/raid1/www/Hosts/bankrupt/TCREUR_Public/120215.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, February 15, 2012, Vol. 13, No. 33
Headlines
A Z E R B A I J A N
STATE OIL: Moody's Assigns 'Ba1' Rating to US$500MM Eurobond
G E O R G I A
BANK OF GEORGIA: S&P Affirms 'BB-/B' Counterparty Credit Ratings
G E R M A N Y
FLEET STREET: S&P Cuts Ratings on Two Note Classes to 'CCC'
PRIMACOM AG: Owners Inject Further Capital Into Business
G R E E C E
FAGE DAIRY: S&P Raises Corp. Credit Rating to 'B'; Outlook Stable
I R E L A N D
EIRCOM GROUP: Won't Make Interest Payment on EUR3.6-Bil. Debt
TREASURY HOLDINGS: Bid to Overturn NAMA Receivership to Proceed
I T A L Y
CASSA DI RISPARMIO: S&P Lowers Issuer Credit Rating to 'BB'
N E T H E R L A N D S
* NETHERLANDS: Agricultural Bankruptcies Hit Record High in 2011
P O L A N D
EILEME 1 AB: Moody's Assigns '(P)Caa1' Ratings to US$201MM Notes
R U S S I A
STRABAG: Inzhglobal Files Bankruptcy Petition
VNESHECONOMBANK: S&P Assesses Foreign Curr. Credit Rating at 'bb'
S P A I N
CAJA INGENIEROS: Moody's Assigns 'B1' Rating to EUR67.5MM Notes
COMPANIA LEVANTINA: In Refinancing Talks with Creditors
S W E D E N
VERISURE HOLDING: Moody's Rates Series B Notes at '(P)Caa1'
S W I T Z E R L A N D
MATTERHORN MOBILE: Moody's Assigns (P)Ba3 Rating to FRN Tranche
U N I T E D K I N G D O M
BADEKABINER: Goes Into Administration, Cuts 82 Jobs
DUNEDIN INDEPENDENT: Enters Into Liquidation Following Takeover
HOLCOMBE HOUSE: In Administration, Ousts Residents
LAUDERDALE PROPERTIES: Goes Into Administration
PETROPLUS HOLDINGS: Coryton Refinery Receives 7th Crude Shipment
PETROPLUS HOLDINGS: Administrators Keep Refinery Running
STUARTS INDUSTRIAL: Goes Into Administration, Cuts 102 Jobs
WHINSTONE CAPITAL: S&P Cuts Ratings on Three Note Classes to 'B'
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A Z E R B A I J A N
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STATE OIL: Moody's Assigns 'Ba1' Rating to US$500MM Eurobond
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Moody's Investors Service has assigned a definitive Ba1 senior
unsecured rating and Loss Given Default (LGD) rating of 4 (50%)
to the US$500 million 5.45% 2017 Eurobond issued by State Oil
Company of Azerbaijan ("SOCAR"). The outlook is stable.
The proceeds of the notes will constitute general unsecured and
unsubordinated obligations of SOCAR, and will rank senior to all
present and future subordinated obligations of the company and
equal in right of payment to all its present and future unsecured
and unsubordinated obligations. The proceeds will be utilized by
the company to partially fund its upstream and downstream
activities, including financing of capital expenditure.
The Ba1 senior unsecured rating is aligned with the company's Ba1
corporate family rating (CFR) and probability of default rating
(PDR), which reflect the company's position as a government-
related issuer (GRI). As such, its ratings incorporate
significant uplift for high implied state support from its
Baseline Credit Assessment (BCA) of 13 (which corresponds to a
Ba3 rating). Moody's factors into SOCAR's ratings high government
support and very high dependence assumptions.
SOCAR's BCA of 13 reflects the medium scale of the company's
reserves and production base, and its solid financial metrics. It
also reflects the fact that SOCAR is a fully integrated oil and
gas company that enjoys either a share in, or a full control
over, the country's oil and gas pipelines for the domestic and
export markets. At the same time, Moody's rating of SOCAR is
constrained by a very high concentration of upstream assets,
which are heavily depleted. Moreover, SOCAR's high susceptibility
to government interference may present an additional challenge
for its credit quality.
Moody's does not expect the new bond issuance to have a material
impact on SOCAR's leverage profile and debt coverage ratios. On a
pro-forma basis and assuming the company's base-case oil price
scenario of US$80/barrel of oil (bbl) Brent, Moody's anticipates
that SOCAR's debt/EBITDA ratio will remain below 2.0x following
the bond issuance. The rating agency also expects that (i) at the
end of 2012, SOCAR's debt/EBITDA ratio will return to 1.5x or
below; and (ii) the company will remain within the financial
thresholds set by Moody's for the rating, i.e., debt/total book
capitalisation of below 30% and retained cash flow (RCF)/net
adjusted debt of above 20%.
Principal Methodologies
The principal methodology used in rating SOCAR was the Global
Integrated Oil & Gas Industry Methodology published in November
2009. Other methodologies used include the Government-Related
Issuers methodology published in July 2010.
The State Oil Company of the Azerbaijan Republic is the national
energy company of Azerbaijan, 100% owned by the government of
Azerbaijan. SOCAR is a vertically integrated oil and gas
producer, including upstream, midstream and downstream
operations. SOCAR is the backbone of Azerbaijan's national
economy. It has a monopoly position in the supply of oil and gas
products to the domestic market and is an official representative
of the State in all oil and gas projects in the territory of
Azerbaijan. In the last twelve months ended June 30, 2011, SOCAR
generated around US$7.8 billion of revenues, US$2.9 billion of
EBITDA and US$1.5 billion of net income.
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G E O R G I A
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BANK OF GEORGIA: S&P Affirms 'BB-/B' Counterparty Credit Ratings
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Standard & Poor's Ratings Services affirmed its 'BB-/B' long- and
short-term counterparty credit ratings on Bank of Georgia (BoG).
"At the same time, we assigned our 'ilA' Standard & Poor's Maalot
(Israel) national scale rating to BoG. The outlook is stable,"
S&P said.
"The ratings on BoG reflect our view of the bank's 'bb-' anchor,
as well as its 'strong' business position, 'moderate' capital and
earnings, 'moderate' risk position, 'average' funding, and
'adequate' liquidity, as our criteria define these terms. The
stand-alone credit profile (SACP) is 'bb-'," S&P said.
"Under our bank criteria, we use the Banking Industry Country
Risk Assessment's economic risk and industry risk scores to
determine a bank's anchor, the starting point in assigning an
issuer credit rating. The anchor for a commercial bank operating
only in Georgia is 'bb-'," S&P said.
"BoG has a 'strong' business position in the Georgian context. It
is the largest bank in Georgia and had a 34.7% share of the
sector's loans and 34.5% of deposits at Nov. 30, 2011. BoG is a
universal bank with a broad mix of business lines and is present
across Georgia. BoG benefits from a strong management team,
which, since 2004, has focused on upgrading the bank's
organization, infrastructure, and risk management capabilities.
Management has international experience and is professional, in
our view," S&P said.
"We consider BoG's capital and earnings 'moderate.' Our estimated
risk-adjusted capital (RAC) ratio, before adjustments for
diversification, was in the range of 6.5% to 7.0% based on data
as of Dec. 31, 2010. Our RAC calculation differs from reported
capital ratios for regulatory purposes, owing to the higher risk
weightings we apply to assets based in Georgia. The bank's
retained earnings are enough to sustain capitalization during
periods of moderate risk asset growth, in our view. The projected
RAC ratio, before adjustments for diversification, is expected to
remain in the range of 6.5% to 7.0% over the next 18 months,
despite anticipated risk asset growth. The Bank for International
Settlements' Tier I capital adequacy ratio reached 18.0% at
mid-year 2011, well in excess of regulatory minimum levels," S&P
said.
"Profitability has normalized since heavy losses in 2009, with
BoG posting a profit of Georgian lari (GEL) 83 million (about $50
million) in 2010 and a further GEL64 million for the first half
of 2011. BoG benefits from strong interest margins exceeding 7%,
complemented by relatively good fee and commission income. Credit
costs reduced materially to 2% of loans in 2010 and less than 1%
of loans in first-half 2011 from a high of more than 6% in 2009.
Given the upturn in business activity and a moderate return to
credit growth, we expect BoG's operating income to continue
improving in 2012," S&P said.
"BoG's risk position is 'moderate' relative to peers', in our
opinion. Given the concentration of its activities in Georgia,
BoG's asset quality is highly vulnerable to the performance of
the narrow domestic economy, accentuated through high amounts of
foreign currency-denominated lending and expected fast credit
growth. BoG's loss experience is in line with peers'. Loan
portfolio indicators worsened in 2009, after several years of
robust credit growth, following the conflict with Russia the
previous year and with the impact of economic recession. This was
consistent with the Georgian banking sector as a whole. Asset
quality deterioration has started to ease since the second half
of 2009, with nonperforming loans representing less than 4% of
customer loans by June 30, 2011. BoG's reserves have remained
comfortable, covering problem loans by more than 100%, providing
a buffer in the event of further asset quality deterioration.
