&P affirmed the short-term rating of 'B'. The outlook is negative. "The downgrade results from S&P's view of the continued deterioration in BACB's loan portfolio in 2010, and its view that the bank's asset quality is likely to remain under pressure in light of the still-tough market conditions in the Republic of Bulgaria (BBB/Stable/A-3)," said Standard & Poor's credit analyst Austen Koles-Boudreaux. The bank's loan portfolio is concentrated in the domestic real estate and construction sector, which S&P view as higher risk, and which has resulted in strong credit deterioration. By March 31, 2010, nonperforming loans (90 days or more overdue) at BACB had increased to 12.5% of the loan portfolio (compared with 9.6% on Dec. 31, 2009, and 5.8% at the previous year-end), with total classified loans now representing almost 40% of total lending. Asset quality deterioration follows sustained growth in the loan portfolio in the years up to 2008, and reflects the significant concentration of BACB's credit exposures toward the real estate development and construction, tourism, and mortgage sectors, which have been particularly affected by the domestic downturn. Credit risks are high and, in S&P's view, only partly mitigated by the bank's good knowledge of its customer base, close monitoring, and active workout of problem loans. The ratings on BACB continue to factor in the bank's niche franchise focused on secured lending to small- and medium-sized enterprises in Bulgaria, its concentrated loan portfolio, deteriorating asset quality indicators, and structurally high liquidity risk profile. The ratings also reflect BACB's strong capitalization and traditionally high profitability, as well as the bank's ownership by, and financial support received from, its main shareholder, Allied Irish Banks PLC (A-/Negative/A-2). "The negative outlook reflects S&P's view that the difficult operating environment in Bulgaria is likely to pressure BACB's asset quality and financial performance, particularly given the bank's concentrated exposure to the domestic real estate sector and local SMEs," said Mr. Koles-Boudreaux. Downward pressure on the ratings would result from a further deterioration in asset quality and increase in provisioning requirements that resulted in a financial loss meaningfully eroding capitalization. Evidence of liquidity and/or cash flow strain would also weigh on BACB's ratings. Weakening support from AIB would, in turn, likely lead us to remove the one-notch uplift in the ratings on BACB. S&P could revise its outlook on BACB to stable if the market environment in Bulgaria were to improve and pressure on the bank's financial profile were to ease, particularly regarding asset quality. Improved granularity and diversification in the loan portfolio would be positive for the ratings on BACB, as would reduced dependence on wholesale funding. =========== F R A N C E =========== LE MONDE: France Telecom to Bid with SFA PAR for 65% Stake ---------------------------------------------------------- Max Colchester at The Wall Street Journal reports that France Telecom SA and Groupe SFA PAR, which controls titles including leftwing weekly Le Nouvel Observateur, will bid around EUR80 million (US$98.8 million) for a 65% stake in Le Monde SA. According to the WSJ, SFA owner Claude Perdriel said that, of this total, France Telecom will offer to pay between EUR20 million and EUR25 million. "We will make a definitive offer next Monday," the WSJ quoted Mr. Perdriel as saying. "By 2011 we can make the paper break even." The WSJ recalls two weeks ago a majority stake in Le Monde was put up for sale as the company struggles to repay debts of around EUR100 million. According to the WSJ, France Telecom and Mr. Perdriel will be bidding against a consortium made up of Lazard France banker Matthieu Pigasse; Xavier Niel, the billionaire founder of telecommunications group Iliad SA; and Pierre Berge, partner of the late fashion designer Yves Saint Laurent. This group is planning to make an offer of between EUR80 million and EUR100 million for a majority stake, the WSJ discloses. Le Monde's supervisory board will announce its preferred bidder on June 28, 2010, the WSJ notes. As reported by the Troubled Company Reporter-Europe on June 4, 2010, Bloomberg News said Le Monde extended a deadline for investors to June 21 after French President Nicolas Sarkozy weighed in on the bids. Bloomberg disclosed that Le Monde spokeswoman Anne Hartenstein on Monday said Mr. Sarkozy last week met with the afternoon daily's chief executive officer, Eric Fottorino, to discuss the newspaper's future. According to Bloomberg, Adrien de Tricornot, vice president of the Society of Editors labor group, said Mr. Fottorino told colleagues that Mr. Sarkozy expressed opposition to the bid from a group that includes Lazard. On June 7, 2010, the Troubled Company Reporter-Europe, citing The Financial Times, reported that Le Monde is in a race against time to find new investors and faces insolvency by the end of July if it fails to recapitalize. Le Monde is a French newspaper. REMY COINTREAU: To Meet with Investors to Propose Junk-Bond Sale ---------------------------------------------------------------- Sonja Cheung at Bloomberg News reports that Remy Cointreau SA is meeting with high-yield debt investors to propose what may be Europe's first junk-bond sale in more than a month. Citing people with knowledge of the matter, Bloomberg says Remy Cointreau hired Credit Suisse Group AG and Credit Agricole CIB to organize the Paris meetings. "There's likely to be appetite for Remy bonds as investors remain hungry for yield and have seen very little issuance," Bloomberg quoted Alex Moss, a fund manager at Insight Investment Management in London, which manages GBP100 billion (US$148 billion) of assets, as saying. "Remy is a good quality name, and will be a good test of the market." According to Bloomberg, bond sales by companies rated below Baa3 at Moody's Investors Service and BBB- by Standard & Poor's have stalled on investor concerns that Europe's debt crisis will hurt economic growth, making it harder for borrowers to repay debt. Headquartered in Cognac, France, Remy Cointreau -- http://www.remycointreau.com/-- offers a range of premium wine and spirit brands, known and recognized throughout the world. These brands include, among others, Remy Martin, Cointreau, Passoa, Metaxa, Mount Gay Rum, Charles Heidsieck and Piper- Heidsieck. * * * As reported by the Troubled Company Reporter-Europe on Jan. 28, 2010, Standard & Poor's Ratings Services said that it has revised its outlook on French spirits manufacturer and distributor Remy Cointreau S.A. to stable from negative. Remy's 'BB-' long-term corporate credit rating was affirmed. At the same time, Moody's Investors Service changed the outlook on Remy Cointreau S.A.'s Ba2 Corporate Family Rating and senior unsecured rating to stable from negative. ============= G E R M A N Y ============= GENERAL MOTORS: Withdraws State Aid Requests for Opel-Vauxhall -------------------------------------------------------------- Andreas Cremer and Angela Cullen at Bloomberg News report that General Motors Co. and its Opel and Vauxhall brands withdrew all applications across Europe for state loan guarantees after failing to reach government agreements. According to Bloomberg, GM said Wednesday in a statement that it will "fund the requirements internally" for a reorganization of Opel and Vauxhall announced seven months ago. Bloomberg notes the company said the amounts and reasons for the funding haven't changed. Bloomberg relates GM Europe President Nick Reilly said Wednesday on a conference call the Opel-Vauxhall operation is sticking to its reorganization plan, funded by GM's improved earnings, and it may return to profit in 2011. Bloomberg