/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/110713.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, July 13, 2011, Vol. 12, No. 137 Headlines A U S T R I A A-TEC INDUSTRIES: Gets Three Binding Bids; July 23 Sale Likely C Z E C H R E P U B L I C ECM REAL ESTATE: Proposes Restructuring Plan to Repay 48% of Debt G E R M A N Y CHOREN INDUSTRIES: May Restructure under Insolvency Plan or Sale VAC HOLDING: S&P Puts 'B-' Long-Term Rating on Watch Positive G R E E C E AXIA FINANCE: S&P Affirms Rating on Class A Notes at 'BB+' OMEGA NAVIGATION: Files for Bankruptcy in United States OMEGA NAVIGATION: Voluntary Chapter 11 Case Summary H U N G A R Y VERTESI EROMU: Court Approves Debt Repayment Deal with Creditors I C E L A N D ORKUVEITA REYKJAVIKUR: Moody's Downgrades Issuer Rating to 'B1' I R E L A N D BANK OF IRELAND: In Restructuring Credit Event, ISDA Rules BANK OF IRELAND: State Aid Gets Temporary EU Approval HSS: Investors Break Into Hotel Premises MCINERNEY HOLDINGS: Liquidation Bid Will Fail, Investor Claims UPDOWN COURT: Facing Receivership Action from NAMA I T A L Y ATLANTE FINANCE: Fitch Affirms Rating on Class C Notes at 'Bsf' CASSA DI RISPARMIO: Moody's Cuts Financial Strength Rating to 'D-' N E T H E R L A N D S ARCOS DORADOS: Moody's Assigns 'Ba2' Corporate Family Rating CADOGAN SQUARE: Moody's Raises Rating on Class E Notes to 'Ba3' NXP BV: S&P Raises Long-term Corp. Credit Rating to 'B+' N O R W A Y THINK GLOBAL: Brightwell Among Potential Buyers P O R T U G A L EDA-ELECTRICIDADE: Moody's Downgrades Issuer Rating to 'Ba2' EMPRESA DE ELECTRICIDADE: Moody's Downgrades Issuer Rating to 'B1' R O M A N I A BANCA COMERCIALA: Fitch Upgrades Long-Term Issuer Default Ratings * CITY OF BRASOV: Fitch Lifts Foreign Currency Rating From 'BB+' * CITY OF ORADEA: Fitch Lifts Foreign Currency Rating From 'BB+' * CITY OF ROMANIA: Fitch Puts 'BB+' Currency Ratings on Watch Pos. * ROMANIA: Fund Shortage Prompts Corporate Insolvencies R U S S I A BANK OF MOSCOW: Moody's Cuts Bank Financial Strength Rating to E+ BANK MOSCOW-MINSK: Moody's Cuts Long-Term Deposit Rating to 'B2' BANK VTB: Moody's Changes Outlook on 'D-' BFSR to Negative S P A I N GC FTPYME: S&P Lowers Rating on Class E Notes to 'CCC-' * SPAIN: Some Savings Banks May Fall Short of Stress Tests S W E D E N ONOFF: Files for Bankruptcy After Sale Talks Fail SAAB AUTOMOBILE: Reaches Agreement with Suppliers to Settle Debts T U R K E Y PETKIM PETROKIMYA: Fitch Affirms Long-Term IDRs at 'BB-' U N I T E D K I N G D O M CANARY WHARF: Fitch Affirms Rating on Class D2 Notes at 'BBsf' DRIVER HIRE: Sheffco Franchisee Enters Liquidation EATONFIELD DEVELOPMENTS: Creditors Appoint Liquidator EUROHOME UK: Fitch Affirms Ratings on Class B2 Notes at 'CCsf' GOTTEX MARKET: Placed Into Voluntary Liquidation IMMIGRATION ADVISORY: Goes Into Administration, Misspent Funds KINETICS GROUP: Remaining Firms Face Administration LEE BANK: In Liquidation; FSCS to Pay Compensation to Members LOSELEY DAIRY: Administrators Set to Put Firm in Liquidation MONTROSE PARTNERS: High Court Places Firm Into Liquidation RENAISSANCE: Is Back in Original Founder's Hands SHAKA ZULU: Goes Into Voluntary Liquidation VOICESERVE INC: Michael Studer CPA Raises Going Concern Doubt WILDING PHOTOGRAPHIC: In Liquidation; 24 Workers Lose Jobs X X X X X X X X * S&P's Global Corp. Default Tally Remains at 18 for 2011 * Moody's: Spec-Grade Default Rate Ends at 2.2% in Q2 2011 ********* ============= A U S T R I A ============= A-TEC INDUSTRIES: Gets Three Binding Bids; July 23 Sale Likely -------------------------------------------------------------- According to Bloomberg News' Jonathan Tirone, Vienna's Die Presse, citing Hans-Georg Kantner, a spokesman for A-Tec Industries AG's creditor committee, reported that the company will probably be sold by July 23. Bloomberg relates that the article said A-Tec has received three binding bids, including an offer from Central European private- equity company Penta Investments Ltd. Presse, as cited by Bloomberg, said that unidentified Chinese and Indian companies have also bid. Bloomberg notes that the newspaper, citing market speculation, reported A-Tec founder Mirko Kovats favors the Chinese offer because he would be allowed to retain part of the company. According to Bloomberg, the story disclosed that the winning bidder needs to pay at least EUR210 million (US$293 million) in cash by September 30 to take over A-Tec. On Oct. 22, 2010, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that A-Tec sought court clearance to reorganize debt after losing access to its line of credit because of an Australian power-station project's financial difficulties. A-Tec said in an Oct. 20 statement that it had filed for self- administered reorganization proceedings at the Vienna Commercial Court and appointed trustees for bondholders, Bloomberg disclosed. The company has a EUR798 million (US$1.11 billion) revolving credit facility and EUR302 million in outstanding bonds, according to Bloomberg data. A-TEC Industries AG engages in plant construction, drive technology, machine tools, and minerals and metals businesses in Europe and internationally. The company is based in Vienna, Austria. =========================== C Z E C H R E P U B L I C =========================== ECM REAL ESTATE: Proposes Restructuring Plan to Repay 48% of Debt ----------------------------------------------------------------- According to Bloomberg News' Lenka Ponikelska, CTK, citing an insolvency registry, reported that ECM Real Estate Investments AG proposed a restructuring plan that would allow repaying 48% of its debt to unsecured creditors. Bloomberg notes that the newswire said ECM would have to finish five development projects in the Czech Republic and Poland to be able to repay the proposed amount. As reported by the Troubled Company Reporter-Europe on May 26, 2011, CTK related that the City Court in Prague declared ECM insolvent and appointed Ivo Hala its insolvency administrator. Insolvency proceedings against the company were launched in April, CTK recounted. ECM has long-term obligations exceeding EUR165.9 million (CZK4 billion), most of the debt being bonds, CTK disclosed. ECM Real Estate Investments AG is known mainly as the builder of high-rise buildings in Prague's Pankrac district. ============= G E R M A N Y ============= CHOREN INDUSTRIES: May Restructure under Insolvency Plan or Sale ---------------------------------------------------------------- Louise Downing at Bloomberg News reports that Choren Industries GmbH began insolvency proceedings after running into "financing difficulties" following the commissioning of a synthetic-gas demonstration plant. According to Bloomberg, Choren said in a statement on its Web site that the administrators will restructure the company through an insolvency plan or sale. The company, as cited by Bloomberg, talks with investors will start in the "near future". Freiberg-based Choren Industries GmbH is a German second generation biofuels company. VAC HOLDING: S&P Puts 'B-' Long-Term Rating on Watch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' long-term corporate credit rating on Germany-based magnetic-materials manufacturer VAC Holding GmbH on CreditWatch with positive implications. The 'B' short-term corporate credit rating was affirmed. "At the same time, we placed all issue ratings on debt instruments issued by VAC Finanzierung GmbH and VAC KG on CreditWatch positive," S&P related. One Equity Partner (OEP), the sole shareholder of VAC Holding GmbH (VAC), has announced it has entered into definitive agreement to sell VAC to higher rated OM Group Inc. (BB-/Stable/--) for a consideration of EUR700 million. The transaction depends on certain regulatory approvals and we expect it to close in third- quarter 2011. "We expect that VAC's rated debt will be repaid as part of the transaction," said Standard & poor's credit analyst Anna Stegert. "We understand that the terms of the outstanding bonds, with principal outstanding of EUR55 million, have a redemption option." VAC is among the leading global manufacturers of high-end magnetic materials for industrial use. Following a difficult 2009, the group's operating performance saw a significant rebound. In the 12 months ended March 31, 2011, VAC generated a strong EBITDA margin of about 20% and revenues of EUR389 million. This compares with a reported (normalized) EBTIDA margin of about 8.3% and revenues of EUR235 million in its trough year 2009. "We will likely withdraw the ratings on VAC if the rated debt is repaid as part the transaction," said Ms. Stegert. "If the rated debt is not repaid, we could raise the ratings to the level of OM Group if the debt is legally assumed or guaranteed by OM Group." =========== G R E E C E =========== AXIA FINANCE: S&P Affirms Rating on Class A Notes at 'BB+' ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+ (sf)' credit rating on Axia Finance PLC's class A notes. "We have subsequently withdrawn our ratings on Axia Finance at the originator's request," S&P stated. Axia Finance is collateralized loan obligation of Greek small and midsize enterprises originated by Piraeus Bank S.A. "Our rating actions follow a review of the most current asset and cash flow information the issuer has provided to us," S&P related. OMEGA NAVIGATION: Files for Bankruptcy in United States ------------------------------------------------------- Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8 in Houston. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. Secured lenders with first liens on the vessels are owed a total of US$242.7 million. HSH Nordbank AG is agent for the lenders that include Bank of Scotland and Dresdner Bank AG. The ships are encumbered with US$36.2 million in second mortgages with NIBC Bank NV is agent. "The global recession lessened demand for international charter shipping of refined petroleum products, and this negatively impacted Omega's business," Gregory McGrath, Chief Financial Officer of Omega Navigation, said in a court filing. Mr. McGrath notes that at the time Omega undertook its senior debt obligations, and also thereafter, Omega was promised by its senior lenders a three-year extension on its senior debt facility if certain conditions were met. Omega believes it has met those conditions, yet Omega's senior lenders have not consented to the agreed upon extension. Consequently, under threat of default and acceleration, Omega has been forced to file the chapter 11 cases to protect its interests. Prepetition Omega sued senior bank lenders in the Courts of the Hellenic Republic Greece contending the lenders violated an agreement to grant a three-year extension on a loan that otherwise matured in April. Omega says the lenders' breach have caused damages of US$570 million. The bankruptcy filing does not include affiliate Omega Management Inc., the vessels' manager, and affiliates with partial ownership interests in other vessels. Omega reported revenue of US$34.4 million for six months ended June 2010, resulting in a net loss of US$394,000. The vessels securing the US$278.9 million debt as of the Petition Date have book value exceeding US$390 million, according to the Debtors. OMEGA NAVIGATION: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Omega Navigation Enterprises, Inc. 61. Vasilisis Sofias Avenue 115 21 Athens Greece Bankruptcy Case No.: 11-35927 Affiliates that simultaneously sought Chapter 11 protection: Debtor Case No. ------ -------- Baytown Navigation Inc. 11-35926 (Lead Debtor) Galveston Navigation Inc. 11-35928 Beaumont Navigation Inc. 11-35930 Carrolton Navigation Inc. 11-35931 Decatur Navigation Inc. 11-35933 Elgin Navigation Inc. 11-35934 Fulton Navigation Inc. 11-35936 Orange Navigation Inc. 11-35937 Omega Navigation (USA) LLC 11-35938 Chapter 11 Petition Date: July 8, 2011 Court: U.S. Bankruptcy Court Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Jason Gary Cohen, Esq. BRACEWELL & GIULIANI LLP 711 Louisiana Street, Suite 2300 Houston, TX 77002 Tel: (713) 221-1416 Fax: (713) 222-3209 E-mail: jason.cohen@bgllp.com - and - William Alfred Wood, III, Esq. BRACEWELL & GIULIANI LLP 711 Louisiana Street, Suite 2300 Houston, TX 77002-2781 Tel: (713) 223-2300 Fax: (713) 221-1212 E-mail: Trey.Wood@bgllp.com Total Assets: US$527.6 million Total Debts: US$359.5 million The Company did not file a list of creditors together with its petition. The petitions were signed by George Kassiotis, president. ============= H U N G A R Y ============= VERTESI EROMU: Court Approves Debt Repayment Deal with Creditors ---------------------------------------------------------------- MTI-Econews reports that Vertesi Eromu, a unit of state-owned Hungarian power company MVM, on Monday said the Komarom-Esztergom County Court approved an agreement made with its creditors while under bankruptcy protection. "The company will soon start paying its liabilities under the deadlines outlined in the agreement," MTI quotes Chairman-CEO Jozsef Magyari, as saying. "Operations can return to normal." Vertesi said on January 31 it reached the agreement after more than five months under bankruptcy protection, MTI recounts. Vertesi's proposal, to pay back about HUF5.6 billion in a lump sum, was approved by all of the company's secured creditors and 90% of its unsecured creditors, MTI relates. Vertesi, MTI says, can only pay the amount with a HUF4 billion loan from its parent company. The loan was approved by a general meeting of MVM shareholders after earlier talks with creditors failed. Vertesi will have until 2014 to repay the loan to MVM, MTI notes. The agreement and the loan from MVM give Vertesi time to reorganize and return to profitable operation, MTI states. Vertesi's former management signed contracts on the purchase of electricity worth more than HUF10 billion in 2008, MTI discloses. A fall in electricity prices and shutdowns among its clients forced the company to break the contracts, MTI relates. The company filed for bankruptcy protection after it piled up almost HUF20 billion in debt on damages approved to its clients by the court, MTI recounts. Vertesi Eromu is a Hungarian power plant. ============= I C E L A N D ============= ORKUVEITA REYKJAVIKUR: Moody's Downgrades Issuer Rating to 'B1' --------------------------------------------------------------- Moody's Investors Service has downgraded to B1 from Ba1 the long- term senior unsecured issuer rating of Orkuveita Reykjavikur, the Icelandic utility 93.5% owned by the City of Reykjavik, Iceland's capital and principal municipality. The outlook on the rating remains negative. RATINGS RATIONALE The downgrade to B1 was prompted by the reduction in the level of support that Moody's incorporates in OR's rating, which follows instances of default by municipalities in Iceland. Moody's continues to recognize the strategic importance of OR -- which provides essential utility services to more than 50% of Iceland's population -- not only to its owners but also to the Government of Iceland (rated Baa3, negative outlook). However, Moody's has considered that in light of municipal defaults, there is now a lower probability that extraordinary support would be forthcoming from the central government in the event that OR were to face financial distress. Moody's notes the five-year plan announced by OR on March 24, 2011. This has been designed by management to allow the company to continue to provide its services as a public utility without the need to seek additional funding from the capital markets or credit institutions until 2016. In broad terms, the plan includes a number of measures to be undertaken during this period, including postponement of investments, increase in tariffs, reduction of operational expenses and sale of non-core assets. These measures will be combined with the funding provided by OR's owners in the form of subordinated loans totaling ISK12 billion. Moody's notes that ISK8 billion has been already disbursed and the remaining amount will be made available in 2013. However, Moody's highlights that OR's ability to achieve the financial position envisaged under its five-year plan remains exposed to a number of key risks, including interest rate, currency and commodity price risks. Moody's cautions that if any of the aforementioned risks were to materialize, the company may not be able to obtain further support either directly from its owners or ultimately from the central government, should the funds available to it in the financial markets be insufficient. There is also some execution risk with regard to the management plan as some of its elements are dependent on the market conditions (e.g. sale of non-core assets). OR is a partnership and under its governing act the partners -- the City of Reykjavik, which owns 93.5% of OR as well as two other municipalities, the Municipality of Akranes and the Municipality of Borgabbygd, which have stakes of 5.5% and 1% respectively -- are responsible for all the liabilities of OR in proportion to their shareholding. OR's rating is assigned under Moody's rating methodology for Government Related Issuers. OR's baseline credit assessment remains unchanged at 16 (equivalent to B3) reflecting the highly leveraged financial profile of the company (funds from operations/debt was 4% at FYE 2010), areas of potential volatility in its operational performance and its limited access to liquidity. Whilst at present about 60% of OR's revenues and 66% of EBITDA are regulated, the share of the higher-risk unregulated cash flows will increase as the new generation capacity fully comes on stream in 2012. Moody's highlights the risks associated with OR's operations and its exposure to increase in the cost of debt, weakening of the Icelandic krona that would raise the cost of servicing the company's foreign currency debt. Furthermore, the company has an exposure to volatility in aluminium prices under its long-term take-or-pay contracts with the aluminium smelters. The negative outlook on OR's rating reflects the negative outlook on the Government of Iceland, which is based on the high level of uncertainty over the economic, financial and banking sector outlook and still existing legal risks. OR's rating could be downgraded if it appears likely that the currently available bank lines are not sufficient to cover the market risks in particular in relation to exchange rate, interest rates or aluminium price. The rating would also come under downward pressure if there were delays in the execution of the five-year plan, which would result in increased funding requirements and the company were not able to raise debt in the domestic or international markets. The principal methodology used in rating OR was "Government Related Issuers: Methodology Update", published July 2010. OR is the largest multi-utility in Iceland providing electricity, hot water, heating, cold water and waste services to more than 50% of the Icelandic population. It is Iceland's second-largest electric utility after Landsvirkjun. As at FYE 2010, the company had revenues of ISK28 billion. ============= I R E L A N D ============= BANK OF IRELAND: In Restructuring Credit Event, ISDA Rules ---------------------------------------------------------- According to Bloomberg News' Abigail Moses, the International Swaps & Derivatives Association ruled that there has been a restructuring credit event that may trigger default swaps on Bank of Ireland Plc. Headquartered in Dublin, Bank of Ireland -- http://www.bankofireland.com/-- provides a range of banking and other financial services. These include checking and deposit services, overdrafts, term loans, mortgages, business and corporate lending, international asset financing, leasing, installment credit, debt factoring, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, life assurance and pension and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. The Company organizes its businesses into Retail Republic of Ireland, Bank of Ireland Life, Capital Markets, UK Financial Services and Group Centre. It has operations throughout Ireland, the United Kingdom, Europe and the United States. * * * As reported by the Troubled Company Reporter-Europe on June 17, 2011, Standard & Poor's Ratings Services lowered its ratings on the affected Tier 1 and Tier 2 hybrid debt instruments issued by Bank of Ireland (BOI; BB+/Watch Neg/B) and subsidiaries to 'C' from 'CC' and affected lower Tier 2 subordinated debt instruments to 'D' from 'CCC'. BANK OF IRELAND: State Aid Gets Temporary EU Approval ----------------------------------------------------- Aoife White at Bloomberg News reports that Bank of Ireland Plc won temporary European Union approval to receive as much as EUR5.35 billion (US$7.5 billion) from the Irish government. According to Bloomberg, the European Commission said it expects the bank to submit a new restructuring plan by the end of July before it can decide on final approval for the aid. "The commission agrees that the measures are necessary to increase the bank's solvency ratios and maintain confidence in the Irish financial markets," Bloomberg quotes the regulator as saying in an e-mailed statement on Monday. Bloomberg notes that EU said in the statement Bank of Ireland's restructuring plan must show a return to long-term viability, an "adequate participation" in the restructuring costs by shareholders and subordinated debt holders and measures to limit the harm to competition caused by the state support. Headquartered in Dublin, Bank of Ireland -- http://www.bankofireland.com/-- provides a range of banking and other financial services. These include checking and deposit services, overdrafts, term loans, mortgages, business and corporate lending, international asset financing, leasing, installment credit, debt factoring, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, life assurance and pension and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. The Company organizes its businesses into Retail Republic of Ireland, Bank of Ireland Life, Capital Markets, UK Financial Services and Group Centre. It has operations throughout Ireland, the United Kingdom, Europe and the United States. * * * As reported by the Troubled Company Reporter-Europe on June 17, 2011, Standard & Poor's Ratings Services lowered its ratings on the affected Tier 1 and Tier 2 hybrid debt instruments issued by Bank of Ireland (BOI; BB+/Watch Neg/B) and subsidiaries to 'C' from 'CC' and affected lower Tier 2 subordinated debt instruments to 'D' from 'CCC'. HSS: Investors Break Into Hotel Premises ---------------------------------------- The Irish Times reports that investors in Citywest hotel, which is in liquidation, broke into the premises over the weekend, changed the locks, and appointed themselves its new managers. According to the report, Seamus Coyle and his business partner Adrian Cooney said they have the backing of all 140 investors in the Citywest Golf Hotel next to the Citywest Hotel, Saggart, for their action. Irish Times relates that Messrs. Coyle and Cooney erected new frontage on the hotel on Saturday saying "Under new management", and put up placards saying "Citywest dispute. We will not be denied access to our property." They have also appointed 24-hour security to the building, the report notes. "We have been driven to breaking in through sheer frustration at being denied access to our property by Bank of Scotland, Ireland," The Irish Times quotes Mr. Coyle as saying. Mr. Coyle, as cited by The Irish Times, said he and Mr. Cooney, and the other investors, had paid an average of EUR300,000 for a three-bedroom suite in the complex in 2002. Bank of Scotland (Ireland) Limited had appointed Martin Ferris as a receiver to HSS in July 2010. Mr. Ferris ran it as a going concern until January, when it was placed in liquidation. HSS consists of a Citywest hotel, a conference center and a leisure and golf resort. About 400 people are employed by HSS, according to Irish Examiner.com. MCINERNEY HOLDINGS: Liquidation Bid Will Fail, Investor Claims -------------------------------------------------------------- John Mulligan at Irish Independent reports that David Nabarro, the activist British investor who is attempting to oust the board of McInerney Holdings plc, claims the board's efforts to liquidate the company this month will fail. Mr. Nabarro told Irish Independent that he had received indications of dissent from investors that he believes will be sufficient to thwart the move. Mr Nabarro owns around 21% of McInerney Holdings, while the proposal to put the company into voluntary liquidation -- which is a special resolution -- will require a greater than 75% majority at an extraordinary general meeting on July 29. As reported in the Troubled Company Reporter-Europe on July 11, 2011, Irish Independent said the board of McInerney Holdings wants to liquidate the company, saying it has "no meaningful assets" and no cash to deal with even the most basic of administrative tasks. According to Irish Independent, the move, if approved by shareholders, will effectively mark the demise of a group that listed on the stock exchange in Dublin 40 years ago. "The directors pursued every measure possible to safeguard your group and put in place a restructuring plan that could have offered shareholder value in the future," Irish Independent quoted Ned Sullivan, chairman of the group, as saying in a letter to shareholders. "It is with great regret that the level of debt in the group's various divisions and the continuing falling market have not allowed us to be successful in this regard." An extraordinary general meeting is due to be held on July 29, Irish Independent discloses. If approved, the liquidation will likely end efforts begun recently by British-based investor David Nabarro to oust the McInerney board, Irish Independent notes. He owns over 21% of the group and has threatened to seek an injunctive relief if McInerney fails to include his proposals to remove the board at any extraordinary general meeting it calls, Irish Independent recounts. Mr. Sullivan, as cited by Irish Independent, said that if the liquidation proposal is rejected then board members will "consider their individual positions". About McInerney McInerney Holdings plc -- http://www.mcinerneyholdings.eu/-- is a home builder and regional home builder in the North and Midlands of England. It also undertakes commercial and leisure projects in Ireland, United Kingdom and Spain. It operates in Ireland, the United Kingdom and Spain. The main trading activities of the Company's Irish home building business during the year ended December 31, 2008, consisted of construction of private houses, trading in developed sites and land, development of residential land for third-parties and in joint-ventures, and contracting for third-parties. The Company's commercial property development division, Hillview Developments Ltd (Hillview), develops industrial units in the Greater Dublin area. Hillview completed 1,223 square meters of industrial units as of December 31, 2008. Its Spanish division, Alanda Group, is developing freehold apartment schemes. As of December 31, 2008, the Company completed 1,359 private and contracting residential units in Ireland, the United Kingdom and Spain. UPDOWN COURT: Facing Receivership Action from NAMA -------------------------------------------------- Emmet Oliver at Irish Independent reports that the most expensive country house ever put on the UK market, and backed by Michael Fingleton's Irish Nationwide, is facing receivership action from National Asset Management Agency (NAMA). The developer Leslie Allen-Vercoe told the Irish Independent in an interview said that he had heard nothing from NAMA about the estate being put into receivership. Mr. Allen-Vercoe, the report notes, said that the issue now was the best way for Irish taxpayers to get value from its sale. Irish Independent notes that Mr. Allen-Vercoe said NAMA's move could jeopardize this. Irish Independent recalls that the house failed to sell in 2005 for a price tag of GBP70 million. The report notes that NAMA may only need to sell Updown Court for GBP20 million (EUR22.5 million) to make a return, after it imposed a severe discount on the original loan. Mr. Allen-Vercoe said he was not personally liable for any of the debts and his only role in the project in the last year was to find a buyer. Irish Independent relays that Mr. Allen-Vercoe added that if NAMA decided to appoint a receiver, it would be against the interests of Irish taxpayers as stamp-duty tax advantages could be lost. Mr. Allen-Vercoe said that if the property market had not taken a downturn, the joint venture would have seen himself and Irish Nationwide taking a 50:50 share of the proceeds, once the loan had been discharged, Irish Independent adds. ========= I T A L Y ========= ATLANTE FINANCE: Fitch Affirms Rating on Class C Notes at 'Bsf' --------------------------------------------------------------- Fitch Ratings has affirmed Atlante Finance S.r.l.'s EUR524.86 million asset-backed floating-rate notes, due in July 2047: -- EUR359,260,343 class A notes: affirmed at 'AAsf'; Outlook Stable; Loss Severity (LS) rating revised to 'LS-2' from 'LS-1' -- EUR28,800,000 class B notes: affirmed at 'Asf'; Outlook Stable ; LS rating revised to 'LS-5' from 'LS-3' -- EUR136,800,000 class C notes affirmed at 'Bsf'; Outlook revised to Stable from Negative; LS rating revised to 'LS-3' from 'LS-2' The affirmation reflects the increased credit enhancement which has been supported by structural de-leveraging. The portfolio has amortized to 48.2% of the initial portfolio size, or EUR667 million, from an initial pool of EUR1.4 billion as of March 2006. Cumulative defaults have reached 11.23% of the initial portfolio size, while delinquencies stand at 10.25% of the current portfolio balance. Defaulted loans and past-due principal installments of delinquent loans are debited to the principal deficiency ledger, the balance of which is written down by diverting excess spread from the portfolio to accelerate the pay down of the notes in order of priority. However, the amounts debited to the PDL have grown significantly during 2009 and the H110, while available excess spread has not been large enough to clear its debit balance, which reached a peak of EUR102 million in June 2010. From September 2010, the PDL balance has been on a decreasing trend thanks to a constant flow of recoveries, which doubled in the past three quarters compared with the amount collected until June 2010. Late delinquencies (90-180 days past due) have also shown a decreasing trend since December 2009. Fitch's analysis of the SME pool, which accounts for about 60.7% of the overall collateral portfolio, used the one-year probability of default benchmark applicable to Italian SMEs to determine the portfolio's expected default rate. However, where assets were in arrears or account for more than 50 basis points of the overall portfolio, adjustments were made to their PDs in line with Fitch's SME criteria to reflect the relative increase in risk. From a recovery perspective, all the loans in the SME pool are secured by economic first-ranking mortgages on real estate assets with a current weighted average loan-to-value ratio of 38.6%. These assets were treated as secured assets in the analysis with the recovery rate linked to each loan's current LTV. For the residential pool, which accounts for about 36.1% of the overall portfolio, Fitch has estimated a stressed loss as envisaged in its EMEA Residential Mortgage Loss Criteria and then compared this loss with the notes' current CE to determine whether it could absorb the expected pool loss. Fitch expects structural de-leveraging to continue, which will further increase CE available to all rated classes of notes. The local public entity pool has experienced no defaults to date, and Fitch expects this positive trend to continue. The residential pool has experienced defaults broadly in line with expectations, and the current weighted average LTV of 46.94%, combined with a 92.45% portion of first-home mortgages securing the loans is not a performance concern. Given the SME pool's high single obligor concentration and industry concentration risks, it is likely to demonstrate more volatility. However, these risks are mitigated to a large extent by the high CE levels of the rated notes, particularly at the senior and mezzanine level. The transaction is a cash flow securitization of an initial EUR1.4bn static pool of commercial mortgage loans granted to Italian SMEs, residential mortgage