/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/110429.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, April 29, 2011, Vol. 12, No. 84 Headlines E S T O N I A WATER SER LOUNA-ESTI: Excessive Liabilities Prompts Bankruptcy G R E E C E * GREECE: Debt Restructuring Not Good for Economy, Orphanides Says * GREECE: Can't Avoid Debt Restructuring, Lars Feld Says I R E L A N D ANGLO IRISH: Steps Closer to Wind-Down; Removes Old Signage RAY GREHAN: Grant Thornton to Oversee Debts & Property Assets I T A L Y FIAT FINANCE: Moody's Reviews 'Ba1' Rating for Possible Downgrade N E T H E R L A N D S MARFRIG HOLDINGS: S&P Assigns 'B+' Rating to US$500MM Sr. Bonds SENSATA TECHNOLOGIES: Incurs US$8.93MM Net Loss in March 31 Qtr. P O R T U G A L * PORTUGAL: European Bailout Fund Hinges on Finland's Support R U S S I A ALFA-BANK: Fitch Assigns Final 'BB' Rating to Sr. Eurobond Issue CREDIT BANK OF MOSCOW: Fitch Assigns 'B+' Rating to RUB5-Bil. Bond TIPOS: To File Constitutional Appeal to Leminko Court Ruling * YAROSLAVL: Fitch Assigns Final 'BB-' Rating to RUB1.82BB Bonds S P A I N CAJA DE AHORROS: Moody's Assigns 'Baa1' Rating to 2014 Bonds S W E D E N SAAB AUTOMOBILE: Seeks Potential Partnerships with Chinese Firms U N I T E D K I N G D O M AMDEGA: Goes Into Administration, May Cut 190 Jobs CLACHNACUDDIN F.C.: Comes Out of Administration GLOBAL CROSSING: Incurs GBP6.95-Mil. Net Loss in 2010 GRAFTON SHOPPING: Miller Developments Acquires Center MONDI FINANCE: S&P Assigns 'BB+' Rating to EUR1.5BB EMTN Program RTC Group: Narrows Pre-Tax Loss by 75% to GBP0.45 Million VON ESSEN: Thornbury Castle Future In Doubt * UK: NHS Reforms Need to Include Plan for Company Failures * UK: Company Voluntary Arrangement to Increase in Popularity X X X X X X X X * EUROPE: Heavily Indebted Nations May Restructure Debt * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ********* ============= E S T O N I A ============= WATER SER LOUNA-ESTI: Excessive Liabilities Prompts Bankruptcy -------------------------------------------------------------- Toomas Hobemagi at Baltic Business News, citing Aripaev, reports that Water Ser Louna-Eesti has filed for bankruptcy. According to BBN, overborrowing and excessive leasing liabilities were blamed for the company's bankruptcy. Employing 35 people, the company's demise has been fast since its result in 2009 was a profit of EEK3.6 million at revenues of EEK84 million, BBN relates. It now owes the state almost EUR50,000 in taxes, BBN discloses. Water Ser Louna-Eesti is a regional subsidiary of Water Ser, one of Estonia's largest builders of water and wastewater networks. =========== G R E E C E =========== * GREECE: Debt Restructuring Not Good for Economy, Orphanides Says ------------------------------------------------------------------ Menelaos Hadjicostis at The Associated Press reports that Athanasios Orphanides, a board member at the European Central Bank, said any move by Greece to renegotiate the terms of its debt, as many in financial markets expect to occur eventually, would be "unnecessary" and a "very bad idea." According to AP, Mr. Orphanides, a board member at the European Central Bank, said talk about restructuring -- that is, extending debt repayment periods or reducing the repayment amount -- could be "damaging to the European Union as a whole." "Restructuring would be a mistake at this time. Restructuring would be undesirable for the Greek economy, it would be undesirable for the eurozone economy," AP quotes Mr. Orphanides as saying. "I certainly don't recommend to European Union politicians to discuss this possibility or to make any such insinuations." Cypriot banks are heavily exposed to Greek debt and would suffer heavily from a restructuring, though Mr. Orphanides claimed their capital buffers are large enough to resist trouble in Greece, AP notes. Greece had to be saved from bankruptcy with EUR110 billion (US$160 billion) in European Union and International Monetary Fund rescue loans last May, AP recounts. Investor confidence in the country, however, remains low a year later as the country struggles to emerge from recession and to raise revenue to repay debt, AP states. Greek officials' denials have failed to silence persistent market chatter of an eventual debt restructuring, AP relates. * GREECE: Can't Avoid Debt Restructuring, Lars Feld Says -------------------------------------------------------- Keith Jenkins and Emma Charlton at Bloomberg News reports that Lars Feld, a member of German Chancellor Angela Merkel's council of economic advisers, said Greece cannot avoid restructuring its debts. "There's more speculation about debt restructuring, which is reflected in the Greek curve," Bloomberg quotes Christopher Rieger, head of fixed-income strategy at Frankfurt-based Commerzbank AG, as saying. "I don't see where any support for Greek debt will be coming from. The prices are still quite a long way away from any reasonable haircut that people will expect if restructuring was announced." "I don't think that Greece will succeed in this consolidation strategy without any restructuring in the future," Mr. Feld told Bloomberg Television in Frankfurt. "I think that Greece should restructure sooner than later." Greece's two-year yields rose to a euro-era record of 24.45% and were at 24.24% as of 5:07 p.m. on April 27 in London, Bloomberg discloses. The 4.6% security due 2013 fell 1.39, or 13.9 euro per 1,000-euro (US$1,462) face amount, to 70.79, Bloomberg states. Ten-year yields reached a record 15.38%, up from 12.84% on March 31, Bloomberg relates. ============= I R E L A N D ============= ANGLO IRISH: Steps Closer to Wind-Down; Removes Old Signage ----------------------------------------------------------- Simon Carswell at The Irish Times reports that Anglo Irish Bank has removed the signage from the bank's six offices across the country as the bank takes further steps to close and wind down over time. The Irish Times relates that the bank began removing the signs from its branches in Dublin, Belfast, Cork, Limerick, Galway and Waterford at 2:00 p.m. on April 20. The bank will be renamed following the merger of Anglo with Irish Nationwide Building Society which will take place this summer, The Irish Times discloses. Mike Aynsley, the bank's chief executive, declined to disclose the new name until the merger, The Irish Times notes. Anglo was focused on "getting the maximum return for the