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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Thursday, July 15, 2010, Vol. 11, No. 138

                            Headlines



B E L G I U M

TRUVO SUBSIDIARY: Moody's Withdraws 'Ca' Corporate Family Rating


G E R M A N Y

HSH NORDBANK: Fitch Affirms Individual Rating at 'D/E'
IKB DEUTSCHE: Ex-Chief Found Guilty of Market Manipulation
PROVIDE VR: Fitch Downgrades Ratings on Class E Notes to 'C'


I C E L A N D

ASKAR CAPITAL: Seeks to Wind Down Business; Blames Court Ruling


I R E L A N D

1800-HOTELS: Forced Into Bankruptcy Proceedings by Two Suppliers
ALLIED IRISH: Three Banks Drop Out of Race to Buy Zachodni Stake
B3 CABLES: Longford Plant to Shut Down; 104 Jobs Affected
EIRLES TWO: S&P Withdraws 'CCC-' Rating on US$20 Mil. CDO Notes
KAUPTHING BANK: Moody's Withdraws 'C' Long-Term Deposit Rating

STARLING FINANCE: S&P Downgrades 'D' Rating on Three CDO Notes


K A Z A K H S T A N

KAZMUNAYGAS: US$1.5 Bil. Bond Sale Won't Move S&P's 'BB' Rating
SEA LAUNCH: Inks Agreement with Asia Satellie Telecomms


N E T H E R L A N D S

ALMATIS BV: Applies for Approval of BNY Mellon Agreement
ALMATIS BV: Hires Ernst & Young GmbH as Tax Adviser
ALMATIS BV: Seeks to Clarify Linklaters Work
NXP BV: S&P Changes Outlook to Positive; Affirms 'CCC+' Rating
NXP SEMICONDUCTORS: Moody's Upgrades Corp. Family Rating to Caa1

TELECONNECT INC: Posts US$335,719 Net Loss in Q2 Ended March 31


R U S S I A

METALLINVESTBANK JSCB: Moody's Affirms 'E+' Bank Strength Rating
NATIONAL BANK: Fitch Junks Issuer Default Rating From 'B-'
ROSSIYSKY KAPITAL: Moody's Reviews 'B3' National Scale Rating


S P A I N

AYT CAJA: Fitch Downgrades Rating on Classes D Notes to 'B'
PROIRIS AVIATION: Moody's Assigns 'B1' Corporate Family Rating

* SPAIN: Majority of City Councils in Deep Crisis


U N I T E D   K I N G D O M

ARTFUL GROUP: In Administration; Around 300 Jobs Affected
CLERICAL MEDICAL: Fitch Raises Ratings on Instruments From 'BB+'
EMI GROUP: New CEO to Present Turnaround Plan in Two Weeks
GALA CORAL: Fitch Assigns Issuer Default Rating at 'B'
GALA ELECTRIC: Moody's Assigns 'B2' Corporate Family Rating

SOMF LIMITED: Moody's Puts Low-B Rated Notes Under Review
TAGGART GROUP: Administrator Has Difficulty Selling Helicopter
VEDANTA RESOURCES: Fitch Affirms 'BB+' Ratings on Two Bonds

* UK: Public Sector Debt May Reach GBP4.84 Trillion, Study Says


X X X X X X X X

* EUROPE: Sovereign Defaults Won't Be Included in Stress Tests

* Upcoming Meetings, Conferences and Seminars




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B E L G I U M
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TRUVO SUBSIDIARY: Moody's Withdraws 'Ca' Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings of Truvo
Subsidiary Corp.

These ratings are withdrawn:

* Corporate Family Rating of Ca
* Probability of Default Rating of D
* EUR 395 million and US$ 200 million senior notes due 2014 of C

The last rating action was implemented on 5 July 2010, when
Moody's downgraded Truvo's PDR to D from Ca following the
company's decision to file an insolvency petition in the United
States Bankruptcy Court for the Southern District of New York on 1
July 2010.

Truvo's ratings were assigned by evaluating factors Moody's
believe are relevant to the credit profile of the issuer, such as:
(i) the business risk and competitive position of the company
versus others within its industry; (ii) the capital structure and
financial risk profile of the company; (iii) the projected
performance of the company over the near to intermediate term; and
(iv) management's track record and tolerance for risk.  These
attributes were compared against other issuers both within and
outside Truvo's core industry and Truvo's ratings are believed to
be comparable with those of other issuers with similar credit
risk.

Truvo Intermediate Corp., the parent of Truvo Subsidiary Corp.,
is, through its subsidiaries, the leading directory publisher in
Belgium and Ireland.  Through its joint venture with Portugal
Telecom, the company is the leading directory publisher in
Portugal and, through its minority interests, holds leading
positions in the directory markets in South Africa and Puerto
Rico.


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G E R M A N Y
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HSH NORDBANK: Fitch Affirms Individual Rating at 'D/E'
------------------------------------------------------
Fitch Ratings has downgraded Germany-based HSH Nordbank AG's Long-
term Issuer Default Rating to 'A-' from 'A'.  The Support Rating
Floor has also been revised to 'A-' from 'A'.  Both ratings remain
on Rating Watch Negative.

At the same time, Fitch is placing the bank's Short-term IDR of
'F1' and Support Rating of '1' on RWN.  A full rating breakdown of
the rating actions is provided at the end of this comment.

HSH's SRF and Long-term IDR reflect Fitch's view of the very high
probability of support from its state-owners, the regional states
of Hamburg and Schleswig-Holstein (both rated 'AAA', Stable).
While factoring in HSH's systemic importance, the downgrade and
SRF revision reflect Fitch's expectation that HSH's state-owners
will reduce their ownership in the bank in the medium term.

While the rescue measures received from the state-owners in H109
underpinned their willingness to provide their Landesbank with
extraordinary assistance during the financial crisis, this also
lowered their own financial flexibility and resulted in a high
political cost.  Consequently, Fitch considers that the state-
owners no longer view HSH as a strategic investment and intend to
sell their majority stake once the restructured bank has restored
a sustainable business model that no longer relies on state
ownership, which is likely to take several years at best.  The
agency also expects the European Commission to communicate in the
coming weeks the findings of its review of HSH's state aid and
subsequent restructuring measures, and request the state-owners to
reduce their ownership of the bank to a minority stake in the
medium term.  This is compounded by the effects of the gradual
expiration of the vast majority of the bank's grandfathered
guaranteed debt until 2015.

Both ratings remain on RWN, signaling Fitch's expectation that the
bank's future majority owner(s) should represent a weaker source
of support than its current ones.  In addition to protracted sale
endeavors, Fitch believes that unexpected delays or adverse
developments in the restructuring process might reduce its chances
of attracting sufficient interest from potential buyers.
Generally, the agency estimates that, even in a normalized market
environment, it will remain challenging to attract adequate
investor interest for a wholesale- funded bank with about
EUR100 billion total assets and focused on long-term financing of
cyclical assets.  Fitch intends to resolve the RWN (which already
factors in the expected outcome of the EC review) once clarity
regarding the bank's future ownership structure is available,
which may take several years.

The Individual Rating reflects the fact that HSH is one of the
German Landesbanken which has suffered the most severe damage from
the financial and economic crisis, exposing substantial
shortcomings in its approach to risk management.  HSH is likely to
break even in 2011 at the earliest and the remuneration of the
state-owners' guarantee will burden its profitability in the
foreseeable future.  In the long term, Fitch expects HSH's
profitability to be lower than in the pre-crisis environment due
to lower asset yields, relatively higher risk provisioning levels
in asset-based finance and significantly increased funding costs
compared to the pre-crisis environment.  The bank's ability to
establish an adequate risk/return profile while increasingly
focusing on the difficult German wholesale market remains
challenged despite its established leading positions in ship
financing (globally) and corporate lending (regionally).

The upside to 'D/E' Individual Rating is currently low in light of
the challenges that HSH's management is facing to sustainably
restore the bank's partially damaged reputation.  Moreover, the
results of the far-reaching restructuring process initiated in
2009, which includes a 50% reduction of the bank's assets mostly
via its internal restructuring unit, have yet to be realized.  In
addition to a material reduction of credit risk from its cyclical
asset base, Fitch would need to gain comfort that the bank is
making progress in sustainably attracting sufficient unsecured
wholesale funding on competitive terms on its own merit before it
considers an upgrade of the Individual Rating.

Fitch will publish in the coming weeks an updated credit analysis
on HSH.

The rating actions taken are:

  -- Long-term IDR downgraded to 'A-' from 'A'; remains on RWN

  -- Short-term IDR of 'F1' placed on RWN

  -- Individual Rating affirmed at 'D/E'

  -- Support Rating of '1' placed on RWN

  -- Support Rating Floor revised to 'A-' from 'A'; remains on RWN

  -- Senior unsecured debt downgraded to 'A-' from 'A'; remains on
     RWN

  -- Subordinated unsecured debt downgraded to 'BBB+' from 'A-';
     remains on RWN

  -- Short-term debt: 'F1'; placed on RWN

  -- State-guaranteed Long-term obligations affirmed at 'AAA'

  -- State-guaranteed Short-term obligations affirmed at 'F1+'

In Fitch's rating criteria, a bank's standalone risk is reflected
in Fitch's Individual ratings and the prospect of external support
is reflected in Fitch's Support ratings.  Collectively these
ratings drive Fitch's Long- and Short-term IDRs.


IKB DEUTSCHE: Ex-Chief Found Guilty of Market Manipulation
----------------------------------------------------------
James Wilson at Reuters reports that Stefan Ortseifen, the former
chief executive of IKB Deutsche Industriebank AG, was found guilty
of market manipulation in one of the first white-collar
convictions in the aftermath of the 2007 sub-prime crisis.

Reuters relates Mr. Ortseifen was fined EUR100,000 (US$127,069)
and received a ten-month suspended jail sentence on Wednesday for
misleading investors about the perilous state of IKB's finances
two years ago.

The ruling was handed down by judge Brigitte Koppenhoefer, Reuters
discloses.

Reuters recalls on July 20 2007, only days before its near
implosion, IKB sent out a release to investors saying the bank saw
"limited" impact from the subprime lending crisis -- which was
ballooning on worries that US borrowers would default on risky
mortgages.

According to Reuters, Duesseldorf prosecutors contend that that
statement constituted a willful misleading of the markets as it
encouraged investors to continue buying shares.

Karin Matussek at Bloomberg News reports that Mr. Ortseifen's
lawyer Rainer Hamm said the executive should be acquitted of
charges he manipulated the lender's share price in 2007 at the
beginning of the subprime-mortgage crisis.  Bloomberg relates Mr.
Hamm told the Dusseldorf Regional Court in closing arguments
Monday Mr. Ortseifen didn't misstate IKB's risks regarding asset-
backed securities tied to the U.S. mortgage market in the press
release his trial centers on.  Bloomberg notes the lawyer said
IKB's troubles only started later and Ortseifen couldn't have
predicted that.

"The mistake is to infer from our knowledge today what
Mr. Orseifen should have known in July 2007," Bloomberg quoted
Mr. Hamm as saying.  "Must a bank executive be smarter than the
chiefs of ratings agencies who tell us only now that they didn't
know at the time that they got these products totally wrong?"

                 About IKB Deutsche Industriebank

IKB Deutsche Industriebank AG -- http://www.ikb.de/-- is a
Germany-based banking company, which specializes in the field of
long-term financing.  It offers a range of financial products and
services directed at medium-sized domestic as well as
international companies and project partners.  The Company's
focuses on the two segments Corporate Customers, including
domestic corporate financing, especially lending, but also product
leasing and private equity; and Real Estate Customers, which
provides customized financing solutions as well as related
services for industrial real estate.  As of March 31, 2009, it
operated through direct and indirect subsidiaries, including the
wholly owned IKB Capital Corporation and IKB Equity Finance GmbH,
among others; its two majority owned subsidiaries; as well as two
affiliated companies.  The Company's subsidiaries are located in
Germany, the United States, the Netherlands, Luxembourg, Austria,
the Czech Republic, France, Hungary, Poland, Russia, Slovakia and
Romania.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on Sept. 21,
2009, Moody's Investors Service confirmed the Baa3 long-term debt
and deposit ratings, Ba2 subordinated debt ratings and Prime-3
short-term rating of IKB Deutsche Industriebank, reflecting
Moody's assessment of a very high probability of ongoing external
support.  The outlook on the senior and junior debt ratings
remains negative.  IKB's E bank financial strength rating, mapping
to a stand-alone baseline credit assessment of Caa1, was affirmed,
with a stable outlook.  Moody's downgraded the upper Tier 2 junior
subordinated instruments issued by IKB and its vehicle ProPart
Funding Ltd to C from Ca, the lowest level on Moody's rating
scale, and the Tier 1 instruments issued by IKB Funding Trust I &
II and Capital Raising GmbH to Ca from Caa3.  Moody's said the
outlook on the instruments is stable.


PROVIDE VR: Fitch Downgrades Ratings on Class E Notes to 'C'
------------------------------------------------------------
Fitch Ratings has downgraded four and affirmed nine tranches of
two Provide VR transactions (Provide VR 2003-1 and Provide VR
2004-1), German RMBS deals.  The downgrades reflect poor
performance of the underlying collateral that has resulted in the
first loss piece amounts being written down in both transactions,
and fully in the case of Provide VR 2003-1.

Upon the complete write-down of the unrated class F notes, in June
2010, the issuer of Provide VR 2003-1 reported a total allocated
loss of EUR766,093 to the class E notes, which was the key driver
behind the downgrade of the class E notes to 'C'.  Realized losses
in these transactions are recognized only once all efforts have
been made to retrieve the outstanding debt due by the defaulted
borrower.  As the interest receipts to noteholders are calculated
from the note balance net of the allocated loss, the interest
received will reduce alongside the losses allocated to a
particular tranche.  The potential recovery for the E tranche is
expected to be low, which is reflected in the Recovery Rating
being revised to 'RR6'.

Fitch is of the opinion that the class D notes of Provide VR 2003-
1 may also have losses allocated by maturity, which is reflected
in the downgrade of the notes to 'CC'.  This view is based on the
current amount of defaulted non-performing loans, which suggests
that the class D notes would suffer losses assuming an average
recovery rate on defaulted loans of approximately 34%, as seen to
date, even if no further default were to occur.  With the full
utilization of the first loss piece, and the expectation of
further reductions of the class E and potentially D notes, the
credit support available to class C is deemed insufficient to
maintain its existing ratings.

With only 25% of the first loss piece utilized to date, the
performance of Provide VR 2004-1 is considered to be better than
Provide VR 2003-1's.  However, Fitch's expectations are that
further losses are likely to be allocated to the un-rated class E
note, which will affect the credit support available to the class
D notes and has resulted in a downgrade to 'BB'.

Both pools comprise a high portion of adverse borrower types.
With more than 10% of self-employed borrowers in the pools, as
well as high portions of borrowers located in East Germany
(approximately 30% in both pools), Fitch has concerns over the
future performance of the underlying assets.  For this reason,
four tranches are on Negative Outlook.

Provide VR 2003-1 Plc:

  -- Senior credit default swap: affirmed at 'AAA'; Outlook Stable

  -- Class A+ (ISIN DE000A0AAZ03): affirmed at 'AAA'; Outlook
     Stable; Loss Severity Rating 'LS-1'

  -- Class A (ISIN DE000A0AAZ11): affirmed at 'AAA'; Outlook
     Stable; Loss Severity Rating 'LS-2

  -- Class B (ISIN DE000A0AAZ29): affirmed at 'AA'; Outlook
     revised to Negative from Stable; Loss Severity Rating revised
     to 'LS-3' from 'LS-2'

  -- Class C (ISIN DE000A0AAZ37): downgraded to 'BBB' from 'A';
     Outlook Negative; Loss Severity Rating revised to 'LS-3' from
     'LS-2'

  -- Class D (ISIN DE000A0AAZ45): downgraded to 'CC' from 'B';
     assigned a Recovery Rating of 'RR5'

  -- Class E (ISIN DE000A0AAZ52): downgraded to 'C' from 'CCC';
     Recovery Rating revised to 'RR6' from 'RR5'

Provide VR 2004-1 Plc:

  -- Senior credit default swap: affirmed at 'AAA'; Outlook Stable

  -- Class A+ (ISIN DE000A0DDC04Z03): affirmed at 'AAA'; Outlook
     Stable; Loss Severity Rating 'LS-1'

  -- Class A (ISIN DE000A0DDC12): affirmed at 'AAA'; Outlook
     Stable; Loss Severity Rating revised to 'LS-2' from 'LS-1'

  -- Class B (ISIN DE000A0DDC20): affirmed at 'AA'; Outlook
     Stable; Loss Severity Rating revised to 'LS-3' from 'LS-2'

  -- Class C (ISIN DE000A0DDC38): affirmed at 'A'; Outlook revised
     to Negative from Stable; Loss Severity Rating revised to 'LS-
     3' from 'LS-2'

  -- Class D (ISIN DE000A0DDC46): downgraded to 'BB' from 'BBB';
     Outlook Negative; Loss Severity Rating 'LS-3'


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I C E L A N D
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ASKAR CAPITAL: Seeks to Wind Down Business; Blames Court Ruling
---------------------------------------------------------------
Omar R. Valdimarsson at Bloomberg News reports that Askar Capital
said in an e-mailed statement Tuesday that it will request that
its business be wound down after a June 16 Supreme Court ruling
depleted the value of its assets and left it with negative equity.

Bloomberg relates Askar said it will seek to wind down its
operations after its unit Avant was left insolvent following the
court ruling.

"As an agreement with creditors on the restructuring of the
company hasn't been reached, the board of Askar has agreed to
request winding up proceedings," Bloomberg quoted the company as
saying.

As reported by the Troubled Company Reporter-Europe, Bloomberg
News said the Supreme Court ruled June 16 that loans indexed to
foreign-currency rates were illegal in three cases involving
private car loans and a corporate property loan.  Bloomberg
disclosed the decisions may mean that borrowers with such loans
are only obliged to repay the principal in kronur, making the
lenders liable for currency losses on about US$28 billion in debt
after a third of the krona's value against the Japanese yen and
Swiss franc was erased since September 2008.  The June 16 decision
didn't make clear whether lenders are obliged to accept the lower
contractual interest rates that the loans were entered at, or
whether they can charge higher Icelandic rates on the krona debt,
Bloomberg noted.

Askar Capital hf. -- http://www.askar.is/-- is an investment bank
established in January 2007 by merger of three companies with
roots in the financial sector in Iceland and worldwide.  The
company specializes in risk advisory services, corporate finance
and management of private equity, development and real estate
projects around the world.


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I R E L A N D
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1800-HOTELS: Forced Into Bankruptcy Proceedings by Two Suppliers
----------------------------------------------------------------
BreakingNews.ie reports that 1800-hotels has confirmed it has been
forced into bankruptcy proceedings.

According to the report, the firm says the move -- aimed at
restructuring debt -- was forced by two suppliers.  It also says
it is pursuing a legal injunction to prevent any further
disruption of customer travel, the report notes.

1800-hotels is an Internet booking firm based in Ireland.


ALLIED IRISH: Three Banks Drop Out of Race to Buy Zachodni Stake
----------------------------------------------------------------
Geoff Percival at The Irish Examiner reports that HSBC and Italian
banking groups Unicredito and Intesa Sanpaolo have effectively
pulled out of the race to buy out AIB's EUR2 billion stake in Bank
Zachodni WBK.

According to the report, the banks were thought to be on a
shortlist of seven companies set to bid -- along with BNP Paribas;
US-headquartered private equity house, Apax Partners; and Poland's
largest two lenders, PKO Bank Polski and Bank Pekao.

The report relates Poland's financial regulator has said it would
oppose the purchase of Bank Zachodni WBK by any foreign bank that
has received government aid, putting in question a potential bid
by France's BNP Paribas.  The report notes it is questionable if a
Polish bidder might pay the EUR2 billion AIB is looking to raise
from the sale.

Allied Irish Banks, p.l.c., together with its subsidiaries --
http://www.aibgroup.com/-- conducts retail and commercial banking
business in Ireland.  It also provides corporate lending and
capital markets activities from its head office at Bankcentre and
from Dublin's International Financial Services Centre.  The Group
also has overseas branches in the United States, Germany, France
and Australia, among other locations.  The business of AIB Group
is conducted through four operating divisions: AIB Bank Republic
of Ireland division, Capital Markets division, AIB Bank UK
division, and Central & Eastern Europe division.  In February
2008, the Group acquired the AmCredit mortgage business in the
Baltic states of Latvia, Lithuania and Estonia.  In September
2008, the Group also acquired a 49.99% shareholding in BACB.

                           *     *     *

Fitch Ratings affirmed Allied Irish Banks plc continues to carry a
'D/E' individual rating from Fitch Ratings.  The rating was
affirmed by Fitch in December 2009.


B3 CABLES: Longford Plant to Shut Down; 104 Jobs Affected
---------------------------------------------------------
Eoghan MacConnell at The Irish Times reports that workers at B3
Cable Solutions were summoned to a meeting in Longford Tuesday and
were told the plant was to shut as no new owner could be found.

The report relates receiver and manager of B3 Cable Solutions Alan
Flanagan of Deloitte said an exhaustive search had failed to find
a buyer for the facility.

The closure will result in the loss of 104 jobs, the report notes.

According to the report, a statement issued Tuesday on behalf of
B3 Cable Solutions said: "Since appointment on Wednesday, June 30,
2010, Alan Flanagan of Deloitte, the receiver of B3 Cable
Solutions (Ireland) Ltd., has been engaged in an extensive process
to sell the business and assets of the company as a going concern.
Unfortunately, this has not proved possible, and reluctantly
Mr. Flanagan is now forced to close the B3 plant at Aghafad,
Longford, and dispose of the assets on a piecemeal basis."

B3 Cable Solutions manufactured copper-based cable for Eircom and
other customers.


EIRLES TWO: S&P Withdraws 'CCC-' Rating on US$20 Mil. CDO Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'CCC-' credit
rating on Eirles Two Ltd.'s US$20 million secured floating-rate
series 236 collateralized debt obligation notes.

The withdrawal follows the arranger's recent notification to us
that the notes were fully repurchased.


KAUPTHING BANK: Moody's Withdraws 'C' Long-Term Deposit Rating
--------------------------------------------------------------
Moody's Investors Service has withdrawn all the ratings of
Kaupthing Bank hf and its covered bond programme, for business
reasons.  This rating action does not reflect a change in the
bank's creditworthiness.

These ratings of Kaupthing have been withdrawn:

* Long-term deposit, senior unsecured, subordinated and junior
  subordinated ratings of C

* Short-term ratings of Not Prime

* Bank financial strength rating of E

* Covered bond ratings of Ba3 on review direction uncertain

Moody's last rating action on Kaupthing was on February 9, 2009,
when it downgraded the bank's long-term deposit rating to C from
Caa1 and senior debt ratings to C from Caa2, while affirming its E
bank financial strength rating and Not Prime short-term local and
foreign currency deposit ratings.  All the ratings carried a
stable outlook.

Moody's last rating action on Kaupthing mortgage covered bonds was
on October 9, 2008, when it downgraded the mortgage covered bonds
to Ba3 on review with direction uncertain from Aaa on review for
downgrade.

Kaupthing is in a winding-up process and is headed by a Resolution
Committee.  The Committee states as its primary objective to
ensure proper handling of, and maximise the value of the bank's
assets to the benefit of its creditors.

Headquartered in Reykjavik, Iceland, Kaupthing Bank hf's total
assets were valued at ISK1,579.9 billion at the end of December
2009 (according to the March 2010 update of the Creditor's Report,
prepared by Kaupthing's Resolution Committee).


STARLING FINANCE: S&P Downgrades 'D' Rating on Three CDO Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'D' its credit
ratings on three series of Starling Finance PLC's European
collateralized debt obligation notes.

The rating actions follow losses in the reference portfolio, which
has led to the credit enhancement and outstanding amount of notes
reducing to zero.


===================
K A Z A K H S T A N
===================


KAZMUNAYGAS: US$1.5 Bil. Bond Sale Won't Move S&P's 'BB' Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on Kazakh
state-owned JSC NC KazMunayGas (BB+/Stable/--; Kazakhstan national
scale 'kzAA-') and on KMG's 60%-owned subsidiary JSC KazMunaiGas
Exploration Production (BB+/Stable/--) remain unchanged following
the announcement that KMG EP will purchase a US$1.5 billion bond
issued by KMG and acquire various oil production assets for
US$750 million, plus US$1.5 billion in net debt acquired.
Although the transaction size is considerable, S&P believes it
will not hurt KMG EP's financials and will somewhat improve its
business profile.

S&P believes that even with the newly acquired debt, KMG EP will
retain healthy credit metrics.  S&P has never netted KMG EP's
considerable cash reserves (US$4.5 billion on March 31, 2010)
against its debt, because most cash is kept in Kazakh banks of
relatively low credit quality.  In addition, KMG EP will be able
to offset the bond against future dividends to KMG and certain
future acquisitions from KMG, should they occur.  For KMG, the
bond issue will not affect the group's consolidated metrics.


SEA LAUNCH: Inks Agreement with Asia Satellie Telecomms
-------------------------------------------------------
SatNews.com reports that Sea Launch reached an agreement with Asia
Satellite Telecommunications Company Limited for launched of an
AsiaSat satellite to geosynchronous transfer orbit on the Sea
Launch's Zeniti-3SL system.  The launch will take place between
2012 and 2014.

                         About Sea Launch

Sea Launch Company, L.L.C., is a satellite-launch services
provider that offers commercial space launch capabilities from the
Baikonur Space Center in Kazakhstan.  Its owners include Boeing
Co., RSC Energia, and Aker ASA.

Sea Launch filed for Chapter 11 on June 22, 2009 (Bankr. D. Del.
Case No. 09-12153).  Joel A. Waite, Esq., and Kenneth J. Enos,
Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington,
Delaware, serve as the Debtor's counsel.  At the time of the
filing, the Company said its assets range from US$100 million to
US$500 million and debts are at least US$1 billion.


=====================
N E T H E R L A N D S
=====================


ALMATIS BV: Applies for Approval of BNY Mellon Agreement
--------------------------------------------------------
Almatis B.V. and its affiliated debtors ask the U.S. Bankruptcy
Court for the Southern District of New York to approve a
disbursing agent agreement with Bank of New York Mellon.

The Agreement requires the Debtors to pay the fees and reimburse
the expenses of BNY Mellon for the services the firm will provide
to implement the Debtors' proposed restructuring plan.

The Debtors' Plan, filed on April 30, 2010, requires them to
enter into an agreement with a disbursing agent in connection
with the implementation of the Plan.

Under the Disbursing Agent Agreement, BNY Mellon is tasked to:

  (1) receive completed letters of transmittal and other
      necessary documentation and supply the same to the
      Debtors, their advisers and the new facility agents;

  (2) record and report details regarding all claimants who have
      returned their letters of transmittal and supporting
      documentation;

  (3) prepare and make a one-time distribution of payments via
      check or wire;

  (4) facilitate claimant inquiries;

  (5) prepare 1099 forms and distribution of the same to
      shareholders; and

  (6) file tax-related information with the Internal Revenue
      Service.

In return for its services, BNY Mellon will be paid a US$10,000
"acceptance fee" due at execution of the Disbursement Agent
Agreement, and a US$40,000 administration fee due on or before the
effective date of the Plan.  BNY Bank will also receive other
fees, including those charged by its counsel, and will be
reimbursed of its expenses.

A full-text copy of the Disbursing Agent Agreement is available
for free at http://bankrupt.com/misc/Almatis_DAAbnymellon.pdf

                       About Almatis Group

Alamtis B.V. and its affiliates filed for Chapter 11 on April 30,
2010 (Bankr. S.D.N.Y. Lead Case No. 10-12308).  Almatis B.V.
estimated assets of US$500 million to US$1 billion and debts of
more than US$1 billion as of the bankruptcy filing.

Almatis, operationally headquartered in Frankfurt, Germany, is a
global leader in the development, manufacture and supply of
premium specialty alumina products.  With nearly 900 employees
worldwide, the company's products are used in a wide variety of
industries, including steel production, cement production, non-
ferrous metal production, plastics, paper, ceramics, carpet
manufacturing and electronic industries.  Almatis operates nine
production facilities worldwide and serves customers around the
world.  Until 2004, the business was known as the chemical
business of Alcoa.  Almatis is now owned by Dubai International
Capital LLC, the international investment arm of Dubai Holding.

Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher LLP, serves
as counsel to the Debtors in the Chapter 11 cases.  Linklaters LLP
is the special English and German counsel and De Brauw Blackstone
Westbroek N.V. is Dutch counsel.  Epiq Bankruptcy Solutions, LLC,
serves as claims and notice agent.

Bankruptcy Creditors' Service, Inc., publishes Almatis Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding and
ancillary foreign proceedings undertaken by Almatis B.V., and its
affiliates.  (http://bankrupt.com/newsstand/or 215/945-7000)


ALMATIS BV: Hires Ernst & Young GmbH as Tax Adviser
---------------------------------------------------
Almatis B.V. and its units sought and obtained Court approval to
employ Ernst & Young GmbH Wirtschaftspr fungsgesellschaft as their
tax adviser effective April 30, 2010.

As tax adviser, Ernst & Young GmbH is tasked to provide tax
advisory services with respect to German law in connection with
the implementation of the Debtors' restructuring plan, and to
resolve the implications of that Plan in Germany.  The firm is
also tasked to provide "ordinary course tax advice" to the
Debtors that are based in Germany on matters unrelated to the
Plan.

The Debtors earlier employed Ernst & Young Belastingadviseurs LLP
to provide them general advice on the tax implications of
implementing their Plan.  E&Y GmbH will make every effort to
avoid duplication of work with E&Y Belastingadviseurs, according
to Remco de Jong, chief executive officer of Almatis B.V.

E&Y GmbH will be paid for its services on an hourly basis and
will be reimbursed for its actual and necessary expenses.  The
E&Y GmbH professionals designated to provide the services and
their hourly rates are:

    Professionals         Role       Hourly Rates
    -------------       --------     ------------
    Ralf Eberhardt       Partner        EUR580
    Marco Huder          Manager        EUR340

In a declaration, Mr. Eberhardt assures the Court that his firm
does not have interest "materially adverse" to the interest of
the Debtors' estates, their creditors and equity security
holders.  He maintains that the firm is a "disinterested person"
under Section 101(14) of the bankruptcy Code.

                       About Almatis Group

Alamtis B.V. and its affiliates filed for Chapter 11 on April 30,
2010 (Bankr. S.D.N.Y. Lead Case No. 10-12308).  Almatis B.V.
estimated assets of US$500 million to US$1 billion and debts of
more than US$1 billion as of the bankruptcy filing.

Almatis, operationally headquartered in Frankfurt, Germany, is a
global leader in the development, manufacture and supply of
premium specialty alumina products.  With nearly 900 employees
worldwide, the company's products are used in a wide variety of
industries, including steel production, cement production, non-
ferrous metal production, plastics, paper, ceramics, carpet
manufacturing and electronic industries.  Almatis operates nine
production facilities worldwide and serves customers around the
world.  Until 2004, the business was known as the chemical
business of Alcoa.  Almatis is now owned by Dubai International
Capital LLC, the international investment arm of Dubai Holding.

Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher LLP, serves
as counsel to the Debtors in the Chapter 11 cases.  Linklaters LLP
is the special English and German counsel and De Brauw Blackstone
Westbroek N.V. is Dutch counsel.  Epiq Bankruptcy Solutions, LLC,
serves as claims and notice agent.

Bankruptcy Creditors' Service, Inc., publishes Almatis Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding and
ancillary foreign proceedings undertaken by Almatis B.V., and its
affiliates.  (http://bankrupt.com/newsstand/or 215/945-7000)


ALMATIS BV: Seeks to Clarify Linklaters Work
--------------------------------------------
Almatis B.V. and its affiliated debtors seek an order from the
U.S. Bankruptcy Court clarifying the scope of Linklaters LLP's
employment.

The Debtors made the request after a lawyer of Weil Gotshal &
Manges LLP, who represents Dubai International Capital LLC,
issued a statement expressing belief that Linklaters will not be
involved in the evaluation or analysis of any rival restructuring
proposal or offer.  The statement was issued at the hearing to
consider approval of Linklaters' employment application.

The Debtors' attorney, Matthew Kelsey, Esq., at Gibson Dunn &
Crutcher LLP, in New York, asserts that Linklaters is "in the
best position" to negotiate with DIC to develop term sheets and
other documents for the new debt which would be issued in
connection with any DIC proposal.  He clarifies, however, that in
providing that service, the firm will not advise the Debtors'
boards regarding their fiduciary duties with respect to the
competing offers.

"Linklaters will simply negotiate and develop the documentation
which represents the best offer that can be obtained from DIC,"
Mr. Kelsey says, adding that the Debtors will then evaluate the
risks and benefits from the offer with the advice of Gibson Dunn
and De Brauw Blackstone Westbroek N.V., the Debtors' Netherlands-
based counsel.

"This arrangement is consistent with the function that the
Debtors represented Linklaters would perform," Mr. Kelsey says in
court papers.  "[Thus,] the Debtors respectfully request that the
Court enter an order clarifying that Linklaters can provide such
services."

                       About Almatis Group

Alamtis B.V. and its affiliates filed for Chapter 11 on April 30,
2010 (Bankr. S.D.N.Y. Lead Case No. 10-12308).  Almatis B.V.
estimated assets of US$500 million to US$1 billion and debts of
more than US$1 billion as of the bankruptcy filing.

Almatis, operationally headquartered in Frankfurt, Germany, is a
global leader in the development, manufacture and supply of
premium specialty alumina products.  With nearly 900 employees
worldwide, the company's products are used in a wide variety of
industries, including steel production, cement production, non-
ferrous metal production, plastics, paper, ceramics, carpet
manufacturing and electronic industries.  Almatis operates nine
production facilities worldwide and serves customers around the
world.  Until 2004, the business was known as the chemical
business of Alcoa.  Almatis is now owned by Dubai International
Capital LLC, the international investment arm of Dubai Holding.

Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher LLP, serves
as counsel to the Debtors in the Chapter 11 cases.  Linklaters LLP
is the special English and German counsel and De Brauw Blackstone
Westbroek N.V. is Dutch counsel.  Epiq Bankruptcy Solutions, LLC,
serves as claims and notice agent.

Bankruptcy Creditors' Service, Inc., publishes Almatis Bankruptcy
News.  The newsletter tracks the Chapter 11 proceeding and
ancillary foreign proceedings undertaken by Almatis B.V., and its
affiliates.  (http://bankrupt.com/newsstand/or 215/945-7000)


NXP BV: S&P Changes Outlook to Positive; Affirms 'CCC+' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it has revised to
positive from stable its outlook on the Netherlands-based
semiconductor manufacturer NXP B.V., reflecting the company's
proposed US$600 million notes due 2018, which it intends to use to
repay long-term debt.  S&P has affirmed its 'CCC+' long-term
corporate credit rating on NXP.

S&P has assigned an issue rating of 'CCC+' and a recovery rating
of '4' to the proposed senior secured notes, indicating its
expectation of average (30%-50%) recovery for creditors in the
event of a payment default.  S&P anticipate that the new notes
will rank pari passu with the existing senior secured bonds at NXP
and will be subordinated to the superpriority debt (including the
EUR500 million revolver and dollar and euro superpriority notes
due 2013).  The rating on the new notes is in line with S&P's
corporate credit rating on NXP.  It is based on preliminary
information and is subject to S&P's satisfactory review of final
documentation.

S&P has placed, on CreditWatch with negative implications, its
'CCC+' long-term ratings on the proposed US$600 million senior
secured notes, and on the existing EUR1 billion floating-rate,
US$1.026 billion 7.875% and US$1.535 billion floating-rate secured
notes (all notes are quoted for their originally issued amounts).
The negative implications mean that S&P could lower or affirm the
debt ratings.  The CreditWatch placement reflects the uncertainty
regarding NXP's ultimate capital structure after issuance and
potential debt repayment, particularly which classes of debt the
company will be repaying.

S&P has affirmed all other issue ratings and the related recovery
ratings remain unchanged.

"The ratings on NXP continue to reflect the company's very high
debt leverage and large debt maturities in 2013 and 2014, which
are only partly offset by the company's positions in high-
performance and mixed signal semiconductors and an improving cost
position," said Standard & Poor's credit analyst Patrice Cochelin.

On March 31, 2010, NXP reported gross consolidated debt of
US$5.2 billion.

Comparable revenues grew by 70% year on year in first-quarter
2010, while gross margin rebounded to 37% from 10% one year
earlier.  Average capacity utilization rose to 93% from 35% in the
same quarter of 2009.  S&P expects further year-on-year revenue
growth through third-quarter 2010, which, combined with NXP's
significantly leaner manufacturing and lower operating expense
base, should support further progress in profitability in S&P's
opinion.  NXP's preliminary second-quarter results also support
S&P's anticipation of continued improvement of NXP's operating
performance in the near term.  NXP had positive income from
operations in second-quarter 2010 and the reduction by only
US$28 million of its cash balances, in spite of a US$50 million
negative currency impact.  This suggests that the company
generated positive free cash flow after interest payments of
US$110 million.

S&P expects NXP's currently high leverage to trend down somewhat
during 2010 based on S&P's anticipation for higher earnings.  S&P
calculates that lease- and pension-adjusted gross debt represented
about 11x EBITDA for the past 12 months and about 7x for the
first-quarter annualized.

"S&P expects to resolve the CreditWatch placement on NXP's senior
secured issue ratings in the next few weeks, after having reviewed
the use of proceeds, and expect to either affirm the ratings or
downgrade them by one notch, reflecting S&P's expectation that the
recovery rating on these instruments could be left unchanged at
'4' or revised to '5'," said Mr. Cochelin.

As part of its analysis, S&P has assumed that net proceeds from
bond issuance will be fully used to repay some of NXP's
outstanding debt.

However, S&P believes that the actual use of proceeds could have a
material impact on its default scenario and waterfall assumptions
at enforcement.  If net proceeds are fully used to repay pari
passu (senior secured) debt, S&P envisage no changes in its
hypothetical default scenario and waterfall assumptions.

In case of partial repayment of superpriority notes, this could
potentially improve numerical coverage for both superpriority debt
and senior secured bonds, although S&P does not envisage the
potentially improved coverage to result in a change in existing
ratings.

However, S&P believes that there is also a possibility that net
proceeds could be used to pay down a proportion of debt currently
drawn under the RCF, for example if NXP did not use the full
proceeds to retire outstanding bonds.  In this case, S&P expects
that the commitment under the RCF would not be cancelled and,
therefore, the available liquidity would improve.  As a result,
S&P's hypothetical default scenario would likely change, as the
higher liquidity would imply a potential delay of hypothetical
default and harsher stress on operating performance in a path to
default.  This could result in lower estimated stressed enterprise
value.  Moreover, assuming that the RCF is fully drawn at the
point of default, projected debt outstanding in the waterfall
could be higher, assuming that no other debt instruments have been
repaid.

Both potentially lower estimated EV and potentially higher
outstanding debt assumed at the point of default could have
negative implications on numerical coverage for debt instruments
outstanding, which could have material impact mainly for the
senior secured notes.

At this point, S&P believes that the higher the proportion of net
proceeds ultimately used to pay down drawn amount of the RCF, the
higher the possibility of a downgrade on the senior secured debt
instruments (both existing and proposed), which are already at the
low end of the 30%-50% recovery expectations range indicated by
S&P's '4' recovery rating on these notes.

The positive outlook indicates the potential for an upgrade to
'B-' if NXP achieves further significant refinancing of its debt
maturities, in particular those issues due in 2013, and continues
to improve its operating performance.  S&P also consider NXP's
possible clearing of drawing conditions on the forward-start
facility to be an important step in achieving a 'B-' rating.

The ratings could come under negative pressure if NXP failed to
significantly cut its cash losses in line with S&P's expectations,
if S&P perceived an increased risk of a distressed exchange offer,
or if the company failed to timely address its debt maturity
profile.


NXP SEMICONDUCTORS: Moody's Upgrades Corp. Family Rating to Caa1
----------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating of
NXP Semiconductors to Caa1 from Caa2, its senior secured debt
rating to Caa1 and its senior unsecured debt rating to Caa3.
Concurrently, Moody's assigned a Caa1, LGD4 (52%) to the senior
secured notes due July 2018 launched.  The notes will not be
registered under the United States Securities Act of 1933, as
amended, and may not be offered or sold within the US (as defined
in Regulation S under the Securities Act) except to qualified
institutional buyers under Rule 144A and to non-US persons outside
the US under Regulation S of the Act.  The outlook for the ratings
is changed to positive from negative.

The rating upgrade reflects the improving trend of NXP's business
operations amid a recovering semiconductor industry since the 2nd
half of 2009 and the positive impact of management's cost savings
measures that are expected to make the company more resilient to
the high volatility customary in the semiconductor industry.  For
the second quarter 2010, NXP now estimates sequential revenue
growth, a return to operating profitability (IFO of US$873 to
US$93 million after PPA, restructuring charges and other), and
only moderate cash consumption impacted negatively by an uneven
interest payment schedule (US$110 million in Q2 compared to
US$35 million in Q1).  The positive trends as well as the
company's access to the capital market evidenced by the bond
launch have gradually mitigated the concern of an unsustainable
capital structure and a dwindling liquidity position.  Both, a
fast demand recovery and cost reduction measures have contributed
to NXP's strengthening profitability with an adjusted EBITDA
rising to US$231 million in Q1 2010 and US$638 million for LTM,
compared to only US$336 million for all of 2009.  NXP's current
portfolio with a focus on high-performance mixed-signal and
standard products is expected to grow in line with the general
semiconductor market supported by very diverse end-uses in
automotive, identification, industrial applications and consumer
electronics, while margins should improve from better capacity
utilization and the disposal of the loss-making and subscale DVS
businesses.  Moody's expect leverage ratios to decline
significantly from 2009 level (11.5x Net debt/EBITDA estimated by
Moody's; 6.8x for LTM Q1 2010), while continuing measures to
improve the maturity profile and to reduce net debt, for example
through the IPO, are positive factors to the rating.

NXP has announced the issuance of US$600 million senior secured
notes with a maturity in 2018, underwritten by a group of banks.
For the time being, NXP's gross debt will increase by this amount
from the level of US$5.2 billion including drawn US$610 million
credit facility at 31 March 2010, but Moody's expects a sustained
debt reduction to be achieved later in the year primarily from the
proceeds of the IPO.  Even with a material deleveraging, a
sustainable capital structure would require more resilience in the
streamlined business operations through the industry volatility
with a positive trend of profitability and a return to positive
free cash flow generation.

The positive outlook reflects NXP's continuous efforts to realize
cost savings and to reduce its debt level which, supported by a
strengthening industry environment currently, should allow the
company to return to cash generation including restructuring
expenditures in H2, 2010 and to make its capital structure and
liquidity profile more robust.  NXP's filing of a F-1 statement
with the SEC to prepare for an IPO in anticipation of
US$1.15 billion proceeds and to apply these proceeds to debt
reduction is also a factor driving the positive rating outlook.  A
rating upgrade would be considered once the IPO has been completed
at around the US$1.15 billion amount targeted, a parallel
reduction of gross debt has been implemented and the business
performance confirms an outlook for high factory load levels and
positive cash generation.

Issuer: NXP B.V.

Upgrades:

  -- Probability of Default Rating, Upgraded to Caa1 from Ca

  -- Corporate Family Rating, Upgraded to Caa1 from Caa2

  -- Senior Secured Regular Bond/Debenture, Upgraded to a range of
     Caa1, LGD4, 52% from a range of C, LGD5, 75%

  -- Senior Unsecured Regular Bond/Debenture, Upgraded to Caa3
     from C

Assignments:

  -- Senior Secured Regular Bond/Debenture, Assigned Caa1, LGD4,
     52%

Downgrades:

  -- Senior Unsecured Regular Bond/Debenture, Downgraded to LGD6,
     91% from LGD5, 85%

Outlook Actions:

  -- Outlook, Changed To Positive From Negative

The last rating action for NXP was on July 2, 2009, when Moody's
affirmed NXP's CFR at Caa2 with a negative outlook, its senior
secured notes and senior unsecured notes at C.

NXP Semiconductors, headquartered in Eindhoven, Netherlands, is a
leading semiconductor company, focusing on the designs and
manufacture of semiconductors for general applications, power
management (Multi-Market) and application-specific integrated
circuits for the electronics, automotive and identification
technology application markets.  NXP posted sales of US$3.8
billion in fiscal year 2009.


TELECONNECT INC: Posts US$335,719 Net Loss in Q2 Ended March 31
---------------------------------------------------------------
Teleconnect Inc. filed its quarterly report on Form 10-Q,
reporting a net loss US$335,712 on US$111 of revenue for the three
months ended March 31, 2010, compared with a net loss of
US$312,861 on US$95,061 of revenue for the same period of 2009.

The Company did not ship any kiosks during the quarter as a
customer of a current 150 kiosk order requested a delay in
shipping additional units.

The Company's balance sheet at March 31, 2010, showed US$2,055,793
in assets and US$2,974,233 of liabilities, for a stockholders'
deficit of US$918,440.

As reported in the Troubled Company Reporter on January 18, 2010,
Coulter & Justus, P.C., in Knoxville, Tennessee, expressed
substantial doubt about Teleconnect Inc. and subsidiaries' ability
to continue as a going concern after auditing the Company's
consolidated financial statements for the year ended September 30,
2009.  The independent public accounting firm pointed to the
Company's recurring losses and net capital deficiency in addition
to a working capital deficiency.

A full-text copy of the quarterly report is available for free at:

               http://researcharchives.com/t/s?665a

                      About Teleconnect Inc.

Based in Breda, The Netherlands, Teleconnect Inc. (OTC: TLCO)
-- http://teleconnect.es/-- derives its revenues from continuing
operations primarily from the sale of multimedia kiosks and
hardware components to retail chains in the Netherlands.  These
kiosks and components can be applied to different functions such
as recharging prepaid telephone cards.

On May 3, 2010, the Company signed a letter of intent to acquire
100% of Hollandsche Exploitatie Maatschappij BV (HEM) in The
Netherlands.  The purchase price contemplated by the letter of
intent is 12% of the outstanding common stock of the Company, post
emission.  The purchase of HEM is subject to due diligence by
Teleconnect as well as shareholders' approval.  HEM, established
in 2007, developed an age validation system, "Ageviewers", which
utilizes the Company's products in its processes.


===========
R U S S I A
===========


METALLINVESTBANK JSCB: Moody's Affirms 'E+' Bank Strength Rating
----------------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
outlook on the B2 long-term foreign and local currency deposit
ratings of Metallinvestbank.  The bank financial strength rating
of E+ and Not-Prime short-term foreign currency deposit rating
were affirmed.  Concurrently, Moody's Interfax Rating Agency
affirmed MIB's Baa1.ru long-term national scale rating.

According to Moody's, the rating action is driven by MIB's success
in withstanding negative pressure on its business franchise, and
in further materially expanding its deposit base in 2009.  MIB has
also gradually diversified its loan book away from related
parties, and improved its core profitability through recurrent
sources.  MIB's liquidity position is adequate, supported by
growing deposits -- MIB's deposit base almost doubled in 2009,
compared to a system-average growth of 20%.

The bank's capitalization is currently adequate, with a Tier 1
ratio of 21% at 31 December 2009, and largely sufficient to absorb
expected credit losses.  Furthermore, the bank has been addressing
the loan book concentration issue: MIB's credit exposure to top 20
borrowers has decreased to 160% of total equity at end-May 2010,
from 200% in 2007.

Moody's says that MIB demonstrated reasonable financial
performance in 2009 as the bank was able to generate a stable flow
of interest and commission income sufficient to cover an increased
level of provisioning which is expected to stabilize in 2010.

Moody's previous rating action on MIB was on 26 November 2007,
when the rating agency changed to negative from stable the outlook
on the bank's B2 long-term deposit ratings, and affirmed the E+
BFSR with a stable outlook.  The bank's Not-Prime short-term
deposit ratings were also affirmed.  Concurrently, Moody's
Interfax Rating Agency downgraded MIB's long-term NSR to Baa1.ru
from A3.ru.  At that time, the rating agency had concerns
regarding MIB's declining market franchise, growing related-party
lending, and deteriorating core profitability.

Headquartered in Moscow, Russia, MIB reported -- at December 31,
2009 -- total consolidated assets of RUB38.7 billion
(US$1.28 billion) and total shareholders' equity of RUB5.0 billion
(US$167 million) Under IFRS.  MIB's net income for 2009 was
RUB646 million (US$21.4 million).


NATIONAL BANK: Fitch Junks Issuer Default Rating From 'B-'
----------------------------------------------------------
Fitch Ratings has downgraded Moscow-based National Bank Trust's
Long-term Issuer Default Rating to 'CCC' from 'B-'.  At the same
time, Fitch has affirmed Moscow-based banks: Probusinessbank,
CentroCredit Bank and Central Commercial Bank Limited at Long-term
IDR 'B-'.

The rating actions resolve the Negative Watch placed on NBT's
ratings on November 23, 2009, and Positive or Evolving Watches
placed on the ratings of the other three banks on March 5, 2010.
The affirmations of the three banks' Long-term IDRs account for
the strengthening of certain aspects of Russia's banking system
infrastructure during the global financial crisis, most notably in
respect of banks' ability to access liquidity.  However, these
ratings still remain constrained to varying degrees by limited
franchises, worsened asset quality and uncertainty as to whether
most of the banks' shareholders would be able to provide support,
in case of need.

The downgrade of NBT reflects considerable weaknesses in the
bank's asset quality and capitalization, as well as depressed
profitability and concerns about the sustainability of the bank's
current business model and operations.  NPLs (loans overdue by
more than 90 days) were reported as a moderate 8% of gross loans
at end-Q110, and rolled-over loans at just 2%.  However, in
Fitch's view, there is significant uncertainty in respect to
borrowers' ability to repay a majority of the bank's largest
corporate loans, and the agency estimates that corporate loans
comprising at least 14% of the total portfolio could be classified
as restructured based on the nature of the transactions.  In
addition, the agency is concerned about limited transparency in
respect to some of the bank's assets, and cannot rule out the
possibility that related-party exposures may be much higher than
the reported 1% of end-2009 loans.  Fast lending growth (25% in
May 2010), high exposure to the real estate/construction sectors
(31% of loans or 133% of regulatory capital at end-Q110) and high
concentrations (exposure to the top 20 borrowers represented 54%
of loans or 360% of equity at end-April 2010) are also sources of
high credit risk, in the agency's view.

In this context, Fitch believes that loan impairment reserves
equal to 6% of gross loans and a regulatory capital of 11.6% at
end-May 2010 look inadequate.  Internal capital generation is also
weak, pressured by high credit and funding costs.  Securities
investments were sizeable (at 4x equity), although mainly in
instruments eligible for refinancing with the Central Bank of
Russia.  On the positive side, the bank has been able to replace
unsecured lending from the CBR due to rapid growth of retail
deposits and repo transactions with local banks, and the bank
currently has no outstanding large ticket wholesale funding.
However, liquidity cushion is limited, and the funding of quite
long-term corporate loans with generally shorter-term and
potentially volatile retail deposits represents an underlying
source of liquidity risk, in Fitch's view.

CCB's ratings are supported by its currently adequate capital and
liquidity positions and the manageable level of impaired assets;
however, the ratings are constrained by the limited franchise and
high levels of market risk.  CCB's core business continues to be
in securities operations.  Investments increased almost twofold in
Q409-H110 and comprised 57% of total assets at end-H110, with the
portfolio dominated by exposure to government securities (83%
percent of the total book at end-H110).  The repo market is also a
major source of the bank's assets and liabilities; the potential
volatility of this market is mitigated by the potential to
refinance the securities book with the CBR.  The loan book
comprised just 10% of assets at end-H110; although loan impairment
is significant, this is adequately covered by reserves.  The
regulatory capital ratio was a comfortable 21% at end-April 2010.

CCBL's ratings are constrained by the bank's narrow franchise,
sizeable amounts of restructured loans, potentially significant
related-party transactions, which may negatively affect the
quality of capital, the concentrated funding base and potentially
vulnerable liquidity.  However, the ratings are supported by the
stability of deposit funding to date and the currently manageable
liquidity position.  Reported NPLs were a low 2.8% at end-May
2010; however, rolled-over loans were a high 50% at the same date,
and loan impairment reserves were 22% of the total book.  The loan
book is dominated by borrowers with significant leverage and weak
profitability, while exposures are largely collateralized by
guarantees, in some cases from related parties of the bank, Fitch
understands.  At end-May 2010, CCBL's regulatory capital ratio was
37.6%, but the loss absorption cushion could still prove
insufficient given the potentially high level of related-party
business.  Customer accounts are concentrated, with a majority of
these sourced from one company; CCBL places the balance on this
current account in liquid instruments, but Fitch believes that the
liquidity position is potentially vulnerable.

PRBB's ratings reflect weak asset quality, tight capital and
operational risks relating to the management of subsidiary
regional banks.  However, the ratings also consider the stable
deposit base, limited wholesale funding and some signs that asset
quality has started to stabilize.  NPLs reached 19.6% of gross
loans at end-Q110 (end-2009: 18.6%), while another 9% were
restructured and around 6.5% were sold during 2009 to companies,
some of which could be related to the bank.

NPL coverage by reserves dropped to 89% at end-2009, while the
current capital cushion is limited, with the regulatory ratios of
both PRBB and its largest subsidiaries close to the minimum 10%
level.  The group's capital position is not expected to be
improved materially in medium term, as internal capital generation
is weak and substantial new share issuance seems unlikely given
the reluctance of senior management, which controls 58% of the
bank, to relinquish control.  Fitch has some concerns in relation
to the level of related-party business.

The rating actions represent the latest part of a broader Fitch
review of privately-owned Russian banks' ratings which were placed
on rating watch in March 2010 (with the exception for NBT).

The rating actions are:

National Bank Trust

  -- Long-term IDR: downgraded to 'CCC' from 'B-'; removed from
     Rating Watch Negative

  -- Short-term IDR: downgraded to 'C' from 'B'

  -- Individual Rating: downgraded to 'E' from 'D/E'; removed from
     Rating Watch Negative

  -- Support Rating affirmed at '5'

  -- Support Rating Floor affirmed at 'No Floor'

CentroCredit Bank

  -- Long-term IDR: affirmed at 'B-'; removed from Rating Watch
     Positive; assigned Stable Outlook

  -- Short-term IDR: affirmed at 'B'

  -- Individual Rating: affirmed at 'D/E'; removed from Rating
     Watch Positive

  -- Support Rating: affirmed at '5'

  -- Support Rating Floor: affirmed at 'No Floor'

  -- National Long-term Rating: upgraded to 'BB (rus)' from 'BB-
     (rus)'; removed from Rating Watch Positive; assigned Stable
     Outlook

Probusinessbank

  -- Long-term foreign currency IDR: affirmed at 'B-'; removed
     from Rating Watch Evolving; assigned Stable Outlook

  -- Long-term local currency IDR: affirmed at 'B-'; removed from
     Rating Watch Evolving; assigned Stable Outlook

  -- Short-term IDR: affirmed at 'B'

  -- Individual Rating: affirmed at 'D/E'; removed from Rating
     Watch Evolving

  -- Support Rating: affirmed at '5'

  -- Support Rating Floor: affirmed at 'No Floor'

  -- National Long-term Rating: affirmed at 'BB- (rus)'; removed
     from Rating Watch Evolving; assigned Stable Outlook

Central Commercial Bank Limited

  -- Long-term IDR: affirmed at 'B-'; removed from Rating Watch
     Evolving; assigned Stable Outlook

  -- Short-term IDR: affirmed at 'B'

  -- Individual Rating: affirmed at 'D/E'; removed from Rating
     Watch Evolving

  -- Support Rating: affirmed at '5'

  -- Support Rating Floor: affirmed at 'No Floor'

  -- National Long-term Rating: affirmed at 'BB- (rus)'; removed
     from Rating Watch Evolving; assigned Stable Outlook


ROSSIYSKY KAPITAL: Moody's Reviews 'B3' National Scale Rating
-------------------------------------------------------------
Moody's Interfax Rating Agency has placed the B3.ru long-term
National Scale Rating of Rossiysky Kapital Bank on review for
possible upgrade.  Moscow-based Moody's Interfax is majority-owned
by Moody's Investors Service, a leading global rating agency.  The
B3.ru NSR reflects the ranking of the bank's credit quality
relative only to its domestic peers.

The rating review follows the announcement that RKB's shareholder,
state-owned Deposit Insurance Agency, would inject RUB6.4 billion
into the bank's capital by year-end 2010.  Additionally, the DIA
issued a letter of comfort in favor of the bank, according to
which the DIA acknowledges its responsibility for ensuring the
bank's stable financial condition and fulfillment of its
obligations to creditors.

"The capital injection, if accomplished, will significantly
alleviate pressure from the bank's currently very weak asset
quality, with non-performing loans accounting for around 60% of
total loans as of year-end 2009, and negative equity, with which
the bank now operates," said Maxim Bogdashkin, a Moscow-based
Moody's Analyst and lead analyst for this issuer.  "Although the
funds from the capital injection are likely to be directed towards
repayment of the DIA loans, the bank's liquidity is expected to
remain sufficient.  The recapitalization and the accumulated
liquidity will also enable the bank to further develop its lending
business, which had been halted since a default in 2008, although
the customer payments were quickly restored after the default,"
added Mr. Bogdashkin.

The review of RKB's rating is expected to be concluded when the
capital injection is accomplished.

The last rating action on RKB was on 8 October 2008, when the
rating agency downgraded the bank's NSR to B3.ru from Baa1.ru and
placed it on review for possible further downgrade.

Headquartered in Moscow, Russia RKB reported total assets of
RUB9.2 billion (US$304 million) under IFRS at year-end 2009.


=========
S P A I N
=========


AYT CAJA: Fitch Downgrades Rating on Classes D Notes to 'B'
-----------------------------------------------------------
Fitch Ratings has downgraded AyT Caja Granada Hipotecario I, FTA,
a Spanish RMBS transaction which contains loans originated by Caja
General de Ahorros de Granada ('BBB+'/Stable/'F2').  The negative
rating actions reflect the weak performance of the pool to date
and Fitch's expectations of continued house price declines in
Spain.

The ratings actions are:

  -- Class A (ISIN ES0312212006) affirmed at 'AAA'; Outlook
     Stable; Loss Severity rating of 'LS-1' assigned;

  -- Class B (ISIN ES0312212014) downgraded to 'BBB' from 'A';
     Outlook Negative; 'LS-3' assigned;

  -- Class C (ISIN ES0312212022) downgraded to 'BB' from 'BBB-';
     Outlook Negative; 'LS-3' assigned;

  -- Class D (ISIN ES0312212030) downgraded to 'B' from 'BB';
     Outlook Negative; 'LS-5' assigned.

The pool contains 59% of loans with an original loan-to-value in
excess of 75%.  Fitch expects these loans are driving the level of
defaults and to also result in higher potential losses due to the
house price declines.  Fitch expects an average 30% decline in
Spanish residential property values, from the peak recorded in
2008.

The downgrades reflect the reduced credit support for class B to D
notes following several draws on the reserve fund.  The latter was
drawn down to EUR3.4 million from its target amount of EUR5.2
million (1.30% of the initial balance of the loans) over the last
four interest payment dates after the excess spread was not
sufficient to cover for all defaulted loans.  Fitch expects
further draws, given the current pipeline of arrears, and that
credit enhancement will reduce for all classes other than the
class A notes.  As of the June IPD, the volume of loans currently
in arrears by more than three months was 5.63% of the current
outstanding assets, At the same date, 0.84% of the initial pool
balance has defaulted, defined as loans in arrears by more than 18
months.

The transaction features a provisioning mechanism through which
available excess revenue is used to provision for defaulted loans,
avoiding the cost of carry of non-performing loans by writing them
off rather than waiting for the actual loss.


PROIRIS AVIATION: Moody's Assigns 'B1' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service has assigned a B1 corporate family
rating and probability of default rating to Proiris Aviation
Spain, S.L., a wholly-owned subsidiary of Inaer Aviation Group,
S.L.  At the same time, Moody's has assigned a provisional (P)Ba3
rating to Proiris' EUR100 million revolving credit facility and a
provisional (P)B2 rating to the proposed EUR470 million senior
notes due 2017 to be issued by Inaer Aviation Finance Limited.

The outlook for all the ratings is stable.  This is a first time
rating assignment.

"The rating reflects Inaer's sound business profile, characterized
by its strong position in the helicopter emergency mission-
critical services market in Europe, a high level of cash flow
predictability, its resilience to the economic downturn, as well
as the value of its large fleet," said Ivan Palacios, a Moody's
Vice President - Senior Analyst and lead analyst for Inaer.
"However, the rating also takes into account the company's
relatively small size and niche market exposure, its high leverage
and weak credit metrics, and the event risk arising from its
acquisitive expansion strategy."

Moody's considers that Inaer's business demonstrates strong
predictability of future cash flows due to the medium-to-long term
nature of the contracts with customers, the company's track record
in contract renewal (historically the renewal rate has been higher
than 95%), and the fact that more than 80% of the revenues are
fixed and not driven by activity levels given the profile of the
services it provides.

In addition, approximately 90% of its revenue is derived from
contracts for providing mission-critical on-shore services with
public administrations, which ensures low collection risk.  While
public administrations in Spain may try to reduce spending on
helicopter services in light of the challenging macroeconomic
condition and the announced budget cuts, Moody's notes that the
mission critical services are less likely to be affected due to
the political weight of sound public safety and their relatively
small amount compared to total government spending.

Inaer's strong business profile is also supported by its large
fleet of 281 aircrafts (mainly helicopters) as of December 2009,
which positions it as one of the largest operators in Europe of
mission-critical services, giving it a leading position in a
market where economies of scale are material.  In addition, the
helicopter fleet provides a significant hard asset base that
preserves its value over time.

Nevertheless, Moody's notes that one of the factors driving the B1
CFR is the company's relatively small size and its niche market
exposure.  In order to increase its geographical diversification
and achieve scale, Inaer has developed an active acquisition and
international expansion strategy.  The current refinancing
exercise also aims to provide Inaer with the flexibility to
acquire an Australian operator with a fleet of 18 helicopters,
Revenues of AUD41 million and EBITDA of AUD15 million for the year
ended June 2009.

In addition, the company's rating reflects its high leverage and
weak credit metrics.  As of FY2009, the group's Adjusted
debt/EBITDA was 5.5x, while return on assets was only around 2%.
In addition, free cash flow was negative due to the high capex
requirements to support organic growth.  Given the low mandatory
debt repayments, Moody's expects deleveraging to come from
improvements in EBITDA rather than reduction in absolute debt
levels.

The B1 CFR is based on the assumption that credit metrics will
improve going forward so that adjusted debt/EBITDA falls below 5x
in FY 2012 while free cash flow is positive over the rating
horizon.  This expectation is supported by the high visibility of
the business plan and the incremental cash flows coming from the
asset to be acquired in Australia.  Deviation from such
expectation will pressure the ratings.

Moody's also believes that the company's appetite for expansion
may lead to further acquisitions which, if primarily debt
financed, could impact its metrics and limit the expected
deleveraging.  However, Moody's notes that the company's ability
to incur in additional leverage is limited by the contractual
restrictions included in the debt agreements.

The (P)Ba3 rating on the EUR100 million revolving credit facility
is one notch above the company's CFR of B1 and two notches above
the (P)B2 rating on the EUR470 million senior notes, reflecting
the former's priority ranking relative to the notes.  The two
debts benefit from upstream guarantees from material subsidiaries
and share the same collateral package (pledge over shares of
operating companies, bank accounts and intra-group receivables)
but the revolving credit facility ranks ahead of the notes by
virtue of the intercreditor agreement.  While the value of the
share pledge might be limited in light of the pari passu upstream
guarantee, in Moody's view, the value of the pledge of intra-group
receivables and bank accounts could be material, justifying the
two notches differential between the instruments.

The stable outlook reflects the expectation that Inaer will
execute its business plan as outlined.

Given the relatively small size of the company and its niche
market exposure, upward pressure on the rating would be dependent
upon a sustained reduction in leverage as measured by adjusted
debt/EBITDA trending towards 4.0x and free cash flow to debt of at
least 8%, while the company demonstrates prudence in its expansion
strategy.

The rating may experience downward pressure if the fundamentals of
its business dramatically changed or key government related
customers significantly cut their business with Inaer.  Credit
metrics that could lead to increased pressure on the rating
include debt/EBITDA higher than 5.5x, and inability to generate
free cash flow to reduce debt.  Downward pressure on the rating
could also develop if the company experiences stress on its
financial covenants.

Moody's issues provisional ratings in advance of the final sale of
securities and these ratings reflect Moody's preliminary credit
opinion regarding the transaction only.  Upon a conclusive review
of the final documentation, Moody's will endeavor to assign a
definitive rating to the revolving credit facility and the notes.
A definitive rating may differ from a provisional rating.

Proiris Aviation Spain, S.L., is a wholly-owned subsidiary of
Inaer Aviation Group S.L., a Spanish-based helicopter services
provider that specialises in the provision of mission-critical on-
shore services to state and local governments, primarily in Spain
and Italy.  The group is owned by World Helicopters S.a.r.l, a
vehicle 50.1% owned by International Helicopters and 49.9% by KKR,
which bought its stake from the former in April 2010.  Inaer
reported revenues of EUR303 million and EBITDA of EUR79 million
for FY2009.


* SPAIN: Majority of City Councils in Deep Crisis
-------------------------------------------------
Ambrose Evans-Pritchard at The Daily Telegraph reports that a
third of Spain's city councils are in dire straits and may be
forced to suspend payments by the end of the year.

According to The Daily Telegraph, the great majority of councils
in Andalucia are already in deep crisis -- either insolvent or
muddling through from day to day.  More than 400 of the 8,000
councils across the country have stopped paying electricity, water
and telephone bills, the report says, citing Spanish newspaper El
Economista.

The Daily Telegraph notes Spain's federation of regional
governments said councils were heading for slow "asphyxiation",
with many facing a payroll cut-off next month.  Pedro Arahuetes,
mayor of Segovia and head of the federation's finance committee,
told The Daily Telegraph that councils had lost up to 30% of tax
revenues because of the property and construction crash, and a
further 20% in funding cuts by Madrid.

The Daily Telegraph relates the body has called for a moratorium
until 2012 on debts to central government, which is itself
slashing wages by 5% as a quid pro quo for backing from the EU's
EUR750 billion (GBP626 billion) rescue.

Council debt is just 3% of Spanish GDP, so default risk is modest,
The Daily Telegraph notes.


===========================
U N I T E D   K I N G D O M
===========================


ARTFUL GROUP: In Administration; Around 300 Jobs Affected
---------------------------------------------------------
Adam Hooker at PrintWeek reports that contemporary art printer
Artful Group has gone into administration, resulting in the loss
of around 300 jobs.

The report relates Will Wright and Mark Orton of KPMG were
appointed as joint administrators on June 28.  Following their
appointment, 270 employees at the company's Northampton print
facility were made redundant, while 30 employees at the group's
Saffron Hill, London-based design site were also let go, the
report recounts.

The report notes Mr. Wright said that the company had suffered a
drop in consumer demand, which had had a "punishing effect" on the
business.

According to the report, a spokeswoman for KPMG said it was in
discussions with interested parties.

The Art Group ran 50 HP and Epson wide-format printers and was
believed to be running four Vutek machines, according to
PrintWeek.


CLERICAL MEDICAL: Fitch Raises Ratings on Instruments From 'BB+'
----------------------------------------------------------------
Fitch Ratings has upgraded Clerical Medical Investment Group Ltd's
(Issuer Default Rating or IDR 'A'/ Negative) and Scottish Widows
PLC's (IDR 'A+'/ Stable) subordinated debt instruments to 'BBB+'
from 'BB+' and to 'A-' from 'BB+'.

Fitch sees reduced risk of coupon deferral on these instruments
following recent coupon payments that have been made on two of
those issued by CMIG.  Coupon payments on certain debts issued by
the ultimate owner, Lloyds Banking Group (LBG; 'AA-'/Outlook
Stable), have been made to defer during 2010 and 2011.  This was a
result of the concept of burden sharing for banks which received
state support, as enforced by the European Commission.  Although
there was a carve-out for subordinated debt issued by LBG's
insurance subsidiaries, Fitch saw heightened risk of deferral in
the aftermath of LBG's state support.  The agency now considers
this to have diminished and has reverted to standard notching and
placed two notches between the subordinated debt ratings and IDRs.

The one-notch differential between the ratings of the debts of
CMIG and SW reflects the lower IDR of CMIG.

The ratings actions are:

CMIG lower tier 2*

  -- XS0132169672: upgraded to 'BBB+' from 'BB+'

CMIG upper tier 2*

  -- XS0103961743: upgraded to 'BBB+' from 'BB+'
  -- XS0222798661: upgraded to 'BBB+' from 'BB+'

  * Issued by Clerical Medical Finance plc and guaranteed on a
    subordinated basis by CMIG.

SW upper tier 2

  -- XS0230493842: upgraded to 'A-' from 'BB+'


EMI GROUP: New CEO to Present Turnaround Plan in Two Weeks
----------------------------------------------------------
Claire Atkinson at The New York Post reports that Roger Faxon, the
newly installed EMI Group CEO, is expected to present his plan for
turning around the struggling music label to boss Guy Hands in the
next two weeks.

The Post's sources said Mr. Faxon's plan includes new distribution
deals and securitizing assets on the publishing side.

"They're looking at new ways to monetize their assets," The Post
quoted one source as saying.  "They're looking for distribution
deals or a sale on the recorded music side."

On June 22, 2010, the Troubled Company Reporter-Europe, citing The
Financial Times, reported that EMI announced a surprise shake-up
in its senior management a week after receiving a GBP105 million
(US$155 million) bail-out from Terra Firma, its private equity
owner, to avoid falling into the hands of its lender, Citigroup.
The FT disclosed the private equity group's investors were not
told about the leadership changes before they injected GBP105
million into the music group this month to avoid a default on its
debt.

EMI Group Ltd. -- http://www.emigroup.com/-- is the fourth
largest record company in terms of market share (behind Universal
Music Group, Sony Music Entertainment, and Warner Music Group).
It houses recorded music segment EMI Music and EMI Music
Publishing.  EMI Music distributes CDs, videos, and other formats
primarily through imprints and divisions such as Capitol Records
and Virgin, and sports a roster of artists such as The Beastie
Boys, Norah Jones, and Lenny Kravitz.  EMI Music Publishing, the
world's largest music publisher, handles the rights to more than a
million songs.  EMI Music operates through regional divisions (EMI
Music North America, International, and UK & Ireland).  Private
equity firm Terra Firma owns EMI.


GALA CORAL: Fitch Assigns Issuer Default Rating at 'B'
------------------------------------------------------
Fitch Ratings has assigned UK-based betting, bingo and casino
company Gala Coral Group Ltd a Long-term Issuer Default rating of
'B' with a Stable Outlook.

The rating reflects Fitch's expectation of strong free cash flow
generation over the period FY10 (ending in September 2010) to FY13
and the moderately integrated nature of its operations.  The
rating also reflects execution risks posed by challenges facing
its five business units, which are being addressed by remedial
action put in place by management, and the high post-
restructuring net lease-adjusted leverage of approximately 6x.

The strong, competitive and resilient profile of the core betting
unit Coral (53% of FY09 group EBITDA) anchors group profits.
However, at Bingo (23%) and Remote (12%) Fitch believes execution
risks and industry dynamics outside management's control could
delay the achievement of strategic goals.  The casino unit (9%)
has historically defended its profitability but Fitch notes the
increasingly attractive profile of some of its competitors'
venues.  The small but rapidly growing Italian unit (3%) should
see limited challenges.

The company in June 2010 completed a restructuring of its capital
structure, whereby holders of GBP556 million mezzanine debt gave
up their claims and injected GBP200 million new money in exchange
for equity in the company.  The new money was applied to part-
prepay senior secured bank debt, which as a consequence was
reduced to GBP1,605 million.  Additionally, the company retains
GBP47 million of second lien debt and has in place GBP367 million
debt secured on the properties of a ring-fenced subsidiary.  As a
result of the application of its opco propco methodology, Fitch
has incorporated propco debt in its lease-adjusted leverage
calculation.

The debt restructuring is expected to contribute to a reduction of
FY10 total debt / EBITDA by 2x to 6.4x and senior debt / EBITDA by
0.5x to 5.1x.  Total lease-adjusted leverage of approximately 6.6x
(6.0x net of cash) projected by Fitch for FY10 is still considered
high relative to peers, although acceptable for the 'B' rating.
Additionally, the agency notes the large cash balances held by the
company -- approximately GBP200 million of unrestricted cash
expected by end-September 2010, equal to 0.6x end April-2010 LTM
EBITDA of GBP305 million.  Liquidity, which includes GBP23 million
undrawn under a GBP50 million revolver line, is expected to be
sufficient to cover outstanding debt repayment obligations up to,
but excluding, October 2014, when the GBP648m tranche B of senior
secured bank debt matures.

Fitch's projections have included a number of stresses to
management's assumptions.  The agency has concluded that,
excluding a one-off working capital movement anticipated for FY10,
annual free cash flow generation above GBP100m pa should be
achievable on a sustained basis.  Fitch takes comfort from the
strong projected cash generation and the expected resulting de-
leveraging.

Gala's rating headroom is viewed as comfortable and supports a
Stable Outlook.  An upgrade may result from a stabilization of
like-for-like club attendance and profits at the Bingo unit,
performance improvements at the Remote unit, steadily growing
group EBITDA, annual free cash flow being maintained in the region
of GBP100 million and a lease-adjusted net leverage under 5x.
Conversely, further weakening at two or more of Gala's businesses,
combined with a sharp contraction of annual free cash flow and an
increase of lease-adjusted net leverage, would lead to a
downgrade.


GALA ELECTRIC: Moody's Assigns 'B2' Corporate Family Rating
-----------------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating to Gala Electric Casinos Limited.  The expected family
recovery rate is 65%, reflecting the above average recovery
expectation for this essentially first lien only capital
structure, which translates into a B3 probability of default
rating.  The rating outlook is stable.  This is the first time
that Moody's has rated Gala.

The B2 CFR for Gala Coral reflects the still high adjusted
leverage for Gala as it emerges from restructuring (expected by
Moody's to be around 6.8x on a Debt/EBITDA basis at the 2009/10
year-end) combined with challenges in particular from (i) a
difficult-to-predict macro-economic environment, (ii) the turn-
around task at Gala Bingo and (iii) the repositioning of the
underperforming sports book within Gala Coral's online activities.
These risks are tempered by the company's strong offline market
position as the most diversified gaming operator in the UK, a
realistic business plan with a likely return to visible free cash
flow generation from 2011 onwards and a more sustainable capital
structure following the restructuring.

Gala Coral is an integrated gambling operator with on- and off-
line activities, mainly in the UK.  The group also has operations
in Italy.  The company's bingo clubs and casinos operate under the
Gala brand name while the group's retail betting operations use
the Coral brand in the UK and the Eurobet name in Italy.  The
company's Remote division provides the umbrella for its online
activities, which use the relevant off-line brand (Gala, Coral)
for its activities.

Following a 2003 leveraged buy-out of Gala's bingo activities and
the subsequent acquisition of Coral Group's betting business in
2005, Gala Coral emerged with a debt burden that, although not out
of line with market practices at the time, subsequently proved to
be unsustainable in the medium term.  Consequently, the company
entered into discussion with its senior and mezzanine bankers
during the second half of 2009 with a view to restructuring its
balance sheet ahead of an eventual covenant breach.  Final
restructuring plans were agreed in May 2010 and the restructuring
closed in mid-June 2010.  Following the restructuring funds
managed by Apollo, Cerberus, Park Square and York Capital
indirectly hold a majority in Gala shares.

Key elements of the restructuring are (i) the exit from the
company's capital of the previous equity holders, after receiving
the benefit from an intercompany debt repayment (GBP10 million),
(ii) the replacement of GBP570 million (including accrued
interest) of mezzanine debt with GBP450 million of subordinated
shareholder debt, which Moody's considers functionally equivalent
to equity, (iii) the injection of GBP210 million of cash equity by
the new equity holders, predominantly used to repay senior debt
and (iv) the resetting of covenants under the senior facility
agreement to provide improved headroom.

Following a small drop in revenues for the financial year ending
September 2009 (GBP1,258 million after GBP 1,269 million), Gala
Coral has indicated that it expects trading conditions to remain
tough throughout the current financial year.  Moody's expects Gala
Coral to focus in the near -term on its core strengths in retail
betting, machine gambling and effective cost management, while re-
vitalizing the bingo and online sports book businesses and
developing its earlier stage international presence in Italy.
While Moody's believes that 2009/10 revenues will be broadly
similar and unadjusted EBITDA levels somewhat weaker compared to
the prior year, the rating agency believes that management
measures taken to address areas of operational weakness (value
strategy in bingo; re-launch of the coral.co.uk website) and a
more stable operating environment should result in profit and cash
flow improvements from 2010/11.  However, the rating agency also
notes that significant execution risks remain.  Moody's therefore
expects leverage to reduce visibly from around 6.8x (including
Moody's adjustment for operating leases and including
GBP367 million in debt at Gala Coral's legally separated property
company which is consolidated in Gala's accounts) in 2009/10 over
the next few years.  The rating agency also expects that the
company will hold total cash in excess of GBP200 million by the
2009/10 year-end.  This is well in excess of operational and
covenant needs and provides some additional financial flexibility.
Gala Coral's net debt position has been aided by around
GBP118 million in VAT refunds from the UK's HMRC to date, and
Moody's cautions that any reversal of the refund, which currently
appears less likely could have a meaningful negative impact on the
company's solid liquidity position.

Gala Coral's stable rating outlook reflects Moody's expectation
that following the June 2010 restructuring of the balance sheet
Gala Coral will remain on a deleveraging trajectory and that the
company will begin to show meaningful EBITDA and free cash flow
growth from its financial year 2010/11 onwards.

Moody's regards Gala Coral's liquidity as adequate for its near-
term financial and operational requirements.  Gala Coral's
operating business has reasonable cash conversion characteristics,
but interest cost, outflows for restructuring and working capital
(after 2009 was managed for cash conservation) are expected to
limit free cash flow generation in 2010, before Gala Coral should
return to a reasonable level of free cash flow generation in 2011.
Apart from cash held on balance sheet (in excess of GBP200 million
by the 2009/10 year-end before exclusions for cash in hand/floats,
restricted cash and PropCo cash) and internal cash flow
generation, the company's remaining source of liquidity is its
GBP50 million RCF (GBP27 million currently utilized for LCs).
Moody's believes that these sources should be sufficient to
address near- term repayment obligations (FY2011: GBP60 million).
Moody's would expect the company to husband cash resources and
internally generated cash flows carefully so that FY2012
maturities of GBP216 million can be addressed and to take timely
refinancing steps ahead of repayment dates in FY 2014 and FY2015
when the bulk of the current debt falls due.

Gala Coral's ratings were assigned by evaluating factors that
Moody's believes to be relevant to the credit profile of the
issuer, such as (i) the business risk and competitive position of
the company versus others within its industry, (ii) the capital
structure and financial risk profile of the company, (iii) the
projected performance of the company over the near to intermediate
term, and (iv) management's track record and tolerance for risk.
These attributes were compared against other issuers both within
and outside of Gala Coral's core industry and Gala Coral's ratings
are believed to be comparable to those of other issuers of similar
credit risk.

Gala Electric Casinos Limited has its registered office in London,
England.  Through its subsidiaries it owns and operates a
diversified gaming company (sales GBP1.3 billion for the year
ending September 2009) with operations mainly in the UK.


SOMF LIMITED: Moody's Puts Low-B Rated Notes Under Review
---------------------------------------------------------
Moody's has placed on review all notes issued by SOMF Limited:

  -- GBP100M GBP 100,000,000 Class A1 Secured Floating Rate Bonds
     due 2014 Notes, Aaa Placed Under Review for Possible
     Downgrade; previously on Jun 17, 2005 Assigned Aaa

  -- GBP80M GBP 80,000,000 Class A2 Secured Floating Rate Bonds
     due 2014 Notes, Ba1 Placed Under Review Direction Uncertain;
     previously on Aug 6, 2009 Downgraded to Ba1

  -- GBP20M GBP 20,000,000 Class B Secured Floating Rate Bonds due
     2014 Notes, Ba3 Placed Under Review Direction Uncertain;
     previously on Aug 6, 2009 Downgraded to Ba3

The transaction represents a repackaging of a share in The Mall
Funding plc notes issued in May 2005.

The review was triggered by a reassessment of the likely
allocation of recovery proceeds in case of a default of the loan
securing the underlying transaction (The Mall Funding plc).  In
this particular scenario (which is not Moody's base case scenario)
Moody's now considers that the principal recovery proceeds that
are used to pay down the Mall Funding Notes would first be
allocated to the Class A1, the Class A2 and the Class B Notes (the
"SOMF Notes") on a pro-rata basis.  In this case, the trigger
embedded in the SOMF Limited transaction would likely only switch
the principal payment allocation from a pro-rata to a sequential
allocation after a significant share of the Mall Funding Notes are
redeemed.  Moody's previously modelled the principal recovery on a
sequential basis.

Moody's will in its review also assess the potential interest
income and expense mismatch on the Issuer level that is mitigated
by a swap entered into with Credit Suisse International.  Moody's
also notes that the Issuer announced a Consent Solicitation
process that might influence the outcome of the rating review.
Moody's expects that the rating changes might align the rating of
the Class A1 Notes more with the rating of the notes issued by The
Mall Funding plc.


TAGGART GROUP: Administrator Has Difficulty Selling Helicopter
--------------------------------------------------------------
BBC News reports that the administrator of Taggart Group had
difficulty selling the company's helicopter partially because its
engines were damaged.

The report recalls the building firm was placed into
administration in October 2008 with debts of up to GBP300 million.

The twin-engined Eurocopter EC 135 was bought with a loan from
Bank of Scotland (Ireland) and was owned by one of the Taggart
companies, Taggart Homes, the report recounts.  According to the
report, the bank was still owed GBP2.1 million of that loan when
the firm went into administration.

The administrator at financial consultancy PwC had initially been
hopeful he could get some of that money back, the report notes.
However, in his latest progress report, filed recently at
Companies House, he stated "recovery of any equity value is
increasingly unlikely," the report notes.

The report says a key problem was that the engines were damaged
and the bank will have to pay for the repairs.  The administrator
also noted that "depressed conditions in the aircraft market" will
also not help matters, the report states.  The aircraft is also
understood to be in negative equity, in other words it is worth
less than the loans secured against it, the report discloses.

The report relates other details in the administrators report,
which covers the period from October 2009 to April 2010, show that
he was able to sell Taggart's former headquarters building at
Clarendon Dock in Belfast for just over GBP2 million, shortly
after the administration began.

Taggart Group was run by brothers Michael and John Taggart.


VEDANTA RESOURCES: Fitch Affirms 'BB+' Ratings on Two Bonds
-----------------------------------------------------------
Fitch Ratings has revised Vedanta Resources Plc's Outlook to
Stable from Negative.  At the same time, the agency has affirmed
Vedanta's Long-term Issuer Default Rating at 'BBB-'.  Fitch has
also affirmed Vedanta's US$500 million bond due January 2014 and
its US$750 million bond due July 2018 at 'BB+'.

The Stable Outlook reflects the progress of the company's
expansion projects and greater visibility of completion.  The
company is on track to commission both its expanded aluminium and
power facilities at Jharsuguda, Orissa, during FY11, which should
contribute materially to its earnings from FY12.  Additional
output from expansion projects in other metals and minerals such
as iron ore, copper and zinc will benefit Vedanta's EBITDA from
FY11.  The Stable Outlook also reflects the increased certainty on
the company's future capex plans, with FY11 likely to be the peak
year for capex (estimated at US$4.4 billion).  Continued firm
metal and mineral prices would further support earnings.  Risks
exist from any material softening in base metal prices and/or less
than expected demand.

The ratings reflect the competitive cost structure of Vedanta's
zinc facility in India, as well as its US$1.3 billion acquisition
of Anglo American Plc's ('BBB+'/Stable/ 'F2') zinc assets through
Hindustan Zinc Ltd, although the same awaits regulatory and other
approvals.  Also, the ratings reflect the strong operating cash
flows from its zinc and iron ore businesses, although the
aluminium and power businesses are still in the investment mode.
The high cost structure of its aluminium business currently
remains a cause for concern, in the absence of captive bauxite
mines.  However, the cost structure should improve once the new
capacities at Vedanta Aluminium stabilize, which is expected by
end-FY11.  Although execution risk remains high for the company
during FY11 with US$4.4 billion of capex scheduled for the year,
Fitch believes that the company's past track record of successful
implementation coupled with its available liquidity partly offsets
these risks.

Negative rating triggers include any material delay in achieving
the targeted output from its projects, time and cost overruns in
its capex programs, any major debt-led acquisition and/ or fresh
expansion materially impacting credit metrics.  Metal prices
remain a key ratings factor, and any material fall could impact
the company's ratings.  In any case, a net debt/EBITDA exceeding
2x on a sustained basis could also act as a negative rating
trigger.

Positive rating triggers include a tangible demonstration of
returns from capex programs and free cash flows over the medium-
term on a sustained basis, which would result in material debt pay
downs, although any potential positive impact on the IDR would be
constrained by India's country ceiling (currently at 'BBB-').
Management expects the company to generate positive FCF from FY12.

The bond ratings are notched down from the IDR, and continue to
reflect the company's fragmented holding structure and the
presence of material minority interest in key subsidiaries, which
could potentially restrict its access to operating cash flows and
liquidity.  Any buyout of substantial minority stake in key
earnings subsidiaries, Hindustan Zinc and Balco, which would
materially reduce the extent of structural subordination of the
bonds, could result in equating the bond ratings with the IDR.

In FY10 Vedanta's revenues grew 20.5% to US$7,931 million, whilst
EBITDA grew 42% to US$2,296 million with an EBITDA margin of 29%,
primarily due to higher volumes and an improvement in base metal
prices.  Its net debt levels rose marginally during the year,
although offset by the higher earnings.  Vedanta reported a net
debt/EBITDA of 0.5x in FY10 (FY09: 0.3x).  The company's Funds
From Operations return-on-adjusted capital remained low at 11.1%
in FY10 (FY09: 13.1%) due to the substantial projects underway and
large cash and liquid balances (around 36% of capital employed in
FY10).  Fitch expects return ratios and EBITDA to materially
improve from Q1FY12, once these projects are completed.


* UK: Public Sector Debt May Reach GBP4.84 Trillion, Study Says
---------------------------------------------------------------
Jonathan Sibun at The Daily Telegraph reports that the UK's public
sector debt could be nearly GBP4 trillion higher than headline
figures suggest.

According to the report, the Office for National Statistics
released a study revealing that public purse could be faced with
GBP4.84 trillion of liabilities compared with the current public
sector net debt figure of GBP903 billion.

The report notes David Hobbs of the ONS described the public
sector balance sheet as an "open-ended concept" as he outlined
liabilities that are considered to be "off-balance sheet" or not
covered in official debt measures.

The report relates the ONS said the government's stakes in RBS and
Lloyds Banking Group could add another GBP1 trillion to GBP1.5
trillion, the largest potential liability.  Meanwhile, unfunded
public service pension obligations could account for a further
GBP770 billion to GBP1.2 trillion, while unfunded state pension
schemes amounted to between GBP1.17 trillion and GBP1.35 trillion,
the report states.

The study also highlighted a potential GBP200 billion of off-
balance sheet obligations from private finance initiative schemes,
and GBP40 billion in nuclear decommissioning liabilities, the
report discloses.

The report notes Hr. Hobbs also set out a further GBP500 billion
miscellaneous grouping of guarantees and contingent obligations,
some of which "are more likely to materialize than others".

The total in liabilities and obligations came to GBP3.68 trillion
to GBP4.84 trillion, the report says.


===============
X X X X X X X X
===============


* EUROPE: Sovereign Defaults Won't Be Included in Stress Tests
--------------------------------------------------------------
Jurjen van de Pol and John Fraher at Bloomberg News report that
Dutch Finance Minister Jan Kees de Jager said European Union
stress tests for banks won't include possible sovereign defaults,
which he doesn't expect to happen.

"The Committee of European Banking Supervisors has said that it
takes into account sovereign debt, for example in the form of a
rise in spreads," Mr. De Jager told reporters after a meeting with
his EU counterparts in Brussels Monday, according to Bloomberg.
"But sovereign default is not included."

Bloomberg relates Mr. De Jager said results will be released on
July 23.

According to Bloomberg, Mr. De Jager said that he will publish
"sovereign debt risk" by individual Dutch financial institution
and that he expects most European countries to do the same for
their banks.

As reported by the Troubled Company Reporter-Europe, Bloomberg
News said EU regulators are examining the strength of 91 banks in
an attempt to reassure investors about their resilience to
potential losses as the debt crisis pummels the bonds of Greece,
Spain and Portugal.  The banks being tested account for 65% of
Europe's banking industry, according to Bloomberg.


* Upcoming Meetings, Conferences and Seminars
---------------------------------------------

July 14-17, 2010
AMERICAN BANKRUPTCY INSTITUTE
    Southeast Bankruptcy Conference
       The Ritz-Carlton Amelia Island, Amelia, Fla.
          Contact: http://www.abiworld.org/

Aug. 5-7, 2010
AMERICAN BANKRUPTCY INSTITUTE
    Mid-Atlantic Bankruptcy Workshop
       Hyatt Regency Chesapeake Bay, Cambridge, Maryland
          Contact: 1-703-739-0800; http://www.abiworld.org/

Oct. 6-8, 2010
TURNAROUND MANAGEMENT ASSOCIATION
    TMA Annual Convention
       JW Marriott Grande Lakes, Orlando, Florida
          Contact: http://www.turnaround.org/

Dec. 2-4, 2010
AMERICAN BANKRUPTCY INSTITUTE
    22nd Annual Winter Leadership Conference
       Camelback Inn, Scottsdale, Arizona
          Contact: 1-703-739-0800; http://www.abiworld.org/

Mar. 31-Apr. 3, 2011
AMERICAN BANKRUPTCY INSTITUTE
    Annual Spring Meeting
       Gaylord National Resort & Convention Center, Maryland
          Contact: 1-703-739-0800; http://www.abiworld.org/

June 9-12, 2011
AMERICAN BANKRUPTCY INSTITUTE
    Central States Bankruptcy Workshop
       Grand Traverse Resort and Spa
          Traverse City, Michigan
             Contact: http://www.abiworld.org/

October 25-27, 2011
TURNAROUND MANAGEMENT ASSOCIATION
    Hilton San Diego Bayfront, San Diego, CA
       Contact: http://www.turnaround.org/

Dec. 1-3, 2011
AMERICAN BANKRUPTCY INSTITUTE
    23rd Annual Winter Leadership Conference
       La Quinta Resort & Spa, La Quinta, California
          Contact: 1-703-739-0800; http://www.abiworld.org/



                            *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled.  Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets.  A company may establish reserves on its balance sheet for
liabilities that may never materialize.  The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged.  Send announcements to
conferences@bankrupt.com

Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.

                            *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA.  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 * * *