Loan concentrations are not very high, as the top 20 exposures
are only 136% of the bank's adjusted total equity, which is below
the average in the region," S&P said.
"BoG's funding is 'average' and its liquidity is 'adequate', in
our view. Liquidity is supported by BoG's diversified funding
base, substantial funding support from multilateral
organizations, and low short-term refinancing needs. The bank's
deposit base increased significantly in 2010, although it has
demonstrated volatility in the past. Central bank funding is also
available when needed, as demonstrated during the financial
market crisis," S&P said.
"Liquidity ratios are comfortable, but will likely keep
tightening as leverage increases with loan growth. The loan-to-
deposit ratio is about 100%, and the leverage ratio is currently
an adequate 58%. BoG still retains a strong level of liquid
assets. Wholesale funding is mostly composed of multilateral
funds," S&P said.
"The Standard & Poor's Maalot (Israel) national scale rating
reflects our view of the bank's creditworthiness relative to
other issuers active in the Israeli financial markets. Standard &
Poor's announced the launch of its national rating scale for
Israel in December 2008," S&P said.
"We have assigned a Standard & Poor's Maalot (Israel) national
scale rating to BoG because the bank is exploring options for
raising financing in the Israeli market," S&P said.
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G E R M A N Y
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FLEET STREET: S&P Cuts Ratings on Two Note Classes to 'CCC'
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Standard & Poor's Ratings Services lowered its credit ratings on
all classes of notes in Fleet Street Finance Three PLC. "At the
same time, we removed from CreditWatch negative our ratings on
the class D and E notes," S&P said.
"The rating actions follow our review of the four remaining loans
in the transaction. In our view, the loans' creditworthiness has
deteriorated due to heightened refinance risk and our increased
expectation of principal losses, given the stagnant market
conditions and mounting evidence of borrowers struggling to
refinance their loans. We believe the class D and E notes may
experience principal losses within the next 12 months," S&P said.
The overall performance of the transaction has deteriorated since
closing.
"The reported weighted-average securitized loan-to-value (LTV)
ratio has deteriorated to 90.3% in January 2012 from 72.3% at
issuance, following various post-closing property revaluations.
Since closing, the reported weighted-average securitized interest
coverage ratio (ICR) has increased to 2.32x in January 2012 from
1.70x at issuance, but this is mainly due to the current low
interest rate environment," S&P said.
The transaction's legal maturity date is October 2016.
Structural Factors
On the April and July 2011 note interest payment dates, the note
trustee instructed the cash manager to retain a total of EUR48.1
million out of the GSW loan repayment/prepayment proceeds
collected by the issuer during these two collection periods. This
was while the note trustee sought judicial guidance on whether a
sequential payment trigger had occurred.
"In April 2011, we placed on CreditWatch negative our ratings on
the class D and E notes, as we believed that, absent any
mitigating factors, the retained balance may have potentially
exposed these two classes of notes to interest shortfalls," S&P
said.
"On Sept. 9, 2011, the High Court of England and Wales said that
a sequential payment trigger had not occurred. Consequently, the
trustee instructed the cash manager to distribute the retained
balance on Oct. 3, 2011, on a modified pro rata basis. Despite
the mismatch balance between the loan and the note balances, the
notes remained current. Following the allocation of the retained
proceeds, the risk of interest shortfalls resulting from the
mismatch balance no longer exists. We have therefore removed from
CreditWatch negative our ratings on the class D and E notes," S&P
said.
Corleone Loan (53% of the Pool Balance)
The largest loan in the pool is the Corleone loan (53% of the
pool balance). The current loan balance is EUR350.0 million.
Since closing, the loan has partially prepaid by approximately
32% from the proceeds of property sales. The reported loan debt
service coverage ratio (DSCR) is 2.08x, and the reported LTV
ratio is 84.0%, based on valuations undertaken in 2011. The loan
is in a cash-trap position -- where the servicer retains excess
rental income that would otherwise be released to the borrower --
following a breach of the loan-to-cost (LTC) ratio.
The loan matures in April 2012. The servicer has watchlisted the
loan due to its upcoming maturity.
"The sponsor's initial business plan was to dispose of the entire
portfolio by loan maturity. The loan is currently secured by a
portfolio of 44 (95 at closing) mixed-use, average-to-secondary
quality assets located across Germany. The portfolio performance
has deteriorated since issuance: The vacancy rate has increased
and, when considered with market yield shift, the value of the
portfolio has declined, in our view," S&P said.
"We believe the borrower may struggle to refinance the loan in
April 2012, in light of stagnant market conditions, the loan's
leverage, and mounting evidence of borrowers struggling to
refinance their loans. For example, our data for loans maturing
in 2010 and 2011 shows that only one in three loans repaid at
maturity. Further, the size of the loan will likely compound the
borrower's refinancing difficulties, in our opinion. Our loan
maturity data shows a similar trend: Only one in three loans with
a balance greater than EUR100 million equivalent repaid," S&P
said.
"Accordingly, even if the loan term is extended beyond April 2012
-- and notwithstanding the credit we have given to potential
relettings in our analysis -- we believe there is a risk of
principal losses on this loan," S&P said.
Blue Star Loan (28% Of The Pool Balance)
The second-largest loan in the pool is the Blue Star senior loan
(28% of the pool balance). The current senior loan balance is
EUR186.1 million. The whole loan is interest-only, with a
reported senior DSCR of 2.11x, and a reported senior LTV ratio of
114.2%, based on valuations undertaken in September 2010. The
loan moved to the servicer's watchlist following a whole loan LTV
breach caused by the 2010 valuation. The loan matures in April
2012.
"The whole loan is secured against three office properties in
Bonn, Stuttgart, and Munich, one of which is let to two tenants.
None of them are trophy assets, in our opinion. The properties
are let to three subsidiaries of entities that we rate at
investment grade (which, in total, account for about 96.5% of the
portfolio's total rent) and to another unrated tenant. The years
remaining to lease break are 10 years, six years, two years, and
four years," S&P said.
"The largest tenant, accounting for about 41.9% of the total
rent, recently agreed to extend its lease until 2021. However, we
understand that the third-largest tenant, accounting for about
26.6% of the total rent, is in negotiations with the borrower to
potentially reduce its occupancy. We believe it may take some
time before spaces are relet if some become vacant," S&P said.
"The property revaluation shows a 35% drop in value against the
initial valuation. In our opinion, market yield shift and
uncertainties concerning the lease profile may have caused the
drop in reported value," S&P said.
"We believe that the borrower may struggle to refinance the loan
in April 2012. Principal losses could be experienced, in our
view, given the leverage and the amount of debt to be repaid.
Because organized property disposals may take place in the near
term, we believe that these principal losses could be
crystallized during this time," S&P said.
Orange Loan (10% of the Pool Balance)
The third-largest loan in the pool is the Orange senior loan (10%
of the pool balance). The whole loan is secured against a mixed-
use portfolio located across the Netherlands. It transferred to
special servicing in December 2010, when the borrower failed to
repay the whole loan at loan maturity. The special servicer
agreed a standstill with the borrower until January 2012 to
enable a consensual sale of the portfolio.
Since the default, the whole loan has trapped excess cash and
uses any amount due to the junior lender to amortize the senior
loan. Since closing, the senior loan has partially prepaid by
approximately 37% from the proceeds of property sales, and the
current senior loan balance is EUR67.1 million. The reported
senior DSCR is 1.77x and the reported senior LTV ratio is 93.2%,
based on valuations undertaken in 2011. This compares with a
senior LTV ratio of 67.6% at issuance.
"The whole loan is currently secured by 23 (31 at closing) mixed-
use assets, of average to secondary quality, located across the
Netherlands. The portfolio net operating income has declined due
to a higher vacancy rate associated with higher property costs.
As in the case of the Corleone loan, declining income associated
with market yield shift was the main reason for the deteriorating
market value, in our view. We have given credit in our analysis
to potential relettings," S&P said.
"Based on the factors cited, we believe there is a real risk that
the senior loan could suffer principal losses in the near term,"
S&P said.
Saxony Loan (9% of the Pool Balance)
Secured against German nursing homes, the smallest loan in the
pool is the Saxony senior loan (9% of the pool balance). The
servicer extended the whole loan's maturity term to July 2013
from January 2011, in return for an annual increased amortization
of EUR2.0 million, which the servicer applies solely to the
senior loan. The borrower has entered into new hedging
arrangements for the extended period.