Irish taxpayer" by recovering as much as it could on the remaining EUR35 billion of loans, or EUR24 billion net of provisions taken against losses. "Removing the old Anglo signage is a step towards reflecting this new reality," The Irish Times quotes Mr. Aynsley as saying. Mr. Aynsley, as cited by The Irish Times, said that consigning the "signage to history" should help create an understanding among the public that the old Anglo has gone. He said the bank had removed about 20 signs on April 20 and would be moving them to one location which he declined to disclose, The Irish Times relates. According to The Irish Times, Mr. Aynsley said that it would consider selling them at auction to make money back for the State or donate them to charity, a museum or a gallery for an art installation. The Irish Times notes that the executive said that, based on the bank's estimates, the State's bailout of the bank should not exceed EUR29.3 billion unless there is a further sharp fall in the property market. Anglo Irish Bank Corp PLC -- http://www.angloirishbank.com/-- operates in three core areas: business lending, treasury and private banking. The Bank's non-retail business is made up of more than 11,000 commercial depositors spanning commercial entities, charities, public sector bodies, pension funds, credit unions and other non-bank financial institutions. The Company's retail deposits comprise demand, notice and fixed term deposit accounts from personal savers with maturities of up to two years. Non-retail deposits are sourced from commercial entities, charities, public sector bodies, pension funds, credit unions and other non-bank financial institutions. In addition, at Sept. 30, 2008, its non-retail deposits included deposits from Irish Life Assurance plc. The Private Bank offers tailored products and solutions for high net worth clients and operates the Bank's lending business in Ireland and the United Kingdom. RAY GREHAN: Grant Thornton to Oversee Debts & Property Assets ------------------------------------------------------------- RTE News reports that receivers Michael McAteer and Paul McCann of accounting firm Grant Thornton have been appointed to oversee the debts and associated property assets of Ray and Danny Grehan. Emmet Oliver and Donal O'Donovan at Independent.ie report that Mr. Grehan expressed surprise and bafflement last night that National Asset Management Agency (NAMA) had placed his property empire into receivership. Independent.ie relates that Mr. Grehan, whose company has about EUR650 million in debts, said he had signed a memorandum of understanding with NAMA in December, but the agency still moved to place his Irish and UK assets in receivership. For its part, NAMA said such an agreement did not mean that borrowers were exempt from enforcement action, Independent.ie discloses. Among the Grehan assets NAMA is seizing are: -- the Grange apartment complex in Stillorgan; -- the former UCD site in Dublin 4; -- the Glenroyal Hotel in Maynooth; and -- a residential project near Liffey Valley, called St Edmunds. Mr. Grehan was a top 20 developer and tried at the tail end of the property boom to boost the market by providing interest-free loans to buyers. ========= I T A L Y ========= FIAT FINANCE: Moody's Reviews 'Ba1' Rating for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade the Ba1 Corporate Family Ratings (CFR) of Fiat S.p.A. and its rated subsidiaries Fiat Finance & Trade and Fiat Finance North America as well as the Ba1 Probability of Default Rating (PDR) following the announced agreement to increase its stake in Chrysler Group LLC by another 16% to 46%. The review was triggered by Fiat's announcement on April 21 that it had reached an Agreement with Chrysler itself and the other members of Chrysler to purchase an additional 16% stake in Chrysler Group LLC for a cash payment to Chrysler of US$1,268 million which represents a significant step in the progressive tighter integration of the two automobile manufacturers globally. The exercise of this option is conditional upon the successful refinancing of Chrysler's government loans provided by the Canadian and US governments. This is expected to be finalized in the second quarter 2011. Following this transaction, Fiat would own 46% in Chrysler. This stake could go up further to 51% without additional cash requirements for Fiat if the last performance event is met. Issuer: Fiat Finance & Trade Ltd., On Review for Possible Downgrade: -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently (P)Ba1 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Issuer: Fiat Finance Canada Ltd. , On Review for Possible Downgrade: -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently (P)Ba1 Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Issuer: Fiat Finance North America Inc. , On Review for Possible Downgrade: -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently (P)Ba1 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative Issuer: Fiat S.p.A. , On Review for Possible Downgrade: -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently Ba1 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba1 Outlook Actions: -- Outlook, Changed To Rating Under Review From Negative The review will mainly focus on (i) the intercompany relationship and future dependency of both companies on each other's performance following the common use of vehicle architecture and drivetrain technology as well as a common purchasing organization, and (ii) the potentially increased exposure of Fiat towards Chrysler that Moody's views as a weaker credit than Fiat. Moody's will also assess the impact on Fiat's liquidity profile following the cash outflow of US$1,268 million though the agency recognizes that Fiat has currently significant cash holdings on its balance sheet. Fiat's ratings benefit from its leading market positions in Brazil (with an approximate 25% market share), as the company's major source of profits and cash flows in the past years. Fiat Group also benefits from a dominant domestic Italian market presence (with an approximate 30% market share). The group generates approximately two thirds of its revenues in these two countries and is therefore especially vulnerable to a drop-off in demand in either one of these regions. This very limited geographic diversification, which would improve with the inclusion of Chrysler in the Group, is a key weakness to its