/raid1/www/Hosts/bankrupt/TCREUR_Public/101020.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, October 20, 2010, Vol. 11, No. 207
Headlines
A U S T R I A
RAIFFEISEN BANK: Moody's Assigns 'D+' Financial Strength Rating
B O S N I A & H E R Z E G O V I N A
GRANIT JABLANICA: Prosecution Seeks to Halt Bankruptcy Procedure
B U L G A R I A
VIVACOM AD: PineBridge to Meet With Lenders in Bid to Keep Stake
G R E E C E
HYPO REAL ESTATE: Ex-Chief Funke Wins Wrongful Dismissal Ruling
WIND HELLAS: Picks Senior Bondholders as Preferred Bidders
I R E L A N D
ANDERSON VALLEY: S&P Downgrades Ratings on Notes to 'CC (sf)'
ANDERSON VALLEY: S&P Cuts Ratings on 2 Note Classes to 'CC (sf)'
NOMOS CAPITAL: Fitch Assigns 'BB-' Rating on Senior Loan Notes
L U X E M B O U R G
INTELSAT SA: Unit Completes Cash Tender Offers to Buy Sr. Notes
N E T H E R L A N D S
EUROLOAN CLO: Moody's Cuts Rating on Class C Notes to 'Caa2 (sf)'
KHAMSIN CREDIT: S&P Withdraws 'B+' Rating on Series 10 Notes
SABIC INNOVATIVE: Moody's Upgrades Corp. Family Rating to 'Ba1'
R U S S I A
ALROSA COMPANY: Fitch Upgrades LT Issuer Default Rating to 'BB-'
INTERNATIONAL INDUSTRIAL: Russia Should Ensure Creditor Repayment
S P A I N
SANTANDER EMPRESAS: Fitch Affirms 'Csf' Rating on Class F Notes
U K R A I N E
BIZ FINANCE: Fitch Assigns 'B' Rating to Limited Recourse Notes
U N I T E D K I N G D O M
EMI GROUP: Terra Firma Lawsuit v. Citigroup Over Buyout Kicks Off
HORSE & COUNTRY TV: Denies Going Into Administration
LEHMAN BROTHERS: Administrators Provide 2-Year Progress Update
LIVERPOOL FOOTBALL: RBS Wrote Off GBP30MM in Late Payment Fees
NORTHERN & SHELL NETWORK: Faces Suit Over GBP1 Million Unpaid Bill
PIERSE CONTRACTING: Mulls 110 Job Cuts Under Rescue Plan
PUNCH TAVERNS: S&P Puts Low-B Ratings on CreditWatch Negative
REGENT INNS: Three More Sites to be Sold
ROYAL BANK: Mulls Sale of Spanish Commercial Property Loans
ROYAL BANK: Bain Capital Nears GBP1 Billion Priory Group Buyout
* UNITED KINGDOM: Salisbury Turns to AG Program to Solve Blight
*********
=============
A U S T R I A
=============
RAIFFEISEN BANK: Moody's Assigns 'D+' Financial Strength Rating
---------------------------------------------------------------
Moody's Investors Service has taken these rating actions on three
subsidiaries of Raiffeisen Bank International AG, which is itself
part of the Raiffeisen Zentralbank Oesterreich Group (the RZB
Group):
(i) ZAO Raiffeisenbank (Russia): outlook changed to positive from
negative on the Baa3 long-term local- and foreign-currency deposit
ratings, the Baa3 senior and the Ba1 subordinated debt ratings
(ii) Raiffeisenbank (Bulgaria) EAD: outlook changed to stable from
negative on the Baa3 long-term local- and foreign-currency deposit
ratings
(iii) Raiffeisen Bank S.A. (Romania): outlook changed to positive
from stable on the Baa3 long-term and short-term local-currency
deposit ratings.
All other ratings of these banks remain unchanged.
The local-currency ratings on Raiffeisen Bank Aval JSC (Ukraine)
remain unchanged because they are constrained by the local-
currency deposit and debt ceilings of Ba1 for Ukraine, and
therefore cannot be upgraded unless the ceiling is raised.
The ratings of Tatra banka, a.s. (Slovakia) also remain unchanged.
This reflects the Slovak bank's intrinsic C- BFSR, translating
into a Baa2 baseline credit assessment (BCA), which is higher than
the bank's parent's BCA. As a result, an upgrade in the parent's
bank financial strength rating (BFSR) is not expected to lead to
upward pressure on Tatra banka's ratings.
Rating Rationale
Moody's notes that according to Raiffeisen Bank International's
announcement, most of the commercial banking assets and
liabilities of Raiffeisen Zentralbank Oesterreich AG have been
transferred to Raiffeisen Bank International AG, which also holds
the stakes in Group subsidiaries operating in Central & Eastern
Europe and the Commonwealth of Independent States. Moody's has
assigned these baseline ratings to RBI: BFSR D+, BCA Baa3,
positive outlook. The subsidiary banks' rating changes result
from (i) the use of RBI's newly-assigned baseline rating as the
supporter rating to impute parental support to the subsidiaries
(previously the ultimate parent's -- RZB's -- baseline rating was
used), and (ii) the change in outlook on the baseline rating from
negative to positive. For details on RBI's announcement, please
refer to Moody's press release titled "Moody's assigns A1/P-1/D+
ratings to Raiffeisen Bank International (Austria)" published on
14 October 2010.
Despite the changes in the RZB Group structure, Moody's has left
unchanged its assumption of a very high probability of parental
support from RBI to its subsidiaries. These support assumptions
provide for a notching uplift to RBI's subsidiaries whose rating
outlooks were changed, in accordance with Moody's Joint-Default
Analysis (JDA) methodology.
Applying the JDA methodology to the ratings of ZAO Raiffeisenbank,
Raiffeisenbank (Bulgaria) and Raiffeisen Bank SA (Romania) would
imply that a possible upgrade of RBI's BFSR would lead to an
upgrade of the debt and deposit ratings of these subsidiaries.
Consequently, the outlooks on the debt and deposit ratings of ZAO
Raiffeisenbank and deposit ratings of Raiffeisen Bank SA were
changed to positive, in line with the outlook on their parent's
BFSR. The outlook on the deposit ratings of Raiffeisenbank
(Bulgaria) was changed to stable, given the negative outlook on
the bank's BFSR.
Headquartered in Moscow, Russia, ZAO Raiffeisenbank reported total
IFRS assets of RUB511 billion (EUR13.4 billion) at 30 June 2010
and net income of RUB3.75 billion (EUR 98 million) for H1 2010.
Headquartered in Kyiv, Ukraine, Raiffeisen Bank Aval reported
total IFRS assets of US$7.0 billion at 31 December 2009 and net
loss of US$ 237 million for 2009.
Headquartered in Bucharest, Romania, Raiffeisen Bank SA reported
total IFRS assets of RON20.4 billion (EUR4.7 billion) at 30 June
2010 and net income of RON210.8 million (EUR49.7 million) for H1
2010.
Headquartered in Sofia, Bulgaria, Raiffeisenbank (Bulgaria)
reported total assets of BGN6.592 billion (EUR3.370 billion) as at
30 June 2010 and net income of BGN33.3 million (EUR17 million) for
H1 2010.
=======================================
B O S N I A & H E R Z E G O V I N A
=======================================
GRANIT JABLANICA: Prosecution Seeks to Halt Bankruptcy Procedure
----------------------------------------------------------------
BBC News, citing Bosnia-Hercegovina Federation official news
agency FENA, reports fifteen police officers were injured and 18
persons arrested during Monday morning's bankruptcy procedure in
"Granit", Jablanica d.d. Sarajevo.
BBC relates according to the order of the Konjic municipal court,
FBiH [Muslim-Croat Federation of Bosnia-hercegovina] Court Police
was asked to assist during introduction of bankruptcy procedure in
"Granit", Jablanica d.d. Sarajevo, and help bankruptcy proceeding
officer Abdulaziz Mahmutovic to enter the property of the company
for exploitation of ornament stone and marble.
Probe
Separately, BBC reports FENA said BiH [Bosnia-Hercegovina]
Prosecution sent requests to competent courts for stoppage of any
bankruptcy procedure in "Granit" [quarry], Jablanica, until the
completion of the investigation.
According to BBC, prosecutor of the special section for organized
crime, economic crime and corruption of the BiH Prosecution, under
the "urgent" mark sent a letter to the [Muslim-Croat] Federation
Supreme Court in which he asked freeze of activities of municipal
courts in relation to the bankruptcy procedure in "Granit",
considering that the investigation of the Prosecution relates to
unlawful gain of property, financial embezzlement and misuse of
over 12 million KM in business transactions of "Granit" from
Jablanica.
BBC notes also, the prosecutor sent a proposal to the BiH Court to
issue temporary security measures in order to secure property,
asking for ban on sales or any other removal of property of
"Granit" as well as movable property of third persons found in the
company's storage and all products on stock, worth about 3 million
KM, until the end of the criminal proceedings.
The BiH Prosecution is conducting an investigation against 18
persons in relation to this case, who are suspected of organized
crime, in relation to money laundering, failure to pay tax, misuse
of authority and other criminal acts in relation to business deals
of "Granit", Jablanica which indicate embezzlement of millions of
KM, BBC discloses.
Granit d.d. Jablanica is a mining and stone processing company.
===============
B U L G A R I A
===============
VIVACOM AD: PineBridge to Meet With Lenders in Bid to Keep Stake
----------------------------------------------------------------
Tennenbaum Capital Partners LLC, a hedge fund founded by Michael
Tennenbaum, is leading a group of creditors set to take over
Richard Li's Vivacom AD unless shareholders prevail in a
last-ditch effort to keep control, Isabell Witt and Kate Haywood
at Bloomberg News report, citing four people familiar with the
matter.
Vivacom is majority-owned by PineBridge Investments LLC, Hong Kong
businessman Li's investment-management firm, Bloomberg discloses.
PineBridge, Bloomberg says, may lose its stake by Oct. 29 under
terms of a debt restructuring agreed by lenders after Vivacom
breached terms on EUR1.5 billion (US$2.1 billion) of loans.
According to Bloomberg, the people said PineBridge is asking
lenders to consider an alternative restructuring and has invited
them to meet before the deadline at the end of this month to give
an update on Vivacom's business. A meeting could take place as
early as this week, Bloomberg states.
Bloomberg notes the people, who declined to be identified because
the negotiations are private, said Tennenbaum Capital's group of
lower-ranked junior lenders, which include Royal Bank of Scotland
Group Plc, plans to swap about EUR425 million of debt for
Vivacom's equity. Bloomberg relates two of the people said the
proposal includes a cash injection of about EUR125 million to pay
off part of the company's senior-ranking debt and for working
capital.
The people, as cited by Bloomberg, said the proposal from the
mezzanine lenders is backed by senior creditors as well as Dubai's
Oger Telecom Ltd., which agreed to become a strategic partner if
lenders take control.
Joe Haj Ali, a Dubai-based official of Oger Telecom, confirmed in
an e-mail that the company had signed an agreement with the
lenders, without giving further details, Bloomberg discloses.