The servicer applies the borrower-level excess cash to the
reduction of the class B notes (soft amortization). The current
senior loan balance is EUR55.1 million and since closing, the
loan has partially prepaid by approximately 13% from scheduled
amortization and partial prepayments. The reported senior DSCR
is 2.24x and the reported senior LTV ratio is 46.2%, based on
valuations undertaken in 2011.
The properties are located throughout Germany and comprise seven
nursing homes and two rehabilitation clinics, which formed part
of a sale-and-leaseback transaction from Marseille Kliniken AG
(B/Negative). Most of the properties are located in former East
Germany. The leases are long term leases that expire in February
2031 with no breaks.
"Given the low reported leverage of this loan, in comparison with
the rest of the pool, we do not anticipate any losses," S&P said.
Rating Actions
"We have lowered the ratings on the class D and E notes to 'CCC
(sf)' to reflect our view that there is a risk of principal
losses in the near term," S&P said.
"We have lowered the ratings on the class B and C notes to
speculative-grade categories to reflect our view of heightened
refinancing risk and principal losses. Taking into consideration
our review of the four remaining loans in the transaction,
combined with the class D and E notes being at risk of principal
losses, we have lowered our ratings on all classes of notes
accordingly," S&P said.
Potential Effects of Proposed Criteria Changes
"We have taken rating actions based on our criteria for rating
European commercial mortgage-backed securities (CMBS). However,
these criteria are under review," S&P said.
"As highlighted in the Nov. 8 Advance Notice of Proposed Criteria
Change, we expect to publish a request for comment (RFC)
outlining our proposed criteria changes for rating European CMBS
transactions. Subsequently, we will consider market feedback
before publishing our updated criteria. Our review may result in
changes to the methodology and assumptions we use when rating
European CMBS, and consequently, it may affect both new and
outstanding ratings on European CMBS transactions," S&P said.
"Until such time that we adopt new criteria for rating European
CMBS, we will continue to rate and surveil these transactions
using our existing criteria," 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
To From
Fleet Street Finance Three PLC
EUR1.105 Billion Commercial Mortgage-Backed Floating-Rate Notes
Ratings Lowered
A1 A+ (sf) AA (sf)
A2 BBB+ (sf) A (sf)
B BB+ (sf) BBB (sf)
C B (sf) BBB- (sf)
Ratings Lowered and Removed From CreditWatch Negative
D CCC (sf) B (sf)/Watch Neg
E CCC (sf) B- (sf)/Watch Neg
PRIMACOM AG: Owners Inject Further Capital Into Business
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Isabell Witt at Reuters reports that the owners of Primacom AG
have been forced to inject another EUR20 million (US$26 million)
into the business and restructure its EUR300 million of debt for
the second time in a year.
Primacom was taken over in January 2011 by bank lenders including
ING Groep and fund managers such as Alcentra Group, Tennenbaum
Capital and Avenue Capital following the insolvency of its
parent, Primacom AG, in June 2010, Reuters recounts. This debt
for equity swap was achieved through a court procedure at the
High Court in London, Reuters notes.
Lenders returned to the court in December 2011 after Primacom's
business, which supplies 1 million households in Germany with
cable TV, failed to grow sufficiently, forcing lenders to
restructure again, Reuters discloses.
The lenders injected the EUR20 million as new short term senior
debt, which is expected to be converted into a three-year loan in
due course, court documents show, Reuters says. The new funds
will be used to back new investments in the cable network to
boost growth, according to Reuters.
In addition, EUR36.7 million of debt was shifted from the
balance sheet of Primacom to its parent company Medfort, Reuters
states. According to Reuters, a lawyer close to the deal said
that an additional EUR32.8 million of debt will be shifted in the
same way if the owners are unable sell the business before the
end of the year.
PrimaCom AG is a Germany-based holding company engaged in owning
and operating cable television (TV) network in Germany. Its
subscribers are offered digital television, pay-per-view, video-
on-demand, telephone and high-speed Internet services to
complement the Company's basic cable television offering. The
Company's customers are connected to the 862 megahertz (MHz)
networks and have access to more than 100 TV and radio programs.
PrimaCom passes 1.4 million homes and serves approximately one
million subscribers. The Company is 90.52% owned by Escaline
Sarl, Luxembourg, through its indirect subsidiary Omega I Sarl.
It operates mainly in six German states, including Berlin,
Brandenburg, Sachsen, Sachsen-Anhalt, Thueringen, and
Mecklenburg-Vorpommern. As of December 31, 2008, the Company had
28 wholly owned subsidiaries in Germany and Austria, as well as
two majority owned subsidiaries in Germany, and one affiliate in
Germany.
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G R E E C E
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FAGE DAIRY: S&P Raises Corp. Credit Rating to 'B'; Outlook Stable
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Standard & Poor's Ratings Services raised its long-term corporate
credit rating on Greek dairy company Fage Dairy Industry S.A. to
'B' from 'B-'. The outlook is stable.
"We also raised our issue rating on Fage's senior unsecured bonds
to 'B' from 'B-'," S&P said.
"The upgrade primarily reflects our view that Fage will continue
to perform solidly over the next 12 months, which should enable
the group to keep adjusted leverage below 5.0x and generate
positive free operating cash flow in 2012," S&P said.
"We anticipate that Fage's credit metrics, with adjusted leverage
at 4.7x and an EBITDA-to-interest ratio of 2.4x for the last 12
months to Sept. 30, 2011, will continue to improve over the next
12 months -- despite a sustained high level of capital
expenditures -- because we anticipate solid performance to
continue in 2012," S&P said.
"We think that Fage's revenue growth rate will be in the low
teens and that EBITDA margins will increase to 15%-16% in 2012,"
S&P said.
"The stable outlook reflects our opinion that Fage should be able
to generate positive free cash flow in 2012, while keeping its
adjusted EBITDA-to-interest ratio above 2.0x and its debt-to-
EBITDA ratio below 5.0x; which we view as commensurate with a 'B'
rating," S&P said.
"We could lower the ratings if Fage's performance weakened, with
the group's metrics falling outside the level outlined above, or
if the company's liquidity deteriorated. We calculate that this
could occur if current margins declined by 100 basis points or
more, while revenues remained flat. This could result from a
persistent spike in milk and packaging prices, which we view as
Fage's main operating risk," S&P said.
"We could raise the ratings if Fage performed above our base
case, leading to consistent annual discretionary cash flow
generation in excess of EUR25 million. We consider that such a
level of discretionary cash flow would make Fage's 2015
refinancing easier. In addition, we believe that reducing and
maintaining adjusted debt leverage closer to 4.0x, and improving
the EBITDA-to-interest ratio to above 2.5x on a sustainable basis
could be consistent with a higher rating," S&P said.
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I R E L A N D
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EIRCOM GROUP: Won't Make Interest Payment on EUR3.6-Bil. Debt
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Donal O'Donovan at Irish Independent reports that Eircom Group on
Thursday night said it will not be making a EUR5.7 million
interest payment to bond holders due on February 15.
It is the first time that Eircom will default on an interest
payment on any of its EUR3.6 billion of debt, even though the
company and its lenders have been involved in months of
ineffectual, negotiations over how to tackle the company's well-
known debt crisis, Irish Independent notes.
An Eircom spokesman said Thursday night that the company had not
run out of money and is financially well able to meet the
interest payment, Irish Independent relates. The spokesman
elaborated, according to the report, that the decision not to pay
the EUR5.7 million was taken on instructions from more senior
lenders to Eircom, who now effectively control the company.
Eircom's EUR3.6 billion borrowings are made up of a complicated,
multi-layered debt structure, Irish Independent states.
The quarterly interest payment that is due to be paid on Feb. 15
relates to a group of lenders that are owed EUR350 million in the
form of "floating rate notes" (FRN) -- a type of corporate bond
where the interest rate due to bondholders tracks the official
interest rate -- similar to pricing a tracker mortgage, Irish
Independent discloses.
Eircom, as cited by Irish Independent, said the payment was being
withheld because more senior lenders to the company had exercised
their rights to suspend payment.
Eircom has breached "covenants" or terms and conditions attached
to these more senior loans, giving the top lenders a veto over
how the company manages its finances, Irish Independent notes.
Headquartered in Dublin, Ireland, Eircom Group --
http://www.eircom.ie/-- is an Irish telecommunications company,
and former state-owned incumbent. It is currently the largest
telecommunications operator in the Republic of Ireland and
operates primarily on the island of Ireland, with a point of
presence in Great Britain.
TREASURY HOLDINGS: Bid to Overturn NAMA Receivership to Proceed
---------------------------------------------------------------
Mary Carolan at The Irish Times reports that Treasury Holdings'
legal bid to overturn the National Assets Management Agency's
appointment of receivers to various assets it owns will proceed
at the High Court later this month.