current rating. The rating also reflects (i) Fiat's business risk, with a pure focus on the highly cyclical automotive industry including an increased 46% stake in Chrysler Group and the activities of Magneti Marelli (automotive components) and Teksid (supplier of engine blocks) as well as of Comau (robotics for the auto industry) and Fiat Powertrain (mostly an internal supplier of engines) and (ii) Moody's view of an ageing product portfolio in Europe resulting from the absence of recent new volume model launches. This has led to an overall relatively infrequent model renewal rate compared with its direct peers, thus constraining the group's competitive position. This was also reflected in last year's market share losses in Europe and in Fiat's important home market Italy. Moody's anticipates that Fiat will be able to contain further market share losses within the next two years before regaining market shares in Europe, based on an attractive renewed model range. The Ba1 rating also takes into consideration a substantial increase in capital expenditures in the current year and beyond, compared with a reduced level in 2010, in order to develop and launch attractive new volume models to the market. Moody's anticipates that the launch schedule will accelerate from 2012 onwards. The principal methodologies used in this rating were Global Automobile Manufacture Industry published in December 2007, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Torino, Italy, Fiat S.p.A. is one of Italy's leading industrial groups and one of Europe's largest automotive manufacturers by unit sales. On Jan. 1, 2011, the group completed the demerger of its capital goods activities, mainly Iveco and CNH (Ba3,stable), into a separate company, called Fiat Industrial (Ba1, stable). On a pro-forma basis, the new Fiat S.p.A. generated consolidated revenues of EUR35.9 billion and reported a trading profit of EUR1.1 billion in 2010. ===================== N E T H E R L A N D S ===================== MARFRIG HOLDINGS: S&P Assigns 'B+' Rating to US$500MM Sr. Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B+' rating to the senior unsecured, unsubordinated bonds to be issued by Marfrig Holdings Europe B.V. in the amount of US$500 million maturing in 2018 (seven-year tenor). The rating on the issue reflects the credit quality of Brazil-based Marfrig Alimentos S.A. (Marfrig; B+/Stable), which will irrevocably and unconditionally guarantee the bonds. "We expect the debt issuance to help Marfrig improve its financial profile, reducing short-term refinancing risks and extending its debt maturity schedule. We believe the company will use part of the proceeds to pay down short-term and more expensive debt," S&P stated. "We assess Marfrig's business risk profile as fair, which reflects the company's sizable scale of operations and its business and geographic diversification. Marfrig's growth, which the company achieved mainly through several sizable acquisitions, has leveraged its financial ratios and has thus led us to assess Marfrig's financial profile as highly leveraged," S&P related. Ratings List Marfrig Alimentos S.A. Corporate credit rating B+/Stable New Rating Marfrig Holdings Europe B.V. US$500 mil sr unsec B+ SENSATA TECHNOLOGIES: Incurs US$8.93MM Net Loss in March 31 Qtr. ---------------------------------------------------------------- Sensata Technologies B.V. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of US$8.93 million on US$444.23 million of net revenue for the three months ended March 31, 2011, compared with net income of US$27.67 million on US$377.13 million of net revenue for the same period during the prior year. The Company's balance sheet at March 31, 2011, showed US$3.39 billion in total assets, US$2.49 billion in total liabilities, and US$895.09 million in total shareholders' equity. A full-text copy of the quarterly report on Form 10-Q is available for free at http://is.gd/vCdYW0 About Sensata Almelo, Netherlands-based Sensata Technologies B.V. -- http://www.sensata.com/-- Sensata Technologies B.V. is a global designer, manufacturer, and marketer of customized and highly- engineered sensors and control products. Sensata is a wholly- owned subsidiary of Sensata Technologies Holding, N.V. Its sensors segment accounts for approximately 60% of the company's 2009 revenues, and supplies sensors and transducers to the commercial, industrial and automotive markets. Revenue for the LTM period ended 9/30/10 approximated US$1.5 billion. In October 2010, Moody's Investors Service said that Sensata Technologies' 'B2' Corporate Family Rating and positive outlook remain unchanged following the announcement of its public holding company, Sensata Technologies Holding N.V., that it has reached a definitive agreement to acquire the "Automotive on Board" sensors business of Honeywell International for US$140 million in cash. Moody's last rating action on Sensata was August 26, 2010, when the company's Corporate Family and Probability of Default ratings were upgraded to B2 from B3 and the ratings outlook was changed to positive. As reported by the TCR on March 1, 2011, Standard & Poor's Ratings Services raised the ratings on sensors and controls manufacturer Sensata Technologies B.V., including the corporate credit rating, to 'BB-' from 'B+'. The outlook is stable. "The rating actions reflect further improvements in Sensata's credit measures and the continuing ownership reduction of its majority owner, private equity firm Bain Capital, which S&P believes provides further indication that the company is likely to maintain a less- aggressive financial policy," said Standard & Poor's credit analyst Dan Picciotto. "S&P believes operating trends for 2011 remain favorable and that the company has demonstrated good profitability through the economic downturn and into the upturn." =============== P O R T U G A L =============== * PORTUGAL: European Bailout Fund Hinges on Finland's Support ------------------------------------------------------------- Xinhua reports that European Economic and Monetary Affairs Commissioner Olli Rehn said on Tuesday in an interview with Finnish Broadcasting Company that a rescue for Portugal is only possible with Finland's support. According to Xinhua, Mr. Rehn said that no other options are in sight. Mr. Rehn stressed that the European bailout fund for Portugal requires unanimity, Xinhua relates. Portugal could go bankrupt