Vivacom's lenders earlier agreed to waive the covenants until the
end of October, Bloomberg notes.
Vivacom, which has loans maturing between 2015 and 2018, breached
the limits on its debt relative to earnings before interest,
taxes, depreciation and amortization in the second quarter of this
year, according to data compiled by Bloomberg.
Vivacom AD is a Bulgarian phone company.
===========
G R E E C E
===========
HYPO REAL ESTATE: Ex-Chief Funke Wins Wrongful Dismissal Ruling
---------------------------------------------------------------
Karin Matussek at Bloomberg News reports that former Hypo Real
Estate Holding AG Chief Executive Officer Georg Funke won a
preliminary ruling and was awarded EUR150,000 (US$211,000) in a
suit over claims he was wrongfully dismissed after the 2008
bailout of the lender.
Bloomberg relates the Munich Regional Court on Friday awarded
Mr. Funke, 55, two months of pay in a verdict issued under a
special procedure that only allows documents as evidence. The
court also granted former Chief Financial Officer Markus Fell one
month of pay of about EUR40,000, Bloomberg says.
"This ruling will only be the last word if Hypo Real Estate won't
ask me to move to a second phase where I can hear more evidence,"
Presiding Judge Helmut Krenek said after delivering the verdict,
according to Bloomberg. "It's very likely that we will see that
second stage."
According to Bloomberg, Hypo Real Estate spokesman's Oliver Gruss
said in a statement distributed after the ruling that the lender
considers Messrs. Funke's and Fell's claims unfounded and it will
start proceedings allowing it to present more evidence.
Bloomberg recounts Messrs. Funke and Fell were dismissed in
December 2008. Friday's ruling concerned their January 2009
payments and Mr. Funke's salary for February of that year,
Bloomberg notes.
Bloomberg relates in a separate suit that is also pending before
the same court, Mr. Funke has asked the court to rule he was
wrongfully dismissed. His contract was to run until 2013 with an
annual payment of EUR800,000, Bloomberg states. Mr. Funke is also
seeking to regain a pension plan under which he would get an
annual payment of about EUR560,000, according to Bloomberg.
About Hypo Real Estate
Germany-based Hypo Real Estate Holding AG (FRA:HRXG) --
http://www.hyporealestate.com/-- is a German holding company for
the Hypo Real Estate Group. It is an international real estate
financing company, combining commercial real estate financing
products with investment banking. The Company divides its
operations into three business units: Commercial Real Estate,
which provides real estate financing on the international and
German market; Public Sector & Infrastructure Finance, and Capital
Markets & Asset Management. Hypo Real Estate Group operates
through a number of subsidiaries, including, among others, Hypo
Real Estate Bank International AG that focuses on Pfandbrief-based
commercial real estate financing in all international markets, and
offers large-volume investment banking and structured finance
transactions; Hypo Real Estate Bank AG that focuses on the
commercial real estate financing and refinancing business in
Germany, and DEPFA Bank plc in Dublin, Ireland, which is a
provider of public finance.
* * *
As reported by the Troubled Company Reporter-Europe, Bloomberg
News said Chancellor Angela Merkel's government took over Hypo
Real Estate in 2009 after the lender's Dublin-based Depfa Bank Plc
unit couldn't raise financing when the bankruptcy of Lehman
Brothers Holdings Inc. froze credit markets. Hypo Real was one of
seven banks to fail stress tests on 91 of Europe's biggest lenders
in July, according to Bloomberg.
As reported by the Troubled Company Reporter-Europe on Oct. 13,
2010, Fitch Ratings upgraded HRE Holding's Individual rating to
'D' from 'F' and simultaneously withdrawn it. Depfa Bank plc's
Individual rating was upgraded to 'D' from 'F'.
WIND HELLAS: Picks Senior Bondholders as Preferred Bidders
----------------------------------------------------------
Kate Haywood and John Glover at Bloomberg News report that Wind
Hellas Telecommunications SA's senior bondholders were picked as
preferred bidders for the Greek mobile phone operator in the
second time the company has been sold in a year.
Wind Hellas's senior secured floating-rate noteholders, owed about
EUR1.2 billion (US$1.67 billion), will inject EUR420 million and
write off debt in exchange for the company, Bloomberg says, citing
Wind's parent Weather Finance III Sarl, the holding company of
Egyptian billionaire Naguib Sawiris.
Bloomberg relates Weather Finance said in a statement that under
the bondholders' proposal, Wind Hellas's GBP250 million-revolver
will be repaid in full, while the company's senior secured notes
and EUR355 million of subordinated bonds will be written off.
According to Bloomberg, the statement said the bondholder group
includes Mount Kellett Capital Partners (Ireland) Ltd., Taconic
Capital Advisers UK LLP, Providence Equity Capital Markets LLC,
Anchorage Capital Group LLC, Angelo Gordon & Co and Eton Park
International LLP.
Wind Hellas, under the control of creditors, put itself up for
sale a second time after deferring a EUR17.5 million interest
payment on a revolving credit in June and missing a EUR23 million
payment on its floating-rate notes, Bloomberg discloses.
As reported by the Troubled Company Reporter-Europe on Oct. 19,
2010, Bloomberg News, citing three people with knowledge of the
situation, said Mr. Sawiris submitted a revised offer for Wind
Hellas. Bloomberg disclosed one of the people said Mr. Sawiris
was offering EUR180 million (US$252 million) of cash and plans to
refinance Wind Hellas's revolving-credit facility by raising
EUR290 million of bonds. Under Mr. Sawiris's proposal, senior
secured bondholders would get the chance to invest in Wind Hellas,
while holders of its subordinated bonds would be wiped out,
Bloomberg said, citing the person with knowledge of that bid.
About WIND Hellas
Headquartered in Athens, Greece, WIND Hellas Telecommunications
S.A. -- http://www.wind.com.gr/-- provides mobile voice and data
services to about 6 million consumer and business customers
throughout Greece. The company enables international roaming in
155 countries for travelling subscribers through agreements with
other carriers. It also provides cellular and satellite-based
vehicle management and tracking services. WIND Hellas is owned by
investment firm Weather Investments, a company led by Cairo-based
Orascom Telecom's founder and chairman, Naguib Sawiris.
* * *
As reported by the Troubled Company Reporter-Europe on Oct. 1,
2010, Standard & Poor's Ratings Services said that it lowered its
long-term corporate credit ratings on Greek mobile
telecommunications operator WIND Hellas Telecommunications S.A.
and related entities to 'D' from 'SD'. Simultaneously, S&P
withdrew all S&P's ratings on the group.
=============
I R E L A N D
=============
ANDERSON VALLEY: S&P Downgrades Ratings on Notes to 'CC (sf)'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
five classes of notes issued by Anderson Valley II CDO PLC.
The rating actions follow developments that S&P has observed since
S&P last took rating action on the transaction in January 2010.
In particular, all outstanding credit events in the reference
portfolio have now been settled, allowing us to better assess the
impact of defaults experienced in the portfolio to date.
Anderson Valley II is a hybrid partially-funded cash flow
collateralized debt obligation. "Hybrid" in this context means
that the transaction has an underlying portfolio containing both
cash and synthetic assets; "partially-funded" denotes that the use
of synthetic assets allows the notional size of the portfolio to
exceed the amount of note issuance.
Anderson Valley II closed in February 2007 and its notes are
denominated in euros. A related U.S. dollar-denominated
transaction, Anderson Valley CDO PLC (Anderson Valley I), closed
in December 2006. The transactions are similar in concept and
both have diversified credit default swap reference portfolios
comprising primarily investment-grade corporate and sovereign
entities.
The issuance proceeds of Anderson Valley II were invested in cash
securities, primarily 'AAA' rated fixed-rate covered bond
securities ultimately backed by Spanish mortgage portfolios. The
issuer has put in place an interest rate swap to convert the
annual fixed-rate coupons on the covered bonds into semiannual
floating-rate payments.
Anderson Valley II was designed so that the issuer could settle
defaults and other credit events in the reference portfolios by
buying affected cash obligations from the CDS counterparty, using
proceeds from the sale of cash securities or amounts drawn on the
transaction's liquidity facility, or a combination of both.
To withstand future losses and repay noteholders, the transaction
relies principally on the net sale or redemption proceeds of
remaining cash securities, plus the value of affected cash
obligations in the portfolio, less the outstanding amount of
liquidity facility drawings. In general, the issuer must repay
liquidity facility drawings before any notes are redeemed.
To help limit losses arising from credit events in the reference
portfolio, Anderson Valley II has a "Net Losses" event of default
under the terms and conditions of its notes. An event of default
is triggered if net losses, as defined in the transaction
documents, equal or exceed 10%. As published in the transaction's
August 2010 report, net losses currently stand at about 9.16%. At
present, the CDS counterparty has the right to enforce security
following an event of default, which would likely lead to
liquidation of the cash collateral and termination of all CDSs and
other swaps.
When S&P published its last rating action in January 2010, S&P
estimated that the amount available to Anderson Valley II to
withstand future losses and repay noteholders, which for ease of
reference S&P term the "net cash collateral", stood then at about
GBP50.0 million.
With defaults now settled, S&P's estimate of net cash collateral
has fallen to GBP49.12 million. By comparison, the total amount
of rated notes outstanding is currently GBP57.8 million, and the
amount of the most senior class S-1 notes is GBP28 million.
In Anderson Valley I, S&P's analysis indicates that net cash
collateral has risen during 2010. S&P considers it likely that
Anderson Valley II's relative underperformance, based on the net
cash collateral measure, is due in part to the termination costs
incurred in cancelling the interest rate swap on any amounts of
covered bond collateral that are sold.
S&P has lowered its rating on Anderson Valley II's class S-1 to
'BB- (sf)' to reflect the decline in net cash collateral, the
potential termination costs likely to be incurred if the
transaction experiences additional defaults in the reference
portfolio in the coming months, and the proximity of the Net
Losses event of default threshold. The rating on Anderson Valley
II's class S-1 notes is now one notch below the class S rating in
Anderson Valley I. In S&P's opinion, this is an appropriate
ranking of relative creditworthiness.
In assessing the ratings on classes A-1, B-1, C-1, and D-1 in
January 2010, S&P took into consideration scenarios where
recoveries were high on defaulted entities in the reference
portfolio. With recoveries now largely finalized at levels below
S&P's more optimistic scenarios, its current analysis indicates
that all classes other than S-1 are vulnerable to nonpayment. S&P
has therefore lowered its credit rating on classes A-1 to 'CCC-
(sf)' from 'CCC (sf)'. S&P's analysis also indicates that classes
B-1, C-1, and D-1 are unlikely to repay in full, and S&P has
therefore lowered its ratings on these classes to 'CC (sf)' from
'CCC- (sf)'.
Based on S&P's analysis of Anderson Valley II's August 2010
report, table 1 gives the rating breakdown of the reference
portfolio using its ratings on the underlying assets as of Oct. 1,
2010. Tables 2 and 3 list the top 15 industry and country
exposures.
