/raid1/www/Hosts/bankrupt/TCREUR_Public/111228.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, December 28, 2011, Vol. 12, No. 257
Headlines
A L B A N I A
* ALBANIA: S&P Affirms 'B+/B' Sovereign Credit Ratings
A Z E R B A I J A N
* AZERBAIJAN: S&P Raises Sovereign Credit Ratings from 'BB+/B'
G E R M A N Y
GROHE HOLDING: S&P Affirms 'B-' Corporate Credit Rating
G R E E C E
PUBLIC POWER CORP: S&P Lowers Corporate Credit Rating to 'CCC'
H U N G A R Y
OTP MORTGAGE: S&P Lowers Counterparty Credit Rating to 'BB+/B'
I C E L A N D
KAUPTHING BANK: SFO Admits Errors in Tchenguiz Search Warrants
I R E L A N D
BACCHUS 2007-1: S&P Raises Rating on Class D Notes to 'B+'
BELFRY HOTEL: Put Up for Sale by Lenders Despite Debt
COSMO FINANCE 2007-1: S&P Affirms 'B' Rating on Class F Notes
EUROCASTLE CDO: S&P Puts 'CCC+'-Rated Class B Notes on Watch Neg.
EUROCREDIT OPPORTUNITIES: S&P Affirms BB+ Rating on Class D Notes
PARTHOLON CDO: S&P Raises Ratings on Two Note Classes to 'B+'
PENTA CLO: S&P Raises Rating on Class E Notes to 'BB'
RMF EURO: S&P Raises Rating on Class IV Notes to 'BB+'
FASTNET LINE: Needs to Raise EUR1-Mil. to Save Cork Swansea Ferry
I T A L Y
EDISON SPA: Fitch Cuts Senior Unsecured Debt Rating to 'BB-'
FONDIARIA SAI: Main Creditors Seek Investors for Capital Increase
LOCAT SV: S&P Affirms 'B+' Rating on Class C Notes
K A Z A K H S T A N
BTA BANK: Fitch Cuts Long-Term Issuer Default Ratings to 'C'
KASSA NOVA: S&P Assigns 'B/C' Counterparty Credit Ratings
KAZAKHTELECOM: Fitch Views Kcell Stake Sale as Rating Neutral
SBERBANK: Fitch Assigns 'BB+' Rating on KZT20-Bil. Sub. Bonds
L A T V I A
* CITY OF RIGA: S&P Raises Issuer Credit Rating to 'BB+'
P O R T U G A L
BANIF - BANCO: Fitch Affirms 'BB' Long-Term Issuer Default Rating
* PORTUGAL: Business Closures Up 35% in 2011
S P A I N
GC SABADELL: S&P Downgrades Rating on Class C Notes to 'CCC-'
S W E D E N
DOMETIC GROUP: S&P Affirms 'B' Corporate Credit Rating
U N I T E D K I N G D O M
AFREN PLC: S&P Raises Corporate Credit Rating to 'B'
BLACKS LEISURE: Fails to Find Buyer for Whole Company
PETER SMITH: Set to Go Into Liquidation; Has Cut Seven Jobs
PROVEN ENERGY: Owes More Than GBP4.5-Mil. to Unsecured Creditors
* UK: High Street Insolvencies Likely to Continue in 2012
* UK: Troubled Football Clubs May Close In 2012, Expert Warns
* UK: Court Orders Three Landbanking Companies Into Liquidation
*********
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A L B A N I A
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* ALBANIA: S&P Affirms 'B+/B' Sovereign Credit Ratings
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Standard & Poor's Ratings Services affirmed its long- and short-
term foreign- and local-currency sovereign credit ratings on
Republic of Albania at 'B+/B'. The outlook is stable. The
transfer and convertibility (T&C) assessment is 'BB-' and the
recovery rating is '4.'
"The ratings on Albania are constrained by our view of the
country's polarized political environment, which has limited the
government's ability to implement reforms that could help its EU
accession. The ratings also reflect its low per capita GDP and
persistently high government debt compared with peers. The
ratings are supported by our view of the economy's long-term
growth potential, a legal framework that explicitly prioritizes
debt-service payments, and long-term prospects for further EU
integration," S&P said.
"Politically, Albania has become increasingly polarized since the
2009 elections. The main opposition party, the Socialist Party of
Albania, has challenged the legitimacy of the current center-
right government by boycotting parliament. Violent antigovernment
protests in January 2011 and disputed results after the local
government elections in May have exacerbated tensions. In our
view, this polarization has disrupted the government's ability to
effectively implement policy, including reforms needed for EU
accession such as strengthening institutional frameworks to
address corruption and enforce property rights. That said, we
believe that the recent return of the Socialist Party to
parliament will likely reduce political tensions. In our view,
this could stabilize the relationship with the governing
coalition, especially if material progress is made regarding key
policy challenges, including the EU integration process," S&P
said.
"We view Albania's public finances as a key credit weakness. The
ratio of general government interest payments to general
government revenues is high, as is the government's debt.
Following the budget deficit narrowing in 2010, the government
has strayed from structural fiscal consolidation and has instead
allowed a higher fiscal deficit target in 2011 -- of 3.5% of GDP
compared with the 3.1% deficit in 2010. Despite solid nominal
economic growth, we believe the government's mid-year
supplementary deficit reduction measures may be insufficient to
meet this year's target, especially with political maneuvering
before the May 2011 local elections leading to potential
slippages in government spending. We believe a likely slowdown in
growth, along with the government's already relatively low
revenue intake, will test its commitment to reaching and
maintaining a deficit of 3% of GDP in 2012 and 2013. In our view,
more-rigorous consolidation and clearer, tighter fiscal rules and
structural measures would prevent fiscal imbalances from
hampering Albania's economic development. Such measures would
include a substantial overhaul of the social security system as
well as reducing Albania's large informal economy," S&P said.
"Persistently large external imbalances are also a vulnerability,
in our view. We estimate that the current account deficit is
likely to hover around 10% of GDP over the medium term,
especially as the anticipated slowdown in 2012 will probably
prevent exports from sustaining current growth rates. Albania's
external vulnerability is mitigated, in our view, by FDI inflows
-- most of which go into telecommunications, energy, banking, and
manufacturing -- and its relatively low external leverage," S&P
said.
"The ratings are supported by our view of the economy's strong
growth potential. However, major structural weaknesses are likely
to persist absent further economic and budgetary reforms that we
believe would benefit from a less-divisive political environment.
We also believe foreign banking groups in Albania may become more
cautious in their lending activities, which could constrain
economic growth," S&P said.
"The stable outlook reflects our view that Albania will operate
sound fiscal and economic policies, anchored by efforts toward EU
integration," S&P said.
"We could lower the ratings if the country's policymakers,
contrary to our current expectations, abandon the EU as a policy
anchor for its institutional structural reforms; if the fiscal
position strays significantly from government targets; or if
external imbalances worsen," S&P said.
"We could consider raising the ratings if the government
successfully addresses institutional challenges regarding EU
membership, while consolidating its budgetary position and
reducing its debt-to-GDP ratio, and if external conditions for
the financial system ease. Political and institutional
developments will also influence future ratings momentum to the
extent that these influence country's economic prospects," S&P
said.
===================
A Z E R B A I J A N
===================
* AZERBAIJAN: S&P Raises Sovereign Credit Ratings from 'BB+/B'
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its long- and short-
term foreign- and local-currency sovereign credit ratings on the
Republic of Azerbaijan to 'BBB-/A-3'. The outlook is stable. The
transfer and convertibility assessment remains at 'BBB-' from
'BB+/B'.
"The rating action reflects our view that Azerbaijan's growing
public-sector net asset and international investment positions
have reached a point where they constitute substantial fiscal and
external buffers. In this regard, we also project general
government debt to remain limited on the back of expected
budget surpluses," S&P said.
"Due to lower oil production in 2011 and despite higher public
spending, we estimate GDP per capita has contracted 0.8% in 2011,
and we forecast per capita growth of 1.9% in 2012. However,
medium-term prospects for oil extraction have improved and we
expect oil exports will increase a little and then stabilize in
2014 at close to 50 million tons per year for several years
before declining. This should ensure continued surpluses in the
current account and consolidated budget positions. Given that
Azerbaijan's mix of light crude trades at a premium to Brent oil,
the current account surplus should remain high at close to 20% of
GDP in 2012-2014. Viewed from the perspective of external
liquidity, gross external financing needs are estimated at 60% of
current account receipts plus useable reserves. With external
liquid assets amounting to about four times external debt,
Azerbaijan is in a strong net external asset position, even
accounting for some data gaps," S&P said.
"In line with external surpluses, Azerbaijan's fiscal balances
remain strongly positive. We expect the assets of the State Oil
Fund of the Republic of Azerbaijan (SOFAZ), a fiscal reserve fund
invested externally, will amount to 56% of GDP in December 2011,
up from 42% at the end of 2010. SOFAZ provides the sovereign
considerable room for maneuver if oil prices were to fall below
the budgeted level. Though the oil price assumption has been
raised closer to market rates of $80/barrel, the consolidated
government budget in 2012 (including net income of SOFAZ) should
again record a substantial surplus of about 10% of GDP at an
assumed oil price of US$100/barrel. These positive figures mask a
large increase in public spending, which we estimate to have
risen from 29% in 2010 to 32% of GDP in 2011. Nonetheless, at 6%
of GDP in 2011, the gross government debt burden (excluding
guarantees) is small," S&P said.
"We continue to view geopolitical and political risk as
constraining factors on the rating. In particular, the impasse
with the neighboring Republic of Armenia (not rated) over the
territory of Nagorno Karabakh retains a residual potential for
armed confrontation. Domestically, we consider that Azerbaijan's
government enjoys high legitimacy among the population on account
of improving standards of living. Nevertheless, events in
neighboring countries caution that material well-being alone is
not a guarantor of political stability. Above all, we believe
that decision-making remains heavily centralized and
insufficiently transparent, which can lead to less predictability
in policy-making. Similarly, we believe the independent
institutions, accountability, and transparency that are needed to
maintain an efficient market economy are mostly absent," S&P
said.
"A final rating constraint is our view that Azerbaijan's monetary
and banking systems are underdeveloped, the latter with weak
governance and underwriting standards as well as high
dollarization (58% of all deposits and 37% of all loans).
Furthermore, monetary policy appears to lack efficient
instruments to effectively sterilize large-scale capital
inflows," S&P said.
"Our local-currency rating is equalized with the foreign-currency
rating because monetary policy options, which underpin a
sovereign's greater flexibility in its own currency, are
constrained by Azerbaijan's high dollarization and relatively
undeveloped domestic bond markets. Our T&C assessment is
equalized with the sovereign foreign-currency rating to reflect
our opinion that the likelihood of the sovereign restricting
access to foreign exchange needed by Azerbaijan-based non-
sovereign issuers for debt service is similar to the likelihood
of the sovereign defaulting on its foreign-currency obligations.
This reflects the difficult political environment, the somewhat
gray line between the public and private sectors, and the modest
capital controls that exist at present," S&P said.
"The stable outlook balances our expectation of further
strengthening of Azerbaijan's external and fiscal balance sheets
against moderate growth and diversification prospects and an
unreformed institutional framework. We could raise the ratings
further if there is significant improvement in the business
environment, acceleration of structural reform and economic
diversification efforts, or a strengthening of monetary policy
and the banking system," S&P said.
"Conversely, we could lower the ratings if there were a
significant shortfall in expected external and fiscal buffers.
Similarly, and contrary to our expectations, an escalation of
geopolitical tensions or pronounced disruption of domestic
political stability could lead to downward ratings pressure," S&P
said.
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G E R M A N Y
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GROHE HOLDING: S&P Affirms 'B-' Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Grohe
Holding GmbH, the indirect parent of German sanitary fittings
manufacturer Grohe AG, to stable from positive. "At the same
time, we affirmed our 'B-' long-term corporate credit rating on
Grohe," S&P said.
"The rating actions reflect our view that, in conjunction with
our revised macroeconomic forecasts, improvements in Grohe's top
line will not be sufficient to support a higher rating in the
short term. Despite a robust recovery in Grohe's turnover in
2011, we now believe that Standard & Poor's-adjusted margins will
weaken in the full-year 2011, with EBITDA margins of less than
16%, down from nearly 18% in 2010. This is in contrast to the
group's reported normalized EBITDA margin of 18.7% for the first
nine months of 2011 (before extraordinary costs and including
100% of earnings from Grohe's Chinese joint venture partner Joyou
AG from July 1, 2011). Earnings have been hit by unfavorable
foreign exchange movements and additional costs such as increased
input costs. However, we believe that margins should gradually
recover in 2012, despite weak end markets that we forecast will
persist. This is because of Grohe's focus on cost control, robust
pricing power, and our expectation of softening raw material and
energy costs in 2012," S&P said.