if no unanimous decision is made on its rescue, Xinhua notes. "If we want to prevent Portugal's bankruptcy, we need a unanimous decision that the European bailout fund can be used to rescue Portugal. Unanimity means also Finland's participation," Xinhua quotes Mr. Rehn as saying. Mr. Rehn pointed out that investor responsibility, demanded by some Finnish political parties, will be included in the European stability mechanism, which will start operating in 2013 and is now in its final stages of preparation, Xinhua discloses. =========== R U S S I A =========== ALFA-BANK: Fitch Assigns Final 'BB' Rating to Sr. Eurobond Issue ---------------------------------------------------------------- Fitch Ratings has assigned Alfa Bond Issuance plc's USD1bn issue of 7.75% senior unsecured limited recourse loan participation notes, due April 28, 2021, a final Long-term foreign currency 'BB' rating. The proceeds from the issue will be on-lent to OJSC Alfa-Bank (Alfa-bank), rated Long-term Issuer Default Rating (IDR) 'BB'/Stable, Short-term IDR 'B', Individual Rating 'C/D', Support Rating '4', Support Rating Floor 'B' and National Long-term rating 'AA-(rus)'/Stable. The term of the issue provide a put option to bondholders on the occurrence of a put event, which may be triggered by a negative rating action in respect of a change of control in ABH Financial Limited, Alfa Banking Group's parent company, of which Alfa-Bank is the main operating entity. The loan will be guaranteed by ABH Financial Limited. ABG is the largest privately owned banking group in Russia by assets. The group is ultimately owned by six individuals, with the largest stakes held by Mikhail Fridman (36.47%) and German Khan (23.27%). CREDIT BANK OF MOSCOW: Fitch Assigns 'B+' Rating to RUB5-Bil. Bond ------------------------------------------------------------------ Fitch Ratings has assigned Credit Bank of Moscow's RUB5 billion bond issue BO-04, due April 15, 2014, a final Long-term rating of 'B+' with a Recovery Rating of 'RR4' and National Long-term rating of 'A-(rus)'. The coupons will be paid semi-annually. The first coupon was priced at 8.0%; second and third coupons have the same rate. The fourth, fifth and sixth coupons will be defined by the issuer. The bonds have a put option after one and a half year. Credit Bank of Moscow was among the 30 largest Russian banks by assets at end-Q111, and its core business is providing banking services to medium-sized trading companies. It is fully owned by a Russian businessman, Roman Avdeev. TIPOS: To File Constitutional Appeal to Leminko Court Ruling ------------------------------------------------------------ The TASR newswire reports that Tipos will file a constitutional appeal in the next few days in response to a ruling by the Supreme Court dated November 2010 whereby Tipos was ordered to pay Cyprus-based firm Lemikon EUR14.122 million. The Supreme Court found that Tipos had unlawfully used the know- how and trademarks of Czech betting company Sportka, TASR recounts. Sportka subsequently sold its claim in the case to Lemikon, TASR discloses. According to TASR, Tipos said it believes the rationale attached to the ruling is insufficient and disputable vis-a-vis the Slovak Constitution. "We'll submit a constitutional appeal on the grounds that the company's rights to court protection, particularly the constitutionally guaranteed right to fair court proceedings, were infringed. This right also includes the right to a high-quality rationale behind a court ruling," TASR quotes Tipos general director Milos Ronec, as saying. Mr. Ronec also announced that Tipos expects Lemikon to pay Tipos around EUR1.9 million in view of the fact that Tipos in the past paid Lemikon around EUR16 million in an out-of-court settlement, i.e. some EUR1.9 million more than the sum awarded by the Supreme Court, TASR notes. Restructuring Proposal TASR relates that Mr. Ronec also said that the company has filed another restructuring proposal after one such proposal was rejected by the Bratislava I District Court last week. The application was turned down over what the court called the failure to observe requirements prescribed by law, TASR states. Tipos, TASR says, has been looking to carry out restructuring in order to gain protection from its creditors, whose claims, Tipos asserts, are dubious. Tipos is a Slovak lottery company. * YAROSLAVL: Fitch Assigns Final 'BB-' Rating to RUB1.82BB Bonds ---------------------------------------------------------------- Fitch Ratings has assigned Yaroslavl Region's RUB1.822 billion domestic bond (ISIN RU000A0JREC7), due April 15, 2014 a final Long-term local currency rating of 'BB-' and a final National Long-term rating of 'A+(rus)'. The region is rated Long-Term foreign and local currency 'BB-', respectively with Positive Outlook, Short-Term foreign currency 'B', and National Long-term 'A+(rus)' with Positive Outlook. The bond has 12 coupon periods and a fixed step-down coupon between 8% and 7.25% per annum. The principal will be amortized by 35% of the initial bond issue value on July 16, 2013 and the remaining 65% of the initial value will be redeemed on April 15, 2014. The proceeds from the new bond will be used to refinance maturing debt and smooth the debt profile of the region. Yaroslavl Region is part of the Central Federal District and lies in the northern part of Russia. The region accounted for 0.9% of the national population (1.31 million residents) and 0.6% of national GDP in 2008. ========= S P A I N ========= CAJA DE AHORROS: Moody's Assigns 'Baa1' Rating to 2014 Bonds ------------------------------------------------------------ Moody's Investors Service has assigned a definitive long-term rating to a new series of mortgage covered bonds issued by Caja de Ahorros del Mediterraneo (CAM or the issuer) under its covered bond program. Issuer: Caja de Ahorros del Mediterraneo, mortgage covered bond program -- EUR1,000M due 04/14/2014, Assigned Baa1. RATINGS RATIONALE The covered bonds constitute direct, unconditional and senior obligations of Caja de Ahorros del Mediterraneo and are secured by the issuer's entire mortgage loan pool (excluding securitized loans). The rating takes into account these factors: (1) The credit strength of the issuer (Ba1/NP/D). (2) The structure created by the transaction documents in combination with the legal framework for Spanish covered bonds. (3) The credit quality of the assets securing the payment obligations of the issuer under the covered bonds. The cover assets are residential and commercial mortgages located in Spain. (4) As of September 2010, the over-collateralization level consistent with the Baa1 rating is 12.5% and the level of over-collateralization is 170.4%. Moody's has assigned a Timely Payment Indicator (TPI) of "Probable" to the covered bonds. The ratings assigned by Moody's address the expected loss posed to investors. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. The Baa1 rating assigned to the existing covered bonds is expected to be assigned to all subsequent covered bonds issued by the issuer under this program and any future rating actions are expected to affect all such covered bonds. Should there be any exceptions to this, Moody's will in each case publish details in a separate press release. KEY RATING ASSUMPTIONS/FACTORS Covered bond ratings are determined after applying a two-step process: expected loss analysis and TPI framework analysis. EXPECTED LOSS Moody's determines a rating based on the expected loss on the bond. The primary model used is Moody's Covered Bond Model (COBOL) which determines expected loss as a function of the issuer's probability of default, measured by its rating of Ba1, and the stressed losses on the cover pool assets following issuer default. As of September 2010, the Cover Pool Losses for this program are 40.1%. This is an estimate of the losses Moody's currently models in the event of issuer default. Cover Pool Losses can be split between Market Risk of 17.5% and Collateral Risk of 22.6%. Market Risk measures losses as a result of refinancing risk and risks related to interest rate and currency mismatches (these losses may also include certain legal risks). Collateral Risk measures losses resulting directly from the credit quality of the assets in the cover pool. Collateral Risk is derived from the Collateral Score which for this program is 33.7%. TPI FRAMEWORK Moody's assigns a "timely payment indicator" (TPI) which indicates the likelihood that timely payment will be made to covered bondholders following issuer default. The effect of the TPI framework is to limit the covered bond rating to a certain number of notches above the issuer's rating. SENSITIVITY ANALYSIS The robustness of a covered bond rating largely depends on the credit strength of the issuer. The number of notches by which the issuer's rating may be downgraded before the covered bonds are downgraded under the TPI framework is measured by the TPI Leeway. Based on the current TPI of "Probable" the TPI Leeway for this program is two notches, meaning the issuer rating would need to be downgraded to B1 before the covered bonds are downgraded, all other things being equal. A multiple notch downgrade of the covered bonds might occur in certain limited circumstances. Some examples might be (a) a sovereign downgrade negatively affecting both the issuer's senior unsecured rating and the TPI; (b) a multiple notch downgrade of the issuer; or (c) a material reduction of the value of the cover pool. For further details on Cover Pool Losses, Collateral Risk, Market Risk, Collateral Score and TPI Leeway across all covered bond programs rated by Moody's please refer to "Moody's EMEA Covered Bonds Monitoring Overview", published quarterly. These figures are based on the most recent reporting by the issuer and are subject to change over time. The principal methodology used in this rating was Moody's Rating Approach to Covered Bonds, published in March 2010. =========== S W E D E N =========== SAAB AUTOMOBILE: Seeks Potential Partnerships with Chinese Firms ---------------------------------------------------------------- Andrew Ward at The Financial Times reports that Saab Automobile is looking to China for a financial lifeline after efforts to save the company hit a fresh stumbling block. According to the FT, the company, bought by Spyker Cars of the Netherlands from General Motors last year, said it was in talks with "various Chinese car manufacturers" about potential partnerships. Saab's future has been thrown into fresh doubt this month after some of its suppliers halted deliveries because of unpaid bills, forcing an indefinite production stoppage that is entering its third week, the FT relates. Spyker, controlled by the Dutch entrepreneur Victor Muller, is pinning most of its hopes on a planned cash injection by Vladimir Antonov, a Russian financier, who has agreed to buy Saab's plant and other real estate and lease it back to the company, the FT says. However, the company warned on Tuesday that the deal was in doubt because of wrangling with the European Investment Bank, Saab's biggest creditor, which must approve any change to its financing arrangements, the FT notes. Spyker, as cited by the FT, said it remained hopeful the rescue plan would eventually go through but, in the meantime, it was holding talks with potential Chinese partners and other investors over additional funding. With an annual production of up to 126,000 cars, Saab's current models include the 9-3 (available as a convertible or sport sedan), the luxury 9-5 sedan (also available in a sport wagon), and the seven-passenger 9-7X SUV. As it prepared to separate from General Motors, Saab filed for bankruptcy protection in February 2009. A year later, in February 2010, GM sold Saab to Dutch sports car maker Spyker Cars for about US$400 million in cash and stock. =========================== U N I T E D K I N G D O M =========================== AMDEGA: Goes Into Administration, May Cut 190 Jobs -------------------------------------------------- Karen Dent at The Journal reports that Amdega has gone into administration with the potential loss of 190 jobs. The administration of the Darlington Company, which has been in business for over 130 years, was disclosed by its owners London- based private equity firm, according to The Journal. The report relates that it is just nine months since the business was taken over by Endless. The Journal notes that at the time it said it was intending to invest substantial sums in the business which at the time of the purchase had annual revenues of over GBP20 million. Amdega is a conservatory and greenhouse company. It is based on the town's Faverdale Industrial Estate. CLACHNACUDDIN F.C.: Comes Out of Administration ----------------------------------------------- The Press and Journal reports that Clachnacuddin Football Club Chairman Brian Urquhart insists his club can look forward to a bright future after coming out of administration. Clach went into administration in October 2009 with debts estimated at GBP250,000, Press and Journal recalls. Following an agreement to sell the social club hall to Inverness Bible Fellowship, the changing rooms and director's board room to the Clach Supporters' Society and the car park to Highland Council, Urquhart believes the Lilywhites can finally put 18 months of financial turmoil behind them, according to Press and Journal. Clachnacuddin F.C. is a semi-professional senior football club from the city of Inverness who currently play in Scotland's Highland Football League. GLOBAL CROSSING: Incurs GBP6.95-Mil. Net Loss in 2010 ----------------------------------------------------- Global Crossing Limited announced fourth-quarter and full-year 2010 results for its subsidiary, Global Crossing (UK) Telecommunications Limited. Global Crossing (UK) reported net loss for the period of GBP1.93 million on GBP82.80 million of revenue for the three months ended Dec. 31, 2010, compared with a net loss for the period of GBP1.56 million on GBP78.12 million of revenue for the same period during the prior year. The Company also reported a net loss for the period of GBP6.95 million on GBP314.01 million of revenue for the year ended Dec. 31, 2010, compared with net profit for the period of GBP4.66 million on GBP308.86 million of revenue during the prior year. The Company's balance sheet at Dec. 31, 2010 showed GBP288.02 million in total assets, GBP508.38 million in total liabilities and a GBP220.36 million in total deficit. "GCUK reported solid results in 2010, with an increase of three percent year over year in GCUK's 'Invest and Grow' revenue," said John Legere, Global Crossing's chief executive officer. "We continue to position the business strategically for long-term growth through investments in sales resources and enhanced capabilities to deliver value-added IP, Ethernet, data center and managed solutions." About Global Crossing Based in Hamilton, Bermuda, Global Crossing Limited (NASDAQ: GLBC) -- http://www.globalcrossing.com/-- is a global IP, Ethernet, data center and video solutions provider with the world's first integrated global IP-based network. The Company's balance sheet at Dec. 31, 2010 showed US$2.31 billion in total assets, US$2.79 billion in total liabilities and US$477 million in total stockholders' deficit. Global Crossing Limited reported a consolidated net loss of US$172 million on US$2.609 billion of consolidated revenue for the twelve months ended Dec. 31, 2010, compared with a net loss of US$141 million on US$2.159 billion of revenue during the prior year. * * * As reported by the Troubled Company Reporter on March 31, 2010, Standard & Poor's Ratings Services raised all its ratings on Global Crossing, including the corporate credit rating to 'B' from 'B-'. The outlook is stable. S&P assigned its 'CCC+' issue-level rating and '6' recovery rating to Global Crossing's proposed $150 million of senior unsecured notes due 2019. The '6' recovery rating indicates S&P's expectation for negligible (0%-10%) recovery in the event of a payment default. GRAFTON SHOPPING: Miller Developments Acquires Center ----------------------------------------------------- Messenger reports that Grafton shopping centre is set for a multi- million pound makeover, after being bought by Miller Developments. Miller Developments has unveiled ambitious plans to revitalize the centre, which went into administration in 2009 and has since been run by administrators, according to Messenger. The report relates that Miller Developments plans a GBP10 million upgrade for the centre -- and work should be underway within a couple of months. Messenger notes that although the purchase price for the centre has not been disclosed, it is believed to be significantly less than the original GBP7 million asking price. Grafton shopping centre is a run-down shopping mall in Altrincham. MONDI FINANCE: S&P Assigns 'BB+' Rating to EUR1.5BB EMTN Program ---------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned an issue rating of 'BB+' to the EUR1.5 billion Euro Medium-Term Note (EMTN) program issued by Mondi Finance PLC, a fully owned finance subsidiary of South Africa-based paper and packaging producer Mondi Group (Mondi). "At the same time, we revised the recovery rating to '3' from '4' on the EUR500 million senior unsecured notes due 2017 issued by Mondi Finance under the EUR1.5 billion EMTN program. The recovery rating of '3' indicates our expectation of meaningful (50%-70%) recovery in the event of a payment default. The issue rating on the senior unsecured notes is unchanged at 'BB+', in line with the corporate credit rating on Mondi," S&P related. The revision of the recovery rating is mainly underpinned by Mondi's recent announcements of a demerger of Mondi Packaging South Africa (MPSA) and the refinancing of a previous EUR1.55 billion revolving credit facility (RCF) with a new EUR750 million RCF (not rated). Recovery Analysis "The issue and recovery ratings on the unsecured notes are underpinned by our view of Mondi's good asset valuation and some documentary protection against the raising of new secured debt. However, the recovery rating is constrained by the unsecured status of the notes, the material amount of debt ranking prior to them, the lack of documentary protection against the future issue of additional unsecured debt, and exposure to several insolvency regimes," S&P noted. S&P continued, "The issue and recovery ratings on the unsecured notes are supported by our valuation of Mondi as a going concern, which reflects our view of its well-invested asset base and leading position in emerging markets. We estimate that Mondi's stressed enterprise value at our simulated point of default in 2014 will be about EUR2.02 billion (after the demerger of MPSA). This estimate assumes distressed operations stemming from reduced demand, pressure on selling prices, higher input costs, and adverse exchange rates." The recovery and issue ratings are constrained by the unsecured nature of the notes and by our view that the documentation is weak (no limitations on indebtedness, dividends, or mergers and acquisitions), providing only limited protection for the noteholders. "In addition, we believe that Mondi's widespread operations and potential exposure to various insolvency regimes post default could delay or lower the ultimate recovery prospects," S&P stated. "We assume in our analysis that Mondi's capital structure at default will be similar to its current structure. In particular, we assume that the new EUR750 million unsecured RCF maturing 2016 (which partly refinanced the previous EUR1.55 billion RCF) will rank pari passu with the unsecured notes. The new RCF was borrowed by Mondi Finance, Mondi Ltd., and Mondi PLC," said S&P. "However, the recovery prospects for the unsecured noteholders would, in our opinion, be materially lower if there were any significant change to the group's capital structure. Such changes could encompass, in particular, the lenders of the RCF obtaining priority over the unsecured noteholders on the path to default by virtue of a breach in the group's financial maintenance covenants," S&P related. Ratings List New Rating Mondi Finance PLC EUR1.5 bil. EMTN program Senior Unsecured Debt BB+ Ratings Affirmed, Revised To From Mondi Finance PLC Senior Unsecured Debt BB+ Recovery Rating 3 4 RTC Group: Narrows Pre-Tax Loss by 75% to GBP0.45 Million --------------------------------------------------------- StockMarketWire.com reports that recruitment and conferencing services provider RTC Group plc narrowed its pre-tax loss by 75% to GBP0.45 million from GBP1.83 million in the year to December. Revenue rose to GBP20.0 million from GBP16.5 million, according to StockMarketWire.com. StockMarketWire.com notes that loss per share was 10.62p, down from the previous 25.99p. No dividend was declared. The company said its Recruitment division made an operating profit of GBP0.21 million, turning round the previous loss of GBP0.46 million, StockMarketWire.com says. The report relates that conferencing made an operating loss of GBP0.28 million, previously GBP0.37 million. The Catalis training business was placed into administration in June and treated as discontinued, StockMarketWire.com notes. VON ESSEN: Thornbury Castle Future In Doubt ------------------------------------------- Liza-Jane Gillespie at Gazette reports that Thornbury Castle's future is in doubt after its owners have gone into administration. As reported in the Troubled Company Reporter-Europe on April 25, 2011, BBC News said the holding company of the von Essen hotel chain has appointed accountants Ernst & Young as administrators. SoGlos.com related that the von Essen is reported to have debts of more than GBP25 million. SoGlos.com noted that while administrators have been appointed and the portfolio of hotels are expected to be sold-off either as a group or as individual properties, the hotels are all expected to continue to trade as usual. "It is business as normal for the hotels and customers of von Essen Hotels can continue to enjoy their stay," The Northern Echo quoted Angela Swarbrick, joint administrator, as saying. von Essen hotel chain owns 28 luxury hotels in the UK and France. * UK: NHS Reforms Need to Include Plan for Company Failures ----------------------------------------------------------- S.A. Mathieson at Guardian Professional reports that the Parliament's Public Accounts Committee said Health secretary Andrew Lansley's National Health Service reforms need to include ways to cope with the failure of health service organizations. According to Guardian Professional, in an unusual report, reviewing a government plan while the legislation is still before Parliament, the committee said that the reorganization could complement the aim of saving GBP20 billion from the NHS's annual budget. Guardian Professional relates that Labour MP and committee chair Margaret Hodge said the committee was concerned that the Department of Health "has not yet developed a high quality risk management protocol for either the commissioning or providing bodies," particularly as some trusts will have to work hard to achieve foundation status -- as they are required to do under the reforms -- and some GP practices have some way to go to become commissioning consortia. "The department must have effective systems in place to deal with failure so that whatever happens, the interests of both patients and taxpayers are protected," Guardian Professional quotes Ms. Hodge as saying. But the report said that the department has not yet planned a framework to deal with the failure of either provider trusts or GP commissioning consortia, Guardian Professional notes. The department told the committee that failure of a hospital foundation trust, currently triggered by the secretary of state, could in future be triggered by the regulator Monitor, Guardian Professional recounts. A special administrator would be appointed to preserve 'designated' services, Guardian Professional says. According to Guardian Professional, the report adds that the details of this special administration regime "had yet to be worked through, including the question of whether the cost of future PFI projects might be driven up because of the increased risk arising from the possibility of a trust going into administration". * UK: Company Voluntary Arrangement to Increase in Popularity ------------------------------------------------------------- Rachael Singh at Accountancy Age reports that insolvency practitioners will increasingly need to draw on their imaginative side to rescue businesses. According to Accountancy Age, government plans to change how the popular pre-pack administration process operates are likely to make other processes more desirable. Accountancy Age says the company voluntary arrangement (CVA) is the most likely to increase in popularity if pre-packs disappear. The problem with CVAs is that they hand more power to creditors than any other process, Accountancy Age stats. IPs will have to be creative if they want to gain creditor approval, according to Accountancy Age. CVAs usually involve a repayment plan for a portion of debt owed to creditors -- including landlords and the taxman -- over a period of time, while allowing the business to continue trading, Accountancy Age discloses. However, a CVA must be voted for by 75% or more, by value, of creditors to be approved, Accountancy Age notes. The growing interest in CVAs stems from a variety of reasons, including government proposals to change pre-packs which could see them slowed down to pointlessness, Accountancy Age discloses. The suggestions include allowing creditors three days to oppose the sale of a business in a pre-pack, compared to deals going through in just hours, Accountancy Age says. Also, recent changes through case law to rent and pension provisions have seen the cost of trading a business in administration spiral upwards, Accountancy Age notes. This leaves the insolvency practitioner's kit short of a few tools to help them continue to trade a viable business, Accountancy Age states. Unlike other insolvency processes CVAs have remained largely untouched by the court system and government red tape, Accountancy Age discloses. No two proposals are alike and practitioners can build and negotiate contracts to keep businesses alive. Accountancy Age relates that Keith Steven, MD of insolvency and turnaround business KSA Group, said CVA proposals that include the same management, same structure and basically the same number of sites will not gain the crucially important creditor approval. Mr. Steven, as cited by Accountancy Age, said that the CVA needs to be more "fluid" than other types of insolvency to appease their demands. =============== X X X X X X X X =============== * EUROPE: Heavily Indebted Nations May Restructure Debt ------------------------------------------------------- Keith Jenkins and Emma Charlton at Bloomberg News reports that yields on government securities from Greece, Ireland and Portugal reached records amid speculation the heavily indebted nations won't be able to avoid restructuring. According to Bloomberg, Ireland's two-year yield reached a euro- era record 12.08% after the European Union said the nation's debt burden surged the most in the currency area last year. Greek two-year yields have climbed almost 870 basis points this month, reaching 24.45% April 26 as investors priced in losses, or so- called haircuts, they may incur in the event of a restructuring, Bloomberg discloses. Portugal's two-year note yields touched a euro-era record of 11.74%, up from 8.78% at the end of last month, Bloomberg notes. The 10-year yield reached a record 9.61% on April 27, compared with 8.41% on March 31, Bloomberg states. * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ---------------------------------------------------------- Authors: Thomas J. Salerno; Craig D. Hansen; Jordan A. Kroop Publisher: Beard Books Hardcover: 728 pages List Price: US$174.95 The newly revised edition of The Executive Guide To Corporate Bankruptcy is perfectly timed. As the global economy continues to deteriorate, more and more companies are sinking into insolvency with executives at their helm who need a crash course in bankruptcy realities. This excellent book will quickly get both the seasoned executive and the uninitiated lawyer up to speed on the bankruptcy process. Salerno, Kroop and Hansen understand that the reorganization process can be intimidating, puzzling, and generally unpleasant. They penetrate the opaque gloom that some lawyers tend to perpetuate. Each chapter of this book addresses a different aspect of the reorganization process, beginning with an overview of the origins and purpose of US bankruptcy laws and ending with a debunking of common myths about reorganization. In between, they discuss each chapter of the bankruptcy code; discussing the gamut from liquidations through Chapter 11 sales and full-blown reorganizations. The authors' ability to distill the bankruptcy code's complex language into comprehensible and manageable blocks of information makes the book extremely readable. The Executive Guide is full of pragmatic advice. After laying out the essential elements and key players in the restructuring process, the authors get down to the nitty gritty of navigating a distressed company through reorganization. They realistically assess the challenges that an executive should expect to face in Chapter 11. They discuss how to assuage and balance the concerns of employees and key vendors, address the inevitable creditor dissatisfaction with executive compensation, deal with members of their professional team and work effectively as an executive whose actions will be constantly scrutinized and second-guessed. The authors also provide the cautionary note that "executives preparing to embark on a reorganization are usually too preoccupied with business emergencies to think about the personal toll that the process will exact." One common flaw in books that try to be accessible while dealing with technical topics is that they fall short in providing the reader with a substantive understanding of the subject matter. The Executive Guide to Corporate Bankruptcy avoids this pitfall. The book's fourth and fifth chapters provide in-depth analysis of the strategic decisions and steps that should be taken during the restructuring process. The authors explain the importance that venue can have a case, the intricacies of first day motions and how to prepare for confirmation. There is a detailed discussion of the sale of assets during the course of a Chapter 11 restructuring and the importance of making sure that major constituencies are a part of the decision-making process. They also walk the reader through the specifics of a plan of a reorganization, explaining the dynamics of the negotiation process, especially how to understand and appreciate the needs of your constituents and how to get a plan confirmed. The icing on the cake for this book is the excellent appendix. The final section of the book includes a user-friendly glossary of commonly used bankruptcy terms and a reorganization timeline. It also includes sample documents such as debtor-in-possession (DIP) financing agreements, operating reports, first day motions and orders, management severance agreements, and more. The summary of management incentive stock plans implemented in recent restructuring transactions is particularly informative. This is a terrific book. While geared to the non-lawyer executive, it will also be a useful resource for any lawyer who wants to gain practical familiarity with the bankruptcy process. This should be a best seller in today's environment, though it may need to be delivered to most executives in a brown paper wrapper. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Psyche A. Castillon, Julie Anne G. Lopez, Ivy B. Magdadaro, Frauline S. Abangan and Peter A. Chapman, Editors. Copyright 2011. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *