/raid1/www/Hosts/bankrupt/TCREUR_Public/130313.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, March 13, 2013, Vol. 14, No. 51
Headlines
A U S T R I A
* AUSTRIA: Moody's Retains Negative Outlook on Banking System
B E L G I U M
4ENERGY INVEST: Units Unlikely to Meet Debt Repayment Obligations
ESMEE MASTER: Moody's Puts Ba2 Rating on Cl. D Notes for Upgrade
C R O A T I A
GEOFOTO: EBRD Files Bankruptcy Petition
D E N M A R K
* DENMARK: Wants Shareholders to Be First in Line to Bear Losses
F R A N C E
CEGEDIM SA: S&P Puts 'B' Corp. Credit Rating on Watch Positive
CODERE SA: Moody's Cuts Corp. Family Rating to Caa2; Outlook Neg
G E R M A N Y
HAWI ENERGIETECHNIK: Files for Insolvency Proceedings
KABEL DEUTSCHLAND: S&P Raises Corporate Credit Rating to 'BB'
LANTIQ DEUTSCHLAND: Moody's Withdraws Caa1 CFR , Caa2-PD PDR
STYROLUTION GROUP: Moody's Alters Ratings Outlook to Stable
VULKAN GMBH: Files for Insolvency in Villingen-Schwenningen Court
* GERMANY: Corporate Insolvencies Decrease 24.4% YOY in December
G R E E C E
YIOULA GLASSWORK: Payment Default Cues Moody's to Cut CFR to Caa3
I R E L A N D
AVIS BUDGET: Fitch Assigns 'B+' Long-Term Issuer Default Rating
IRON HILL: Moody's Raises Rating on Class C Notes From 'Ba2'
PARTHOLON CDO: Moody's Affirms 'B1' Ratings on Two Note Classes
WHITE TOWER: Fitch Lowers Ratings on Two Note Classes to 'Csf'
* IRELAND: Business Collapses Slow Down in 2013
I T A L Y
AEROPORTI DI ROMA: Moody's Upgrades Debt Rating From 'Ba2'
SAFILO GROUP: S&P Raises Long-Term Corp. Credit Rating to 'B'
* ITALY: Moody's Notes Positive Trend for Corporate Bond Issues
L U X E M B O U R G
GRUPO ACP: Commences Solicitation of Consents From 9% Noteholders
SUNRISE COMMUNICATIONS: Fitch Affirms 'BB-' Issuer Default Rating
M O L D O V A
* MOLDOVA: Sees Negative Outlook for Poultry Sector
N E T H E R L A N D S
UCL RAIL: Moody's Assigns 'Ba1' CFR; Outlook Stable
S P A I N
TDA SA: Fitch Affirms 'BB' Ratings on Two Certificate Classes
S W E D E N
KF: Faces Financial Woes; Future Uncertain
S W I T Z E R L A N D
SUNRISE: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative
U K R A I N E
SSB No .1: Moody's Assigns B3 Rating to US$-Denominated LPNs
U N I T E D K I N G D O M
AFREN PLC: S&P Puts 'B' Corp. Credit Rating on Watch Positive
CJ DEIGHTON: Set to Go Into Voluntary Liquidation
ERIC FRANCE: Goes Into Liquidation; Owes GBP22 Million
FSL MANAGEMENT: RSM Tenon Appointed as Liquidators
HMV GROUP: ASDA In Talks with Administrators Over Possible Bid
JELLYBOOK LIMITED: To Go Into Members Voluntary Liquidation
SOUTH DEVON: High Court Winds Up Eoin Murray-Controlled Firms
UK SPV: Fitch Assigns 'B' Final Rating to Recourse Notes
* UK: Moody's Says Transition to RIIO Credit Neutral for GDNs
X X X X X X X X
* Fitch Says Re-Entry Into Recession Hit IPF Entities in 2012
*********
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A U S T R I A
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* AUSTRIA: Moody's Retains Negative Outlook on Banking System
-------------------------------------------------------------
The outlook for the Austrian banking system remains negative,
says Moody's Investors Service in a Banking System Outlook
entitled "Banking System Outlook: Austria."
The outlook is unchanged from 2009 and reflects (1) a weakening
operating environment in Austria, amidst recessionary trends in
Europe and pressurized operating environments in several Central
and Eastern European countries (CEE) in which the largest
Austrian banks operate; (2) rising risk charges and deteriorating
asset quality; and (3) the limited loss-absorption capacity of
many banks in a stressed environment. These negative drivers are
partly counter-balanced by the only-modest funding risk of most
Austrian banks, which is a relative strength of this system.
Domestic macro-economic conditions will likely remain relatively
benign for the next 12-18 months given Austria's diversified
economy and close ties to Germany. The CEE region has long-term
growth potential; however, current economic weaknesses in several
CEE countries poses challenges for the leading Austrian banks
that have significant operations there.
Moody's expects that weak asset quality will lead to persistently
high credit costs, limiting banks' earnings capacity over the 12-
18 months. Aggregate system problem loans reached 10.2% of total
loans at year-end 2011 reflecting many banks large CEE activities
as well as a high stock of problem loans from domestic
corporates, especially from the SME and micro segment. For 2013,
Moody's expects a persistently high, though only moderately
rising problem loan ratio for the banking system. Despite some
improvement in capital positions since 2008, Moody's considers
that most Austrian banks' loss-absorption capacity would be
limited in a stressed economic environment.
Most domestically-focused Austrian banks, including the retail-
oriented Austrian local cooperative and savings banks, are under
less pressure than the three largest Austrian banks that are
exposed to a possible renewed downturn in several CEE countries.
However, they also face low growth prospects in a highly
competitive domestic market and related weak earnings, limiting
their capital generation ability.
Most Austrian banks face only modest funding risks, which is a
relative strength of this banking system and partly counter-
balances the negative drivers. Banks benefit from strong deposit
franchises, both domestically and in their CEE activities.
Regulatory lending limits for CEE subsidiaries will eventually
lead to a more balanced funding structure because it reduces
wholesale-sourced parental funding, but this will take time.
Moody's does not expect to see any major shifts in the support
environment for Austrian banks over the 12-18 month horizon of
this report. In common with many of its European peers, Austria's
government has demonstrated its willingness to support banks in
pursuit of financial stability on several occasions over the
course of the crisis, and in none of these cases were senior
creditors required to take any losses. However, the objective of
protecting taxpayers from future bank failures is commonly-held
amongst European policy-makers and consistent with that
objective, the Austrian government recently published a draft
bank intervention and restructuring law which is to be introduced
in compliance with the evolving EU resolution framework. This
indicates that the longer-term support environment is less
certain.
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B E L G I U M
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4ENERGY INVEST: Units Unlikely to Meet Debt Repayment Obligations
-----------------------------------------------------------------
4Energy Invest on March 8 disclosed that it expects the financial
and operational results of the group will be significantly lower
than expected, as a result of lower operational performance as
well as non-cash impairments.
In view of the group's current and expected financial and
operational condition and prospects, 4Energy Invest has informed
its bank consortium ING/KBC, LRM and Think2Act that it considers
unlikely that its subsidiaries Renogen and 4HamCogen will be able
to meet their debt repayment obligations as they are currently
structured.
ING, KBC and LRM have agreed to a standstill on scheduled
principal repayments of the group until August 30, 2013.
Think2Act has informed 4Energy Invest that the conditions to its
interest to subscribe to a capital increase are no longer met.
The operational cash flows of the group remain positive. In the
coming months, 4Energy invest intends to try and further
restructure its debt at the level of its subsidiaries. 4Energy
Invest has aborted its plans to raise new capital.
If the group does not succeed in bringing its financial
obligations in line with its debt service capacity before the
expiry of the standstill, on August 30, 2013 at the latest, it
will be confronted with significant liquidity problems and with a
risk of discontinuity.
The board of directors has filled the vacancy that resulted from
the resignation by Nico Terry BVBA by Nadece BVBA, represented by
its permanent representative Nathalie De Ceulaer, who will serve
as director until the annual shareholders' meeting of 2013.
4Energy Invest is a Belgian renewable energy company that focuses
on the valorization of biomass into energy.
ESMEE MASTER: Moody's Puts Ba2 Rating on Cl. D Notes for Upgrade
----------------------------------------------------------------
Moody's Investors Service placed on review for upgrade three
classes of mezzanine notes issued by Esmee Master Issuer N.V. --
S.A. Series 0-2009-I (Esmee Master 2009), a SME loans-backed
notes program.
The rating actions reflect (1) Moody's updated methodology for
set-off risk in Belgian structured finance transactions; and (2)
the better-than-expected collateral performance.
EUR1400M Class B notes, A2 (sf) Placed Under Review for
Possible Upgrade; previously on Dec 2, 2009 Assigned A2 (sf)
EUR320M Class C notes, Baa2 (sf) Placed Under Review for
Possible Upgrade; previously on Dec 2, 2009 Assigned Baa2 (sf)
EUR240M Class D notes, Ba2 (sf) Placed Under Review for
Possible Upgrade; previously on Dec 2, 2009 Assigned Ba2 (sf)
Fortis Bank S.A./N.V. (deposits A2, Prime-1 stable; bank
financial strength rating C-/baseline credit assessment baa1) is
the originator for this transaction.
Ratings Rationale:
First Driver --- Updated Methodology
As described in the report "Moody's Approach to Quantifying Set-
off Risk for Belgian Structured Finance and Covered Bonds
Transactions", the enactment of the Belgian Mobilization Act by
the Belgian government on August 3, 2012 (the Act) has largely
removed set-off risk for most transactions including transactions
backed by loans to small and medium-sized enterprises (SMEs). As
a result Moody's will no longer account for set-off in its rating
analyses for affected transactions. The Act could positively
impact the ratings of three mezzanine notes issued by Esmee
Master 2009 given that Moody's considered for this specific
transaction a set-off exposure of 18.75% of the pool balance.
Second Driver --- Solid Collateral Performance
The rating action also reflects the better-than-expected
performance, evidenced by the low delinquency and loss levels
observed in the transaction since the closing date in December
2009. As of December 2012, loans 90+ days in arrears represented
0.35% of current balance, whilst cumulative defaults represented
0.4% of total securitized assets compared with an initial
assumption of 14%.
Focus of the Review
As part of the transaction review, Moody's will analyze the
updated data on the collateral pool characteristics -- in the
form of loan-by-loan data from transaction originators -- to
reassess the cumulative default and loss rate for the remaining
life of the transaction. Moody's analysis will capture the
collateral performance to date, as well as the rating agency's
expectations on how the future macroeconomic environment might
affect the collateral performance.
The methodologies used in this rating were Moody's Approach to
Rating CDOs of SMEs in Europe published in February 2007, Moody's
Approach to Rating Granular SME Transactions in Europe, Middle
East and Africa published in June 2007, and Refining the ABS SME
Approach: Moody's Probability of Default assumptions in the
rating analysis of granular Small and Mid-sized Enterprise
portfolios in EMEA published in March 2009.
Other factors used in this rating are described in Moody's
Approach to Quantifying Set-off Risk for Belgian Structured
Finance and Covered Bonds Transactions published in March 2013.
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C R O A T I A
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GEOFOTO: EBRD Files Bankruptcy Petition
---------------------------------------
SeeNews reports that the European Bank for Reconstruction and
Development has filed a petition for bankruptcy against Geofoto,
in which it holds a minority stake.
According to SeeNews, daily Vecernji List reported on Friday that
EBRD's petition will be analyzed by a court-appointed expert who
will issue an opinion in about 60 days.
Vecernji List reported that Geofoto's CEO Zvonko Biljecki is
hoping that the company will be able to regain solvency and
address its problems within this two-month period, SeeNews
relates.
Mr. Biljecki, as cited by SeeNews, said that Geofoto has won
contracts worth HRK52 million (US$9 million/EUR6.7 million) to be
executed over the next year and is about to ink a deal in
Azerbaijan of up to EUR100 million (US$131 million), adding that
2013 will be marked by the firm's recovery.
Geofoto is a Croatian mapping, cadastral and geodetic services
provider.
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D E N M A R K
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* DENMARK: Wants Shareholders to Be First in Line to Bear Losses
----------------------------------------------------------------
Peter Levring and Frances Schwartzkopff at Bloomberg News report
that Denmark is lobbying hard to make sure bondholders don't get
off too lightly in the European Union's proposed bank resolution
framework.
The Scandinavian nation -- which was the first to pass bail-in
legislation in 2010, leading to senior bondholder losses less
than a year later -- argues the EU's latest plan still entails a
risk for taxpayers that shouldn't be there, Bloomberg discloses.
Economy Minister Margrethe Vestager is now pressing her
counterparts in the EU to drive home Denmark's point that the
best way to protect public finances is to have explicit
legislation showing bank investors can't tap them, Bloomberg
relates.
"I told Rehn that, on the next step of the banking union, the
issue of bank resolution, we want to nail the Danish bail-in
model," Bloomberg quotes Ms. Vestager as saying in an interview.
"If taxpayers should get involved, it must only be to provide
temporary funding, which will eventually be repaid."