"Grohe's adjusted debt increased by more than we anticipated in
2011, peaking at EUR1.45 billion by the end of September. This
was primarily due to Grohe's acquisition of a controlling stake
in Joyou. The offer was funded by EUR42 million of group cash,
with Grohe's shareholders -- Credit Suisse and TPG Partners --
providing the remaining EUR42 million of funds through a
structurally subordinated shareholder loan, which we treat as
debt," S&P said.
"We believe that adjusted debt to EBITDA will increase in 2011 to
more than 8.0x in 2011, from 7.5x in 2010, on a pro rata adjusted
basis. We forecast that improved underlying earnings and growth
in earnings from Joyou should reduce this ratio to less than 7x
in 2012, but that a more substantial improvement will not occur
until 2013, when we expect end markets to make a more noticeable
recovery," S&P said.
"While we no longer believe that a significant improvement in
credit metrics is likely before 2013, we could raise the rating
on Grohe by one notch should we believe the group capable of
sustaining adjusted debt to EBITDA of less than 6x. This could
occur through a rebound in Grohe's core markets, together with
a recovery in the adjusted EBITDA margin toward the 2009 level of
about 21% and an increased economic contribution of earnings from
Joyou. Nevertheless, we note that the group remains net loss-
making and we forecast that its key credit ratios will remain
highly leveraged for the coming years, limiting the likelihood of
further rating upside," S&P said.
"Negative rating pressure could arise should we observe any risks
to Grohe addressing the 2014 bond refinancing in a timely manner
ahead of the maturity, or increased funding requirements that
lead liquidity to deteriorate. A more pronounced deterioration in
the group's markets than we currently forecast, or the adoption
of a more aggressive financial policy, could also trigger a
negative rating action," S&P said.
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G R E E C E
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PUBLIC POWER CORP: S&P Lowers Corporate Credit Rating to 'CCC'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Greece-based utility Public Power
Corp. S.A. (PPC) to 'CCC' from 'B-'. "We took the rating off
CreditWatch, where it was placed with negative implications on
Dec. 7, 2010. The outlook is negative," S&P said.
"The downgrade chiefly reflects our view that PPC's 'weak'
liquidity position under our criteria has rapidly deteriorated
further in the last six months, putting into question the
company's capacity to honor its financial obligations in 2012,"
S&P said.
"We previously revised PPC's liquidity downward to weak because
of the possibilities that debtholders could exercise put options
on part of the company's debt in the event of a privatization
planned for the second half of 2012 and that a near-term
liquidity crisis in the Greek banking system could impair PPC's
access to cash deposits. We now believe that PPC's liquidity
position is weak even excluding such possibilities. The company
has no bonds outstanding and the only debt that it has issued is
held mostly by Greek banks and the European Investment Bank," S&P
said.
"The negative outlook reflects the possibility that we could
downgrade PPC if we came to the conclusion that it will default
on its obligations, as defined by our criteria," S&P said.
S&P may lower the rating on PPC should one or several of the
risks materialize in the coming 12 months:
PPC fails to refinance its material maturities with Greek
banks in due course.
PPC fails to secure additional credit facilities to finance
its investments.
PPC's cash flow generation narrows further.
A Greek banking system liquidity crisis restricts PPC's
access to its cash.
A breach of ownership covenant triggers the acceleration of
some debt repayments.
An outlook revision to stable or an upgrade would, in S&P's view,
depend on the group's ability to significantly improve its
liquidity position in the next 12 months, should one or several
of the following events bridge PPC's liquidity gap in the short
term and strengthen its liquidity situation in the medium term:
The tariff reform prescribed by the EU and IMF as part of
Greece bailout program is implemented and results in
significant tariff and therefore earnings increases for PPC
as soon as in 2012.
PPC disposes of some assets, including coal mines and coal
power plants, or opens the capital of its recently setup
transmission or distribution subsidiaries.
Debt markets reopen for Greek issuers.
The future owner of PPC's privatized stake provides liquidity
support to the company.
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H U N G A R Y
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OTP MORTGAGE: S&P Lowers Counterparty Credit Rating to 'BB+/B'
--------------------------------------------------------------
Standard & Poor's Ratings Services took various negative rating
actions on four Hungarian banks, following a downgrade of the
Republic of Hungary (BB+/Negative/B).
"We lowered the long- and short-term counterparty credit ratings
on OTP Bank PLC and its core subsidiary OTP Mortgage Bank to
'BB+/B' from 'BBB-/A-3' and removed them from CreditWatch, where
we had placed them on Nov. 15, 2011. The outlooks on both banks
are negative," S&P said.
"We lowered the long-term unsolicited public information (pi)
rating on K&H Bank to 'BBpi' from 'BBB-pi'," S&P said.
"We affirmed the 'BB/B' long- and short-term counterparty credit
ratings on Magyar Takarekszovetkezeti Bank ZRt (Takarekbank) and
revised the outlook to negative," S&P said.
"The ratings on the other Hungarian banks that we rate, Central-
European International Bank Ltd. ('BBpi') and MKB Bank ZRT
('Bpi'), are unaffected by the rating actions," S&P said.
"The rating actions on Hungarian banks were prompted by our Dec.
20, 2011, downgrade of Hungary (see 'Ratings On Republic of
Hungary Lowered To 'BB+/B' On Unpredictable Policy Framework;
Outlook Negative,' published Dec. 21, 2010)," S&P said.
"The downgrade of Hungary reflects our opinion that the
predictability and credibility of Hungary's policy framework
continues to weaken. We believe this is due, in part, to official
actions that have weakened the independence of regulatory
institutions and complicated the operating environment for some
investors. In our view, this is likely to have a negative impact
on investment and fiscal planning, which we believe will continue
to weigh on Hungary's growth prospects. Moreover, in our opinion,
risks to Hungary's creditworthiness have increased as the global
and domestic economic environments have weakened," S&P said.
"OTP, K&H Bank, and Takarekbank are predominantly domestic
lenders, and we typically do not rate banks above the foreign-
currency sovereign ratings under our criteria. This decision to
cap banks' ratings at the sovereign level reflects the banks'
exposure to the sovereign through the Hungarian bonds in their
securities portfolios, the deteriorating operating environment,
and the consequences of unfriendly measures the government has
imposed on the Hungarian banking system since 2010," S&P said.
"In addition to the sovereign-related pressures, we believe the
currently weaker economy is accentuating long-standing weaknesses
in the Hungarian banking system. Weak domestic consumption and
the economy's dependence on exports make the country vulnerable
to the health of its main trading partners, notably the eurozone,
which is showing signs of deceleration for 2012. Nonperforming
loans (NPLs) keep rising, and topped 12% systemwide at the end of
June 2011, from 10.5% at end-2010 according to Hungarian
Financial Supervisory Authority data. We expect the negative
trend to continue in 2012. The amount of restructured loans in
the system, not included in the ratio, is already high, notably
in weak sectors like construction and commercial real estate
financing. Hungarian commercial banks also generally rely on
external funding, essentially parental funding, which is likely
to be less abundant in the future given the liquidity constraints
on the Western European parents that own over two-thirds of
Hungary's domestic banking assets," S&P said.
"We have already factored most of these challenges into our
Banking Industry Country Risk Assessment (BICRA) score of '7' for
Hungary (on a scale of '1' to '10', '1' is the lowest score) and
the 'bb' anchor we use for domestic banks in Hungary. A deepening
of current negative trends could, over time, weigh further on
Hungarian banks' ratings, which our current negative rating
outlooks capture," S&P said.
"The imposition of a bank levy and the September 2011 government
law on the repayment of households' foreign-currency-denominated
mortgages at discounted rates have already started to weaken the
Hungarian banking sector. We note substantial deterioration in
banks' profitability and expect most of the large players, with
the exception of OTP, to post losses in 2011. For some of the
banks this will be their second consecutive year of losses, and
their capacity to build up capital is constrained. Pressure on
banks' capital will reduce the supply of credit in the economy.
This may constrain growth prospects and put the government's
fiscal targets in jeopardy. We view positively for the banking
system that the authorities and the local banking association
reached an agreement very recently, under which the government
may share a part of the cost for easing foreign currency
borrowers' debt burden," S&P said.
OTP Bank PLC and OTP Mortgage Bank
The ratings on OTP reflect the bank's 'bb' anchor, as well as its
"strong" business position, "adequate" capital and earnings,
"adequate" risk position, "average" funding, and "adequate"
liquidity, as S&P's criteria define these terms. The stand-alone
credit profile (SACP) on OTP is 'bb+'.
"OTP benefits from a strong domestic retail franchise,
particularly its solid granular retail deposit base, and leading
position in residential mortgage loans. OTP's earnings and
business diversification in the area of consumer, small and
midsize enterprise financing, and in certain parts of Central and
Eastern Europe (CEE) and the Commonwealth of Independent States
(CIS) are also positive for the ratings. The ratings also benefit
from OTP's strong pre-provisioning earnings, which, in our view,
have helped steer it through the crisis and cushion elevated
credit losses. We expect that our risk-adjusted capital (RAC)
ratio before adjustments will increase and remain slightly above
7.0% for the next 18-24 months, an adequate level in our view.
OTP remains exposed to heightened credit risk from its pre-
crisis, rapidly-expanded loan portfolios, particularly its
foreign currency-denominated domestic mortgages and those in some
of its Eastern European subsidiaries. The ratings on OTP Mortgage
Bank are equalized with those of OTP because of its core status,"
S&P said.
K&H Bank
"The rating on K&H Bank factors in our 'bb' anchor for banks
operating in Hungary, as well as our view that K&H Bank's
business position, capital and earnings, risk position, funding,
and liquidity are all neutral for the rating. We assess K&H
Bank's SACP in the 'bb' category," S&P said.
The 'pi' rating on K&H Bank factors in expected support from
Belgian parent KBC Bank N.V. (A-/Stable/A-2), reflecting K&H
Bank's status as a "strategically important" subsidiary to its
parent. K&H fits well with KBC's objective to be a leading bank
in selected CEE countries, and is well integrated into KBC's
risk and operational framework. "We believe that KBC will remain
committed to Hungary and K&H Bank, despite the detrimental
measures implemented by the Hungarian authorities. KBC also has a
track record of supporting K&H Bank, notably with a Hungarian
forint (HUF) 67.3 billion capital injection in the first-half of
2011. The 'pi' rating also reflects K&H Bank's strong domestic
franchise and market position in commercial banking and
bancassurance. We expect K&H Bank to post a small loss, or at
best break even, in 2011. We project that its RAC ratio before
adjustments, post capital increase, will be slightly above 5% and
stay at that moderate level for the next 15-18 months," S&P said.
Takarekbank
Standard & Poor's bases its ratings on Takarekbank on the bank's
'bb' anchor and its view of the bank's "weak" business position,
"moderate" capital and earnings, "adequate" risk position,
"average" funding, and "strong" liquidity, as S&P's criteria
define these terms. "We assess Takarekbank's SACP in the 'b+'
category," S&P said.
"We also assess Takarekbank as a 'strategically important'
subsidiary of the Integrated Savings Cooperatives (SCs),
Takarekbank's 61.53% majority shareholder. Takarekbank's ratings
are supported by the bank's 'average' funding and 'strong'
liquidity as a central bank for the SC sector, as well as
its asset quality, which we view as being better than the
Hungarian banking system's average. Takarekbank lends to small
and midsize enterprises and not directly to the SCs. We see the
possibility of deteriorations in the SCs' creditworthiness in the
increasingly challenging environment, and subsequently of their
capacity to support Takarekbank in case of need," S&P said.
Outlook
OTP/OTP Mortgage Bank
The negative outlook reflects that on the sovereign. A further
negative rating action on Hungary would likely lead to the same
rating action on OTP and OTP Mortgage Bank.
"A deterioration in OTP's SACP, notably stemming from a weakening
of its funding and liquidity, or a substantial deterioration in
the RAC ratio before diversification to below 5%, would prompt us
to consider a negative rating action on OTP, and subsequently on
OTP Mortgage Bank. We might also take a negative rating action if
new NPL formation accelerates again in 2012, after the
deceleration in 2011, as this would indicate that the stock of
NPLs is continuing to rise above the already elevated 16%
nonperforming assets-to-gross customer loans ratio reached in the
third quarter of 2011," S&P said.