Table 1: Rating Breakdown
Percentage
of reference
Rating portfolio
------ ------------
AAA 2.52
AA+ 4.48
AA 2.69
AA- 3.78
A+ 8.08
A 19.74
A- 15.73
BBB+ 8.52
BBB 16.28
BBB- 7.33
BB+ 0.56
BB 0.90
BB- 6.05
B+ 0.00
B 0.56
B- 0.00
CCC+ 1.85
CCC 0.73
CCC- 0.00
CC 0.00
D 0.00
Table 2: Top 15 Industry Exposures
1 Financial intermediaries 14.92%
2 Utilities 9.77%
3 Conglomerates 6.62%
4 Diversified insurance 6.41%
5 Telecommunications 6.17%
6 Sovereign 5.78%
7 Equity REITS and REOCS 4.48%
8 Oil and gas 4.37%
9 Property and casualty insurance 3.90%
10 Nonferrous metals/minerals 3.48%
11 Building and development 3.48%
12 Lodging and casinos 2.41%
13 Cosmetics/toiletries 2.19%
14 Life insurance 2.19%
15 Industrial equipment 2.13%
Table 3: Top 15 Country Exposures
1 U.S. 63.92%
2 U.K. 8.47%
3 France 5.25%
4 Germany 3.20%
5 Italy 2.86%
6 Russia 2.30%
7 Spain 2.19%
8 Australia 1.46%
9 Chile 1.46%
10 Mexico 1.46%
11 Switzerland 1.42%
12 Luxembourg 1.40%
13 China 1.29%
14 Hong Kong 0.73%
15 Malaysia 0.73%
Ratings List
Anderson Valley II CDO PLC
GBP86.4 Million Floating-Rate Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
S-1 BB- (sf) BB (sf)
A-1 CCC- (sf) CCC (sf)
B-1 CC (sf) CCC- (sf)
C-1 CC (sf) CCC- (sf)
D-1 CC (sf) CCC- (sf)
ANDERSON VALLEY: S&P Cuts Ratings on 2 Note Classes to 'CC (sf)'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Anderson Valley CDO PLC's class A-1, A-2, C-1, and D-1, and Q
combo notes. At the same time, S&P affirmed its ratings on
classes S-1, S-2, and B-1.
The rating actions follow developments that S&P has observed since
S&P last took rating action on the transaction in January 2010.
In particular, all outstanding credit events in the reference
portfolio have now been settled, allowing us to better assess the
impact of defaults experienced in the portfolio to date.
Anderson Valley I is a hybrid partially-funded cash flow
collateralized debt obligation. "Hybrid" in this context means
that the transaction has an underlying portfolio containing both
cash and synthetic assets; "partially-funded" denotes that the use
of synthetic assets allows the notional size of the portfolio to
exceed the amount of note issuance.
Anderson Valley I closed in December 2006 and its notes are
denominated in U.S. dollars. A related euro-denominated
transaction, Anderson Valley II CDO, closed in February 2007. The
transactions are similar in concept and both have diversified
credit default swap reference portfolios comprising primarily
investment-grade corporate and sovereign entities.
The issuance proceeds of Anderson Valley I were invested in cash
securities--primarily 'AAA' rated floating-rate credit card asset-
backed securities. The transaction was designed so that the
issuer could settle defaults and other credit events in the
reference portfolio by buying affected cash obligations from the
CDS counterparty, using proceeds from the sale of cash securities
or amounts drawn on liquidity facilities, or a combination of
both.
To withstand future losses and repay noteholders, the transaction
relies principally on the net sale or redemption proceeds of
remaining cash securities, plus the value of affected cash
obligations in the portfolio, less the outstanding amount of
liquidity facility drawings. In general, the issuer must repay
liquidity facility drawings before any notes are redeemed.
To help limit losses arising from credit events in the reference
portfolio, Anderson Valley I has a "Net Losses" event of default
under the terms and conditions of its notes. An event of default
is triggered if net losses, as defined in the transaction
documents, equal or exceed 10%. As reported by the portfolio
administrator, net losses currently stand at about 9.16%. At
present, the CDS counterparty has the right to enforce security
following an event of default, which would likely lead to
liquidation of the cash collateral and termination of all CDSs and
other swaps.
When S&P published its last rating action in January 2010, S&P
estimated that the amount available to Anderson Valley I to
withstand future losses and repay noteholders, which for ease of
reference S&P term "net cash collateral", stood then at about
US$196.99 million.
With defaults now settled, S&P's estimate of net cash collateral
has risen to US$200.4 million. By comparison, the total amount of
rated notes outstanding is currently US$231.2 million, and the
total amount of the most senior class S notes is US$112 million.
Despite the improvement in the net cash collateral position, S&P
considers that its 'BB (sf)' ratings on classes S-1 and S-2 in
Anderson Valley I remain appropriate, given the proximity of the
Net Losses event of default threshold. S&P has therefore affirmed
its ratings on classes S-1 and S-2.
In assessing the ratings on classes A-1, A-2, B-1, C-1, and D-1 in
January 2010, S&P took into consideration scenarios where
recoveries were high on defaulted entities in the reference
portfolio. With recoveries now finalized at levels below S&P's
more optimistic scenarios, its current analysis indicates that all
classes other than class S are vulnerable to nonpayment. S&P has
therefore lowered its credit ratings on classes A-1 and A-2 to
'CCC- (sf)' and affirmed its 'CCC- (sf)' rating on class B-1.
S&P's analysis also indicates that classes C-1 and D-1 are
unlikely to repay in full, and S&P has therefore lowered its
ratings on these classes to 'CC (sf)' from 'CCC- (sf)'.
The transaction's class Q notes are combination notes benefiting
from all the cash flows on classes S-2 and A-2, and 29.76% of the
cash flows on the transaction's subordinated notes. S&P's
analysis indicates that if classes S-2 and A-2 repay in full, the
rated balance of the class Q notes will be repaid even if no
further payments are made on the subordinated notes.
While class Q's rated balance may be repaid even if class A-2 is
not repaid in full, S&P continue to consider it appropriate to
link the rating on class Q to the rating on class A-2, given the
current reliance on cash flows from the A-2 notes. S&P has
therefore lowered S&P's rating on class Q to 'CCC- (sf)' from 'CCC
(sf)'.
Based on S&P's analysis of Anderson Valley I's August 2010 report,
table 1 gives the rating breakdown of the reference portfolio
using its ratings on the underlying assets as of Sept. 23, 2010.
Tables 2 and 3 list the top 15 industry and country exposures.
Table 1: Rating Breakdown
Percentage
of reference
Rating portfolio
------ ------------
AAA 2.51
AA+ 4.12
AA 2.68
AA- 3.24
A+ 8.62
A 16.33
A- 15.16
BBB+ 9.52
BBB 16.07
BBB- 8.48
BB+ 0.56
BB 0.89
BB- 7.28
B+ 0.00
B 1.96
B- 0.00
CCC+ 1.85
CCC 0.73
CCC- 0.00
CC 0.00
D 0.00
Table 2: Top 15 Industry Exposures
1 Financial intermediaries 15.02%
2 Utilities 8.73%
3 Conglomerates 6.53%
4 Sovereign 6.49%
5 Telecommunications 6.32%
6 Property and casualty insurance 5.28%
7 Diversified insurance 4.85%
8 Equity REITS and REOCS 4.68%
9 Building and development 3.97%
10 Oil and gas 3.80%
11 Nonferrous metals/minerals 3.47%
12 Life insurance 3.30%
13 Lodging and casinos 2.91%
14 Automotive 2.84%
15 Beverage and tobacco 2.10%
REIT -- Real estate investment trust.
REOC -- Real estate operating company.
Table 3: Top 15 Country Exposures
1 U.S. 59.69%
2 U.K. 9.15%
3 France 5.56%
4 Germany 5.04%
5 Italy 2.85%
6 Russia 2.85%
7 Spain 2.18%
8 Australia 1.46%
9 Chile 1.46%
10 Mexico 1.46%
11 China 1.29%
12 Luxembourg 1.12%
13 Hungary 1.12%
14 Hong Kong 1.01%
15 Switzerland 0.86%
Ratings List
Anderson Valley CDO PLC
US$438.6 Million Fixed- and Floating-Rate Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
A-1 CCC- (sf) CCC (sf)
A-2 CCC- (sf) CCC (sf)
C-1 CC (sf) CCC- (sf)
D-1 CC (sf) CCC- (sf)
Q combo CCC- (sf) CCC (sf)
Ratings Affirmed
Class Rating
----- ------
S-1 BB (sf)
S-2 BB (sf)
B-1 CCC- (sf)
NOMOS CAPITAL: Fitch Assigns 'BB-' Rating on Senior Loan Notes
--------------------------------------------------------------
Fitch Ratings has assigned Nomos Capital Plc.'s upcoming issue of
senior unsecured loan participation notes an expected Long-term
rating of 'BB-'.
The final rating of the notes is contingent upon the receipt of
final documentation conforming to information already received.
Nomos Capital Plc., an Ireland-domiciled special-purpose vehicle,
will use the proceeds from the note issuance to finance a senior
unsecured loan to Nomos Bank (rated 'BB-'/Stable) and will only
pay noteholders principal and interest received from the bank.
At end-H110, Nomos ranked 15th by assets among Russian banks with
a 1% market share. A group of local businessmen, some also
beneficiaries of the ICT industrial group, controls 50.1%; the
remainder is ultimately owned by Peter Kellner and Roman Korbacka.
Recently Nomos announced its plan to acquire a 52% stake of Bank
of Khanty Mansiysk, which the agency expects to be neutral to
Nomos' credit profile.
===================
L U X E M B O U R G
===================
INTELSAT SA: Unit Completes Cash Tender Offers to Buy Sr. Notes
---------------------------------------------------------------
Intelsat S.A. said that its subsidiary, Intelsat Corporation,
completed on Oct. 15, 2010, its cash tender offers to purchase any
and all of Intelsat Corp.'s outstanding 9 1/4% Senior Notes due
2014, and Intelsat Corp.'s outstanding 6 7/8% Senior Secured
Debentures due 2028, in each case on and subject to the terms and
conditions set forth in the related Offer to Purchase and Consent
Solicitation Statement.
Intelsat Corp. received tenders of US$546,286,000 aggregate
principal amount of the 2014 Notes, representing approximately
83.0% of the outstanding principal amount of the 2014 Notes, and
US$124,959,000 aggregate principal amount of the 2028 Notes,
representing approximately 99.9% of the outstanding principal
amount of the 2028 Notes. Intelsat Corp has purchased all of the
Notes validly tendered in the Tender Offers.
About Intelsat S.A.
Based in Luxembourg, Intelsat S.A. provides fixed satellite
services worldwide. Its unit Intelsat Corporation, --
http://www.intelsat.com/-- formerly known as PanAmSat
Corporation, is a global provider of video, corporate, Internet,
voice and government communications services with a fleet of 25
satellites in-orbit.