According to the Irish Times, Michael Cush SC of Treasury
Holdings told Mr. Justice Peter Kelly his side's application for
leave to bring a judicial review challenge to the actions of
NAMA, and for orders preventing the receivers acting pending the
outcome of any challenge, is ready to proceed on February 21.
Mr. Cush, as cited by the Irish Times, pointed out that NAMA had
not filed a statement of opposition in the full action as it was
opposing the granting of leave.
NAMA took the view that if it succeeded, that could be the end of
the matter, the Irish Times says. If leave was granted,
discovery would also be required, the report adds.
The judge also granted Mr. Cush leave to amend his side's
statement of grounds so Treasury may also seek leave to quash a
decision of NAMA of December 8 last to proceed with the
appointment of receivers, the Irish Times relates.
The proceedings by Treasury and 22 related companies arose after
NAMA indicated it intended to appoint receivers to assets of the
companies in Ireland, including the PricewaterhouseCoopers head
office in Spencer Dock, the Alto Vetro building on Barrow Street,
and the Central Park office complex near Leopardstown, the Irish
Times discloses.
Treasury claims the actions of NAMA could have a domino effect
within the group, threatening its survival, the Irish Times
notes.
Treasury Holdings is owned by Richard Barrett and John Ronan.
=========
I T A L Y
=========
CASSA DI RISPARMIO: S&P Lowers Issuer Credit Rating to 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 34
Italy-based financial institutions. The downgrades follow the
lowering of the unsolicited long- and short-term sovereign credit
ratings on the Republic of Italy (BBB+/Negative/A-2). "They also
reflect the revision of our Banking Industry Country Risk
Assessment (BICRA) on Italy to group '4' from group '3', and of
our economic risk and industry risk scores--both components of
the BICRA -- on Italy to '4' from '3'," S&P said.
"In addition, we have affirmed our ratings on two Italian
financial institutions and removed them from CreditWatch with
negative implications. We have also kept the ratings on one
Italian financial institution on CreditWatch with negative
implications," S&P said.
"We will publish individual research updates on banks identified
below, including a list of ratings on affiliated entities, as
well as the ratings by debt type -- senior, subordinated, junior
subordinated, and preferred stock," S&P said.
The research updates will be available at
www.standardandpoors.com/AI4FI and on RatingsDirect on the Global
Credit Portal. Ratings on specific issues will be available on
RatingsDirect on the Global Credit Portal and
www.standardandpoors.com.
Ratings List
The ratings listed are issuer credit ratings unless otherwise
stated.
Downgraded
To From
UniCredit SpA
UniCredit Leasing SpA
BBB+/Negative/A-2 A/Watch Neg/A-1
Intesa Sanpaolo SpA
Banca IMI SpA
Banca Infrastrutture Innovazione e Sviluppo SpA (BIIS)
BBB+/Negative/A-2 A/Watch Neg/A-1
Banca Nazionale del Lavoro SpA
BBB+/Negative/A-2 A/Watch Neg/A-1
Cassa di Risparmio di Parma e Piacenza SpA
BBB+/Negative/A-2 A/Watch Neg/A-1
Banca Monte dei Paschi di Siena SpA
BBB/Negative/A-2 BBB+/Watch Neg/A-2
Banco Popolare Societa Cooperativa SCRL
Credito Bergamasco
Banca Aletti & C. SpA
BBB-/Negative/A-3 BBB/Watch Neg/A-2
Unione di Banche Italiane Scpa
BBB+/Negative/A-2 A-/Watch Neg/A-2
Mediobanca SpA
BBB+/Negative/A-2 A/Watch Neg/A-1
Banca Popolare dell'Emilia Romagna S.C.
BBB/Negative/A-2 BBB+/Watch Neg/A-2
Banca Popolare di Milano SCRL
Banca Akros SpA
BBB-/Negative/A-3 BBB/Watch Neg/A-2
Banca Carige SpA BBB-/Negative/A-3 BBB/Watch Neg/A-2
Banca Popolare di Vicenza ScpA
BBB-/Negative/A-3 BBB/Watch Neg/A-2
Credito Emiliano SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2
Veneto Banca SCPA BBB-/Negative/A-3 BBB/Watch Neg/A-2
Banca Popolare dell'Alto Adige
BBB/Negative/A-2 BBB+/Watch Neg/A-2
Cassa di Risparmio della Provincia di Teramo SpA
BB-/Negative/B BB+/Watch Neg/B
Cassa di Risparmio di Cento SpA
BB/Negative/B BB+/Watch Neg/B
Unipol Banca SpA BB/Watch Neg/B BB+/Watch Neg/B
Iccrea Holding SpA
Iccrea Banca SpA
Iccrea BancaImpresa SpA
BBB/Negative/A-2 BBB+/Watch Neg/A-2
Banca Fideuram BBB+/Negative/A-2 A-/Watch Neg/A-2
Agos-Ducato SpA BBB/Negative/A-2 BBB+/Watch Neg/A-2
Dexia Crediop SpA BB-/Negative/B BB+/Watch Neg/B
Banca Mediocredito del Friuli-Venezia Giulia SpA
BBB/Negative/A-3 BBB+/Watch Neg/A-2
Istituto per il Credito Sportivo
BBB+/Negative/A-2 A/Watch Neg/A-1
Eurofidi Scpa BBB-/Negative/A-3 BBB/Watch Neg/A-2
Ratings Affirmed; CreditWatch Action
To From
Banca di Credito Cooperativo di Conversano S.c.r.l
BBB-/Negative/A-3 BBB-/Watch Neg/A-3
Istituto Centrale delle Banche Popolari Italiane SpA
CartaSi SpA
BBB-/Negative/A-3 BBB-/Watch Neg/A-3
CreditWatch Update
To From
FGA Capital SpA BBB/Watch Neg/A-3 BBB/Watch Neg/A-3
NB. This list does not include all ratings affected.
=====================
N E T H E R L A N D S
=====================
* NETHERLANDS: Agricultural Bankruptcies Hit Record High in 2011
----------------------------------------------------------------
Rudy Ruitenberg at Bloomberg News reports that Dutch agriculture
bankruptcies in 2011 increased to a record high in seven years,
led by failures of horticulture companies and farms that combine
crops with raising livestock.
According to Bloomberg, the Netherlands' Centraal Bureau voor de
Statistiek wrote in a report on its Web site on Monday that farm
bankruptcies rose to 141 in 2011 from 136 in the previous year.
The figure was the highest since 2004, Bloomberg says.
The statistics office reported that horticulture accounted for
most of the bankruptcies, with 84 growers of vegetables, flowers
or mushrooms going bust compared with 80 in the previous year,
Bloomberg notes. The number of companies combining crops and
livestock that shut shop rose to eight from none, Bloomberg
discloses.
===========
P O L A N D
===========
EILEME 1 AB: Moody's Assigns '(P)Caa1' Ratings to US$201MM Notes
----------------------------------------------------------------
Moody's Investors Service assigned a provisional (P)Caa1 rating
and loss given default (LGD) assessment of LGD6 to Eileme 1 AB
(publ)'s US$201 million worth of payment-in-kind (PIK) notes due
in 2020. Eileme 1 AB (publ) is an indirect parent of Polkomtel
S.A. (Polkomtel).
Eileme 1 AB (publ)'s B1 corporate family rating (CFR) and
probability of default rating (PDR) remain unchanged, as well as
the (P)B3 rating on Eileme 2 AB (publ)'s EUR542.5 million and
US$500 million worth of senior subordinated notes due in 2020.
The outlook for all the ratings is stable.
Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect the rating agency's
preliminary credit opinion regarding the transaction only. Upon a
conclusive review of the final documentation, Moody's will
endeavor to assign a definitive rating to the group's proposed
PIK notes. The definitive rating may differ from the provisional
rating.
Ratings Rationale
"The (P)Caa1 rating on the PIK notes is three notches below the
company's B1 CFR and one notch below the (P)B3 rating on the
senior subordinated notes. This notching differential reflects
the PIK notes' contractually and structurally subordinated
position relative to the secured bank facilities and the senior
subordinated notes," says Ivan Palacios, a Moody's Vice President
-- Senior Analyst and lead analyst for Polkomtel.
"Due to the high initial leverage and the substantial amount of
secured bank debt and senior subordinated notes that effectively
rank senior to the PIK noteholders, Moody's believes that the
amount of residual collateral value available to the PIK
noteholders in a recovery scenario is expected to be very
limited," explains Mr. Palacios.
The PIK notes issuance is part of the original financing package
that was put in place for the acquisition of Polkomtel by Spartan
Capital Holdings Sp. z o.o. (Spartan Holdings), which is
controlled indirectly by Polish media entrepreneur Mr. Zygmunt
Solorz-Zak. At the time of original rating assignment, Moody's
had already included the PIK debt in the company's leverage
calculations. Therefore, this debt issuance does not have an
impact on Polkomtel's ratings.