loans granted to private individuals in Italy and unsecured loans granted to Italian local public entities. Atlante Finance S.r.l. is a limited liability special purpose vehicle incorporated under Italian law. Fitch has confirmed an Issuer Report Grade of Two Stars for Atlante Finance S.r.l's payment and servicer reports. An IRG of One Star indicates poor report quality and an IRG of Five Stars represents outstanding reports. The Two Star rating reflects that basic information is provided by the reports. While the reports have some characteristics of higher IRGs, they do not disclose single obligor, industry or regional concentrations, counterparty rating triggers and LTV information. CASSA DI RISPARMIO: Moody's Cuts Financial Strength Rating to 'D-' ------------------------------------------------------------------ Moody's Investors Service has downgraded Cassa di Risparmio di Ferrara's long-term debt and deposit ratings to Ba1 from Baa3 and the Prime-3 short-term ratings to Non-Prime; at the same time, the bank's standalone bank financial strength rating was downgraded to D-, mapping to Ba3 on the long-term scale, from D (which maps to Ba2). The outlook on all ratings is negative. RATING RATIONALE Moody's says that the downgrade of the standalone rating reflects CR Ferrara's (i) weak profitability caused both by the low interest rate environment in Italy and by the bank's heightened provisioning requirements due to a deterioration in asset quality, (ii) the ongoing restructuring challenge the bank faces as a result of an unsuccessful expansion strategy in the past. Moody's further noted that this failed expansion strategy and deterioration in asset quality pointed towards (iii) weaknesses in its corporate governance and risk management culture that will take time to turn around and improve. The combination of these factors indicate a rating level more compatible with a D- BFSR. At this stage, Moody's believes that the bank's remaining core franchise with a strong market share in an economically attractive region underpins standalone ratings in the D/Ba rating range, rather than in a lower category. The negative outlook reflects the challenges associated with restoring the bank's financial fundamentals to stronger levels, following the losses incurred in recent years, particularly in the context of the still difficult operating environment. The bank's Ba1 long-term deposit rating continues to benefit from two notches of rating uplift, as a result of a moderate expectation of systemic support. The downgrade of the debt ratings is in line with the lowering of the BFSR rating. Moody's says that CR Ferrara's D- BFSR remains underpinned by (i) the bank's good franchise in the Ferrara Province, with a market shares for deposits and lending of around 35% and 25% respectively; (ii) the planned capital increase; and (iii) a now more focused strategy to restructure the bank and re-implement a conservative strategy. CR Ferrara reported net losses for 2010 and 2009 of EUR58 million and EUR78 million, respectively, mainly due to extensive loan-loss provision charges and lower revenues. The cost of risk was 256 bps in 2010 and 246 bps in 2009. Problem loans as percentage of gross loans stood at 16.5% and account for 124% of loan-loss reserves and equity. Non-performing loans (sofferenze) stood at EUR739 million and total watch-list items reached EUR548 million at year- end 2010. The bank has stated that it expects a return to profitability in 2011. In Moody's view, there is the potential for some profitability improvement, given the expectation of rising interest rates that could lead to wider net interest margins, and also due to a reduction in loan-loss charges from the high levels of previous years. However, the rating agency notes that considerable challenges remain with regards to the bank's loan portfolio, in a still uncertain Italian economy. Despite the prospects of modest improvement, the degree of deterioration -- and the absolute level of the bank's asset-quality indicators -- are at present more compatible with a D- BFSR. CR Ferrara's Tier 1 ratio was 5.11% at year-end 2010. In April 2011, CR Ferrara announced a EUR150 million capital increase, which is due for completion in Q3 2011. The bank is targeting a Tier 1 capital ratio of 8.4% following the capital increase and asset sales by Q3 2011. Moody's views this capital increase positively, although it remains uncertain to what extent the increased capital ratio could provide a significant buffer given the uncertainties with regards to the bank's expected future dividend pay-out, profitability, loan-loss provision expenditure and the introduction of Basel III. CR Ferrara's BFSR could be moderately upgraded if its profitability improves at least to the level envisaged in its business plan. However, this would have to be accompanied by a significant reduction in non-performing loans and the core Tier 1 ratio being higher than the 8% targeted over a sustained period. The BFSR could be downgraded further if profitability deteriorated further, and if asset quality fails to show an improving trend. Failure to complete the capital increase or maintain the targeted core Tier 1 capital ratio of 8% could also exert downward pressure on the ratings. These ratings were downgraded: Issuer: Cassa di Risparmio di Ferrara Spa -- Bank Financial Strength Rating, Downgraded to D- from D -- Bank Deposit Rating, Downgraded to Ba1 from Baa3 -- Issuer Rating, Downgraded to Ba1 from Baa3 -- Senior Unsecured, Downgraded to Ba1 from Baa3 -- Multiple Seniority Medium-Term Note Program, Downgraded to a range of (P)Ba2 to (P)B1 from a range of (P)Ba1 to (P)Ba3 PREVIOUS RATING ACTION & METHODOLOGIES USED The principal methodologies used in this rating were "Bank Financial Strength Ratings: Global Methodology", published in February 2007, and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", published in March 2007. CR Ferrara is headquartered in Ferrara, Italy. At December 2010, it had total assets of EUR7.6 billion. ===================== N E T H E R L A N D S ===================== ARCOS DORADOS: Moody's Assigns 'Ba2' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service has assigned a Ba2 corporate family rating to Arcos Dorados' Holding Inc. and a Ba2 rating to its proposed Brazilian real-denominated Senior Unsecured Global Notes, equivalent to US$250 million due in 2016. At the same time, Moody's withdrew Arcos Dorados' B.V. Ba2 corporate family rating and affirmed the Ba2 rating to its US$450 million Senior Unsecured Notes. Arcos Dorados Holdings is the indirect holding company of Arcos Dorados B.V. The ratings outlook is stable. Net issuance proceeds will be used to refinance a portion of the senior unsecured notes at Arcos Dorados B.V. and to fund its investment requirements under its master franchise agreements. The proposed senior unsecured notes would be fully and unconditionally guaranteed by Arcos Dorados B.V. and relevant operating companies. Assignments: Issuer: Arcos Dorados Holdings Inc. -- Corporate Family Rating, Ba2 -- Senior Unsecured 2016 Global Notes, Ba2 Outlook, Stable Ratings Affirmation: Issuer: Arcos Dorados B.V. -- Senior Unsecured 2019 Global Notes, Ba2 Withdrawal: Issuer: Arcos Dorados B.V. -- Corporate Family Rating of Ba2 RATINGS RATIONALE Arcos Dorados' Ba2 ratings are underpinned by the company's status as McDonald's master franchisee in Latin America, which affords it a leading position and broad geographic footprint in the region's under-penetrated and growing quick service restaurant segment of the informal eating out market. Moody's believes that the company's rights to use McDonald's strong brand name and proven operating procedures as a master franchisee, an expected close strategic alignment with McDonald's, and the industry experience of the company's management provide a solid basis to pursue growth opportunities and expand its earnings base across the region. Furthermore, the company owns the land of 30% of its restaurants and most of its restaurants' buildings, which provides hard asset protection for bondholders. Credit negatives partly offsetting these strengths include Arcos Dorados's relatively high lease-adjusted leverage, concentration of cash flows in a limited number of markets with increasing dependency on its Brazilian subsidiary, performance challenges in Mexico, the presence of currency controls in Venezuela, and currency exposures in the debt structure. Moody's also notes that Arcos Dorados faces some exposure to Argentine country risk and that the company is subject to certain minimum investment requirements and financial covenants under its MFAs. The stable ratings outlook reflects our expectation that revenue growth and operating margins will continue improving in line with positive growth trends in Latin America. It is also based on the expectation that the company will maintain a conservative financial profile, with long-term investment spend generally covered by internal cash flow generation. Ratings could come under upward pressure if better than anticipated cash flow generation and prudent financial policies cause a material and sustainable strengthening of credit metrics, with lease-adjusted Debt/EBITDA dropping to close to 3.0 times and EBIT/Interest rising towards 3.0 times. An upgrade would likely also require solid progress in turning around the Mexican operation, a reduction of debt structure currency exposures and acceptable levels of country risk in relevant markets subject to weak sovereign credit quality Downward pressure on ratings could occur if Arcos Dorados' free cash flow turns negative over an extended period of time, for example because of a combination of margin pressures and aggressive investment spending, and if as a result credit metrics weaken substantially such that Debt/EBITDA exceeds 4.5 times or EBIT/Interest falls well below 2.0 times. A significant weakening of local currencies and further tightening of currency controls in Venezuela, or their implementation in Argentina, could also place pressure on the ratings if dollar cash flow available to bondholders is significantly reduced. Headquartered in Buenos Aires, Argentina, to Arcos Dorados' Holding Inc. is the leading quick service restaurant operator in Latin America and the Caribbean and McDonald's largest franchisee globally in terms of system-wide sales and restaurant count Arcos Dorados began operating in August 2007 when it acquired most of McDonald's operations in Latin America and the Caribbean in a leveraged buyout led by the company's controlling shareholder Woods Staton, who is also the company's current CEO and chairman. For the last twelve months ended March 31, 2011, the company's revenues reached US$3.2 billion. CADOGAN SQUARE: Moody's Raises Rating on Class E Notes to 'Ba3' --------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Cadogan Square CLO B.V.: Issuer: Cadogan Square CLO B.V. -- EUR185M Class A-1 Senior Secured Floating Rate Notes due 2022, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade -- EUR120.7M Class A-2 Senior Secured Floating Rate Notes due 2022, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade -- EUR33.2M Class B Senior Secured Floating Rate Notes due 2022, Upgraded to Aa3 (sf); previously on Jun 22, 2011 A3 (sf) Placed Under Review for Possible Upgrade -- EUR31.2M Class C Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba2 (sf) Placed Under Review for Possible Upgrade -- EUR27.4M Class D Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Ba1 (sf); previously on Jun 22, 2011 B2 (sf) Placed Under Review for Possible Upgrade -- EUR10.3M Class E Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Ba3 (sf); previously on Jun 22, 2011 Caa2 (sf) Placed Under Review for Possible Upgrade -- EUR4M Class W Combination Notes due 2022 (current rated balance of EUR 2.2MM), Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba2 (sf) Placed Under Review for Possible Upgrade -- EUR23M Class X Combination Notes due 2022 (current rated balance of EUR 6.9MM), Upgraded to A3 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade The ratings of the Combination Notes address the repayment of the Rated Balance on or before the legal final maturity. For Classes W and Class X, which do not accrue interest, the 'Rated Balance' is equal at any time to the principal amount of the Combination Note on the Issue Date minus the aggregate of all payments made from the Issue Date to such date, either through interest or principal payments. The Rated Balance may not necessarily correspond to the outstanding notional amount reported by the trustee. RATINGS RATIONALE Cadogan Square CLO B.V., issued in December 2005, is a single currency Collateralised Loan Obligation backed by a portfolio of mostly high yield European loans. The portfolio is managed by Credit Suisse First Boston Alternative Capital. This transaction will be in reinvestment period until February 2012. It is composed of 88.6% senior secured loans. According to Moody's, the rating actions taken on the notes are primarily a result of applying Moody's revised CLO assumptions described in "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. The actions reflect key changes to the modeling assumptions, which incorporate (1) a removal of the temporary 30% default probability macro stress implemented in February 2009, (2) increased BET liability stress factors as well as (3) change to a fixed recovery rate modeling framework. Additional changes to the modeling assumptions include (1) standardizing the modeling of collateral amortization profile, and (2) changing certain credit estimate stresses aimed at addressing time lags in receiving information required for credit estimate updates, and (3) adjustments to the equity cash-flows haircuts applicable to combination notes. Moody's also notes that this action also reflects improvements of the transaction performance since the last rating action. In Moody's view, positive developments coincide with reinvestment of sale proceeds (including higher than previously anticipated recoveries realized on defaulted securities) into substitute assets with higher par amounts. Moody's adjusted WARF has declined since the rating action in October 2009 due to a decrease in the percentage of securities with ratings on "Review for Possible Downgrade" or with a "Negative Outlook." Additionally, defaulted securities total about EUR3.3 million of the underlying portfolio compared to EUR17.6 million in September 2009. The overcollateralization ratios of the rated notes have also improved since the rating action in October 2009. The Class A/B, Class C, Class D and Class E overcollateralization ratios are reported at 131.19%, 120.13%, 111.85% and 109.03%, respectively, versus September 2009 levels of126.72%, 116.04%, 108.04% and 105.31%, respectively, and all related overcollateralization tests are currently in compliance. The change in reported WARF understates the actual credit quality improvement because of the technical transition related to rating factors of European corporate credit estimates, as announced in the press release published by Moody's on 1 September 2010. Due to the impact of revised and updated key assumptions referenced in "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011, key model inputs used by Moody's in its analysis, such as the portfolio par amount, WARF, diversity score, and weighted average recovery rate, may be different from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool to have a performing par and principal proceeds balance of EUR448 million, defaulted par of EUR3.3 million, a weighted average default probability of 23.3% (consistent with a WARF of 3042), a weighted average recovery rate upon default of 45.3%, and a diversity score of 39. The default probability is derived from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The average recovery rate to be realized on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed that 88% of the portfolio exposed to senior secured corporate assets would recover 50% upon default, while the remainder non first-lien loan corporate assets would recover 10%. In each case, historical and market performance trends and collateral manager latitude for trading the collateral are also relevant factors. These default and recovery properties of the collateral pool are incorporated in cash flow model analysis where they are subject to stresses as a function of the target rating of each CLO liability being reviewed. The deal is allowed to reinvest and the manager has the ability to deteriorate the collateral quality metrics' existing cushions against the covenant levels. However, in this case given the limited time remaining in the deal's reinvestment period, Moody's analyzed the impact of assuming weighted average spread consistent with the midpoint between reported and covenanted values. Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, as evidenced by 1) uncertainties of credit conditions in the general economy and 2) the large concentration of speculative-grade debt maturing between 2012 and 2014 which may create challenges for issuers to refinance. CDO notes' performance may also be impacted by 1) the manager's investment strategy and behavior and 2) divergence in legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Sources of additional performance uncertainties are: 1) Recovery of defaulted assets: Market value fluctuations in defaulted assets reported by the trustee and those assumed to be defaulted by Moody's may create volatility in the deal's overcollateralization levels. Further, the timing of recoveries and the manager's decision to work out versus sell defaulted assets create additional uncertainties. Moody's analyzed defaulted recoveries assuming the lower of the market price and the recovery rate in order to account for potential volatility in market prices. 2) Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the portfolio, which may be extended due to the manager's decision to reinvest into new issue loans or other loans with longer maturities and/or participate in amend-to-extend offerings. The principal methodology used in this rating was "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. Moody's modeled the transaction using the Binomial Expansion Technique, as described in Section 2.3.2.1 of the "Moody's Approach to Rating Collateralized Loan Obligations" rating methodology published in June 2011. The cash flow model used for this transaction, whose description can be found in the methodology listed above, is Moody's CDOEdge model. In addition to the quantitative factors that are explicitly modeled, qualitative factors are part of the rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, specific documentation features, the collateral manager's track record, and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision. Moody's also notes that around 54% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. NXP BV: S&P Raises Long-term Corp. Credit Rating to 'B+' -------------------------------------------------------- Standard & Poor's Ratings Services raised the long-term corporate credit rating on Dutch semiconductor manufacturer NXP B.V. to 'B+' from 'B-'. "At the same time, we removed all ratings on NXP B.V. and its subsidiary NXP Funding LLC from CreditWatch, where they were placed with positive implications on Feb. 22, 2011. The outlook is stable," S&P related. "At the same time, we raised all issue ratings by two notches in line with the two-notch rise in the corporate credit rating and removed the ratings from CreditWatch. The recovery ratings remain unchanged," S&P noted. "The upgrade primarily reflects our expectations that NXP's credit metrics and liquidity profile are likely to improve significantly in 2011 after it completed the disposal of the Sound Solutions business to Knowles Electronics Holdings Inc. (NR)," said Standard & Poor's credit analyst Matthias Raab. "It also reflects our expectation of moderate revenue growth, improving operating margins, and meaningful free cash flow generation. We understand that the group will use the gross disposal proceeds of US$855 million and excess cash on the balance sheet to reduce its still large financial debt. As of March 31, 2011, NXP reported net consolidated financial debt of US$3.75 billion," S&P said. Standard & Poor's views NXP's business profile as fair, compared with its earlier view of weak. The product portfolio has a high proprietary content and primary-supplier status in many of its markets, which supports a largely recurring revenue stream. "We note that through its restructuring program, NXP has improved profitability to levels matching that of its peers," S&P stated. Nevertheless, the business risk profile remains constrained by the semiconductor industry's cyclical and seasonal demand, significant pricing erosion and high operating leverage, and the company's reduced scale following asset disposals. "We are raising our financial risk profile on NXP to aggressive from highly leveraged, because we expect the company's credit metrics, free cash flow generation, and liquidity profile to improve over the coming quarters," S&P stated. "In our base-case assessment, we forecast gross debt to EBITDA, as adjusted by Standard & Poor's, will decline to about 3.3x by year- end 2011, from 4.7x as of March 31, 2011. This is, however, partly offset by the company's still high indebtedness and significant debt maturities in 2013. In addition, NXP is still majority-owned by private-equity sponsors with a track record of following a very aggressive financial policy in the past," according to S&P. "The stable outlook reflects our expectation that NXP's credit metrics will strengthen significantly over 2011, primarily because it intends to use excess cash to reduce debt and because we expect that its EBITDA will expand moderately," said Mr Raab. "At the same time, we expect the group to generate at least US$200 million of discretionary cash flow in 2011 and to continue to reduce its still large debt maturity wall in 2013." =========== N O R W A Y =========== THINK GLOBAL: Brightwell Among Potential Buyers ----------------------------------------------- Ercan Ersoy at Bloomberg News reports that Brightwell Holding NV, a Turkish company investing in innovative businesses, is among seven companies that bid for Think Global AS. According to Bloomberg, Brightwell Chairman Alphan Manas said in a telephone interview on Monday that BD Otomotiv AS, a Turkish electric car distributor and charger operator, and a joint venture between Turkish companies Lider Plastik and Yesil Kundura that make parts of the bodywork for Think cars, are the other two Turkish companies that put in bids. Mr. Manas, as cited by Bloomberg, said that bankruptcy liquidators were set decide on the winning bid yesterday. As reported by the Troubled Company Reporter-Europe on June 24, 2011, Automotive News Europe related that Think Global filed for bankruptcy in its home market of Norway after attempts to keep the company going through recapitalization and restructuring failed. It is the fourth time Think Global has collapsed financially in its 20-year history, Automotive News Europe noted. Think Global AS is a Norway-based maker of electric cars. =============== P O R T U G A L =============== EDA-ELECTRICIDADE: Moody's Downgrades Issuer Rating to 'Ba2' -------------------------------------------------------------- Moody's has downgraded the issuer rating of EDA - Electricidade dos Acores S.A. to Ba2 from Baa3. The rating action concludes the review initiated on April 8, 2011. The rating remains under review for possible further downgrade. RATINGS RATIONALE The rating action follows Moody's earlier downgrade of (i) the government of the Republic of Portugal to Ba2, with negative outlook, from Baa1, on review for downgrade; and (ii) the Autonomous Region of Azores to Ba3, on review for downgrade, from Baa2, on review for downgrade. Moody's downgrade of the RoP's rating was driven by (i) the growing risk that Portugal will require a second round of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a pre-condition; and (ii) heightened concerns that Portugal will not be able to fully achieve the deficit reduction and debt stabilization targets set out in its loan agreement with the European Union and International Monetary Fund due to the formidable challenges the country is facing in reducing spending, increasing tax compliance, achieving economic growth and supporting the banking system. Moody's downgrade of the RAA's rating reflected the close operational and financial linkages with the RoP. The RAA's rating remains on review for further possible downgrade, reflecting the pending assessment of the RAA's ability to meet financing requirements. EDA's Ba2 rating is constrained by the rating of the RAA and the RoP, given its exposure to economic stresses in the area and its inability to disconnect itself from local economic and market circumstances. In accordance with Moody's previously published guidance, infrastructure and utility companies would not normally be expected to have a rating more than one to two notches higher than the government of the country where the majority of their business is located. EDA's rating has been downgraded to Ba2, and remains on review for further downgrade pending Moody's final conclusion of the review for downgrade of the rating of the RAA. Moody's expects to conclude its review on EDA following the completion of the review on the RAA. The rating of EDA will likely move in line with the rating of the RAA and the rating of EDA is not expected to be more than one notch higher than the rating of the RAA, assuming a comfortable liquidity profile, no adverse regulatory developments and continued solid operating performance. EDA's Ba2 rating reflects the company's position as the dominant vertically integrated utility in the RAA, characterized by a low business risk profile and the fully regulated nature of its activities, in the context of a relatively well established and transparent regulatory framework. The rating also reflects the relatively small size of the company. From a financial perspective, EDA's rating incorporates the expectation that its sizeable capex program will continue to weigh on the company's financial profile over the medium term, thus limiting financial flexibility. However, Moody's understands that the company could potentially postpone some investments in light of the current financial environment. The rating also recognizes the company's efforts aimed at diversify its funding structure and increase the availability of committed long-term liquidity sources. In this context Moody's cautions that any deterioration in the company's liquidity profile, impaired access to debt funding, adverse regulatory developments and/or negative evolution of the company's operating performance would likely result in negative rating pressure. The principal methodology used in this rating was Regulated Electric and Gas Utilities published in August 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. EDA is the dominant vertically integrated utility in Azores. As of December 2010, the company reported revenues of EUR199 million and operating profit of EUR40 million. EMPRESA DE ELECTRICIDADE: Moody's Downgrades Issuer Rating to 'B1' ------------------------------------------------------------------ Moody's has downgraded the issuer rating of Empresa de Electricidade da Madeira SA to B1 from Ba1. The rating action concludes the review initiated on March 23, 2011. The rating remains under review for possible further downgrade. RATINGS RATIONALE Today's rating action follows Moody's earlier downgrade of (i) the government of the Republic of Portugal to Ba2, with negative outlook, from Baa1, on review for downgrade; and (ii) the Autonomous Region of Madeira to B1, on review for downgrade, from Baa3, on review for downgrade. Moody's downgrade of the RoP's rating was driven by (i) the growing risk that Portugal will require a second round of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a pre-condition; and (ii) heightened concerns that Portugal will not be able to fully achieve the deficit reduction and debt stabilization targets set out in its loan agreement with the European Union and International Monetary Fund due to the formidable challenges the country is facing in reducing spending, increasing tax compliance, achieving economic growth and supporting the banking system. Moody's downgrade of the RAM's rating reflected the close operational and financial linkages with the RoP. The RAM's rating remains on review for further possible downgrade, reflecting the pending assessment of the RAM's ability to meet financing requirements. EEM's B1 rating is positioned at the same level of the RAM, given its exposure to economic stresses in the area and its inability to disconnect itself from local economic and market circumstances. More particularly, the downgrade of EEM's rating to B1 from Ba1 reflects (i) Moody's downgrade of EEM's stand-alone credit profile by two notches to 14 (equivalent to the B1 rating category); and (ii) Moody's decision to eliminate the one-notch uplift previously incorporated in EEM's rating, reflecting the possibility of extraordinary support from the RAM, in the context of the weaker region's rating. Moody's expects to conclude its review on EEM following the completion of the review on the RAM. The rating of EEM will likely move in line with the rating of the RAM. In concluding the review of EEM's ratings, Moody's will also consider (i) EEM's liquidity profile; and (ii) the company's ability to adapt to more challenging funding conditions. EEM's B1 rating reflects the company's position as the dominant vertically integrated utility in the RAM, characterized by a low business risk profile and the fully regulated nature of its activities, in the context of a relatively well established and transparent regulatory framework. The rating also reflects the relatively small size of the company. From a financial perspective, EEM's rating factors in the company's leveraged profile and weak credit metrics resulting from the build up of outstanding receivables from various municipalities and regional public entities in the RAM. In Moody's view, the recent downgrades of the RAM's and RoP's ratings will likely put additional strain on municipalities and public entities in the region, thus potentially reducing the likelihood of a reduction of these overdue receivable positions. Moody's notes that the company's material investment program will continue to weigh on its financial profile over the medium term, thus limiting financial flexibility, although Moody's understands that the company is in the process of reviewing its capex plans. Moody's highlights that EEM currently receives a guarantee from the RAM in respect of its EUR220 million syndicated facility, which represents approximately half of the company's long term debt. In light of this guarantee mechanism, Moody's believes that the integrity of EEM's financial structure and its credit quality is linked to the credit profile of the RAM. The principal methodology used in this rating was the Regulated Electric and Gas Utilities published in August 2009. EEM is the dominant vertically integrated utility in Madeira. As of December 2010, the company reported revenues of EUR174 million and operating income of EUR18 million. ============= R O M A N I A ============= BANCA COMERCIALA: Fitch Upgrades Long-Term Issuer Default Ratings ----------------------------------------------------------------- Fitch Ratings has upgraded the Long-term Issuer Default Ratings of three Romanian banks (Banca Comerciala Romana S.A., BRD -- Groupe Societe Generale S.A., and UniCredit Tiriac Bank S.A.) to 'BBB+' from 'BBB' following the agency's sovereign rating action on Romania. Fitch upgraded Romania's Long-term foreign currency Issuer Default Rating to 'BBB-' from 'BB+' and the Country Ceiling to 'BBB+' from 'BBB' on July 4, 2011. The upgrade of the banks reflects Romania's revised Country Ceiling of 'BBB+'. The Long-term IDRs and Support Ratings of the three Romanian banks are driven by institutional support from their respective foreign parents and are constrained by the Country Ceiling. The rating actions are: Banca Comerciala Romana S.A. (69.4% owned by Erste Group Bank AG, 'A'/Stable): -- Long-term foreign currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable -- Long-term local currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable -- Short-term foreign currency IDR: upgraded to 'F2'from 'F3' -- Support Rating: affirmed at '2' -- Individual Rating: 'D' not affected BRD -- Groupe Societe Generale S.A. (59.4% owned by Societe Generale, 'A+'/Stable): -- Long-term foreign currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable -- Short-term foreign currency IDR: upgraded to 'F2'from 'F3' Support Rating: affirmed at '2' UniCredit Tiriac Bank S.A. (50.6% owned by UniCredit Bank Austria AG, 'A'/Stable): -- Long-term foreign currency IDR: upgraded to 'BBB+' from 'BBB'; Outlook Stable -- Short-term foreign currency IDR: upgraded to 'F2'from 'F3' -- Support Rating: affirmed at '2' -- Individual Rating: 'D' not affected * CITY OF BRASOV: Fitch Lifts Foreign Currency Rating From 'BB+' ---------------------------------------------------------------- Fitch Ratings has upgraded the Romanian cities of Brasov and Oradea's Long-term foreign currency ratings to 'BBB-' from 'BB+'. The Outlook is Stable. The agency has also upgraded their Short- term foreign currency ratings to 'F3' from 'B'. Fitch has simultaneously affirmed the Long-term local currency ratings at 'BBB-' with Stable Outlooks. At the same time, the agency has placed the City of Bucharest's Long-term foreign currency rating of 'BB+' and Long-term local currency rating of 'BBB-' and Short-term foreign currency rating of 'B' on Rating Watch Positive. The rating actions follow the upgrade of Romania's Long-term foreign currency Issuer Default Rating to 'BBB-', Long-term local currency IDR to 'BBB' from 'BBB-', both with Stable Outlooks, and Short-term foreign currency IDR to 'F3' from 'B'. The RWP on Bucharest's ratings reflects Fitch's view that as the capital city, it should have improved in terms of economy and budgetary performance in line with the sovereign. Bucharest, Brasov and Oradea's ratings reflect the tight financial and governance relationships between the Romanian cities' local governments and the sovereign, ensuring a strong credit linkage. The highly-centralized budgetary system for Romanian local governments ensures state support and control of the cities' financial position, including debt approval, but it also acts as a constraint on the cities' budgetary flexibility. The state controls the cities' tax base, tax rates and main revenue collection, as well as important expenditures, such as staff salaries. The bulk of the cities' revenues is derived from the pool of national tax revenue (personal income tax and value added tax). The upgrade of Brasov and Ordea's Long-term foreign currency ratings and the affirmation of the Long-term local currency rating at 'BBB-' reflect Fitch's view on the two cities' current financial profiles. The 'BBB-' rating takes into account the cities' budgetary performances and current debt and debt coverage ratios. The Long-term local currency ratings are one notch below the sovereign, while the Long-term foreign currency ratings are equal with the sovereign but are no longer capped by the sovereign rating. Brasov's ratings are driven by the city's rebalanced fiscal position and improved financial flexibility. Positive rating factors would be continued strengthening of self financing and debt servicing ability and/or a sovereign upgrade reflecting an overall improvement in the economic environment. A prolonged deterioration in the operating margin to previous years' levels, coupled with further significant debt increases would be negative for Brasov's ratings. Oradea's ratings are driven by its developing economy, its sustainable investment plans and its sound financial performance. They also reflect limited budgetary flexibility and a strong increase of debt. A negative rating action on Oradea would be triggered by an operating margin below 10% and debt exceeding 100% of current revenue, or a distortion and/ or deterioration of debt- servicing ratios. Budgetary performance at current levels and improved debt and debt servicing ratios would be positive for the ratings. A negative rating action on the sovereign ratings would prompt a downgrade for both cities. * CITY OF ORADEA: Fitch Lifts Foreign Currency Rating From 'BB+' ---------------------------------------------------------------- Fitch Ratings has upgraded the Romanian cities of Brasov and Oradea's Long-term foreign currency ratings to 'BBB-' from 'BB+'. The Outlook is Stable. The agency has also upgraded their Short- term foreign currency ratings to 'F3' from 'B'. Fitch has simultaneously affirmed the Long-term local currency ratings at 'BBB-' with Stable Outlooks. At the same time, the agency has placed the City of Bucharest's Long-term foreign currency rating of 'BB+' and Long-term local currency rating of 'BBB-' and Short-term foreign currency rating of 'B' on Rating Watch Positive. The rating actions follow the upgrade of Romania's Long-term foreign currency Issuer Default Rating to 'BBB-', Long-term local currency IDR to 'BBB' from 'BBB-', both with Stable Outlooks, and Short-term foreign currency IDR to 'F3' from 'B'. The RWP on Bucharest's ratings reflects Fitch's view that as the capital city, it should have improved in terms of economy and budgetary performance in line with the sovereign. Bucharest, Brasov and Oradea's ratings reflect the tight financial and governance relationships between the Romanian cities' local governments and the sovereign, ensuring a strong credit linkage. The highly-centralized budgetary system for Romanian local governments ensures state support and control of the cities' financial position, including debt approval, but it also acts as a constraint on the cities' budgetary flexibility. The state controls the cities' tax base, tax rates and main revenue collection, as well as important expenditures, such as staff salaries. The bulk of the cities' revenues is derived from the pool of national tax revenue (personal income tax and value added tax). The upgrade of Brasov and Ordea's Long-term foreign currency ratings and the affirmation of the Long-term local currency rating at 'BBB-' reflect Fitch's view on the two cities' current financial profiles. The 'BBB-' rating takes into account the cities' budgetary performances and current debt and debt coverage ratios. The Long-term local currency ratings are one notch below the sovereign, while the Long-term foreign currency ratings are equal with the sovereign but are no longer capped by the sovereign rating. Brasov's ratings are driven by the city's rebalanced fiscal position and improved financial flexibility. Positive rating factors would be continued strengthening of self financing and debt servicing ability and/or a sovereign upgrade reflecting an overall improvement in the economic environment. A prolonged deterioration in the operating margin to previous years' levels, coupled with further significant debt increases would be negative for Brasov's ratings. Oradea's ratings are driven by its developing economy, its sustainable investment plans and its sound financial performance. They also reflect limited budgetary flexibility and a strong increase of debt. A negative rating action on Oradea would be triggered by an operating margin below 10% and debt exceeding 100% of current revenue, or a distortion and/ or deterioration of debt- servicing ratios. Budgetary performance at current levels and improved debt and debt servicing ratios would be positive for the ratings. A negative rating action on the sovereign ratings would prompt a downgrade for both cities. * CITY OF ROMANIA: Fitch Puts 'BB+' Currency Ratings on Watch Pos. ------------------------------------------------------------------ Fitch Ratings has upgraded the Romanian cities of Brasov and Oradea's Long-term foreign currency ratings to 'BBB-' from 'BB+'. The Outlook is Stable. The agency has also upgraded their Short- term foreign currency ratings to 'F3' from 'B'. Fitch has simultaneously affirmed the Long-term local currency ratings at 'BBB-' with Stable Outlooks. At the same time, the agency has placed the City of Bucharest's Long-term foreign currency rating of 'BB+' and Long-term local currency rating of 'BBB-' and Short-term foreign currency rating of 'B' on Rating Watch Positive. The rating actions follow the upgrade of Romania's Long-term foreign currency Issuer Default Rating to 'BBB-', Long-term local currency IDR to 'BBB' from 'BBB-', both with Stable Outlooks, and Short-term foreign currency IDR to 'F3' from 'B'. The RWP on Bucharest's ratings reflects Fitch's view that as the capital city, it should have improved in terms of economy and budgetary performance in line with the sovereign. Bucharest, Brasov and Oradea's ratings reflect the tight financial and governance relationships between the Romanian cities' local governments and the sovereign, ensuring a strong credit linkage. The highly-centralized budgetary system for Romanian local governments ensures state support and control of the cities' financial position, including debt approval, but it also acts as a constraint on the cities' budgetary flexibility. The state controls the cities' tax base, tax rates and main revenue collection, as well as important expenditures, such as staff salaries. The bulk of the cities' revenues is derived from the pool of national tax revenue (personal income tax and value added tax). The upgrade of Brasov and Ordea's Long-term foreign currency ratings and the affirmation of the Long-term local currency rating at 'BBB-' reflect Fitch's view on the two cities' current financial profiles. The 'BBB-' rating takes into account the cities' budgetary performances and current debt and debt coverage ratios. The Long-term local currency ratings are one notch below the sovereign, while the Long-term foreign currency ratings are equal with the sovereign but are no longer capped by the sovereign rating. Brasov's ratings are driven by the city's rebalanced fiscal position and improved financial flexibility. Positive rating factors would be continued strengthening of self financing and debt servicing ability and/or a sovereign upgrade reflecting an overall improvement in the economic environment. A prolonged deterioration in the operating margin to previous years' levels, coupled with further significant debt increases would be negative for Brasov's ratings. Oradea's ratings are driven by its developing economy, its sustainable investment plans and its sound financial performance. They also reflect limited budgetary flexibility and a strong increase of debt. A negative rating action on Oradea would be triggered by an operating margin below 10% and debt exceeding 100% of current revenue, or a distortion and/ or deterioration of debt- servicing ratios. Budgetary performance at current levels and improved debt and debt servicing ratios would be positive for the ratings. A negative rating action on the sovereign ratings would prompt a downgrade for both cities. * ROMANIA: Fund Shortage Prompts Corporate Insolvencies ------------------------------------------------------- Ziarul Financiar, citing Transylvania Insolvency House, reports that as many as 96% of Romanian insolvent companies end up declaring bankruptcy due to fund shortage from creditors to cover procedure costs and reduced refinancing possibilities. =========== R U S S I A =========== BANK OF MOSCOW: Moody's Cuts Bank Financial Strength Rating to E+ ----------------------------------------------------------------- Moody's Investors Service has downgraded these ratings of JSC Bank of Moscow: standalone bank financial strength rating to E+ (mapping to B2 on the long-term scale) from D-, long-term local and foreign currency debt and deposit ratings to Ba2 from Ba1, and long-term foreign currency subordinated debt rating to Ba3 from Ba2. The short-term foreign currency deposit rating of Not-Prime has been affirmed. The outlook on the stand-alone and long-term supported ratings is negative. RATINGS RATIONALE The rating action concludes the review process initiated on June 28, 2011 when BOM's long-term local and foreign currency debt and deposit ratings, long-term foreign currency subordinated debt rating and the standalone BFSR were placed on review for possible downgrade. Moody's assessment is primarily based on the official press releases of the Russian Central Bank and VTB, BOM's monthly statutory accounts according to Russian financial accounting standards and the information we received from the top management of VTB. Standalone Ratings According to Moody's, the downgrade of BOM's standalone BFSR reflects the recent announcement by Bank VTB and the Russian Central Bank that BOM has been placed under financial recovery procedures due to significant losses incurred on its credit portfolio. These losses have significantly impaired the bank's capital base, necessitating external assistance. At the same time, the BFSR reflects the very high probability that the bank will receive the announced support package from the Russian authorities and from VTB, thus stabilizing its financial position. The rating agency expects the first part of the package to be received in the coming weeks from Russia's Deposit Insurance Agency (RUB295 billion deposit at 0.51% with a maturity of ten years, thus enabling BOM to record an immediate RUB150 billion gain under IFRS). This deposit will only be provided to BOM after VTB Group increases its stake at BOM to more than 75% from 46% currently; this transaction is likely to be finalized in the coming weeks, according to VTB. VTB announced that it will then provide up to RUB100 billion in Tier 1 capital to BOM by year-end 2012. This potential capital increase is likely to restore BOM's capital position under IFRS. The negative outlook on BOM's BFSR reflects the downside risks that the support process may become somewhat disrupted and/or delayed. This may be caused by inability or delays in obtaining a 75% stake in BOM by VTB Group. If such scenario is realized, Moody's says the BFSR would likely be downgraded. Moody's notes that the failure of the bank to comply with the regulatory capital adequacy ratios could trigger the violation of covenants embedded in its senior bonds documentation. If not remedied within 30 days period, it could trigger an event of default on the existing eurobonds with cross acceleration to the majority of international wholesale funding. However, according to Moody's estimates, the current liquidity position of BOM is adequate to meet the possible repayments even if the waiver from the creditors is not received and majority of debt and facilities with cross default clause have to be repaid in full prior to their contractual maturity. Supported Ratings The downgrade of BOM's long-term deposit and senior debt ratings reflect the downgrade of its standalone BFSR. BOM's ratings continue to reflect: (i) the E+ BFSR, mapping to B2 on the long- term scale and (ii) Moody's assessment of a high level of systemic support, given the bank's importance for the Moscow region and the banking system as a whole -- as the sixth-largest bank in Russia. The negative outlook on BOM's supported ratings reflects the negative outlook on the bank's BFSR which is significantly linked to BOM's ability to receive the support packages in a timely manner. If there are significant impediments to the proposed support packages, Moody's would expect to announce a multi-notch downgrade of the supported ratings. PREVIOUS RATING ACTIONS AND PRINCIPAL METHODOLOGIES The last rating action on Bank of Moscow was on June 28, 2011, when Moody's downgraded the following ratings of JSC Bank of Moscow (BOM): standalone BFSR to D- from D, long-term local and foreign currency debt and deposit ratings to Ba1 from Baa2, long- term foreign currency subordinated debt rating to Ba2 from Baa3, and short-term foreign currency deposit rating to Not-Prime from Prime-2. At that time, Moody's placed the following ratings on review for further downgrade: the long-term local and foreign currency debt and deposit ratings, long-term foreign currency subordinated debt rating and the standalone BFSR. The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. Headquartered in Moscow, Russia, Bank of Moscow reported total assets of RUB853 billion (approximately US$28 billion) and net