"We might consider a positive rating action on OTP if our view of
Hungary's creditworthiness improved," S&P said.
Takarekbank
"The negative outlook reflects our belief that the financial
profiles of Takarekbank and the Integrated Savings Cooperatives
could deteriorate in line with weakening economic prospects in
Hungary. We do expect the links between Takarekbank and the
Integrated Savings Cooperatives to change," S&P said.
"We would consider a negative rating action if we observed
significant weakening in Takarekbank's links with the Integrated
Savings Cooperatives, which would trigger a change in our view of
its 'strategically important' subsidiary status, or if the credit
risk profile of the Integrated Savings Cooperatives weakened, as
less supportive economic and operating domestic conditions could
worsen households' and enterprises' creditworthiness. We could
also lower the ratings if the bank's capitalization weakened to a
point that resulted in a RAC ratio before adjustments of less
than 3%, or if its currently strong liquidity position were to
weaken. A one-notch deterioration in the bank's SACP would not
result in our lowering the issuer credit rating, because of the
potential three notches of uplift that we could incorporate for
group support," S&P said.
"We might consider a positive rating action on Takarekbank if our
view of Hungary's creditworthiness improved," S&P said.
K&H
"We do not assign outlooks to 'pi' ratings," S&P said.
Ratings List
Downgraded; CreditWatch/Outlook Action
To From
OTP Bank PLC
OTP Mortgage Bank
Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3
Certificate Of Deposit BB+/B BBB-/Watch Neg/A-3
Downgraded
To From
K&H Bank (Unsolicited Ratings)
Counterparty Credit Rating
Local Currency BBpi/--/-- BBB-pi/--/--
Ratings Affirmed; CreditWatch/Outlook Action
To From
Magyar Takarekszovetkezeti Bank ZRt.
Counterparty Credit Rating BB/Negative/B BB/Stable/B
Certificate Of Deposit BB/B --
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I C E L A N D
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KAUPTHING BANK: SFO Admits Errors in Tchenguiz Search Warrants
--------------------------------------------------------------
Ed Hammond at The Financial Times reports that the Serious Fraud
Office has admitted to errors in the information it used
obtaining warrants against property tycoon Vincent Tchenguiz.
The SFO, as cited by the FT, said the search warrants it used to
raid the Mayfair offices of Mr. Tchenguiz in March should be
"quashed and the material seized under the warrants returned
forthwith".
The news, coming nine months after Mr. Tchenguiz and his brother
Robert were arrested and questioned in relation to their dealings
with failed Icelandic bank Kaupthing, will be a setback for the
SFO as it seeks to continue its investigation, the FT states.
The agency is looking at whether value was extracted from the
bank in the weeks leading up to its demise, the FT discloses.
The announcement does not affect the SFO investigation of Robert
Tchenguiz, the FT notes.
Kaupthing was one of three Icelandic banks that failed at the
height of the credit crunch in October 2008, the FT recounts.
According to the FT, when the SFO announced the probe in 2009, it
said it was focused on "decision-making processes which appear to
have allowed substantial value to be extracted from the bank in
the weeks and days before its collapse."
In September, Mr. Tchenguiz reached a legal settlement with
Kaupthing, ending a protracted battle to sue the bank over claims
it had misrepresented its solvency position and violated a March
2008 pledge not to call in security interests on some of the
Tchenguiz-related loans, the FT relates.
About Kaupthing Bank
Headquartered in Reykjavik, Kaupthing Bank --
http://www.kaupthing.com/-- is Iceland's largest bank and among
the Nordic region's 10 largest banking groups. With operations
in more than a dozen countries, the bank offers a range of
services including retail banking, corporate finance, asset
management, brokerage, private banking, treasury, and private
wealth management. Kaupthing was created by the 2003 merger of
Bunadarbanki and Kaupthing Bank. In October 2008, the Icelandic
government assumed control of Kaupthing Bank after taking similar
measures with rivals Landsbanki and Glitnir.
As reported by the Troubled Company Reporter-Europe, on Nov. 30,
2008, Olafur Gardasson, assistant for Kaupthing Bank hf, filed a
petition under Chapter 15 of title 11 of the United States Code
in the United States Bankruptcy Court for the Southern District
of New York commencing the Debtor's Chapter 15 case ancillary to
the Icelandic Proceeding and seeking recognition for the
Icelandic Proceeding as a "foreign main proceeding" under the
Bankruptcy Code and relief in aid of the Icelandic Proceeding.
=============
I R E L A N D
=============
BACCHUS 2007-1: S&P Raises Rating on Class D Notes to 'B+'
----------------------------------------------------------
Standard & Poor's Ratings Services took various rating actions on
BACCHUS 2007-1 PLC's outstanding EUR378.95 million notes.
Specifically, S&P:
Raised its ratings on the class RCF, A, B, C, and D notes;
and affirmed its rating on the class E notes.
BACCHUS 2007-1 is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms.
"These rating actions follow our assessment of the transaction's
performance, as well as the application of all relevant criteria
for corporate CDOs," S&P said.
"In our opinion, the credit quality of the portfolio has
improved, and at the same time higher spreads are being earned on
the assets than we observed in 2009. We have also observed an
increase in credit enhancement. These factors, in our view,
support higher ratings on the class RCF, A, B, C, and D notes,"
S&P said.
"We have subjected the capital structure to a cash flow analysis
to determine the break-even default rate for each rated tranche.
In our analysis, we have used the reported portfolio balance,
weighted-average spread, and weighted-average recovery rates that
we consider to be appropriate. We have incorporated various cash
flow stress scenarios, using alternative default patterns,
levels, and timings for each liability rating category (i.e.,
'AAA', 'AA', and 'BBB' ratings), in conjunction with different
interest rate stress scenarios," S&P said.
"We have applied our 2010 counterparty criteria and, in our view,
the swap agreements do not entirely reflect these criteria.
Considering this, we have assessed our ratings, taking into
account the transaction's exposure to counterparties and the
potential impact if they did not perform. However, none of the
ratings on any class of notes are above our long-term issuer
credit rating on the option counterparty plus one notch," S&P
said.
"Since we lowered our ratings on all BACCHUS 2007-1's classes of
notes on Feb. 5, 2010, Barclays Bank PLC (A+/Stable/A-1) has
replaced American International Group Inc. (A-/Stable/A-2) in its
role as option counterparty," S&P said.
"We have also applied the largest obligor default test, a
supplemental stress test that we introduced as part of our
criteria update (see 'Update To Global Methodologies And
Assumptions For Corporate Cash Flow And Synthetic CDOs,'
published Sept. 17, 2009), and the largest industry default test,
another of our supplemental stress tests. The supplemental stress
test restricts the rating on the class E notes at the current
rating," S&P said.
"Considering all of these factors, we have raised our ratings on
the class RCF, A, B, C, and D notes, because our analysis
indicates that the credit enhancement available to each of these
tranches is commensurate with higher ratings than previously
assigned," S&P said.
"Also, the cash flow stresses support a higher rating on the
class E notes. However, the supplemental test restricts the class
E notes from achieving a higher rating. Therefore, we have
affirmed our current rating on the class E notes," S&P said.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
BACCHUS 2007-1 PLC
EUR450 Million Secured Floating-Rate and Subordinated Notes
Ratings Raised
RCF AA- (sf) BBB+ (sf)
A AA- (sf) BBB+ (sf)
B A- (sf) BB+ (sf)
C BB+ (sf) BB (sf)
D B+ (sf) CCC (sf)
Rating Affirmed
E CCC- (sf)
BELFRY HOTEL: Put Up for Sale by Lenders Despite Debt
-----------------------------------------------------
According to Birmingham Mail's Jon Griffin, Belfry hotel and golf
resort is up for sale despite a reported GBP105 million debt
pile.
Bank lenders Bank of Ireland, Barclays, and Certus are said to be
seeking a buyer for the popular luxury business, golf and leisure
complex, near Sutton Coldfield, Birmingham Mail discloses.
The complex's lenders brought in business advisers Ernst and
Young to examine potential options for the site, including a debt
restructuring and sale, Birmingham Mail relates. One report said
an unnamed Malaysian investor had already made contact to submit
a GBP90 million offer for the Belfry, Birmingham Mail notes.
The Belfry has made no official comment, but the sale comes just
months after a financial crisis gripped the complex's Irish
owners the Quinn Group, Birmingham Mail relates.
The Quinns bought the North Warwickshire business back in
February 2005, Birmingham Mail recounts. Financial catastrophe
hit the group earlier this year, forcing the Belfry into the
hands of Anglo-Irish Bank and US insurance firm Liberty Mutual,
Birmingham Mail discloses.
The Quinn Group bought the complex for GBP186 million but the
recession has seen its value dramatically decline, Birmingham
Mail notes.
COSMO FINANCE 2007-1: S&P Affirms 'B' Rating on Class F Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
all classes of notes in CoSMO Finance 2007-1 Ltd. and CoSMO
Finance 2008-1 Ltd.
"The rating actions follow our surveillance review of both
transactions, including a full credit review of the underlying
reference pools as well as a review of the counterparty roles
involved in the deals. Both transactions represent partially
funded synthetic small-and-midsize enterprise (SME)
collateralized loan obligations (CLOs) that reference portfolios
of corporate loans granted to German SME clients of Commerzbank
AG. Both transactions will continue to actively replenish their
portfolios until mid-2012," S&P said.
"The issuer has invested the proceeds from the issuance of
credit-linked notes in cash deposits currently held with Banco
Santander S.A. Thus, the entire principal portion of the rated
notes is cash-collateralized. We expect the transactions to
unwind shortly after the end of the replenishment periods, as
both portfolio display extremely short weighted-average life (0.3
years). We therefore classify the underlying cash deposit
agreements as direct limited support according to our 2010
counterparty criteria (see 'Counterparty And Supporting
Obligations Methodology And Assumptions,' published on Dec. 6,
2010)," S&P said.
Since closing, the transaction portfolios have been actively
replenishing. On the November 2011 replenishment dates, the
maximum portfolio amounts outstanding were EUR2 billion for CoSMO
Finance 2007-1 and EUR1.5 billion for CoSMO Finance 2008-1. The
transactions have met all of the replenishment conditions, under
the transaction documentation and S&P considers the portfolio
credit quality to be stable.
CoSMO Finance 2007-1 has accumulated EUR17.1 million of defaults
since closing. To date, no losses have been allocated to the
capital structure as a result of these defaults. The current
remaining balance of the synthetic threshold amount is EUR14.8
million and an additional EUR2.5 million of synthetic excess
spread is available every quarter.
CoSMO Finance 2008-1 has accumulated EUR21 million of defaults
since closing. To date, no losses have been allocated to the
capital structure as a result of these defaults. The current
remaining balance of the synthetic threshold amount is EUR23
million.
"Both transactions have a very short weighted-average life of
currently just 0.3 years. However, we expect this to fluctuate to
some extent during the remaining replenishment period. We
consider the replenishment conditions to be tight; they include a
test using Standard & Poor's synthetic rated
overcollateralization (SROC) metric to ensure that the portfolio
credit quality remains stable," S&P said.
"In summary, we consider that the credit enhancement levels
available to the various notes are commensurate with the current
ratings on the notes and the current risk profile of the
underlying reference pools," S&P said.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
CoSMO Finance 2007-1 Ltd.
EUR1.985 Billion Floating-Rate Credit-Linked Notes
Ratings Affirmed
A1+ AAA (sf)
A2+ AAA (sf)
B AA (sf)
C A (sf)
D BBB (sf)
E BB (sf)
F B
CoSMO Finance 2008-1 Ltd.
EUR119 Million Floating-Rate Credit-Linked Notes
Ratings Affirmed
A1+ AAA (sf)
A2+ AAA (sf)
B AA (sf)
C A (sf)
D BBB (sf)
E BB (sf)
F B (sf)
EUROCASTLE CDO: S&P Puts 'CCC+'-Rated Class B Notes on Watch Neg.
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed on CreditWatch negative
its credit ratings on three and six classes of notes in
Eurocastle CDO II PLC and Eurocastle CDO III PLC.
"The rating actions follow the restructuring of these
transactions in November 2011. While the issuer has published
notices of amendments to the transactions' documents, in our
view, the notices do not contain sufficient information to allow
us to analyze the restructured transactions. We have therefore
placed on CreditWatch negative our ratings on the class A-1, A-2,
and B notes in Eurocastle CDO II, and our ratings on the class A-
1, A-2, B, C, D, and E notes in Eurocastle CDO III. If we do not
receive what we consider to be sufficient information in the
coming weeks, we may withdraw our ratings in the two
transactions," S&P said.
Both Eurocastle CDO II and Eurocastle CDO III are cash flow
collateralized debt obligations (CDOs) of mezzanine structured
finance securities that closed in 2005. Eurocastle CDO II invests
primarily in sterling-denominated securities, and Eurocastle CDO
III primarily in euro-denominated securities. Both transactions
are managed by Fortress Investment Group LLC.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
Ratings Placed on CreditWatch Negative
Eurocastle CDO II PLC
GBP295.8 Million Senior and Mezzanine Deferrable-Interest
Fixed- and Floating-Rate Notes
A-1 AA (sf)/Watch Neg AA (sf)
A-2 BB+ (sf)/Watch Neg BB+ (sf)
B CCC+ (sf)/Watch Neg CCC+ (sf)
Eurocastle CDO III PLC
EUR736 Million Senior and Mezzanine Deferrable-Interest
Floating-Rate Notes
A-1 AAA (sf)/Watch Neg AAA (sf)
A-2 AA+ (sf)/Watch Neg AA+ (sf)
B A- (sf)/Watch Neg A- (sf)
C BBB+ (sf)/Watch Neg BBB+ (sf)
D BBB- (sf)/Watch Neg BBB- (sf)
E BB (sf)/Watch Neg BB (sf)
EUROCREDIT OPPORTUNITIES: S&P Affirms BB+ Rating on Class D Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Eurocredit Opportunities Parallel Funding I Ltd.'s class A, B,
and C notes. "At the same time, we have affirmed our rating
on the class D notes," S&P said.
"The rating actions follow our performance review of the
transaction and the application of our 2010 counterparty criteria
(see 'Counterparty And Supporting Obligations Methodology And
Assumptions,' published on Dec. 6, 2010)," S&P said.
"Since our last review in February 2010, we have observed a
positive rating migration of the performing assets in the
underlying portfolio, with a reduction of 'CCC' rated assets to
3% from 9%. However, defaulted assets have increased to 4.2% from
2.0%, causing the aggregate collateral balance to drop to EUR419
million from EUR434 million," S&P said.
Consequently, the credit enhancement available to each class of
notes has slightly decreased, because none of the notes have paid
down apart from a marginal reduction of the class A note balance.
That reduction followed the cure of an overcollateralization
trigger that was previously in breach. The transaction has not
yet entered its amortization period, which is scheduled to begin
in May 2012.
"Positive factors in our analysis include the reduction of the
weighted-average life to less than four years and the increase of
the weighted-average spread to 3.07% from 2.63%, following the
continuous reinvestment of redemption proceeds into assets that
pay greater margins," S&P said.
"Therefore, and in accordance with our analysis, we have affirmed
our rating on the class D notes and raised our ratings on classes
A, B, and C to levels that appropriately reflect the current
levels of credit enhancement, the portfolio credit quality, and
the transaction's performance," S&P said.
Eurocredit Opportunities Parallel Funding I is a cash flow
collateralized loan obligation (CLO) transaction backed primarily
by leveraged loans to speculative-grade corporate firms.
Geographically, the portfolio is concentrated in Germany, France,
Spain, the Netherlands, and the U.K, which together account for
nearly 85% of the portfolio. Eurocredit Opportunities
Parallel Funding I closed in April 2008 and is managed by
Intermediate Capital Manager Ltd.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
Eurocredit Opportunities Parallel Funding I Ltd.
EUR450.5 Million Floating-Rate and Subordinated Notes
Ratings Raised
A AA (sf) AA- (sf)
B AA- (sf) A+ (sf)
C A+ (sf) A (sf)
Rating Affirmed
D BB+ (sf)
PARTHOLON CDO: S&P Raises Ratings on Two Note Classes to 'B+'
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on all
classes of notes issued by Partholon CDO I PLC (Partholon).
"The rating actions follow our assessment of the transaction's
performance using data from the latest available trustee report,
dated Nov. 1, 2011, in addition to a cash flow analysis. We have
taken into account recent developments in the transaction and
reviewed the transaction under our 2010 counterparty criteria
(see 'Counterparty And Supporting Obligations Methodology And
Assumptions,' published Dec. 6, 2010)," S&P said.
"From our cash flow analysis, we have observed an increase in
credit enhancement available for all classes of notes. In our
opinion, this has resulted primarily from the repayment of the
class A notes issued by the special-purpose entity (SPE;
Partholon). Additionally, we note from the November 2011 trustee
report that the overcollateralization test results for all
classes of notes have improved and are currently passing their
required levels. At the same time, the weighted-average spread
earned on the collateral pool has also increased since our last
review in March 2010," S&P said.
"In addition, our analysis indicates that the weighted-average
maturity of the portfolio since our last review has decreased,
which has led to a reduction in our scenario default rates (SDRs)
for all rating categories," S&P related.
"We subjected the capital structure to a cash flow analysis in
order to determine the break-even default rate for each rated
class, which we then compared against its SDR to determine the
rating level for each class of notes. In our analysis, we used
the reported portfolio balance that we consider to be performing,
the weighted-average spread, and the weighted-average recovery
rates that we considered appropriate. We incorporated various
cash flow stress scenarios using our standard default patterns,
levels, and timings for each rating category assumed for all
classes of notes, in conjunction with different interest rate
stress scenarios," S&P said.
"In our view, the deleveraging of the class A notes, combined
with improvements that we have seen in the transaction's
performance since our last review, indicate that the credit
enhancement available to this class of notes is commensurate with
higher rating levels than previously assigned. These higher
rating levels are also consistent with the application of our
2010 counterparty criteria. We have therefore raised our ratings
on the class A-1 and A-3 notes to 'AAA (sf)'," S&P said.
"The improvements we have seen in the transaction's performance
since our last review have benefited the class B and C notes, and
we believe the credit enhancement levels available to these
classes of notes are now commensurate with higher rating levels.
We have therefore raised our ratings on the class B-1 and B-2
notes to 'A+ (sf)'. At the same time, we raised our ratings on
the class C-1 and C-2 notes to 'B+ (sf)'," S&P said.
"The class R combination notes comprise Partholon's class B-3 and
subordinated notes as components. Our upgrade of the class R
notes to 'A+ (sf)' reflects the effect the transaction's improved
performance has had on the class B-3 notes," S&P said.
"None of the notes issued by Partholon CDO was constrained by the
application of the largest obligor default test, a supplemental
stress test we introduced in our 2009 criteria update for
corporate collateralized debt obligations (CDOs) (see 'Update to
Global Methodologies And Assumptions For Corporate Cash Flow And
Synthetic CDOs,' published Sept. 17, 2009)," S&P said.
Partholon is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans to primarily speculative-grade
corporate firms. The transaction closed in October 2003 and its
reinvestment period ended in January 2009. The CLO is managed by
The Governor and Company of The Bank of Ireland.
Ratings List
Class Rating
To From
Partholon CDO I PLC
EUR409.425 Million Fixed-Rate, Floating-Rate and Zero Coupon
Notes
Ratings Raised
A-1 AAA (sf) A- (sf)
A-3 AAA (sf) A- (sf)
B-1 A+ (sf) BB+ (sf)
B-2 A+ (sf) BB+ (sf)
B-3 A+ (sf) BB+ (sf)
C-1 B+ (sf) CCC- (sf)
C-2 B+ (sf) CCC- (sf)
R A+ (sf) BB+ (sf)
PENTA CLO: S&P Raises Rating on Class E Notes to 'BB'
-----------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Penta CLO 1 S.A.'s class A-1, A-2, B, C, D, and E notes.
"The rating actions follow our performance review of the
transaction and the application of our 2010 counterparty criteria
(see 'Counterparty And Supporting Obligations Methodology And
Assumptions,' published on Dec. 6, 2010)," S&P said.
'Since our last review in January 2010, we have observed a
relatively positive rating migration of the underlying portfolio,
marked by a noticeable decrease of defaulted assets due to the
sale or reclassification of defaulted assets into the 'CCC'
rating category, following restructuring (for example, Bodybell
or Gasserv, which was formerly known as Taylor-Wharton
International)," S&P said.
"At the same time, the credit enhancement available to each class
of notes has increased due to the deleveraging of the class A-1
notes, the cure of an overcollateralization test that was
previously in breach. Other positive factors in our analysis
include the reduction of the weighted-average life and the
increase of the weighted-average spread, following the continuous
reinvestment of redemption proceeds into assets that pay greater
margins," S&P said.
"Therefore, and in accordance with our analysis, we have raised
our ratings to levels which appropriately reflect the current
levels of credit enhancement and the portfolio credit quality,"
S&P said.
"Note, in particular, that the class E tranche rating was
previously constrained by the application of the largest obligor
default test, a supplemental stress test we introduced as part of
our 2009 corporate criteria update; however, this is no longer
the case, and we have therefore raised it to 'BB (sf)' from 'CCC+
(sf)'," S&P said.
Penta CLO 1 is a cash flow collateralized loan obligation (CLO)
transaction backed primarily by leveraged loans to speculative-
grade corporate firms. Geographically, the portfolio is
concentrated in Germany, France, Spain, the Netherlands, and the
U.K, which together account for over 75% of the portfolio. Penta
CLO 1 closed in April 2007 and is managed by Partners Group.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
Penta CLO 1 S.A.
EUR405 Million Floating-Rate Notes
Ratings Raised
A-1 AAA (sf) AA+ (sf)
A-2 AA+ (sf) AA (sf)
B A- (sf) BBB (sf)
C BBB (sf) BB+ (sf)
D BB+ (sf) BB- (sf)
E BB (sf) CCC+ (sf)
RMF EURO: S&P Raises Rating on Class IV Notes to 'BB+'
------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions on RMF Euro CDO V PLC's outstanding EUR486.53 million
notes.
Specifically, S&P:
Raised its ratings on the class I, Rev Fac, II, III, and IV
notes; and
Affirmed its rating on the class V notes.
RMF Euro CDO V is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms.
"These rating actions follow our assessment of the transaction's
performance, as well as the application of all relevant criteria
for corporate collateralized debt obligations (CDOs)," S&P said.
"In our opinion, the credit quality of the portfolio has
improved, and at the same time higher spreads are being earned on
the assets than we observed in 2009. We have also observed an
increase in credit enhancement. These factors, in our view,
support higher ratings on the class I, Rev Fac, II, III, and IV
notes," S&P said.
"We have subjected the capital structure to a cash flow analysis
to determine the break-even default rate for each rated tranche.
In our analysis, we have used the reported portfolio balance,
weighted-average spread, and weighted-average recovery rates that
we consider to be appropriate. We have incorporated various cash
flow stress scenarios, using alternative default patterns,
levels, and timings for each liability rating category (i.e.,
'AAA', 'AA', and 'BBB' ratings), in conjunction with different
interest rate stress scenarios," S&P said.
"We have applied our 2010 counterparty criteria and, in our view,
the swap agreements do not entirely reflect these criteria.
Considering this, we have assessed our ratings, taking into
account the transaction's exposure to counterparties and the
potential impact if they did not perform. However, none of the
ratings on any class of notes are above our long-term issuer
credit rating on the option counterparty plus one notch," S&P
said.
"Since we lowered our ratings on all RMF Euro CDO V's classes of
notes on Feb. 5, 2010, Barclays Bank PLC (A+/Stable/A-1) has
replaced American International Group Inc. (A-/Stable/A-2) as
option counterparty," S&P said.
"We have also applied the largest obligor default test, a
supplemental stress test that we introduced as part of our
criteria update (see 'Update To Global Methodologies And
Assumptions For Corporate Cash Flow And Synthetic CDOs,'
published Sept. 17, 2009), and the largest industry default test,
another of our supplemental stress tests. The supplemental stress
test restricts the rating on the class V notes at the current
rating," S&P said.
"Considering all of these factors, we have raised our ratings on
all of the class I, Rev Fac, II, III, and IV notes, because our
analysis indicates that the credit enhancement available to each
of these tranches is commensurate with higher ratings than
previously assigned," S&P said.
"Also, the cash flow stresses support a higher rating on the
class V notes. However, the supplemental test restricts the class
V notes from achieving a higher rating. Therefore, we have
affirmed our current rating on the class V notes," S&P said.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
RMF Euro CDO V PLC
EUR558.6 Million Secured Floating-Rate Notes
and Revolving Facility
Ratings Raised
I AA- (sf) A+ (sf)
Rev Fac AA- (sf) A+ (sf)
II A (sf) BBB+ (sf)
III BBB+ (sf) BBB- (sf)
IV BB+ (sf) BB (sf)
Rating Affirmed
V B+ (sf)
FASTNET LINE: Needs to Raise EUR1-Mil. to Save Cork Swansea Ferry
-----------------------------------------------------------------
Fastnet Line needs to raise a remaining EUR1 million by January
next year to save the Cork Swansea ferry and get it back in
operation in March.
Fastnet Line confirmed at a Dec. 20 hearing in the High Court
that there is only one investment proposal available to save the
Cork Swansea ferry, which is currently in examinership.
The examinership process will continue with the West Cork Tourism
Co-Op emerging as the only viable entity capable of returning the
ferry to a profitable business model.
The West Cork Tourism Co-Operative Society outlined on Dec. 20
the urgent funding required to secure the future of the ferry
service, which will allow them to present a financial proposal to
the Examiner in early January.
As of Dec. 20, EUR673,000 has been raised by individual donors,
customers, shareholders and local businesses, leaving just under
EUR1 million to be raised.
Noel Murphy, Chairman of the Co-Op related in a statement, "The
response we have received in such a short period of time has been
overwhelming.
"The West Cork Tourism Cooperative has agreed to present an
investment proposal to the examiner early in 2012.
"This business plan would be supported by EUR1.65 million, which
would be made available to Fastnet Line.
"The Ferry provides the only direct passenger and freight link
between the South West Irish region and the U.K. In so doing, it
is a key generator of business and tourism and related revenues
for both regions.
"During its time in operation, the ferry service was responsible
for an additional EUR40 million per annum to the Munster Region.
This kind of revenue to local businesses cannot be lost,
especially in these stringent economic times.
"The ferry is also a vital piece of Irish transport
infrastructure and brings tens of thousands of tourists into
Southern Ireland - its collapse could hit the local economy to
the tune of tens of millions in lost revenues", said Mr. Murphy.
At the event, the Co-op will outline a number of management
decisions designed to ensure the long-term viability of the
service. These include altering the business model to a six-
month sailing service and the establishment of more efficient
marketing unit.
G. Haden Urges Raising of Fund to Save Ferry
Robin Turner at Western Mail related in a Dec. 27 report that
businessman Geoff Haden has joined the campaign for more support
for plans to save the Cork Swansea ferry. Mr. Haden said, the
report noted, the ferry service has so many benefits and that
local people and businesses should give it their backing.
Mr. Haden, as cited by Western Mail, said that apart from the
money that needs to be raised, there are a number of actions that
could make the revitalized ferry more attractive. "For instance,
if Associated British Ports and the city council are committed to
encouraging people to come to Swansea they have to look at
upgrading the approach to the ferry port, particularly reopening
an easy route into the city," the report quoted Mr. Haden as
saying.
Mr. Haden runs the Swansea-based Clyne Farm Centre tourism
business and the Dylan Thomas Birthplace in Swansea.
John Williams, vice chairman of the West Cork Tourism Co-
operative Society, said the remainder of the money needed to
allow Fastnet Line to emerge from examinership must be raised by
the second week of January if the service is to resume as planned
on March 31, Western Mail discloses.
As reported by the Troubled Company Reporter-Europe on Nov. 17,
2011, The Irish Times related that Mr. Justice Peter Kelly on
Nov. 15 approved examinership for Fastnet Line Ship Holdings Ltd.
and related companies where no opposition to court protection was
voiced by creditors. Michael McAteer --
michael.mcateer@ie.gt.com -- of Grant Thornton was appointed
examiner for the Fastnet Line companies, the Irish Times
disclosed. He has 100 days to finalize a survival scheme, the
Irish Times noted. Ross Gorman, for the companies, had outlined
that the Fastnet companies are insolvent with a deficit of some
EUR10.3 million on a going concern basis, rising to about EUR13.2
million in a winding-up scenario, the Irish Times said. The
companies said their difficulties were due to problems including
start-up cost overruns and the decision to operate an all-year
service in 2010 in line with recommendations of a firm of
independent consultants in a "flawed" report commissioned by the
Port of Cork, the Irish Times noted. The companies said it
became apparent during that first year the ferry was running at a
significant loss outside the high season, according to the Irish
Times.
The Fastnet Line companies are 100%-owned by the West Cork
Tourism Co-Operative Society Limited, which was formed in April
2009 to fund and operate the Cork-Swansea ferry service as a
community-based cooperative of over 450 investors and enterprises
in both Wales and Ireland. Since March 2010, about 153,000
passengers have used the ferry service. A fundraising drive is
underway in Ireland and Wales. The West Cork Tourism
Cooperative, which currently owns Fastnet Line has agreed to
present an investment proposal to the examiner in early 2012 in
order to ensure the survival of the unique Cruise Ferry service
between Ireland and Wales.
=========
I T A L Y
=========
EDISON SPA: Fitch Cuts Senior Unsecured Debt Rating to 'BB-'
------------------------------------------------------------
Fitch Ratings has downgraded Edison Spa's Long-term Issuer
Default Rating (IDR) and Senior Unsecured rating to 'BB-' from
'BBB-' and its Short-Term IDR to 'B' from 'F3'. The Long-term
IDR and Senior Unsecured ratings are placed on Rating Watch
Evolving (RWE).
The downgrade is driven by the negative impact of the prolonged
negotiation process undertaken by Edison's shareholders, EDF SA
('A+'/Stable) and its Italian counterparties grouped in Delmi
Spa. So far, the negotiation process has recorded four
reschedulings and increasingly appears at risk of failing to meet
the next deadline of 30 December 2011. Together with a high
probability of a further rescheduling of negotiations, Edison's
liquidity position remains weak.
"Against a backdrop of increasingly difficult credit market
conditions and a challenging macroeconomic environment, the
prolonged delay in the negotiation process has limited the
company's ability to focus on key management functions, including
the planning of funding and liquidity requirements, to the extent
that the company is no longer commensurate with an investment
grade credit profile," says Francesca Fraulo, Director in Fitch's
EMEA Energy, Utilities and Regulation team in Milan.
The likelihood that political intervention might drag the
negotiations on even longer is also looming again and Fitch would
negatively view a solution not driven by market dynamics as one
influenced by political pressure might result in further lengthy
negotiations and potential legal disputes, which are likely to be
detrimental to the company's operating activity.
The EUR1.1 billion debt at Edipower, a company 50% owned by
Edison, is maturing on December 31 and Fitch understands that
repayment should take place through a shareholders loan, the
signing of which was approved by Edipower's board. Fitch notes
that, despite Edison's obligation to Edipower being limited to
its 50% shareholding, a cross default clause in Edison's EMTN
program could have led to an acceleration of payments under
Edison's outstanding bonds should Edipower have had a non-
payment. While the shareholders loan alleviates immediate
liquidity pressure, Fitch remains concerned about Edison's
liquidity profile in view of upcoming debt maturities and
liquidity requirements for its trading activity.
The RWE on Edison's 'BB-' Long-term IDR and Senior Unsecured
ratings highlights Fitch's concern that a protracted failure to
reach an agreement among shareholders might escalate liquidity
concerns and be prejudicial to Edison's bondholders and therefore
result in a further downgrade of the company. On the other hand,
if an agreement is reached that would result in the majority of
Edison being transferred to EDF, there is scope for positive
rating momentum. The timing and significance of the latter would
depend on clarity on legal, strategic and operational links
between Edison and EDF SA.
FONDIARIA SAI: Main Creditors Seek Investors for Capital Increase
-----------------------------------------------------------------
Armorel Kenna at Bloomberg News, citing daily Il Sole 24 Ore,
reports that Fondiaria SAI SpA's main creditors, Mediobanca SpA
and UniCredit SpA, are seeking to involve private equity firms in
the company's planned EUR750 million (US$980 million) capital
increase.
According to Bloomberg, the Italian newspaper said that Clessidra
SGR SpA may be interested in buying shares.
Sole reported that Geox SpA founder Mario Moretti Polegato and
other potential investors have also been sounded out, Bloomberg
notes.
* * *
As reported by the Troubled Company Reporter-Europe on Dec. 16,
2011, Fitch Ratings downgraded Fondiaria-SAI's IFS rating to
'BB-' from 'BB+'. The Outlook is Negative.
Fondiaria SAI SpA is an Italian insurer.
LOCAT SV: S&P Affirms 'B+' Rating on Class C Notes
--------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions on several transactions issued by Locat SV S.r.l. and
Locat Securitisation Vehicle 2 S.r.l.
Specifically, S&P has:
Kept on CreditWatch negative the ratings on the class A notes
in Locat Securitisation Vehicle 2, Locat SV's series 2005,
and Locat SV's series 2006;
Affirmed S&P's ratings on the class C notes in Locat SV's
series 2005, and on the class B and C notes in Locat SV's
series 2006; and
Raised S&P's ratings on the class B notes in Locat
Securitisation Vehicle 2 and Locat SV's series 2005.
"These rating actions follow our credit and cash flow analysis of
these transactions, and our review of the performance data
contained in the latest investor reports, as well as the current
levels of available credit enhancement," S&P said.
As of the September 2011 interest payment date (IPD), these three
transactions have amortized substantially, with pool factors:
Locat Securitisation Vehicle 2: 15%;
Locat SV series 2005: 22%; and
Locat SV series 2006: 37%.
In all three transactions, the performance of the underlying
collateral has been stable, or has improved during the past 18
months. This follows a deterioration recorded in H2 2009 and H1
2010, alongside the weak economic environment in Italy.
The current arrears levels, according to the September 2011
investor report, are:
Locat Securitisation Vehicle 2: 5.36%;
Locat SV series 2005: 3.80%; and
Locat SV series 2006: 4.64%.
The three transactions experienced a rise in defaults during
2010, and excess spread in series 2005 and 2006 has so far been
insufficient to clear the principal deficiency ledgers (PDLs).
This has resulted in undercollateralization of EUR21.9 million
for the class C notes in series 2006.
Even if Locat SV series 2005 and 2006 present an unpaid PDL of
EUR2.01 million and EUR27.17 million, the current levels are
below the peak recorded in H1 2010, equal to EUR17.19 million for
series 2005, and EUR33.26 million for series 2006.
All three transactions feature a deferral mechanism of interest
payments on the class B and C notes, to give additional
protection to the class A notes. If the net cumulative default
ratio increases beyond a certain level, payment of interest on
the class B and C notes is subordinated to payment of principal
on the class A notes.
The interest-deferral trigger for the cumulative default ratios
in the three transactions are:
11% for the class B notes in Locat Securitisation Vehicle 2,
with a current net cumulative default ratio of 2.89% -- up
from 2.78% recorded on the previous IPD;
11.5% for the class B notes and 6.5% for the class C notes in
Locat SV series 2005, with a current net cumulative default
ratio of 3.32% -- up from 3.14% (for both classes) recorded
on the previous IPD; and
11.5% for the class B notes and 6.5% for the class C notes in
Locat SV series 2006, with a current net cumulative default
ratio of 4.96% -- up from 4.87% (for both classes) recorded
on the previous IPD.
The rating actions are the result of the current performance, the
level of defaults, and the current net cumulative defaults ratio
in relation to the levels of the interest-deferral triggers.
"We conducted a cash flow analysis for these transactions, in
which we ran a number of scenarios to test the structures'
ability to make timely payment of interest and ultimate repayment
of principal in every rating scenario," S&P said.
"The ratings on the class A 'AAA' notes in these transactions
remain on CreditWatch negative as a result of the current
CreditWatch action on the rating of the Republic of Italy,
through the application of our EMU criteria when rating above the
sovereign ceiling (see 'Nonsovereign Ratings That Exceed
EMU Sovereign Ratings: Methodology And Assumptions,' published on
June 14, 2011). Under the application of these criteria, the
ratings on these classes of notes would most likely be affected
if the Republic of Italy were to be downgraded below 'A-'.
Furthermore, the rating on the class B notes in Locat
Securitisation Vehicle 2 would most likely be affected if the
rating on the Republic of Italy were to be downgraded below
'BBB'," S&P said.
"On Dec. 9, 2011, we placed our ratings on the class A notes in
these three transactions on CreditWatch negative (see 'European
Structured Finance CreditWatch Placements Following Eurozone
Sovereign CreditWatch Placements - Dec. 9, 2011'), because the
current ratings on these tranches is higher than the maximum
structured finance rating we would assign under our criteria if
we lowered our sovereign rating on Italy by up to two notches,"
S&P said.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating Rating
To From
RATINGS REMAINING ON CREDITWATCH NEGATIVE
Locat Securitisation
Vehicle 2 S.r.l.
EUR2.5-Bil. Asset-Backed
Floating-Rate Notes A AAA (sf)/Watch Neg
Locat SV S.r.l.
EUR2 Billion Asset-Backed
Floating-Rate Notes
Series 2005 A2 AAA (sf)/Watch Neg
Locat SV S.r.l.
EUR1.973-Bil. Asset-Backed
Floating-Rate Notes
Series 2006 A2 AAA (sf)/Watch Neg
RATINGS AFFIRMED
Locat SV S.r.l.
EUR2 Billion Asset-Backed
Floating-Rate Notes
Series 2005
C BB+ (sf)
Locat SV S.r.l.
EUR1.973 Billion Asset-Backed
Floating-Rate Notes Series 2006
B A- (sf)
C B+ (sf)
RATINGS RAISED
Locat SV S.r.l.
EUR2 Billion Asset-Backed
Floating-Rate Notes
Series 2005 B A A- (sf)
Locat Securitisation
Vehicle 2 S.r.l.
EUR2.5 Billion Asset-Backed
Floating-Rate Notes B AA A (sf)
===================
K A Z A K H S T A N
===================
BTA BANK: Fitch Cuts Long-Term Issuer Default Ratings to 'C'
------------------------------------------------------------
Fitch Ratings has downgraded Kazakhstan-based BTA Bank's (BTA)
Long-term Issuer Default Ratings (IDR) to 'C' from 'CCC'.
The downgrade follows announcements by BTA that it would
recommend a second restructuring of the bank's liabilities to its
shareholders (the previous was completed in 2010), and by deputy
chairman of the board of the national welfare fund Samruk Kazyna
(SK) (BTA's majority shareholder) Aidan Karibzhanov, that SK
intends to support the proposal. Fitch understands from the
statement that the restructuring would primarily affect BTA's
issued debt, which stood at 33% of BTA's liabilities at end-Q311
according to IFRS financial statements.
A formal decision on restructuring is due to be made at the
bank's shareholder meeting scheduled for January 26, 2012. In
Fitch's view, BTA's default is probably imminent following these
statements and the fact that SK has a sufficient majority vote to
approve the restructuring, which is commensurate with the
agency's rating definition of 'C'. Fitch expects to downgrade
BTA to 'RD' if and when the restructuring is officially approved
by the bank's shareholder meeting and the bank ceases to service
some of its obligations.
The downgrade of the Recovery Rating on the senior unsecured debt
to 'RR5' from 'RR4' reflects the increased uncertainty about the
ultimate recovery prospects stemming from both the less
supportive stance of SK and also potential acceleration of the
recovery notes, which were issued to some creditors affected by
the first restructuring and which are mostly reflected off
balance sheet but, if accelerated, become payable at their
nominal value of US$5.2 billion.
The agency notes that BTA's standalone financial position is
exceptionally weak and the bank will almost certainly default
without external support as reflected in its Viability Rating at
'f'. At end-Q311, BTA's negative equity, as reported in the IFRS
financial accounts, was about US$2.2 billion, mainly due to the
high level of reserves for impaired loans (equal to 69% of the
gross loan book). The pre-impairment loss for 9M11 was USD0.5bn
as a result of material negative carry due to the high cost of
BTA's debt, and high operating expenses.
SK has held a 81.5% stake in BTA since the completion of the
bank's restructuring in 2010.
The rating actions are as follows:
BTA Bank
-- Long-term foreign and local currency IDRs downgraded to 'C'
from 'CCC'
-- Short-term foreign and local currency IDRs affirmed at 'C'
-- Viability Rating affirmed at 'f'
-- Individual Rating affirmed at 'F'
-- Support Rating affirmed at '5'
-- Support Rating Floor revised to 'C' from 'CCC'
-- Senior unsecured rating downgraded to 'C' from 'CCC';
-- Recovery Rating at 'RR5'
-- Subordinated debt rating affirmed at 'C'; Recovery Rating at
'RR6'
KASSA NOVA: S&P Assigns 'B/C' Counterparty Credit Ratings
---------------------------------------------------------
Standard & Poor's Ratings assigned its 'B' long-term and 'C'
short-term counterparty credit ratings and 'kzBB' Kazakhstan
national scale rating to Kassa Nova Bank JSC. The outlook is
stable.
"The ratings on Kassa Nova reflect our view of the bank's 'weak'
business position, 'very strong' capital and earnings, 'moderate'
risk position, 'below-average' funding, and 'moderate' liquidity,
as our criteria define these terms. The stand-alone credit
profile (SACP) is 'b'," S&P said.
"Kassa Nova's 'weak' business position reflects a balance between
its short track record, limited business model, and small balance
sheet against its focused strategy and experienced management
team. Kassa Nova is a small bank ranking in the lower third of
Kazakhstan's 34 banks by asset size. The bank was created by the
former major shareholder and former managers of ATF Bank (not
rated) in November 2009. By Sept. 30, 2011, Kassa Nova had
already achieved a US$65 million loan portfolio and developed a
regional network of five branches and 22 outlets. The bank
focuses on offering a limited number of standardized retail
products to the middle and lower-middle wealth segments of the
population and individual entrepreneurs," S&P said.
"We assess Kassa Nova's capital and earnings as 'very strong'.
This reflects our projected risk-adjusted capital (RAC) ratio,
before adjustments for diversification, of about 20% for the bank
over the next 12-18 months. However, Kassa Nova has a small
absolute capital base of KZT10.5 billion (about US$70 million),
which slightly exceeds the regulatory minimum of KZT10 billion as
of July 1, 2011. Our projection incorporates very rapid loan
growth, no capital injections in 2012, and no dividend payments
on common shares. The bank achieved break-even profitability in
mid-2011. We expect a positive earnings trend in the medium term,
supported by a targeted net interest margin of more than 10%.
This is in view of Kassa Nova's high margined consumer finance
business and lean cost structure, due to high automation and
standardization. Nevertheless, the earnings buffer is likely to
turn positive only in 2013," S&P said.
"Kassa Nova's risk position is 'moderate', in our view. The bank
targets rapid loan growth from a low base, but we regard its
enterprise risk management better than peers', which should
enable it to control the increasing loan portfolio. The bank does
not have high single-name or industry concentrations; the top 20
loans represented 11.4% of total loans on Sept. 30, 2011.
However, we are mindful that Kassa Nova's short history does not
allow for representative data on previous loss experience. Loans
more than 90 days overdue (overall 26 borrowers) comprised 0.3%
of the loan book on Sept. 30, 2011. We expect nonperforming loans
to increase in the medium term as the loan portfolio matures, but
loans more than 90 days overdue to not exceed 5% over the next 18
months," S&P said.
"Kassa Nova's funding is, in our view, 'below average' and its
liquidity 'moderate'. The bank plans to diversify its funding
base away from the current dependence on subordinated debt, which
accounted for 52% of total funding as of Dec. 1, 2011. Additional
funding was represented by customer deposits (27%) and interbank
funding (21%). The funding mix at year-end 2012 is targeted to
be more diversified at 21% subordinated debt, 9% interbank
funding, 19% domestic bonds, 15% retail deposits, and 36%
corporate deposits. Only 9% of Kassa Nova's assets were liquid
assets as of Sept. 30, 2011. The bank assumes that it can rely on
an expedient cash injection from its wealthy shareholders, in
case of need," S&P said.
"The stable outlook reflects our expectation that although Kassa
Nova will be challenged by the rapid growth of its predominantly
retail franchise over the next 12 months, we believe it has
sufficient capital to absorb such growth," S&P said.
KAZAKHTELECOM: Fitch Views Kcell Stake Sale as Rating Neutral
-------------------------------------------------------------
Fitch Ratings says that the sale of Kazakhtelecom's 49% stake in
Kcell to TeliaSonera is viewed as rating neutral, in line with
Fitch's expectations when the company's Issuer Default Rating
(IDR) was affirmed at 'BB'\Stable on December 13, 2011.
Kazakhtelecom has signed an agreement to sell its entire stake in
Kcell for US$1,519 million to Sonera Holdings B.V., a subsidiary
of TeliaSonera AB. The deal is subject to regulatory approvals
and is expected to be finalized during Q112.
Receiving cash from the deal is, in Fitch's view, not rating
positive since Kazakhtelecom stores cash in local banks, which
have a substantially lower rating than the company, while there
is a possibility that its controlling shareholder Samruk-Kazyna
might require it to upstream cash received from the sale. If all
cash from the deal was upstreamed it would be mildly negative for
the rating.
The disposal Kcell does not necessarily weaken Kazakhtelecom's
market position since it has only been receiving dividends from
Kcell. Kazakhtelcom has been focusing on the development of its
data services segment (fixed and mobile broadband, IPTV) and the
development of its CDMA mobile subsidiaries (one of them has
recently received 4G frequencies), and these segments have
improved the company's business diversification.
Kcell is a leading mobile operator in Kazakhstan with a
subscriber base exceeding seven million. Kazakhtelcom has a 49%
in Kcell, while the remaining 51% is owned by Fintur Holdings
B.V. (of which 58.55% is owned by Telia Sonera AB, 41.55% is
owned by Turkcell).
SBERBANK: Fitch Assigns 'BB+' Rating on KZT20-Bil. Sub. Bonds
-------------------------------------------------------------
Fitch Ratings has assigned Kazakhstan-based Subsidiary Bank
Sberbank of Russia 's (SBK) KZT20bn subordinated bonds a Long-
term local currency rating of 'BB+' and a National Long-term
rating of 'AA-(kaz)'. The bank has a Long-term local currency
Issuer Default Rating of 'BBB-' and a National Long-term rating
of 'AA(kaz)', both with Stable Outlook.
This KZT20 billion notes represent the Series 1 bonds issued in
the framework of the bank's 2nd subordinated note program with
the total volume of KZT100 billion. The Series 1 issue carries a
fixed interest rate of 7% and matures in 2018.
The subordinated bonds' Long-term ratings are notched one level
below SBK's senior debt, reflecting the former's lower recovery
prospects for investors.
SBK, formerly Texakabank, was established in 1993 in Kazakhstan.
Russia-based Sberbank ('BBB'/Stable), which currently owns 100%
of SBK, acquired the bank in 2007. At end-10M11, SBK had a 3.6%
market share of the Kazakh banking system's assets.
===========
L A T V I A
===========
* CITY OF RIGA: S&P Raises Issuer Credit Rating to 'BB+'
--------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term issuer
credit rating on the Latvian capital City of Riga to 'BB+' from
'BB'. The 'B' short-term rating was affirmed. The outlook is
stable.
"The upgrade reflects our expectation, under our base-case
scenario, that Riga's revenues will be boosted over the period
2011-2014, owing to an anticipated recovery of economic growth in
Latvia. The upgrade also reflects the Riga management's track
record of taking structural budget consolidation measures, and
its improved liquidity position. The ratings on Riga are
constrained, in our view, by the consolidated and uneven Latvian
system of interbudgetary relations, its declining demographic
profile, high and increasing debt burden, and very weak budgetary
flexibility.
Nevertheless, we view the ratings as supported by Latvia's
expected economic recovery in 2012-2014 after a very severe
economic recession in 2009 and 2010, the city management's track
record of structural budgetary consolidation measures, and Riga's
positive liquidity situation. We expect Riga's debt service to
rise significantly because the city in 2010 started repaying its
amortizing obligations related to the Southern Bridge. As a
consequence, our base-case scenario anticipates debt service
rising to almost 10% of operating revenues in 2013-2014, from a
low 3% in 2010. The stable outlook reflects our base-case
scenario that economic recovery will help Riga's revenues to
rebound. Financial performance should, however, somewhat weaken
as a result of spending catch-ups and growing interest," S&P
said.
"Nevertheless, Riga's strong liquidity position is expected to
ensure high debt service coverage within the outlook horizon.
We could consider an upgrade if the sovereign rating is raised
and if Riga's budgetary performance improved to an only slightly
negative balance after capital accounts over 2011-2014.
Consequently, this would lead to lower tax-supported debt of
about 90% of consolidated operating revenues by 2014 as per our
upside scenario. The ratings could come under pressure should we
observe a significant deterioration in Riga's budget performance,
leading to average negative 7%-11% deficit after capital accounts
in 2012-2013 and, consequently, a faster accumulation of debt,
and a weaker liquidity position with a decline in cash reserves
below annual debt service needs," S&P said.
===============
P O R T U G A L
===============
BANIF - BANCO: Fitch Affirms 'BB' Long-Term Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has affirmed Banif - Banco Internacional do
Funchal, S.A.'s Long-term Issuer Default Rating (IDR) at 'BB'
with a Negative Outlook. The agency has also downgraded Banif's
Viability Rating (VR) to 'b-' from 'b+' and removed it from
Rating Watch Negative.
The rating actions conclude Fitch's review of the bank following
the downgrade of Portugal's sovereign rating to 'BB+' from 'BBB-'
with a Negative Outlook.
The affirmation of Banif's Long-term IDR, which remains at its
Support Rating Floor, is based on Fitch's assessment of available
sovereign and/or international support. The Negative Outlook
mirrors the Outlook on the Portuguese sovereign's IDR. Banif's
IDR and Support Rating Floor (SRF) might only be downgraded if
Portugal was downgraded by more than one notch.
The downgrade of Banif's VR primarily reflects its deteriorating
asset quality and profitability, affected by Portugal's
recessionary environment and funding and liquidity pressures.
Capital pressures at Banif's parent, Banif SGPS, were also a
contributing factor to the rating decision.
Fitch expects that pressure on the earnings of Banif and Banif
SGPS will continue in 2012 due to low interest rates and
sustained high retail funding costs, lower business volumes from
de-leveraging and high loan impairment charges from further asset
quality deterioration. This will add further pressure on Banif's
capital ratios. Banif was loss making in 9M11.
Banif's funding and liquidity will remain under pressure due to
persistent high competition for deposits, Portuguese banks'
inability to raise funding in the markets and debt maturities
falling due in 2012. As a result, it will prove difficult for
Banif to reduce its reliance on ECB funds (high at 14% of end-
Q311 assets). Banif had a low level of unencumbered ECB eligible
assets at end-Q311, but this improved in Q411.
Banif's overdue loans ratio was 5.1% at end Q311, worse than the
average of the Portuguese system, and Fitch expects it to
deteriorate further in 2012.
The group is under pressure to meet higher regulatory capital
requirements by end-2011, although at the Banif level the
regulatory core capital ratio was above 9% at end-Q311. Should
the group's capital strengthening plans not succeed, it could
ultimately have recourse to the EUR12 billion backstop capital
facility available for the Portuguese banking system under the
IMF/EU support program.
In accordance with Fitch's criteria on 'Rating Bank Regulatory
Capital and Similar Securities' (dated 15 December 2011), the
bank's subordinated debt has also been downgraded to a level one
notch below the bank's new VR. The downgrade of Banif's
preference shares follows the downgrade of the bank's VR and
reflects the heightened risk of non-performance.
Banif is the main subsidiary of Banif SGPS. This was the
seventh-largest Portuguese bank by total assets at end-H111 with
market shares of around 4% of loans and deposits.
The ratings actions are as follows:
Banif:
-- Long-term IDR affirmed at 'BB', Outlook Negative
-- Short-term IDR affirmed at 'B'
-- Viability Rating downgraded to 'b-' from 'b+'; removed from
RWN
-- Individual Rating: Downgraded to 'D/E' from 'D'; removed
from RWN
-- Support Rating affirmed at '3'
-- Support Rating Floor affirmed at 'BB'
-- Senior unsecured debt long-term rating affirmed at 'BB'
-- Senior unsecured debt short-term rating affirmed at 'B'
-- State guaranteed debt affirmed at 'BB+'
-- Subordinated debt downgraded to 'CCC' from 'BB-'; removed
from RWN
-- Preference shares downgraded to 'C' from 'B-', removed from
RWN
* PORTUGAL: Business Closures Up 35% in 2011
--------------------------------------------
BBC Monitor Euro, citing Portuguese newspaper Publico Web site,
reports that more than 25,000 businesses closed in Portugal
between January and November this year, a 35% rise over the same
period in 2010.
According to BBC, figures released by the Ministry of Justice
show that, after a slowdown in the number of company liquidations
in 2010, this year is approaching the spike registered in 2009 (a
year in which more than 37,000 businesses closed by November).
Since January, 25,046 firms have closed their doors, compared to
18,530 last year, BBC discloses.
Of around 25,000 companies that were wound up in 2011, in the
majority of cases (14,398) it was due to unofficial liquidations
-- a procedure registered in the Simplex program [public sector
simplification initiative], created in 2008, and which is used
when companies fail to meet their obligations, such as
redenominating share capital into euros or filing an IRC
[Corporate Income Tax] return, for example, BBC notes.
Despite the fact that they disappear from the records on account
of administrative action, they are considered closures, even if,
in practical terms, they have not closed in the year they are
officially defunct, BBC states.
Excluding these unofficial liquidations, between January and
February, 10,648 businesses actually closed, which, compared with
the figures from 2010, represents a rise of 7.5%, BBC discloses.
Last year, "real" closures came to 9,906 firms. Compared to 2009,
the number of closures fell by 18.4%, BBC recounts.
The retail and wholesale trade sector registered most closures in
2011, BBC discloses. Next on the list of sectors with most
liquidation are real estate development and related activities,
with 883 and 699 closures, respectively, BBC says. In the
construction industry and consultancy area, 399 and 390
businesses disappeared, according to BBC.
=========
S P A I N
=========
GC SABADELL: S&P Downgrades Rating on Class C Notes to 'CCC-'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit rating on GC Sabadell Empresas 2,
Fondo de Titulizacion de Activos' class B notes. "We have also
lowered our rating on the class C notes, and placed on
CreditWatch negative our rating on the class A2 notes," S&P said.
"On July 15, 2011, we took a series of rating actions on this
transaction; among these actions, we placed on CreditWatch
negative our rating on the class B notes," S&P said.
"We have now conducted further analysis of the transaction's
collateral performance and structural features, taking into
account the latest data provided by the transaction's trustee. We
have taken the rating actions in light of what is, in our view, a
continuing deterioration in the performance of the underlying
collateral backing this transaction, and weakening of the
credit enhancement available to the class B notes," S&P said.
As stated in S&P's July 15 media release, in this transaction S&P
has been observing a deterioration in the performance of the
underlying collateral, as per these parameters:
An increase in cumulative defaults, due to the rollover of
long-term delinquencies into defaults (cumulative defaults as
a percentage of the closing portfolio balance were 3.53% as
of the end of November 2011, versus 3.37% at S&P's last
review in July 2011, and 10% of the current portfolio
balance);
A low level of recoveries (the recoveries associated with
these defaulted assets are low, averaging 38% versus 37% at
S&P's July review); and
An increase in obligor concentration risk, as the top obligor
represents 2.32% of the current portfolio balance, and the
top five, 10, and 20 obligors represent 9.6%, 16.0%, and
23.0% of the current portfolio balance.
"The performance deterioration is also significant for the class
C notes, in our view, which are getting closer to breaching their
interest-deferral trigger. As per the transaction documents, the
interest-deferral trigger for this class is based on the
cumulative level of defaults experienced by the underlying
collateral. This trigger is set at 3.62%, and it is 3.53% as of
the December 2011 interest payment date. As a consequence of the
class C notes' proximity to a trigger breach, we have lowered our
rating on the class C notes to 'CCC-' from 'CCC'; we believe that
the obligor is not likely to meet its financial commitment on the
class C interest payment due to this structural feature. A breach
of the interest-deferral trigger would divert the amounts
due to service the interest on the class C notes, toward the
payment of the amounts due under the class A notes," S&P said.
"As we noted in our July 2011 release, the increase in defaults
is associated with a lack of recoveries in the transaction. We
believe this makes the transaction highly sensitive to variations
in the level of performing collateral available to service the
amounts due under the notes, and this level is weakening.
Although the level of credit enhancement provided by the
performing balance (including the amount of reserve fund
available in the transaction) is still positive for the class A
and B notes, we consider it to be relatively low. The level of
credit enhancement based on the performing balance (including the
amount of reserve fund available in the transaction) is zero for
the class C notes," S&P said.
The transaction features the credit enhancement mechanism:
The subordination of junior notes;
The level of excess spread generated by the performing
balance of collateral. While there is some excess spread
generated at the transaction level, the amount of interest
proceeds received by the fund are transferred to the swap
provider on a quarterly basis, and therefore the excess
spread left in the transaction as per the swap mechanism in
this transaction is 25 basis points (bps); and
The reserve fund, which is used to cure defaults arising in
the transaction.
"The reserve fund -- funded at closing by a subordinated loan --
is intended to provide credit enhancement to the rated notes. It
is used to cure defaults in the transaction, and is not currently
at its required level. The reserve fund began to be drawn in
September 2009, and since then it has been almost continually
depleted at each note payment date; and while it did marginally
increase at the December 2011 interest payment date, it stands at
50.5% of its required value (as defined in the transaction
documents). Although the reserve fund still provides protection
to the class C notes, it would not be of any use to prevent a
breach of the class C interest-deferral trigger. Based on the
latest data reported by the trustee, the class C notes only
benefit from a 9 bps cushion before breaching their interest-
deferral trigger, which would therefore divert the amounts due to
service the interest on the class C notes toward the payment of
the amounts due under the class A notes," S&P said.
"Based on our cash flow analysis, we are maintaining our current
rating on the class A notes; nevertheless, we have placed our
rating on this class of notes on CreditWatch negative. This
follows our Oct. 11, 2011 rating action on Banco de Sabadell (see
'Spain's Slowing Economy And Depressed Real Estate Market Prompt
Negative Rating Actions On 15 Spanish Banks'), which acts as
account provider and swap counterparty in this transaction, and
our understanding that to date Banco de Sabadell has not taken
relevant remedy actions as per the transaction documents entered
into by Banco de Sabadell for this transaction. We understand
that Banco de Sabadell is currently in the process of taking
remedy actions in accordance with our counterparty criteria, and
we are planning to resolve the CreditWatch negative placement of
the class A notes upon receiving evidence of these remedy actions
being executed. The contractual remedy period ended 10 business
days following the Oct. 11 downgrade of Banco de Sabadell in
respect of the derivatives support provided by Banco de Sabadell,
and 60 calendar days from that date in respect of Banco de
Sabadell's required remedy actions in the account agreement. We
later downgraded Banco de Sabadell, on Dec. 15, 2011, to
BBB/Watch Neg/A-2," S&P said.
The collateral backing GC Sabadell Empresas 2 comprises a
portfolio of leasing receivables made to Spanish enterprises and
self-employed borrowers. These loans were originated by and are
serviced by Banco de Sabadell. The transaction closed in March
2008.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
Ratings List
Class Rating
To From
GC SABADELL EMPRESAS 2
Fondo de Titulizacion de Activos
EUR1 Billion Floating-Rate Notes
Rating Lowered and Removed From CreditWatch Negative
B B (sf) BBB (sf)/Watch Neg
Rating Placed on CreditWatch Negative
A2 A (sf)/Watch Neg A (sf)
Rating Lowered
C CCC- (sf) CCC (sf)
===========
S W E D E N
===========
DOMETIC GROUP: S&P Affirms 'B' Corporate Credit Rating
------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Sweden-
based leisure-product maker Dometic Group AB and subsidiary
Dometic Holding AB (together "Dometic" or "the group") to
negative. "At the same time, we affirmed the 'B' long-term
corporate credit rating on both entities," S&P said.
"We also affirmed the 'CCC+' issue rating on EUR202 million
payment-in-kind (PIK) notes issued in April 2011 and maturing in
2019. The recovery rating on these notes is '6', reflecting our
expectation of negligible (0%-10%) recovery in an event of
payment default," S&P said.
"The outlook revision reflects our concerns that the covenant
headroom on Dometic's senior facilities will tighten in the face
of increasingly tough economic conditions that could pressure
sales and margins. Although Dometic's underlying margins have
historically proven resilient against swings in demand and have
consequently been the main supportive rating factor, the group's
very high debt burden makes it sensitive to small changes in
profits and cash flow," S&P said.
"Dometic Group AB (formerly Frostbite 1 AB) is a leading
manufacturer of comfort products for the recreational vehicle,
automotive, and marine leisure market. It wholly owns Dometic
Holding AB. We equalize the business risk and financial risk
profiles of both entities. The group underwent a change of
ownership and a debt restructuring in May 2011," S&P said.
"In our base-case scenario for 2012, we anticipate that Dometic
will experience a decline in revenues of up to 5% which could
lead to some pressure on its underlying EBITDA margin which is
currently at a healthy 17%-plus. We believe that Dometic's
underlying free operating cash flow generation will remain
solid, as has been the case over the past 10 years. Due to the
group's heavy debt burden, however, we forecast that adjusted
funds from operations to debt will stay below 10% and debt to
EBITDA at 8x," S&P said.
"The ratings on Dometic are constrained by our view of the
group's high leverage, which we believe will keep its financial
metrics in a range that we view as 'highly leveraged' over the
next two-three years. In the group's second and third quarter
2011 reports, a number of post-acquisition adjustments have been
made to the financial statement retrospectively. Most of the
adjustments are related to non-recurring items connected with the
ownership change and debt restructuring. Since May 4, 2011, the
reporting company has been Dometic Group AB. Before that, it was
Dometic Holding AB," S&P said.
"Further constraints on the ratings include Dometic's high
exposure to the cyclical recreational vehicle, automotive, and
marine leisure industry, which represents about 85% of revenues.
These constraints are reflected in the group's 'weak' business
risk profile. However, Dometic enjoys leading positions in its
niche markets and strong relationships with original equipment
manufacturers, which create high entry barriers and give the
group pricing power. Dometic has a history of strong cash flow
generation, which is also a key supporting rating factor," S&P
said.
"The negative outlook primarily reflects the risks associated
with deteriorating covenant headroom, which we view as likely
during 2012. Given Dometic's highly leveraged capital structure,
we would view any covenant breach or minimal covenant headroom as
incompatible with the current ratings," S&P said.
===========================
U N I T E D K I N G D O M
===========================
AFREN PLC: S&P Raises Corporate Credit Rating to 'B'
----------------------------------------------------
Standard & Poor's Ratings Services raised its long-term corporate
credit rating on U.K.-based oil and gas exploration and
production company Afren PLC to 'B' from 'B-'. The outlook is
stable.
"At the same time, we raised our issue rating on Afren's senior
secured US$500 million bond to 'B' from 'B-'," S&P said.
"The one-notch upgrade reflects the successful start-up and ramp-
up of Afren's key Ebok oil field in 2011, and our forecast of
further and sustained production gains. This should in our view
lead to much higher EBITDA -- US$600 million in 2012 under our
base-case credit scenario -- and stronger operating cash flows
compared with 2011 and 2010. Combined with what we consider to be
a supportive financial policy and commensurate capital
expenditures (capex) of US$300 million or less in 2012, we
anticipate that Afren's total financial debt will decline from
our forecast year-end-2011 peak of about US$1 billion. We
continue to assess the company's business risk profile as
'vulnerable' and its financial risk profile as 'aggressive,'" S&P
said.
"In our view, Afren will materially increase its oil production
in 2012, notably thanks to the Ebok field. We also believe that
oil prices will remain high over this period. In the event of
adverse cash flow developments, we anticipate that the company
would reduce capex, most of which is not committed, to protect
free cash flows. We also believe that Afren's liquidity position
will remain 'adequate' in 2012, and we assume that financial debt
will decline from our forecast year-end-2011 peak of about US$1
billion," S&P said.
Negative rating pressure would increase if Afren's production
falls to less than about 30,000 barrels per day on average in
2012. Negative rating pressure would also arise if financial debt
increases in 2012.
"We view rating upside as limited in the short term because of
Afren's exposure to country risk and asset concentration in
Nigeria. Over the long term, we believe that an upgrade could
result from a diversified cash flow base with lower country risk;
and a track record of much higher production, EBITDA, and FOCF
than we currently assume, combined with supportive financial
policies," S&P said.
BLACKS LEISURE: Fails to Find Buyer for Whole Company
-----------------------------------------------------
Adam Jones, Andrea Felsted and Claer Barrett at The Financial
Times report that Blacks Leisure's shareholders are likely to
lose all their investment in the company as the firm said on
Friday it has failed to find a buyer for the whole company.
A number of parties however, had submitted preliminary offers to
buy all or part of its assets, the FT notes.
Blacks, as cited by the FT, said no one was expected to buy the
company, adding that the offers for assets it had received were
pitched so low it was "most unlikely that any value will be
attributable to the ordinary shares."
A "pre-pack" administration is now seen as the most likely
outcome, followed by a sale of the group's assets, the FT says.
KPMG, appointed to handle the Blacks sale, will continue talks
with and provide further information to interested parties, with
the aim of concluding the process in January, the FT discloses.
It is likely that any buyers would back Julia Reynolds, the
highly regarded former Tesco executive, who is chief executive of
Blacks, the FT says.
Blacks said this month its net debt had risen to GBP36 million,
the FT relates. It made a GBP16 million pre-tax loss in the six
months to August 27, the FT notes.
Blacks Leisure is an outdoor clothing and equipment retailer.
The company operates about 300 shops under the Blacks and Millets
brands.
PETER SMITH: Set to Go Into Liquidation; Has Cut Seven Jobs
-----------------------------------------------------------
Burton Mail reports that Peter Smith Sports Cars looks set to go
into liquidation in the New Year with seven staff being made
redundant.
Burton Mail says the company, in Station Road, was set to
celebrate its 40th anniversary in 2012 but is now in the process
of being wound up.
The firm shut its doors at the beginning of this month after
business recovery firm MCR was brought in to settle the company's
affairs, according to the report.
The report relates that the car showroom was famous across the
area for selling rare and high performance vehicles such as
Noble, Lotus, TVR and BMWs. In total, says Burton Mail, seven
staff were employed at the firm. All have lost their jobs
following the announcement.
According to Burton Mail, it is believed that the contents of the
firm's showroom, bodyshop and service centre will be auctioned in
January by GWA Auctioneers and Valuers.
A meeting of creditors was due to take place at MCR's Manchester
offices on Dec. 20 before the firm was formally place into
liquidation.
"Steve Muncaster and Sarah Bell were appointed by the director of
Peter Smith Sports Cars on December 1," a spokesman for MCR told
Burton Mail. "Prior to their appointment all members of staff
were made redundant by the director. The company will be going
into liquidation following the creditors' meeting."
Peter Smith Sports Cars is a luxury sports car dealer.
PROVEN ENERGY: Owes More Than GBP4.5-Mil. to Unsecured Creditors
----------------------------------------------------------------
The Scotsman reports that Proven Energy, which went into
receivership after discovering a potentially dangerous fault in
one of its products, owed more than GBP4.5 million to unsecured
creditors.
It is unlikely the creditors, including several suppliers, will
receive any of the money back, with Clydesdale bank also left out
of pocket and the main shareholder writing off GBP11.5 million,
the Scotsman says, citing a report into the company's affairs by
receivers KPMG.
The report highlighted the dramatic events leading up to the
collapse of the company, the Scotsman notes.
In September, the company's directors issued a statement after
identifying a serious manufacturing defect with the company's
flagship P35-2 turbine, the Scotsman recounts.
The fault meant the company was unable to manufacture or sell the
problem model which accounted for 75% of turnover, the Scotsman
discloses. Significant media coverage of the issue centered on a
risk of blades "flying off" turbines, the Scotsman relates.
"This had a significant and immediate adverse impact on the
company's cash flow as invoices were unable to be presented to
the bank for payment under its invoice discounting facility," the
Scotsman quotes the report as saying.
The position was worsened when the company's main investor and
shareholder Low Carbon Accelerator (LCA), an investment fund
which specializes in the sector, publicly withdrew its support
for the company in an announcement to the stock market, although
the receivers' report stressed that was in line with LCA's
obligations as a quoted company, according to the Scotsman. LCA
also said it was writing off its GBP11.5 million investment in
the company, the Scotsman notes.
With no further funding forthcoming from any source, the
directors decided that insolvency was inevitable, the Scotsman
says.
Proven Energy is a Scottish wind turbine manufacturer. The
company had manufactured small wind turbines sold across the
world since 1993.
* UK: High Street Insolvencies Likely to Continue in 2012
---------------------------------------------------------
The UK Press Association reports that year-on-year increase in UK
high street insolvencies is likely to continue in 2012.
As was expected, 2011 saw marginally more companies put into
administration than 2010, UKPA discloses.
"Our prediction is that insolvency will go up next year. The
consumer is more strapped for cash now than in 2008 and the
public sector cuts will also start to bite," UKPA quotes Mike
Jervis, a corporate recovery expert at PricewaterhouseCoopers, as
saying. "As well as that, companies with highly leveraged
balance sheets will need to refinance large amounts of debts
entered into in the height of the market in 2007."
* UK: Troubled Football Clubs May Close In 2012, Expert Warns
-------------------------------------------------------------
creditman.co.uk reports that as several football clubs start the
New Year in dire financial straits, a football insolvency expert
warns that failing clubs could be shut down in 2012.
The report relates that Brendan Guilfoyle of The P&A Group of
Companies, who has handled football insolvencies at Crystal
Palace, Leeds United, Luton Town and recently Plymouth Argyle,
said that it may no longer be financially viable to save some
clubs.
According to the report, Mr. Guilfoyle and his colleagues at P&A
have created a new model for future football insolvencies
following the sale of Plymouth Argyle Football Club last autumn.
The deal to sell the club took more than six months and,
according to Guilfoyle, "penalised players, staff and advisers".
"P&A is planning a new model that will be fairer on everyone,
more realistic about the chances of saving a failing club and
make the process quicker and more transparent. Plymouth Argyle
fans were passionate about saving their club. As a football
fanatic myself, I could understand their concerns and comments,"
the report quotes Mr. Guilfoyle as saying. "But parts of the
insolvency process and confidentiality clauses made it impossible
to communicate as openly with fans and others as I would have
liked."
"As a result fans took to forums, blogs and other social media to
complain about the process and get their messages out."
According to creditman.co.uk, the proposed P&A plan will focus on
three key areas: no secrecy and more transparency; involving fans
and other stakeholders from the start of the process; and setting
a month's time limit for a prospective purchaser to come up with
all necessary funds.
creditman.co.uk quotes Mr. Guilfoyle, in a blog on whether
football clubs are worth saving, as saying that, "At the outset
of any administration we will be realistic with everyone - fans,
creditors, players and staff - spelling out exactly what the
prospects are for a rescue. The market has changed and is getting
worse; we can no longer assume we can find buyers for football
clubs. We also need everyone to understand what could scupper a
potential purchaser. At Plymouth Argyle two potential buyers
withdrew because of campaigns run by fans.
"In any future administrations we won't sign any confidentiality
or exclusivity clauses - that way we can keep fans, staff and
other stakeholders involved and have open discussions. It is not
financially viable to have protracted negotiations so we will
have a short deadline for bids from potential purchasers -
probably a month. We either get the money in full for the deal -
as with other business administrations - or the club will be shut
down."
* UK: Court Orders Three Landbanking Companies Into Liquidation
---------------------------------------------------------------
creditman.co.uk reports that three companies in Essex that
missold undeveloped land for investment to the public have been
ordered into liquidation in the High Court on grounds of public
interest following an investigation by Company Investigations
(CI) of the Insolvency Service.
According to creditman.co.uk, the investigation found that
Theydon Land Developments Limited, Emerging Property Partnership
Limited and Franklin Knight Ltd had missold small, residential-
sized plots of undeveloped land at sites in Theydon Bois, Essex
to the public.
The report relates that the investigation found that the three
companies were linked to 11 other landbanking companies which had
already been wound up; six of these companies were wound up in
June 2011 and five in March 2010.
The report discloses that Theydon Land Developments Limited
bought two sites in Theydon Bois in March and August 2010 for
GBP68,000. The company then sold 66 plots to investors for
GBP388,452,between March 2011 and April 2011 through its agents,
including Franklin Knight Ltd.
Emerging Property Partnership Limited sold plots at a site in
Theydon Bois prior to being struck off the Register of Companies
and dissolved on Oct. 19, 2010.
The director of Franklin Knight Ltd was Miss Manjit Kaur Minhas
who had also been the director of Alpha Capital Investments
(London) Limited, one of the land banking companies already wound
up, according to creditman.co.uk.
*********
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-
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Copyright 2011. All rights reserved. ISSN 1529-2754.
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