Polkomtel's B1 rating reflects its leading position in the Polish
mobile market, its track record of generating solid profitability
and strong cash flows, and the better growth prospects of the
Polish market within the broader European context. In addition,
the B1 rating reflects the potential market share gains derived
from the group's plan to offer 4G/LTE services ahead of
competition and its good liquidity profile post-transaction. At
the same time, the B1 rating reflects Polkomtel's relatively high
leverage and its expected slow pace of deleveraging.
The rating also reflects (i) Polkomtel's lack of a fixed-line
business; (ii) the challenging competitive environment in Poland;
(iii) the group's exposure to foreign currency fluctuations, as
around one third of its debt will be denominated in foreign
currency while most of its revenues are generated in the domestic
currency; and (iv) the increased complexity of the group's
structure following its agreement with LTE Group to cooperate in
the deployment of a 4G/LTE network.
The stable outlook factors in that Polkomtel's credit metrics
will initially be more weakly positioned for the rating category,
with the group's adjusted debt/EBITDA slightly above 5.0x.
However, it also reflects Moody's expectation that the company
will deleverage to below 5.0x in 2013, while its RCF/adjusted
debt ratio will remain between 10% and 15%. In addition, the
rating assumes that Polkomtel and other group entities will form
a Polish consolidated tax group during 2012 in order to increase
tax efficiencies, as indicated by the company. If the group were
to fail to do this, its credit metrics could be negatively
affected and downward pressure on the rating could arise.
WHAT COULD CHANGE THE RATING UP/DOWN
Upward pressure on the rating could develop if the company
delivers on its business plan, such that its adjusted debt/EBITDA
ratio trends towards 4.0x and its RCF/adjusted debt ratio reaches
15% or higher.
Conversely, downward pressure could be exerted on the rating if
Polkomtel's operating performance weakens such that its adjusted
debt/EBITDA does not trend to below 5.0x and the group sustains
an RCF/adjusted debt ratio of below 10%. A weakening in the
company's liquidity profile (including a reduction in headroom
under financial covenants) could also exert downward pressure on
the rating.
Principal Methodology
The principal methodology used in rating Polkomtel was the Global
Telecommunications Industry Methodology published in December
2010. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Headquartered in Warsaw, Poland, Polkomtel S.A. is one of the
largest mobile telecommunications operators in Poland (no.1 in
terms of revenues and no.2 in terms of customers). As of the last
12 months ended September 2011, Polkomtel had 14.2 million
customers and generated revenues of PLN7.4 billion (c. EUR1.7
billion) and EBITDA of PLN2.8 billion (c. EUR636 million). In
November 2011, the group was acquired by Spartan Capital Holdings
Sp. z o.o. (Spartan Holdings), which is controlled indirectly by
Mr Zygmunt Solorz-Zak.
===========
R U S S I A
===========
STRABAG: Inzhglobal Files Bankruptcy Petition
---------------------------------------------
RBC News reports that Inzhglobal, a subcontractor, has filed a
lawsuit with the Moscow Arbitration Court seeking to declare
Russia's Strabag bankrupt.
According to RBC, Strabag owes more than RUR16 million
(approximately US$535 million) to Inzhglobal, which erected the
facade of a building on Ostozhenka Street, pursuant to an order
by the Moscow government.
In late December 2011, the arbitration court ordered Strabag to
repay RUR11 million (approximately US$368 million) to the
subcontractor, RBC recounts.
VNESHECONOMBANK: S&P Assesses Foreign Curr. Credit Rating at 'bb'
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BBB' rating to
the series 5 bonds to be issued, via VEB Finance Ltd., by Russia-
based The Bank for Development and Foreign Economic Affairs
(Vnesheconombank, VEB; foreign currency BBB/Stable/A-3; local
currency BBB+/Stable/A-2) on Feb. 13, 2012. The bonds are worth
US$750 million and form part of VEB's large loan-participation
note program. They have a five-year maturity and a fixed 5.375%
interest rate paid semi-annually.
The ratings on the bonds are equalized with the foreign currency
issuer credit rating on VEB.
"The ratings on VEB are equalized with those on the Russian
Federation (foreign currency BBB/Stable/A-3; local currency
BBB+/Stable/A-2; Russia national scale 'ruAAA'), reflecting our
view of an 'almost certain' likelihood that the Russian
government would provide timely and sufficient extraordinary
support to VEB if necessary," S&P said.
In accordance with S&P's criteria for government-related
entities, its view of an "almost certain" likelihood of
extraordinary government support is based on its assessment of
VEB's:
"Critical" role to the Russian Federation as the prime public
development institution of the government, which cannot be
readily undertaken by a private entity; and
"Integral" link with the Russian Federation.
"This is because of VEB's special status as a state corporation
with strong oversight from the federal government and its proven
track record of adequate extraordinary financial support in all
circumstances. As a result, VEB's foreign currency credit rating
is three notches higher than its stand-alone credit profile
(SACP), which we currently assess as 'bb'. It is based on the
'bb' anchor and our assessment of the bank's 'strong' business
position, 'moderate' capital and earnings, 'moderate' risk
position, 'above Average' funding, and 'adequate' liquidity, as
our criteria define these terms," S&P said.
"Under our bank criteria, we use our Banking Industry Country
Risk Assessment (BICRA) economic and industry risk scores, which
we currently assess at '7', to determine a bank's anchor, the
starting point in assigning an issuer's SACP. For a Russian bank,
we assess the anchor as 'bb'," S&P said.
"Our 'strong' assessment of VEB's business position reflects the
bank's unique status as a prime state development institution in
Russia. VEB is a state corporation and its activity is regulated
under a special legal act. In Russia, VEB is a prime source of
long-term bank funding for complex investment projects in
infrastructure, machinery, and other strategic sectors defined by
Russia's government. VEB's supervisory board authorizes its
investment decisions. It is headed by the prime minister and
comprises members of the federal government and VEB's chairman,"
S&P said.
"Our 'moderate' assessment of VEB's capital and earnings reflects
our expectation that the projected risk-adjusted capital (RAC)
ratio before diversifications will be between 5%-7% for the next
two years and that the bank's earnings capacity will remain
limited," S&P said.
"Our risk position assessment for VEB is 'moderate' because of
the policy role that it plays and its involvement in government-
related projects, which we consider risky because of concerns
regarding their commercial viability, unconventional nature, and
significant concentrations. VEB's problematic loans (including
overdue loans and renegotiated loans) reached 15.3% of total
loans at year-end 2010, up from 14.2% at year-end 2009. We expect
VEB's gross problematic assets (GPAs) to increase further because
market conditions remain uncertain and the assets themselves are
unconventional. In our view, the bank has large concentrations,
especially in real estate. Overall, loans to the volatile real
estate and construction sectors accounted for about 25% of VEB's
portfolio on a consolidated basis at June 30, 2011," S&P said.
"The bank's funding is 'above average' and liquidity is
'adequate', in our opinion. VEB relies on long-term funding (both
domestic and international) and has a limited amount of on-demand
deposits. Therefore, we expect the debt service due within the
next 12 months (excluding Central Bank of Russia deposits, which
are regularly rolled over) to be well covered by the bank's
available cash during 2012. VEB retains unhindered access to
funding from the central bank and National Wealth Fund, and good
access to foreign capital markets," S&P said.
The stable outlook on VEB mirrors that on the Russian Federation.
Future rating actions, positive or negative, on VEB will likely
follow those on the sovereign, assuming that the institution's
fundamentals and public policy functions remain unchanged.
"We could lower VEB's local currency rating over the next two
years -- even if the local currency sovereign rating remains
unchanged -- if VEB's link with the government weakens; for
example, if VEB loses its special legal status as a state company
or most of the prominent government members leave the supervisory
board. We could also lower the ratings if the government reduces
VEB's role as a prime development institution, or significantly
scales down its interventions into the domestic economy. We do
not currently expect either scenario to occur, but should both
take place, we could lower VEB's foreign currency rating," S&P
said.
=========
S P A I N
=========
CAJA INGENIEROS: Moody's Assigns 'B1' Rating to EUR67.5MM Notes
---------------------------------------------------------------
Moody's Investors Service has assigned these definitive ratings
to the debt issued by CAJA INGENIEROS AYT 2, Fondo de
Titulizacion de Activos:
-- EUR382.5M Serie A Notes, Definitive Rating Assigned Aaa (sf)
-- EUR67.5M Serie B Notes, Definitive Rating Assigned B1 (sf)
Ratings Rationale
CAJA INGENIEROS AYT 2, FTA is a securitization of loans granted
by Caja de Credito de los Ingenieros, sociedad Cooperativa de
Credito ("Caja de Ingenieros") (N.R) to Spanish individuals. Caja
Ingenieros is acting as Servicer of the loans while Ahorro y
Titulizacion S.G.F.T., S.A. is the Management Company
("Gestora").
As of January 2012, the provisional pool was composed of a
portfolio of 2,816 contracts granted to 2,722 obligors located in
Spain. The assets supporting the notes are prime mortgage loans
secured on residential properties located in Spain. The Current
Weighted Average LTV is 58%. The assets were originated between
1997 and 2011, with a weighted average seasoning of 3.75 years
and a weighted average remaining term of 27.1 years.
Geographically, the pool is located mostly in Catalonia (70%) and
Andalusia (12%). 0.6% of the pool corresponds to loans in
principal grace periods. 2.2% of the loans were granted to non
Spanish nationals.
According to Moody's, the deal has the following credit
strengths: (i) a reserve fund fully funded upfront equal to 8% of
the notes to cover potential shortfalls in interest and
principal, (ii) relatively low weighted-average current LTV
(based on valuation at origination) of 58% (No loans over 80%
LTV), (iii) All loans are first-lien mortgages on residential
properties (89.4% owner occupied) located in Spain and granted to
Spanish nationals (only 2.2% non Spanish nationals) and (iv) very
strong performance in previous deal of this originator, with low
variability including through the current downturn.
Moody's notes that the transaction features a number of credit
weaknesses, including: (i) No interest rate swap in place to
cover the interest rate risk; (ii) geographical concentration in
the region of Catalonia (69%) and (iii) the originator (and
servicer) is not publicly rated. However, there is a back-up
servicer agreement at closing with Banco Cooperativo Espanol
(A1/P-1 on Review for Possible Downgrade).
Moody's analysis focused primarily on (i) an evaluation of the
underlying portfolio of loans; (ii) historical performance
information and other statistical information; (iii) the credit
enhancement provided via excess-spread, the cash reserve and the
subordination of the notes. As noted in Moody's comment 'Rising
Severity of Euro Area Sovereign Crisis Threatens Credit Standing
of All EU Sovereigns' (November 28, 2011), the risk of sovereign
defaults or the exit of countries from the Euro area is rising.
As a result, Moody's could lower the maximum achievable rating
for structured finance transactions in some countries, which
could result in rating downgrades.
The resulting key assumptions of Moody's analysis for this
transaction are a MILAN Aaa Credit Enhancement of 15.0% and a
expected loss of 2.35%.
The V Score for this transaction is Medium, which is in line with
the V score assigned for the Spanish RMBS sector. Only two sub
components underlying the V Score have been assessed higher than
the average for the Spanish RMBS sector. Market Value Sensitivity
is Medium because there is no hedging for the interest rate risk.
Back-up Servicer Arrangement is assessed as Medium because the
originator is not rated. However, there is a back-up servicer
appointed at closing, although it will only step in if the
management deems it is necessary.
Moody's also ran sensitivities around key parameters for the
rated notes. For instance, if the assumed MILAN Aaa Credit
Enhancement of 15% used in determining the initial rating was
changed to 21% and the expected loss of 2.35% was changed to
3.3%, the model indicated rating for Series A and Series B of Aaa
and B1 would have changed to Aa1 and B3 respectively.
The methodologies used in this rating were Moody's Approach to
Rating RMBS in Europe, Middle East, and Africa published in
October 2009, Moody's Updated Methodology for Rating Spanish RMBS
published in October 2009, Cash Flow Analysis in EMEA RMBS:
Testing Structural Features with the MARCO Model (Moody's
Analyser of Residential Cash Flows) published in January 2006,
and Revising Default/Loss Assumptions Over the Life of an
ABS/RMBS Transaction published in December 2008.
In rating this transaction, Moody's used ABSROM to model the cash
flows and determine the loss for each tranche. The cash flow
model evaluates all default scenarios that are then weighted
considering the probabilities of the lognormal distribution
assumed for the portfolio default rate. In each default scenario,
the corresponding loss for each class of notes is calculated
given the incoming cash flows from the assets and the outgoing
payments to third parties and noteholders. Therefore, the
expected loss or EL for each tranche is the sum product of (i)
the probability of occurrence of each default scenario; and (ii)
the loss derived from the cash flow model in each default
scenario for each tranche. As such, Moody's analysis encompasses
the assessment of stressed scenarios.
COMPANIA LEVANTINA: In Refinancing Talks with Creditors
-------------------------------------------------------
Sharon Smyth at Bloomberg News reports that Compania Levantina de
Edificacion y Obras Publicas SA said it is in talks with
creditors to refinance debt after public administrations did not
pay their bills on time.
According to Bloomberg, the company made the statement in a
regulatory filing.
La Compania Levantina de Edificacion y Obras Publicas S.A.
operates in the construction and public work sectors in Spain and
Central America. La Compania Levantina de Edificacion y Obras
Publicas S.A. was founded in 1926 and is based in Valencia,
Spain.
===========
S W E D E N
===========
VERISURE HOLDING: Moody's Rates Series B Notes at '(P)Caa1'
-----------------------------------------------------------
Moody's Investors Service assigned a provisional (P)Caa1 rating
to the EUR272 million of Series B senior secured notes and a
provisional (P)B2 rating to the EUR100 million of Series A senior
secured FRNs to be issued by Verisure Holding AB. Verisure is
the indirect parent of the Swedish Target (previously named
Securitas Direct AB) and carries a B3 corporate family rating
(CFR). The (P)Caa1 rating for the Series B notes reflects their
contractual subordination to the super senior revolving credit
facility, the Series A senior secured fixed notes and Series A
senior secured FRNs (both rated (P)B2) and Series A loan all
issued by Verisure. The (P)B2 rating for the Series A FRNs is a
result of them being pari passu with the existing Series A senior
secured notes (rated (P)B2) and the Series A loan.
Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation and the final amounts of Series
A and Series B notes and loans issued, Moody's will endeavor to
assign a definitive rating to the notes. A definitive rating may
differ from a provisional rating.
Ratings Rationale
The EUR100 million Series A FRNs, EUR272 million Series B notes
and an unrated EUR50 million Series A loan, in combination with
EUR500 million Series A fixed notes, will refinance the senior
bridge facility entered into in connection with the acquisition
of Securitas Direct which closed in September 2011.
The (P)B2 ratings on the EUR600 million of Series A notes and the
(P)Caa1 rating on the EUR272 million of Series B notes reflect
the presence of a EUR279 million super senior RCF offset by a
EUR394 million cushion in the form of a Mezzanine Facility. In
addition, the 2 notch difference between the Series A and Series
B notes reflects the fact that the Series A notes and EUR50
million of unrated Series A loans will rank ahead of the Series B
notes in priority of payment with regards to proceeds from
enforcement.
The Series A and Series B notes will both be jointly and
severally guaranteed on a senior basis by most of the material
and certain other subsidiaries that guarantee the new revolving
credit facility, including the Swedish Purchaser and each of the
subsidiaries organized in Sweden, Norway, Portugal and Spain. The
notes guarantors accounted for 83% of total net sales in 2010 and
84% of total assets as of September 2011. They also generated all
the operating profit, while the subsidiaries not guaranteeing the
notes, in aggregate generated an operating loss in 2010.
The Series A and B notes will both benefit from incurrence
covenants including a 6.75x leverage test falling to 6x after one
year, as well as other covenants including those regarding
creating liens, restricted payments and asset sales. The RCF has
only one maintenance covenant that references drawn RCF debt to
portfolio EBITDA that Moody's expects to have substantial
headroom.
The B3 CFR reflects (i) the company's high leverage and weak
credit metrics pro-forma for the proposed transaction, with gross
adjusted leverage expected at around 7x at FY2011, with modest
deleveraging expected in the near term; (ii) its large exposure
to the Spanish market, which has been one of the only European
markets to actually show a decline in RHSB alarm penetration in
the last few years; (iii) its modest expected free cash flow
generation, with negative free cash flow generation expected in
2012; and (iv) the high cost per customer acquisition with a
relatively long 4 year period to reach breakeven. However, these
are somewhat mitigated by (i) the company's leading market share
in the fragmented European residential and small business
monitored alarm market with a widely recognized brand; (ii) the
resilient nature of the business in an economic downturn with
most capital expenditure success based; (iii) longstanding
customer relationships with low churn and an average life of
around 14 years; (iv) growth prospects resulting from low
penetration in many of its markets and underpinned by the proven
success of the company's business model; and (v) a track record
of growth in sales and profitability, including in Spain, during
the downturn independent of the macroeconomic environment.
The stable outlook reflects Moody's expectation that Verisure
will continue to deliver improving operating performance with no
deterioration in its financial profile. It also incorporates an
assumption that the company preserves at all times an adequate
liquidity profile.
Positive rating pressure could develop if Verisure reduces
leverage on a Gross Debt to EBITDA basis (as adjusted by Moody's)
to well below 6.5x; combined with a track-record of positive free
cash flow generation and a conservative financial strategy. On
the contrary, downward rating pressure could develop with an
increase in leverage to 7.5x Gross Debt to EBITDA (as adjusted by
Moody's) and/or material negative free cash flow on a sustained
basis.
The principal methodology used in rating Verisure Holding AB was
the Global Business & Consumer Service Industry Rating
Methodology published in October 2010. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the US, Canada, and EMEA published June 2009.
Verisure Holding AB has its registered office in Sweden. Through
its subsidiaries it is a leading diversified provider of
monitored alarm solutions (sales SEK5.5 billion for the year
ending December 2010) with operations mainly in Spain, Sweden,
Norway, and France.
=====================
S W I T Z E R L A N D
=====================
MATTERHORN MOBILE: Moody's Assigns (P)Ba3 Rating to FRN Tranche
---------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Ba3
rating and loss-given-default (LGD) assessment of LGD3 to
Matterhorn Mobile S.A.'s new CHF400 million senior secured
floating-rate notes (FRN) issuance. Matterhorn Mobile S.A. is an
intermediate holding company and parent of Orange Communications
S.A.
Concurrently, Moody's has withdrawn the (P)Ba3 rating and LGD3
assessment of Matterhorn Mobile S.A.'s existing CHF150 million
(previously CHF275 million) Term Loan B1 and CHF68 million
(previously CHF125 million) Term Loan B2.
These ratings of different group entities remain unchanged:
- Corporate family rating (CFR) and probability of default
rating (PDR) of Matterhorn Mobile Holdings S.A.: B1
- CHF272 million (equivalent) of senior notes due 2020
(previously CHF225 million), issued by Matterhorn Mobile
Holdings S.A.: (P)B3/LGD6
- CHF450 million of senior secured bonds due 2019 (previously
CHF325 million), issued by Matterhorn Mobile S.A.: (P)Ba3/LGD3
- CHF225 million senior secured Term Loan A at Matterhorn Mobile
S.A.: (P)Ba3/LGD3
The outlook for all the ratings is stable.
Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect the rating agency's
preliminary credit opinion regarding the transaction only. Upon a
conclusive review of the final documentation, Moody's will
endeavor to assign a definitive rating to the group's proposed
senior facilities, senior secured notes and senior notes. The
definitive ratings may differ from the provisional rating.
Ratings Rationale
OCH has made a number of changes in its capital structure as
compared with that assessed by Moody's at the time of original
rating assignment (see press release dated January 31, 2012). The
main change relates to the introduction of a new CHF400 million
(equivalent) senior secured FRN tranche, with the same terms and
conditions and under the same indenture as OCH's senior secured
fixed rate notes. In addition, the company has (i) upsized its
senior secured notes by CHF125 million; (ii) cancelled Term Loan
B1 and Term Loan B2; (iii) cancelled its capital expenditure
(capex) facility of CHF125 million; and (iv) increased its senior
notes by CHF47 million.
These changes will result in an overall increase in debt quantum
of around CHF50 million, which will increase the group's leverage
on a pro forma basis by around 0.1x-0.2x. While this increase in
leverage is not material, Moody's notes that it will slow the
rate at which it initially expected OCH to be able to deleverage
and will weaken the company's positioning within the rating
category. Therefore, there is limited tolerance under the B1 CFR
for deviation from Moody's expectations for OCH's operating
performance and deleveraging profile.
OCH's B1 rating continues to reflect both a relatively weak
business risk profile and a relatively stronger financial profile
compared with similarly rated peers such as Sunrise, Polkomtel or
Wind Telecomunicazioni. Specifically, the rating reflects OCH's
leveraged capital structure following its acquisition by
Matterhorn, a company indirectly owned by funds advised by Apax
Partners LLP, with pro forma adjusted debt/EBITDA of around 4.1x
by year-end 2012. OCH's high business risk reflects its small
size, lack of fixed-line business, weak technological positioning
and the strategic challenges ahead linked to the company's
separation from its previous owner, the France Telecom group.
The stable outlook factors in that OCH's credit metrics will
initially be weakly positioned for the rating category, with the
company's adjusted debt/EBITDA at around 4.1x. However, it also
reflects Moody's expectation that the company will deleverage to
below 4.0x in 2013, while its retained cash flow (RCF)/adjusted
debt ratio will remain between 15% and 20%.
What Could Change The Rating Up/Down
Upward pressure on the rating could develop if OCH's management
team delivers on its business plan, such that the company's (i)
adjusted debt/EBITDA ratio decreases to 3.5x or below; and (ii)
RCF/adjusted debt ratio increases to 20% or above.
Conversely, downward pressure could be exerted on the rating if
OCH's operating performance weakens such that the company does
not deleverage from current levels. Ratios that could be
indicative of downward pressure on the rating are adjusted
debt/EBITDA above 4.0x and RCF/adjusted debt below 15% on a
sustained basis. Any emerging concerns over liquidity (including,
but not limited to, reducing covenant headroom) could also exert
downward pressure on the rating.
Principal Methodology
The principal methodology used in rating OCH was the Global
Telecommunications Industry Methodology, published in December
2010. Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Orange Communications S.A. ("OCH") is the #3 mobile network
operator in Switzerland in terms of revenues (a mobile revenue
market share of around 19% as of September 2011) and subscribers
(with approximately 1.6 million customers). For the last 12
months ended September 2011, the company reported revenues of
CHF1.243 billion (EUR1.007 billion) and EBITDA of CHF312 million
(EUR253 million).
===========================
U N I T E D K I N G D O M
===========================
BADEKABINER: Goes Into Administration, Cuts 82 Jobs
---------------------------------------------------
Iain Laing at The Journal reports that Badekabiner has been
forced into administration after cash-flow problems caused by the
decline in the construction industry and the collapse of a major
customer which owed it nearly GBP500,000.
The company made 82 of its workers redundant after the collapsed,
the third time in two years, according to The Journal. The
report relates that the workers were only paid half the wages due
for their last month's work and are claiming for the money owed
from the Government's Redundancy Payments Office.
The Journal notes that administrators at Leeds-based PKF are
looking for a buyer for the firm.
"The business could potentially be quite successful again. It
has a strong order book, considerable assets and potential
workforce which is keen to get back to work. . . . We have had
quite few companies in the construction industry come to us
already who are interested in buying the company and we will be
looking to make a sale to the right buyer soon while keeping open
talks with its customers, many of whom will want to resume supply
of the bathroom pods into their developments quickly," the report
quoted PKF partner Charles Escott as saying.
The report notes that Mr. Escott said that the firm's books were
still being examined but it is believed it owed more than GBP1
million to suppliers, Her Majesty's Revenue and Custom and to
building giant Galliford Try, which owned 25% of the business
before its collapse.
Badekabiner makes concrete bathroom pods which can be used in the
construction of large buildings such as hotels or student
accommodation.
DUNEDIN INDEPENDENT: Enters Into Liquidation Following Takeover
---------------------------------------------------------------
Annabelle Williams at Wealth Manager reports that Dunedin
Independent has been put into liquidation less than 18 months
after it was taken over by Swiss firm Helvetia Wealth.
According to reports in The Herald, KPMG has been appointed as
liquidator owing to the firm's "untenable" financial position,
following a restructuring and reports Dunedin's portfolios were
hit by falling property values, Wealth Manager notes.
The Edinburgh-based firm was established in 1994 and grew to
become one of Scotland's largest independent IFAs with
GBP350 million under administration, Wealth Manager recounts.
A total of 16 Dunedin staff were moved to fellow Edinburgh IFA
Melville Independent while the remaining staff worked on lower
value clients, Wealth Manager discloses.
HOLCOMBE HOUSE: In Administration, Ousts Residents
--------------------------------------------------
BBC News reports that Holcombe House at Moretonhampstead has gone
into administration and is due to shut down.
Families of residents have been trying to find alternative
accommodation after the company gave them a week to leave,
according to BBC News.
"It's a real shame they've had short notice, but it's unavoidable
really. . . . We're trying to keep it going as long as we can
until people can be re-homed," the report quoted administrator
David Kirk as saying.
LAUDERDALE PROPERTIES: Goes Into Administration
-----------------------------------------------
BBC News reports that Lauderdale Properties, which bought the
Bedford Street office block in 2007, has gone into
administration.
Lauderdale was a joint venture between Dublin developer Ray
Grehan and Cavan-based P Elliott construction group, according to
BBC News. The report relates that Mr. Grehan and P Elliott are
among the casualties of the Irish property crash.
BBC News notes that Mr. Grehan was declared bankrupt in London in
December 2011 and was being pursued over a EUR300 million debt
owed to the Irish government's National Asset Management Agency.
P Elliott was placed into receivership in May 2011 with debts of
about EUR500 million, the report relates. BBC News discloses
share of Windsor House was held by a company called Dorwins
Investments.