Intelsat S.A.'s balance sheet at June 30, 2010, showed
US$17.34 billion in total assets, US$814.64 million in total
current liabilities, US$15.22 billion in long term debt,
US$128.77 million in deferred revenue, US$254.63 million in
deferred satellite performance, US$548.71 million in deferred
income taxes, US$239.87 million in accrued retirement benefits,
a US$335.15 million redeemable non-controlling interest,
US$8.88 million commitment and contingencies, and a stockholders'
deficit of US$210.76 million.
Intelsat S.A. reported revenue of US$635.3 million and a net loss
of US$180.6 million for the three months ended June 30, 2010.
Intelsat S.A., formerly Intelsat, Ltd., carries a 'Caa1' corporate
family rating from Standard & Poor's.
=====================
N E T H E R L A N D S
=====================
EUROLOAN CLO: Moody's Cuts Rating on Class C Notes to 'Caa2 (sf)'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the rating of the Class C
note issued by Euroloan CLO I B.V:
-- EUR18,000,000 Class C Notes Due January 2029 (current
balance of EUR18,990,881 including deferred interest),
Downgraded to Caa2 (sf); previously on Nov 4, 2009 Downgraded
to B3 (sf)
Ratings Rationale
Euroloan CLO I B.V. is a static collateralized loan obligation
backed by a portfolio of senior secured loans (78%), and other
non-secured loans. A significant proportion of the portfolio
(14%) additionally consists of CLO mezzanine securities rated
between B1 and Caa3.
According to Moody's, the downgrade rating action taken on the
Class C note is the result of continued credit deterioration of
the portfolio. While the average credit quality of the portfolio
has remained stable since the last rating action in November 2009,
Moody's has observed a significant increase in the proportion of
securities rated Caa1 and below (7.57% in October 2009, compared
to 20.74% in June 2010). This deterioration of the portfolio
predominantly affects the junior classes of notes.
Although the increase in the Caa bucket has resulted in larger
haircuts being applied to overcollateralization calculations, its
effect has been largely compensated by amortization of the
portfolio. Consequently, overcollateralization ratios have been
relatively steady with Class A/B and Class C overcollateralization
ratios currently observing 103.37% and 95.82% respectively (June
2010 Trustee Report), versus previous levels of 103.85% and 96.79%
respectively (October 2009 Trustee Report).
As a base case, Moody's analyzed the underlying collateral pool
with an adjusted weighted average rating factor of 4894 and a
weighted-average recovery rate of 45.44%. In addition, specific
asset correlations were applied to CLO mezzanine securities (20%
asset correlation between CLO securities and loans and 80%
correlation between two CLO securities) as per the methodology
used at the inception of the transaction.
Moody's additionally ran sensitivity analyses on key parameters
for the rated notes. Among these, Moody's considered the impact
of CLO assets observing recovery rates between 15% and 25% in the
event of a default versus the base case assumption of 0%. Moody's
found that applying such recovery rates would not significantly
impact the results modelled for the senior Class A1 note but could
impact Classes A2, B and C by 3, 4 and 2 notches respectively.
Moody's also considered the impact of further stresses to large
single exposures assessed through credit estimates. A two notch
downgrade applied to the rating of credit estimates equal or
greater than 3% of the portfolio had no significant effect on
model results for the Class A1 note and would likely impact model
results of Class A2 and B by not more than two notches. Moody's
current ratings do not deviate by more than one notch from the
model results of these sensitivity runs.
Under this methodology, due to the lack of granularity of the
portfolio and the correlation framework required to model the
large proportion of structured finance assets, Moody's relies on a
simulation based framework. Moody's therefore used CDOROM, to
generate default and recovery scenarios for each asset in the
portfolio and then a cash-flow model in order to compute the
associated loss to each tranche in the structure.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's EMEA
Cash-Flow model.
Due to the impact of revised and updated key assumptions
referenced in "Moody's Approach to Rating Collateralized Loan
Obligations" and "Annual Sector Review (2009): Global CLOs", key
model inputs used by Moody's in its analysis, such as par,
weighted average rating factor, diversity score, and weighted
average recovery rate, may be different from the trustee's
reported numbers.
Moody's also notes that a material proportion of the collateral
pool consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. As credit estimates do
not carry credit indicators such as ratings reviews and outlooks,
a stress of a quarter notch-equivalent assumed downgrade was
applied to each of these estimates. In addition, large single
exposure to obligors bearing a Credit Estimates have been
considered for the analysis and applied a stress applicable to
concentrated pools with non publicly rated issuers as per the
report titled "Updated Approach to the Usage of Credit Estimates
in Rated Transactions" published in October 2009.
Moody's Investors Service did not receive or take into account a
third party due diligence report on the underlying assets or
financial instruments related to the monitoring of this
transaction in the past 6 months.
Regulatory Disclosures
The rating has been disclosed to the rated entity or its
designated agents and issued with no amendment resulting from that
disclosure.
Information sources used to prepare the credit rating are these:
parties involved in the ratings, parties not involved in the
ratings, public information and confidential and proprietary
Moody's Investors Service information.
Moody's Investors Service considers the quality of information
available on the issuer or obligation satisfactory for the
purposes of maintaining a credit rating.
MOODY'S adopts all necessary measures so that the information it
uses in assigning a credit rating is of sufficient quality and
from sources MOODY'S considers to be reliable including, when
appropriate, independent third-party sources. However, MOODY'S is
not an auditor and cannot in every instance independently verify
or validate information received in the rating process.
KHAMSIN CREDIT: S&P Withdraws 'B+' Rating on Series 10 Notes
------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B+ (sf)' rating
on the notes from Khamsin Credit Products (Netherlands) B.V.
Series 10, a synthetic collateralized debt obligation transaction.
The rating withdrawal follows the termination of the transaction.
Rating Withdrawn
Khamsin Credit Products (Netherlands) B.V.
Series 10
Rating
------
Class To From
----- -- ----
Notes NR B+ (sf)
NR - Not rated
SABIC INNOVATIVE: Moody's Upgrades Corp. Family Rating to 'Ba1'
---------------------------------------------------------------
Moody's Investors Service has upgraded the Corporate Family Rating
of SABIC Innovative Plastics Holding B.V. to Ba1 from Ba2. The
ratings of the senior secured term loans of SIP and its
subsidiaries were upgraded to Baa3/LGD 2 (26%) from Ba2/LGD3 (40%)
and the rating of SIP's senior unsecured notes were upgraded to
Ba2/LGD 5 (72%) from B1/LGD 6 (91%). The outlook for all ratings
is stable.
Moody's also withdrew the Ba2/LGD 3 (40%) rating assigned to SIP's
senior secured ABL revolving facility following the termination
and cancellation of the facility effective 5 October 2010.
Ratings Rationale
Moody's said that the upgrade of SIP's ratings reflects the recent
improvement in financial profile reported by the company thanks to
the substantial and constant financial support provided by its
parent Saudi Basic Industries Corporation (SABIC: A1, stable) in
parallel with a sustained recovery in its operating performance
driven by more benign trading conditions and benefits accruing
from self-help initiatives.
In the past two and a half years, SABIC has explicitly
demonstrated its unwavering commitment to its 100%-owned
subsidiary by providing significant financial support to SIP in
the face of the challenging operating environment that has
affected the polycarbonate sector as a result of heightened input
cost inflation and subsequently very depressed demand conditions
resulting from the global economic downturn.
During the period, SABIC has made significant capital
contributions to SIP including a mix of equity, subordinated PIK
notes and more recently subordinated floating rate notes. This
intercompany funding has ensured that SIP timely met all its
financial obligations, including the financial covenants set out
in its bank credit facilities, at all times. This has also
allowed the partial prepayment of the secured term loans and
unsecured bond raised by SIP to finance the acquisition from
General Electric in 2007, which has led to a 45% cut in external
borrowings from an initial level of US$8.1 billion. Recently, SIP
has also used funds advanced by its parent to repay in full
outstandings under its US$1.0 billion senior secured ABL revolving
facility. This facility has now been terminated and replaced by a
3-year senior unsecured committed facility of the same amount
provided by SABIC Capital I B.V., which is in line with SABIC's
policy of centralizing its international liquidity funding through
this entity.
The ongoing refinancing of SIP's debt and recalibration of its
capital structure has allowed SIP to bring leverage back to a more
manageable level relative to expected future operating
profitability and cash flow generation. Looking ahead, Moody's
believes that SABIC will continue to demonstrate its full
commitment to SIP and take further initiatives to enhance the
financial flexibility of its subsidiary. In this context, it is
expected that further refinancing of SIP's external debt with
intercompany funding will take place over time.
At the same time, Moody's notes that the operating performance of
SIP and its financial results have shown some significant
improvement over the past twelve months following the severe
downturn experienced by the group in its main end-user markets
such as housing, construction, automotive and consumer electronics
in 2008/ early 2009. Notably, the recovery in demand that
commenced in H2 2009, gathered significant momentum in H1 2010
reflected in a strong rebound in capacity utilization and sales
volumes, particularly in the US market, and a marked pick-up in
core product sales prices. This has led to continuing improvement
in operating profitability with EBITDA margins lifted to the mid
to high teens.
Looking ahead, the benign trading conditions that have prevailed
within the polycarbonate sector in the first half of 2010 may not
prove sustainable as raw material cost pressures resurface fuelled
by stronger oil prices. However, SIP's underlying operating
profitability should be underpinned by the savings achieved
through the restructuring action implemented in the past two
years, which has helped trim the company's fixed cost base and
resulted in a headcount reduction in excess of 1,000 employees.
The outlook is stable reflecting Moody's expectation that further
refinancing of SIP's external debt in parallel with a sustained
recovery in the company's underlying operating performance and
financial results, will support the recent improvement in SIP's
stand-alone credit profile.
Upward pressure on the Ba1 CFR may arise should the stand-alone
financial profile of SIP further strengthen underpinned by a
sustained improvement in operating results in parallel with
further deleveraging in the context of the ongoing refinancing of
the company's external debt, which would help position net debt
(excluding subordinated PIK parent notes) to EBITDA below 4.5
times on average throughout the cycle.
Conversely, SIP's CFR could be downgraded should renewed weakness
in internal cash flow generation in the absence of further
deleveraging of the company's capital structure lead net debt
(excluding subordinated PIK parent notes) to EBITDA to rise above
6.0 times on average throughout the cycle.
The Baa3 and LGD assessment of LGD 2 (26%) assigned to the senior
secured term loan facility reflects the significant protection
afforded by a comprehensive collateral package supporting this
facility as well as the sizeable layer of subordinated
intercompany debt recently injected in SIP's capital structure.
The Ba2 and LGD assessment of LGD 5 (72%) assigned to the senior
unsecured notes reflects the existence of substantial senior
secured bank facilities ranking ahead of the notes, which however
rank ahead of the various subordinated shareholder's loans.
Moody's last rating action on SIP was the confirmation of its
ratings on 27 March 2008.
Incorporated in The Netherlands, SABIC Innovative Plastics Holding
B.V. is a global leading manufacturer of engineering
thermoplastics. The group had total revenues of US$5.4 billion in
the fiscal year ended 31 December 2009.
Regulatory Disclosures
Information sources used to prepare the credit rating are these:
parties involved in the ratings, public information, confidential
and proprietary Moody's Investors Service's information.
Moody's Investors Service considers the quality of information
available on the issuer or obligation satisfactory for the
purposes of maintaining a credit rating.
The rating has been disclosed to the rated entity or its
designated agents and issued with no amendment resulting from that
disclosure.
MOODY'S adopts all necessary measures so that the information it
uses in assigning a credit rating is of sufficient quality and
from sources MOODY'S considers to be reliable including, when
appropriate, independent third-party sources. However, MOODY'S is
not an auditor and cannot in every instance independently verify
or validate information received in the rating process.
===========
R U S S I A
===========
ALROSA COMPANY: Fitch Upgrades LT Issuer Default Rating to 'BB-'
----------------------------------------------------------------
Fitch Ratings has upgraded Russian diamond producer Alrosa Company
Limited's Long-term foreign currency Issuer Default Rating and
senior unsecured rating to 'BB-' from 'B+' (the RR4 Recovery
Rating is withdrawn). The Outlook on the Long-term IDR is Stable.
Alrosa's Short-term IDR is affirmed at 'B'. Fitch has also
assigned an expected 'BB-' rating to the proposed 10-year Eurobond
issue in the name of Alrosa Finance S.A. This bond benefits from
a guarantee issued by Alrosa.
Alrosa plans to use the net proceeds from the notes to refinance
and extend the tenor of existing group debt. Fitch will assign
the notes a final rating upon closure, scheduled for 29 October
2010, and receipt of final documentation materially conforming to
the information reviewed.
Fitch now assesses Alrosa's stand-alone rating at 'B+' compared to
'B-' previously. The previous stand-alone rating was heavily
weighed down by the company's then significant short-term
liquidity concerns. Conversely at that time the Russian
Federation's support, including support in terms of liquidity via
the purchase of diamonds, warranted a two-notch uplift resulting
in the final ratings of 'B+'. The upgrade in Alrosa's stand-alone
rating to 'B+' reflects measures taken over the past 12 months by
the company's new management team to reduce operational and
financial risks, together with a stabilization of the global rough
diamond market. As the severity of the previous liquidity profile
has lessened, that component of the Russian Federation support is
of less immediate need thus the notch uplift for state support has
been narrowed to one-notch. Consequently, Alrosa's final rating
is now 'BB-' (stand-alone rating of 'B+' with a one notch uplift).
Over the past 12 months Alrosa has continued to build its sales
network with an increase in the share of sales under long-term
contracts with major international and Russian clients to 51% in
H110 from 21% in 2009. Measures taken to reduce financial risks
have included a 30% reduction in gross debt over the 12 months to
October 2010 together with a lengthening of the company's debt
maturity profile. The planned Eurobond issue will further
lengthen this profile with the majority of debt then maturing post
2011.
Alrosa's standalone credit profile continues to be underpinned by
its leading market position in the highly consolidated diamond
industry, together with a competitive cash cost position and sound
reserve base. Rating constraints include Alrosa's exposure to the
price cycles of the diamond market (albeit these prices cycles are
typically not as severe as for other mined commodities), and its
exposure to the weak Russian business environment with the
associated higher-than average political, business and regulatory
risks. In addition, the company's planned switch to underground
mining operations, a potential strengthening of the Russian rouble
and general mining cost inflation may place pressure on the
company profitability over the next 3-5 years.
Fitch expects Alrosa to show revenue growth of 40%-50% in FY2010
before stabilizing in FY2011 and 2012. EBITDAR margins are
expected to improve to 26%-32% in 2010 and 2011 (FY09: 24.6%).
Alrosa's 9M09 total debt totaled RUB104.7 billion (US$3.4
billion), including US$1.2 billion maturing over the remainder of
FY2010. In the event that the company is unable to refinance debt
maturing in Q4 2010 from its planned Eurobond issue, Fitch
believes that the company could feasibly refinance these
facilities in the bank debt market. Fitch estimates 2010 gross
leverage (gross debt/EBITDAR) at 2.7x-2.9x, and net leverage (net
debt/EBITDAR) at 2.6x-2.8x. These figures are projected by the
agency to rise to 3.2x-3.4x, and 3x-3.2x respectively in 2011.
The Stable Outlook reflects Fitch's expectation that demand
conditions in the global diamond market will continue in a stable
manner, together with the expectation that the company will be
able to refinance debt maturing over 2010-2011.
INTERNATIONAL INDUSTRIAL: Russia Should Ensure Creditor Repayment
-----------------------------------------------------------------
Lucian Kim at Bloomberg News reports that Bank Rossii Chairman
Sergey Ignatiev said the country should ensure that creditors of
ZAO International Industrial Bank get paid.
"The central bank and other government agencies should focus their
efforts so that the demands of creditors, Russian and foreign, are
satisfied to the maximum," Mr. Ignatiev said Monday at an investor
conference in Moscow, according to Bloomberg.
According to Bloomberg, the central bank head said the lender,
whose license was revoked by the central bank this month, has had
sufficient opportunities to repay debt.
IIB is the country's first lender to default on foreign-currency
bonds in more than a decade, Bloomberg notes.
Headquartered in Moscow, International Industrial Bank lends to
commercial and industrial projects run by United Industrial
Corporation, which is affiliated with Sergey Pugachyov, a
businessman and member of the Federation Council of Russia, the
upper chamber of the parliament of the Russian Federation.
Mr. Pugachyov and his family own 81% of IIB. The bank's senior
managers own the rest.
* * *
As reported by the Troubled Company Reporter-Europe on Oct. 15,
2010 Fitch Ratings revised Russia-based International Industrial
Bank's Long-term foreign and local currency Issuer Default Ratings
to 'D' from 'RD'. Simultaneously, Fitch downgraded the
Recovery Rating assigned to IIB's senior unsecured debt to 'RR5'
from 'RR4'. Fitch said the revision of the Long-term IDRs
reflects the full cessation of the bank's business activity
following the revocation of its banking license and entry into
external administration.
=========
S P A I N
=========
SANTANDER EMPRESAS: Fitch Affirms 'Csf' Rating on Class F Notes
---------------------------------------------------------------
Fitch Ratings has upgraded one tranche and affirmed all other
tranches of four small-and medium-sized enterprise collateralized
debt obligations: Fondo de Titulizacion de Activos Santander
Empresas 1, 2, 3 and 4.
All four transactions have benefited from portfolio amortization
and structural de-leveraging, with more de-leveraging observed in
the older vintage transactions due to the increased passage of
time.
FTA Santander Empresas 1:
The upgrade on the class B notes in Fondo de Titulizacion de
Activos Santander Empresas 1 principally reflects increased credit
enhancement and improved portfolio arrears performance over the
past twelve months. Class B has built up significant credit
enhancement of 50.5%, and Fitch expects the note to start
amortizing next year once the Class A1 note is redeemed. The
level of portfolio defaults have increased to 0.7% of the current
outstanding balance compared to 0.1% in October 2009; however,
Fitch believes defaults are unlikely to significantly increase in
the medium term considering the low levels of loans in the
delinquency pipeline. Obligor concentration is relatively high
(18% for the top ten obligors) but all investment grade notes have
sufficient credit enhancement buffers. The notes also benefit
from a 65 bps excess spread, mitigating the basis and interest
rate risk. The subordinated tranches benefit from comfortable CE
levels, underlining sufficient protection, which are commensurate
with their current ratings. In light of the transaction
performance over the last year and improved portfolio dynamics,
Fitch maintains a stable outlook on the transaction.
FTA Santander Empresas 2:
The affirmation reflects stable performance in terms of
delinquencies and defaults. The current defaults stand at 1.7% of
the outstanding balance in comparison with 0.9% twelve months ago.
While continued portfolio amortization has resulted in increased
CE levels for all the rated tranches, the top ten obligor
concentration of 23.3% has increased from 20.8% since October
2009. This and the relatively lower percentage of loans backed by
mortgage collateral is reflected in Fitch's ratings of the junior
and mezzanine notes. The advanced amortization of the Class A2
notes is reflected in the change to Outlook Positive from Stable.
FTA Santander Empresas 3:
The transaction has seen a rise in defaults to 2.2% of the
outstanding balance in comparison with 0.7% twelve months ago
and consequently a further decrease of its reserve fund to
EUR28.5 million, which is below the minimum required amount of
EUR45.5 million.
However, the structure's continued de-leveraging and consequently
increased CE as well as stable arrears levels led Fitch to assign
a positive outlook to Classes A2 and A3 which are amortizing pro
rata and whose CE has now increased to 26.8%.
All junior tranches were affirmed at current levels.
FTA Santander Empresas 4:
The 2007 vintage transaction has only had a limited period of note
amortization and additionally suffered from defaults of 3.51% of
the outstanding balance. The reserve fund was depleted and a
first principal deficiency ledger entry of EUR12.47 million on the
last payment date in July 2010 resulted in the mezzanine and
junior notes not building up significant cushions. Even though
the 90+ and 180+ day delinquencies have stabilized and are around
the same levels of twelve months ago, the increasing defaults lead
to decreased CE of the Class C, D and E notes. Fitch therefore
decided to place Class C notes on Outlook Negative. All other
tranches were affirmed at their current rating and rating status
levels.
Fitch has assigned an Issuer Report Grade of 'Two Stars' to FTA
Santander Empresas 1, 2 and 3 reflecting the 'basic' investor
reporting. Fitch notes that the investor report includes details
on account balances and cash flow summaries however it does
provide portfolio stratifications and asset level information.
Fitch has assigned an IRG of 'One Star' to Fondo de Titulizacion
de Activos Santander Empresas 4 on account of inconsistencies in
reporting and approachability of the trustee.