income of RUB2.8 billion according to (unaudited) IFRS at H1 2010. BANK MOSCOW-MINSK: Moody's Cuts Long-Term Deposit Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service has downgraded the long-term local currency deposit rating of Bank Moscow-Minsk to B2 (with a negative outlook) from B1. All other ratings of BMM are not affected by this rating action. This concludes the review initiated on June 30, 2011. RATINGS RATIONALE Moody's assessment is primarily based on the rating downgrade of BMM's parent, Bank of Moscow, on July 8, 2011. BOM's standalone Bank Financial Strength Rating (BFSR) was downgraded to E+ (mapping to B2 on the long-term scale) from D-. BOM's standalone E+ BFSR is currently used as an anchor for parental support. As a result, BMM's B2 long-term local currency deposit rating now only reflects its standalone financial strength which is reflected in its E+ BFSR, mapping to B2 on the long-term scale. The negative outlook on BMM's long-term local currency deposit rating is driven by the considerable downside risks reflected in the potential deterioration of the operating environment, which would, in turn, affect the Belarusian banking system. Moody's believes that the system's financial fundamentals are likely to come under pressure in the near to medium term, following the recent worsening of the country's macroeconomic environment. PRINCIPAL METHODOLOGIES The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. Headquartered in Minsk, Belarus, BMM reported total assets of US$633 million and equity of US$73 million, according to the bank's audited IFRS financial report at year-end 2010. BOM controls 100% of the bank's shares. BANK VTB: Moody's Changes Outlook on 'D-' BFSR to Negative ---------------------------------------------------------- Moody's Investors Service has changed the outlook to negative from stable on these ratings of Bank VTB: -- D- bank financial strength rating -- Baa1 supported long-term local and foreign-currency deposit -- Baa1/(P)Baa2 senior/subordinated debt ratings. The bank's P-2 short-term local and foreign-currency deposit ratings were affirmed. The outlook on the D- BFSR of VTB24 -- VTB's retail and SME subsidiary -- remains stable. VTB24's Baa1 supported ratings now carry a negative outlook, in line with the parent. Similarly, outlooks are also negative on the Baa1 senior debt issued by VTB Capital S.A. (a special purpose vehicle), and Baa2 subordinated debt issued by Bank VTB North-West. Moody's assessment is primarily based on VTB's and VTB24's audited financial statements for 2010 prepared under IFRS. Information on VTB's investment in Bank of Moscow is derived from VTB's press releases. The rating agency's opinion is also based on discussions with the management of VTB. RATINGS RATIONALE "The revision of the outlook to negative on VTB's ratings reflects a higher risk that the bank's capitalization could weaken as a result of the planned consolidation of Bank of Moscow, a financially-stressed institution which recently required extraordinary support from the Russian Central Bank," says Eugene Tarzimanov, a Moody's Vice-President and lead analyst for VTB. On July 8, 2011, Moody's downgraded the Bank of Moscow's BFSR to E+ from D- and its deposit ratings to Ba2 from Ba1. This rating action reflected its entry into financial rehabilitation due to a large loan impairment (please see Moody's press release dated July 8, 2011). As a result, the Russian Central Bank announced a US$10.5 billion rescue package, which will be deposited in BoM as long-term deposits. As part of the rescue effort, VTB has announced that it will increase its participation at BoM from 46% to 75% in the coming weeks, and then provide up to US$3.6 billion in Tier 1 capital to BoM by year-end 2012. "According to Moody's stress-test analysis, VTB's Basel 1 total capital adequacy ratio has a moderate chance of decreasing to around 11%-12% in the medium term, from around 17% at year-end 2010," adds Mr. Tarzimanov. This deterioration could materialize as a result of the increase in risk assets associated with the consolidation of BoM (around US$18 billion), and goodwill of around US$2.6 billion (according to VTB). Moody's stress-test also includes a moderate probability of additional impairment of VTB's loan book. The rating agency notes that the negative outlook reflects the risk that the amount of goodwill recorded by VTB on acquisition of BoM, and the resulting negative impact on VTB's capital, could be higher than anticipated by VTB. VTB'S SUPPORTED RATINGS The negative outlook on VTB's Baa1 supported ratings is driven by the negative outlook on its standalone credit rating. Although Moody's continues to classify VTB as a fully supported bank by the Russian government, the supported ratings of VTB could come under pressure in case of a potential BFSR downgrade. VTB's supported ratings currently benefit from a five-notch uplift from its standalone credit strength rating of Ba3. This support is justified by the government's controlling ownership at VTB, and the bank's key position in Russia, with a 10%-15% market share in certain segments. LAST RATING ACTION & PRINCIPAL METHODOLOGY The principal methodologies used in this rating were "Bank Financial Strength Ratings: Global Methodology" published in February 2007, and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" published in March 2007. Headquartered in Moscow, VTB reported total assets of RUB4.3 trillion and net income of RUB55 billion according to audited IFRS for 2010. VTB24 had assets of RUB904 billion and net income of RUB17 billion for 2010. ========= S P A I N ========= GC FTPYME: S&P Lowers Rating on Class E Notes to 'CCC-' ------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on GC FTPYME PASTOR 4 Fondo de Titulizacion de Activos's class A2, A3(G), B , C, and class D notes. "We have also lowered our rating on the class E notes," S&P said. "In February 2011, we placed on CreditWatch negative our ratings on the class B, C, and D notes following our preliminary credit analysis at that time, and we lowered the rating on the class E notes to 'CCC (sf)' from 'BB (sf)' (see 'Ratings Lowered On Spanish SME CLO Deal GC FTPYME Pastor 4's Class E Notes; Classes B, C, And D Placed On Watch Neg' published Feb. 14, 2011). We had placed classes A2 and A3(G) on CreditWatch negative on Jan. 18, 2011, following the application of our 2010 counterparty criteria ('Counterparty And Supporting Obligations Methodology And Assumptions,' published Dec. 6, 2010)," S&P stated. "We have performed a review of the transaction's collateral performance and structural features. We have taken the rating actions in light of what is in our view significant performance deterioration of the underlying collateral backing this transaction, and weakening of the credit enhancement available to the rated notes," S&P continued. "Since our last review in February 2011, we have observed that the level of short-term delinquencies has been increasing as of the latest interest payment dates, and that the level of cumulative defaults is still increasing due to the rollover of long-term delinquencies into defaults. In our view, this likely indicates that there are insufficient proceeds available to the issuer to cure such long-term delinquencies," S&P related. The transaction documents define defaulted assets in GC FTPYME PASTOR 4 as assets that have been in arrears for more than 18 months. While the levels of defaults and delinquencies have increased, the recoveries associated with these defaulted assets are low, averaging 17%. "We have consequently lowered our recovery assumptions, taking into account the recovery data reported by the trustee, as well as the level of recoveries we have observed in similar Spanish transactions backed by the same type of loans, and with the same vintage and the same servicer (Banco Pastor S.A.)," S&P stated. Due to the seasoning of the transaction, and because the underlying collateral is now highly amortized (the pool factor as of the last interest payment date was 21%), the transaction is exposed to an increased level of concentration risk in terms of obligors. As of the most recent payment date in April 2011, the reported ratio of cumulative defaults represented 4.48% of the original portfolio balance securitized at closing, and 21.66% of the current portfolio balance. In terms of industry concentration, the biggest sectors currently represented in this portfolio are the real estate and construction industry (21.36%, combined), and the retail sector (26.08%). In terms of geographic concentration, the three most represented regions in this transaction are Galicia, Catalonia, and Madrid, which is in line with the geographic breakdown of the closing portfolio. "This increase in defaults is associated with a lack of recoveries in the transaction. As a result, in our view, GC FTPYME PASTOR 4 is becoming highly sensitive to variations in the level of performing collateral available to service the amounts due under the notes, and this level is weakening," S&P related. Although the level of credit enhancement provided by the performing balance is positive for the class A2, A3(G), B, and C notes, it is now negative for the class D and E notes, which are therefore undercollateralized. Based on the current level of proceeds received by the reserve fund, the fund will not be able to repay any amounts of principal due when classes D and E mature. The reserve fund -- funded at closing by the issuance proceeds of the class E notes -- is intended to provide credit enhancement to the rated notes. It is used to cure defaults in the deal, and since the October 2010 payment date it has been fully depleted. "Since then, we understand that the reserve fund has not been replenished as the performing collateral balance has decreased. Additionally, the transaction did not receive sufficient excess spread to allocate toward the reserve fund's replenishment," S&P stated. The reserve fund's depletion has exposed the transaction to principal amortization deficiencies. These principal deficiencies began to accrue on the July 2010 interest payment date, when the reserve fund began to be insufficient to cure the amount of defaulted assets in the underlying portfolio. Credit enhancement for the notes is provided by: * The subordination of junior notes; * The level of excess spread generated by the performing balance of collateral; * Excess spread received by the fund under the swap, which guarantees 98 basis points of excess spread to the deal; and * The reserve fund, which will be used to cure defaults arising in the transaction. The level of the reserve fund has been decreasing since the April 2009 payment date. "It became fully depleted at the October 2010 payment date, and no replenishments have taken place since that date. Currently, we understand that the reserve fund is not at its required level, therefore lowering the recourse of the class E notes against an increase in defaults in the underlying pool. As the class E notes are now rated 'CCC- (sf)' due to their undercollateralization, according to our criteria they cannot provide credit support to the class D notes. Class D is in turn providing credit support to class C, and is also undercollateralized, based on the level of performing balance in the transaction," S&P related. The increase in defaults is associated with a decrease in the reserve fund and the increase of the obligor concentration risk. "In our view, these are negative factors for the transaction, as they are not offset by the credit enhancement provided by the subordination of junior classes," S&P stated. "Based on the review of our credit analysis assumptions in terms of default and recoveries, and taking into account the current level of support available to the rated notes in the capital structure, in our view this affects the current ratings of all the rated notes. We have consequently lowered and removed from CreditWatch negative our ratings on the class A2, A3(G), B, C, and D notes, and lowered our rating on the class E notes. The class A3(G) notes feature a guarantee provided by the Kingdom of Spain. As the guarantee features do not comply with our guarantee criteria, we do not give any credit to this guarantee in our analysis (see 'European Legal Criteria For Structured Finance Transactions,' published Aug. 28, 2008)," S&P stated. Ratings List Class Rating To From GC FTPYME PASTOR 4, Fondo de Titulizacion de Activos EUR630 Million Floating-Rate Notes Ratings Lowered and Removed From CreditWatch Negative A2 AA (sf) AAA (sf)/Watch Neg A3(G) AA (sf) AAA (sf)/Watch Neg B BBB (sf) A (sf)/Watch Neg C BB (sf) BBB- (sf)/Watch Neg D CCC BB (sf)/Watch Neg Rating Lowered E CCC- CCC (sf) * SPAIN: Some Savings Banks May Fall Short of Stress Tests ---------------------------------------------------------- Christopher Bjork at Dow Jones Newswires reports that Spanish Finance Minister Elena Salgado said some Spanish savings banks may show a capital shortfall in the European Union stress tests due to be released Friday. Spain's central bank in 2000 introduced a system of so-called anti-cyclical provisioning that forced banks to build up reserves against future, hypothetical losses, Dow Jones relates. During times of economic growth, the system forces banks to set aside a provision for each new loan in case it goes bad, Dow Jones discloses. During the downturns, banks can draw on these general provisions to cover bad loans, lessening their need to cut back on lending or raise new capital, Dow Jones notes. The country's lenders still have about EUR27 billion in dynamic provisions, Dow Jones states. "If the provisions were included, no savings bank would fail," Dow Jones quotes Ms. Salgado as saying. In last year's test, five Spanish banks were among the seven lenders that failed, Dow Jones recounts. =========== S W E D E N =========== ONOFF: Files for Bankruptcy After Sale Talks Fail ------------------------------------------------- The Local reports that ONOFF filed for bankruptcy on Monday, citing stiff competition, price pressure, and low profits. According to The Local, the firm wrote in a statement released on Monday that "Several cost rationalization programs have been carried out simultaneously, and we've had negotiations with several interested parties about selling or merging the company. Negotiations have gone far, but unfortunately haven't lead to any finalized deal." ONOFF is a Swedish home electronics chain. The company has 67 stores in Sweden, six in Estonia and one store in Finland. SAAB AUTOMOBILE: Reaches Agreement with Suppliers to Settle Debts ----------------------------------------------------------------- Anna Ringstrom and Aaron Gray-Block at Reuters report that Saab Automobile on Monday reached deals with many suppliers to settle debts as it struggles to secure parts and resume production. Saab, owned by Netherlands-based Swedish Automobile, has scraped together EUR61 million (US$88.5 million) in short-term funding in recent days, Reuters relates. But it needs to get supplies moving again so car assembly can resume, and investors are worried about its prospects after it said last week production will not restart until Aug. 9, Reuters notes. "We have reached agreement with a large part of our suppliers," Reuters quotes Saab spokeswoman Gunilla Gustavs as saying on Monday, adding discussions with other suppliers continue. "We are aiming for August 9. It's an ambition, so that we can at least get everyone to work towards one date." 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. =========== T U R K E Y =========== PETKIM PETROKIMYA: Fitch Affirms Long-Term IDRs at 'BB-' -------------------------------------------------------- Fitch Ratings has revised Turkey-based petrochemicals producer Petkim Petrokimya Holdings A.S.'s rating Outlook to Stable from Negative and affirmed its Long-term foreign and local currency Issuer Default Ratings at 'BB-'. Fitch has simultaneously upgraded Petkim's National Long-term rating to 'A+(tur)' from 'A(tur)'. The Outlook on the National Long-term rating is Stable. The Stable Outlook reflects the agency's expectation that near- term market conditions will underpin strong capacity utilization rates, improved operational results and cash flow generation in 2011. Fitch forecasts a net cash position with gross FFO leverage maintained below 1.0x during 2011-2013, despite higher capex requirements to support de-bottlenecking and expansion projects and dividend payments (at least 50% of net income) assumed from 2012 onwards. Petkim's ratings continue to be supported by its unleveraged balance sheet and strong liquidity. The company ended 2010 with a net cash position of TRY105m, up TRY30m on the level expected by Fitch under its base rating case. This is attributable to stronger operating results and lower capex levels than projected. Petkim posted a 40% growth in sales y-o-y in Q111, primarily driven by strong export volumes in the Other division (aromatics, C4, chlorine etc). Petkim's performance also benefited from robust demand for thermoplastic products and feedstock cost push across all segments. The reported EBITDA margin increased to 11.3% from 6.4% a year earlier, on the back of strong capacity utilizations (98%). Under the agency's base rating case, revenue growth is forecast around 13% in 2011, with EBITDA margin at around 8%. In 2012, Fitch conservatively projects a low double digit drop in revenues, primarily reflecting competitive pricing pressure from new low-cost capacity. Margins are expected to erode slightly from 2011 levels. The ratings continue to be constrained by Petkim's weak cost position relative to peers. While restructuring measures undertaken over the past few years have yielded some savings and efficiency gains, Petkim's EBITDA margins remain well below those of the petrochemical producers competing in its domestic and exports market. New low-cost capacity ramping up in the Middle- East in 2012 could put pressure on prices and offset some of the benefits of the cost savings realized to date. Competition from low-cost imports could also erode the company's domestic market share in the longer run. Petkim's ability to tap into the growth potential of the Turkish petrochemicals market (73% of 2010 sales) is currently constrained by its production and investment capacity, and dependent on the execution of a US$4.0-5.0 billion greenfield project by Socar & Turcas, its majority shareholder. Fitch understands that the construction of the 10mtpa refinery, which has been announced for late 2011, would be fully funded by Socar & Turcas. While the agency acknowledges that the project would offer feedstock security, operational and efficiency gains, and would constitute the first milestone towards Petkim's expansion ambitions, these benefits are not factored into its forecast or ratings. Petkim's standalone investment capacity is constrained by its small size (revenue and cash flow generation), high exposure to naphtha price volatility, and the inherent cyclicality of its commodity products. Its ongoing debottlenecking and expansion initiatives are expected to yield a 5%-8% increase in saleable production capacity in aggregate over 2011-2013, with capex of around TRY215 million in 2011. This compares with expected low double digit growth rates for the Turkish petrochemicals market. A negative rating action could result from a visible and prolonged deterioration in profitability with EBITDA margin eroding below 5%, sustained negative FCF and/or any large debt financed investments or dividend payments resulting in a net debt position/ liquidity score below 1.0x ((FCF + available cash + committed facilities)/(Short term debt + interest). Conversely, fundamental and material improvements in Petkim's business profile and cost position relative to peers could warrant a positive rating action. This is not currently envisaged in the rating horizon. =========================== U N I T E D K I N G D O M =========================== CANARY WHARF: Fitch Affirms Rating on Class D2 Notes at 'BBsf' -------------------------------------------------------------- Fitch Ratings has affirmed Canary Wharf Finance II plc and revised the Outlook on the class C2 notes to Stable: -- GBP1,113.8m class A1 due October 2037 (XS0112279616): affirmed at 'AAAsf'; Outlook Stable -- GBP400m class A3 due October 2037 (XS0130681512): affirmed at 'AAAsf'; Outlook Stable -- GBP222m class A7 due October 2037 (XS0295171341): affirmed at 'AAAsf'; Outlook Stable -- GBP193.5m class B due October 2037 (XS0112281190): affirmed at 'AAsf'; Outlook Stable -- GBP104m class B3 due October 2037 (XS0295172075): affirmed at 'AAsf'; Outlook Stable -- GBP275m class C2 due October 2037 (XS0295172406): affirmed at 'Asf'; Outlook revised to Stable from Negative -- GBP125m class D2 due October 2037 (XS0295172745): affirmed at 'BBsf'; Outlook Stable The affirmation and revision of the class C2 notes' Outlook to Stable follow a satisfactory review of the most recent investor reports and further analysis of the transaction's performance to date. The income coverage ratio (ICR) has fluctuated between 1.23x and 1.05x, since the last review, with the latest reported figure of 1.17x. The collateral was re-valued at GBP3.194 billion in December 2010, resulting in a market value decline of 28% from the peak value in June 2007, but an 8% increase on December 2009. The latest valuation, in conjunction with the scheduled amortization, results in a loan, minus cash reserves, to value ratio of 73.4%. The transaction is secured by seven prime office buildings on London's Canary Wharf estate. The majority of rental income is derived from tenants in the financial services industry that contribute a strong weighted average tenant rating of 'BBB+'. The WA term to lease expiry is 15 years, and the vacancy rate currently stands at 4.5% of the total floor area. Fitch will continue to monitor the performance of the transaction. DRIVER HIRE: Sheffco Franchisee Enters Liquidation -------------------------------------------------- RoadTransport.com reports that Sheffco, trading as Driver Hire Warrington, has entered liquidation. However, Redvee Consulting, which shares the same director as Sheffco, now continues the franchise operation. According to RoadTransport.com, Ian Jones, partner at Manchester- based insolvency practice Jones Lowndes Dwyer said market conditions added to Sheffco's woes, but that cash flow problems and a build up of PAYE to Revenue and Customs also led to its collapse. "Drivers are cutting out the middlemen and going direct, cutting companies like Driver Hire out," RoadTransport.com quotes Mr. Jones as saying. "Driver Hire as a franchise isn't the first and won't be the last to lose a franchisee like this." Richard Owen-Hughes, group marketing director at Driver Hire Group Services, said Sheffco's problems do not reflect wider recruitment trends. Driver Hire offers a range of recruitment services, including full and part time driving work and logistics jobs, to the transport and logistics industry. EATONFIELD DEVELOPMENTS: Creditors Appoint Liquidator ----------------------------------------------------- The board of Eatonfield Group plc disclosed Zolfo Cooper LLP was appointed as liquidator to Eatonfield Developments Limited at a creditors' meeting held on July 8, 2011. Majority of the Group's property assets are owned by EDL and are subject to bank loans from various senior lenders. Under the loan arrangements in place, these properties are each subject to separate legal charges in favor of the relevant lenders and, in respect of some of these properties, Law of Property Act receivers have now been appointed. The board is in discussions to establish whether Eatonfield can assist certain of the lenders in realizing the value of their security. A further announcement will be made in due course. EUROHOME UK: Fitch Affirms Ratings on Class B2 Notes at 'CCsf' -------------------------------------------------------------- Fitch Ratings has upgraded three and affirmed 12 tranches of two Eurohome UK Mortgages transactions, a series of UK non-conforming deals comprising loans originated by DB UK Bank Limited. The rating actions reflect the continued stable performance of the underlying assets in the two portfolios. The level of outstanding repossessions in the two portfolios has declined significantly from levels seen in February 2009. At present 0.1% of the current portfolio of Eurohome UK Mortgages 2007-1 (EHM07-1) and 1.0% of Eurohome UK Mortgages 2007-2 (EHM07-2) are waiting to be sold. Losses per period in the two transactions have declined from levels seen throughout 2009, which has in turn led to reserve fund replenishment and in the case of EHM07-2, outstanding principal deficiency ledgers being cleared. As of the June 2011 interest payment date the reserve funds stood at 85.8% and 60.8% of their target amounts. In Fitch's view EHM07-1's reserve fund is likely to reach its target amount by December 2011, while the reserve fund replenishment of EHM07-2 is expected by Q112. The interest deferred on EHM07-2's uncollateralized class C notes has been cleared and the noteholders are now receiving their interest payments. In addition, once the reserve funds reach their target amounts, any excess spread that is left over at the bottom of the waterfall will be used towards principal payments on the class C notes. For this reason, Fitch no longer views the default on these notes as imminent, but possible, which is why the notes have been upgraded to 'CCCsf' from 'Csf'. The replenishment of EHM07-2's reserve fund has led to an increase in the credit support available to the notes. As a result, the credit enhancement of the class B1 notes currently stands at 2.4% compared to 0.9% at the time of the last review. As the reserve fund continues to replenish and the deal continues to amortize, this level of credit support is expected to increase further. In light of this, Fitch has upgraded the class B1 notes to 'CCCsf'. Fitch considers the portfolios to have adverse characteristics, with high portions of self-certified loans and interest-only loans, most of which were originated around the peak of the mortgage market. At transaction close, the portfolios comprised of high portions of loans on fixed rates, and in combination with the high interest rates seen at the time, the deals struggled to generate sufficient revenue to build the reserve funds to their target amounts. All of the mortgages that were originally on a fixed interest rate basis have converted to variable rates, linked either to Libor or the Bank of England base rate, paying weighted average margins of 3% and 2%, respectively. The borrowers continue to benefit from the low interest rate environment, which has led to their monthly payments being considerably lower than those payable at origination. In Fitch's view, the portfolios may see further deterioration if interest rates revert to levels seen in the past. The rating actions are: Eurohome UK Mortgages 2007-1 plc: -- Class A (ISIN XS0290416527): affirmed at 'Asf'; Outlook Stable; Loss Severity Rating revised to 'LS-1' from 'LS-2' -- Class M1 (ISIN XS0290417418): affirmed at 'BBBsf'; Outlook revised to Stable from Negative; Loss Severity Rating 'LS-4' -- Class M2 (ISIN XS0290419380): affirmed at 'Bsf'; Outlook revised to Stable from Negative; Loss Severity Rating 'LS-4' -- Class B1 (ISIN XS0290420396): affirmed at 'CCCsf'; Recovery Rating 'RR3' -- Class B2 (ISIN XS0290420982): affirmed at 'CCsf'; Recovery Rating 'RR6' -- Class C (ISIN XS0290421956): upgraded to 'CCCsf' from 'Csf'; Recovery Rating revised to 'RR3' from 'RR6' Eurohome UK Mortgages 2007-2 plc: -- Class A1(A) (ISIN XS0311688054): affirmed at 'AAAsf'; Outlook Stable; assigned Loss Severity Rating to 'LS-2' from'LS-1' -- Class A1(B) (ISIN XS0311689532): affirmed at 'AAAsf'; Outlook Stable; assigned Loss Severity Rating to 'LS-2' from 'LS-1' -- Class A2 (ISIN XS0311691272): affirmed at 'AAAsf'; Outlook Stable; Loss Severity Rating revised to 'LS-2' from 'LS-1' -- Class A3 (ISIN XS0311693484): affirmed at 'Asf'; Outlook Stable; Loss Severity Rating 'LS-3' -- Class M1 (ISIN XS0311694029): affirmed at 'BBBsf'; Outlook revised to Stable from Negative; Loss Severity Rating revised to 'LS-4' -- Class M2 (ISIN XS0311695182): affirmed at 'Bsf'; Outlook revised to Stable from Negative; Loss Severity Rating 'LS-4' -- Class B1 (ISIN XS0311695778): upgraded to 'CCCsf' from 'CCsf'; Recovery Rating 'RR4' -- Class B2 (ISIN XS0311697394): affirmed at 'CCsf'; Recovery Rating 'RR6' -- Class C (ISIN XS0311699507): upgraded to 'CCCsf' from 'Csf'; Recovery Rating revised to 'RR4' from 'RR6' GOTTEX MARKET: Placed Into Voluntary Liquidation ------------------------------------------------ The Board of Gottex Market Neutral Trust Limited said that at the Extraordinary General Meeting of the Company held on June 30, 2011, all Ordinary and Special Resolutions, including the Liquidation Resolution put forward before the meeting were approved by Shareholders. In accordance with the passing of the Liquidation Resolution, the Company has been placed into voluntary liquidation and Ashley Charles Paxton and Robert James Kirby of KPMG Channel Islands Limited have been appointed as liquidator to the Company. Gottex Market Neutral Trust Limited is a closed-ended investment company incorporated with limited liability under the laws of Guernsey. IMMIGRATION ADVISORY: Goes Into Administration, Misspent Funds -------------------------------------------------------------- Jack Doyle at Mail Online reports that millions of pounds in legal aid for immigrants and asylum seekers was misspent by a Government-backed charity, The Immigration Advisory Service. The Immigration Advisory Service has collapsed into administration after auditors uncovered the financial irregularities, according to Mail Online. The report notes that the charity received GBP15 million a year to pay for lawyers and legal advice for 27,000 migrants trying to stay in the country. But an internal audit revealed hundreds of cases where funding went to ineligible applicants, Mail Online relates. Mail Online says auditors were shocked to discover that in other cases there was no paperwork to show money was properly spent. The report discloses that the charity's bosses also said some recipients had claimed money 'in error' because of complex Government rules. However, there is no suggestion of any deliberate fraud, the report discloses. Mail Online relays that IAS bosses pulled the plug after failing to agree how to repay the money. The report relates that bosses said that they had 'no alternative', blaming Ministry of Justice cuts to legal aid funding. The report notes that the charity's financial irregularities are believed to relate to the 2010-2011 financial year, after Tory MP Keith Best left following a restructuring. Severance payments for several staff who left that year totaled nearly GBP250,000, Mail Online adds. KINETICS GROUP: Remaining Firms Face Administration --------------------------------------------------- Inside Housing reports that the remaining part Kinetics Group is set to go into administration, according to one of its housing association clients. The group has reportedly told clients it will be entering administration in the next two weeks, according to Inside Housing. Inside Housing notes that reports that the company ceased trading at 1:00 p.m. on July 4, are unconfirmed. A source told Inside Housing in an interview that: "We are working on the basis that they are no longer trading and they are certainly no longer trading with us." Kinetics Group first went into administration last month and two of its subsidiaries, Cameron Industrial Services and Lord Group ceased trading, the report recalls. Inside Housing relates that three other subsidiaries, Sureway Gas, TA Horn and Wallmotts, were sold to a new company called SCP Renewable energy, owned by Kinetics investor Sovereign Capital. The company intended the companies to continue trading under the Kinetics name, the report adds. A separate Inside Housing report relates that a former employee of Kinetics has now confirmed said that the administrators for the firms will be Begbies Traynor. "The administration was requested because a number of clients of the companies which traded on did not pay their debts. They placed orders with the group but would not honor payments and with this the group has had to cease finally. It is a sad day and 600 people will lose their jobs despite their best efforts, a majority will find work or be TUPE transferred, for a number it will be difficult though," Inside Housing quoted the unnamed employee as saying. Kinetics Group is a social housing contractor. LEE BANK: In Liquidation; FSCS to Pay Compensation to Members ------------------------------------------------------------- Ashley Wassall at FTAdviser reports that the Financial Services Compensation Scheme has warned that compensation may be required for Lee Bank & Highgate Credit Union that has gone into liquidation, the fifth such failure so far in 2011. FTAdviser relates that FSCS said it had been notified by the Financial Services Authority (FSA), which regulates credit unions alongside other mutual societies, that Lee Bank & Highgate Credit Union was being closed. The FSCS added that it was, along with the FSA, seeking to establish whether the credit union is able to return members' savers, according to FTAdviser. "If the credit union can't pay back the money it owes its members, we will declare it 'in default' and will aim to pay compensation to eligible members in the majority of cases within seven days," FTAdviser quotes FSCS as saying in a statement. "We will aim to pay any remaining compensation claims (i.e. those that are likely to be more complex) within twenty working days. Members of the credit union will not need to apply for compensation -- we expect to send their compensation to them automatically." The FSCS guarantees savings up to GBP85,000 for members of a credit union that is declared in default, FTAdviser discloses. FTAdviser notes that this is the fifth credit union to enter insolvency in 2011, following the closure of the Havant Area Savers Credit Union in January, the Southend Credit Union in May, and both the Worcestershire Credit Union and the Caribbean Parents Group Credit Union in June. Lee Bank & Highgate Credit Union is a Birmingham-based credit union. LOSELEY DAIRY: Administrators Set to Put Firm in Liquidation ------------------------------------------------------------ Anne Bruce at FoodManufacture.co.uk reports that administrators expect to place Loseley Dairy Ice Cream into liquidation in the next couple of months, after selling off the company's plant and assets. Mike Field, an associate at Portland Business & Financial Solutions, which is handling the company's affairs, told Foodmanufacture.co.uk that a total of GBP1.2 million had been raised from the two separate sales. FoodManufacture.co.uk relates that the administrators last month sold the equipment at the site off via property management company Edward Symmons to American auction company Rabin for more than GBP750,000. Rabin is now auctioning the kit off on July 14. That deal followed on from the sale of the brands, intellectual property of the company and the stock last month to Beechdean Farmhouse Dairy Ice cream, the report says. According to Foodmanufacture.co.uk, Mr. Field said the business would now be put into liquidation within the next month or two, and there would be an expected GBP2.1 million shortfall in payments to creditors. As reported in the Troubled Company Reporter-Europe on April 27, 2011, South Wales Argus said Loseley Dairy Ice Cream Ltd went into administration, with the loss of 83 jobs. Portland Business and Financial Solutions was appointed as administrator. Loseley's troubles came to a head after private equity backer the Foresight Group withdrew its funding. The firm had struggled to compete against larger rivals and their promotional activity. It was also hit by soaring costs for raw materials such as cream and sugar, according to Foodmanufacture.co.uk. Headquartered in Llantarnam Parkway, Loseley Dairy Ice Cream Ltd is an ice cream company. The factory, which opened in 2005, saw the consolidation of production for all the UK's Thayers, Loseley and Yorkshire Dales ice cream, following a flood at the Yorkshire Dales factory and the need for modernization of the Thayers plant in Cardiff. MONTROSE PARTNERS: High Court Places Firm Into Liquidation ---------------------------------------------------------- NDS UK reports that The Insolvency Service investigation found that Montrose Partners Limited and The Montrose Partnership Limited had sold some 63 plots of land to members of the public at four sites generating an income of around GBP372,868. The vast majority of the sales were made by The Montrose Partnership Limited following Montrose Partners Limited's difficulties with a similarly named but unconnected business. False and misleading statements were made to potential investors claiming the land being sold would deliver significant investment returns as it was likely to receive planning permission for residential development. There was no likelihood of this happening. Both companies were closed down on Dec. 17, 2010, by The Insolvency Service's enforcement action. Commenting on the case Company Investigations Supervisor Chris Mayhew said: "The Insolvency Service is determined to come down hard on directors who set out to rip people off by deliberately misrepresenting the investment opportunity on offer. These schemes are designed to make those behind them rich, not investors; not one of the land banking companies we have investigated and shut down has made any profit for the investor. I would urge people who are cold-called and invited to invest not to be pressured into a decision and to seek independent professional advice." The petitions to wind up both companies were presented on Dec. 16, 2010, under the provisions of section 124A of the Insolvency Act 1986. The grounds for winding up the companies were their lack of commercial probity and continuing a method of trading for which an earlier related company, Willow International Limited, was wound up on grounds of public interest. In ordering Montrose Partners Limited and The Montrose Partnership Limited into liquidation on grounds of public interest on July 6, 2011, Mr. Registrar Baister said: "These companies were engaged in the business of selling small plots of land to the public as an investment, a practice commonly referred to as land banking. The Secretary of State's grounds for winding up both companies are clearly made out, namely that the information given to the public was misleading and unfounded as the land being marketed by these companies was unlikely to be granted planning permission and/or is unsuitable for housing development and the huge increase in the price paid by investors was so unusual that it is unlikely they would break even. The information given to them was plainly misleading and it is plainly in the public interest to wind up the companies, more so given the continuing method of trading as that carried on by a previous company Willow International Limited. Plainly those involved in the companies' management must have known that it was objectionable to carry on the same business practices. Both companies have been placed into provisional liquidation and have not opposed the winding up action and I am fully satisfied that the companies should be wound up and I do so order" Montrose Partners Limited was incorporated on Aug. 21, 2009. The registered office of the company was at Union House, 65-69 Shepherds Bush Green, Shepherds Bush, London, W12 8TX. The recorded directors of the company are Mr. Jose Emilio Gongora and Mr. Dean Benjamin Straker. There is no recorded company secretary. RENAISSANCE: Is Back in Original Founder's Hands ------------------------------------------------ residentadvisor.net reports that after going into administration last year, Renaissance is back in the hands of its original founder, Geoff Oakes. As reported in the Troubled Company Reporter-Europe on Sept. 16, 2010, Resident Advisor, citing a notice sent out by London-based firm Resolve Partners LLP, said that Renaissance has gone into administration. According to the report, declining sales in the mix CD market are likely a large part of the reason behind Renaissance entering into administration. Renaissance, the quintessential '90s club label has been in operation since 1994. It was founded by Geoff Oakes. SHAKA ZULU: Goes Into Voluntary Liquidation ------------------------------------------- Tom Hall at citmagazine.com reports that Shaka Zulu Trading Company has gone into voluntary liquidation. Shaka Zulu appointed insolvency practitioner Hodgsons on June 27, 2011. citmagazine.com relates that Shaka Zulu's PR agency Captive Minds said the winding-up of equity holding business Shaka Zulu Trading Company was because five original small investors in the London venue had now been paid back. "In June 2011 after a hugely successful first trading year, one of the many companies that Shaka Zulu used to hold equity was closed down through voluntary liquidation. This was the cheapest and easiest manner to close the company after the equity was no longer needed thanks to a successful return," citmagazine.com quotes Captive Minds special projects director Alex Rayner as saying. The London venue is now trading under investors from Junerun after Shaka Zulu Trading Company has been wound down, citmagazine.com says. "We have gone through a restructuring with a new operator, Junerun, after Shaka Zulu Trading went into liquidation," Shaka Zulu sales and marketing specialist Simon Yandell said. Shaka Zulu Trading Company is the equity holding company involved in launching Shaka Zulu, a GBP5.5 million events venue. VOICESERVE INC: Michael Studer CPA Raises Going Concern Doubt ------------------------------------------------------------- Voiceserve, Inc., filed on July 6, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. Michael T. Studer CPA P.C., of Freeport, New York, expressed substantial doubt about Voiceserve, Inc.'s ability to continue as a going concern. Mr. Studer noted that as of March 31, 2011, the Company had negative working capital of US$313,059. Further, since inception, the Company has incurred losses of US$3,766,212. The Company reported a net loss of US$772,057 on US$4.4 million of revenues in fiscal 2011, compared with a net loss of US$665,442 on US$3.3 million of revenues in fiscal 2010. The Company's balance sheet at March 31, 2011, showed US$2.4 million in total assets, $738,604 in total liabilities, and stockholders' equity of US$1.7 million. A copy of the Form 10-K is available at http://is.gd/wGypFP Headquartered in Middlesex, England, Voiceserve, Inc. (OTC BB: VSRV) -- http://www.voiceserve.com/-- is a software platform provider focusing primarily on delivering affordable, complete, next generation services to Internet Telephony Providers (ITSPs). WILDING PHOTOGRAPHIC: In Liquidation; 24 Workers Lose Jobs ---------------------------------------------------------- Amateur Photographer reports that Wilding Photographic Ltd, which runs seven independent camera shops across the North West, has been put into liquidation with the loss of 24 jobs. The firm blamed 'crippling' rents at several of the stores as a key factor in the demise of the 63-year-old business, Amateur Photographer says. According to the report, Chris Lea, one of the directors, said the firm had been put into 'voluntary liquidation' and that the economic climate had also played a part in the closures, as well as competition from internet retailers. Mr. Lea added that 24 staff across the group have been made redundant, though five will be re-employed, Amateur Photographer notes. Amateur Photographer discloses that Wildings also operates a postal and mail-order firm, buyacamera.co.uk, owned by the same directors as a separate business in Standish, Lancashire. This will continue to trade. The firm, which trades as Wildings, started life in 1948 as a commercial studio. Wildings ran camera stores in Bolton, Chorley, Macclesfield, Manchester, Northwich, Wigan and Wilmslow. Services offered by Wildings included camera repairs, passport photos, canvas prints and photo restoration. =============== X X X X X X X X =============== * S&P's Global Corp. Default Tally Remains at 18 for 2011 --------------------------------------------------------- The 2011 global corporate default tally remains at 18 after no issuers defaulted last week, said an article published July 8 by Standard & Poor's Global Fixed Income Research, titled "Global Corporate Default Update (June 30 - July 6, 2011) (Premium). Of the total, 11 issuers were based in the U.S., two each were based in Canada and New Zealand, and one each was based in the Czech Republic, France, and Russia. By comparison, 46 global corporate issuers had defaulted by this time in 2010. Of these defaulters, 33 were U.S.-based issuers, two were European issuers, four were from the emerging markets, and seven were in the other developed region (Australia, Canada, Japan, and New Zealand). Seven of this year's defaults were due to missed interest or principal payments and six were due to distressed exchanges -- both among the top reasons for default in 2010. Of the remaining five, three issuers defaulted after they filed for bankruptcy, another had its banking license revoked by its country's central bank, and the fourth was forced into liquidation as a result of regulatory action. Of the defaults in 2010, 28 defaults resulted from missed interest or principal payments, 25 resulted from Chapter 11 and foreign bankruptcy filings, 23 from distressed exchanges, three from receiverships, one from regulatory directives, and one from administration. * Moody's: Spec-Grade Default Rate Ends at 2.2% in Q2 2011 ---------------------------------------------------------- The trailing 12-month global speculative default rate finished the second quarter at 2.2%, down from 2.5% in the first quarter of 2011, according to Moody's Investors Service in its monthly default report. A year ago, the default rate stood at 6.2%. Moody's default rate forecasting model now predicts that the global speculative-grade default rate will fall to 1.5% by the end of this year then edge up to 1.7% by the second quarter of 2012. "Spreads are widening, particularly in Europe, and the continued softness in the global economy is certainly worrying" says Albert Metz, Moody's Director of Credit Policy Research. "But corporate fundamentals still remain fairly good, spreads, though increasing, remain near typical levels, and defaults continue to be few and far between." There were four debt defaults in the second quarter, bringing the year to date total to 12. By comparison, there were 17 and 10 defaults in the first and second quarter of last year, respectively. Moody's expects default rates to be highest in the Wholesale sector in the U.S. and the Media: Advertising, Printing & Publishing sector in Europe. In the U.S. the speculative-grade default rate ended the second quarter at 2.6%, down from 2.9% in the previous quarter. At this time last year, the U.S. default rate was 6.4%. In Europe, the default rate fell from 1.9% in the first quarter to 1.4% in the second quarter. Last year, the European default rate ended at 5.6% in the second quarter. When measured on a dollar-volume basis the global speculative- grade bond default rate fell slightly to 1.5% at the close of Q2 2011 from 1.6% in Q1 2011. A year ago, the global dollar-weighted default rate was higher at 3.5%. In the U.S., the dollar-weighted speculative-grade default rate closed the quarter at 1.4%. The comparable rate last quarter was 1.5% and 3.5% a year ago. In Europe, the dollar-weighted speculative-grade bond default rate remained unchanged from the previous quarter at 1.8%. The speculative-grade bond default rate stood at 3.4% this time last year. Moody's speculative-grade corporate distressed index -- a measure of the percentage of high-yield issuers that have debt trading at distressed levels -- rose to 9.5% at the end of the second quarter, up from the 7.7% level in the previous quarter. A year ago, the index was markedly higher at 16.0%. Among U.S. leveraged loan issuers, the trailing 12-month default rate was unchanged from the previous quarter at 1.7% but significantly lower than the 6.2% rate recorded this time last year. Four Moody's-rated companies defaulted on loans in the second quarter, compared to one in the first quarter. ********* 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 * * *