/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120926.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, September 26, 2012, Vol. 13, No. 192 Headlines C R O A T I A AGROKOR DD: New Notes Issuance No Impact on Moody's 'B2' CFR I R E L A N D BROOKSLANDS 2004-1: Fitch Affirms 'Dsf' Rating on Class E Notes CAVENDISH SQUARE: Fitch Affirms 'Bsf' Rating on Class C Notes JOHN J FLEMING: NAMA Gets EUR3.5-Mil. Payment From Receiver I T A L Y BUZZI UNICEM: S&P Rates EUR350MM 6.25% Notes 'BB+' L U X E M B O U R G ARCELORMITTAL SA: Moody's Assigns '(P)Ba2' Rating to Securities ARCELORMITTAL SA: Fitch Assigns 'BB(EXP)' Rating to Securities ARCELORMITTAL: S&P Assigns 'B+' Rating to Capital Securities N E T H E R L A N D S FORNAX BV: Fitch Affirms 'CCCsf' Ratings on Two Note Classes LAURELIN BV: S&P Says Percentage of Rated 'SD' Assets Increased PINAFORE HOLDINGS: Moody's Says Division Sale Credit Negative P O L A N D TVN SA: Moody's Affirms 'B1' CFR; Outlook Stable R U S S I A * PENZA REGION: Fitch Assigns 'BB' Long-Term Currency Ratings S P A I N BANCO DE VALENCIA: Fitch Cuts Rating on Subordinated Debt to 'C' S W I T Z E R L A N D MATTERHORN MIDCO: Moody's Rates Notes '(P)Caa1'; Outlook Stable MATTERHORN MOBILE: S&P Affirms 'B+' Corporate Credit Rating U N I T E D K I N G D O M APPRENTICESHIP TRAINING: Learning Provider Goes Into Liquidation DANFORDS MOTOR: Goes Into Liquidation FIRST4SKILLS: In Administration; 40 Jobs Affected HSW PRINT: Goes Into Administration JJB SPORTS: Enters Administration as Sales Process Continues MUSIC FESTIVALS: Calls in Administration WYG GROUP: 90 Jobs Saved After Sale to WYG Plc X X X X X X X X * Moody's Revises Global Pharmaceutical Sector Outlook to Stable ********* ============= C R O A T I A ============= AGROKOR DD: New Notes Issuance No Impact on Moody's 'B2' CFR ------------------------------------------------------------ Moody's Investors Service said that Agrokor D.D.'s expected issuance of an equivalent EUR475 million senior unsecured notes due 2020 is credit positive, but does not impact the B2 corporate family rating. The new notes are rated provisional (P)B2. There is also no impact to the B2 rating on the existing senior unsecured notes due 2016 and 2019. The new notes are expected to rank pari passu with the existing senior unsecured notes due 2016 and 2019, with the same security and guarantee package as well as the same covenants. The rating outlook is stable. Moody's issues provisional ratings in advance of the final sale of securities. Upon closing of the transaction and a conclusive review of the final documentation, Moody's will endeavour to assign definitive ratings. A definitive rating may differ from a provisional rating. Moody's understands that Agrokor will use the proceeds from the new notes together with cash on hand to repay approximately EUR 486 million of debt outstanding under a senior credit facility, facilities with the European Bank for Reconstruction and Development (EBRD), facilities with the International Finance Corporation (IFC), and a facility with Credit Agricole. Most of these outstanding facilities, now expected to be repaid with the new notes, have a final maturity of either 2013, 2014, or 2015. Based in Zagreb, Agrokor is the largest company in the Adria region, with operations in food and beverages, as well as food retailing. Beyond Croatia, the company also operates in Serbia, Bosnia and Herzegovina, Montenegro, Slovenia, Macedonia and Hungary. ============= I R E L A N D ============= BROOKSLANDS 2004-1: Fitch Affirms 'Dsf' Rating on Class E Notes --------------------------------------------------------------- Fitch Ratings has affirmed Brooklands Euro Reference-Linked Notes 2004-1 Limited (Brooklands 2004-1), as follows: -- Class A1-b (ISIN XS0193141388) affirmed at 'CCCsf' -- Class A2 (ISIN XS0193141891) affirmed at 'CCsf' -- Class B (ISIN XS0193142436) affirmed at 'Csf' -- Class C-E (ISIN XS0193142782) affirmed at 'Csf' -- Class C-Y (ISIN XS0193142865) affirmed at 'Csf' -- Class D (ISIN XS0193143590) affirmed at 'Csf' -- Class E (ISIN XS0193143913) affirmed at 'Dsf' The class A1-a notes were redeemed in full in March 2012. The scheduled maturity date of the rest of the notes is 2014; the legal final is 2054. The affirmation of the class A1-b to C notes reflects the notes' levels of credit enhancement relative to the reference portfolio credit quality. The reference pool's credit quality has deteriorated year on year with the 'CCsf' and below bucket increasing to 6.1% from 2.5%. In addition, the share of investment grade assets has declined to 51% of the reference portfolio from 56% at the time of the last review in October 2011. The reference portfolio exposure to peripheral countries is limited at 3%. The reference pool concentration at industry level has not changed significantly during the past year: RMBS, Banking & Finance and CMBS account for 19%, 16% and 11%, respectively. Credit enhancement for the notes has declined since the last review in October 2011 following the settlement of an outstanding credit event. As a result of the credit event settlement, the class E note balance was further written down and now stands at 26% of its original balance .There have been five credit events since origination, which resulted in losses of EUR32.6 million. As of the August 2012 report, there are no outstanding credit events. The issuer, Brooklands, is a special purpose vehicle incorporated with limited liability under the laws of the Cayman Islands. Brooklands provides protection to UBS AG, London Branch on a portfolio of reference credits with an initial notional value of EUR750m. The ratings of the class A to E notes address the full and timely payment of interest and ultimate payment of principal by the final maturity. CAVENDISH SQUARE: Fitch Affirms 'Bsf' Rating on Class C Notes ------------------------------------------------------------- Fitch Ratings has affirmed Cavendish Square Funding 2 Limited's notes, as follows: -- Revolving Credit Facility: affirmed at 'Asf'; Outlook Stable -- Class A1-N: affirmed at 'Asf'; Outlook Stable -- Class A2: affirmed at 'BBB-sf'; Outlook Negative -- Class B: affirmed at 'BBsf'; Outlook Negative -- Class C: affirmed at 'Bsf'; Outlook Negative -- Class P combination notes: affirmed at 'BBsf'; Outlook Negative The affirmation reflects the notes' level of credit enhancement relative to the portfolio's credit quality. The portfolio's credit quality has slightly deteriorated since the last review in November 2011, with assets rated 'CCCsf' or below representing 12% of the portfolio, up from 11% in November 2011 and cumulative defaults increasing to EUR30.3 million from EUR25.9 million. All over-collateralization (OC) and interest coverage (IC) tests are passing since closing. As a consequence of the OC test breach, excess spread has been used to repay the class A notes. Class A and B are making timely interest payments while interest on class C, D, and E is being deferred. The collateral manager has managed to build par building up the performing portfolio to EUR487 million compared with a total liabilities balance of EUR398 million. The transaction is still within its reinvestment period, which ends in September 2013. However, after the end of the reinvestment period the collateral manager has the discretion to continue to reinvest certain principal proceeds including unscheduled principal proceeds, and sales proceeds from credit improved and credit impaired assets subject to compliance with certain conditions. The two largest industry sectors are RMBS at 78.0% of the portfolio and CMBS at 11.6%. Additionally, the pool mainly comprises Spanish and Italian assets, which account for 25% and 21% of the collateral's balance respectively. The total portfolio exposure to assets of the eurozone periphery (Spain, Italy, Portugal, Greece) is 55% of the portfolio. Fitch believes that a material risk for the transaction is that the portfolio assets' maturity may extend beyond their reported weighted-average expected life. The affirmations and Negative Outlooks on the class A2 to C notes reflect the extension risk of the portfolio assets, which may prolong the risk horizon of the portfolio. The rating of the class P combination notes reflect the ratings of its component classes i.e. EUR14.8 million class B notes and EUR4.4 million subordinated notes, total distributions to date (which count towards reducing the rated balances) and future distributions expected on each of the component classes. The rated balance of the class P notes currently stands at EUR13.7 million. JOHN J FLEMING: NAMA Gets EUR3.5-Mil. Payment From Receiver ----------------------------------------------------------- Barry O'Halloran at The Irish Times reports that the National Asset Management Agency has been paid EUR3.5 million by the receiver of part of builder and developer John Fleming's property empire following a land sale earlier this year. Mr. Fleming's businesses were placed in receivership and liquidation in early 2010 owing more than EUR1 billion to the banks after the Supreme Court refused to approve a rescue plan for his Tivway group proposed by George Maloney of Baker Tilly Ryan, the Irish Times recounts. According to the Irish Times, documents recently filed with the Companies Registration Office show NAM recovered EUR3.5 million earlier this year from the sale of some property owned by John J Fleming Construction to University College Cork. The papers, filed by receiver Bill O'Riordan of PricewaterhouseCoopers, show that the property, at Curraheen on the western edge of Cork city, was sold to the university for EUR3.55 million, the Irish Times discloses. Of this, NAMA received EUR3.51 million, the Irish Times notes. A second document, filed by Eoin Ryan of BDO, who was appointed by EBS, shows the company has 38 residential properties, which are valued at EUR6.6 million, the Irish Times states. Anglo Irish Bank, now known as Irish Bank Resolution Corporation, appointed Mr. O'Riordan, the Irish Times notes. Tivway owed the bank EUR260 million, the Irish Times says. Kenneth Fennell of Kavanagh Fennell was appointed liquidator to the company, according to the Irish Times. The Fleming group ran into problems when it launched a partly built residential, office and retail scheme in Sandyford, Co Dublin, just as the market collapsed, the Irish Times relates. ========= I T A L Y ========= BUZZI UNICEM: S&P Rates EUR350MM 6.25% Notes 'BB+' -------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' issue rating to the proposed EUR350 million 6.25% euro-denominated senior unsecured notes to be issued by Italy-based cement manufacturer Buzzi Unicem SpA (BB+/Stable/B). "The issue ratings are in line with the corporate credit rating on Buzzi. We have also assigned a recovery rating of '3' to the notes, indicating our expectation of meaningful (50%-70%) recovery in the event of a payment default. Recovery prospects for the debt issued by Buzzi are at the low end of the range," S&P said. "The ratings are subject to our satisfactory review of the final documentation," S&P said. "At the same time, we left unchanged the 'BB+' issue rating on the rated existing unsecured debt facilities issued by Buzzi Unicem SpA and its subsidiaries Dyckerhoff AG (BB+/Stable/B) and RC Lonestar Inc. The '3' recovery rating on these instruments remains unchanged, reflecting our expectation of meaningful (50%- 70%) recovery for debtholders in the event of a payment default," S&P said. "We understand that Buzzi will use the proceeds of the proposed notes issuance to refinance existing indebtedness, diversify its funding sources, raise its average debt maturity profile, and for other general corporate purposes," S&P said. The terms of the proposed issuance are similar to those governing the company's previous unsecured bond issues. "Recovery prospects for the proposed notes are supported by our expectation that, in a default, the company would be reorganized rather than liquidated," S&P said. "We have revised the timing of the hypothetical payment default compared with our previous analysis, and assumed that the default would occur in 2016 as a result of a severe and prolonged decline in the group business on the back of unfavorable general economic and industry conditions and an inability to refinance debt maturing in that year. Our estimate is based on the assumption that debt maturing prior to 2016, except the mezzanine debt which we assume will be repaid, will largely be refinanced with similar ranking instruments," S&P said. "Our scenario leads to a default in 2016, with EBITDA declining to about EUR290 million," S&P said. "To calculate the enterprise value of the wider Buzzi group (including Dyckerhoff) at the hypothetical point of default, we apply the market multiple approach using a stressed EBITDA multiple of 5.5x. On this basis, we estimate the stressed enterprise value at the hypothetical point of default in 2016 at approximately EUR1.6 billion," S&P said. "After deducting priority liabilities of EUR365 million comprising enforcement costs, pension liabilities, debt located at subsidiaries (mainly the various U.S. private placements), and prepetition interest, the residual value of the Buzzi Group (including Dyckerhoff and the rest of Buzzi's subsidiaries) would be about EUR1.2 billion," S&P said. "We treat Dyckerhoff's senior unsecured debt as having a senior claim on Dyckerhoff's earnings and assets, ranking ahead of the debt borrowed at Buzzi level. In our view, Buzzi's debt has claims on the earnings and assets of subsidiaries, other than Dyckerhoff, through intergroup loans, as well as through an equity interest in Dyckerhoff," S&P said. The recovery prospects for the various unsecured debt instruments, including the proposed notes, are in the 50%-70% range, leading to a recovery rating of '3' on these instruments. Cover is at the low end of the range. =================== L U X E M B O U R G =================== ARCELORMITTAL SA: Moody's Assigns '(P)Ba2' Rating to Securities --------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)Ba2 long- term rating to the proposed issuance of Subordinated Perpetual Capital Securities (the "Hybrid") by ArcelorMittal S.A. The outlook is negative, in line with that of ArcelorMittal's Baa3 senior unsecured issuer rating. The size and completion of the Hybrid remain subject to market conditions. Ratings Rationale The rating of (P)Ba2 is two notches below ArcelorMittal's senior unsecured rating of Baa3, reflecting the features of the Hybrid. The instrument is undated, very deeply subordinated and ArcelorMittal can opt to defer coupons on a cumulative basis. 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, Moody's will endeavor to assign a definitive rating to the Hybrid. A definitive rating may differ from a provisional rating. As the Hybrid rating is positioned relative to another rating of ArcelorMittal, a change in either (i) Moody's relative notching practice or (ii) the Baa3 senior unsecured rating of ArcelorMittal, which carries a negative outlook, could affect the Hybrid rating. The guidance given in the Announcement published on 2 August 2012 still applies. Principal Methodology The principal methodology used in rating ArcelorMittal S.A. was the Global Steel Industry Methodology published in January 2009. ArcelorMittal is the world's largest steel company. It operates approximately 65 integrated and minimill steel-making facilities in over 20 countries, which have a production capacity of around 125 million tonnes of crude steel per year. The company also has sizable captive supplies of iron ore and coal and a trading and distribution network. Over the last 12 months, the company shipped 86 million tonnes of steel and had sales of US$92 billion. ARCELORMITTAL SA: Fitch Assigns 'BB(EXP)' Rating to Securities -------------------------------------------------------------- Fitch Ratings has assigned Luxembourg-based ArcelorMittal S.A's (AM) planned subordinated perpetual capital securities a 'BB(EXP)' expected rating and affirmed its Long-term Issuer Default Rating (IDR) and senior unsecured ratings at 'BBB-'. The Short-term IDR was affirmed at 'F3'. The Outlook on the Long- term IDR is Negative. The hybrid notes will be unsecured and deeply subordinated, leading to a two-notch differential to the Long-term IDR. The notes will feature a fixed rate resettable coupon, with the first reset in year five and subsequently every five years thereafter. There is a step up of 25bps on the second reset date and a subsequent cumulative step up of 75bps fifteen years later. In addition, AM will also have the option to redeem the notes prior to the first call date for accounting, tax, rating agency or change of control reasons. The notes have been assigned 50% equity credit as they are expected to feature fully discretionary coupon deferral, will be highly loss absorbing and are considered deeply subordinated obligations of the issuer. However, any deferred interest payments will become subsequently due and payable following discretionary distributions on or repurchases of junior or parity securities. Fitch notes that the proceeds from the transaction will be used to refinance existing debt, lengthening the maturity profile and slightly improving the liquidity position. The final issue rating will be assigned once Fitch receives final documentation that conforms to information already reviewed by the agency. AM's ratings continue to reflect its core strengths including its scale as the world's largest steel producer, its leading market positions in most key steel-consuming regions, significant product and geographic diversification, competitive operating cost positions in the various regions in which it operates, and strong participation at all stages of the steel value chain from ownership of raw materials to control of its own distribution networks. The Negative Outlook reflects the challenging short-term outlook for steel markets, particularly in Western Europe, which will mean a slower rate of debt reduction over the next two to three years compared to previous expectations. While AM continues to make good progress with non-core asset disposals and its cost- saving programs, these measures will not fully offset the negative impact of weaker organic cash flow generation. AM's credit metrics will remain weak for the 'BBB-' rating level over the next two years to end-2013, before recovering thereafter. Supporting this recovery will be the company's asset disposal and asset optimization programs. While some execution risk remains, a number of measures under these programs have already been announced and are in progress. What Could Trigger A Rating Action? Negative: Negative rating action could result if AM's FFO gross leverage is sustained above 3.0x over the next two years and profitability remains under pressure. Notably, should the EBIT margin remain below 5% by 2014. Fitch would also expect FCF generation to remain neutral over the next three years. Positive: A positive rating action could be considered if the company significantly deleverages including FFO gross leverage below 2.5x and EBIT margins recovering to above 8%. AM is the largest global steel company and produces a broad range of high-quality finished and semi-finished steel products. Specifically, the company produces flat products, including sheet and plate, long products, including bars, rods and structural shapes and also produces pipes and tubes for various applications and end-uses. ARCELORMITTAL: S&P Assigns 'B+' Rating to Capital Securities ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' long-term issue rating to the proposed optionally deferrable and subordinated perpetual capital securities, to be issued by Luxembourg-registered steel group ArcelorMittal (BB+/Negative/B). "We consider that the proposed securities have 'intermediate' equity content because they meet our criteria requirements of sufficient subordination and permanence, and the coupons are deferrable at the company's discretion," S&P said. The 'B+' issue rating reflects a three-notch differential with S&P's 'BB+' long-term corporate credit rating (CCR) on ArcelorMittal in application of our notching methodology, which calls for: -- A two-notch deduction for subordination because the CCR on ArcelorMittal is speculative grade (that is, 'BB+' or below); and -- An additional one-notch deduction for payment flexibility to reflect the fact that the deferral of coupon payments is optional. "The notching down of our issue rating on the proposed securities is linked to our perception of a currently low likelihood of deferral. Should we consider that this risk has grown, we could increase the notching significantly and, in relative terms, more quickly than a revision of the CCR would call for," S&P said. "Given our view that the proposed securities have 'intermediate' equity content, we will treat 50% of the related coupon payment as an interest expense charge and 50% of the principal as debt. The proposed issue is therefore credit-supportive, although we already factor it into the current ratings and our assumption of seeing adjusted debt decrease toward $30 billion (from $37.6 billion at year-end 2011)," S&P said. KEY FACTORS IN S&P'S ASSESSMENT OF THE INSTRUMENT'S PERMANENCE "Although the proposed securities are permanent, they can be called at any time following 'special events' listed in the documentation, including tax changes or if credit agencies considered the securities had lost their equity content. In addition, there is a general repurchase and cancellation provision, under which ArcelorMittal can repurchase the proposed notes in the open market or redeem them for cash as of the first call date, second call date, and on each annual interest payment date thereafter," S&P said. "We view the first margin step-up of 25 basis points (bps) following the proposed securities' tenth anniversary as low and not affecting the permanence of the instruments. After the 25th anniversary, the proposed securities are subject to a margin step-up for a total of 100 bps and an issuer call. We believe that this significant step-up, unmitigated by any current commitment to replace the instruments at that time, would provide ArcelorMittal an incentive to redeem the instruments on that call date," S&P said. "Consequently, and in accordance with our criteria, we will no longer recognize the instruments as having 'intermediate' equity content following the first step-up date, since the economic period until its economic maturity would then be less than 15 years. However, we classify the instruments' equity content as 'intermediate' until the first step-up date, providing we believe the loss of the beneficial intermediate equity content treatment will not cause the instruments to be called at that point. We could also revise the equity content to 'minimal' if we saw a change in ArcelorMittal's financial policy, which would imply a heightened risk of redemption of the instruments. Our current assessment of equity content is supported by our perception of management's commitment to reducing adjusted debt and strengthening its credit profile," S&P said. KEY FACTORS IN S&P'S ASSESSMENT OF THE INSTRUMENT'S DEFERABILITY "In our view, ArcelorMittal's option to defer payment on the proposed securities is 'discretionary,' according to our criteria. This means that the company may choose not to pay accrued interest on an interest payment date because it has no obligation to do so. However, any outstanding deferred interest payment will have to be settled in cash if, in an ordinary general meeting, ArcelorMittal's shareholders decide on the payment of a dividend or if the company pays interest on, redeems, or repurchases equally ranking or junior securities. We see this as a negative factor," S&P said. "However, this condition remains acceptable under our methodology, because once the issuer has settled the deferred amount, it may still choose to defer on the next interest payment date," S&P said. "There are several considerations that modestly weaken the deferability of the instrument in our opinion: the coupons are cumulative, deferred interest accrues further interest, and ArcelorMittal cannot pay dividends while deferred interest is outstanding," S&P said. KEY FACTORS IN S&P'S ASSESSMENT OF THE INSTRUMENT'S SUBORDINATION The proposed securities and coupons are intended to constitute unsecured and subordinated obligations of ArcelorMittal. The proposed securities rank senior to the common shares. RATINGS LIST New Rating ArcelorMittal Proposed Subordinated B+ ===================== N E T H E R L A N D S ===================== FORNAX BV: Fitch Affirms 'CCCsf' Ratings on Two Note Classes ------------------------------------------------------------ Fitch Ratings has downgraded Fornax (Eclipse 2006-2) B.V.'s class C notes, and affirmed the others, as follows: -- EUR84.4m class B (XS0267554334) affirmed at 'AAAsf'; Outlook Stable -- EUR31.9m class C (XS0267554508) downgraded to 'Asf' from 'AAsf'; Outlook Negative -- EUR19.9m class D (XS0267554920) affirmed at 'BBBsf'; Outlook Negative -- EUR24.8m class E (XS0267555570) affirmed at 'B-sf'; Outlook Negative -- EUR16.8m class F (XS0267555737) affirmed at 'CCCsf'; Recovery Estimate (RE) 50% -- EUR8.0m class G (XS0267556032) affirmed at 'CCCsf'; RE 0% The downgrade of the class C notes and the Negative Outlook on several tranches reflect the overall credit deterioration within a pool of loans facing successive maturities, with five of the remaining seven loans due in the next 14 months and another already overdue. Fitch does not foresee a let up in the financial strains afflicting the eurozone, within which all the borrowers are based, and as a result credit exposure assumed by noteholders could extend closer to the 2019 bond maturity. The class B notes are in a materially stronger position than other classes due to their circa 20% debt yield, on which the Stable Outlook is based. In addition to the potential for further shocks in the property market, loan extensions or prolonged workouts will also increase noteholders' reliance on the performance of a small number of sub-investment grade tenants. Four loans (comprising over 40% of the pool) are substantially reliant on single tenants for debt service. While leverage is not excessive for any of these loans, refinancing them will prove challenging given the exposure to single tenants. Potential refinancers of substantially singly- let property must take into account the condition of the tenant, especially where finding new tenants may take time and result in lower income. ATU, a German car workshop chain, is sole tenant for two loans, ATU Germany (16%) and ATU Austria (7%). The former has already been granted a temporary reduction on its lease payments, although a concurrent ten-year lease extension (taking the remaining lease term up to 16 years) should help mitigate this. Nevertheless, losses may occur due to the type of collateral and the high-yield nature of the company. Burger King and Netto are dominant tenants for the KingBu Portfolio loan due in October and the overdue Netto Portfolio loan (both 10%), respectively. While these are also volatile, Fitch believes these have a better chance of avoiding loss through a refinancing. Many of the other loans are secured by generally strong collateral on reasonable lease lengths. The Century Centre loan (23% of outstanding balance, maturing February 2013) is secured by a shopping centre with attached offices in Antwerp. Income is highly concentrated with the top five tenants accounting for 55%. The property was last valued in May 2011, resulting in a reported LTV today of 74%. Despite a weighted average (WA) lease to break of just over four years, falling occupancy remains a concern. Fitch estimates an LTV of approximately 100%, and as such full loan repayment is not certain. The office collateral securing the Cassina Plaza loan (21%, maturing November 2013) is located in the outskirts of Milan, and its performance has steadily improved over the past 12 months. Occupancy has increased to 84% from 72% as at Fitch's last rating action in October 2011, which underpins an increase in interest coverage. Income is generally high quality and long-dated. An April 2012 valuation -- the first since closing -- showed a relatively modest 10% fall since 2006. Fitch believes that the loan will repay without loss. The Bielfeld/Berlin loan is secured by a number of residential assets in west Germany as well as an office asset in Berlin. It is the only loan not due or overdue by 14 months from now, and instead matures in 2016. LAURELIN BV: S&P Says Percentage of Rated 'SD' Assets Increased --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit rating on Laurelin B.V.'s class D notes to 'BBB (sf)' from 'BBB+ (sf)'. "At the same time, we have affirmed our ratings on the class A-T, A- R, B-1, B-2, and C notes," S&P said. Laurelin is a multiple-currency cash flow collateralized debt obligation (CDO) transaction, backed primarily by leveraged loans to speculative-grade corporate firms. The transaction closed on July 20, 2006, and is managed GoldenTree Asset Management, L.P. "The rating action follows our assessment of the transaction's performance since our previous review on Dec. 7, 2011," S&P said. "In our review, we considered recent transaction developments. We included data from the trustee report dated August 2012, along with our ratings database and our cash flow analysis. We applied our 2012 counterparty criteria, our 2009 cash flow CDO criteria, and our 2011 nonsovereign ratings criteria," S&P said. "The transaction started its post-reinvestment period on Oct. 25, 2011. Since our last review in December 2011, the structure has been paid down to EUR222.2 million from EUR333.3 million (rated liabilities calculated at initial exchange rate)," S&P said. "In terms of the portfolio's credit quality, the level of assets that we consider to be rated in the 'CCC' category ('CCC+', 'CCC', or 'CCC-') has not really changed. On the other hand, the level of assets that we consider to be rated in the 'BB' category ('BB+', 'BB', or 'BB-') has decreased to 11.71% from 14.21%, and the percentage of defaulted assets (i.e., debt obligations of obligors rated 'CC', 'SD' [selective default], or 'D') has increased to 4.37% from 0.00%," S&P said. Additionally, the weighted-average life of the assets in the portfolio has decreased to 4.43 years from 5.57 years. "The evolution of those parameters has led to a higher scenario default rate (SDR) to our previous review, as provided by our CDO Evaluator (Version 6.0.1) model. Through a 'Monte Carlo' methodology, CDO Evaluator evaluates a portfolio's credit quality, considering the issuer credit rating, size, domicile, and maturity date of each asset, and the correlation between each pair of assets. It presents the portfolio's credit quality in terms of a probability distribution for potential default rates. From this distribution, it derives a set of SDRs that identify, for each rating level, the maximum level of portfolio defaults a class of notes should be able to withstand without defaulting," S&P said. "Following our credit analysis, we subjected the transaction's capital structure to a cash flow analysis, to determine the break-even default rate for each rated class of notes at each rating level. The tranche BDR and the SDR, provided by CDO Evaluator (Version 6.0.1) model, are the key parameters in our methodology for the rating and the surveillance of CDO transactions," S&P said. "In our analysis, we used the portfolio balance that we considered to be performing (EUR309.5 million), the reported weighted-average spread (3.77%) and the weighted-average recovery rates as per our 2009 cash flow CDO criteria. We incorporated various cash flow stress scenarios using our standard default patterns, levels, and timings for each rating category assumed for each class of notes, in conjunction with different interest rate stress scenarios," S&P said. The issuer has entered into options agreements with Barclays Bank PLC (A+/Negative/A-1). "Our 2012 counterparty criteria provides that in cases where the replacement language in the derivative agreements is in line with any of our previous counterparty criteria, the maximum achievable rating on a tranche is equal to the counterparty's long-term rating plus one notch ('ICR+1'), unless we apply additional stresses in our cash flow analysis to capture that risk," S&P said. "Therefore, in our cash flow analysis, we have tested additional scenarios by assuming that there are no options in the transaction for all notes with a rating higher than ICR+1,'AA- (sf)', i.e., the class A-T, A-R, B-1, and B-2 notes," S&P said. "Even though we observed an increase in SDRs at each rating level and a decrease in BDRs for each tranche, our analysis shows that the credit enhancement available to the class B-1 and B-2 notes (49%) is still commensurate with a 'AA+ (sf)' rating. Therefore, we have affirmed our 'AA+ (sf)' ratings on the class B-1 and B-2 notes," S&P said. "Similarly, our cash flow analysis of the class C notes shows that the level of credit enhancement available to this class is commensurate with its current rating. Therefore, we have affirmed our 'A+ (sf)' rating on the class C notes," S&P said. "In our opinion, the level of credit enhancement available to the class D notes is no longer commensurate with its current rating. Therefore we have lowered our rating on the class D notes to 'BBB(sf') from 'BBB+(sf')," S&P said. "Where a structured finance transaction invests in assets located in investment-grade sovereigns within the European Economic and Monetary Union (EMU or eurozone), we cap the maximum potential issue rating at six notches above our rating on the related sovereign. To assess the amount of securities that can achieve the maximum potential issue rating, we apply a haircut to the cash flows from assets located in jurisdictions rated below 'A-', i.e., six notches below 'AAA' rating," S&P said. "This transaction has an aggregate exposure of approximately 10.97% to assets in Spain (BBB+/Negative/A-2) and Italy (unsolicited; BBB+/Negative/A-2). In accordance with our criteria, to assess how many of the securities in the transaction could achieve the maximum potential rating of 'AAA (sf)', our aggregate performing balance can only include up to 10% of the assets in the 'BBB+' rated jurisdictions. This reduces the aggregate performing balance considered in 'AAA' scenarios by EUR2.9 million. We then apply other stresses to account for counterparty risk," S&P said. "Our analysis shows that the class A-T and A-R notes could withstand the 'AAA' stress, in addition to the other stresses. Therefore, we have affirmed the 'AAA (sf)' rating on the class A- T and A-R 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 property-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 Laurelin B.V. EUR400 Million Secured Floating-Rate Notes Rating Lowered D BBB(sf) BBB+ (sf) Ratings Affirmed A-R AAA (sf) A-T AAA (sf) B-1 AA+ (sf) B-2 AA+ (sf) C A+ (sf) PINAFORE HOLDINGS: Moody's Says Division Sale Credit Negative ------------------------------------------------------------- Moody's Investors Service said the announcement by Pinafore Holdings B.V. (Pinafore, CFR at Ba3) that it will sell its air distribution division in a transaction sponsored by the Canada Pension Plan Investment Board is viewed as a negative credit event. The aggregate consideration payable in the transaction will be approximately $1.1 billion in cash (subject to certain customary adjustments). Yet, an amendment to the company's credit agreement completed earlier this month and an amendment to the company's 9% note indenture completed in July, gives Pinafore flexibility to return a significant portion of the cash consideration from the transaction to its shareholders. As the sale of the air distribution division will reduce business diversification and result in the loss of EBITDA and cash flow generation without an assured equivalent reduction in debt, Moody's views the transaction as a negative credit event. Nevertheless, because Pinafore has made progress in reducing overall debt from prior asset sales, the announcement has no immediate implications for the assigned ratings. Pinafore Holding B.V. is the parent holding company for the operations of Tomkins Ltd (Tomkins) following its acquisition by Pinafore Acquisitions Limited (jointly owned by Onex and the Canada Pension Plan Investment Board). Tomkins is a diversified global engineering company focused on industrial and automotive- related activities -- including power transmission, fluid power and fluid systems, accounting for 78% of sales; as well as building products, accounting for 22% of sales in fiscal year 2011. In FY 2011, Tomkins generated sales of US$4.6 billion and employed around 24,700 people through operations in 32 countries. =========== P O L A N D =========== TVN SA: Moody's Affirms 'B1' CFR; Outlook Stable ------------------------------------------------ Moody's Investors Service has affirmed the B1 corporate family rating ("CFR")of TVN S.A. Concurrently, Moody's has assigned a Ba3 probability of default rating ("PDR"), and also affirmed the B1 rating on the 2017 and 2018 senior unsecured notes respectively issued by TVN Finance Corporation II A.B and TVN Finance Corporation III AB. The outlook is stable. Ratings Rationale The B1 CFR reflects (i) TVN's business profile as one of the top two leading private broadcasters in Poland; (ii) the expected deleveraging following the impending sale of Onet and the use of those proceeds to reduce debt (iii) the group's strong liquidity position supported by a long-dated debt maturity profile. At the same time, the B1 CFR also takes into account (i) the expected decline in TVN's performance on the back of poor forecasted advertising trends in Poland for 2012 and 2013; (ii) the lack of leverage restriction provided to TVN by a generous incurrence based covenant under the bonds and the lack of of bank maintenance covenants (iii) the company's loss of revenue diversification as it divests its online platform and merges its pay-TV business with Canal+ (iv) exposure to currency risk arising from a euro-denominated debt structure. With the forthcoming deconsolidation of its pay-TV business and the sale of its online segment, both of which benefit from relatively stable revenue streams, TVN's business model will become fully exposed to the cyclicality of the advertising market. This was evidenced in Q2 2012, when the local TV advertising market suffered an 11% drop driven mainly by the Euro football championship. This, in addition with volatility in the Polish macro-economic landscape had a pronounced negative effect on advertising budgets and saw TVN post a drop in TV related revenue of 14% compared to the same quarter last year. The majority of this decline was concentrated at the end of the quarter, mostly in June. With programming costs already scheduled, TVN was left with little room to manoeuvre to cut costs, which amplified the impact on profitability such that in Q2 2012 the TV segment's EBITDA reported a drop of 25% vs. Q2 2011. TVN anticipates that the advertising market will continue to report negative growth in 2012. Against this backdrop, Moody's expects that the company will manage its cost base aggressively to mitigate the negative impact on its full year EBITDA to an extent. However, a prolonged and structural decline in advertising revenue would still put pressure on the ratings. TVN's ratings are supported by the impending sale of Onet. This transaction which, in September 2012, received consent from the anti-trust authorities will allow TVN to reduce its outstanding debt by approximately PLN950 million and reduce adjusted leverage substantially. The Ba3 PDR, one notch above the CFR, incorporates Moody's assumptions under its LGD methodology of a below-average family recovery for all-bond debt capital structures while the B1 ratings on TVN's senior notes due 2017 and 2018 - in line with the CFR - reflect the notes' unsecured position within the group's capital structure. Both the 2017 and 2018 notes share the same guarantee and covenant package. The stable outlook is supported by expectations of a substantially improved leverage by year-end, following the disposal of Onet. The outlook also reflects, TVN's good liquidity profile supported by a large cash balance, reasonable Capex and no upcoming debt repayment until its 2017 senior notes maturity date. Positive pressure on the ratings could develop should (i) TVN regain enough positive momentum to reverse the currently declining trends in performance (ii) return to sustainable free cash flow generation; and (iii) leverage decline towards 4.0x on a sustainable basis and absent any positive impact from foreign exchange movement (as all of TVN's debt is denominated in euros). Negative pressure on the ratings could develop should (i) further deterioration in the company's performance occur; (ii) TVN's audience share were to show signs of a structural and persistent decline; or (iii) the company's leverage rise above 5.25x on a sustainable basis. The principal methodology used in rating TVN S.A was the Global Broadcast and Advertising Related Industry Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. =========== R U S S I A =========== * PENZA REGION: Fitch Assigns 'BB' Long-Term Currency Ratings ------------------------------------------------------------- Fitch Ratings has assigned Russia's Penza Region Long-term foreign and local currency ratings of 'BB', a Short-term foreign currency rating of 'B' and a National Long-term rating of 'AA- (rus)'. The Outlooks for the Long-term ratings are Stable. The ratings reflect the region's sound operating performance and moderate, albeit increasing, direct risks, which are all expected to be maintained in 2012-2014. However, the ratings also factor in the expected massive capital expenditure in 2012 leading to the direct debt increase, and low fiscal flexibility stemming from its small economy. Fitch notes that if the region sustains a stable operating balance at about 15% of operating revenue in the coming two years, and direct risk stabilization at below 50% of operating revenue, the ratings could be upgraded. Conversely, deterioration in the budgetary performance with operating balance not sufficient for the debt servicing needs and/or dramatic growth in a short term debt would lead to a downgrade. Fitch expects there to be a continuation of the region's stable and sound operating performance in 2012 with the operating margin close to 9%. This is slightly below the average operating margin of 10.5% during the past four years, but this remains satisfactory for the region's debt servicing needs. Fitch expects the operating margin to gradually improve to 9%-11% in 2013 and 2014. Penza's capital expenditure was relatively high in 2010-2011, averaging 26% of total expenditure. Fitch expects capital spending to remain high in 2012 at about 30% of total expenditure, which is linked to a large program of infrastructure modernization in the City of Penza due to the forthcoming celebration of its 350-year anniversary. To a large extent high capex is underpinned by significant capital grants from the federation, which were linked to the regional healthcare and education modernization programs. High capex led to a fast debt increase, albeit from a low base. The region's direct risk totalled RUB10.5 billion (US$333 million) by end-2011 and Fitch expects continuous growth of the region's direct risk by 35% yoy to about RUB14.1 billion in 2012. However, direct risk will stay moderate in relative terms and in the context of debt servicing needs at slightly above 40% of current revenue. Fitch expects the debt coverage (direct risk to current balance) to remain sound at about four-six years in 2012- 2014. Fitch estimates the Penza's immediate refinancing risk as low, which is not the case for many Russian regions. As of 1 September 2012 the region has several unused committed credit lines totalling RUB1.5 billion. This exceeds the region's refinancing needs of RUB0.8 billion in 2012. However the region's refinancing needs are high in an international context. The region mostly relies on bank loans with two years maturity, which requires approximately one third of total direct risk to be refinanced every year. This is to cause two refinancing peaks, of about RUB4.7 billion and RUB5.1 billion, in 2013 and 2014 respectively. Penza's economy is historically weaker than the average Russian region. This has led to the region having a relatively weak tax capacity compared to national peers. As a consequence current federal transfers constitute a significant proportion of operating revenue (about 45% in 2011). This limits the region's revenue flexibility, but the stable nature of the transfers underpinned budget revenue proceeds in the current vulnerable economic circumstances. Penza region is located in the centre of the European part of Russia. The region's capital, the city of Penza, is about 630km from Moscow. The region contributed 0.4% of the Russian Federation's GDP in 2010 and accounted for 1% of the country's population. ========= S P A I N ========= BANCO DE VALENCIA: Fitch Cuts Rating on Subordinated Debt to 'C' ---------------------------------------------------------------- Fitch Ratings has placed Banco de Valencia's (BValencia) Support rating (SR) of '3' and its Support Rating Floor (SRF) of 'BB-' on Rating Watch Negative (RWN). As a result, its Long-term Issuer Default Rating (IDR) of 'BB-', which is based on the moderate probability of the authorities supporting the bank, and its Short-term IDR of 'B', have also been placed on RWN. At the same time Fitch has affirmed BValencia's Viability Rating (VR) at 'f'. RATING ACTION RATIONALE AND DRIVERS - SUPPORT RATING, SRF AND IDRs Fitch believes there to be a moderate probability that BValencia will be recapitalized by the Fund for Orderly Bank Restructuring (FROB) with the ultimate goal of rehabilitating the bank for its future sale. While this is Fitch's base scenario, the SR, SRF and hence IDRs have been placed on RWN to reflect Fitch's opinion that, because of the severity of the bank's problems, there is a heightened risk that an alternative form of orderly resolution could take place that, even if customer depositors are fully compensated as Fitch expects, could still qualify as some form of default or 'restricted default' under Fitch's definitions and criteria. Fitch has analyzed three different scenarios for BValencia: full liquidation; full bank support with the final goal of being sold to a more solvent institution and partial bank support with potentially some subset of senior creditors being made to absorb losses and others (including customer depositors) being supported. Fitch's analysis suggests that a full liquidation of the bank is unlikely as this would be the most expensive and destabilizing route to take and the Memorandum of Understanding signed in July between Spain and the Euro Group seems quite explicit in its support of customer deposits. The likelihood of a partial bank support solution for example by way of a bridge bank structure into which assets, depositors, secured creditors etc. could be transferred depends to some extent on the amount of senior unsecured creditors that could be left in the rump bank (i.e. BValencia) onto which it would be politically acceptable or rational to enforce losses. Fitch's analysis suggests that such senior creditors are few in number and value and are either Spanish government-related or guaranteed or domestic banks. This leaves the full bank recapitalization, clean up and sale option which, on balance, is Fitch's base case. However, the RWNs reflect the heightened risk of an alternative scenario emerging. RATING ACTION RATIONALE AND DRIVERS - VR BValencia's VR has been affirmed at 'f' despite having already having received EUR1bn in FROB funds in June. This is because Fitch believes that, following its analysis of the institution and stressing its loan book, the institution still needs further very significant capital support particularly in respect of its exposure to the distressed real estate sector. RATING ACTION RATIONALE - DATED SUBORDINATED DEBT The bank's dated subordinated debt has also been downgraded to 'C' from 'CC' to reflect a high risk of high losses being enforced on the instruments in line with the burden sharing laid out in the MOU and in Royal Decree Law 24/2012. Its non- performing preference shares have been affirmed at 'C' for the same reason. RATING SENSITIVITIES - SUPPORT RATING, SRF AND IDRs On the downside, these ratings are potentially very sensitive to any change in Fitch's assumptions around the level of support available to the bank and, in the near term for example, one of the alternative scenarios cited above or similar scenarios arising. On the upside, BValencia's IDR could ultimately be affirmed or upgraded were the bank to be recapitalized and its VR upgraded to 'bb-' or higher or if the bank were to be recapitalized and sold to a higher rated institution. RATING SENSITIVITIES - VR Upon recapitalization, Fitch would reassess the bank and upgrade the VR to a level that reflects its post-recapitalization financial and risk profile. While still subject to uncertainty and further analysis as details become clear, these ought to be capable of being in the 'b' or possibly even low 'bb' range. The rating actions are as follows: BValencia: -- Long-term IDR: 'BB-' placed on RWN -- Short-term IDR: 'B' placed on RWN -- Viability Rating: affirmed at 'f' -- Support Rating: '3' placed on RWN -- Support Rating Floor: 'BB-' placed on RWN -- Subordinated debt: downgraded to 'C' from 'CC' -- Preference shares: affirmed at 'C' ===================== S W I T Z E R L A N D ===================== MATTERHORN MIDCO: Moody's Rates Notes '(P)Caa1'; Outlook Stable --------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P)Caa1 rating to the proposed issuance of EUR155 million (CHF188 million equivalent) of senior unsecured notes due 2020 by Matterhorn Midco & Cy S.C.A. ("Matterhorn Midco"), the holding company of Orange Communications S.A. ("Orange Switzerland" or "OCH"). Concurrently, Moody's has assigned a corporate family rating (CFR) of B2 and a probability of default rating (PDR) of B1 to Matterhorn Midco, and withdrawn the B1 CFR and Ba3 PDR at the Matterhorn Mobile Holdings S.A. ("MMH") level. The new notes will have substantially the same terms and conditions as the existing senior unsecured notes issued by MMH. However, the new notes will benefit from a senior guarantee from MMH, but not from the other companies that guarantee the revolving credit facility, the senior secured notes issued by Matterhorn Mobile S.A., or the senior unsecured notes issued by MMH. Matterhorn Midco will use the majority of the net proceeds from the offering to pay an extraordinary distribution to its shareholders worth CHF181 million (EUR150 million). The following ratings have been affirmed: Matterhorn Mobile Holdings S.A.: - EUR225 million (CHF272 million) of senior notes due February 2020: B3/loss given default (LGD) assessment of 6 Matterhorn Mobile S.A.: - EUR330 million (CHF400 million) of senior secured floating- rate notes (FRNs) due May 2019: B1/LGD4 - CH450 million of senior secured fixed-rate notes due May 2019: B1/LGD4 - CHF180 million of senior secured FRNs due 2019: B1/LGD4 The outlook on 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 proposed new notes. The definitive ratings may differ from the provisional rating. Ratings Rationale The (P)Caa1 rating on the new notes issued by Matterhorn Midco is two notches below the company's B2 CFR and one notch below the B3 rating on the senior unsecured notes issued by MMH. This notching differential reflects the new notes' subordinated position relative to the other debt instruments in the group's capital structure. Due to the high initial leverage and the substantial amount of secured notes and senior unsecured notes that effectively rank ahead of the new notes in case of enforcement, Moody's expects that the amount of residual collateral value available to the new noteholders in a recovery scenario would be very limited. The B2 CFR of Matterhorn Midco is one notch below the B1 CFR that Moody's previously assigned to MMH. The differential reflects (1) Matterhorn Midco's increased leverage as a result of the company's new debt issuance, the proceeds of which it will use to pay a dividend to its shareholders; and (2) the financial strategy implemented by the shareholders, which is more aggressive than initially expected. This is Matterhorn Midco's second dividend distribution funded with new debt in only seven months since the company's completion of its LBO of Orange Switzerland. It follows the company's payment of a CHF90 million dividend in early September 2012. In total, Matterhorn Midco's shareholders have recovered more than one third of their original equity contribution. Pro forma for the dividend payment, Moody's expects Matterhorn Midco's adjusted debt/EBITDA to increase by 0.5x, to 4.4x compared with 3.9x pre-transaction. This is outside of the 3.5x- 4.0x range that the rating agency considers appropriate for Matterhorn Midco to be rated in the B1 category. The B1 rating on the senior secured notes issued by Matterhorn Mobile S.A. and the B3 rating on the senior unsecured notes issued by MMH remain unchanged after this transaction. This is because the new notes will absorb the first losses in a recovery scenario, providing an additional cushion for the existing senior secured and senior unsecured notes. Matterhorn Midco's B2 CFR 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 Matterhorn Midco's leveraged capital structure following its acquisition of Orange Switzerland by funds advised by Apax Partners LLP. Matterhorn Midco's high business risk reflects its small size, lack of fixed-line business, and the strategic challenges ahead linked to the company's separation from its previous owner, the France Telecom group. The rating also reflects the track record of aggressive financial policies implemented to date by the shareholders, as well as Moody's expectation that the shareholders are likely to make use of the financial flexibility that Matterhorn Midco will develop over time as it progressively deleverages. The stable outlook reflects Moody's expectation that Matterhorn Midco's adjusted debt/EBITDA will remain in the 4.0x-4.5x range on a sustained basis and that the company can broadly achieve its objectives in terms of operational metrics. What Could Change The Rating Up/Down Upward pressure on the rating could develop if Matterhorn Midco's financial profile improves, such that the company's (1) adjusted debt/EBITDA ratio decreases to 4.0x-3.5x on a sustained basis; and (2) RCF/adjusted debt ratio increases well above 15%. Upward pressure on the rating would require a track record of deleveraging, with indications of a more conservative financial strategy to be implemented by the shareholders. Conversely, downward pressure could be exerted on the rating if Matterhorn Midco's operating performance weakens such that the company's adjusted debt/EBITDA trends towards 5.0x and its RCF/adjusted debt falls below 10% on a sustained basis. In addition, downward pressure could be exerted on the rating if Moody's becomes concerned about the company's liquidity -- including, but not limited to, a reduction in covenant headroom. Principal Methodology The principal methodology used in rating Matterhorn Midco & Cy S.C.A., Matterhorn Mobile Holdings S.A., and Matterhorn Mobile S.A. 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 number three mobile network operator in Switzerland, with a reported mobile revenue market share of around 20% and a subscriber market share of around 17% for the six months ended June 2012. The company has more than 1.6 million customers. For the 12 months ended June 2012, the group reported revenues of CHF1.3 billion (EUR1.06 billion) and adjusted EBITDA of CHF372.5 million (EUR310 million). MATTERHORN MOBILE: S&P Affirms 'B+' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Luxembourg-based Matterhorn Mobile Holdings S.A., one of Orange Communications S.A.'s holding companies, the third-largest wireless network operator in Switzerland, to negative from stable. "At the same time, we affirmed our 'B+' long-term corporate credit rating on Matterhorn Mobile Holdings," S&P said. "We also assigned an issuer credit rating of 'B+' to Matterhorn Midco & Cy S.C.A., Matterhorn Mobile Holdings' parent, and our recovery rating of '6' and issue rating of 'B-' to the proposed Swiss franc (CHF)188 million (EUR155 million) senior notes maturing 2020, to be issued by Matterhorn Midco & Cy," S&P said. "We also affirmed our 'BB', 'BB-', and 'B-' issue ratings on the CHF100 million super senior revolving credit facility (RCF) due 2018, the existing senior secured notes due 2019, and the existing senior unsecured notes due 2020. The recovery ratings on these instruments remain unchanged at '1', '2' and '6'," S&P said. "Our ratings are subject to our satisfactory review of the final documentation," S&P said. "The outlook revision reflects our view that the recapitalization initiative, only days after a EUR90 million dividend, demonstrates Matterhorn Mobile Holdings' financial policy's very aggressive nature, as set by its controlling equity sponsor. The outlook revision also factors in that previous headroom existing within the rating has been entirely consumed. In addition we are concerned that further credit dilutive financial policy initiatives are likely within a year, or that any softening of trading performances could lead to less-than-adequate credit metrics," S&P said. "The rating on Matterhorn Mobile Holdings is constrained by our assessment of the company's financial risk profile, which we have changed to 'highly leveraged' from 'aggressive,' as our criteria define the term. The rating is supported by our assessment of the company's business risk profile as fair," S&P said. "The financial risk profile reflects our view of Matterhorn Mobile Holdings' very aggressive financial policy, given the company's private equity ownership, and our expectation of modest free cash flow generation and a high debt-to-EBITDA ratio in 2012," S&P said. "We believe Matterhorn Mobile Holding's business risk profile is constrained by the company's lack of scale and diversity, owing to its narrow business and geographic focus, considerable competition from the dominant market player, and some execution risk as the company rolls out its strategy as a stand-alone company," S&P said. "We view the company's business risk profile as weaker than those of its two main competitors, Swisscom AG (A/Stable/--) and Sunrise Communications Holdings S.A. (B+/Stable/--). Matterhorn Mobile Holdings is focused on mobile telecommunications while both its competitors are integrated into fixed network services. It also has lower EBITDA margins than most rated European peers, given its smaller scale and challenger position compared with Swisscom's strong position in the domestic market," S&P said. "These business weaknesses are balanced by the company's well- established high-end wireless position, a broadly satisfactory and nearly completely revamped network, a wealthy and stable domestic economy, and our expectation that the competitive environment will not change significantly, given high entry barriers and more favorable regulation than in other European markets," S&P said. "The negative outlook reflects the risk of a downgrade in the next 12 months if the company fails to sustain its recent turnaround performances, or if renewed recapitalization measures further weaken our anticipations for its credit metrics. These include cash interest cover of more than 3x, a debt-to-EBITDA ratio of less than 5.5x, and annual free cash flow of roughly EUR50 million-EUR100 million in 2013-2014," S&P said. Rating upside potential is remote as long as private equity shareholders retain control of the company. =========================== U N I T E D K I N G D O M =========================== APPRENTICESHIP TRAINING: Learning Provider Goes Into Liquidation ---------------------------------------------------------------- Julian Robinson at Daily Echo reports that nearly 100 Hampshire apprentices faced uncertain futures after Apprenticeship Training Limited went in to liquidation. According to Daily Echo, Apprenticeship Training set up its new GBP500,000 college in Southampton just four months ago to help unemployed youngsters get into the building service industry. But students who turned up at the converted school in Thornhill have been handed letters telling them the company is being wound up, Daily Echo relates. Daily Echo says mystery surrounds why the 20-year-old business is going in to voluntary liquidation and there has been no indication of how many jobs will be lost. Around 90 young apprentices in Southampton -- most aged between 16 and 19 -- have been told they need to find new courses, the report relays. The Government body paying for their tuition, the Skills Funding Agency, has vowed to help them find alternative training, according to Daily Echo. But one Hampshire teenager told the Daily Echo he was already struggling to enrol in colleges or find a company to take him on. DANFORDS MOTOR: Goes Into Liquidation ------------------------------------- The Sentinel reports that Danfords Motor Auction has gone into liquidation just three months after opening -- leaving dozens of customers out-of-pocket. Letters have been sent out by Danford Motor Auctions to those with vehicles still on the site in Fenton, with the keys to their cars enclosed. But some trade and private sellers said they are still owed cash for vehicles which were sold via the firm, the report relays. The letter sent out to customers stated: "We are deeply saddened to say that Danfords Ltd has gone into liquidation. "Please accept our sincere apologies for any distress caused by this unpleasant occurrence." Danfords ran motor auctions on Tuesdays and Fridays. The company had been trading out of a rented warehouse on the Grove Road Industrial Estate. FIRST4SKILLS: In Administration; 40 Jobs Affected ------------------------------------------------- Belfast Telegraph reports that First4Skills has gone into administration and will close its branch in the city. According to Belfast Telegraph, around 40 jobs are being lost in Belfast at the company. Administrators Deloitte said branches in Wales will also close, Belfast Telegraph notes. Parts of the company in Scotland and England have been sold on to new owners, Belfast Telegraph discloses. Belfast Telegraph relates that Deloitte said most of the business had been sold to a joint venture company, but said "unfortunately, a sale of the Northern Ireland and Welsh apprenticeship business was not achievable, leading to the closure of these businesses". "Although First4Skills had been trading profitably, its cash position was falling," Belfast Telegraph quotes Deloitte partner Nick Edwards as saying. First4Skills is a training company that carries out vocational training programs. HSW PRINT: Goes Into Administration ----------------------------------- Pamela Mardle at PrintWeek reports that HSW Print has appointed SFP Group as its administrator after accruing debts of around GBP850,000. SFP Group partners Simon Franklin Plant and Daniel Plant were appointed as joint administrators to the company on Sept. 17, PrintWeek relates. According to PrintWeek, in a statement, SFP said it was continuing to trade the business while seeking a going concern sale, although HSW Print's telephone number appears to already have been disconnected and its Web site has been taken down. "We are already in discussions with a number of potential purchasers," PrintWeek quotes Simon Plant as saying. HSW Print (formerly Hackman Printers) is a B1 and B2 litho printer. It employs 65 people and has an annual turnover of GBP7 million. JJB SPORTS: Enters Administration as Sales Process Continues ------------------------------------------------------------ The Drum reports that JJB has been placed into administration as it continues with an ongoing sales process of the brand and trade assets. The retailer has held discussions with advisors and has held talks with 'a number of selected parties' with final offers now submitted, with the sale of the trade, assets and brands affected through an administration process, according to The Drum. KPMG has been appointed as administrators, with the company hoping to announce a sale over the next few days. JBB is a sports retailer firm. MUSIC FESTIVALS: Calls in Administration ---------------------------------------- Chris Britcher at Kentnews.co.uk reports Vince Power-run promoter Music Festivals plc confirmed that it was calling in the administrators -- almost certainly spelling doom for the popular event. Music Festivals plc had issued a warning recently that it would deliver a loss in the year up to December, according to Kentnews.co.uk. The report relates that it blamed poor ticket sales at the Kent event and a dip in profits at its Spanish festival, Benicassim. However, the report relates that it lurched into further trouble after confirming it was suspending the trading of shares in the company. Kentnews.co.uk notes that the firm only floated on the Alternative Investment Market (AIM) last June, buoyed by a 2011 Hop Farm event which featured a strong line-up that included Prince, Morrissey, The Eagles, Lou Reed and Killers' frontman Brandon Flowers. But a disappointing 2012 line-up, which featured Bob Dylan, Suede and Peter Gabriel, and pressure from the weather and the Olympic Games saw ticket sales tumble and looks destined to cost Mr. Power his company, the report says. The report discloses that administrators could still look to sell the company as a going concern, but will examine what assets can be sold to liberate funds for creditors and whether or not it should continue trading. WYG GROUP: 90 Jobs Saved After Sale to WYG Plc ---------------------------------------------- Margaret Canning at Belfast Telegraph reports that around 90 jobs have been saved at WYG Ireland as plans are confirmed for its takeover by a linked company. According to the report, WYG plc has said it will buy the three Northern Ireland WYG subsidiaries, based at Montgomery Road in Belfast, after their former owner WYG Ireland went into liquidation last month. Belfast Telegraph relates that the Northern Ireland business said it had secured new deals worth around GBP6 million over the last few months, including engineering services at the new Omagh Local Hospital. Around 50 jobs were lost when WYG Ireland went under, after facing pressures as a result of the decline in the construction industry. The three Northern Ireland subsidiaries are WYG Engineering, WYG Environmental and Planning and WYG Management Services. As reported in the Troubled Company Reporter-Europe on Sept. 6, 2012, The Irish Times said provisional liquidators have been appointed by the High Court to the WYG Group of companies in Ireland. Barrister Kelley Smith told Mr. Justice Gerard Hogan that the parent -- WYG Ireland Holding Company Ltd -- had funded the companies to the tune of EUR70 million over recent years. The parent company was the main creditor to WYG Engineering Ireland, WYG Environmental and Planning Ireland and WYG Nolan Ryan Tweeds, all registered in Ireland, according to The Irish Times. The companies sought the appointment of Paul McCann and Stephen Tennant of Grant Thornton as joint provisional liquidators. WYG Plc provides management and technical consulting services for built, natural, and social environments. =============== X X X X X X X X =============== * Moody's Revises Global Pharmaceutical Sector Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service revised its outlook for the global pharmaceutical industry to stable, with earnings expected to rebound in 2013 as patent expirations ease from their peak, says Moody's Investors Service in a new industry outlook, The Worst Is Over. The outlook was previously changed to negative in October 2007. "The stable outlook reflects our view that the worst of the industry's blockbuster patent expirations has passed," said Michael Levesque, a Moody's Senior Vice President. "Although industry earnings will still be affected by very recent patent expirations, earnings for large, branded players will reach a trough point in late 2012 and rebound in 2013." Although some major companies with recent patent expirations -- including Bristol-Myers Squibb (A2 stable) and AstraZeneca (A1 negative) -- will still face year-over-year declines in earnings during the remainder of 2012 and into 2013, Moody's says that the next 12 months will be less onerous than the past 12 months when blockbuster drugs like Lipitor and Plavix went generic. The industry remains challenged by a difficult regulatory approval environment for new products, and by areas of research that are still seeing limited success, such as Alzheimer's Disease, says the report. The industry is also pressured by global cost containment efforts that seek to reduce healthcare spending. The use of generic drugs is rising and will benefit generic companies such as Teva Pharmaceutical Industries Ltd. (A3 stable), Watson Pharmaceuticals Inc. (Baa3 stable) and Mylan Inc. (Ba1 stable). However, generic companies face ongoing price erosion and stringent manufacturing compliance requirements that will cut into profits, says Moody's. Moody's industry outlooks reflect the rating agency's expectations for fundamental business conditions in the industry over the next 12 to 18 months. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 240/629-3300. * * * End of Transmission * * *