Windsor House was mortgaged with Bank of Ireland, meaning they
probably appointed the administrator, the report adds.
PETROPLUS HOLDINGS: Coryton Refinery Receives 7th Crude Shipment
----------------------------------------------------------------
Nidaa Bakhsh at Bloomberg News reports that Petroplus Holdings
AG's Coryton oil refinery in the U.K. received a seventh crude
tanker since the company's credit lines were frozen in December,
allowing operations to continue at reduced rates.
The Katja has a draft, or sailing depth, of 8.5 meters on Monday
compared with 12.7 meters when it was at the terminal on Feb. 10,
signaling it unloaded cargo, according to AISLive ship-tracking
data on Bloomberg.
The Coryton refinery near London was running at less than half of
its 220,000 barrel-a-day capacity after lenders froze credit
lines to the company, Bloomberg notes. The site has received
about 4.6 million barrels of crude since the end of last year
aboard seven ships, including the Katja, according to Bloomberg
calculations.
Partners at PricewaterhouseCoopers LLP who were named as joint
U.K. administrators for Petroplus when the company filed for
insolvency last month have been obtaining crude cargoes for the
facility, Bloomberg recounts.
According to Bloomberg, PwC said last week that options being
explored included tolling arrangements, whereby third parties
supply oil to the facility.
Based in Zug, Switzerland, Petroplus Holdings AG is Europe's
largest independent oil refiner.
PETROPLUS HOLDINGS: Administrators Keep Refinery Running
--------------------------------------------------------
scotsman.com reports that administrators at
PricewaterhouseCoopers have bought a further batch of crude oil
for processing at the Coryton refinery in Kent.
PwC has kept the plant running since last month when the UK arm
of Swiss owner Petroplus fell into administration, according to
scotsman.com. The report relates that the company was forced to
shut three of its five refineries in Belgium and France last
month because of a lack of crude oil.
More than 40 parties have expressed interest in buying the
Coryton refinery, UK energy minister Charles Hendry said, but
industry sources questioned how many were serious buyers, the
report notes.
As reported in the Troubled Company Reporter-Europe on Jan. 25,
2012, Petroplus Holdings AG disclosed that the company and its
subsidiaries received notices of acceleration on Jan. 23 from the
lenders under its Revolving Credit Facility after negotiations
with lenders to reopen credit lines needed to maintain operations
and meet financial obligations failed. The lenders served
notices of acceleration, commenced enforcement actions and
appointed a receiver in respect of Petroplus Marketing AG's
assets in the UK. Such acceleration constitutes an event of
default under the U$1.75 billion aggregate principal amount of
outstanding senior notes and convertible bonds of Petroplus
Finance Limited.
Based in Zug, Switzerland, Petroplus Holdings AG is Europe's
largest independent oil refiner.
STUARTS INDUSTRIAL: Goes Into Administration, Cuts 102 Jobs
-----------------------------------------------------------
news.stv.tv reports that Stuarts Industrial Flooring has gone
into administration.
KPMG was appointed administrators and the redundancies, totaling
102 across the company, take effect immediately, according to
news.stv.tv
The report says that six workers, including three in Scotland,
have been kept on to help with the winding-down process.
"While this business has been historically profitable, the
downturn in the construction industry has seen it generating
significant trading losses over recent years. . . . In the
current challenging economic conditions, the business has no
commercially viable future in its current form and as a result,
we have taken the difficult decision to wind the business down
with immediate effect," the report quoted joint administrator
Mark Orton as saying.
Stuarts Industrial Flooring is a flooring company that has
operated for 172 years. It has three sites at Loanhead in
Midlothian, Tamworth in Staffordshire and Roecliffe in North
Yorkshire.
WHINSTONE CAPITAL: S&P Cuts Ratings on Three Note Classes to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised and removed from
CreditWatch negative its credit ratings on Whinstone Capital
Management Ltd.'s class B notes, and lowered and removed from
CreditWatch negative its ratings on the class C notes. "At the
same time, we raised and removed from CreditWatch negative our
ratings on Whinstone 2 Capital Management Ltd.'s class C notes,"
S&P said.
"On Dec. 12, 2011, we placed on CreditWatch negative our ratings
on all classes of notes in both of these transactions, pending a
review under our updated U.K. residential mortgage-backed
securities (RMBS) criteria," S&P said.
"The rating actions follow our credit and cash flow analysis of
the most recent transaction information that we have received
from the originator, applying our recently published U.K. RMBS
criteria," S&P said.
"On Jan. 23, 2012, we raised our ratings on all the junior
classes of notes in all series of the Granite master trust, which
houses the reference portfolios for Whinstone and Whinstone 2,
following our credit and cash flow analysis incorporating our
updated U.K. RMBS criteria," S&P said.
"Whinstone and Whinstone 2 are synthetic transactions where the
issuers have each entered into a credit-default swap (CDS) with
Northern Rock (Asset Management) PLC. Under these CDSs, the
issuers sell protection on portfolios referenced to the Granite
U.K. RMBS master trust, which comprises five 'capitalist' issuers
(Granite Mortgages 03-2, 03-3, 04-1, 04-2, and 04-3), and a
'socialist' issuer (Granite Master Issuer PLC [GMI]) where nine
issuances remain outstanding," S&P said.
"In Whinstone, the issuer sells protection for the issuer reserve
funds in Granite Mortgages 03-2, 03-3, 04-1, 04-2, and 04-3,
while in Whinstone 2, it sells protection for the program reserve
fund in GMI for series 2005-1, 2005-2, 2005-4, and 2006-1.
Northern Rock (Asset Management), as protection buyer, makes
quarterly payments to the issuers. In return, the issuers make
credit protection payments to Northern Rock (Asset Management),
if a credit event occurs," S&P said.
"A credit event occurs if the balance in the relevant reserve
fund is lower than the target reserve amount on the final
distribution date of the referenced Granite master trust notes,
after all payment obligations ranking higher than the reference
obligations have been fully discharged," S&P said.
"In our credit and cash flow analysis of the Granite master
trust, we have analyzed the reserve draws in different scenarios
under our updated U.K. RMBS criteria, to establish rating levels
commensurate with credit enhancement available to cover any
losses resulting from a credit event. We outline the results of
our analysis," S&P said.
Whinstone
The Granite Mortgages 03-2, 03-3, 04-1, 04-2, and 04-3 reserve
funds are topping up to the target amount, which stepped up at
their respective step-up dates. This increase in the target
reserve is providing increased credit enhancement for all classes
of notes.
"Our analysis indicates that the maximum reserve fund draws under
a 'BB' rating scenario are larger than the available credit
enhancement for the class C notes. Accordingly, we have lowered
and removed from CreditWatch negative our ratings on these
notes," S&P said.
"However, the level of credit enhancement provided by the
stepped-up reserve funds and subordination of the class C notes
is sufficient to mitigate the credit protection payments due
under a credit event at higher rating levels than 'BBB' for the
class B notes. We have therefore raised and removed from
CreditWatch negative our ratings on these notes," S&P said.
"Our ratings were constrained by the application of our 2010
counterparty criteria. Because we do not consider Whinstone's
bank agreement to be in line with these criteria, our highest
potential rating on the notes in this transaction is equal to the
long-term issuer credit rating on the bank account provider --
Northern Rock (Asset Management) (A/Stable/A-1)," S&P said.
Whinstone 2
"Our analysis indicates that the projected maximum draws on the
GMI program reserve fund are less than the threshold amount for
the 'BBB-' rating scenarios. We therefore consider that there is
sufficient credit enhancement available at this rating level to
cover any losses. Accordingly, we have raised and removed from
CreditWatch negative our ratings on the class C notes -- the only
outstanding notes in this transaction," 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
To From
Whinstone Capital Management Ltd.
EUR308.6 Million, GBP129.96 Million, and US$147 Million Floating-
Rate Credit-Linked Notes
Ratings Raised and Removed from CreditWatch Negative
B1 A (sf) BBB (sf)/Watch Neg
B2 A (sf) BBB (sf)/Watch Neg
B3 A (sf) BBB (sf)/Watch Neg
Ratings Lowered and Removed from CreditWatch Negative
C1 B (sf) BB (sf)/Watch Neg
C2 B (sf) BB (sf)/Watch Neg
C3 B (sf) BB (sf)/Watch Neg
Whinstone 2 Capital Management Ltd.
EUR129 Million and GBP80 Million Floating-Rate
Credit-Linked Notes
Ratings Raised and Removed from CreditWatch Negative
C1 BBB- (sf) BB (sf)/Watch Neg
C2 BBB- (sf) BB (sf)/Watch Neg
*********
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
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A list of Meetings, Conferences and Seminars appears in each
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related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T.
Fernandez, Joy A. Agravante, Ivy B. Magdadaro, Frauline S.
Abangan and Peter A. Chapman, Editors.
Copyright 2012. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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