Fondo de Titulizacion de Activos Santander Empresas 1:
-- EUR236,183,916 class A2 notes (ISIN ES0382041012): affirmed
at 'AAAsf'; Outlook Stable; assigned a Loss Severity rating
of LS-2
-- EUR80,600,000 class B notes (ISIN ES0382041020): upgraded to
'AAAsf' from 'AA+sf'; Outlook Stable; assigned LS-3
-- EUR96,100,000 class C notes (ISIN ES0382041038): affirmed at
'A+sf'; Outlook Stable; assigned LS-3
-- EUR170,500,000 class D notes (ISIN ES0382041046): affirmed
at 'CCCsf'
Fondo de Titulizacion de Activos Santander Empresas 2:
-- EUR464,629,893 class A2 notes (ISIN ES0338058011): affirmed
at 'AAsf' ; assigned Outlook Positive; assigned LS-3
-- EUR84,100,000 class B notes (ISIN ES0338058029): affirmed at
'Asf'; assigned Outlook Positive; assigned LS-4
-- EUR62,300,000 class C notes (ISIN ES0338058037): affirmed at
'BBBsf'; Outlook Stable; assigned LS-5
-- EUR59,500,000 class D notes (ISIN ES0338058045): affirmed at
'BBsf'; Outlook Stable; assigned LS-5
-- EUR29,000,000 class E notes (ISIN ES0338058052): affirmed at
'Bsf'; Outlook Negative; assigned LS-5
-- EUR53,700,000 class F notes (ISIN ES0338058060): affirmed at
'Csf';
Fondo de Titulizacion de Activos Santander Empresas 3:
-- EUR596,297,880 class A2 notes (ISIN ES0337710018): affirmed
at 'A+sf' ; assigned Outlook Positive ; assigned LS-3
-- EUR254,303,975 class A3 notes (ISIN ES0337710026): affirmed
at 'A+sf'; assigned Outlook Positive; assigned LS-3
-- EUR39,700,000 class B notes (ISIN ES0337710034); affirmed at
'Asf'; Outlook Stable; assigned LS-5
-- EUR117,300,000 class C notes (ISIN ES0337710042): affirmed
at 'BBBsf'; Outlook Stable; assigned LS-4
-- EUR70,000,000 class D notes (ISIN ES0337710059): affirmed at
'BBsf'; Outlook Negative; assigned LS-5
-- EUR45,500,000 class E notes (ISIN ES0337710067): affirmed at
'CCCsf'
-- EUR45,500,500 class F notes (ISIN ES0337710075): affirmed at
'Csf'
Fondo de Titulizacion de Activos Santander Empresas 4:
-- EUR40,451,328 class A1 notes (ISIN ES0337944005): affirmed
at 'Asf' ; Outlook Stable ; assigned LS-2
-- EUR842,876,289 class A2 notes (ISIN ES0337944013): affirmed
at 'Asf'; Outlook Stable; assigned LS-2
-- EUR297,415,465 class A3 notes (ISIN ES0337944021): affirmed
at 'Asf'; Outlook Stable; assigned LS-2
-- EUR90,200,000 class B notes (ISIN ES0337944039): affirmed at
'BBBsf'; Outlook Stable; assigned LS-4
-- EUR97,400,000 class C notes (ISIN ES0337944047): affirmed at
'BBsf'; assigned Outlook Negative; assigned LS-4
-- EUR79,700,000 class D notes (ISIN ES0337944054): affirmed at
'CCCsf'
-- EUR56,600,000 class E notes (ISIN ES0337944062): affirmed at
'CCsf'
-- EUR46,000,000 class F notes (ISIN ES0337644070): affirmed at
'Csf'
=============
U K R A I N E
=============
BIZ FINANCE: Fitch Assigns 'B' Rating to Limited Recourse Notes
---------------------------------------------------------------
Fitch Ratings has assigned Biz Finance PLC's US$250 million 7.5%
upcoming tap issue of limited recourse notes an expected Long-term
rating of 'B' and a Recovery Rating of 'RR4'. The notes will be
consolidated to form a single series with the outstanding US$500
million 8.375% notes due in April 2015. The final ratings are
contingent on the receipt of final documentation conforming
materially to information already received.
The notes are to be used solely for financing a loan to Ukraine-
based JSC The State Export-Import Bank of Ukraine (Ukreximbank).
Fitch rates Ukreximbank Long-term Issuer Default 'B', Short-term
IDR 'B', Individual 'D', Support '4', Support Rating Floor 'B',
and National Long-term 'AA-(ukr)'. The Outlooks on both the Long-
term IDR and National Long-term rating are Stable. Ukreximbank's
IDRs, National Long-term and Support ratings are underpinned by
potential support from the Ukrainian authorities, in case of need,
based on the bank's state ownership and policy role. The ratings
also take into consideration the ability of the Ukrainian
authorities to provide such support, which remains limited, as
indicated by the sovereign's Long-term IDR of 'B'.
Biz Finance PLC, a UK-based company, will only pay noteholders
amounts (principal and interest) received from Ukreximbank under
the loan agreement. The claims under the loan agreement will rank
at least equally with the claims of other senior unsecured
creditors of Ukreximbank, save those preferred by relevant laws.
Under Ukrainian law, the claims of retail depositors rank above
those of other senior unsecured creditors. At end-H110, retail
depositors accounted for around 23% of Ukreximbank's non-equity
funding, according to the bank's local GAAP reporting.
At end-H110, Ukreximbank was the second-largest bank by assets in
Ukraine. It primarily serves corporates (mainly focused on
exports or import substitution). The state, represented by the
Cabinet of Ministers of Ukraine, is the only shareholder in the
bank.
===========================
U N I T E D K I N G D O M
===========================
EMI GROUP: Terra Firma Lawsuit v. Citigroup Over Buyout Kicks Off
-----------------------------------------------------------------
Andrew Edgecliffe-Johnson at The Financial Times reports that Guy
Hands' lawsuit against Citigroup over his Terra Firma private
equity group's GBP4.2 billion (US$6.7 billion) buy-out of EMI
Group has kicked off with clashing accounts of the deal.
The FT relates Terra Firma's legal team claimed that David
Wormsley, Citigroup's UK investment banking head, had known that
Cerberus, Terra Firma's last remaining rival in the May 2007
auction, had dropped out but advised Mr. Hands otherwise on the
eve of the bid deadline.
Citigroup's lawyer responded by presenting video depositions from
Simon Borrows, EMI's lead banker at Greenhill, and Eric Nicoli,
EMI's chief executive at the time, saying that neither man had
told Mr. Wormsley that Cerberus had dropped out, the FT discloses.
According to the FT, David Boies, the high-profile lawyer leading
Mr. Hands' prosecution team, said Mr. Wormsley "had secretly
promised EMI to use his relationship with Guy Hands and Terra
Firma to help EMI".
Citigroup's case opened by emphasizing the lack of any reference
to Mr. Wormsley's alleged advice in Terra Firma documents around
the time of the bid, its numerous chances to walk away before the
deal closed and Mr. Hands' subsequent decisions to invite
Mr. Wormsley to his villa in Italy, a night at the opera and Terra
Firma's clay pigeon shoot, the FT relates.
Citigroup lawyers challenged Terra Firma's reliance on
Mr. Wormsley's alleged advice and noted that the lawsuit emerged
only two years after the ill-fated deal, the FT discloses.
Banking Covenants
As reported by the Troubled Company Reporter-Europe on Aug. 19,
2010, the FT said that an assessment by Maltby Capital, EMI's
private equity owner, shows that EMI will fall short of its
banking covenants until 2015 and will need a far larger injection
of fresh equity next year than the GBP87.5 million (US$136
million) it received in 2010. The FT disclosed that while Maltby
outlines strong operational improvements in the business in its
annual report, the gains remain insufficient to satisfy tightening
banking covenants, raising the pressure for a renegotiation with
Citigroup to avoid breaching the terms of the GBP3.04 billion debt
due between 2014 and 2017. The FT noted that although it has a
provisional commitment from Terra Firma funds to provide the
GBP26.9 million it expects to need for the periods ending June 30,
September 30 and December 31 this year, it expects "a further
significant shortfall" when the covenant is tested at the end of
March 2011. The FT said EMI could require "substantially in
excess" of the GBP87.5 million in equity cures injected in 2010.
Further smaller sums may also be required for the remaining three
covenant tests in 2011, the FT stated.
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.
HORSE & COUNTRY TV: Denies Going Into Administration
----------------------------------------------------
Equine-themed UK satcaster Horse & Country TV is continuing with
"business as usual," and has denied that it has gone into
administration and is facing a legal battle, C21 Media reports.
According to the report, Daily Telegraph reported that H&C TV
Chairman Heather Killen -- a non-executive director at ITV until
earlier this year -- last week put the network into
administration.
But, the report relates, H&C TV Commercial Director Richard
Burdett denied this, telling C21: "The channel is not in
administration. We are continuing to operate on all fronts and
have a great new show in the worlds."
However, Mr. Burdett said that the company was in the midst of a
corporate restructure, the report notes. It will "fully update"
shareholders on its financial situation later this week, a
spokeswoman added.
Daily Telegraph, the report discloses, reported that Mr. Burdett
also denied that Ms. Killen is embroiled in a legal dispute with
former H&C TV MD Nick Ludlow, whom she fired last year, with the
pair set for a courtroom showdown.
Mr. Ludlow is claiming GBP142,000 (US$225,000) for wrongful
dismissal by Ms. Killen, who acquired H&C TV in 2008 via her
holding company Hemisphere Capital, the report adds.
About H&C TV
H&C TV was launched in 2006 to service the UK equestrian, eventing
and dressage sports industries. Other senior managers who joined
the company included former ITV exec Jonathan Rippon, ex-IMG exec
Mark Young and former BBC governor Roger Jones.
LEHMAN BROTHERS: Administrators Provide 2-Year Progress Update
--------------------------------------------------------------
The Joint Administrators of Lehman Brothers International (Europe)
In Administration have updated the creditor community with details
of their progress over the two-year period of the Administration.
Tony Lomas, Joint Administrator of LBIE and Partner at PwC said:
"We have achieved exceptional progress in the administration,
dealing with some GBP29 billion of securities and cash, having now
returned almost GBP12 billion of this to clients. While there are
still numerous major challenges to address, our actions to date
have generated significant realisations for creditors which will
be paid to them in due course."
The Joint Administrators' report details the considerable progress
made to date in resolving complex issues through the development
of ground breaking and pragmatic solutions.
Tony Lomas continued:
"Following the successful launch of our innovative Claims
Resolution Agreeement, which has seen almost GBP2 billion of Trust
assets returned since March, we have focused on developing a new
approach for the accelerated agreement of unsecured claims. For
those creditors who want to take advantage of it, this will give
them finality and certainty regarding their claims in a much
shorter timescale than could otherwise be achieved."
The Joint Administrators are currently unable to advise LBIE's
creditors on the timing or amount of an interim dividend.
Commenting on this fact, Tony Lomas added:
"Despite our best intentions and the significant progress made on
very many fronts, the Court of Appeal judgment in July relating to
Client Money has unfortunately impacted badly on our ability to
commence distributions in the short term, both to Client Money
claimants and to unsecured creditors. Despite these challenges,
we are determined to return Trust Property and agree creditors'
claims at the earliest possible opportunity such that once the
legal landscape is clearer, distributions can commence."
Key Achievements to Date
* GBP11.9 billion of cash has been recovered to September 14,
2010, of which GBP1.8 billion was realized within the last six
months.
* A framework has been developed for the expedited resolution of
claims for financial trading counterparties. The mechanism will
provide eligible creditors with an option to achieve finality
and certainty regarding its financial claim against LBIE.
* Considerable progress has been achieved on the many affiliate
company issues in the period, and Court directions are currently
being sought to determine ownership of substantial assets
claimed by different Lehman affiliates.
* LBIE has returned almost GBP2 billion of assets to clients since
the March 2010, bar date under the Claims Resolution Agreement.
* The pre-Administration Client Money judgment was handed down by
the Court of Appeal in August 2010. The judgment as it stands
has a material impact for both Client Money claimants and
unsecured creditors of LBIE, resulting in significant delay to
distributions and substantial additional costs. The
Administrators now need to embark on a complex tracing exercise
to identify additional Client Money claimants and cash or assets
which might possibly be subject to a trust claim. Given the
overwhelming adverse impact on the LBIE House estate, the
Administrators have sought permission to appeal to the Supreme
Court.
* A sustained headcount of over 480 Lehman staff and contractors
continue to support the Administration, in addition to PwC staff
and the Administrators' legal advisers. The contribution and
collaboration between the teams is key to the outstanding
achievements made to date.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition
listed US$639 billion in assets and US$613 billion in debts,
effectively making the firm's bankruptcy filing the largest in
U.S. history. Several other affiliates followed thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the
U.S. District Court for the Southern District of New York, entered
an order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI
The Bankruptcy Court has approved Barclays Bank Plc's purchase
of Lehman Brothers' North American investment banking and
capital markets operations and supporting infrastructure for
US$1.75 billion. Nomura Holdings Inc., the largest brokerage
house in Japan, purchased LBHI's operations in Europe for US$2
plus the retention of most of employees. Nomura also bought
Lehman's operations in the Asia Pacific for US$225 million.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers International
(Europe) on September 15, 2008. The joint administrators have
been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
Lehman Brothers Japan Inc. reported about JPY3.4 trillion
(US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other insolvency
and bankruptcy proceedings undertaken by its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LIVERPOOL FOOTBALL: RBS Wrote Off GBP30MM in Late Payment Fees
--------------------------------------------------------------
Martin Flanagan at The Scotsman reports that Royal Bank of
Scotland wrote off GBP30 million in late payment fees to pave the
way for the GBP300 million sale of Liverpool Football Club last
week.
The Scotsman relates its source said: "The waiving of late payment
fees was designed to incentivize the owners to sell the club.
RBS's focus was on recovery of the debt."
According to The Scotsman, RBS, 82% owned by the British taxpayer,
imposed so-called ticking fees, weekly multi-million pound charges
that eventually mounted up to GBP40 million, against American
businessmen Tom Hicks and George Gillette, owners of the club, at
the end of August to encourage them to sell.
It is understood that New England Sports Ventures LLC paid GBP10
million of the bill, but RBS waived the rest, The Scotsman notes.
As reported by the Troubled Company Reporter-Europe on Oct. 19,
2010, that NESV, controlled by John W. Henry and Tom Werner,
agreed to buy Liverpool for GBP300 million (US$481 million),
ending a legal fight for the 18-time English champion. Bloomberg
disclosed the former owners were in default for GBP280 million to
Royal Bank of Scotland Group Plc and Wells Fargo & Co., and tried
to block the purchase in courts in the U.K. and Texas. The owners
dropped a final Texas case on Friday and the Liverpool board
approved the deal hours later, according to Bloomberg. Messrs.
Hicks and Gillett were to repay their debt on Friday after
having agreed to sell the club as part of a loan extension granted
in April, Bloomberg said. Bloomberg noted Mr. Henry's group said
the transaction removes all of the pair's debt, cutting payments
to GBP2 to GBP3 million from GBP25 to GBP30 million. Messrs.
Hicks and Gillett are planning to pursue more legal challenges and
to seek US$1.6 billion in damages from RBS after withdrawing a
restraining order blocking the sale on Friday, Bloomberg said.
The sale saves the team from the possibility of administration,
which would have brought a nine-point penalty from the Premier
League, according to Bloomberg.
About Liverpool Football
Liverpool Football Club and Athletic Grounds owns and operates one
of the more popular and most successful franchises in the UK
Premier League. Known as The Reds, Liverpool has won 18 first
division titles and seven FA Cups since it was founded by John
Houlding in 1892. In addition to the football club, the company
owns and operates Anfield Stadium, Liverpool's home ground. The
company generates revenue primarily through sponsorships,
broadcasting fees, and ticket sales. The company was acquired by
US businessmen George Gillett and Tom Hicks in 2007.
NORTHERN & SHELL NETWORK: Faces Suit Over GBP1 Million Unpaid Bill
------------------------------------------------------------------
Ben Fenton at The Financial Times reports that Elisabeth Murdoch,
one of the most powerful independent producers in the UK, has
instructed solicitors to sue Richard Desmond's Northern & Shell
over an alleged unpaid bill of almost GBP1 million for a talent
show she made for his Channel 5 broadcaster.
The FT relates Ms. Murdoch, whose father Rupert controls one of
the world's largest media empires, has also offered "support" to
other smaller producers which her company, Shine Productions, said
were "threatened with insolvency by N&S's refusal to pay overdue
bills".
Pact, the body representing independent producers, told the
Financial Times on Friday night that nine or 10 smaller companies
were in similar disputes with Mr. Desmond's group, which bought
Channel 5 this year.
According to the FT, John McVay, chief executive of Pact, said
that he had been negotiating with N&S for two weeks as a rising
number of his members complained about changes to the terms and
conditions of existing contracts.
"They are changing 30-day payment terms to 60 days plus end of the
month. The larger companies may be able to survive the effect on
their cash flow, but many of the smaller ones can't," Mr. McVay
told the FT.
Shine Productions has instructed lawyers Reed Smith to recover the
debt for payments due for the talent show Don't Stop Believing,
which was ordered before Mr. Desmond bought Channel 5 in July for
GBP104 million.
Patrick Keegan, Shine's head of communications, said in a
statement, "Shine cannot tolerate a new owner of a public service
broadcaster reneging on contractual commitments made by Channel
5's previous owners RTL and has instructed litigators Reed Smith
to use all legal recourse to recover the near GBP1 million debt,"
according to the FT.
About Northern & Shell Network
Northern & Shell -- http://www.northernandshell.co.uk/-- is a
British publishing group owned by Richard Desmond; the group
holding company is "Northern and Shell Network Ltd". The company
publishes the Daily Express, Sunday Express, Daily Star and Daily
Star Sunday, and the magazines OK!, New!, and Star. Northern &
Shell owns Channel 5 and Portland TV, Television X, Red Hot TV and
others.
PIERSE CONTRACTING: Mulls 110 Job Cuts Under Rescue Plan
--------------------------------------------------------
Ian Kehoe at The Sunday Business Post Online reports that Pierse
Contracting plans to halve its 211-strong workforce, as part of a
rescue strategy aimed at saving the company from liquidation.
Pierse Contracting's management team has made plans to make 110
staff redundant over the coming weeks in an effort to slash the
company's cost base, the Post.ie says, citing confidential court
pleadings prepared for the Pierse Group.
The Post.ie notes a number of the company's employees are already
on protective notice, and staff will be briefed on the redundancy
plans in the coming days.
All the redundancies will be made while the company is under the
protection of the court, the Post.ie says, citing an independent
accountant's report submitted by the company to support its
examinership petition. According to the report, which was
prepared by the accountancy firm KPMG, the company must also
engage with the state loans agency Nama, as many of its bank loans
are currently being transferred to the agency, the Post.ie
discloses.
According to the Post.ie, the report states that the examiner will
need the agreement of Nama on "any proposals put forward in
respect of the survival of the business".
The Post.ie relates court documents show that Pierse Contracting
would leave behind a deficit of EUR221 million, of which EUR29.2
million is owed to banks and EUR45.8 million owed to trade
creditors.
Its subsidiary, Pierse Building Services, which also went into
examinership last week, would leave behind a deficit of EUR85
million in the event of liquidation, the Post.ie notes.
As reported by the Troubled Company Reporter-Europe on Oct. 14,
2010, BreakingNews.ie said that the High Court's Mr. Justice Brian
McGovern appointed John McStay as interim examiner to Pierse
Contracting and Pierse Building Services. BreakingNews.ie
disclosed the firms cited the economic downturn and cash flow
difficulties caused by bad debts of approximately EUR30 million on
completed works as the reasons why it has sought the protection of
the courts.
Pierse Contracting and Pierse Building Services are involved in
the fitting out and refurbishing of premises for blue chip clients
in Ireland. The firms, which employed 700 at their peak, now have
211 employees.
PUNCH TAVERNS: S&P Puts Low-B Ratings on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed on CreditWatch negative
its credit ratings on Punch Taverns Finance PLC's class A, M, B,
C, and D notes and Punch Taverns Finance B Ltd.'s class A, B, and
C notes.
The full-year 2010 performance has not shown any improvement in
the trading conditions for tenanted pubs, with Punch Taverns PLC
(the parent of the securitizations) reporting like-for-like
revenues down 6.8% in 2010 compared with 7.2% in 2009.
Furthermore, EBITDA per leased pub is down 6%. The operating
margin for the tenanted pub division was also down by 3.2
percentage points to 47.5%.
As indicated in the outlook section of S&P's recent transaction
update, S&P highlighted these: (i) to maintain its current
business risk assessment, S&P would anticipate the speed of
decline of EBITDA per pub to slow down in the second half of the
fiscal year and for there to be clear signs that 2011 will be
significantly better than 2010; and (ii) S&P would anticipate that
EBITDA margins would not drop below 50%. Therefore, in S&P's
view, the full-year 2010 results have increased the probability
that S&P might lower its business risk profile, leading to its re-
assessment of stresses at each rating level.
At the securitization level, the performance does not differ
significantly from Punch Taverns' numbers. The key indicators for
cash flow quality have continued to be weak for Punch A, with
EBITDA margins dropping to 52.1% in 2010 from 56.7% in 2009. In
the same period, Punch Taverns has sold 14% of its pubs and seen a
19% decline in gross profit.
In Punch B, the EBITDA margin has dropped to 49.6% in 2010 from
54.6% in 2008, while it sold 13.2% of its estate and gross profit
is down 19.4%. The weak performance of the securitizations has
led Punch Taverns to inject about GBP9 million of support to Punch
A and GBP20 million of support to Punch B.
In S&P's view, the combination of government spending cuts, the
value-added tax increase, and national insurance rise will mean
that the tenanted-pub sector will continue to find it difficult to
improve trading to levels that would be commensurate with S&P's
satisfactory business risk score. S&P believes that while these
external factors will also affect the managed pubs, they will
continue to be in a better position to offset these pressures and
hence are likely to continue to warrant a satisfactory business
risk profile, in S&P's view.
S&P also note that Punch Taverns announced that it is looking to
sell 1,300 tail-end pubs over the next two to four years, which
S&P view as being due to two negative key factors. Firstly, the
announcement suggests that the trading conditions for tenanted
pubs are weaker than the company had previously anticipated.
Secondly, S&P is concerned about how the sale of the pubs could
affect the cash flow to debt service profile of the transactions.
This is especially a concern for the lower-rated notes that start
to amortize toward the back-end of the securitizations.
S&P will resolve the CreditWatch placements in due course after
S&P has reviewed the business risk profiles of the two
transactions, the cash flow stresses for these deals, and the
performance of the U.K. pub market.