The EU's latest bank resolution proposal -- one of three main
pillars in a banking union that includes a single supervisory
authority and common deposit insurance -- would give regulators
bail-in powers by 2018, Bloomberg says. Germany, the Netherlands
and Finland want implementation as early as 2015, Bloomberg
saying, citing people familiar with the content of technical
meetings held in Brussels in January. The proposal allows
national authorities to resort to taxpayer-funded bailouts after
exhausting bail-in options, Bloomberg notes.
For Denmark, "it's very important that shareholders are first in
line to bear losses and the industry second," Ms. Vestager, as
cited by Bloomberg, said.
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F R A N C E
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CEGEDIM SA: S&P Puts 'B' Corp. Credit Rating on Watch Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'B'
long-term corporate credit rating on French healthcare software
and services group Cegedim S.A. on CreditWatch with positive
implications.
In addition, S&P placed its 'B' issue rating on Cegedim's
existing EUR280 million 7% unsecured notes due 2015 on
CreditWatch positive, in line with the corporate credit rating.
The recovery rating on these notes is '3', indicating S&P's
expectation of meaningful (50%-70%) recovery.
At the same time, S&P assigned its 'B+' issue rating to the
group's proposed EUR300 million senior unsecured notes due 2020.
The recovery rating on these notes is '4', indicating S&P's
expectation of average (30%-50%) recovery for creditors in the
event of a payment default.
S&P notes that the final ratings on the proposed notes are
subject to the closing of the proposed issuance and S&P's receipt
and satisfactory review of the final transaction documentation.
In addition, S&P's recovery analysis assumes that the amortizing
term loan will be fully repaid with the proceeds of the proposed
bond.
The CreditWatch placement follows Cegedim's recent announcement
of a tender offer for its unsecured notes due 2015, conditional
to the issuance of euro-denominated notes due 2020. S&P
understands from Cegedim that the purpose of the offer is to
proactively manage the company's debt maturity profile. S&P
assumes that the existing bonds will not be fully tendered, and
believe that the portion of the issued notes not dedicated to the
repayment of the 2015 bonds will be used to refinance all or part
of the group's outstanding EUR140 million term loan.
S&P considered that Cegedim could face liquidity issues from June
2014 onward if no refinancing was done by then, notably owing to
the bulky term loan amortization of EUR40 million per year
against S&P's forecast of flat-to-slightly positive free cash
flow. Depending on the success, size, and use of the issuance,
S&P believes Cegedim's liquidity mismatch could be addressed
through a significant lowering of its annual debt amortization.
A material improvement in the group's debt maturity profile could
improve its liquidity to "adequate" from "less than adequate,"
according to S&P's criteria.
S&P aims to resolve the CreditWatch placement once Cegedim's
refinancing actions materialize. A one-notch upgrade is highly
likely if the group significantly reduces its annual debt
amortization.
S&P could affirm the current 'B' rating if Cegedim did not issue
the euro-denominated notes or if the proceeds from the new bonds
did not materially lower the group's annual debt repayments.
CODERE SA: Moody's Cuts Corp. Family Rating to Caa2; Outlook Neg
----------------------------------------------------------------
Moody's Investors Service downgraded to Caa2 from Caa1 the
corporate family rating and from Caa1-PD to Caa2-PD the
probability of default rating of Codere S.A. Concurrently,
Moody's has downgraded to Caa3 from Caa2 the ratings on Codere
Finance (Luxembourg) S.A.'s EUR760 million worth of 8.25% senior
notes due 2015 and USD300 million worth of 9.25% senior notes due
2019. The outlook on all ratings is negative.
Ratings Rationale:
"The one-notch downgrade of Codere to Caa2 primarily reflects
Moody's view that the company's default risk has increased given
the absence of material progress to date in refinancing its EUR60
million senior facility, which matures in June 2013 and which is
vital for the company's ability to continue meeting its
obligations at the parent level," says Ivan Palacios, a Moody's
Vice President - Senior Credit Officer and lead analyst for
Codere.
Moody's understands that the company is currently negotiating a
refinancing of the facility with existing lenders, as well as
alternative, or complementary financing arrangements, such as
local financing in Mexico and the extension of payment terms with
suppliers. However, these lines are not yet in place.
Moreover, before the end of June 2013, Codere will also seek to
refinance AR$200 million of local financing raised in Argentina
in 2012 to support the payment of the gaming licenses in the
Province of Buenos Aires. Codere expects that the US$30 million
(c. EUR23 million) of cash collateral that supports one of the
Argentinean loans that amounts to AR$100 million will be released
once the loan is refinanced.
"Even if the company successfully refinances the senior facility
or signs alternative financing arrangements, we believe that the
company's liquidity profile will continue to be very tight,
leaving Codere little headroom for deviation in terms of
operating performance," adds Mr. Palacios. In the absence of
asset sales (which could affect the company's geographical
diversification and business profile), Moody's believes the group
is running out of options to support its liquidity profile in the
short term.
This is because Codere relies on sustained access to the cash
flows from its Argentinean operations, which generated 53% of the
group's consolidated EBITDA in 2012. However, cash flows from
Argentina are currently used to repay debt at local level
incurred to pay for the license renewals. In addition, access to
these cash flows over the medium term remains highly uncertain in
light of the strict foreign-exchange controls imposed by the
Argentinean authorities.
Moody's notes that it will be difficult for Codere to raise
further debt at the local level in countries in which there are
no restrictions on upstreaming cash flow, given that there is
limited headroom remaining under the group's senior debt covenant
and no headroom under the Euro notes' debt incurrence test.
Headroom under the maintenance covenants of the existing senior
facility is also very limited.
Moreover, even if Codere manages to withstand liquidity stress
over the next three to six months, the group faces the medium-
term challenge of having to refinance the EUR760 million notes
due in June 2015 in the context of a potentially still uncertain
operating environment in Argentina. Moody's notes that the
refinancing of this debt will likely be made at higher rates, in
light of the weaker credit quality of the group. In addition,
Moody's believes that this refinancing could be complicated by
the overhang that results from the PIK loan issued by Masampe
Holding B.V., a special purpose vehicle that holds a controlling
stake in Codere, and which comes due in December 2015.
The downgrade also reflects the company's higher-than-expected
leverage as of year-end 2012, with adjusted debt/EBITDA of 5.4x,
well above the 4.1x reported a year earlier. Moody's expects the
company's leverage to remain at these levels in 2013, since
EBITDA will remain broadly flat when compared with 2012. This is
because the increase in taxes in Italy and Argentina, the effect
from the smoking ban in the Province of Buenos Aires and the
devaluation of the peso will broadly offset the positive impacts
from the opening of the Carrasco Casino in Uruguay in March 2013,
and the expected improved performance in Mexico.
Codere's Caa2 rating reflects the group's weak liquidity, high
risk of default in the near to medium term and high adjusted
leverage, which Moody's expects to remain at around 5.5x in 2013.
In addition, the rating reflects the company's exposure to
emerging markets risks, including the risk of adverse legal and
regulatory developments, political, social or economic
instability, currency depreciation or restrictions on the
transfer of funds. However, Moody's recognizes Codere's track
record of successfully managing challenging operating
environments. The Caa2 rating continues to reflect Codere's
position as one of the leading gaming operators in Latin America,
Italy and Spain, and its diversification in terms of business
lines, gaming assets and geographies.
The negative outlook on the Caa2 rating reflects Moody's concerns
about Codere's liquidity profile over the short term in view of
its need to successfully refinance its senior facility and the
Argentinean loans, and over the medium term if the group is
unable to access, on a sustained basis, the cash flows generated
by its Argentinean operations.
What Could Change The Rating Up/Down
Moody's would consider further downgrading the ratings if there
is no progress in the timely refinancing of the senior facility
and the bank loans in Argentina and there are indications that
the US$30 million cash collateral backing the Argentinean loans
is not released. The rating could also be downgraded if there are
indications that the company is considering potential debt-
restructuring measures involving a discounted offer on debt
components of its capital structure, which could be considered a
distressed exchange and, by implication, a default under Moody's
methodologies.
In view of the action and the negative rating outlook, Moody's
does not currently anticipate upward rating pressure. However,
the rating agency could change the outlook on the ratings to
stable if (1) Codere successfully refinances its senior facility
and other 2013 debt maturities; (2) it implements cash-
preservation measures that are not detrimental to the business;
and (3) there is increased visibility as to the company's ability
to access, on a sustained basis, the cash flows it generates in
Argentina.
Principal Methodology
The principal methodology used in these ratings was the Global
Gaming published in December 2009. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Codere is a multinational gaming operator engaged in the
management of gaming machines, machine halls, bingo halls, horse
racing tracks, casinos and sports betting locations in Latin
America, Italy and Spain. As of December 2012, Codere managed
56,474 gaming machine seats, 186 gaming halls (including machine
halls, bingo halls with machines, machine halls at racetracks and
casinos), 1,379 betting locations and three horse racing tracks.
In 2012, Codere generated operating revenue of EUR1,664 million
and EBITDA of EUR305 million.
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G E R M A N Y
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HAWI ENERGIETECHNIK: Files for Insolvency Proceedings
-----------------------------------------------------
Sandra Enkhardt at pv-magazine.com reports that Germany-based PV
distributor HaWi Energietechnik has submitted an application to
open insolvency proceedings, according to an official notice.
pv-magazine.com, citing Germany's Passauer Neuen Presse, relates
that the photovoltaic wholesaler filed the application on March
4. Lawyer Jochen Zaremba has been appointed provisional
administrator by the local court in Landshut, the report relays.
According to pv-magazine.com, the newspaper adds that around 100
employees, more than half of which are located at Hawi's
headquarters in Eggenfelden, have been affected by the
insolvency.
Company founder, Johann Wimmer, said Mr. Zaremba is expected to
make a decision regarding continued business operations in the
coming days, the report notes.
Mr. Wimmer said the rapidly decrease photovoltaic module prices
and sudden fall in demand for modules in Italy and France, are
responsible for the company's current position, pv-magazine.com
adds.
HaWi Energietechnik is a Germany-based PV distributor. It has
offices in Germany, France, Italy and Greece.
KABEL DEUTSCHLAND: S&P Raises Corporate Credit Rating to 'BB'
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it raised its long-
term corporate credit rating on German cable operator Kabel
Deutschland Holding AG (KDH) to 'BB' from 'BB-'. The outlook is
stable.
The upgrade primarily reflects S&P's view of KDH's stronger
credit measures, as adjusted by Standard & Poor's, following the
cancellation of the acquisition of German cable operator Tele
Columbus. Furthermore, S&P expects the group will maintain a
ratio of net financial debt to EBITDA, as adjusted by the
company, well within its 3.0x-3.5x target range. In addition,
S&P forecasts the group will continue generating positive free
operating cash flow (FOCF) despite its intention to invest an
additional EUR300 million in its network infrastructure over the
next two fiscal years.
On Feb. 18, 2013, KDH announced that the German Federal Cartel
Office (FCO) deemed its remedy package for the planned
EUR0.6 billion acquisition of Tele Columbus insufficient. KDH
said the FCO's remedy requirements were not commercially
reasonable and that the FCO therefore prohibited the transaction.
The ratings on KDH continue to reflect S&P's assessment of the
group's business risk profile as "satisfactory" and financial
risk profile as "aggressive."
KDH's financial risk profile is constrained, in S&P's view, by
the group's still-high Standard & Poor's-adjusted debt-to-EBITDA
ratio, which S&P expects will remain at 4.0x-4.5x. The major
difference between KDH's reported and Standard & Poor's adjusted
leverage ratios is that S&P makes significant debt adjustments
for operating leases. In S&P's base case, it forecasts group
leverage will decline to about 4.4x at the end of March 2013,
from 4.6x as of Dec. 31, 2012, primarily owing to strong working
capital inflows.
The stable outlook reflects S&P's expectation that KDH will
maintain a Standard & Poor's-adjusted debt-to-EBITDA ratio of
4.0x-4.5x and generate solid FOCF. S&P believes FOCF will
increase to at least 5% of gross financial debt in fiscal 2015,
with good prospects to reach about 10% in the medium term.
S&P could lower the ratings if KDH's adjusted leverage ratio
deteriorated permanently to more than 4.5x as a result of large
shareholder distributions or significant acquisitions.
S&P could raise the rating if KDH's credit measures improved
thanks to continued revenue and earnings growth and the use of
free cash flow for debt reduction.
LANTIQ DEUTSCHLAND: Moody's Withdraws Caa1 CFR , Caa2-PD PDR
------------------------------------------------------------
Moody's Investors Service has withdrawn the Caa1 corporate family
rating and Caa2-PD probability of default rating of Lantiq
Deutschland GmbH. Concurrently, Moody's has withdrawn the Caa1
rating on the company's syndicated secured term loan with a loss
given default assessment of 3 (LGD3, 31%). The ratings had a
developing outlook.
Outlook Actions:
Issuer: Lantiq Deutschland GmbH
Outlook, Changed To Rating Withdrawn From Developing
Withdrawals:
Issuer: Lantiq Deutschland GmbH
Probability of Default Rating, Withdrawn , previously rated Caa2-
PD
Corporate Family Rating, Withdrawn , previously rated Caa1
Senior Secured Bank Credit Facility Nov 16, 2015, Withdrawn ,
previously rated Caa1
Senior Secured Bank Credit Facility Nov 16, 2015, Withdrawn ,
previously rated a range of LGD3, 31 %
Ratings Rationale:
Moody's has withdrawn the rating for its own business reasons.
This action does not reflect a change in the company's
creditworthiness.
Lantiq Deutschland GmbH, headquartered in Neubiberg (Munich,
Germany), is a designer of communications semiconductors deployed
by major carriers in traditional voice and broadband access
networks around the world. Lantiq generated revenues of around
$260 million in the first nine months of fiscal year ended
September 30, 2012.
STYROLUTION GROUP: Moody's Alters Ratings Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating of Styrolution Group GmbH and its rating on EUR480 million
of senior secured guaranteed notes due in 2016 and changed to
stable from negative the outlook on the ratings.
"We have changed the outlook on Styrolution's B2 rating to stable
from negative following the company's adequate financial
performance for the recently reported financial year ended 31
December 2012, as a result of which we now expect that it will
maintain its current profitability levels and liquidity profile,"
says Anthony Hill, a Moody's Vice President -- Senior Analyst and
lead analyst for Styrolution.
Ratings Rationale:
The rating action reflects Moody's revised expectation that
Styrolution will be able to maintain its current profitability
levels and liquidity profile, despite the weak trading
environment for styrenics and the uncertain European
macroeconomic conditions.
For the quarter ended September 30, 2012, Styrolution's last-12-
month financial interest expense and leverage were around 4.1x
EBITDA/interest and 3.6x debt/EBITDA, respectively and on a
Moody's-adjusted basis. However, for financial year-end December
2012, the company's interest coverage was 5.3x and leverage was
3.0x. While Styrolution reported a 5% decrease in revenues from
financial year 2011 to 2012, the company's Moody's-adjusted
EBITDA increased by nearly 6% over the same period (EUR291
million in 2011 compared with EUR307 million in 2012). This
increase primarily reflects stronger margins due to Styrolution's
increased ability to pass on rising feedstock costs to its
customers as more contracts are renewed at current feedstock
price levels.
While Moody's continues to expect volatile feedstock prices
through 2013, it does not expect a repeat of the steep price
rises experienced in 2012. Furthermore, Moody's expects
Styrolution's significant exposure to the Americas, which
continues to benefit from stronger demand levels and better
margins, to help offset the continued weak European demand
(approximately 40% of the company's 2012 revenues are from the
Americas). Additionally, in financial year-end 2012, Styrolution
generated Moody's-adjusted funds from operations (FFO) of EUR203
million. On current assumptions, Moody's expects Styrolution to
sustain this level of FFO generation in the coming quarters;
supported in part by efficiency measures (Styrolution targets
approximately EUR100 million in net cost savings for 2013).
Against this backdrop, the rating agency also expects the
company's financial and liquidity profile to remain stable over
the coming quarters.
Styrolution's liquidity position is adequate. However, Moody's
notes that the company is prone to large intra-year working
capital swings, mainly related to the market valuation of its
inventory, which is predominantly a function of feedstock prices.
As a result, when there are steep rises in feedstock prices over
a short period of time, as was the case in 2012, the company's
free cash flow (FCF) generation can be negative. In order to
weather such periods of negative volatility and maintain an
adequate level of liquidity, the company must retain significant
levels of cash as it does not have any working capital facilities
in place. At financial year-end 2012, Styrolution's Moody's-
adjusted FCF was negative US$42 million, and cash levels were a
reported EUR190 million. Moody's expects Styrolution's FCF
generation to turn positive in 2013, and the company's cash
levels to increase to a more adequate level of above EUR200
million.
What Could Change The Rating Up/Down
Positive pressure on the rating could materialize if Styrolution
were to (1) sustainably achieve a Moody's-adjusted EBITDA margin
of around 7%; (2) generate a sustained positive FCF/debt ratio of
around 8%; (3) improve its liquidity profile through increased
cash balances; and (4) improve its leverage profile such that its
Moody's-adjusted debt/EBITDA ratio is solidly below 3.5x.
Conversely, negative pressure on the ratings would emerge if
Styrolution's liquidity profile and credit metrics deteriorate as
a result of a weakening of its operational performance.
Quantitatively, Moody's would also consider downgrading
Styrolution if (1) the company's Moody's-adjusted EBITDA margin
falls sustainably below 5%; (2) its Moody's-adjusted FCF fails to
turn positive over the next 12 months; (3) the company
experiences a significant decrease in cash balances; or (4) its
debt/EBITDA ratio rises towards 5.0x.
Principal Methodology
The principal methodology used in rating Styrolution Group GmbH
was the Global Chemicals Industry Methodology, published in
December 2009. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA, published in June 2009.
Styrolution, based in Frankfurt, Germany, is a leading global
styrenics supplier (based on revenues), especially in Europe and
North America. Styrolution is focused on the production and sale
of polystyrene, acrylonitrile butadiene styrene (ABS), styrene
monomer, and other styrenic specialities. The group is a joint
venture between BASF (SE) (A1 stable) and Ineos Group Holdings SA
(B2 positive). The joint venture became fully operational as a
new independent company on October 1, 2011. For financial year-
end December 2012, Styrolution's revenues and EBITDA were
approximately EUR6.0 billion and EUR307 million respectively and
on an audited, Moody's-adjusted basis.
VULKAN GMBH: Files for Insolvency in Villingen-Schwenningen Court
-----------------------------------------------------------------
The Management Board of Hess AG disclosed that Vulkan GmbH in
which Hess indirectly holds 100% of the shares on March 8 filed
for opening of the insolvency procedure at the responsible
District Court of Villingen-Schwenningen (insolvency court).
The District Court of Villingen-Schwenningen (insolvency court)
has, in this connection, appointed lawyer Wolfgang Bilgery,
partnership Grub Brugger & Partner, Stuttgart, as temporary
insolvency administrator for Vulkan GmbH, this being subject to
approval (section 21 (2) no. 2 2nd alt. German Insolvency Code).
* GERMANY: Corporate Insolvencies Decrease 24.4% YOY in December
----------------------------------------------------------------
RTT News reports that data from the Federal Statistical Office
showed Tuesday German corporate insolvencies decreased 24.4%
year-on-year in December.
According to RTT, insolvency courts reported 1,885 corporate
insolvencies during the month.
In 2012, a total of 28,304 business insolvencies were reported,
6% less than in 2011, RTT discloses.
===========
G R E E C E
===========
YIOULA GLASSWORK: Payment Default Cues Moody's to Cut CFR to Caa3
-----------------------------------------------------------------
Moody's Investors Service has downgraded Yioula Glasswork S.A.'s
probability of default rating to Ca-PD (limited default) from
Caa2-PD. Concurrently, the group's corporate family rating was
downgraded to Caa3 and the rating of its senior unsecured notes
was downgraded to Ca (LGD 4, 68%). The rating outlook remains
negative.
Ratings Rationale:
The rating action reflects Moody's understanding that Yioula has
failed to make scheduled amortization payments under several loan
agreements, which have been waived by banks in the course of a
broader renegotiation of lending terms of these credit
facilities. The delay in making contractually obligated payments
constitutes a payment default in Moody's view.
Moody's understands that the delay and rescheduling of
amortization provides Yioula with time to negotiate a
restructuring of contractual payments to alleviate the company's
stressed liquidity profile. Moody's estimates the recovery of the
bond in case of a default to be somewhat above the standard
assumptions (i.e. 50%), which results in a higher CFR at Caa3.
The negative outlook recognizes that further downward pressure
could be exerted on the ratings in the coming months if the
company fails to term out upcoming debt maturities and to
reschedule amortization to levels in line with Yioula's cash
generation ability.
More positively, Moody's notes that Yioula's operating
performance has remained fairly stable during 2012 despite weak
macroeconomic fundamentals in its core markets with nine months
EBITDA as of September 2012 largely in line with prior year.
Aside from the stressed liquidity profile, which continues to be
the major rating driver in the short term, Yioula's corporate
family rating also reflects the company's relatively small scale,
the large share of commoditized products and its dependence on
volatile input factors such as natural gas and soda ash, a weak
financial risk profile evidenced by a debt/EBITDA of 5.8x per end
of September 2012 and low interest coverage ratios following
significant investment activity over the past years as well as
lower profitability on the back of high input costs, the
inability to generate meaningful positive free cash flows in the
last couple of years and therefore the inability to reduce debt
to a more sustainable level.
At the same time, the rating reflects (i) the company's dominant
position in its core market of south-eastern Europe, (ii) its
long-standing relationships in that region, (iii) the ability to
leverage its production in low cost countries and (iv) a more
efficient asset base following sizeable investments over the past
years aimed at improving the cost efficiency of the group's
furnaces.
Downward pressure on the rating could develop if (i) a payment
default were to occur or (ii) Yioula were to announce a
restructuring of its debt and this were deemed a distressed
exchange, which Moody's considers a default.
The rating could be upgraded if Yioula implemented an adequate
liquidity profile by refinancing its upcoming debt maturities on
a long term basis or instating other long term liquidity sources,
such as revolving liquidity facilities as back up for its
refinancing requirements.
Downgrades:
Issuer: Yioula Glassworks S.A.
Probability of Default Rating, Downgraded to Ca-PD /LD from
Caa2-PD
Corporate Family Rating, Downgraded to Caa3 from Caa2
Senior Unsecured Regular Bond/Debenture Dec 1, 2015, Downgraded
to Ca from Caa3
Adjustments:
Issuer: Yioula Glassworks S.A.
Senior Unsecured Regular Bond/Debenture Dec 1, 2015, Upgraded
to a range of LGD4, 68 % from a range of LGD4, 69 %
The principal methodology used in this rating was the Global
Packaging Manufacturers: Metal, Glass, and Plastic Containers
published in June 2009. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in
the U.S., Canada and EMEA published in June 2009.
Yioula Glassworks S.A., based in Athens (Greece), produces a wide
variety of glass containers for the food and beverage industries
throughout south-eastern Europe as well as glass tableware for
the Greek, Bulgarian, Romanian and Ukrainian markets. Founded in
Greece in 1947, the company expanded into Bulgaria in 1997,
Romania in 2003 and to the Ukraine in 2005. Total group revenues
for the last twelve months ending September 2012 were EUR 233
million.
=============
I R E L A N D
=============
AVIS BUDGET: Fitch Assigns 'B+' Long-Term Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has assigned a long-term Issuer Default Rating
(IDR) of 'B+' to Avis Budget Finance PLC and 'B+/RR4' ratings to
Avis Budget Finance's EUR250 million, 6% senior unsecured notes
due March 2021. In addition, Fitch has assigned 'BB+/RR1' ratings
to Avis Budget Car Rental, LLC's US$900 million senior secured
term loan maturing March 2019. Of the proceeds, US$200 million
represents incremental issuance, while the remaining US$700
million will be used to refinance ABCR's existing senior secured
term loan maturing March 2019 at lower interest rates. The Rating
Outlook for Avis Budget Finance is positive.
Key Rating Drivers
Avis Budget Finance is a wholly-owned, indirect subsidiary of
Avis Budget Group, Inc. (ABG, rated 'B+', Outlook Positive by
Fitch). The 'B+' ratings of Avis Budget Finance and its senior
unsecured notes reflect the unconditional guarantee provided by
ABG (indirect parent), Avis Budget Holdings, LLC (indirect
parent) and ABCR (direct parent), and all current and future
direct and indirect domestic subsidiaries. The note ranks pari
passu with all other unsecured and senior indebtedness of the
company. The Recovery Rating of 'RR4' reflects average recovery
prospects in a distressed scenario based upon collateral coverage
of unencumbered balance sheet assets on a pro forma basis as of
Dec. 31, 2012. The 'BB+/RR1' ratings assigned to the term loan
reflect outstanding recovery prospects for this class of debt
upon liquidation in a distressed scenario. The term loan is
secured by pledges of all of the capital stock of ABG's domestic
subsidiaries and up to 66% of ABG's foreign subsidiaries.
The proceeds of the note and incremental term loan issuance will
be used to finance ABG's acquisition of Zipcar, Inc. (ZIP), which
was announced on Feb. 2, 2013. Fitch expects the incremental
issuance will modestly increase ABG's corporate leverage, and
will have a marginal impact on ABG's overall credit profile in
the medium term. On a pro forma basis net of unrestricted cash,
corporate debt-to-full-year adjusted EBITDA is expected to
increase from 2.9x to 3.4x in 2012, excluding the effects of $60
million of potential midpoint synergies associated with the
acquisition. Including synergies, net corporate leverage would
have declined to 3.0x on a combined basis in 2012. Given ABG's
prior track record of managing operating leverage, Fitch believes
the proposed synergies are achievable.
Subsidiary and Affiliated Company Rating Drivers and
Sensitivities
Avis Budget Finance and ABCR are wholly-owned subsidiaries of
ABG. Avis Budget Finance's IDR is aligned with that of ABG
because of the unconditional guarantee provided by ABG and its
various subsidiaries. Therefore, the ratings are sensitive to the
same factors that might drive a change in ABG's IDR.
Rating Sensitivities - IDRS and SENIOR DEBT
Positive rating actions would be driven by ABG's ability to
sustain improvements in operating leverage and liquidity,
maintain appropriate capitalization and economic access to
funding in the capital markets, and its ability to achieve
proposed synergies and manage expected integration costs. Fitch
would also view positively ABG's ability to manage net leverage
to pre-acquisition levels, as measured by net corporate debt-to-
adjusted EBITDA below its articulated range of 3x-4x in the
longer term.
Conversely, negative rating actions could result from a material
deterioration in revenue and cash flow generation resulting from
declines in passenger volumes, rental rates, and used car values
which impair ABG's access to funding, liquidity, and/or
capitalization. A meaningful and sustained increase in net
leverage over and above ABG's articulated range could also yield
negative rating actions. The Recovery Ratings are also sensitive
to changes in the level of balance sheet assets and collateral
values, which ultimately impact the level of available asset
coverage in a distressed scenario.
Fitch assigns these ratings:
Avis Budget Car Rental, LLC
-- Senior secured term loan 'BB+/RR1'.
Avis Budget Finance PLC
-- Long-term IDR 'B+';
-- Senior unsecured 'B+/RR4'.
The Rating Outlook is Positive.
IRON HILL: Moody's Raises Rating on Class C Notes From 'Ba2'
------------------------------------------------------------
Moody's Investors Service upgraded the ratings of the following
notes issued by Iron Hill CLO Limited.
US$14.007M Class B Senior Secured Deferrable Floating Rate
Notes due 2025, Upgraded to A3 (sf); previously on Aug 12, 2011
Confirmed at Baa3 (sf)
US$16.342M Class C Senior Secured Deferrable Floating Rate
Notes due 2025, Upgraded to Baa3 (sf); previously on Aug 12,
2011 Upgraded to Ba2 (sf)
Iron Hill CLO Limited, issued in January 2008, is a multi-
currency Collateralized Loan Obligation backed by a portfolio of
mostly high yield European and US loans. The portfolio is managed
by Guggenheim Partners Europe Limited. This transaction has ended
the reinvestment period in July 2011. It is predominantly
composed of senior secured loans.
Ratings Rationale:
According to Moody's, the rating actions taken on the notes are
primarily a result of an increase in the transaction
overcollateralization ratios due to amortization of the unrated
Class A-T and A-R. The Class A notes have been paid down by
approximately EUR135 million (54%) since the last rating action
in August 2011. As of the latest trustee report dated
February 11, 2013, the Class A, Class B and Class C
overcollateralization ratios are reported at 152.36%, 139.50% and
127.00%, respectively, versus July 2011 levels (on which the last
rating action was based) of 124.39%, 119.54% and 114.33%,
respectively.
In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR174.97 million, defaulted par of EUR6.08 million, a weighted
average default probability of 20.67% (consistent with a WARF of
3580), a weighted average recovery rate upon default of 48.66%
for a Aaa liability target rating, a diversity score of 21 and a
weighted average spread of 3.70%.
The default probability is derived from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The average recovery rate to be realized on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that 96.65% of the portfolio exposed to senior
secured corporate assets would recover 50% upon default, while
the remainder non first-lien loan corporate assets would recover
10%. In each case, historical and market performance trends and
collateral manager latitude for trading the collateral are also
relevant factors. These default and recovery properties of the
collateral pool are incorporated in cash flow model analysis
where they are subject to stresses as a function of the target
rating of each CLO liability being reviewed.
In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
(1) Deterioration of credit quality to address the refinancing
and sovereign risks -- Approximately 17% of the portfolio
are rated B3 and below with maturities between 2014 and
2016, which may create challenges for issuers to refinance.
The portfolio also has approximately 4% exposure to obligors
located in Ireland and Spain. Moody's considered a scenario
where the WARF of the portfolio was increased to 3793 by
forcing ratings on 25% of such exposures subject to
refinancing and sovereign risk to Ca. This scenario
generated model outputs that were within one notch from the
base case results.
(2) Sensitivity to lower recovery assumptions -- The portfolio
contains about 15% of covenant-lite loans which are subject
to no or less stringent covenants. Moody's considered a
scenario with a weighted average recovery rate of 47.18%,
reflecting lower recovery assumptions for covenant-lite
loans upon default. This scenario generated model outputs
that were within one notch from the base case results.
Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by (1) uncertainties of credit
conditions in the general economy and (2) the large concentration
of speculative-grade debt maturing between 2014 and 2016 which
may create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by (1) the manager's investment strategy and behavior and (2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.
Sources of additional performance uncertainties:
(1) Portfolio Amortization: The transaction has recently entered
into the amortization period. Pace of amortization could
vary significantly subject to market conditions and this may
have a significant impact on the notes' ratings. In
particular, amortization could accelerate as a consequence
of high levels of prepayments in the loan market or
collateral sales by the Collateral Manager or be delayed by
rising loan amend-and-extent restructurings. Fast
amortization would usually benefit the ratings of the notes.
(2) The transaction has assets and liabilities denominated in
EUR, GBP and USD. Volatility in foreign exchange rates will
have a direct impact on interest and principal proceeds
available to the transaction, which may affect the expected
loss of rated tranches.
(3) Moody's also notes that around 43% of the collateral pool
consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. Further
information regarding specific risks and stresses associated
with credit estimates are available in the report titled
"Updated Approach to the Usage of Credit Estimates in Rated
Transactions" published in October 2009.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.
Under this methodology, Moody's used its Binomial Expansion
Technique, whereby the pool is represented by independent
identical assets, the number of which is being determined by the
diversity score of the portfolio. The default and recovery
properties of the collateral pool are incorporated in a cash flow
model where the default probabilities are subject to stresses as
a function of the target rating of each CLO liability being
reviewed. The default probability range is derived from the
credit quality of the collateral pool, and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority and jurisdiction of the assets in the collateral pool.
The cash flow model used for this transaction, whose description
can be found in the methodology, is Moody's EMEA Cash-Flow model.
This model was used to represent 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 binomial 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. Therefore,
Moody's analysis encompasses the assessment of stressed
scenarios.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
PARTHOLON CDO: Moody's Affirms 'B1' Ratings on Two Note Classes
---------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of the
following notes issued by Partholon CDO I plc:
EUR31.432M Class B-1 Floating Rate Notes, Upgraded to Aa3 (sf);
previously on Aug 3, 2011 Upgraded to A3 (sf)
EUR2.25M Class B-2 Fixed Rate Notes, Upgraded to Aa3 (sf);
previously on Aug 3, 2011 Upgraded to A3 (sf)
EUR4M Class B-3 Zero Coupon Notes, Upgraded to Aa3 (sf);
previously on Aug 3, 2011 Upgraded to A3 (sf)
EUR10M Class S Combination Notes (currently EUR5.9M rated
balance outstanding), Upgraded to Baa1 (sf); previously on
Aug , 2011 Upgraded to Ba2 (sf)
EUR4M Class R Combination Notes (currently EUR2.9M rated
balance outstanding), Upgraded to Aa1 (sf); previously on
Aug 3, 2011 Upgraded to A2 (sf)
Moody's also affirmed the ratings of the following notes issued
by Partholon CDO I plc:
EUR271.443M Class A-1 Floating Rate Notes (currently EUR51.3M
outstanding), Affirmed Aaa (sf); previously on Aug 3, 2011
Upgraded to Aaa (sf)
EUR9M Class A-3 Zero Coupon Notes (currently EUR2.3M
outstanding), Affirmed Aaa (sf); previously on Aug 3, 2011
Upgraded to Aaa (sf)
EUR28.45M Class C-1 Floating Rate Notes, Affirmed B1 (sf);
previously on Aug 3, 2011 Upgraded to B1 (sf)
EUR7.75M Class C-2 Fixed Rate Notes, Affirmed B1 (sf);
previously on Aug 3, 2011 Upgraded to B1 (sf)
EUR24M Class J Combination Notes (currently EUR4M rated balance
outstanding), Affirmed Aaa (sf); previously on Aug 3, 2011
Upgraded to Aaa (sf)
Partholon CDO 1 plc, issued in October 2003, is a Collateralized
Loan Obligation backed by a portfolio of mostly high yield
European loans. It is predominantly composed of senior secured
loans. The portfolio is managed by The Governor & Company of the
Bank of Ireland. This transaction ended its reinvestment period
on January 6, 2009.
Ratings Rationale:
According to Moody's, the rating actions taken on the notes
result primarily from the amortization of the Class A Notes,
which have been paid down by approximately 65%, or EUR95 million,
since the last rating action in August 2011.
As a result of this deleveraging, the overcollateralization
ratios (or "OC ratios") have increased since the rating action in
August 2011. As of the latest trustee report dated February 1,
2013, the Class A/B and Class C OC ratios are reported at 149.53%
and 107.08%, respectively, versus July 2011 levels of 119.87% and
105.72%, respectively. All OC tests are currently in compliance.
In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR140.6 million, defaulted par of EUR15.1 million, a weighted
average default probability of 25.16% with a weighted average
life of 2.5 years, a weighted average recovery rate upon default
of 46.44% for a Aaa liability target rating, a diversity score of
16 and a weighted average spread of 3.38%. The default
probability is derived from the credit quality of the collateral
pool and Moody's expectation of the remaining life of the
collateral pool. The average recovery rate to be realized on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that 91.1% of the portfolio exposed to senior
secured corporate assets would recover 50% upon default, while
the remainder non first-lien loan corporate assets would recover
10%. In each case, historical and market performance trends and
collateral manager latitude for trading the collateral are also
relevant factors. These default and recovery properties of the
collateral pool are incorporated in cash flow model analysis
where they are subject to stresses as a function of the target
rating of each CLO liability being reviewed.
In addition to the base case analysis, Moody's also performed
sensitivity analyses on key parameters for the rated notes:
(1) Deterioration of credit quality to address the refinancing
and sovereign risks -- Approximately 51% of the portfolio are
European corporate rated B3 and below and maturing between 2014
and 2016, which may create challenges for issuers to refinance.
Approximately 2.4% of the portfolio are exposed to obligors
located in Spain. Moody's considered a model run where the base
case WARF was increased to 5097 by forcing ratings on 25% of such
exposure to Ca. This run generated model outputs that were within
one notch from the base case results.
The ratings of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For Class S,
the 'Rated Balance' is equal at any time to the principal amount
of the Combination Note on the Issue Date increased by the Rated
Coupon of 3.0% per annum accrued on the Rated Balance on the
preceding payment date minus the aggregate of all payments made
from the Issue Date to such date, either through interest or
principal payments. For Classes J and R which do not accrue
interest, the 'Rated Balance' is equal at any time to the
principal amount of the Combination Note on the Issue Date minus
the aggregate of all payments made from the Issue Date to such
date, either through interest or principal payments. The Rated
Balance may not necessarily correspond to the outstanding
notional amount reported by the trustee.
Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by 1) uncertainties of credit
conditions in the general economy and 2) the large concentration
of speculative-grade debt maturing between 2014 and 2016 which
may create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by 1) the manager's investment strategy and behavior and 2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.
Sources of additional performance uncertainties:
1) Portfolio Amortization: The main source of uncertainty in this
transaction is whether delevering from unscheduled principal
proceeds will continue and at what pace. Delevering may
accelerate due to high prepayment levels in the loan market
and/or collateral sales by the liquidation agent, which may have
significant impact on the notes' ratings.
2) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices.
3) Moody's also notes that 87% of the collateral pool consists of
debt obligations whose credit quality has been assessed through
Moody's credit estimates. Large single exposures to obligors
bearing a credit estimate have been subject to a stress
applicable to concentrated pools as per the report titled
"Updated Approach to the Usage of Credit Estimates in Rated
Transactions" published in October 2009.
4) Long-dated assets: Moody's notes that the underlying portfolio
includes a number of investments in securities that mature after
the maturity date of the notes. As of February 2013, reference
securities that mature after the maturity date of the notes
currently make up approximately 5.2% of the underlying performing
reference portfolio. These investments potentially expose the
notes to market risk in the event of liquidation at the time of
the notes' maturity.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.
Under this methodology, Moody's used its Binomial Expansion
Technique, whereby the pool is represented by independent
identical assets, the number of which is being determined by the
diversity score of the portfolio. The default and recovery
properties of the collateral pool are incorporated in a cash flow
model where the default probabilities are subject to stresses as
a function of the target rating of each CLO liability being
reviewed. The default probability range is derived from the
credit quality of the collateral pool, and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority and jurisdiction of the assets in the collateral pool.
The cash flow model used for this transaction is Moody's EMEA
Cash-Flow model.
This model was used to represent 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 binomial 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. Therefore,
Moody's analysis encompasses the assessment of stressed
scenarios.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
WHITE TOWER: Fitch Lowers Ratings on Two Note Classes to 'Csf'
--------------------------------------------------------------
Fitch Ratings has downgraded White Tower Europe 2007-1's class A,
B, C and D notes and affirmed the class E notes due 2015, as
follows:
EUR36.6m class A (XS0300055620): downgraded to 'Bsf' from
'Asf'; Outlook Negative
EUR19.7m class B (XS0300056198): downgraded to 'CCsf' from
'Bsf'; Recovery Estimate (RE) 10%
EUR19.5m class C (XS0300056271): downgraded to 'Csf' from
'CCsf'; RE0%
EUR19.4m class D (XS0300056354): downgraded to 'Csf' from
'CCsf'; RE0%
EUR11.7m class E (XS0300056511): affirmed at 'Csf'; RE0%
Key Rating Drivers
The downgrades reflect the continued falls in reported market
value (MV) as well as concerns over the future leasing profile of
the collateral supporting the one remaining loan, the Spanish
Loan (Heron City).
Heron City, a retail and leisure center, was revalued in December
2012 at EUR36.9 million, resulting in a market value decline of
40% from the December 2011 valuation and 66% since transaction
close. The current reported loan-to-value ratio of 290%, suggests
that a loss could possibly be attributable to all note classes,
after costs of enforcement.
A number of factors have contributed to the fall in value,
including: further lease expiries (resulting in an aggregate
rental loss of EUR500,000) and no significant new lettings,
tenant rent concessions and arrears, a decline in visitor
numbers, a lack of surety about the possibility of a new
supermarket lease, and a possible future reduction in rent for
the cinema operator (whose lease is estimated to be 60% above
market)
The center targets a young demographic, making it particularly
exposed to the very high levels of youth unemployment in Spain.
The level of occupancy has continued to decline to 76.1% from
84.5% at the last rating action and rental arrears are reported
at EUR1.3 million from a number of the smaller tenants.
In conjunction with these factors, continued poor market
conditions for the Spanish retail occupier and investment markets
and competition from more successful nearby centers, are likely
to be contributing to the falling sales and footfall. The latest
valuation indicates that the secondary nature of the asset will
affect its desirability to investors. In particular, the valuer
highlights that this center would no longer be a desirable
investment for institutional investors, with purchasers being
more likely to be opportunistic, who would expect higher returns.
This has led the valuer to markedly increase the exit yield and
discount rate used in the valuation, contributing to the fall in
value.
Fitch believes that the current value of the center remains
highly volatile and is greatly dependent on the outcome of the
rental disputes with various tenants. However, successfully
completing the addition of the supermarket would go some way to
stabilizing the center's cash flow. In conjunction with the wider
market conditions in Spain, this makes determining an accurate MV
very difficult.
The Heron City loan is secured by a single leisure-oriented
shopping center located on the outskirts of Barcelona. The
property's largest tenants are Cinesa, a large multiplex cinema
operator, and Virgin Active, an international gym operator, which
together account for 58% of current passing rent. The loan passed
its scheduled maturity date in December 2011 and the borrower has
negotiated with the special servicer for a six-month renewable
standstill agreement. The conditions precedents, required for the
seconds standstill period, which ends in September 2013, were
met.
However, uncertainty remains surrounding the successful
conversion and leasing of the bowling alley to a supermarket
operator. The second standstill period, which was planned to
start in January 2013, is contingent upon planning authorizations
and lease completion.
Rating Sensitivities
Fitch expects significant losses on all of the note classes
except the class A notes. If the borrower is able to negotiate
more time to actively manage the center, then it is possible that
some stabilization could occur prior to final maturity in 2015.
This could result in a full recovery for the class A notes and
increased recoveries for the class B notes. However, a further
worsening of the Spanish retail market in general, or failing to
replace the bowling alley with a supermarket, could result in a
further decline in value.
* IRELAND: Business Collapses Slow Down in 2013
-----------------------------------------------
Herald.ie reports that the number of business failures in Ireland
has slowed down in 2013 with 140 companies collapsing in
February.
A total of 99 went into liquidation, 39 entered receivership, and
an examiner was appointed to two companies in February, Herald.ie
discloses.
However, the latest monthly statistics suggest the rate of
business failures is slowing on a sustained basis, the report
says. According to Herald.ie, figures from business intelligence
service Vision-net showed that the number of companies going out
of business in February fell 32% within the year. This follows on
from a 21% annualized drop in the number of businesses failing in
January.
Herald.ie adds that Vision-net managing director Christine Cullen
said the survey identifies the possibility of recovery in the
economy.
=========
I T A L Y
=========
AEROPORTI DI ROMA: Moody's Upgrades Debt Rating From 'Ba2'
----------------------------------------------------------
Moody's Investors Service upgraded the debt ratings of Aeroporti
di Roma S.p.A. and its financing affiliate, Romulus Finance
s.r.l., by two notches to Baa3 from Ba2. The outlook on the
ratings is stable. This concludes the ratings review initiated by
Moody's on January 8, 2013.
Ratings Rationale:
The rating action follows the finalization of the regulatory
settlement applicable to ADR, which has introduced a more
supportive and transparent framework of economic regulation,
providing greater visibility in respect of the company's rights
and obligations under the concession agreement to operate the
Rome airport system for the whole concession period (i.e. to
2044), and has implemented a new tariff-setting mechanism.
However, Moody's also notes that the new regulatory framework
represents a significant change from the past and will result in
a material step-up in ADR's revenues. Hence its robustness
remains untested.
As a result of the implementation of the regulatory settlement
and the associated introduction of a more transparent tariff
framework, ADR is expected to increase its aviation tariffs
effective 9 March 2013 by approximately EUR8 to above EUR25 per
passenger on average, with future tariff increases implemented
from 2014 depending on ADR's finalized investments. This
represents a substantial increase from current levels.
These tariff increases are critical to ADR's ability to carry out
its capital expenditure (capex) plan, which includes targeted
expenditure of EUR12 billion over the period 2013-44 (of which
EUR3.1 billion has been earmarked for 2013-22 and, more
specifically, EUR1.2 billion for the 2013-16 first regulatory
sub-period) on major improvements such as the expansion of
boarding areas, as well as a fourth runway and a new terminal at
Fiumicino Airport, the main airport that serves Rome. However,
Moody's also notes ADR's relatively limited track record and
expertise in respect of the implementation of such a complex
investment plan, which could result in some execution risk.
The upgrade of ADR's rating also reflects Moody's expectation
that the improved clarity introduced by the regulatory settlement
will support the company's funding and refinancing strategy. This
is particularly critical in light of the magnitude of ADR's
refinancing needs in 2015 and the additional funding requirements
associated with the company's capex plan. More generally, Moody's
cautions that the implementation of a satisfactory plan to
address future debt maturities and additional funding needs
remains critical in the context of ADR's rating positioning.
The stable outlook on the ratings reflects Moody's view that the
increased visibility resulting from the implementation of the
regulatory framework will support ADR's refinancing strategy.
Nevertheless, it remains to be seen whether there will be any
substantial changes to the terms and conditions of ADR's
financing arrangements over the medium term.
Moody's notes the announcement, on March 8, 2013, related to the
merger between ADR's holding company Gemina (not rated) and the
largest Italian toll roads operator Atlantia (Baa1 negative).
Should the transaction be finalized, it should be credit positive
for ADR as (1) it could mitigate the execution risk associated
with ADR's planned investments, given Atlantia's expertise in
this field, and (2) could support ADR's refinancing strategy, in
light of the size and financial strength of the Atlantia group.
The extent of this impact will need to be assessed in the light
of the wider group's financing and debt leverage strategy for ADR
post transaction and the consistent application of ADR's
regulatory settlement.
The ratings affected are:
Aeroporti di Roma S.p.A.:
- Senior secured bank loan facility -- upgraded to Baa3, stable
outlook
Romulus Finance s.r.l.:
- EUR175 million of senior secured floating-rate notes due in
2015 -- upgraded to Baa3, stable outlook
- EUR200 million of senior secured floating-rate notes due in
2015 -- upgraded to Baa3, stable outlook
- GBP215 million of 5.441% senior secured bonds due in 2023 --
upgraded to Baa3, stable outlook
What Could Change The Rating Up/Down
Upward rating pressure could develop if (1) there was evidence of
the regulatory and tariff-setting framework applicable to ADR
being consistently applied over a longer period of time; and (2)
ADR successfully refinanced its upcoming debt maturities and
delivered a satisfactory plan to address its funding needs within
the next 12-18 months.
Conversely, downward rating pressure could develop as a result of
(1) inconsistencies in the implementation of the regulatory and
tariff-setting framework applicable to ADR, e.g. as a result of
political interference and/or discriminatory measures that would
negatively affect the company's business and financial risk
profile; (2) ADR failing to implement a satisfactory plan to
address its upcoming debt maturities and funding needs within the
next 12-18 months; and (3) material negative pressures on the
Italian macroeconomic environment and sovereign rating (currently
Baa2 negative).
The principal methodology used in rating ADR was "Operational
Airports Outside of the United States", published May 2008.
Aeroporti di Roma has a concession to operate the Rome airport
system until 2044. For the nine months to September 2012, ADR
reported total revenues of EUR474 million.
SAFILO GROUP: S&P Raises Long-Term Corp. Credit Rating to 'B'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on Italy-based eyewear manufacturer
Safilo Group SpA to 'B' from 'B-'. The outlook is positive.
At the same time, S&P raised its issue rating on the group's
second-lien notes to 'B-' from 'CCC+'. The recovery rating of
'5' on the second-lien notes remains unchanged, indicating S&P's
expectation of modest (10%-30%) recovery for noteholders in the
event of a payment default.
S&P removed all ratings from CreditWatch, where it placed them
with developing implications on Feb. 21, 2013.
The upgrade reflects S&P's view that Safilo's liquidity has
improved owing to two additional revolving credit facilities
(RCFs), and S&P's anticipation that it will maintain credit
metrics in 2013 in line with 2012 levels.
Safilo announced on March 6, 2013, that it had signed two new
RCFs totaling EUR100 million and maturing on June 30, 2015.
These RCFs are in addition to Safilo's existing EUR200 million
RCF due on the same date and of which EUR135 million was undrawn
at Dec. 31, 2012. Consequently, S&P believes that Safilo will be
able to repay its outstanding EUR128 million notes at maturity on
May 15, 2013, and have enough liquidity thereafter to fund its
operations. This takes into account the group's EUR59 million in
cash balances at end-2012 and its positive cash flow generation.
The positive outlook reflects S&P's view that, absent
releveraging, S&P could raise the rating if Safilo puts in place
a longer-term financing structure within the next 12 months.
Safilo has addressed its imminent liquidity issue with the two
recent additional revolving credit facilities. However, further
rating upside would hinge on Safilo addressing its medium-term
debt maturities -- primarily EUR300 million of RCFs, of which
EUR235 million undrawn, all maturing on June 30, 2015 -- in a
timely manner. S&P takes into account in its analysis Safilo's
track record of debt restructuring, which, in S&P's opinion, may
lead to a lengthier refinancing than otherwise anticipated for a
company with similar operating performance and credit metrics.
Conversely, S&P could revise the outlook to stable if Safilo did
not put in place new refinancing ahead of its June 2015
maturities. S&P could also revise the outlook to stable if
Safilo's performance weakened, leading to credit metrics
deteriorating into what S&P considers in line with financial risk
in S&P's "highly leveraged" category, or if free cash flow turned
negative.
* ITALY: Moody's Notes Positive Trend for Corporate Bond Issues
---------------------------------------------------------------
With banks continuing to restrict lending, the positive bond
issuance trend for Italian corporates is set to continue, says
Moody's in its latest report on the Italian corporate bond market
entitled "More Italian Corporates Turn To Bond Issuance as Bank
Lending Remains Low.".
"We expect the positive trend in bond issuance among Italian
corporates to continue because they are diversifying their
funding sources given the likelihood the country's banks will
remain more selective when lending," says Paolo Leschiutta, a
Vice President - Senior Credit Officer in Moody's Corporate
Finance Group and author of the report. "We also expect continued
investor appetite for corporate bonds compared to financial
institution ones, which are perceived as more directly correlated
with sovereign risk."
Italian corporate bond issuance set a record in 2012, with a
total of EUR29.8 billion worth of bonds issued, up 98% in value
terms and almost double the number of issuances from 2011. The
syndicated loan market was largely flat in terms of value but the
number of transactions fell significantly. Despite some Italian
banks recently regaining access to funding sources, Moody's
believes that bonds will remain popular because the lending risk
has re-priced since the credit crunch.
Moody's expects small to medium enterprises in Italy to benefit
from the growing bond market, thanks to a government scheme that
eases access to the capital markets.
Refinancing and investment needs, together with ongoing stress in
the banking system, will fuel further bond market growth. There
are a number of rated and unrated companies with upcoming loan
and bond maturities and Moody's expects some of these loans to be
replaced with bonds. Italian corporates have approximately
US$36.9 billion of bank debt and US$49.5 billion of bonds
maturing between 2013 and 2015, almost double that of the
preceding three years.
Growing interest in Italian issuers from international investors
will also benefit new issuers. However, smaller companies with
modest international recognition or family-owned businesses might
experience difficulties in accessing the bond market for the
first time and very small companies will remain excluded from
international bond markets. Moody's expects large, publicly rated
and well-known issuers to continue to enjoy good access to the
capital markets.
However, political and macroeconomic uncertainties could
constrain growth in Italian corporate bond issuance. Developments
in the euro area sovereign and banking crises could also be
drivers of future bond issuance.
===================
L U X E M B O U R G
===================
GRUPO ACP: Commences Solicitation of Consents From 9% Noteholders
-----------------------------------------------------------------
Grupo ACP Inversiones y Desarrollo on March 8 disclosed that it
has commenced a solicitation of consents from holders of record
as of March 7, 2013 of its outstanding US$85.0 million aggregate
principal amount of 9.00% Notes due 2021 (ISIN No. XS0611909291,
Common Code: 061190929) for certain amendments to the Indenture,
dated as of March 30, 2011, by and among Grupo ACP, as issuer,
Citibank, N.A., London Branch, as trustee, registrar and paying
agent, and Dexia Banque Internationale a Luxembourg, societe
anonyme, as Luxembourg transfer agent and paying agent, governing
the Notes.
The purpose of the Consent Solicitation is to obtain consents to
the Proposed Amendments in order to provide Grupo ACP with a more
flexible capital structure to fund the group's expansion plans in
the region by creating a new corporate holding company "Grupo ACP
Corp. S.A.A".
Grupo ACP is soliciting consents to amend the Indenture (1) to
modify the Event of Default relating to the obligation of Grupo
ACP to maintain a majority of the outstanding Capital Stock of
any Essential Asset (as defined in the Indenture) to permit the
holding of any Essential Asset directly or indirectly, and (2) to
amend the definition of Net Financial Debt, in order to sum the
unconsolidated debt of Grupo ACP Corp. S.A.A. with the
unconsolidated debt of Grupo ACP for the purpose of calculating
the aggregate amount of debt in the "Maximun Debt Ratio"
covenant, as defined in the Indenture.
The Proposed Amendments require the consent of Holders as of the
Record Date of a majority in aggregate principal amount of the
Notes outstanding. Grupo ACP will pay a consent fee of US$1.00
in cash for each US$1,000 principal amount of Notes for which
consents are properly delivered and not revoked on or prior to
5:00 p.m., Central Europe time, on March 21, 2013, unless it is
extended by Grupo ACP, in its sole discretion.
The Consent Solicitation is conditioned upon receipt of consents
from holders of at least a majority in aggregate principal amount
of the outstanding Notes. Upon receipt of Requisite Consents,
Grupo ACP and the trustee under the Indenture will execute a
supplemental indenture giving effect to the Proposed Amendments,
which will become operative upon payment of the consent fee
immediately prior to the closing of the Consent Solicitation.
The terms and conditions of the Consent Solicitation are
described in a consent solicitation statement dated March 8,
2013, which is being sent to all Holders of record as of 5:00
p.m. Central Europe time, on March 7, 2013. Any questions
regarding the Consent Solicitation or requests for assistance in
delivering Consents or requests for additional copies of the
Consent Solicitation Statement or other related documents should
be directed to Bondholder Communications Group, LLC., the
information and tabulation agent, at: +44 (0) 20 7382-4580
(London) or +1 (212) 809-2663 (New York); or to Citigroup Global
Markets Inc., the Solicitation Agent at (800) 558-3745 (U.S. toll
free) or (212) 723-6108 (collect), Attn: Liability Management
Group.
SUNRISE COMMUNICATIONS: Fitch Affirms 'BB-' Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has affirmed Sunrise Communications Holdings S.A.'s
Long-term Issuer Default Rating (IDR) at 'BB-' with a Stable
Outlook and senior notes at 'B'. The agency has also affirmed the
senior secured fixed and floating rate notes issued by Sunrise
Communications International S.A and the senior secured RCF
borrowed by Sunrise Communications AG at 'BB'.
Fitch has assigned Mobile Challenger Intermediate Group S.A.
(HoldCo), Sunrise's parent company and the issuer of the PIK
Notes, an IDR of 'B+' with a Stable Outlook. Fitch has also
assigned a 'B-(EXP)/RR6' instrument rating to the planned
issuance of the EUR500 million equivalent PIK notes. The final
instrument rating will be contingent on the receipt of the final
documents conforming materially to the preliminary documentation.
The EUR500 million equivalent PIK notes will be issued outside of
Sunrise's restricted group and are therefore not expected to have
impact on Sunrise's financial profile. The notes have a maturity
of six years and the proceeds will be used to repay part of the
issuer's existing preferred equity certificates (PECs). The PIK
notes will represent a senior obligation of the issuer and will
not benefit from any guarantees or security over the restricted
group. No cross-default provision regarding these PIK notes is
included in the restricted group's financing documentation. A
pay-if-you-can option is envisaged under the notes indentures
whereby the issuer may defer interest payments under certain
conditions, with cash interest payments on the notes being
subject to the restricted payment basket available under the
restricted group's financing documentation.
HoldCo's IDR reflects its higher default risk relative to
Sunrise. This is largely attributable to the higher degree of
financial risk of the latter due to its subordinated nature
within the holding structure and significant limitations (e.g.
restricted payments) to upstream payments from the restricted
group. According to Fitch's "Parent and Subsidiary Rating
Linkage" criteria, dated August 8, 2012, and Fitch's Special
Report on the "Treatment of Junior Corporate Debt in Europe"
dated April 8, 2011, both available at www.fitchratings.com,
Fitch notes that although strategic ties exist between HoldCo and
the restricted group, HoldCo's IDR could be at best one notch
lower than the restricted group's IDR. The one-notch differential
between the IDRs of the two entities reflects the default risk of
HoldCo, which is linked to the operating performance of the
restricted group.
The expected instrument rating on the PIK notes reflects the
deeply subordinated nature of these instruments relative to
Sunrise's liabilities as well as the absence of direct claims
over the restricted group other than a residual equity claim in
Sunrise. Fitch believes that under a distressed scenario, this
feature is likely to result in poor recovery ratings of 'RR6' in
the range of 0%-10%.
Key Rating Drivers
Strong Operating Performance To Slow Down
The affirmation of Sunrise's IDR reflects the company's strong
market position in the Swiss telecommunications market as well as
its positive performance throughout 2012, with revenues and
EBITDA in line with Fitch's expectations despite material price
cuts implemented in Q312. Fitch expects Sunrise's top-line
performance in the mobile business to slow down in 2013 as mobile
customers migrate to more convenient price plans due to the
recent tariff reductions. However, this is not expected to have a
material impact on EBITDA due to the significant cost
restructuring measures implemented by the company in Q412 as well
as ongoing subscriber growth within the higher ARPU/AMPU post-
paid mobile segment.
Free Cash Flow (FCF) Generation Despite Increasing Capex
Fitch believes FCF generation before spectrum-related payments
will remain strong over the next 12-18 months, underpinned by
relatively stable EBITDA despite a significant increase in capex.
This will be mainly related to the upgrade of the mobile network
to LTE as well as further roll-out of the existing UMTS network.
Downside pressure on cash flow is also likely to be exerted by
upstream payments out of the restricted group.
Challenging Competitive Environment
The ratings are constrained by Fitch's expectation of a more
aggressive competitive environment following Swisscom's and
Sunrise's mobile tariff reductions implemented in 2012, as this
could possibly trigger a reaction from third-placed Orange,
despite its different market positioning within the higher ARPU
segment. However, Fitch believes Sunrise's fixed line business
could be more affected by increased competition due to its weaker
business profile and the presence of aggressive competitors such
as Cablecom and Swisscom, which are both capable of providing a
competitive and comprehensive commercial offer. While the recent
successful introduction of IPTV and the future roll-out of FTTH
will benefit Sunrise's fixed line business by complementing its
commercial offer, in our view this will not be sufficient to
mitigate its vulnerability to increasing competition.
Leveraged Capital Structure, Slower De-Leveraging Profile
The ratings are constrained by the company's leveraged capital
structure -- with funds from operations (FFO) adjusted net
leverage of 4.4x as of December 2012 -- resulting in large cash
interest payments, as well as by a slower de-leveraging profile
than previously anticipated due to the expectation of a slow-down
in cash flow generation.
Treatment of Junior Debt
In its assessment of the capital structure, Fitch has not
included within its leverage metrics the liabilities arising from
the issuance of PECs issued by Sunrise, or the PECs and new PIK
facility issued by HoldCo.
RATING SENSITIVITIES (Sunrise)
Positive: Future developments that could lead to positive rating
actions include:
- FFO net adjusted leverage to fall well below 4.0x
- FFO interest cover above 4.0x
Negative: Future developments that could lead to negative rating
action include:
- Failure by the company to reduce leverage below 4.5x on FFO
adjusted net basis over the next one to two years
- FFO interest cover below 2.75x
RATING SENSITIVITIES (HoldCo)
Positive: Future developments that could lead to positive rating
actions include:
- Positive rating actions on Sunrise
Negative: Future developments that could lead to negative rating
action include:
- Negative rating actions on Sunrise
- An increase in the notching differential from Sunrise's IDR is
likely to be driven by an increase in leverage of the HoldCo
or the issuance of new cash pay debt with no PIK option.
=============
M O L D O V A
=============
* MOLDOVA: Sees Negative Outlook for Poultry Sector
---------------------------------------------------
WorldPoultry reports that a negative outlook on the poultry
industry development over the coming months has been recently
published by the Ministry of Agriculture of the Republic of
Moldova.
The ministry's report shows that in March to April of this year,
approximately 60% of poultry farms in the country will stop
operating and about 15,000 people now employed in the industry
will lose their jobs, WorldPoultry discloses.
According to WorldPoultry, government experts stated that as a
result, estimated monthly losses will be around MDL250 million
(US$19.9 million). The report says that these losses will occur
due to underpayment of payroll tax, WorldPoultry notes.
Under the current competitive market conditions only 40% of
manufacturers could continue their work, while these producers
account for a little more than 50% of the total volume of poultry
production in Moldova, WorldPoultry discloses. The crisis of
poultry production in the country followed the rise of feed
prices, which led to domestic producers competing with cheap
imports at current poultry sales prices, WorldPoultry relates.
Several agricultural producers already appealed to the Ministry
to prevent the catastrophe in the market and help local producers
deal with the crisis, WorldPoultry notes. However, according to
representatives of the Ministry, the government today does not
have sufficient available funds necessary to support the poultry
industry, WorldPoultry says.
=====================
N E T H E R L A N D S
=====================
UCL RAIL: Moody's Assigns 'Ba1' CFR; Outlook Stable
---------------------------------------------------
Moody's Investors Service assigned a Ba1 corporate family rating
and Ba1-PD probability of default rating to UCL Rail B.V. The
outlook on the ratings is stable. This is the first time Moody's
has assigned a rating to UCL Rail B.V.
Ratings Rationale:
The Ba1 CFR reflects UCL Rail's (1) strong business profile due
to its ownership of Russia's largest railcar fleet of 210,000
units, diversified by type of railcars; (2) diversified customer
base comprising more than 5,000 clients, including Russia's
largest industrial groups, with the group's five largest
customers generating a moderate 20% of revenues; (3) high
operating margin; (4) conservative financial policy and robust
financial metrics projected for the next 12-18 months, with
debt/EBITDA trending below 2.0x, retained cash flow (RCF)/net
debt above 40% (compared with 2.5x and 38% as of June 2012,
respectively) and solid free cash flow (FCF) generation (all
metrics are as adjusted by Moody's); and (5) strong liquidity and
low foreign currency risk.
The rating also factors in UCL Rail's (1) highly concentrated
ownership, which creates the risk of the group making changes to
its strategy and development plans, along with the risk of it
revising its conservative financial policy and increasing its
dividend payouts; (2) lack of track record of operating in its
current form (i.e., following the acquisition of Freight One in
late 2011), and evolving corporate structure; (3) the fairly high
average age of the group's railcar fleet, at 20 years, with
nearly half of the fleet requiring capital repairs in 2013-15 to
extend its useful life; and (4) overall exposure to an emerging
market operating environment with a less developed regulatory,
political and legal framework.
The stable outlook reflects Moody's expectation that UCL Rail
will (1) reduce its debt/EBITDA to below 2.0x (as adjusted by
Moody's) on a sustainable basis over the next 12-18 months; (2)
maintain its solid liquidity and strong market position; and (3)
continue to demonstrate a strong operating performance.
What Could Change The Rating Up/Down
Moody's could consider UCL Rail's ratings for an upgrade if the
group reduces its debt/EBITDA to below 1.5x (as adjusted by
Moody's) on a sustainable basis, while (1) continuing to generate
solidly positive FCF; (2) maintaining solid liquidity; and (3)
demonstrating a strong operating performance.
Conversely, negative pressure could be exerted on the ratings if
debt/EBITDA remains above 2.0x (as adjusted by Moody's) on a
sustained basis, or there is a material deterioration in UCL
Rail's liquidity, operating performance or market position.
Principal Methodology
UCL Rail B.V.'s ratings were assigned by evaluating factors that
Moody's considers relevant to the credit profile of the issuer,
such as the company's (i) business risk and competitive position
compared with others within the industry; (ii) capital structure
and financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside UCL Rail B.V.'s core
industry and believes UCL Rail B.V.'s ratings are comparable to
those of other issuers with similar credit risk.
UCL Rail is the largest private freight rail transportation group
operating in Russia. The group's key operating entities are (1)
Freight One JSC, which is Russia's major freight railcar
operator, previously owned by Russian Railways JSC (Baa1 stable);
and (2) Independent Transport Company LLC (ITC), which is a
former captive railcar operator of NLMK (Baa3 stable). UCL Rail
is ultimately controlled by Mr. Vladimir Lisin. Moody's estimates
the group to have generated revenue of more than $4 billion in
2012.
=========
S P A I N
=========
TDA SA: Fitch Affirms 'BB' Ratings on Two Certificate Classes
-------------------------------------------------------------
Fitch Ratings has taken rating actions on TDA SA Nostra Empresas
1 and 2 FTA as follows:
TDA SA Nostra Empresas 1
Series A (ISIN: ES0377969003): affirmed at 'Asf', off Rating
Watch Positive (RWP), Outlook Stable
Series B (ISIN: ES0377969011): affirmed at 'Asf'; off RWP,
Outlook Stable
Series C (ISIN:ES0377969029): 'BB+sf'; Rating Watch revised to
Negative from Positive
Series D (ISIN: ES0377969037): 'BB+sf'; Rating Watch revised to
Negative from Positive
Series E (ISIN: ES0377969045): affirmed at 'BBsf'; Outlook
Stable
TDA SA Nostra Empresas 2
Series A (ISIN: ES0377957008): affirmed at 'Asf', off RWP,
Outlook Stable
Series B (ISIN: ES0377957016): affirmed at 'Asf'; off RWP,
Outlook Stable
Series C (ISIN: ES0377957032): 'BB+sf', Rating Watch revised to
Negative from Positive
Series D (ISIN: ES0377957024): affirmed at 'BBsf', Outlook
Stable
Key Rating Drivers
The rating actions reflect the notes' material exposure to Banco
Mare Nostrum (BMN; 'BB+'/RWN/'B') which continues to hold the
reserve fund. The expected remedial actions have been only
partially implemented. While the issuer account bank has been
transferred to BNP Paribas Securities Services
('A+'/Stable/'F1+'), the reserve fund remains in an account in
the name of BMN. Given the significant size of the reserve fund,
this results in counterparty risk. To address this counterparty
risk exposure for ratings above BMN's rating, the agency
discounted the reserve fund for the credit analysis.
The affirmation of the class A and B notes reflect their robust
levels of credit enhancement, which are sufficient to support the
ratings without the reserve fund. However, discounting the
reserve means the notes lack liquidity to address any payment
interruption risk (for example servicer disruption) and as a
result the ratings are capped at 'Asf'.
The ratings of Empresas 1's class C and D notes and Empresas 2's
class C notes are now capped at BMN's rating as a result of the
dependence on the reserve fund providing most of the credit
enhancement to these notes. The revision of the Rating Watch to
Negative from Positive results from the ratings cap to BMN, which
is also on RWN.
Fitch notes that to date, performance has been good overall
although the transactions' arrears performance has been volatile
during the past year. However, there has been little migration of
the delinquencies into defaults so far. Current defaults
represent 0.3% and 0.1% of Empresas 1 and 2's balances,
respectively.
Both portfolios are concentrated at regional, industry and
borrowers levels. More than 95% of the pools' assets are in
Balearic Islands. Empresas 1's exposure to the largest industry,
lodging and restaurants, stands at 44% while the top one and top
ten obligors account for 5% and 42%, respectively. For Empresas
2, the largest industry, real estate and construction, represent
27% of the outstanding balance while the top one and top ten
obligors account for 3% and 14%, respectively. Fitch has
addressed these concentration levels in the analysis.
Ratings Sensitivities
As part of its analysis, the agency considered the sensitivity of
the notes' ratings to the stresses on default and recovery rates
but the stresses did not have a material impact on the notes'
ratings.
===========
S W E D E N
===========
KF: Faces Financial Woes; Future Uncertain
------------------------------------------
Radio Sweden reports that the Swedish Cooperative Union KF, which
owns Coop, is struggling to curb a SEK1 billion debt (more than
EUR125 million).
According to Radio Sweden, several industry analysts are warning
that the problems are so big that they doubt that it is possible
to balance the books.
Professor Ulf Johansson at the School of Economics in Lund doubts
the future existence of KF, Radio Sweden discloses. And he
wonders how long the banks think it is viable to run a loss-
making business, Radio Sweden notes.
KF's decrease in revenues has been going on for years, Radio
Sweden states. But in the last two years, the situation worsened
with the Co-Op reporting one billion in annual losses, Radio
Sweden relates. This despite the fact that KF closed several
stores and sold its pharmacy chain and some properties, Radio
Sweden says.
=====================
S W I T Z E R L A N D
=====================
SUNRISE: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook on
Swiss telecommunications operator Sunrise Communications Holdings
AG (Sunrise) to negative from stable. At the same time, S&P
affirmed its 'B+' long-term corporate credit rating on Sunrise.
S&P assigned a 'B-' issue rating to the proposed EUR500 million
(equivalent) subordinated payment-in-kind (PIK) toggle notes due
2019, which will be issued by Sunrise's holding company Mobile
Challenger Intermediate Group S.A. (MCIG).
S&P affirmed its 'BB-' issue rating on the senior secured notes,
issued by subsidiary Sunrise Communications International S.A.
The recovery rating on these notes is unchanged at '2',
indicating S&P's expectation of substantial (70%-90%) recovery in
the event of a payment default.
S&P also affirmed its 'B-' issue rating on Sunrise's subordinated
bonds. The recovery rating on these bonds is unchanged at '6',
indicating S&P's expectation of negligible (0-10%) recovery in
the event of a payment default.
The outlook revision reflects S&P's view that Sunrise's
refinancing of the preferred equity certificates (PECs) held by
its private equity sponsor, CVC, with the proposed issue of PIK
toggle notes, weakens the group's cash-interest leverage ratios
and free operating cash flow generation. Pro forma the
completion of the refinancing, S&P considers that the group's
previous headroom within the rating has been entirely consumed
and that a softening in EBITDA generation in the next two years
could result in less-than-adequate credit metrics for the current
rating.
On March 11, 2013, MCIG announced plans to issue EUR500 million
(equivalent) in PIK toggle notes, denominated in euros or Swiss
francs, to repay the PECs held by CVC.
Pro forma completion of the refinancing at year-end 2012, S&P
calculates that the group's Standard & Poor's adjusted debt to
EBITDA ratio, excluding the PECs but including the proposed PIK
toggle notes, will increase from about 4.7x to about 5.6x. In
addition, S&P estimates that, depending on the pricing of the
proposed PIK toggle notes and assuming cash interest payments on
these notes, the group's free cash flow generation will be
reduced by about Swiss franc CHF50 million-CHF60 million and that
the group's cash interest coverage ratio will decline to the
lower end of the 2.5x-3.0x range from more than 3.0x in 2012.
The negative outlook reflects the possibility of a downgrade in
the next 12 months if the group's credit metrics do not improve
following the proposed recapitalization through free cash flow
generation and at least stable EBITDA. In particular, S&P could
lower the rating if competition in the Swiss mobile market
resulted in lower revenues and EBITDA, which could impede the
group from reducing its Standard & Poor's adjusted debt to EBITDA
ratio (including the PIK toggle notes, but excluding the PECs and
convertible PECs at Sunrise's holding companies) below 5.5x
during 2013. In addition, a cash interest cover ratio (including
PIK toggle interest) below 2.5x could result in a downgrade.
S&P could revise the outlook to stable if Sunrise modestly grew
its revenues and EBITDA in 2013 and beyond and at the same time
gradually improved its credit ratios through free cash flow
generation and debt reduction.
=============
U K R A I N E
=============
SSB No .1: Moody's Assigns B3 Rating to US$-Denominated LPNs
------------------------------------------------------------
Moody's Investors Service assigned a B3 foreign-currency debt
rating to the US dollar-denominated senior unsecured loan
participation notes (LPNs) to be issued by SSB No .1 PLC, a UK-
based special purpose vehicle, for the purpose of financing a
loan to Savings Bank of Ukraine. The terms of the notes -- such
as amount, coupon and tenor -- will be determined by market
conditions. The outlook on the rating is negative.
The loan supporting the notes issued by the SPV ranks pari passu
with other senior unsecured obligations of Savings Bank of
Ukraine.
Ratings Rationale:
The B3 rating assigned to the LPNs is based on the credit quality
of Savings Bank of Ukraine, the ultimate obligor under the notes.
Savings Bank of Ukraine's creditworthiness is constrained
primarily by (1) the bank's exposure to Ukraine's weak and
volatile economic environment, including Ukrainian state-owned
companies and sovereign debt; and (2) very high single-party loan
concentrations and high level of related-party lending. At the
same time, the rating is supported by the bank's market position,
which is underpinned by the largest branch network in the
country, and high regulatory capitalization.
What Could Change the Rating - Up / Down
There is limited upside potential for Savings Bank of Ukraine's
ratings in the short term (12 to 18 months), captured by the
negative outlook for the ratings and low sovereign rating of
Ukraine at B3, which constrains upward development of the bank's
financial strength rating (BFSR) and thus debt and deposit
ratings given high linkages between sovereign creditworthiness
and the bank's credit profile.
Any deterioration in Savings Bank of Ukraine's operating
environment and/or a weakening of its standalone financial
fundamentals could exert downwards pressure on the ratings.
The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June
2012.
Headquartered in Kyiv, Ukraine, Savings Bank of Ukraine reported
total assets of UAH86 billion (US$1.8 billion) in accordance with
unaudited local GAAP accounts as at year-end 2012.
===========================
U N I T E D K I N G D O M
===========================
AFREN PLC: S&P Puts 'B' Corp. Credit Rating on Watch Positive
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'B'
longterm corporate credit and issue ratings on U.K.-headquartered
oil and gas exploration and production company Afren PLC on
CreditWatch with positive implications.
The CreditWatch placement reflects S&P's understanding that Afren
will likely post strong full-year 2012 operating results, which
are better than S&P had previously anticipated, based on recently
published operational information. S&P considers that these
strong results are due to a substantial net production increase
to about 43,000 barrels of oil equivalent per day (boepd) (from
19,000 in 2011), combined with a strong realized average oil
price of US$107 per barrel. As a result, S&P anticipates that
Standard & Poor's-adjusted debt to EBITDA will have declined to
less than 1x as of Dec. 31, 2012, based on preliminary estimates,
which is better than S&P's previous forecast of more than 1.5x.
In S&P's view, this should result in a substantial improvement in
funds from operations (FFO) to debt of more than 100% at the end
of 2012, up from 44.7% in 2011.
These credit metrics are numerically more in line with S&P's
minimal financial risk profile assessment. However, S&P assesses
Afren's financial risk profile as "aggressive" based on S&P's
view of the company's ongoing acquisitive strategy, the potential
volatility of its cash flows -- and the negative nature of some
of these -- and its reliance on the Ebok field. That said, S&P
could reassess the company's financial risk profile as
"significant" from "aggressive" if S&P sees the above risk
decline in the context of a stronger operational track record.
S&P's current base-case scenario assumes that debt to EBITDA will
remain relatively stable, at about 1x in 2013.
S&P believes that Afren will sustain high production levels of
between 40,000 and 47,000 boepd from its existing assets, located
mostly in Nigeria, and will achieve a realized average oil price
of no less than US$95 per barrel in 2013. This could translate
into robust credit metrics for the ratings if Afren manages to
fund most of its large capital expenditure (capex) and other
investing and financing needs using its existing cash flows.
Capex amounted to US$522 million in 2012, which was higher than
S&P's previous forecast of about US$450 million.
S&P intends to resolve the CreditWatch placement after meeting
with management and receiving more in-depth information on its
acquisition strategy, its ability to deliver on production
targets, its capex plans, and its financial policies.
S&P could raise the ratings by one notch if it believes that the
above factors can be tackled adequately. An upgrade would also
likely depend on Afren's continued ability to manage its
liquidity in line with an "adequate" assessment.
S&P could affirm the rating if it comes to believe that
acquisition and operational risks will remain high over the next
two years in the absence of any offsetting factors to S&P's
assessment of negative free operating cash flow in 2013-2014.
CJ DEIGHTON: Set to Go Into Voluntary Liquidation
-------------------------------------------------
CJ Deighton and Co Ltd, an established Westbury-based building
firm, is set to go into voluntary liquidation.
The company has ceased to trade following a meeting held with
corporate recovery experts Begbies Traynor, based in Bath.
Begbies Traynor partner Neil Vinnicombe --
neil.vinnicombe@begbies-traynor.com -- has been advising the
company and is expected to be formally appointed as liquidator of
the firm in the next two weeks.
Mr. Vinnicombe said the company had been hit hard by a large
contractual dispute combined with the poor economic climate and
the difficulties faced particularly by the construction sector.
"This has been a very good business over the years, and latterly
employed some 13 people, but the business has run into cash flow
difficulties, and reluctantly we have agreed it will cease to
trade," Mr. Vinnicombe said.
CJ Deighton and Co Ltd, of Main Street, Westbury, are specialist
builders of housing association accommodation, and were founded
more than 30 years ago.
ERIC FRANCE: Goes Into Liquidation; Owes GBP22 Million
------------------------------------------------------
Recycling International reports that UK company Eric France Metal
Recycling, which was the trading name of JKL Wakefield, went into
liquidation on Feb. 26, 2013, with total debts of around
GBP22 million.
The report says the vast majority of the sum appears to relate to
unpaid VAT, according to liquidators at KPMG and
PricewaterhouseCoopers.
David Standish -- david.standish@kpmg.co.uk -- joint liquidator
and partner in KPMG's restructuring practice, has confirmed the
company has ceased trading and unfortunately all 18 employees
have been made redundant, Recycling International reports.
Yorkshire-based Eric France Metal Recycling was a specialist in
non-ferrous scrap and also handled stainless and other forms of
steel.
FSL MANAGEMENT: RSM Tenon Appointed as Liquidators
--------------------------------------------------
RSM Tenon has been appointed by the Secretary of State as
liquidators to FSL Management Montgomery Limited following a
winding up order made in February. The company traded with a
number of other companies under the name of Fresh Start Living.
The company has been placed into liquidation following the non-
payment of rent in excess of GBP140,000 to investors in
Montgomery House, a student property in South Manchester.
Students living at Montgomery House will be unaffected by the
Liquidation.
A spokesperson from RSM Tenon said, "we are liaising closely with
the investors during our on-going investigations in order to
support them throughout this process."
HMV GROUP: ASDA In Talks with Administrators Over Possible Bid
--------------------------------------------------------------
The Sun reports that supermarket giant ASDA has looked at a deal
to save HMV Group.
The grocer has been in talks with HMV's administrators Deloitte
about putting together a bid for the iconic brand, the Sun
relates.
Asda could go head to head with restructuring experts Hilco in a
race to grab the business, the Sun cites.
More than 2,400 staff still work at HMV after its collapse into
administration at the start of the year, the Sun discloses.
According to the Sun, experts say a deal for some or all of HMV's
remaining 120 stores has to be struck within a fortnight when HMV
faces a huge rent bill.
"Asda has been looking at HMV and it's not about taking on a few
stores to convert into supermarkets. They've been looking at
taking on the brand -- the business," the Sun quotes a City
source as saying.
The Sun last month revealed that Hilco had entered talks about a
potential GBP50 million deal for HMV, the Sun recounts. It wants
to take on as many as 150 stores, the Sun days.
Some 110 HMV stores are already earmarked for closure by
Deloitte, the Sun states.
About HMV Group
United Kingdom-based HMV Group plc is engaged in retailing of
pre-recorded music, video, electronic games and related
entertainment products under the HMV and Fopp brands, and the
retailing of books principally under the Waterstone's brand. The
Company operates in four segments: HMV UK & Ireland, HMV
International, HMV Live, and Waterstone's.
On Jan. 14, HMV Group went into administration after suppliers
refused a request for a GBP300 million lifeline for the company.
Deloitte was appointed as administrator to the chain, which was
hit by growing competition from online rivals, supermarkets, and
illegal downloads. Deloitte is currently in talks with potential
buyers of the business, which has 223 UK stores in total, and a
workforce of about 4,000.
The administrators received "well over 50" expressions from
parties interested in buying HMV as a going concern. Hilco, a
restructuring specialist, emerged as one of the front runners.
Potential bidders include video game retailer Game, private
equity firm Endless, Jon Moulton's Better Capital as well as
Oakley Capital. No deadline has been set for formal bids for
HMV.
On Jan. 22, Hilco acquired the bank debt of HMV, effectively
giving it control and paving the way for a rescue of the company.
Hilco had acquired the debt from the group's lenders, Lloyds and
Royal Bank of Scotland for about GBP40 million. HMV had
underlying net debt of GBP176 million as at the end of October.
On Feb. 4, around 200 jobs were secured after HMV's
administrators offloaded the company's last remaining music and
entertainment venues. HMV's majority shareholding in G-A-Y
Group, which comprises a number of bars and Heaven nightclubs,
was sold to the founder and other shareholder in the business,
Jeremy Joseph.
On Feb. 7, Deloitte announced the closure of 66 lossmaking HMV
stores, resulting in the loss of 930 jobs, taking the company's
headcount nationwide to about 3,000.
Irish Operations
On Jan. 16, HMV's operation in the Irish Republic, which employs
300 people, was put into receivership. A total of 16 HMV outlets
were closed in Ireland. Deloitte, which was appointed receiver,
is also attempting to secure a purchaser for the Irish stores.
JELLYBOOK LIMITED: To Go Into Members Voluntary Liquidation
-----------------------------------------------------------
Jellybook Limited said that since the announcement of its interim
results on Sept. 26, 2012, the board has been unable to identify
a suitable investment opportunity which fulfils the Company's
investment strategy, which was to acquire or invest in businesses
in the social media sector, particularly those companies with
both digital media and social networking capabilities, such that
it would constitute a reverse takeover within the meaning of the
AIM Rules for Companies.
"The board no longer believes that the Company is able to fulfil
the purpose for which it was established and has therefore
decided to recommend that the Company should be wound up by way
of a members' voluntary liquidation. It is further proposed that
any net surplus cash of the Company should be distributed by the
liquidators (once appointed) to the Company's
shareholders and for admission of the Company's shares from
trading on AIM to be cancelled as soon as possible," Jellybook
said in a statement.
"A circular is in the process of being prepared and will shortly
be sent to shareholders to convene a general meeting at which
resolutions will be proposed to approve the Liquidation and the
cancellation of the Company's AIM listing."
Jellybook Limited is an investment company. Jellybook focuses on
acquiring businesses in the social media sector, particularly
those companies with both digital media and social networking
capabilities.
SOUTH DEVON: High Court Winds Up Eoin Murray-Controlled Firms
-------------------------------------------------------------
Four companies effectively controlled by a disqualified company
director in Devon have been wound up by the High Court in the
public interest, following investigations by Company
Investigations of The Insolvency Service.
The four companies are:
South Devon Construction Limited;
South Devon Services Limited;
Nationwide Shopfitters Limited; and
South Devon Construction Exeter Limited.
A fifth, linked company, South Devon Construction SW Limited
which was also a subject of the same investigation had already
been wound up on Aug. 14, 2012.
The investigation found that the four companies were either
controlled or likely to be controlled by Eoin Murray who has been
disqualified as a director twice and is also bankrupt.
The companies were wound up because of the 'appreciable risk'
that they had been set up and were effectively controlled by Mr.
Murray, who has shown a total disregard for the disabilities
imposed on him and so was likely to present a danger to both
suppliers and customers in the future.
Mr. Murray was first disqualified for six years in 2006, but he
started acting as a director while disqualified and was again
banned for nine years in 2007. He was made bankrupt on Jan. 10,
2011, and his discharge remains suspended indefinitely for
contravening the terms of his bankruptcy.
In addition, the investigation found that Mr. Murray had been
involved in the running of South West while disqualified and
after he was made bankrupt. In particular:
-- He had sole control of South West's online banking facility
-- One of South West's directors and the company secretary was
Ms. Tracey French, a former girlfriend of Mr Murray's. The
other director was a David Constable a longstanding friend
of Mr. Murray who attended the company's premises only
infrequently. South West's sole shareholder was Mrs. Nancy
Murray, Mr. Murray's ex-wife.
-- The bookkeeper reported to and sought instructions from
Mr. Murray.
-- Invoices and letters from creditors were directed to
Mr. Murray to deal with.
In winding up the companies, the court was satisfied that Mr.
Murray should be treated as a de facto director of South West and
that the other four companies bore the hallmarks of companies
that were created as vehicles for the continuation of the
business operated by Mr. Murray.
There was therefore an appreciable risk that Mr Murray would act
in the management of these companies in a manner similar to that
he had used in the earlier companies that had become insolvent
thus leading to losses for both creditors and customers.
Geoff Hanna, the Case Supervisor for The Insolvency Service,
said:
"This is a shocking example of how disqualified directors may
seek to hide behind other corporate identities with the help of
family and friends to allow them to conceal a continuing
involvement in managing companies.
"Disqualified directors should be aware that there is no escaping
the restrictions imposed on them by their disqualification and I
am pleased we have removed these companies from the business
environment so that they cannot cause any more harm to the
public."
The petitions to wind up the companies were presented in the High
Court of Justice on Dec. 4, 2012, under the provisions of section
124A of the Insolvency Act 1986 following confidential enquiries
by Company Investigations under section 447 of the Companies Act
1985, as amended. All the petitions were heard unopposed and the
winding up orders were made on Feb. 27, 2013.
UK SPV: Fitch Assigns 'B' Final Rating to Recourse Notes
--------------------------------------------------------
Fitch Ratings has assigned UK SPV Credit Finance plc's US$175
million issue of fixed-rate limited recourse notes a final Long-
term rating of 'B' and a Recovery Rating of 'RR4'. The issue has
a maturity date of 28 February 2018 and a coupon rate of 10.875%.
The notes are to be used solely for financing a loan to Ukraine-
based PJSC CB PrivatBank. For further details on the issue, see
"Fitch Rates PrivatBank's Upcoming Medium Term Notes at
'B(EXP)'/'RR4'", dated February 22, 2013 at www.fitchratings.com.
Key Rating Drivers
The issue's Long-term rating corresponds to PrivatBank's Long-
term foreign currency Issuer Default Rating (IDR; 'B'/Stable).
The issue's Recovery Rating of 'RR4' reflects average recovery
prospects for bondholders in case of default.
Rating Sensitivities
Any changes in PrivatBank's Long-term foreign currency IDR would
impact the issue's Long-term rating. Any marked increase in
bondholder subordination - for example as a result of an increase
in the proportion of retail funding, which in Ukraine ranks above
other senior claims in case of a bank bankruptcy - could result
in a downgrade of the Recovery Rating, and hence also the Long-
term rating of the debt.
* UK: Moody's Says Transition to RIIO Credit Neutral for GDNs
-------------------------------------------------------------
UK energy regulator Ofgem's application of its new regulatory
model RIIO to the country's eight gas distribution networks
(GDNs) will not, in isolation, have an impact on the ratings of
the regulated energy network sector, says Moody's Investors
Service in its latest report on UK GDNs entitled "UK Gas
Distribution Networks: Transition to RIIO Is Credit Neutral."
Ofgem has almost completed the application of RIIO (Revenue =
Incentives + Innovation + Outputs) to the UK's eight GDNs, three
electricity transmission operators and one gas transmission
operator, outlining the revenues that each can recover from
consumers over the eight-year period 2013-21.
"We believe the move to RIIO is broadly supportive of our Aaa
assessment of the stability and predictability of the overall
regulatory framework for UK GDNs," says Scott Phillips, an
Assistant Vice President - Analyst in Moody's Infrastructure
Finance group and author of the report.
In Moody's view, while there was a potential for a step-change in
regulation -- with almost all aspects of the regulatory framework
examined -- it is clear that RIIO is more a rebranding of the
previous 'RPI-X' regime and represents a natural evolution in
regulation that has continued since the utilities were first
privatized in the late 1980s and early 1990s. From a credit
perspective, the fundamental aspects of the regulatory framework
have been retained, including the concept of a regulatory asset
value (RAV), an allowed financial return, ex-ante allowances for
operating and capital expenditure, Retail Prices Index (RPI)
indexation, incentives, uncertainty mechanisms, true-ups and re-
openers as well as the right to seek independent arbitration from
the Competition Commission.
Moody's considers that the biggest change under RIIO is that
during the price control process there has been, and will
continue to be, a deeper scrutiny of a company's submitted
business plan and a greater focus on the quality of stakeholder
engagement. However, any penalties or rewards associated with
these factors are likely to be minimal, with the risks arguably
more reputational than financial. In addition to this, RIIO does
place a greater emphasis on innovation and there are now more
schemes that provide opportunities for networks to earn
additional funding for research and development. While the
previous regulatory framework did also offer a number of similar
schemes (e.g., the Innovation Funding Incentive and the Low
Carbon Networks Fund), a greater focus in this area is arguably
more in response to the new challenges in the energy sector
rather than because of a change in regulatory approach.
For the GDNs in particular, while there have been a number of
changes for the companies in their recent price determination
RIIO-GD1, e.g., a focus on total expenditure and outputs, many of
these themes had been developed by Ofgem for the electricity
distribution network operators' (DNOs) price control in 2009,
i.e., before the launch of RIIO.
===============
X X X X X X X X
===============
* Fitch Says Re-Entry Into Recession Hit IPF Entities in 2012
-------------------------------------------------------------
The eurozone's re-entry into recession extended the negative
rating drift affecting international public finance (IPF)
entities in 2012. Local and regional governments (LRGs) within
the eurozone remain constrained by increasing deficits,
contracting revenues, and rigid expenditures, according to a new
Fitch Ratings study released on March 11, 2013.
The 2012 ratio of international public finance downgrades to
upgrades, 4.9 to 1, reflects the difficult economic and market
circumstances within Europe. The margin widened from the 3.1 to 1
ratio recorded in 2011.
For the fifth consecutive year Fitch recorded no international
public finance defaults.
Fitch has recorded just nine international public finance
defaults over the period 1995-2012, resulting in an average
annual issuer-based default rate of 0.49%.
Fitch's new study provides data and analysis on the performance
of Fitch's international public finance ratings in 2012 and over
the long term, covering the period 1995-2012. The report provides
summary statistics on the year's key rating trends.
The study is titled 'Fitch Ratings International Public Finance
2012 Transition and Default Study' and is available on Fitch's
web site under Credit Market Research.
*********
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., Washington, D.C., 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 2013. All rights reserved. ISSN 1529-2754.
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