notes Mr. Reilly said reorganizing Ruesselsheim, Germany-based Opel and the Vauxhall division in the U.K. will cost EUR3.3 billion. Mr. Reilly, as cited by Bloomberg, said in the absence of the guarantees, GM will provide an additional EUR1.4 billion to Opel and Vauxhall. The Opel-Vauxhall reorganization program includes eliminating 8,300 jobs from a European workforce of 48,000 employees, Bloomberg states. Bloomberg recounts the four German states with Opel factories started talks about possible separate guarantees after Chancellor Angela Merkel said the carmaker may seek their help following the federal authorities' rejection of GM's request. The state governments held a first round of discussions Tuesday without giving any commitment to aiding Opel, Bloomberg discloses. "The decision by the German government was a disappointment for us," while arranging help from the states would have delayed financing further, Bloomberg quoted Mr. Reilly as saying. "We cannot afford to wait for government decisions any longer." As reported by the Troubled Company Reporter-Europe on June 11, 2010, Bloomberg News said Germany turned down GM's request for EUR1.1 billion (US$1.3 billion) in aid for its money-losing Opel division, forcing the automaker to seek new ways to reorganize the unit. "I'm convinced GM has sufficient financial resources," Bloomberg quoted Economy Minister Rainer Bruederle, a Free Democrat, as saying in Berlin on June 9, in explaining why he rejected GM. "The state is not the better entrepreneur." According to Bloomberg, Mr. Bruederle said GM has about EUR10 billion in free liquidity after paying back credits from the U.S. and Canadian governments. Opel is seeking EUR333 million in guarantees from the U.K., EUR437 million from Austria and Spain combined and EUR50 million in project financing from Poland, Bloomberg disclosed, citing a PricewaterhouseCoopers report last month commissioned by the German government. About General Motors General Motors Company -- http://www.gm.com/-- is one of the world's largest automakers, tracing its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM acquired its operations from General Motors Company, n/k/a Motors Liquidation Company, on July 10, 2009, pursuant to a sale under Section 363 of the Bankruptcy Code. Motors Liquidation or Old GM is the subject of a pending Chapter 11 reorganization case before the U.S. Bankruptcy Court for the Southern District of New York. At March 31, 2010, GM had US$136.021 billion in total assets, total liabilities of US$105.970 billion and preferred stock of US$6.998 billion, and non-controlling interests of US$814 million, resulting in total equity of US$23.053 billion. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PHOENIX GROUP: Close to Securing EUR3.6-Bil. in Financing --------------------------------------------------------- Phoenix Group is close to obtaining as much as EUR3.6 billion (US$4.4 billion) in financing, Aaron Kirchfeld and Angela Cullen at Bloomberg News report, citing two people familiar with the negotiations. According to Bloomberg, the people said the company may reach an agreement with banks by early next month on EUR2.6 billion in syndicated loans to refinance existing debt. Bloomberg notes the people said the company also has plans to sell as much as EUR1 billion in hybrid bonds. Bloomberg relates the people said that as part of the refinancing plan, Ludwig Merckle, Adolf Merckle's sole son and heir, agreed to inject EUR500 million in cash and repay a loan to Phoenix. Sources told Bloomberg Mr. Merckle's VEM Vermoegensverwaltung GmbH investment vehicle borrowed as much as EUR500 million from Phoenix as the family patriarch sought to stem his losses. Bloomberg notes one of the people said the refinancing is aimed at bolstering Phoenix's credit standing as it considers selling as much as 25% of Phoenix in an initial public offering in the next year. Phoenix Group is a drug wholesaler based in Mannheim, Germany. The company was started by deceased billionaire Adolf Merckle. PRIMACOM AG: Unit Secures EUR30 Mil. in Liquidity From Lenders -------------------------------------------------------------- Aaron Kirchfeld at Bloomberg News reports that PrimaCom GmbH, a subsidiary of PrimaCom AG, has secured about EUR30 million in liquidity from lenders, allowing it to continue operations. On June 16, 2010, the Troubled Company Reporter-Europe, citing CommsUpdate, reported that the parent company said it will file for insolvency protection, after its shareholders failed to come to an agreement with creditors regarding repayment of a EUR29.2 million (US$35.7 million) loan. PrimaCom AG is a Germany-based holding company engaged in owning and operating cable television (TV) network in Germany. Its subscribers are offered digital television, pay-per-view, video- on-demand, telephone and high-speed Internet services to complement the Company's basic cable television offering. The Company's customers are connected to the 862 megahertz (MHz) networks and have access to more than 100 TV and radio programs. PrimaCom passes 1.4 million homes and serves approximately one million subscribers. The Company is 90.52% owned by Escaline Sarl, Luxembourg, through its indirect subsidiary Omega I Sarl. It operates mainly in six German states, including Berlin, Brandenburg, Sachsen, Sachsen-Anhalt, Thueringen, and Mecklenburg- Vorpommern. As of December 31, 2008, the Company had 28 wholly owned subsidiaries in Germany and Austria, as well as two majority owned subsidiaries in Germany, and one affiliate in Germany. WILHELM KARMANN: Vorwerk Renews Interest in Roof Business --------------------------------------------------------- Jan Schwartz at Reuters reports that Vorwerk Autotec has renewed its interest in Karmann's roof business, having lost out in a previous auction earlier this year. "We have been offered the opportunity to do due diligence and we want to take advantage of this," Vorwerk managing director Peter Coellen told Reuters on Wednesday. Citing German daily Neue Osnabruecker Zeitung, Reuters notes that in addition to Vorwerk Autotec's renewed interest, the company's insolvency administrator, Ottmar Hermann, is discussing possible bids with troubled French niche car and equipment maker Heuliez, and Finnish engineering group Metso Oyj. Financial group Nordwind Capital has also expressed an interest in this round of negotiations, Reuters discloses. As reported by the Troubled Company Reporter-Europe, Karmann filed for bankruptcy protection in April 2009 as the worst slump in automotive markets for decades left the manufacturer unable to pay workers. Headquartered in Osnabrueck, Wilhelm Karmann GmbH -- http://www.karmann.com/-- is a car parts supplier. =========== G R E E C E =========== HELLENIC SECURITISATION: Moody's Cuts Rating on Notes to 'Ba1' -------------------------------------------------------------- Moody's Investors Service announced this rating action on repack notes issued by Hellenic Securitisation S.A. Series 2 -- EUR295M Hellenic Securitisation S.A. - Series 2 EUR 295,000,000 5.875 per cent Asset Backed Notes due 2011 Notes, Downgraded to Ba1; previously on Apr 27, 2010 Downgraded to A3 and Placed Under Review for Possible Downgrade This rating is based on the ability of the Hellenic Republic to guarantee the obligations due under the notes as per the receivables purchase agreement. The Hellenic Republic unconditionally undertakes to pays sufficient funds to the issuer and trustee to enable the issuer to make up any shortfalls in funds to pay debt service. The underlying receivables are the dividends that the CDLF (Consignment Deposits and Loans Fund) of Greece pays each year to the Greek State. The CDLF comprises of loans granted to civil servants and municipalities. Moody's explained that the rating action taken is the result of the Greek Government been downgraded to Ba1 on June 14, 2010. ============= I R E L A N D ============= ARGON CAPITAL: S&P Withdraws Ratings on Two European CDO Tranches ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its credit ratings on two of Argon Capital PLC's European collateralized debt obligation tranches. The withdrawals follow Merrill Lynch's -- the arranger's -- recent notification to us that the notes were fully repurchased. Ratings List Ratings Withdrawn Argon Capital PLC EUR100 Million Limited Recourse Secured Variable-Rate Credit-Linked Notes Series 89 Ratings ------- To From -- ---- NR CCC- Argon Capital PLC EUR50 Million Limited Recourse Secured Credit-Linked Variable-Rate Notes Series 90 Ratings ------- To From -- ---- NR CCC- NR -- Not Rated. CONWAY PARTNERSHIP: Court to Rule on Summary Judgment Today ----------------------------------------------------------- Vivion Kilfeather at The Irish Examiner reports that the Commercial Court's Mr. Justice Peter Kelly adjourned Bank of Ireland's application for summary judgment orders for about EUR63 million against Michael Conway Sr., Michael Conway Jr., Kieran Conway, Burkes Hill and Paudie Dennehy. The report says the bank claims EUR24.3 million is owed under loans advanced to the defendants, trading together as the Conway Partnership, while another EUR38.5 million is due under guarantees allegedly provided by them over the liabilities of Rumex Ltd. and Daphne Investments Ltd., trading as the Dee Partnership. The report relates in response to issues raised by Hugh O'Keeffe, for the defendants, John Hennessy, who is representing BOI, said the receiver had not sold any of the properties and none of the issues raised amounted to a defense. According to the report, Mr. Justice Kelly will rule today, June 18, whether to send the matter to plenary hearing or enter judgment for the sums sought. CREDIT-LINKED ENHANCED: S&P Downgrades Rating on CDO Notes to 'D' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D' from 'CCC-' and then withdrew its credit rating on Credit-Linked Enhanced Asset Repackagings (C.L.E.A.R.) PLC's collateralized debt obligation series 7 notes. The withdrawal follows the arranger's recent notification to us that the transaction redeemed early. On the early termination date, the noteholders received zero principal payment. Ratings List Rating Lowered and Withdrawn Credit-Linked Enhanced Asset Repackagings (C.L.E.A.R) PLC US$2 Billion Credit Assessment on the Principal Portfolio Series 7 Ratings ------- To From -- ---- D CCC- NR D NR -- Not Rated. DONAL RIGNEY: Bank of Scotland Secures EUR1.5MM Summary Judgment ---------------------------------------------------------------- Vivion Kilfeather at The Irish Examiner reports that Bank of Scotland Ireland secured summary judgment for about EUR1.5 million against Donal Rigney and his company Donal Rigney Ltd. Donal Rigney Ltd. is based at Mountpleasant, Bluebell, Tullamore. EVANWOOD DEV'T: Court Enters EUR34.57MM Summary Judgment Order -------------------------------------------------------------- Vivion Kilfeather at the Irish Examiner reports that the Commercial Court's Mr. Justice Peter Kelly made summary judgment orders against Gerard Clohessy arising from six loan accounts operated by the Limerick developer with the Irish Nationwide Building Society. According to the report, INBS claimed the total amount owed under the various accounts, plus interest, was EUR34.57 million. The report notes the society said the loan arrangements were principally connected with the Evanwood development being carried out by Mr. Clohessy at Golf Links Road, Castletroy, Limerick, the Drominbeg Housing Estate development at Rhebogue, Co Limerick and the purchase of other investment properties at Rhebogue. The report relates the society said it learned for the first time in November 2009 that judgment mortgages had been registered against Mr. Clohessy's property interests which were not notified to it, constituting a major event of default of the conditions of the loan facilities. The report recalls that in March 2010, it issued letters of demand and also appointed a receiver over several properties. Mr. Clohessy entered no appearance or defense to the claims and in those circumstances summary judgment was entered, the report discloses. FUTURE PRINT: Faces Closure; 110 Jobs Affected ---------------------------------------------- Colm Keena at The Irish Times reports that Future Print, which was placed in examinership in March, is to close with the loss of 110 jobs after efforts to find new investors failed. The report recalls David Carson of Deloitte was appointed examiner to the company in April. According to the report, notes for the company's accounts, which are dated June 2009, state that conditions had deteriorated acutely, margins had been much reduced, and competition had increased. The company's premises were valued at EUR7.75 million, the report discloses. The report says group borrowings were EUR7 million with some of the borrowings being the subject of personal guarantees from the directors, Chris and Jacqueline Jameson. A subsidiary, Fodhla Printing Company, had gone into liquidation, the report relates. Future Print is a printing company based in Baldoyle, Dublin 13. MTS INTERNATIONAL: S&P Assigns 'BB' Rating on US$750 Mil. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB' issue rating to the proposed US$750 million loan participation notes to be issued by the special purpose vehicle MTS International Funding Ltd., which is incorporated as a company limited by shares under the laws of the Republic of Ireland and owned 100% by a charitable trust. S&P has not assigned a corporate credit rating to MTS International Funding, nor have S&P assigned a recovery rating to the proposed notes. The proceeds of the proposed notes will be used to fund a proposed loan facility for the largest provider of mobile telecoms services in Russia and the Commonwealth of Independent States, Mobile TeleSystems (OJSC) (BB/Stable/--). S&P has assigned a debt rating of 'BB' to the proposed loan facility (in line with the corporate credit rating on MTS). The recovery rating on this facility is '3', indicating S&P's expectation of meaningful (50%-70%) recovery for creditors of the loan in the event of a payment default. The ratings on the proposed notes and on the proposed loan facility are based on preliminary information and are subject to S&P's satisfactory review of the final documentation. In the event of any changes to the amount and terms of the notes or the facility, the recovery and issue ratings might be subject to further review. The rating on the proposed loan facility is predicated on S&P's understanding that this facility will have an unsecured claim on MTS, thereby ranking pari passu with the existing unsecured creditors at MTS. The rating on the proposed notes is based on the direct pass- through of the economic benefit of the loan facility to the noteholders, through notes whose terms are back to back with those of the loan facility. MTS International Funding is an orphan SPV, whose activity is limited only to the issue of the notes and the onlending of the proceeds to MTS. These features offset the facts that neither MTS nor any of its subsidiaries will either guarantee or provide any credit support to MTS International Funding, and that the notes will not have a direct claim on the cash flows and assets of MTS and its subsidiaries. The rating on the proposed notes reflects the rating on the proposed loan facility. Any change to the preliminary documentation relating to the pass-through features and other legal aspects of the transaction could have a material impact on the rating on the proposed notes. Recovery Analysis The proposed loan facility has a recovery rating of '3', indicating S&P's expectation of meaningful (50%-70%) recovery for creditors of the loan in the event of a payment default. S&P value the MTS group on a going-concern basis. Given MTS' leading market positions in Russia and the CIS, established network assets, and valuable customer base, S&P believes that a default would most likely result from excessive leverage as a result of operating underperformance. At the hypothetical point of default, S&P values the company at about US$6.2 billion. The issue and recovery ratings on the proposed loan facility take into account the nature of MTS' assets, the probability of a restructuring or going-concern sale, and the likelihood of insolvency proceedings being adversely influenced by MTS being domiciled in Russia, which S&P considers to be a relatively unfavorable jurisdiction for creditors. With regard to the pass-through transaction, although S&P has not assigned a recovery rating to the proposed notes, S&P believes that recovery prospects for these notes are intrinsically linked to those for the loan facility, based on S&P's understanding that the noteholders will be granted the same rights as those under the loan facility. As a result, S&P considers that potential recoveries for noteholders would rely entirely on the effective operation of the pass-through structure between MTS and the issuer, MTS International Funding. In addition, S&P foresees a risk that enforcement costs at the issuer level could create an additional layer of expense that may slightly reduce the recovery prospects for noteholders versus the direct recovery prospects for the loan facility lender. Ratings List New Ratings MTS International Funding Ltd. US$750 mil. loan participation notes (proposed) BB Mobile TeleSystems (OJSC) Loan facility (proposed) BB Recovery Rating MURRAYS RENT-A-CAR: Pays EUR1.56 Million in Tax Settlement ---------------------------------------------------------- Colm Keena at The Irish Times reports that Murrays Rent-a-Car Ltd. for a period, made a settlement of EUR1.56 million arising from the under-declaration of VAT. The company went into examinership in 2009. ========= I T A L Y ========= FIAT SPA: Fiom Union Balks at Labor Demands at Pomigliano Plant --------------------------------------------------------------- Guy Dinmore at The Financial Times reports that Fiat car workers at a plant in Naples came under intense pressure on Wednesday to vote in favor of management proposals for sweeping changes in work practices and labor rights. The FT relates four unions agreed on Tuesday to Fiat's proposals -- a precondition for investing EUR700 million in the Pomigliano D'Arco plant -- but the largest metalworkers union, Fiom, refused to sign and denounced the proposed ballot next week as "blackmail". According to the FT, Guglielmo Epifani, leader of the leftwing CIGL federation which includes Fiom, said on Wednesday that it was important for all workers to take part in the June 22 ballot at the plant and declared that he believed a majority would vote in favor of the reforms. Fiat's investment plans for Italy focus on closing a plant in Sicily but expanding output at Pomigliano by transferring production of the Panda model from Poland, the FT states. Sergio Marchionne, Fiat chief executive, has indicated that Pomigliano would have no future if all the unions did not come on board, the FT notes. Fiom leaders say Fiat's demands, including possible sanctions against absenteeism and strikers, broke existing labor contracts and were unconstitutional, the FT discloses. About Fiat SpA Headquartered in Turin, Italy, Fiat SpA (BIT:F) -- http://www.fiatgroup.com/-- is principally engaged in the design, manufacture and sale of automobiles, trucks, wheel loaders, excavators, telehandlers, tractors and combine harvesters. Through its subsidiaries, Fiat operates mainly in five business areas: Automobiles, including sectors led by Maserati SpA, Ferrari SpA and Fiat Group Automobiles SpA, which design, produce and sell cars under the Fiat, Alfa Romeo, Lancia, Fiat Professional, Abarth, Ferrari and Maserati brands; Agricultural and Construction Equipment, which is led by Case New Holland Global NV; Trucks and Commercial Vehicles, which is led by Iveco SpA; Components and Production Systems, which includes the sectors led by Magneti Marelli Holding SpA, Teksid SpA, Comau SpA and Fiat Powertrain Technologies SpA, and Other Businesses, which includes the sectors led by Fiat Services SpA, a publishing house Editrice La Stampa SpA and an advertising agency Publikompass SpA. With operations in over 190 countries, the Group has 203 plants, 118 research centers, 633 companies and more than 198,000 employees. * * * As reported by the Troubled Company Reporter-Europe on April 27, 2010, Standard & Poor's Ratings Services said that it placed its 'BB+' long-term corporate credit rating on Italian industrial group Fiat SpA on CreditWatch with negative implications. At the same time, the 'B' short-term credit rating on Fiat was affirmed. In addition, S&P placed the 'BB+' long-term rating on Fiat's subsidiary CNH Global N.V. on CreditWatch with developing implications. "The CreditWatch placement reflects S&P's view that Fiat's credit quality could weaken due to increased business risk as a consequence of the proposed demerger of CNH, Iveco SpA (not rated), and the industrial and marine divisions of Fiat Powertrain Technologies into the newly created entity Fiat Industrial SpA," said Standard & Poor's credit analyst Barbara Castellano. ===================== N E T H E R L A N D S ===================== SILVER BIRCH: Moody's Cuts Rating on Class E Notes to 'Caa3' ------------------------------------------------------------ Moody's Investors Service has taken these rating actions on notes issued by Silver Birch CLO I B.V.: -- EUR205.5M Class A Senior Secured Floating Rate Notes due 2020 Notes, Aa1 Placed Under Review for Possible Downgrade; previously on Nov 18, 2009 Downgraded to Aa1 -- EUR18M Class B Senior Secured Floating Rate Notes due 2020 Notes, A2 Placed Under Review for Possible Downgrade; previously on Nov 18, 2009 Downgraded to A2 -- EUR21M Class C Senior Secured Deferrable Floating Rate Notes due 2020 Notes, Downgraded to Ba1 and Placed Under Review for Possible Downgrade; previously on Nov 18, 2009 Confirmed at Baa3 -- EUR18M Class D Senior Secured Deferrable Floating Rate Notes due 2020 Notes, Downgraded to B2 and Placed Under Review for Possible Downgrade; previously on Nov 18, 2009 Downgraded to B1 -- EUR7.5M Class E Senior Secured Deferrable Floating Rate Notes due 2020 Notes, Downgraded to Caa3; previously on Nov 18, 2009 Downgraded to Caa1 This transaction is a managed cash leveraged loan collateralized loan obligation with exposure to predominantly European senior secured loans. The rating actions reflect further deterioration in the credit quality of the portfolio. This is observed through a decline in the portfolio weighted average rating factor 'WARF' (3100 in April 2010, compared to 2627 in September 2009) and an increase in the proportion of securities rated Caa1 and below in the portfolio (25.35% in April 2010, compared to 16.62% in September 2009). Moody's notes a significant amount of cash in the principal account, currently EUR36.7 million (approximately 13% of the pool) as per the April 2010 trustee report. Moody's assumed in its analysis full reinvestment of the cash and looked at several scenarios of WARF, diversity score and par changes (taking into account WARF projections provided by the collateral manager). This includes a number of sensitivity analyses, including consideration of an improvement in portfolio WARF. Further, Moody's has taken into consideration West LB's decision to exit the transaction, in their role as collateral manager. West LB informed us of a back-up plan to ensure complete reinvestment of the cash if the appointment of a successor collateral manager fails to take place before the end of the reinvestment period. Moody's will closely monitor the evolution of the portfolio in the coming months and will conclude its review for downgrade once the transition to a new collateral manager and reinvestment of cash has been completed. ============= R O M A N I A ============= * Fitch Affirms 'B+' Rating on Romanian Metro Area of Oradea ------------------------------------------------------------ Fitch Ratings has affirmed the Romanian Metropolitan Area of Oradea's Long-term foreign and local currency ratings at 'B+', respectively, and its Short-term foreign currency rating at 'B'. The Outlooks on the Long-term ratings are Stable. The ratings reflect OMA's main objective of providing economic and infrastructure development to the metropolitan area which is of high importance to its 12 local authority members. The ratings also factor in the importance of the City of Oradea ('BB+'/Stable) to the metropolitan area as its main sponsor and revenue contributor. The ratings also take into account OMA's limited revenue flexibility and small budget. A clear commitment by Bihor County Council to the obligations of OMA's members in the form of a guarantee, and/or an improvement of the Romanian economy, positively affecting the creditworthiness of Romanian local authorities and Oradea in particular, would be positive for OMA's ratings. Further deterioration in OMA's budgetary performance and an operating margin turning to negative, which could stem from delays in member contributions, and/or deterioration in Oradea's ratings would be negative for OMA's ratings. OMA has a short track record although its performance to date has been good with reported overall surpluses. According to Fitch's calculations, the operating margin declined to 8.9% in 2009, significantly below the average margin of 38.6% for 2005-2009. This development is driven by expanding business and associated higher personnel and administrative expenditure, while fees remained rather stable. In Fitch's' view, contributions should remain sufficient to run the association's administration. OMA's limited budget size, with total revenue of just RON1.39 million in 2009, is a rating constraint but is mitigated somewhat by its sound liquidity position with cash-balance covering operating expenditure by almost 100% at end-2009. Romania's highly centralized budgetary system ensures adequate support and control from the central government, as the state supervises local authorities' accounts and financial positions including debt approval, but it also limits their budgetary flexibility. In addition, the current mayor of Oradea has clearly stated the importance of OMA with respect to economic and infrastructure development and the improvement of Oradea and its associated communes, ensuring the necessary support for annual contributions to the association's operating and business activities. OMA was founded in 2005 as an association of nine -- since increased to 12 -- local authorities for the purpose of implementing common projects to benefit the economic and infrastructural development of the metropolitan area. OMA's total population is about 250,000 inhabitants, most of whom (205,000) are located in Oradea which is the capital and largest city of Bihor County located in north-west Romania. =========== R U S S I A =========== ALFA-BANK OJSC: S&P Affirms 'B+' Counterparty Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'B+' long-term and 'B' short-term global scale counterparty credit ratings and its 'ruA+' Russia national scale rating on Russia- based OJSC Alfa-Bank. At the same time S&P revised the outlook to positive from stable. "The outlook revision reflects Alfa-Bank's improving financial profile, namely its stronger balance sheet liquidity; the stabilization of asset quality and core revenues; and maintenance of capitalization at an adequate level," said Standard & Poor's credit analyst Elena Romanova. Although the bank's financial profile has begun to recover somewhat ahead of those of domestic peers, the improvements largely depend on a sustained recovery in Russia's economy and markets. In addition, S&P has observed that the bank's management follows a conservative development strategy, which it has been implementing since 2009, which S&P believes should help it mitigate to some extent the continuing high risks that banks in Russia are exposed to. The ratings reflect Alfa-Bank's stand-alone credit profile and do not include any uplift for potential extraordinary external support, either from owners or the government. The bank's financial and business profiles have suffered as a result of the more challenging conditions in Russia and global markets. Alfa-Bank's loans overdue by more than 90 days stood at 13% of its loan portfolio at year-end 2009, but had fallen to 9% by March 31, 2010, as it has continued to restructure problem loans. Restructured loans amounted to 11.5% of total loans on Jan. 1, 2010. Credit risks are exacerbated by high single-name and industry concentrations, especially in the high-risk construction sector, representing 14% of total loans on Jan. 1, 2010. Even though S&P anticipates a large share of restructured loans to turn performing, S&P still expects provisioning costs to remain high in 2010, and margins to come under pressure from tougher competition for deposits and good-quality borrowers. Consequently, profitability is likely to remain constrained, in S&P's view. The positive outlook reflects S&P's view that Alfa-Bank's financial profile will continue to improve over the next 12 months, with asset quality and subsequent credit losses reducing to more manageable levels. Preprovision operating income is therefore likely to stabilize with a reduced cost of risk and enhance the bank's internal capital-generation capacity. S&P anticipate that the bank's current adequate capitalization will be sustained, given the bank's more conservative asset growth targets in 2010. "S&P would consider an upgrade if S&P see continued improvement in asset quality closer to pre-2008 levels, particularly with respect to the overall portfolio (including restructured loans), which S&P believes will lead to more robust profitability and capitalization," said Ms. Romanova. A reduction or loss of this positive momentum would result in a revision of the outlook back to stable. S&P could lower the ratings if S&P sees a weakening of Alfa-Bank's credit profile, with a negative spillover onto the bank's financial and credit standing and liquidity and capitalization, although this is not S&P's base-case expectation. MOBILE TELESYSTEMS: Raises US$750 Mil. in Dollar-Bond Sale ---------------------------------------------------------- Tim Catts and Denis Maternovsky at Bloomberg News report that OAO Mobile TeleSystems raised US$750 million in the biggest dollar-bond sale by an emerging-market company in almost two months. The 10-year notes were priced at par to yield 8.625%, or 531.7 basis points more than similar-maturity Treasuries, Bloomberg data show. "With longer-term financing unavailable on the domestic market we believe a limited portion of our debt portfolio should be in hard currencies providing longer tenure," Chief Financial Officer Alexei Kornya said in an e-mailed response to questions from Bloomberg. "Any deal around US$1 billion with tenure of 10 years extends the average maturity of our debt outstanding by one year." Mr. Kornya, as cited by Bloomberg, said the company seeks to limit the share of foreign- currency debt to no more than 30%. The bond sale was organized by Bank of America Merrill Lynch, Credit Suisse Group AG and Royal Bank of Scotland Group Plc, Bloomberg discloses. Headquartered in Moscow, Mobile TeleSystems OJSC -- http://www.mtsgsm.com/-- is a provider of mobile cellular communications services in Russia, Uzbekistan, Turkmenistan and Armenia and Ukraine. During the year ended December 31, 2008, the Company had a subscriber base of 91.33 million (64.63 million in Russia, 18.12 million in Ukraine, 5.65 million in Uzbekistan, 0.93 million in Turkmenistan and 2.02 million in Armenia). In addition to standard voice services, the Company offers its subscribers value added services, including voice mail, short message service (SMS), general packet radio service (GPRS), augmented by enhanced data rates for GSM evolution (EDGE), high-speed downlink packet access (HSDPA), and various SMS- and GPRS/EDGE/HSDPA-based information and entertainment services (including multi media message service (MMS)). It also offers its subscribers the ability to roam automatically throughout Europe and in much of the rest of the world. * * * Mobile Telesystems' debt is rated Ba2, two levels below investment grade, by Moody's Investors Service and an equivalent BB at Standard & Poor's, according to Bloomberg News. MOBILE TELESYSTEMS: Moody's Puts 'Ba2' Rating on US$750 Mil. Notes ------------------------------------------------------------------ Moody's Investors Service has assigned a (P) Ba2, LGD4/58% rating to Mobile TeleSystems OSJC's issuance of US$750 million 8.625% Loan Participation Notes due 2020. MTS's other ratings remain unchanged (Ba2 corporate family and Ba2 senior unsecured ratings). The outlook for all ratings is stable. On June 15, 2010, MTS priced the Notes to refinance its foreign currency (non-ruble) denominated liabilities and for general corporate purposes. The Notes will be issued through a special purpose finance vehicle, MTS International Funding Limited, created for the sole purpose of on-lending the proceeds to MTS. The Notes will represent a secured limited recourse obligation of the Issuer. The Notes will be secured on all the rights to principal, interest and additional amounts payable from MTS to the Issuer pursuant to a loan agreement between MTS and the Issuer. The provisional (P) Ba2 rating reflects the fact that the claim of the Issuer on MTS's assets by virtue of the loan to it will rank pari passu with other unsecured liabilities of MTS. The Notes will not benefit from financial covenants. Certain covenants, including, inter-alia, the sale of assets and the merger, consolidation and disposition of assets covenant would disappear if MTS acquires investment grade status. Moody's issues provisional ratings in advance of the final issue of securities, and these ratings only represent Moody's preliminary opinion. Upon a conclusive review of the transaction and associated documentation, Moody's will endeavor to assign a definitive rating to the securities. A definitive rating may differ from a provisional rating. Moody's last rating action was implemented on October 14, 2009, when it confirmed all MTS's ratings. MTS is the largest wireless telecommunication operator in Russia with US$9.8 billion in revenues and US$4.5 billion in reported OIBDA (45.5% margin) at December 31, 2009. ========= S P A I N ========= CAJA SAN FERNANDO: S&P Junks Rating on Class A1 Notes From 'BB' --------------------------------------------------------------- Standard & Poor's Rating Services lowered and removed from CreditWatch negative its credit rating on the class A1 notes in Caja San Fernando CDO I Fondo de Titulizacion de Activos series USD. The ratings on the class A2, B, C, and D notes remain unaffected. S&P placed the class A1 notes on CreditWatch negative on Sept. 17, 2009, as a result of S&P's revised corporate collateralized debt obligation criteria. The rating actions follow a review of this transaction under S&P's updated CDO criteria, which apply to corporate CDOs and transactions that are backed by pools of corporate CDO securities, as well as S&P's assessment of the credit deterioration in the transaction portfolio. The underlying portfolio comprises primarily 2002 and 2003 vintage U.S. CDOs of asset-backed securities. According to S&P's analysis, the number of performing assets remaining in the portfolio is very limited, with up to 48% of the portfolio currently rated 'CC' or 'D'. S&P's analysis also shows that a further 17.5% of the portfolio is currently rated within the 'CCC' rating category. In S&P's view, the portfolio is highly concentrated with the five largest obligors together accounting for about 22.5% of the portfolio. As a result of these developments, the existing rating on the class A1 notes is, in S&P's opinion, no longer commensurate with the available credit enhancement, and S&P has therefore lowered the rating on them. Ratings List Caja San Fernando CDO I Fondo de Titulizacion de Activos US$171 Million Fixed- And Floating-Rate Notes Series USD Rating Lowered and Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- A1 CCC- BB/Watch Neg Ratings Unaffected Class Rating ----- ------ A2 CCC- B CC C CC D CC MEDIAPRODUCCION SL: Soccer Rights Row Prompts Bankruptcy Filing --------------------------------------------------------------- Paul Tobin at Bloomberg News reports that Mediaproduccion SL said Wednesday it was seeking protection from creditors after Sogecable SA failed to make a payment to broadcast games next season. Madrid-based pay-television company Sogecable and Mediaproduccion were locked in a dispute over control of soccer broadcast rights in recent years, Bloomberg relates. Bloomberg recalls the battle led to legal challenges and in March a court ruled that Mediaproduccion had to pay EUR97 million (US$119.3 million) in damages to Audiovisual Sport, a unit of Sogecable. According to Bloomberg, Sogecable said in a statement late Wednesday that it had demanded the execution of the March ruling on June 9. Based in Barcelona Mediaproduccion SL is the owner of the broadcast rights for the Spanish soccer league. * SPAIN: To Publish Results of Stress Tests on Banks ---------------------------------------------------- Gavin Finch and Simon Clark at Bloomberg News report that the Bank of Spain's decision to publish the results of stress tests on the nation's lenders may force European neighbors to follow suit as investors demand more disclosure of the risks on banks' books. "Pressure is increasing and now European countries need to consider whether to follow Spain," Bloomberg quoted Daniel Hupfer, who helps manage US$40 billion at M.M. Warburg in Hamburg, including shares of Deutsche Bank AG, BNP Paribas SA and Banco Santander SA, as saying. "Whether they will is hard to predict. Europe isn't really seeing eye-to-eye right now." Bloomberg relates Miguel Angel Fernandez Ordonez, the central bank governor, said in a speech Wednesday that the Bank of Spain will make the findings public to give investors more information on the state of the banks. The Bank of Spain intends "to reveal the deterioration estimated, the consequent capital requirements and the capital funding committed, to provide the markets with a perfectly clear idea of the situation of the Spanish banking system," Mr. Fernandez Ordonez said in the text of the speech delivered in Madrid, according to Bloomberg. Greece's sovereign debt woes have focused attention on Spain's public finances and the costs of buttressing the country's banks, including the foundation-based lenders known as "cajas" that have been hobbled by a surge in bad debts, Bloomberg notes. * SPAIN: Risk Premium on 10-Year Bonds Rises to Decade High ----------------------------------------------------------- Emma Ross-Thomas at Bloomberg News reports that Spain, which faces EUR24.7 billion of maturing debt in July, has seen the risk premium on its 10-year bonds rise to a decade high on concern it may need to tap a European Union financial lifeline. According to Bloomberg, the Treasury said Spain plans to sell as much as EUR3.5 billion (US$4.3 billion) of 10- and 30-year bonds. Bloomberg says the yield on the country's benchmark 10-year bond rose to 4.939% at auctions on Thursday, June 17, the highest in almost eight years and 89 basis points more than the 4.045% it paid at the last 10-year auction on May 20. Spain is trying to convince investors it can cut the third- largest deficit in the euro region, while propping up the country's savings banks and lifting the economy out of a two-year slump, Bloomberg states. Bloomberg relates the auction comes as EU leaders meet in Brussels to advance their plan to establish a EUR750-billion financial backstop to support high-deficit nations such as Spain and defend the euro. Bloomberg notes concern is also mounting that Spain will need funds to pump liquidity into its banking system. Spanish lenders have been hit by a surge in bad loans stemming from the collapse of its real- estate market, and the Bank of Spain has had to seize two savings banks, Bloomberg discloses. Short-term lending has dried up as confidence in the banks wanes, Bloomberg states. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Talks With Cabin Crew Union Collapse ----------------------------------------------------- Kaveri Niththyananthan at Dow Jones Newswires reports that fresh talks between British Airways PLC and Unite, the union representing cabin crew broke, down Tuesday despite a mediator having suggested a proposal aimed at breaking the deadlock. "Having given the parties time to reflect upon this initiative, ACAS met separately with the parties [Tues]day," Dow Jones quoted a spokesperson for the Advisory, Conciliation and Arbitration Service, which has been mediating the dispute, as saying. "Regrettably, the parties were unable to move closer to an agreement." Dow Jones notes ACAS said no further meetings are planned but it will monitor developments. According to Dow Jones, a spokesman for BA said it remains available for further talks. Dow Jones relates BA and Unite have been in dispute for 16 months over changes to working practices, and tensions have flared in recent months after the carrier removed travel perks for those cabin crew who joined the picket lines in strikes earlier this year. Ballot On June 11, 2010, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that BA's cabin-crew union said it will ballot members on further strike action, with the timing of the vote the only issue to be resolved. Bloomberg disclosed Brian Boyd, the Unite union's national officer for aviation, said that in addition to contract terms, the vote will concern the removal of travel perks for striking workers and disciplinary action taken during the dispute. The union, Bloomberg said, estimates the strike has cost the carrier GBP7 million (US$10.2 million) a day. 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 March 19, 2010, Moody's Investors Service 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. Moody's said 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 HIGHGATE & DAVENPORTS: In Liquidation; 18 Jobs Affected ------------------------------------------------------- Martyn Leek at M&C reports that Highgate & Davenports has gone into liquidation, with the loss of 18 jobs. According to the report, the company, which entered into a pre-pack administration less than a year ago, will be liquidated on Friday. The company owes in the region of GBP0.5 million in unpaid excise duty, the report says. The report relates Peter Darcy, of KJ Watkin & Co, an Aldridge- based insolvency practitioner, said: "The company has ceased trading and all employees have been made redundant." Highgate & Davenports is the operator of the historic Walsall- based brewery. It produced beers including Davenports IPA, according to M&C. ROYAL BANK: Raises GBP100-Mil. From Pakistan, UAE Units Sale ------------------------------------------------------------ Jennifer Hill at The Scotsman reports that Royal Bank of Scotland had raised more than GBP100 million by selling units in Pakistan and the UAE. According to the report, the bank said it had sold its Pakistan unit for GBP34 million to Faysal Bank, owned by Bahraini company Ithmaar. The report relates RBS said it was also disposing of its retail banking business in the UAE to Abu Dhabi Commercial Bank. It will pay a cash sum equal to the net asset value of the unit on completion plus a premium of around GBP31 million, the report says. The two transactions, collectively worth GBP102 million, are subject to regulatory approval, the report notes. The Pakistan deal is expected to complete in the third quarter of the year, with the UAE disposal in the fourth quarter, the report discloses. About RBS The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed of its entire interest in Global Voice Group Ltd. * * * As reported by the Troubled Company Reporter-Europe on March 29, 2010, Standard & Poor's Ratings Services said that it lowered its ratings on "may pay" Tier 1 securities issued or guaranteed by The Royal Bank of Scotland Group PLC (A/Stable/A-1) to 'C' from 'CC'. At the same time, the rating on the RBSG-related security issued by Argon Capital PLC was similarly lowered to 'C' from 'CC'. The counterparty credit ratings and stand-alone credit profiles of RBSG and subsidiaries, and the ratings on other debt securities issued by these entities, are unaffected. * UK: Launches Review That May Trigger Bank Break-Ups ----------------------------------------------------- Jeff Salway at The Scotsman reports that a year-long review that could trigger the break-up of the UK's biggest banks was launched Wednesday. According to the report, the Independent Commission on Banking will examine if the risks posed by banks of "different size, scale and function" demand the separation of investment and retail banking operations. The commission will be chaired by Sir John Vickers, former head of the Office of Fair Trading, once chief economist of the Bank of England and a member of the Bank's monetary policy committee between 1998 and 2000, the report discloses. The report says the commission, which will make its recommendations to the cabinet committee on banking by September 2011, will also examine the extent to which the biggest banks benefit competitively from being perceived as too big to fail and look at how to reduce the impact of bank failure. Breaking up banks would eliminate conflicts of interest and contribute to a safer system, according to the commission, which also recommended the establishment of "living wills" to manage future bank collapses and a ban on commissions or bonuses not linked to performance, the report states. * UK: Creditors to Be Hit as Insolvency Service Shuts IT System --------------------------------------------------------------- Rachael Singh at Accountancy Age reports that creditors could find themselves more than GBP19 million out of pocket while the Insolvency Service shuts its IT system down for 10 days. According to the report, insolvency practitioners will be unable to request payments, on behalf of creditors, from the Official Receivers' offices, as the government agency upgrades its technology system in an GBP82 million project. The report notes the government agency had given insolvency practitioners "as much notice as possible", equating to around six weeks, and said it has made provisions for the extra payments required for creditors when the upgrade is completed. The Insolvency Service expects all its major online based services, including insolvency notices sent to the London Gazette and support services, to be disrupted during this period, the report states. =============== X X X X X X X X =============== * S&P Takes Various Rating Actions on 16 European CDO Tranches -------------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions on 16 European synthetic collateralized debt obligation tranches. Specifically, S&P: * Removed from CreditWatch negative its ratings on eight tranches; * Lowered and removed from CreditWatch negative its rating on one tranche; * Raised and removed from CreditWatch positive its ratings on six tranches; and * Raised and kept on CreditWatch positive its rating on one tranche. The rating actions follow S&P's recent rating actions on the underlying collateral, reference obligor, or guarantor to which these transactions are weak-linked. According to the transaction documents, the ratings on these tranches are linked to the rating on the underlying collateral, reference obligor, or guarantor. Under S&P's criteria, changes to the weak-linked rating should be reflected in its rating on the CDO tranche. Ratings List Ratings Removed From Creditwatch Negative Aria CDO II US$50 Million Class L-2U7 Accreting Composite Security Secured Portfolio Credit-Linked Notes (Issued By Aria CDO II (Ireland) PLC) Rating ------ To From -- ---- AAAp AAAp/Watch Neg Cheyne Credit SPI (Ireland) PLC US$5 Million Non-Coupon Paying Cheyne Managed CSO Fund-Linked SPI Notes Series 21 Rating ------ To From -- ---- AAAp AAAp/Watch Neg Eirles Four Ltd. EUR79.2 Million Variable Coupon Secured Notes Series 68 Rating ------ To From -- ---- AAA AAA/Watch Neg Eirles Two Ltd. EUR15.75 Million Variable Coupon And Redemption Amount Secured Notes Series 142 Rating ------ To From -- ---- AAA AAA/Watch Neg Far East Funding I SPC Ltd. US$100 Million Principal Protected Notes Series 2007-04 Rating ------ To From -- ---- Ap Ap/Watch Neg Modjeska Canyon S.A. US$15 Million Mezzanine Notes Series 2005-02U Rating ------ To From -- ---- AAA AAA/Watch Neg Modjeska Canyon S.A. US$5 Million Combination Notes Series 2005-06U Rating ------ To From -- ---- AAA AAA/Watch Neg Pisces Finance Ltd. CLP2.7 Billion Secured Inflation-Linked and Credit-Linked Fixed-Rate Notes Series 2006-02 Rating ------ To From -- ---- BBB- BBB-/Watch Neg Rating Lowered and Removed From Creditwatch Negative Coriolanus Ltd. EUR6 Million Pass-Through Floating-Rate Secured Notes Series 28 Rating ------ To From -- ---- B- B+/Watch Neg Ratings Raised and Removed From Creditwatch Positive Aria CDO I CHF58.4 Million, EUR31.5 Million, GBP0.4 Million, US$17.4 Million Floating-Rate Secured Notes (Issued By Aria CDO I (Cayman Islands) Ltd.) Series 7 Rating ------ To From -- ---- BBB+ BBB-/Watch Pos Aria CDO I CHF58.4 Million, EUR31.5 Million, GBP0.4 Million, US$17.4 Million Floating-Rate Secured Notes (Issued By Aria CDO I (Cayman Islands) Ltd.) Series 6 Rating ------ To From -- ---- BBB+ BBB-/Watch Pos Edam Funding One Ltd. EUR20 Million Limited Recourse Floating-Rate Credit-Linked Notes Series 2006-1 Rating ------ To From -- ---- B+ B-/Watch Pos Edam Funding One Ltd. EUR25 Million Limited Recourse Floating-Rate Credit-Linked Notes Series 2006-02 Rating ------ To From -- ---- B+ B-/Watch Pos Edam Funding One Ltd. EUR20 Million Limited-Recourse Floating-Rate Credit-Linked Notes Series 2006-03 Rating ------ To From -- ---- B+ B-/Watch Pos Eirles Two Ltd. US$50 Million Floating-Rate Secured Notes Series 120 Rating ------ To From -- ---- BBB- BB+/Watch Pos Rating Raised and Kept on Creditwatch Positive Prelude Europe CDO Ltd. A$40 Million Credit-Linked Notes Series 2005-4 (Credit Sail) Rating ------ To From -- ---- B-/Watch Pos CCC+/Watch Pos * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ---------------------------------------------------------- Authors: Thomas J. Salerno; Craig D. Hansen; Jordan A. Kroop Publisher: Beard Books Hardcover: 728 pages List Price: US$174.95 The newly revised edition of The Executive Guide To Corporate Bankruptcy is perfectly timed. As the global economy continues to deteriorate, more and more companies are sinking into insolvency with executives at their helm who need a crash course in bankruptcy realities. This excellent book will quickly get both the seasoned executive and the uninitiated lawyer up to speed on the bankruptcy process. Salerno, Kroop and Hansen understand that the reorganization process can be intimidating, puzzling, and generally unpleasant. They penetrate the opaque gloom that some lawyers tend to perpetuate. Each chapter of this book addresses a different aspect of the reorganization process, beginning with an overview of the origins and purpose of US bankruptcy laws and ending with a debunking of common myths about reorganization. In between, they discuss each chapter of the bankruptcy code; discussing the gamut from liquidations through Chapter 11 sales and full-blown reorganizations. The authors' ability to distill the bankruptcy code's complex language into comprehensible and manageable blocks of information makes the book extremely readable. The Executive Guide is full of pragmatic advice. After laying out the essential elements and key players in the restructuring process, the authors get down to the nitty gritty of navigating a distressed company through reorganization. They realistically assess the challenges that an executive should expect to face in Chapter 11. They discuss how to assuage and balance the concerns of employees and key vendors, address the inevitable creditor dissatisfaction with executive compensation, deal with members of their professional team and work effectively as an executive whose actions will be constantly scrutinized and second-guessed. The authors also provide the cautionary note that "executives preparing to embark on a reorganization are usually too preoccupied with business emergencies to think about the personal toll that the process will exact." One common flaw in books that try to be accessible while dealing with technical topics is that they fall short in providing the reader with a substantive understanding of the subject matter. The Executive Guide to Corporate Bankruptcy avoids this pitfall. The book's fourth and fifth chapters provide in-depth analysis of the strategic decisions and steps that should be taken during the restructuring process. The authors explain the importance that venue can have a case, the intricacies of first day motions and how to prepare for confirmation. There is a detailed discussion of the sale of assets during the course of a Chapter 11 restructuring and the importance of making sure that major constituencies are a part of the decision-making process. They also walk the reader through the specifics of a plan of a reorganization, explaining the dynamics of the negotiation process, especially how to understand and appreciate the needs of your constituents and how to get a plan confirmed. The icing on the cake for this book is the excellent appendix. The final section of the book includes a user-friendly glossary of commonly used bankruptcy terms and a reorganization timeline. It also includes sample documents such as debtor-in-possession (DIP) financing agreements, operating reports, first day motions and orders, management severance agreements, and more. The summary of management incentive stock plans implemented in recent restructuring transactions is particularly informative. This is a terrific book. While geared to the non-lawyer executive, it will also be a useful resource for any lawyer who wants to gain practical familiarity with the bankruptcy process. This should be a best seller in today's environment, though it may need to be delivered to most executives in a brown paper wrapper. ********* 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. Joy A. Agravante, Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Frauline S. Abangan 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 * * *