Ratings List
Ratings Placed on Creditwatch Negative
Punch Taverns Finance PLC
GBP2.65 Billion Asset-Backed Fixed- And Floating-Rate Notes
Rating
------
Class To From
----- -- ----
A1(R) AAA (sf)/Watch Neg AAA (sf)/Negative
A2(R) AAA (sf)/Watch Neg AAA (sf)/Negative
M1 A- (sf)/Watch Neg A- (sf)/Negative
M2(N) A- (sf)/Watch Neg A- (sf)/Negative
B1 BBB- (sf)/Watch Neg BBB- (sf)/Negative
B2 BBB- (sf)/Watch Neg BBB- (sf)/Negative
B3 BBB- (sf)/Watch Neg BBB- (sf)/Negative
C(R) BB+ (sf)/Watch Neg BB+ (sf)/Negative
D1 BB (sf)/Watch Neg BB (sf)/Negative
Punch Taverns Finance B Ltd.
GBP1.574 Billion Fixed- and Floating-Rate Asset-Backed Notes
Rating
------
Class To From
----- -- ----
A3 A (sf)/Watch Neg A (sf)/Negative
A6 A (sf)/Watch Neg A (sf)/Negative
A7 A (sf)/Watch Neg A (sf)/Negative
A8 A (sf)/Watch Neg A (sf)/Negative
B1 BBB- (sf)/Watch Neg BBB- (sf)/Negative
B2 BBB- (sf)/Watch Neg BBB- (sf)/Negative
C BB+ (sf)/Watch Neg BB+ (sf)/Negative
REGENT INNS: Three More Sites to be Sold
----------------------------------------
Lorraine Heller at Big Hospitality News reports that three more
former Regent Inns sites are coming onto the market, a year after
the operator went into administration. The report relates that
property agent Christie & Co, acting on behalf of administrators
BDO LLP, is marketing the leasehold interests of the three sites
located in Devon, Staffordshire and Hertfordshire.
According to the report, Christie & Co is currently calling for
offers for the properties on an individual or group basis.
Big Hospitality News notes that the sites available are:
-- the site in Devon is an Old Orleans branch situated in a
leisure park in Plymouth, whose leisure park facilities
include a Vue cinema and a bowling arcade unit,
-- the Staffordshire site is the Australian-themed Walkabout
bar, located in Hanley's main drinking circuit, next to a
Chicago Rock unit; and
-- the Stone House in Hertford, Hertfordshire, which is said to
be a "stylish, funky" bar in the town centre, and includes a
dance floor area on an upper floor.
Regent Inns plc -- http://www.regentinns.co.uk/-- is engaged in
the business of creating and managing licensed bars, restaurants
and entertainment venues within the United Kingdom. The Company
operates in two segments: Entertainment bars and restaurants. Its
entertainment bars comprises three brands: Walkabout, Jongleurs
and Bar Risa. Walkabouts are large scale, Australian-themed
venues focused on late-night entertainment and sport. All
Jongleurs venues operate in conjunction with Bar Risa's or
Walkabout venues under common management and administrative
control. Its restaurants include Old Orleans and Asha's The
Company's wholly owned subsidiaries include Regent Inns Walkabout
Limited, Regent Inns Bar Risa Limited, Old Orleans Limited, Regent
Inns Property Limited and Regent Inns Finance Limited. In March
2009, the Company completed the disposal of Brandasia Limited.
The business being disposed of comprises an Indian restaurant
based in Birmingham.
* * *
As reported in the Troubled Company Reporter-Europe on October 23,
2009, Bloomberg News said that Regent Inns Plc was placed into
administration, resulting in the closure of nine bars and clubs
and the loss of 186 jobs. Bloomberg related BDO LLP said it was
appointed administrator of the company and sold 60 pubs and
restaurants and clubs to iNTERTAIN Ltd., a company controlled by
former Chief Executive Officer John Leslie. According to a
separate TCREUR report on October 20, 2009, The Sunday Times said
management buy-out talks at Regent Inns collapsed Oct. 16. The
Sunday Times disclosed Regent's chief executive John Leslie and
former Pitcher & Piano boss Mike Dowell were close to completing a
management buy-out, but the pair failed to secure financing at the
11th hour.
ROYAL BANK: Mulls Sale of Spanish Commercial Property Loans
-----------------------------------------------------------
Sharlene Goff and Daniel Thomas at The Financial Times report that
Royal Bank of Scotland is sounding out potential buyers for
GB1 billion of Spanish commercial property loans, as the UK
government-backed bank moves to sell a huge portfolio of unwanted
real estate assets.
According to the FT, RBS has hired Morgan Stanley, the investment
bank, to gauge whether private equity groups and other investors
would have an appetite to buy the loans.
The FT says the portfolio, the vast majority of which is secured
on commercial real estate in the troubled Spanish property market,
forms part of the GBP250 billion of non-core assets RBS is looking
to wind down or sell as it cleans up its balance sheet.
Commercial real estate makes up a large chunk of the bank's non-
core portfolio after a rapid expansion of its lending book at the
height of the bubble left it nursing large losses when the market
turned sour, the FT states.
Investors were expecting further details of the RBS sale to be
released by the bank this month, the FT notes.
Bailout
As reported by the Troubled Company Reporter-Europe on Aug. 26,
2010, Stephen Hester, Royal Bank of Scotland's chief executive, as
cited by The Scotsman, said that the bank should not be given a
second chance of a taxpayer bailout if it is involved in another
financial crisis. In a bold admission that the public would not
tolerate further handouts, Mr. Hester said all financial
institutions -- including RBS -- should be allowed to fail and
suffer the consequences without the state rushing to their aid,
according to The Scotsman. The Scotsman disclosed Mr. Hester was
drafted in when RBS sank under a mountain of debt after the
meltdown that followed its disastrous takeover of the Dutch bank
ABN Amro before the credit crunch.
About RBS
The Royal Bank of Scotland Group plc (NYSE:RBS) --
http://www.rbs.com/-- is a holding company of The Royal Bank of
Scotland plc (Royal Bank) and National Westminster Bank Plc
(NatWest), which are United Kingdom-based clearing banks. The
company's activities are organized in six business divisions:
Corporate Markets (comprising Global Banking and Markets and
United Kingdom Corporate Banking), Retail Markets (comprising
Retail and Wealth Management), Ulster Bank, Citizens, RBS
Insurance and Manufacturing. On October 17, 2007, RFS Holdings
B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V.,
Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and
controlled by RBS, completed the acquisition of ABN AMRO Holding
N.V. (ABN AMRO). In July 2008, the company disposed of its entire
interest in Global Voice Group Ltd.
ROYAL BANK: Bain Capital Nears GBP1 Billion Priory Group Buyout
---------------------------------------------------------------
Martin Arnold and Daniel Thomas at The Financial Times report that
US private equity group Bain Capital is close to sealing a buy-out
of the Priory Group in a deal worth slightly less than GBP1
billion.
According to the FT, an agreement for Bain to enter a period of
exclusive negotiations with the owners of the Priory, led by Royal
Bank of Scotland, is expected to be sealed in the coming days.
A sale of the mental healthcare provider could be announced within
weeks, the FT notes. It is likely to value the group below the
GBP1 billion asking price initially set by RBS, according to the
FT. The auction is being run by Rothschild, the FT discloses.
Bain is expected to sign up a group of banks, likely to include
JPMorgan and possibly RBS itself, to provide about GBP500 million
of debt financing for the deal, the FT discloses.
RBS had hoped to raise more than GBP1 billion through the sale of
the Priory, which came after an aborted attempt to float the
business on the London Stock Exchange, the FT states. RBS
inherited the Priory when it took over ABN Amro in 2007, the FT
notes.
Bailout
As reported by the Troubled Company Reporter-Europe on Aug. 26,
2010, Stephen Hester, Royal Bank of Scotland's chief executive, as
cited by The Scotsman, said that the bank should not be given a
second chance of a taxpayer bailout if it is involved in another
financial crisis. In a bold admission that the public would not
tolerate further handouts, Mr. Hester said all financial
institutions -- including RBS -- should be allowed to fail and
suffer the consequences without the state rushing to their aid,
according to The Scotsman. The Scotsman disclosed Mr. Hester was
drafted in when RBS sank under a mountain of debt after the
meltdown that followed its disastrous takeover of the Dutch bank
ABN Amro before the credit crunch.
About RBS
The Royal Bank of Scotland Group plc (NYSE:RBS) --
http://www.rbs.com/-- is a holding company of The Royal Bank of
Scotland plc (Royal Bank) and National Westminster Bank Plc
(NatWest), which are United Kingdom-based clearing banks. The
company's activities are organized in six business divisions:
Corporate Markets (comprising Global Banking and Markets and
United Kingdom Corporate Banking), Retail Markets (comprising
Retail and Wealth Management), Ulster Bank, Citizens, RBS
Insurance and Manufacturing. On October 17, 2007, RFS Holdings
B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V.,
Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and
controlled by RBS, completed the acquisition of ABN AMRO Holding
N.V. (ABN AMRO). In July 2008, the company disposed of its entire
interest in Global Voice Group Ltd.
* UNITED KINGDOM: Salisbury Turns to AG Program to Solve Blight
---------------------------------------------------------------
Angeljean Chiaramida at Daily News reports that a little known
program run by the state attorney general's office is being lauded
as a way to help rehabilitate Salisbury's abandoned and run-down
properties, including distressed properties at the south end of
the beach. The report relates that Salisbury has requested the
attorney general take into receivership 10 of its most problematic
properties, as town officials pursue all avenues within their
means to improve substandard housing stock.
Under the program, the report notes, owners of abandoned or
noncompliant properties will receive a demand letter, notifying
them they must make the repairs needed to bring substandard
buildings into compliance with state building and sanitation codes
or lose control of the properties to the state through
receivership, according to health agent Jack Morris. The report
relates Mr. Morris said that if property owners make repairs, the
process will be halted. If not, the attorney general's office
will take all the legal steps, pay all related fees, and go to
court to follow through on the process, he added.
According to Board of Health Chairwoman Joanne Housianitis, the
program fits Salisbury's need well, the report says.
Daily News notes that for years the board has fielded complaints
concerning the town's stock of abandoned and dangerous buildings
and substandard rental housing. The report relates that to
identify the problem buildings and improve them, the board created
its rental housing inspection bylaw, which requires all year-round
and seasonal rental housing be inspected once a year.
Yet even with inspections, the report says, some landlords have
refused to fix serious health and building code violations when
problems have been found and citation orders written, leaving town
officials frustrated and left with the option of declaring the
buildings uninhabitable and forcing tenants to move.
Mr. Housianitis said the receivership program will not only supply
a way to improved blighted areas, abandoned buildings and the
town's housing inventory, it will put non-compliant landlords on
notice the town has a new tool in its tool belt to use to upgrade
its distressed rental housing units, the report discloses.
Daily News relates that Mr. Housianitis believes the program's
recent expansion is directly related to the large inventory of
foreclosed properties throughout the state, which can sometimes go
unsold, become abandoned and distressed. The program can help
stabilize neighborhoods where foreclosed and abandoned buildings
exist before the neighborhoods fall into decline, she said, the
report adds.
Mr. Harrington has hopes the receivership program will prevent a
repeat of that unfortunate scenario, the report adds.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine
T. Fernandez, Joy A. Agravante, 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
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contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *