/raid1/www/Hosts/bankrupt/TCREUR_Public/130926.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
Thursday, September 26, 2013, Vol. 14, No. 191
Headlines
B E L G I U M
DEXIA SA: Offloads Asset Management Unit to New York Life
F R A N C E
SPCM SA: Moody's Rates Proposed US$250MM Senior Notes (P)Ba3
I R E L A N D
DIRECTROUTE FINANCE: Moody's Changes Ba3 Rating Outlook to Stable
* Moody's Outlook on Ireland's Banking Sector is Stable
* Moody's Says Irish RMBS Performance Still Weak in July 2013
I T A L Y
BANCA CARIGE: Moody's Mulls Downgrade of Mortgage Covered Bonds
BANCA MONTE: Delays Restructuring Plan Pending Regulator Review
ENEL SPA: Moody's Rates New US$1.25-Bil. Hybrid Issuance Ba1
L U X E M B O U R G
NIELSEN COMPANY: US$125MM Loan Increase No Impact on Ratings
P O R T U G A L
BANCO BPI: S&P Puts 'BB-' Bond Rating on CreditWatch Negative
BANCO SANTANDER: S&P Puts 'BB+' Rating on CreditWatch Negative
MILLENNIUMBCP AGEAS: S&P Puts 'BB' Rating on CreditWatch Negative
R U S S I A
PROMSVYAZBANK: Moody's Downgrades Ratings to Ba3; Outlook Stable
* NIZHNIY NOVGOROD: Fitch Affirms 'BB-' LT Currency Rating
S P A I N
CODERE SA: S&P Raises Corp. Credit Rating to 'CC'; Outlook Neg.
U K R A I N E
DTEK HOLDINGS: Moody's Cuts CFR to Caa1 After Ukraine Downgrade
UKRAINE MORTGAGE: Moody's Cuts Rating on Cl. B Notes to Caa1
U N I T E D K I N G D O M
AMBERLEY KNIGHT: High Court Winds Up Land Banking Company
BRITAX GROUP: Moody's Assigns B1 CFR; Outlook Stable
BRITAX GROUP: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
CROSBY KITCHENS: Goes Into Liquidation; NTP in Receivership
HAWKHURST CAPITAL: Placed Into Provisional Liquidation
MARSTON: Fitch Affirms 'BB+' Rating on GBP155MM Class B Notes
NGS PRINT: Placed Into Creditors' Voluntary Liquidation
ODEON & UCI: S&P Cuts Corp. Credit Rating to 'B-'; Outlook Stable
PICSEL INT'L: Enters Into Insolvency Proceedings for Second Time
PUNCH TAVERNS: Optimistic on Consensual Debt Restructuring
R.C.M.H. LIMITED: High Court Winds Up Escort Agencies
SPIRIT ISSUER: Fitch Affirms 'BB' Ratings on Five Note Classes
* UK: Pace of High Street Closures Slows in First Half of 2013
X X X X X X X X
* Moody's Changes Outlook on Baltic Area Banking System to Stable
* Upcoming Meetings, Conferences and Seminars
*********
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B E L G I U M
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DEXIA SA: Offloads Asset Management Unit to New York Life
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Stephen Foley at The Financial Times reports that Dexia, the
Franco-Belgian bank that had to be bailed out three times by
taxpayers, offloaded its asset management division for EUR380
million to New York Life, matching the price of a deal that fell
through earlier this year.
The sale, announced late on Tuesday, came two months after the
collapse of an agreement to sell the division to GCS Capital of
Hong Kong, the FT relates.
New York Life emerged last week as the favored bidder after a
second auction, the FT discloses.
Dexia Asset Management will add a further US$100 billion in assets
under management to the US insurer's US$388 billion portfolio, and
propel it into the top 25 largest asset managers in the world, the
FT discloses. It has more than doubled in size since the
financial crisis, the FT notes.
The sale of DAM is the last major disposal planned by Dexia, which
is being wound down following losses from the credit crunch and
the eurozone debt crisis, the FT states.
The bank, as cited by the FT, said the deal was subject to
regulatory approvals, and that it would delay publishing the
impact of the sale on its financial situation and capital ratios
until the transaction closed. It is expected before the end of
December, the FT notes.
According to the FT, the sale of DAM is important to the French
and Belgian governments which both remain exposed to Dexia. The
Cour des Comptes, France's national auditor, calculates that
France has lost EUR6.6 billion as a result of the Dexia bailouts
and could face further losses if the planned run-off of the bank's
remaining assets proves over-optimistic, the FT discloses.
Dexia SA is a Belgium-based banking group with activities
principally in Belgium, Luxembourg, France and Turkey in the
fields of retail and commercial banking, public and wholesale
banking, asset management and investor services. In France, Dexia
Bank focuses on funding public sector bodies and providing
financial services to local government. In Luxembourg, Dexia
operates in two main areas: commercial banking (for personal and
professional customers) and private banking (for international
investors). In Turkey, Dexia is involved in retail and commercial
banking and offers services to ordinary account holders, business
and local public sector customers and institutional clients. The
Company operates through its subsidiaries, such as Dexia Credit
Local, DenizBank, Dexia Credicop, Dexia Sabadell, Dexia
Kommunalbank Deutschland, Dexia Asset Management, among others.
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F R A N C E
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SPCM SA: Moody's Rates Proposed US$250MM Senior Notes (P)Ba3
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Moody's Investors Service assigned provisional (P)Ba3 ratings to
the proposed issuance of US$250 million senior notes, due 2022, by
SPCM SA (SPCM), the holding company for SNF Floerger group. The
Ba2 corporate family rating (CFR) and Ba2-PD probability of
default rating (PDR) are affirmed and the outlook on all ratings
remains positive.
Moody's issues provisional ratings in advance of the final sale of
securities. Upon closing of the transaction and a conclusive
review of the final documentation, Moody's will endeavor to assign
definitive ratings. A definitive rating may differ from a
provisional rating.
Ratings Rationale:
The proceeds from the senior notes issuance are intended to repay
in full the $213 million outstanding under the existing senior
secured credit facilities and repay $20 million under the
bilateral credit loans. The remainder will be used to pay fees and
for general corporate purposes.
The (P)Ba3 rating on the new notes, one notch below the CFR,
reflects that they will effectively rank pari passu with the
existing EUR300 million senior notes but behind over US$200
million in financial and non-financial liabilities, including
trade payables, due to the lack of operating company guarantees.
The 2022 notes will be senior unsecured obligations and will not
be guaranteed by any subsidiaries, in line with the 2020 notes.
They will also have incurrence covenants substantially similar to
those of the existing 2020 notes, including limiting the company's
ability to incur additional indebtedness and pay dividends.
SPCM's CFR and PDR are affirmed at Ba2 and Ba2-PD respectively.
These reflect SPCM's limited scale and muted free cash flow
generation, which limits the company's ability to handle
unforeseen, yet probable challenges to its business plan, such as
sharp raw material price volatility, raw material supply
limitations, or the substitution of other products for
polyacrylamide (PAM). Furthermore, SPCM's global competition can
come from the PAM division of substantially larger and more
financially flexible companies such as BASF (SE) (A1 stable),
Ecolab, Inc. (Baa1 negative), and Ashland Inc. (Ba1 stable).
However, more positively, the Ba2 CFR also reflects Moody's
positive view that SPCM (1) is a leading specialty chemicals
producer for the global PAM industry with a track record of
maintaining a solid market share position across diverse
applications; (2) has a proven ability to generate solid revenue
and EBITDA growth, while modestly reducing leverage, through
global and European economic cycles; (3) has a resilient business
model, as demonstrated by solid operating performance and growth;
and (4) is able to pass on material and production costs while
simultaneously improving marginal income, despite the high degree
of competition in the US markets and the challenging trading
environment in Europe.
The positive outlook on the ratings reflects Moody's view that
SPCM's operating performance is likely to remain solid over the
coming quarters, despite the highly competitive US markets,
challenging European markets, and the company's robust organic
expansionary program.
Moody's would consider upgrading SPCM's rating to the extent that
the company can improve on its scale through revenue expansion;
and continue to generate meaningful RCF while maintaining, or
improving on, current leverage such that Moody's-adjusted RCF/debt
ratio is sustained around 25% and Moody's-adjusted debt/EBITDA is
kept at around 2.3x.
Negative rating pressure, although unlikely at this stage, could
develop in the event of the company suffering a material
deterioration in operating performance, leading to (1) a sustained
weakness in cash flow generation, with RCF/debt falling to the low
teens in percentage terms; and (2) weaker debt coverage metrics,
with a debt/EBITDA ratio consistently above 3.0x. Moreover, the
ratings could also come under negative pressure if the company's
liquidity profile were to significantly deteriorate due to the
implementation of an adverse dividend policy and/or an overly
robust capital investment program.
The principal methodology used in this rating was the Global
Chemical Industry 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.
SPCM SA is the parent holding company of the SNF Group (SNF). SNF
is one of the world's leading producers of polyacrylamide, which
is a water-soluble specialty chemical used in water treatment, oil
and gas applications, mineral extraction, and pulp and paper
manufacturing. The company is family-owned and was formed as a
result of a buy-out of the flocculants business of WR Grace in
1978. SNF, headquartered in Saint-Etienne, France, reported
revenues of approximately EUR1.9 billion and Moody's adjusted
EBITDA of EUR258 million for the last 12 months ending June 30,
2013.
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I R E L A N D
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DIRECTROUTE FINANCE: Moody's Changes Ba3 Rating Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
outlook on the Ba3 ratings on the following two loan facilities
raised by DirectRoute (Limerick) Finance Limited: the EUR143.5
million guaranteed secured loan due 2040 from Guildhall Asset
Purchasing Company (No 11) UK Limited, and the EUR97.6 million
guaranteed secured loan from the European Investment Bank.
Concurrently, Moody's has affirmed these ratings.
The Issuer is a financing conduit that on-lends the proceeds of
the Loans to DirectRoute (Limerick) Limited, a special purpose
company that in 2006 entered into a 35-year concession agreement
with the Irish National Roads Authority (state body of Ireland
responsible for the national road network) to design, build,
maintain and operate a 10 km user-pay tolled dual carriageway road
to the southwest of the city of Limerick in the Republic of
Ireland.
Ratings Rationale:
The rating action follows Moody's change in the outlook on
Ireland's Ba1 government bond rating to stable from negative.
The Issuer's stable outlook reflects the stable outlook on
Ireland's rating. The two-notch differential between the credit
quality of ProjectCo's offtaker and the Ba3 rating on the Loans
reflects the risk of delay or interruption of payments from the
National Roads Authority ("NRA") and the limited ability of
ProjectCo to withstand such an event given its tight debt service
coverage ratios.
The Ba3 rating on the senior debt facilities is constrained by (1)
actual traffic volume on the Project road being materially below
initial projections and the NRA's contractually guaranteed levels,
making the Project dependent on payments from the NRA; (2)
Ireland's Ba1 government bond rating and Moody's approach of
generally rating projects at least two notches below the
offtaker's credit quality; and (3) the Project's high leverage,
with low debt service coverage ratios of 1.12x and 1.05x in 2011
and 2012 respectively, which reduces its ability to withstand
unexpected stress.
However, the rating also reflects as positives (1) ProjectCo's
long-term concession agreement with the NRA ; (2) timely payments
from the NRA under its minimum traffic guarantee; (3) ProjectCo's
track record of satisfactory operating performance; (4) the
protection afforded to senior creditors by the terms and
conditions of the concession agreement, particularly the
compensation provisions in the event of an NRA default; (5) the
Issuer's sizeable cash balance, on top of its mandatory reserves,
of EUR14.9 million; and (6) Moody's expectation that there is a
likelihood of high recovery for senior lenders in the event of any
default by the Issuer.
Scheduled payments of principal and interest under the Loans are
unconditionally and irrevocably guaranteed by MBIA UK Insurance
Limited ("MBIA", B1 positive) pursuant to a financial guarantee
insurance policy. The rating on the Loans is determined as the
higher of (1) MBIA's insurance financial strength rating; and (2)
the Ba3 standalone credit quality of the Loans, absent the benefit
of the guarantee. Accordingly, the rating on the Loans is Ba3.
What Could Change The Ratings Up/Down
Moody's could upgrade the ratings as a result of (1) an upgrade of
Ireland's rating; or (2) growth in traffic volumes on the Project
road such that ProjectCo is no longer dependent on the NRA's
payments under the minimum traffic guarantee.
Conversely, Moody's could downgrade the ratings as a result of (1)
a downgrade of Ireland's rating; (2) a delay in ProjectCo
receiving payments from the NRA under the minimum traffic
guarantee; (3) operations, maintenance and lifecycle cost
assumptions proving inadequate; (4) poor service delivery,
increasing the possibility of a ProjectCo default under the
concession agreement; or (5) a material underperformance by key
subcontractors, which could impair the concession agreement's
viability.
Principal Methodology
The principal methodology used in this rating was the Operating
Risk in Privately-Financed Public Infrastructure (PFI/PPP/P3)
Projects rating methodology, published in December 2007.
DirectRoute (Limerick) Limited is ultimately owned by Strabag AG
(20%), John Sisk & Sons Limited (10%), Lagan Projects Investments
Limited (10%), Roadbridge (10%), Allied Irish Banks Holdings and
Investments Limited (25%) and Meridiam Infrastructure Finance
(SCA) SICAR (25%).
* Moody's Outlook on Ireland's Banking Sector is Stable
-------------------------------------------------------
Moody's Investors Service has changed the outlook to stable from
negative on the Ba1 government-guaranteed debt of four Irish
banks. This action follows Moody's change of outlook to stable
from negative on Ireland's Ba1 government's bond ratings.
The following banks are affected: Allied Irish Banks, p.l.c.
(AIB), Bank of Ireland (BoI), EBS Ltd (EBS), and Permanent tsb
p.l.c (PTSB).
The outlook on these banks' other ratings -- including the deposit
ratings, senior unsecured debt ratings and the standalone bank
financial strength ratings (BFSRs) -- are unaffected by this
rating action. This is because the outlooks on the BFSRs drive the
outlook on the bank deposit and senior unsecured debt ratings.
The other Irish bank ratings are unaffected by this action.
Ratings Rationale:
In line with the change of the outlook on the Ba1 Irish government
bond rating to stable from negative, Moody's has changed the
outlook to stable from negative on the Ba1 government-backed
senior debt of AIB, BoI, EBS and PTSB.
These four banks have all issued public debt under the Eligible
Liabilities Guarantee scheme, which expired on March 28, 2013 for
new issuances. The assigned government-backed Ba1/Not Prime
ratings are based on the unconditional and irrevocable guarantee
from the Irish government.
What Could Change The Rating Up/Down
Moody's aligns the government-guaranteed bond ratings and their
outlooks with the rating and outlook of the Irish government bond
rating, respectively.
The principal methodology used in these ratings was Global Banks
published in May 2013.
* Moody's Says Irish RMBS Performance Still Weak in July 2013
-------------------------------------------------------------
The performance of the Irish prime residential mortgage-backed
securities (RMBS) market showed some sign of stabilization but
remained weak during the three-month period leading to July 2013,
according to the latest indices published by Moody's Investors
Service.
From April to July 2013, the 90+ and 360+ day delinquency trend
(which is used as a proxy for defaults) continued to rise to 18.6%
from 18.1% and to 10.2% from 9.4%, respectively, of the
outstanding portfolios. However, 30+ day delinquencies are
increasing at a slower pace, and 60 to 90 day delinquencies are
showing signs of stabilization, which should lead to a further
stabilization in the increase in long-term arrears. Moody's
annualized total redemption rate (TRR) trend was 2.7% in July
2013, down from 3.9% in July 2012.
Moody's outlook for Irish RMBS is negative. The steep decline in
house prices since 2007 has placed the majority of borrowers deep
into negative equity. Low house prices increased the severity of
losses on defaulted mortgages.
In July 2013, Moody's concluded the rating reviews of a number of
Irish transactions placed on review for downgrade in September
2012 due to insufficiency of credit enhancement to address
sovereign risk:
On July 18, Moody's downgraded the rating of one note in Lansdowne
Mortgage Securities No.1 plc and confirmed the rating of two notes
in Emerald Mortgages No. 4 plc and Emerald Mortgages No. 5
Limited. Insufficiency of credit enhancement to address sovereign
risk prompted this downgrade.
On July 17, Moody's took several actions:
Moody's confirmed the ratings of five senior notes and upgraded
the rating of one senior note in four Irish RMBS transactions:
Celtic Residential Mortgages Securitization No. 9 PLC, Celtic
Residential Mortgages Securitization No. 10 PLC, Celtic
Residential Mortgages Securitization No. 11 PLC and Celtic
Residential Mortgages Securitization No. 12 LIMITED.
This rating action concluded the reviews of the affected notes
placed on review for downgrade on September 12, 2012 due to
insufficient credit enhancement to address sovereign risk,
following the lowering of the Irish country ceiling to A3.
Moody's confirmed the ratings of three senior notes in three Irish
RMBS transactions: Phoenix Funding 2 Limited, Phoenix Funding 3
Limited and Phoenix Funding 4 Limited. This rating action
concludes the review of Phoenix 2 notes placed on review for
downgrade on September 12, 2012 due to insufficient credit
enhancement to address sovereign risk, following the lowering of
the Irish country ceiling to A3 and of Phoenix 3 placed on review
on November 15, 2012, following Moody's revision of key collateral
assumptions for the Irish RMBS market. Finally, it concludes the
review of Phoenix 4, placed on review for downgrade on March 13,
2013 due to insufficient credit enhancement to address sovereign
risk.
Moody's downgraded the ratings of nine senior notes in four Irish
residential mortgage-backed securities transactions: Fastnet
Securities 2, 3, 6 & 7. At the same time, Moody's confirmed the
rating of three senior notes in Fastnet Securities 8.
Insufficiency of credit enhancement to address sovereign risk and
counterparty exposure has prompted the downgrade. This rating
action concludes the review of eight notes placed on review on
November 15, 2012 pending the incorporation of country risk
exposure across capital structure. It also concludes the review
four notes placed on review on September 12, 2012, following
Moody's intention to reassess credit enhancement adequacy for each
of the rated notes, given the increased risk of economic and
financial instability.
As of July 2013, 18 Moody's-rated Irish prime RMBS transactions
had an outstanding pool balance of EUR42.84 billion. This
constitutes a year-on-year decrease of 13.5% compared with
EUR49.50 billion for the same period in the previous year.
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I T A L Y
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BANCA CARIGE: Moody's Mulls Downgrade of Mortgage Covered Bonds
---------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade the
Baa1 ratings of the covered bonds from Banca Carige's mortgage
program (residential), and the Baa2 ratings of the covered bonds
from its mortgage prograe 2 (commercial).
These review placements follow Moody's decision to downgrade to B2
from Ba2, and place on review for further downgrade, the issuer
rating of Banca Carige SpA (deposits B2 on review for downgrade,
standalone bank financial strength rating E+/baseline credit
assessment b3; on review for downgrade).
Ratings Rationale:
These rating actions are prompted by the downgrade and further
review for downgrade of the issuer ratings on September 18, 2013.
In its review, Moody's will incorporate all available information,
including the recent ECOFIN proposal and until such analysis is
completed it intends to leave on review any covered bond ratings
potentially affected by downgrades of bank senior unsecured
ratings.
The Credit Ratings of the covered bonds from Banca Carige mortgage
programs were assigned in line with Moody's existing Credit Rating
Methodology entitled "Moody's Approach to Rating Covered Bonds",
dated July 2012. Moody's notes that on September 19, 2013 it
published a Request for Comment (RFC). In the RFC, the rating
agency proposes an adjustment to the anchor point it uses in its
covered bond analysis. If the revised Credit Rating Methodology is
implemented as proposed, the Credit Ratings of the covered bonds
from Banca Carige mortgage programs may be positively impacted
relative to application of the existing Credit Rating Methodology.
The TPIs assigned to Carige's residential and commercial programs
remain "Improbable". Moody's TPI framework may constrain the final
rating of both Carige's covered bond programs following the review
of Carige's ratings.
The rating that Moody's has assigned addresses the expected loss
posed to investors. Moody's ratings address only the credit risks
associated with the transaction. Moody's did not address other
non-credit risks, but these may have a significant effect on yield
to investors.
Key Rating Assumptions/Factors
Moody's determines covered bond ratings using a two-step process:
an expected loss analysis and a TPI framework analysis.
EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to
determine a rating based on the expected loss on the bond. COBOL
determines expected loss as (1) a function of the issuer's
probability of default (measured by the issuer's rating); and (2)
the stressed losses on the cover pool assets following issuer
default.
The cover pool losses are an estimate of the losses Moody's
currently models if the relevant issuer defaults. Moody's splits
cover pool losses between market risk and collateral risk. Market
risk measures losses stemming from refinancing risk and risks
related to interest-rate and currency mismatches (these losses may
also include certain legal risks). Collateral risk measures losses
resulting directly from the cover pool assets' credit quality.
Moody's derives collateral risk from the collateral score.
Residential Mortgage Covered Bonds
The cover pool losses are 29.5%, with market risk of 23.5% and
collateral risk of 6.0%. The collateral score for this program is
currently 9.0%. The over-collateralization (OC) in this cover pool
is 51.9%, of which Carige provides 22% on a "committed" basis.
Once the rating review concludes, Moody's will reassess the
minimum level of OC required to meet the maximum rating
achievable.
Commercial Mortgage Covered Bonds
The cover pool losses are 44.3%, with market risk of 19.6% and
collateral risk of 24.7%. The collateral score for this program is
currently 36.8%. The OC in this cover pool is 46.5%, of which
Carige provides 10.5% on a "committed" basis. Once the rating
review concludes, Moody's will reassess the minimum level of OC
required to meet the maximum rating achievable.
TPI FRAMEWORK: Moody's assigns a "timely payment indicator" (TPI),
which indicates the likelihood that the issuer will make timely
payments to covered bondholders if the issuer defaults. The TPI
framework limits the covered bond rating to a certain number of
notches above the issuer's rating.
Sensitivity Analysis
The issuer's credit strength is the main determinant of a covered
bond rating's robustness. The TPI Leeway measures the number of
notches by which Moody's might downgrade the issuer's rating
before the rating agency downgrades the covered bonds because of
TPI framework constraints.
The TPI assigned to Carige's residential and commercial covered
bonds remains Improbable. The TPI Leeway for these programs is
limited, and thus any downgrade of the issuer ratings may lead to
a downgrade of the covered bonds.
A multiple-notch downgrade of the covered bonds might occur in
certain limited circumstances, such as (1) a sovereign downgrade
negatively affecting both the issuer's senior unsecured rating and
the TPI; (2) a multiple-notch downgrade of the issuer; or (3) a
material reduction of the value of the cover pool.
Rating Methodology
The principal methodology used in these ratings was "Moody's
Approach to Rating Covered Bonds" published in July 2012.
BANCA MONTE: Delays Restructuring Plan Pending Regulator Review
---------------------------------------------------------------
Sonia Sirletti, Elisa Martinuzzi and Sergio Di Pasquale at
Bloomberg News report that Banca Monte dei Paschi di Siena SpA,
the bailed-out bank embroiled in a fraud probe, delayed approval
of a restructuring needed to win regulator support for state aid
as the authorities complete their review of the plan.
According to Bloomberg, the bank said in a stock-exchange
statement that Monte Paschi's board met on Tuesday and decided to
postpone the approval. The plan may include more asset sales,
branch closings and savings than originally sought to comply with
the tougher European antitrust regulator's requirements for a
EUR4.1 billion (US$5.5 billion) bailout received this year,
Bloomberg notes.
"Although a lot of progress has been made over the past few weeks,
we are still in contact with Italian authorities to finalize some
aspects of the restructuring terms of Monte Paschi," Antoine
Colombani, EU competition commissioner
Joaquin Almunia's spokesman, said in an e-mailed comment to
Bloomberg News on Tuesday after the announcement of the delay.
Undisclosed losses from financings carried out in previous years
forced Chief Executive Officer Fabrizio Viola, 55, and Chairman
Alessandro Profumo, 56, to seek additional state aid and prompted
demands from regulators for a deeper reorganization of the world's
oldest bank, Bloomberg discloses. The pair, appointed last year
to turn the company around, must convince investors they can meet
the goal, which includes luring buyers to a
EUR2.5 billion stock sale over the next year, an amount that's
similar to Paschi's current market value, Bloomberg relates.
According to Bloomberg, analysts at Fidentiis Equities wrote in a
note to client on Sept. 24 "A delay should be read in negative
terms considering it contributes to reduce the visibility on Monte
Paschi, its restructuring and its capital base".
Monte Paschi agreed with authorities earlier this month to more
than double the amount of capital it must raise to repay state
aid, Bloomberg recounts.
Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is
an Italy-based company engaged in the banking sector. It
provides traditional banking services, asset management and
private banking, including life insurance, pension funds and
investment trusts. In addition, it offers investment banking,
including project finance, merchant banking and financial
advisory services. The Company comprises more than 3,000
branches, and a structure of channels of distribution. Banca
Monte dei Paschi di Siena Group has subsidiaries located
throughout Italy, Europe, America, Asia and North Africa. It has
numerous subsidiaries, including Mps Sim SpA, MPS Capital
Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca
Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA.
* * *
As reported by the Troubled Company Reporter-Europe on Sept. 18,
2013, Fitch downgraded MPS's Viability Rating (VR) to 'ccc' from
'b' and removed it from Rating Watch Negative (RWN).
As reported by the Troubled Company Reporter-Europe on June 19,
2013, Standard & Poor's Ratings Services said that it lowered its
long-term counterparty credit rating on Italy-based Banca Monte
dei Paschi di Siena SpA (MPS) to 'B' from 'BB', and affirmed the
'B' short-term rating. S&P also lowered its rating on MPS' Lower
Tier 2 subordinated notes to 'CCC-' from 'CCC+'. S&P affirmed
the ratings on MPS' junior subordinated debt at 'CCC-' and on its
preferred stock at 'C'. At the same time, S&P removed the
ratings from CreditWatch, where it placed them with negative
implications on Dec. 5, 2012.
ENEL SPA: Moody's Rates New US$1.25-Bil. Hybrid Issuance Ba1
------------------------------------------------------------
Moody's Investors Service has assigned a definitive Ba1 long-term
rating to the US$1.25 billion (semi-annual fixed coupon of 8.75%
and first call date in 2023) issuance of Capital Securities by
ENEL S.p.A. This is the third of three tranches of hybrids and
follows earlier euro- and sterling-denominated issuances of
EUR1.25 billion and GBP400 million. The outlook on the rating is
negative.
Ratings Rationale:
The Ba1 rating assigned to the Hybrid is two notches below Enel's
senior unsecured rating of Baa2. The rating differential with the
senior unsecured rating reflects the key features of the Hybrid,
namely that (1) it is a deeply subordinated instrument; (2) it has
a minimum 60-year maturity; (3) Enel can opt to defer coupons on a
cumulative basis; and (4) there is no step-up in coupon prior to
year 10 and the step-up will not exceed a total of 100 basis
points thereafter.
Moody's notes that the Hybrid issuance is in line with Enel's
financial policies announced at the time of its March update of
its 2013-17 business plan, which are factored into the current
Baa2 senior unsecured rating. The company plans to reduce its high
leverage and enhance its financial flexibility through a series of
measures over the life of the plan. In addition to Hybrid
issuance, Enel plans to make asset disposals of EUR6 billion,
operating expenditure cuts of EUR4 billion and maintain
flexibility in its capex program of EUR27 billion with the aim of
strengthening its financial profile by the end of 2014.
However, the macroeconomic, regulatory and operating environment
in Enel's core Italian and Spanish markets remains challenging.
The latest Spanish regulatory reforms announced in July are
expec\ed to add to the regulatory measures taken in Spain during
2012 and early 2013 which the rating agency expects to result in a
decline in Enel's EBITDA of around EUR1.3 billion in 2013. The
company's strategic plan has already incorporated the expected
effect of the majority of these changes. Whilst Enel has
identified a maximum EUR400 million cut to 2014 EBITDA as a result
of the July measures, further regulatory clarifications are still
awaited, particularly with regard to the effect of the latest
reforms on renewables businesses, although Moody's does not expect
this to have a significant impact on Enel. Moody's expects that
Enel will adjust its strategic plan, if necessary, to mitigate the
additional effect of these cuts when further regulatory details
are available.
At the same time, the regulatory measures are designed to (1)
eliminate the tariff deficit for 2013 including the
extrapeninsular deficit, which is currently funded only by Enel's
subsidiary, Endesa; and (2) minimize the creation of deficits in
future years. If successful, these measures should reduce Enel's
debt, which was burdened by EUR4.3 billion of tariffs as at June
2013, which would be credit positive for the company.
The Baa2 senior unsecured rating also factors in (1) Enel's large
scale and geographic diversification; (2) the beneficial effect of
expected growth in its Latin American, international and
renewables business divisions although this will only partially
mitigate pressure on earnings in core Italian and Spanish markets;
and (3) its strong liquidity position.
Rating Outlook:
Given that Enel's core markets are Italy and Spain, the current
negative outlook on the company's ratings is aligned to that of
the Baa2-rated Italian and Baa3-rated Spanish sovereigns.
What Could Change The Rating Up/Down
As the Hybrid rating is positioned relative to another of Enel's
ratings, either (1) a change in the senior unsecured rating of
Enel or (2) a re-evaluation of its relative notching could affect
the Hybrid rating.
Negative rating pressure could result from (1) a further
deterioration of Spanish or Italian sovereign creditworthiness
below investment grade; (2) a significant deterioration in Enel's
operating environment; or (3) the company deviating significantly
from its plan to strengthen its financial profile over 2013-14
such that it can generally achieve ratios in the region of
retained cash flow (RCF)/net debt in the mid-teens and funds from
operations (FFO)/net debt of around 20%.
Given the current negative outlook, Moody's does not currently
anticipate any upwards rating pressure. However, the rating agency
could consider changing the outlook on the rating to stable if (1)
the outlook on both the Spanish and Italian sovereigns were to
stabilize; and (2) Enel were able to achieve and maintain the
improvement in financial metrics indicated.
The principal methodology used in this rating was Unregulated
Utilities and Power Companies published in August 2009.
Enel is the principal electric utility in Italy and is 31.2%-owned
by the Italian state. Through its ownership of Endesa S.A., Enel
also has a leading position in electricity in Spain and Latin
America. Moreover, the company has interests in Russia, South East
and Central Europe. Its renewables businesses are held through
Enel Green Power, S.p.A..
===================
L U X E M B O U R G
===================
NIELSEN COMPANY: US$125MM Loan Increase No Impact on Ratings
------------------------------------------------------------
Moody's Investors Service says that the US$125 million increase to
The Nielsen Company (Luxembourg) S.a.r.l.'s, senior notes offering
to US$625 million from US$500 million has no immediate impact on
the ratings of Nielsen Holdings N.V. or Nielsen Finance LLC.
Proceeds from the debt facilities will be used to refinance all of
the existing 11.625% senior notes due 2014 and for general
corporate purposes. All other ratings remain unchanged and the
outlook remains positive.
On September 20, 2013, the company announced that it reached an
agreement with the Federal Trade Commission (FTC) to gain
clearance for its proposed acquisition of Arbitron which is now
expected to close on September 30, 2013. Moody's believes the
agreement with the FTC to preserve competitive landscape pre-
acquisition does not have an immediate impact on debt ratings.
The last rating action was on September 20, 2013, when $500
million senior notes were rated B2 and the Speculative Grade
Liquidity Rating was changed to SGL -- 1 from SGL -- 3. All other
credit ratings were affirmed.
Nielsen Holdings N.V., headquartered in Diemen, The Netherlands
and New York, NY, is a global provider of consumer information and
measurement that operates in approximately 100 countries.
Nielsen's Buy segment (63% of FY 2012 revenue) consists of two
operating units: (i) Information, which includes retail
measurement and consumer panel services; and (ii) Insights, which
provide analytical services for clients. The Watch segment (37% of
revenue) provides viewership data and analytics across television,
online and mobile devices for the media and advertising
industries. Nielsen's proposed $1.3 billion acquisition of
Arbitron is expected to close at the end of September 2013.
Revenue for the 12 months ended June 2013 was roughly $6 billion
excluding Expositions and including Arbitron.
On September 20, 2013, Moody's assigned B2 to the proposed $500
million Senior Notes being issued by The Nielsen Company
(Luxembourg) S.a.r.l., an indirect subsidiary of Nielsen Holdings
N.V. ("Nielsen"), to refinance the existing 11.625% senior notes
due 2014 and general corporate purposes. Moody's also affirmed
Nielsen Holdings N.V.'s Ba3 Corporate Family Ratings, Ba3-PD
Probability of Default Rating, and other debt instrument ratings.
===============
P O R T U G A L
===============
BANCO BPI: S&P Puts 'BB-' Bond Rating on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it has placed its
'A-' rating on the mortgage and 'BB-' rating on the public sector
covered bonds issued by Portugal-based Banco BPI S.A.
(BB-/WatchNeg/B) on CreditWatch with negative implications.
The rating action follows the recent placements on CreditWatch of
S&P's long-term ratings on Banco BPI and Portugal.
All else remaining unchanged, if S&P lower its long-term rating on
Banco BPI, it would lower the rating on the covered bonds by an
equal number of notches.
The ratings on both the programs are primarily governed under
S&P's criteria for asset-liability mismatches in covered bonds and
for rating nonsovereign issues above the sovereign in the eurozone
(European Economic and Monetary Union).
MORTGAGE COVERED BONDS
Under S&P's criteria "Revised Methodology And Assumptions For
Assessing Asset-Liability Mismatch Risk In Covered Bonds,"
(hereinafter ALMM criteria) published Dec. 16, 2009, the ratings
on the program could be up to six notches above the long-term
rating on the bank. The program makes use of all six notches to
achieve the current 'A-' rating. Therefore, all else remaining
equal, if S&P lowers its rating on Banco BPI, it would lower the
rating on the mortgage covered bonds by an equal number of
notches.
Under S&P's criteria "Nonsovereign Ratings That Exceed EMU
Sovereign Ratings: Methodology And Assumptions," (hereinafter EMU
criteria) published June 14, 2011, a mortgage covered bond program
that has what S&P considers to be "low" country-risk exposure
would typically achieve a maximum uplift of six notches above the
investment-grade rating on the country in which the cover pool
assets are located. If the sovereign rating is in the
speculative-grade category, the maximum uplift is five notches.
As S&P's long-term rating on Portugal is currently 'BB', its EMU
criteria constrain its ratings on Banco BPI's mortgage covered
bond program at a long-term rating of 'A-'. Therefore, all else
remaining equal, if S&P lowers its long-term rating on Portugal,
it would lower the rating on the mortgage covered bonds by an
equal number of notches.
PUBLIC SECTOR COVERED BONDS
Under S&P's EMU criteria, it considers that public-sector covered
bonds have a "high" sensitivity to sovereign risk. A covered bond
program that has what S&P considers to be "high" country-risk
exposure would typically only achieve a one-notch uplift above the
rating on the country in which the cover pool assets are located.
Banco BPI's public-sector covered bonds are exposed solely to
Portuguese public-sector entities. Additionally, the underlying
public-sector loans rely on sovereign system support and transfer
payments from the Portuguese government.
Therefore, based on these criteria, S&P's maximum potential rating
on Banco BPI's public-sector covered bond program is currently
capped at 'BB+', two notches above S&P's long-term rating on Banco
BPI.
Because the program's available credit enhancement does not cover
the asset default risk, the program is not able to achieve the
first notch of uplift under S&P's ALMM criteria for rating covered
bonds. Therefore, the rating on the covered bonds currently
equals the issuer credit rating.
Consequently, the sovereign rating currently does not constrain
the rating on the covered bonds. However, all else remaining
equal, if S&P lowers the long-term rating on Banco BPI, it would
lower the rating on the covered bonds by an equal number of
notches.
S&P aims to resolve the CreditWatch on the covered bonds after it
resolves the CreditWatch on Banco BPI.
BANCO SANTANDER: S&P Puts 'BB+' Rating on CreditWatch Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it has placed its
'BB+' rating on the mortgage covered bond program and related
series issued by Portugal-based Banco Santander Totta S.A.
(BB/WatchNeg/B) on CreditWatch with negative implications.
The rating action follows the recent placements on CreditWatch of
S&P's long-term ratings on Banco Santander Totta and Portugal.
If S&P lowers its long-term rating on Banco Santander Totta, it
would lower the rating on the mortgage covered bonds by an equal
number of notches. Under S&P's criteria "Revised Methodology And
Assumptions For Assessing Asset-Liability Mismatch Risk In Covered
Bonds," published Dec. 16, 2009, the ratings on the program could
be up to four notches above the long-term rating on the bank.
However, the credit and cash flow characteristics of the program,
together with the available credit enhancement, enable the program
to achieve only the first notch of uplift. In the absence of
sufficient overcollateralization, there would be no additional
buffer to the rating. This would then result in a downgrade of
the program mirroring that on the bank.
"Under our criteria "Nonsovereign Ratings That Exceed EMU
Sovereign Ratings: Methodology And Assumptions," published
June 14, 2011, a mortgage covered bond program that has what we
consider to be "low" country-risk exposure would typically achieve
a maximum uplift of six notches above the investment-grade rating
on the country in which the cover pool assets are located. If the
sovereign rating is in the speculative-grade category, the maximum
uplift is five notches. As our long-term rating on Portugal is
currently 'BB', our criteria constrain our ratings on Banco
Santander Totta's mortgage covered bond program and related series
at a long-term rating of 'A-'. Therefore, the rating on Portugal
currently does not constrain the rating on the program," S&P said.
S&P aims to resolve the CreditWatch on the program after resolving
the CreditWatch on Banco Santander Totta.
MILLENNIUMBCP AGEAS: S&P Puts 'BB' Rating on CreditWatch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it placed its 'BB' long-
term counterparty credit and insurer financial strength ratings of
the core operating entities of Portugal-based Millenniumbcp Ageas
Grupo Segurador S.G.P.S. (MAGS) on CreditWatch with negative
implications.
The rating action follows a similar action on the Republic of
Portugal. According to S&P's criteria, it generally limits the
ratings on domestic insurers at the local currency sovereign
rating S&P assess MAGS' exposure to Portugal as "high," given that
virtually all premiums and liabilities stem from Portugal.
Additionally, MAGS invests 49% of its assets domestically,
including in Portuguese sovereign debt and several Portuguese
banks--the main one being its banking shareholder, Banco Comercial
Portugues S.A. (B/Watch Neg/B). These sovereign-related risks
constrain the rating at three notches below S&P's 'bbb' anchor for
MAGS.
S&P views MAGS as strategically important to the Belgium-based
Ageas group (core operating entities insurer financial strength
rating A-/Stable/--), but this does provide uplift to the ratings
owing to sovereign risk. MAGS contributes substantial revenues to
Ageas, of about 9% of its gross premiums written as of
Dec. 31, 2012.
The CreditWatch implications mirrors those on Portugal. S&P will
resolve this CreditWatch within the next three months, upon the
resolution of the CreditWatch on Portugal. S&P could lower its
ratings on MAGS if it lowered the rating on Portugal. S&P could
also affirm the ratings on MAGS if it affirmed the rating on
Portugal.
===========
R U S S I A
===========
PROMSVYAZBANK: Moody's Downgrades Ratings to Ba3; Outlook Stable
----------------------------------------------------------------
Moody's Investors Service has downgraded the deposit ratings and
senior debt ratings of Promsvyazbank (Russia) to Ba3 from Ba2.
Concurrently, the bank's subordinated debt rating was downgraded
to B1 from Ba3. The rating agency has also downgraded the bank's
standalone financial strength rating (BFSR) from D to D-, which is
equivalent to a baseline credit assessment (BCA) of ba3.
Promsvyazbank's Not Prime short-term deposit ratings were
affirmed. All of the bank's long-term ratings carry a stable
outlook.
Moody's Investors Service also downgrades the following credit
ratings on Promsvyazbank:
- Senior Unsecured Medium Term Notes Program (foreign currency)
rating to (P)Ba3 from (P)Ba2
- Subordinate Medium Term Notes Program (foreign currency)
rating to (P)B1 from (P)Ba3
- Short Term Medium Term Notes Program (foreign currency) rating
of (P)NP is affirmed.
Ratings Rationale:
Moody's downgrade of Promsvyazbank's ratings reflects (1) the
uncertainty related to the quality of a significant portion of the
bank's corporate loan book; (2) the bank's low level of loan loss
reserves against impaired loans; and (3) the relatively thin level
of Tier 1 capital.
In Moody's opinion, Promsvyazbank's loan loss reserves of 3.6% of
gross loans as of H1 2013 are low in the context of the bank's
NPLs (loans overdue by more than 90 days: 3.3% of gross loans),
impaired not past-due loans (5.2%) and other potentially
vulnerable corporate loans. Despite the recent issuance of
subordinated and perpetual debt, Promsvyazbank's 15.5% Basel I
total capital adequacy ratio is relatively thin to address the
potential asset quality deterioration. Moreover, the rating agency
considers that Promsvyazbank's Tier 1 ratio (10% at mid-2013 under
Basel-I) is modest, and the bank has currently no plans to raise
new equity.
Stable Outlook On The Bank's Ratings
The stable outlook on Promsvyazbank's ratings reflects the rating
agency's opinion that the bank's financial fundamentals will
remain close to their current levels in 2013 and 2014. Despite the
recent downward pressure on Promsvyazbank's net interest margin,
its profitability remains solid with return on average assets
(ROAA) of 1.3% and return on average equity (ROAE) of around 14%
in 2012-1H 2013. The bank's liquidity profile is stable: it
consistently operates at a comfortable gross loans-to-deposits
ratio of 100%-115%, and it continues to reduce its reliance on
large deposits: top-10 deposits amounted to 22% of total customer
funds at June 30, 2013, down from 27% at June 30, 2012.
What Could Move The Ratings Up/Down
The key constraint on Promsvyazbank's rating is the relatively low
loss-absorption capacity; therefore a prerequisite for any upgrade
would be a significant increase in the bank's Tier 1 capital or in
the coverage of problem loans by loan loss reserves.
Negative pressure could be exerted on Promsvyazbank's ratings as a
result of any asset quality deterioration that is not matched with
an adequate capital or loan loss reserve increase to absorb
losses.
The principal methodology used in this rating was Global Banks
published in May 2013.
Domiciled in Moscow, Russia, Promsvyazbank reported -- as of 1H
2013 -- total assets of RUB732 billion (US$22.4 billion) and
equity of RUB67 billion (US$2.1 billion), under unaudited IFRS. In
the same reporting period, the bank posted net IFRS profits of
US$144 million.
* NIZHNIY NOVGOROD: Fitch Affirms 'BB-' LT Currency Rating
----------------------------------------------------------
Fitch Ratings has affirmed Nizhniy Novgorod Region's Long-term
foreign and local currency ratings at 'BB-', with Stable Outlooks,
and Short-term foreign currency rating at 'B'. The agency also
affirmed the region's National Long-term rating at 'A+(rus)' with
Stable Outlook. The rating action also affects the region's
outstanding domestic bonds of RUB31 billion.
Key Rating Drivers
The affirmation reflects satisfactory operating performance and
moderate albeit increasing direct risk. The ratings also factor in
continued budget deficit driven by the high level of capex.
Fitch expects the region's operating performance in 2013 will be
in line with 2012, when the operating balance accounted for 8% of
operating revenue. The operating margin deteriorated in 2012 from
13% in 2011 due to both high pressure on operating expenditure and
suppressed revenue as a result of the new rules for corporate
income tax payment. Fitch expects an improvement in the region's
operating performance in 2014-2015, which should be driven by
expansion of the tax base.
Fitch expects direct risk will continue to increase in the medium
term, but will remain moderate in relative terms. Fitch estimates
that direct risk will account for 52% of current revenue in 2013
increasing from 49% in 2012. Meantime, the maturity profile of the
debt should improve in 2013 as the region has already replaced the
majority of short-term bank loans with a new domestic bond. On
August 26, the region issued a RUB10 billion amortizing bond with
final maturity in 2020. The level of short-term bank loans dropped
significantly to 7% of total risk by 1 September 2013 from 42% at
the beginning of 2013. This reduces the region's annual
refinancing risk, which Fitch regards as a credit strength.
The region has a high level of capital expenditure compared with
its national peers. In 2011-2012, capex averaged 22% of total
spending. High investments need to get 40% financed by new debt in
2010-2012, resulting in a continuous budget deficit. . In 2012 the
deficit before debt variations accounted for a relatively high
10.6% of total revenue, and Fitch expects a deficit of 10% of
total revenue in 2013. Fitch assumes maintenance of high capex in
the medium term as Nizhniy Novgorod will host the World Football
Championship in 2018.
The region's economy is well-developed and diversified. Its GRP is
among the top 15 in Russia. The administration expects the economy
will continue to expand by average 4%-5% in the medium term, which
will support the regional tax revenue. Actual results for H113
economic growth in the region far exceeded the national average
rate of growth.
Rating Sensitivities
Consolidated operating performance and stabilized debt would be
positive. The region's ratings could be positively affected by tax
revenue recovery and maintenance of operating balance at about 10%
of operating revenue coupled with a lengthening of the debt
maturity profile.
Weaker debt ratios would be negative. A downgrade or revision of
the Outlook to Negative could occur as a result of deterioration
of debt coverage ratio (direct risk to current balance) to above
10 years accompanied by inability to reduce short-term debt.
Key Assumptions
- Russia has an evolving institutional framework with the
system of intergovernmental relations between federal, regional
and local governments still under development. However, Fitch
expects that Nizhniy Novgorod will continue to receive a steady
flow of transfers from the federation.
- Russia's economy will continue to demonstrate modest economic
growth. Fitch does not expect dramatic external macroeconomic
shocks.
- Nizhniy Novgorod will continue to have fair access to the
domestic financial markets sufficient for refinancing of maturing
debt.
=========
S P A I N
=========
CODERE SA: S&P Raises Corp. Credit Rating to 'CC'; Outlook Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on Spain-based gaming company Codere S.A.
to 'CC' from 'SD' (selective default). The outlook is negative.
At the same time, S&P raised its issue rating on the US$300
million senior notes issued by Codere Finance (Luxembourg) to 'CC'
from 'D' (default). The recovery rating on these notes remains
unchanged at '4', reflecting S&P's expectation of average (30%-
50%) recovery prospects in the event of a payment default.
The rating on the EUR760 million senior notes due 2015, also
issued by Codere Finance (Luxembourg), remains at 'CC'. The
recovery rating of these notes is '4'.
The upgrade reflects S&P's understanding that Codere is now
current on all of its outstanding debt instruments following the
group's announcement that it has settled overdue interest payments
on its dollar-denominated notes. Although the missed payments
were settled outside the standard 30-day grace period, S&P
understands that the majority of investors have agreed to waive
their right to demand early repayment.
S&P understands Codere is current on its EUR760 million senior
notes due 2015, the US$300 million notes due 2019, the credit
facilities that it recently extended until Jan. 5, 2014, and its
other obligations, such as an Argentinian loan. The next payment
is not due until Oct. 10, 2013, when the Argentinian loan comes
due, and S&P believes that Codere has the necessary funds to repay
the loan in local currency.
In addition, on Sept. 17, 2013, Codere obtained an additional
EUR35 million term loan facility from its creditors in the form of
cash advances, which is available in up to three separate draws.
It is S&P's understanding that EUR15 million has already been
drawn. However, S&P currently believes that the group may not be
able to meet its next interest payment on its euro-denominated
notes due Dec. 15, 2013, in a timely manner. The group's amended
senior credit facility prohibits it from making such a payment,
unless it repays the facility, and we think the group does not
have the capacity to do so at this time.
S&P notes that Codere is restructuring its balance sheet because
its capital structure has become unsustainable in view of recent
operating trends. This deterioration is mostly due to the
implementation of a smoking ban in Argentina from October 2012, in
addition to the ongoing weakening of Argentina's macroeconomic
environment, the temporary closure of gaming halls in Mexico, and
higher taxes in Italy.
S&P will follow the progress of Codere's pending capital
restructuring over the coming months. If Codere reaches an
agreement on restructuring, S&P will then reassess the ratings.
S&P's assessment would take into account the group's business
prospects, new capital structure, and any gains achieved through
the reorganization process.
The negative outlook reflects S&P's view that it could lower the
ratings on Codere to 'D' or 'SD' if it postpones upcoming interest
payments on the euro-denominated notes beyond the fifth business
day of the due date, Dec. 15, 2013, or if it carries out a credit-
dilutive restructuring measure, which S&P would view as tantamount
to default.
S&P views Codere's capital structure to likely remain
unsustainable, especially in light of the adverse business
conditions. In addition, due to Codere's sizable upcoming debt
maturities and ongoing negotiations with various stakeholders for
a balance sheet restructuring, S&P believes that management could
implement credit-dilutive restructuring measures. S&P would view
such an approach as tantamount to a default, under its criteria.
Given S&P's view of Codere's weakening operating trend, and the
uncertainty of current discussions with the various stakeholders,
S&P believes that a positive rating action is unlikely at this
stage.
=============
U K R A I N E
=============
DTEK HOLDINGS: Moody's Cuts CFR to Caa1 After Ukraine Downgrade
---------------------------------------------------------------
Moody's Investors Service has downgraded to Caa1 from B3 the
corporate family rating and to Caa1-PD from B3-PD the probability
of default rating of DTEK Holdings B.V. (DTEK). Moody's has also
downgraded to Caa1 from B3 the senior unsecured bond ratings of
DTEK Finance B.V. and DTEK Finance plc, fully owned finance
subsidiaries of DTEK. In addition, Moody's has placed all ratings
on review for downgrade.
Ratings Rationale:
The rating action follows Moody's decision to lower Ukraine's
foreign-currency bond country ceiling to Caa1 from B3. This also
follows Moody's downgrade of Ukraine's government bond rating by
one notch to Caa1 from B3 and placement of the government's bond
rating under review for downgrade.
In Moody's view, DTEK's capacity to service its foreign currency
debt is substantially exposed to actions that may be taken by the
Ukrainian government to preserve the country's foreign-exchange
reserves and earnings. Although DTEK's Ukraine-based business
generates foreign currency in an amount exceeding its debt-
servicing needs, Moody's believes that the company's revenues and
cash flows generated both inside and outside of the country could
be exposed to foreign-currency transfer and convertibility risks,
which are reflected in the Caa1 ceiling. Moody's notes that DTEK
has trading operations and cash balances outside of Ukraine.
However, the rating agency believes they are not sufficient to
warrant a rating higher than the country ceiling given the risk
that the company may be stopped from using export revenues to
service foreign currency debt. Moody's regards DTEK as constrained
in the Caa1 rating category, and given the company's strong
business fundamentals, reasonable performance and moderate
leverage, absent such constrain it would have a rating higher than
Caa1.
DTEK's ratings were placed on review for downgrade reflecting the
fact that Ukraine's sovereign rating was placed on review for
downgrade and the consequent risk of a further downgrade of the
foreign-currency bond country ceiling.
What Could Move The Rating Up/Down
Given the review for downgrade, Moody's does not currently expect
upward pressure on DTEK's rating. However, Moody's could upgrade
the rating if (1) it raises the foreign-currency bond country
ceiling; and (2) DTEK continues to deliver strong operating
performance, increases export revenues and maintains a good
liquidity position and long-term debt maturity profile. As DTEK's
integrated electric utility business is focused on Ukraine, the
company's rating will be ultimately dependent on further
developments at the sovereign level.
Conversely, downward pressure could be exerted on DTEK's rating as
a result of a further downgrade of the sovereign rating and
further lowering of the foreign-currency bond country ceiling. The
ratings could also face downward pressure if DTEK's financial
profile deteriorates materially and sustainably from its 2012
level and its liquidity position weakens.
The methodologies used in these ratings were Unregulated Utilities
and Power Companies published in August 2009, and Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Headquartered in Donetsk and Kyiv, DTEK is one of the major energy
companies in Ukraine and part of a financial and industrial group
System Capital Management (SCM). DTEK generated revenue of UAH82.6
billion, or US$10.3 billion, including heat tariff compensation,
in 2012. DTEK's H1 2013 revenue, including heat tariff
compensation, and net profit were UAH43.8 billion, or US$5.5
billion, and UAH1.2 billion, or US$149.8 million, respectively.
UKRAINE MORTGAGE: Moody's Cuts Rating on Cl. B Notes to Caa1
------------------------------------------------------------
Moody's Investors Service has downgraded credit ratings of notes
issued by Ukraine Mortgage Loan Finance No. 1 Plc. The following
notes were affected:
US$36.9M Class B Residential Mortgage Backed Floating Rate Notes
due 2031, Downgraded to Caa1 (sf); previously on Jul 20, 2010
Confirmed at B3 (sf)
Ratings Rationale:
The rating action follows the downgrade of the Foreign Currency
Country Bond Ceiling of Ukraine to Caa1 from B3 on September 20,
2013. This consequently limits the highest achievable rating of
the notes in this transaction to Caa1 (sf).
The principal methodology used in this rating was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
May 2013.
Key modeling assumptions, sensitivities, cash-flow analysis and
stress scenarios of the affected transactions have not been
updated as the rating action has been primarily driven by revision
of maximum achievable ratings.
===========================
U N I T E D K I N G D O M
===========================
AMBERLEY KNIGHT: High Court Winds Up Land Banking Company
---------------------------------------------------------
Amberley Knight Ltd a land banking company in Milton Keynes which
misled investors into buying plots of green belt land for property
development, was wound-up in the public interest on Sept. 17,
2013, in the High Court in Manchester, following an investigation
by the Insolvency Service.
Between July 2007 and September 2013, Amberley Knight Ltd, sold 97
plots of land at an average price of more than GBP7,700 apiece by
targeting investors through cold calling and advertising on its
website. This was from a total of 158 plots subdivided from a
larger piece of land purchased from its director and an associate
for GBP64,173.
Amberley marketed the land and exaggerated its experience, saying
that its expert team provided clients with profitable land
investment opportunities by identifying prime land sites across
the UK with the potential for development.
However, the investigation discovered that:
The land being sold by Amberley was within the green belt and
development was generally restricted under the Local Authority's
existing planning policies.
The company had contacted the Local Authority in general terms
only, despite claiming that it had conducted thorough research
indicating that the land was likely to obtain planning consent.
There was no evidence that Amberley had ever obtained professional
advice on the likelihood of obtaining planning permission or the
prospects for development.
Amberley operated from a single office and the director had no
prior experience of buying and selling land.
It had no other members of staff beyond sales agents.
The claimed returns for investors were overstated and unrealistic.
In winding the company up, the court accepted the Secretary of
State's evidence that the business carried out by Amberley lacked
commercial probity and that there was a lack of commercial benefit
to its customers. The court also observed that customers thought
that they were dealing with a company of vast experience, whereas
Amberley actually had significantly less experience than it
claimed.
Commenting on the case, Scott Crighton, Investigation Supervisor
at the Insolvency Service, said:
"Directors of companies who set out to market investment
opportunities to the public on the basis of false or misleading
information should be aware that the Insolvency Service can and
will take rigorous action to stamp out their activities."
BRITAX GROUP: Moody's Assigns B1 CFR; Outlook Stable
----------------------------------------------------
Moody's Investors Service has assigned a corporate family rating
of B1 and a probability of default rating of B1-PD to Britax Group
Limited.
Concurrently, Moody's has assigned a (P)B1 rating to the EUR280
million first lien term loan and EUR40 million revolving credit
facility issued by Britax US Holdings Inc. (as the Lead Borrower).
The outlook on all ratings is stable.
Loan proceeds will be used by the company to refinance its
existing senior bank debt facilities.
Moody's issues provisional ratings in advance of the final sale of
securities and these ratings reflect Moody's preliminary credit
opinion regarding the transaction only. Upon a conclusive review
of the final documentation, Moody's will endeavor to assign a
definitive rating to the facilities. A definitive rating may
differ from a provisional rating.
Ratings Rationale:
The B1 CFR incorporates the company's: (i) highly leveraged
capital structure with gross debt / EBITDA of 4.6x at closing,
(ii) relatively small scale, (iii) limited product segments
compared to its rated peers, (iv) exposure to cyclical end
consumer markets, and (v) reliance on the successful roll out of
new products over the lifecycle of the business.
The rating positively reflects: (i) the group's leading market
positions and brand strength in the child travel safety market,
(ii) the barriers to entry created by regulation, (iii) the stable
and resilient financial track record, (iv) the strong track record
of safety innovation, and (v) potential growth into adjacent
product categories and new geographies.
Britax operates in three broad geographies including North America
(41% of sales), Europe (35%), Australasia (21%) and other (4%).
Within these markets Britax has multiple sales channels for both
car seats and wheeled goods products including retailers and
increasingly e-tailers, although there is a degree of customer
concentration with the top ten customers accounting for c.50% of
FY 2012 sales.
Britax achieves higher margins in the car seat market than for
wheeled goods. This reflects the higher investment costs involved
in testing and meeting strict regulatory approvals and supply
chain dynamics in the car seat markets that vary across the
jurisdictions in which the company operates.
While the car seat market benefits from being regulated with the
result that car seats are mainly a non-discretionary purchase, the
wheeled goods market has evidenced some cyclicality with reduced
sales growth over the period 2007-2009. Overall the through-the-
cycle trend is for stable growth, reflecting underlying strong
demand for the company's products.
Moody's believes that a high proportion of the company's costs are
fully variable, and total capital expenditure is around 2.5% of
sales (some of which would be discretionary). Working capital is
largely stable, although there is some first-quarter seasonality
in the wheeled-goods segments. Moody's expects that Britax should
generate meaningful free cash flow.
The stable business profile is reflected in the through-the-cycle,
like-for-like revenue CAGR of 9.1% 2001-2012 and stable adjusted
EBITDA margin around 18-22%. The recent acquisitions of B.O.B. (in
the US) and Brio (in Europe) should support sales growth, while
margins are expected to remain within the historical range.
Britax Group Limited is the top company of the restricted group
and the reporting entity for the consolidated group. The senior
secured facilities will share the same security package (including
security on essentially all assets) and guarantees. Operating
entities representing at least 85% of consolidated EBITDA will
provide upstream guarantees and lenders will benefit from share
pledges over entities also accounting for at least 85% of
consolidated total assets. The (P)B1 rating on the bank
facilities, and the B1-PD Probability of Default rating -- both at
the same level as the CFR - reflects the fact that the facilities
are the only financial debt in the capital structure, and the
covenant-light nature of the senior secured facilities. The RCF
has a springing leverage covenant, when it is more than 25% drawn.
The stable outlook reflects Moody's expectation that Britax will
be able to deleverage the business in the short term. Positive
ratings pressure could result from adjusted gross debt / EBITDA
sustained below 4.0x and free cash flow trending towards 15% of
adjusted gross debt. Downward ratings pressure could occur if the
company fails to maintain leverage below 4.5x within the next 12
months, or if the company's strong liquidity profile were to
diminish, or if it significantly drew on its RCF to fund rapid
expansion.
The principal methodology used in these ratings was the Global
Consumer Durables published in October 2010. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in June
2009.
Britax Group Limited, headquartered in the UK, is a manufacturer
of a range of children's car seats and wheeled-goods. The company
operates across Europe, North America and Australasia. For the
year ending December 31, 2012, the company reported net sales of
EUR349.8 million and EBITDA of EUR63.5 million. The company is
owned by Nordic Capital.
BRITAX GROUP: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'B'
long-term corporate credit rating to U.K.-based child car seat and
wheeled goods manufacturer Britax Group Ltd. (Britax). The
outlook is stable.
At the same time, S&P assigned its issue rating of 'B' to Britax'
proposed first-lien credit facilities, including a US$370 million
(EUR280 million) term loan and US$53 million (EUR40 million)
revolving credit facility (RCF). The recovery rating on the
first-lien credit facilities is '3', indicating S&P's expectation
of meaningful (50%-70%) recovery in the event of a payment
default.
The issue and recovery ratings are based on preliminary
information. The ratings are subject to the successful closing of
the proposed debt issuance and depend on S&P's receipt and
satisfactory review of the final transaction documentation.
The ratings on Britax reflect S&P's assessment of the group's
"fair" business risk profile and "highly leveraged" financial risk
profile. Britax designs, manufactures, and supplies child car
safety seats and wheeled goods (baby and child strollers) to
retail customers in developed markets in the U.S., Europe, and
Australia.
S&P's assessment of Britax' business risk profile as "fair"
reflects its view of the group's No. 2 position (almost joint
No. 1) in the global child car seat market, with an overall share
of about 22%, and more than a 50% share of the premium price
segment. S&P's assessment also reflects the group's growing
presence in wheeled goods following the acquisition of U.S.
stroller and bike trailer firm B.O.B. Trailer Inc. in 2011 and the
stroller and child car safety business of BRIO Holding AB (BRIO)
in 2013.
On the other hand, Britax' "fair" business risk profile is
constrained in S&P's view by the mature and highly competitive
nature of the child car seat and stroller markets in developed
countries. In addition, the group has high exposure to Western
Europe and Australia--which generate just less than 50% of
consolidated annual EBITDA--and where S&P believes demand should
remain constrained by weak consumer confidence.
Britax' "highly leveraged" financial risk profile reflects S&P's
view of its high leverage following the proposed refinancing. S&P
estimates that the group's ratio of debt to EBITDA will be above
11x in December 2013, which, in S&P's view, indicates a very
aggressive financial policy. This level of leverage includes a
shareholder loan and preference shares (shareholder debt) of about
EUR393 million in total at closing.
Mitigating this high leverage is S&P's assessment of the group's
liquidity as "adequate" and its EBITDA cash interest coverage in
excess of 3.5x (excluding the noncash interest element of the
shareholder debt). In addition, S&P forecasts low, but positive
free operating cash flow (FOCF) generation of about EUR15 million-
EUR20 million per year over the medium term.
In S&P's view, Britax should be able to maintain positive FOCF
thanks to its strong core brands and its robust pipeline of new
products. This is notwithstanding soft demand conditions in some
of its key markets, notably in Western Europe and Australia.
Furthermore, S&P assumes that Britax's liquidity will remain
"adequate" as per its criteria. Over the next 12 months, S&P
anticipates that Britax' coverage of cash interest by EBITDA will
stay comfortably above 2.5x. S&P considers these levels
commensurate with a "highly leveraged" financial risk profile and
the current rating.
S&P could lower the ratings if Britax did not maintain "adequate"
liquidity, if adjusted EBITDA interest coverage fell to
meaningfully less than 2.5x excluding the noncash-interest element
of the shareholder loan, or if FOCF became negative. The most
likely triggers for these developments would be increased price
competition in Britax' major markets or a severe deterioration in
the credit available to retail companies. However, S&P do not
consider these risks as central to its base-case assumptions at
present.
S&P could take a positive rating action if the group's FOCF
generation increases significantly thanks to the contribution from
new product launches and growth in the sales of wheeled goods.
That said, in view of the company's highly leveraged capital
structure, S&P considers a near-term positive rating action to be
unlikely under its base case.
CROSBY KITCHENS: Goes Into Liquidation; NTP in Receivership
-----------------------------------------------------------
insidermedia.com reports that Crosby Kitchens has confirmed that
it is has gone into liquidation, while its sister company
Aberdeen-based NTP Kitchens has been placed into receivership.
Gordon MacLure and Ewen Alexander from Johnston Carmichael have
been appointed receivers and have already commenced talks with
staff, key suppliers and customers, the report says.
Three of Crosby Kitchens's six staff members have been made
redundant with immediate effect, while the remaining employees
have been retained to assist with a closing down sale and other
administrative matters, according to insidermedia.com.
"It is with deep regret that we confirm today that NTP Kitchens
has been placed into receivership, whilst Crosby Kitchens has
entered liquidation," the report quotes a spokesman for Crosby
Kitchens and NTP Kitchens as saying.
"These developments stem from the recent recession, which had a
hugely negative impact on retail sales, with customers proving to
be extremely cautious when it came to discretionary purchases such
as kitchens."
NTP, which designs, builds and installs kitchens, employs 23
members of staff at its Bridge of Don headquarters. The company
also operates the Kutchenhaus franchise in Scotland on behalf of
Nobilia, employing six staff members at its Union Square store.
HAWKHURST CAPITAL: Placed Into Provisional Liquidation
------------------------------------------------------
Hawkhurst Capital Plc, whose shares were offered to the public as
part of an early pension release scheme, was put into provisional
liquidation on Sept. 13, 2013, by the High Court in Manchester
following an investigation by the Insolvency Service.
The purchase of shares in Hawkhurst Capital Plc was made a
condition of the release of pension funds, before pensionable age,
to the participants in the scheme. The company's registered office
was in Great Bookham, Surrey. Its financial accounts describe it
as an investment management company.
The order placing the company into provisional liquidation was
made following a petition on public interest grounds presented by
the Secretary of State for Business, Innovation and Skills. The
Official Receiver has been appointed as Provisional Liquidator.
The role of the Provisional Liquidator is to protect assets in the
possession of or under the control, of the company pending the
determination of the petition. The Provisional Liquidator also has
the power to investigate the affairs of the company insofar as it
is necessary to protect the assets including any third party or
trust money or assets in the possession of or under the control of
the company.
The case is now subject to High Court action and no further
information will be made available until the petition is heard in
the High Court on Nov. 5, 2013.
MARSTON: Fitch Affirms 'BB+' Rating on GBP155MM Class B Notes
-------------------------------------------------------------
Fitch Ratings has affirmed Marston's Issuer plc's (Marston's)
class A, AB and B notes with Negative Outlooks.
The rating actions mainly reflect the overall stable performance
of the estate in the context of the on-going difficult trading
conditions in particular for the tenanted pubs (predominantly
community wet-led).
Key Rating Drivers
The overall performance of the securitized estate for the trailing
12 months (TTM) to June 2013 has been marginally above Fitch's
base case (by c. 2%) with EBITDA margin also marginally improving.
This represents a mild year-on-year (yoy) increase of just above
1% from GBP127.7 million. The growth is largely the result of
strong performance within the managed estate, which grew by c.
11.8% (with strong food sales now representing over 44% of total
managed sales, up by 2pp) positively offsetting the tenanted
estate's performance, which was below expectations (dropping by
5.7% despite the annual average number of pubs falling by just
1.4%).
The managed division continues to represent an increasing share of
total EBITDA (now reaching 45%, up yoy from 40%) partly driven by
increasing managed EBITDA margin. This improvement is a direct
result from the positive effect of operating leverage from
increased sales of the managed estate (up by 3.9%). In contrast,
the recovery of the tenanted estate has halted. This is mainly due
to the on-going fundamental decline of community wet-led pubs, in
addition to the bulk of the conversion of wet-led tenanted pubs to
Marston's proprietary franchise 'Retail Agreement' having been
completed. To date, close to 600 pubs have been converted,
representing about 40% of the tenanted estate (up from 450 in the
previous year).
TTM June 2014 EBITDA is forecast to marginally decline under
Fitch's base case by just over 1% to around GBP128 million with
EBITDA margin declining slightly. In the long term, Fitch's base
case assumes EBITDA will remain broadly flat (with below 1% growth
in the early years and a gradual decline in the later years).
Fitch expects free cash flow (FCF; EBITDA -- maintenance capex --
tax) debt service coverage ratios (DSCR) for the class A, AB, and
B notes to continue to fluctuate above 1.7x, 1.6x and 1.4x,
respectively. These ratio levels remain in line with the rating
thresholds indicated in Fitch's UK WBS criteria, albeit with
little cushion for unexpected declines in performance.
The Negative Outlook is underpinned by the combination of a
continuing weak industry and uncertain macroeconomic outlook,
particularly for the wet-led pubs with real income continuing to
decline. The worse than expected decline in performance of the
tenanted estate, in addition to a continued limited cushion with
regard to the recommended FCF DSCR levels as per Fitch's UK whole
business securitization criteria also contributes to the Negative
Outlook.
Rating Sensitivities
The ratings could be adversely affected if performance drops
significantly below Fitch's base case, notably due to worse than
expected performance of the tenanted pubs or declining food sales
in the managed estate (due for instance to a continued squeeze on
real income). A decline in Fitch's base case FCF DSCR metrics to
anything substantially below 1.7x, 1.6x and 1.4x for the class A,
AB and B notes, respectively, could also result in a downgrade of
the notes.
Summary Of Credit
The transaction is the securitization of both managed and tenanted
pubs operated by Marston's comprising 271 managed pubs
(representing over half of Marston's plc's managed pubs) and 1,492
tenanted pubs (close to 100%).
The ratings actions are:
GBP135.5m class A1 floating-rate notes due 2020: affirmed at
'BBB+'; Outlook Negative
GBP214.0m class A2 fixed rate notes due 2027: affirmed at 'BBB+';
Outlook Negative
GBP200.0m class A3 fixed-rate notes due 2032: affirmed at 'BBB+';
Outlook Negative
GBP216.9m class A4 floating-rate notes due 2031: affirmed at
'BBB+'; Outlook Negative
GBP80.0m class AB1 floating-rate notes due 2035: affirmed at
'BBB'; Outlook Negative
GBP155.0m class B fixed-rate notes due 2035: affirmed at 'BB+';
Outlook Negative
NGS PRINT: Placed Into Creditors' Voluntary Liquidation
-------------------------------------------------------
Hannah Jordan at PrintWeek reports that NGS Print Finishing, which
merged with Purfect Binding Company (PBC) in July, has been placed
into creditors' voluntary liquidation.
It follows a members' meeting, which took place on September 19,
where it was agreed to place NGS into creditors' voluntary
liquidation, the report relates.
Carl James Bowles and John Anthony Dickinson of accountancy firm
Carter Backer Winter were appointed as joint liquidators,
PrintWeek discloses.
In July, NGS Print Finishing closed the doors of its Perivale,
West London site and moved into the Wembley facility of Purfect
Binding Company, taking all NGS staff with it, the report recalls.
NGS managing director Neil Sharp was appointed managing director
of the new entity, while PBC's co-directors Reginald Walwyk and
Yat Ng positions were terminated on the same day, PrintWeek relays
citing Companies House.
Sharp formed NGS Finishing Solutions in February 2011, which he
then used to buy his previous company, NGS Print Finishers, out of
administration the following month, the report notes.
ODEON & UCI: S&P Cuts Corp. Credit Rating to 'B-'; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
corporate credit rating on U.K.-based cinema operator Odeon & UCI
Cinemas Group Ltd (Odeon) to 'B-' from 'B'. The outlook is
stable.
The downgrade reflects S&P's view that recent weak performances
point to deterioration in Odeon's business profile, and that its
credit ratios may deteriorate in 2013.
"We now view the group's business profile as "weak," compared with
"fair" previously. Our initial assumption that Odeon's geographic
diversification stabilized financial performance by making the
company less reliant on Hollywood productions no longer seems to
be valid. In Spain, an increase in value-added tax (VAT) combined
with high unemployment has led to a sharp decline in attendance,
which has markedly impaired the group's EBITDA. Our reassessment
of Odeon's business profile also factors in the volatility of
intra-year results. Past performances have shown that the film
lineup, economic conditions, weather, and sporting events have an
impact on revenues. This is compounded at EBITDA level by the
high share of fixed costs," S&P said.
"High debt and negative free cash flow generation also constrain
the rating. Odeon's adjusted debt reached about GBP2 billion on
June 30, 2013, which translates into adjusted debt-to-EBITDA and
EBITDA-to-interest ratios of about 12x and 1.0x, or about 8.5x and
1.3x if we exclude shareholder loans. Even though management
plans to reduce capital expenditure (capex), we still anticipate
negative free cash flow generation for the next 12 months. In
this context, it is possible that the capital structure may become
unsustainable if Odeon is unable to stop the erosion of its
EBITDA. On the positive side, liquidity remains adequate, with
small short-term debt maturities and no maintenance covenants,"
S&P added.
"We now forecast that EBITDA before adjustments will decline to
about GBP80 million in 2013, compared with GBP93 million in 2012,
based on our calculation. As a result, we believe that the
adjusted debt-to-EBITDA ratio will increase to about 13x, or to 9x
excluding shareholder loans, and that the adjusted EBITDA-to-cash
interest ratio will reach about 1.3x. While the lack of sporting
events should have positive effects on attendance, this is more
than offset by the negative consequences of the VAT increase in
Spain, although we believe that other markets will remain
supportive. That said, we acknowledge that performances have
historically been difficult to predict," S&P noted.
The stable outlook reflects S&P's belief that the company will
maintain an adjusted EBITDA-to-interest ratio of about 1.0x, or
1.3x excluding shareholder loans, and that liquidity will remain
adequate. S&P's base-case scenario for the next 12 months factors
in a flat to low-single digit decline in revenues and a decrease
in the adjusted EBITDA margin of about 100 basis points, as
Northern European operations should partly offset the difficulties
in the Spanish market.
S&P might consider a negative rating action if it perceived a
weakening of the liquidity position, notably if management failed
to address the refinancing of its debt maturities early in
advance. Negative rating pressure would also arise if reported
EBITDA were to fall below GBP80 million, or if we had reason to
believe that the capital structure had become unsustainable.
S&P might consider a positive rating action if Odeon sustainably
maintained an adjusted EBITDA-to-cash interest above 2.0x, owing
to sustained positive business trends leading to an improvement in
adjusted EBITDA. Rating upside seems limited over the next 12
months, in S&P's opinion.
PICSEL INT'L: Enters Into Insolvency Proceedings for Second Time
----------------------------------------------------------------
Greig Cameron at Herald Scotland reports that Picsel International
has entered insolvency proceedings for the second time inside five
years.
The company, which has a range of intellectual property and
patents relating to apps and mobile phone software, has now been
placed in provisional liquidation while subsidiary SmartOffice
Technologies is in administration, Herald Scotland relates.
That development comes four years after management at Picsel
Technologies, including co-founder Imran Khand, staged a buyout of
that business to rescue it from administration, Herald Scotland
says. The Picsel International business emerged from this buyout,
Herald Scotland discloses.
According to Herald Scotland, Brian Milne and Linda Barr, from
French Duncan, have been appointed as provisional liquidator at
Picsel International and administrator of Paisley-based
SmartOffice.
Mr. Milne confirmed the businesses have suffered from cash flow
difficulties which meant they were unable to continue trading,
Herald Scotland notes.
There were 14 redundancies made from the Paisley premises last
week, Herald Scotland recounts. That leaves 17 employees in
Scotland and Mr. Milne, as cited by Herald Scotland, said he is
still trying to find out if a further six people in Asia are staff
members or contractors.
Herald Scotland notes that while admitting it was "early days" in
the insolvency process Mr. Milne revealed there has already been
"two or three" notes of interest from buyers keen to take on
Picsel's technology.
According to Herald Scotland, Mr. Milne refused to be drawn on how
much the assets could be sold for and said: "The IP and patents
are worth what someone is willing to pay for them."
Herald Scotland notes that the future of the remaining employees
is also uncertain with Mr. Milne adding: "It very much depends on
who buys it and what they want to do with it."
Picsel International is a Scottish software firm. The company was
set up by Mr. Khand and Dr Majid Anwar in 1998.
PUNCH TAVERNS: Optimistic on Consensual Debt Restructuring
----------------------------------------------------------
Adam Jones at The Financial Times reports that Punch Taverns said
it remained hopeful of launching a consensual restructuring of its
heavy debt burden this year as the pub owner posted a 68% drop in
annual pre-tax profit.
The group's most recent attempt to cut its debt was rejected by
senior bondholders in June but on Wednesday Punch said it had
continued with an "extensive process of engagement" with a broad
range of interested parties over the matter, the FT relates.
"While the process of engagement has taken longer than previously
anticipated, the board believes that a consensual restructuring
can be launched in the fourth quarter of the 2013 calendar year,"
the FT quotes the company as saying.
Punch, which owns 4,100 pubs run by semi-independent publicans,
had net debt of GBP2.3 billion at Aug. 17, the FT discloses. The
group needs to ease the terms of two big tranches of securitized
debt to avoid a covenant default, the FT notes.
Punch floated in 2002 and its shares topped 270p in 2007 before it
started to struggle under its debt load, a smoking ban and
competition from cheap alcohol sold through supermarkets, the FT
recounts.
Punch Taverns plc is a United Kingdom-based pub company. The
Company is engaged in the operation of public houses under either
the leased model or as directly managed by the Company. The
Company operates in two business segments: punch partnerships, a
leased estate and punch pub company, a managed estate.
R.C.M.H. LIMITED: High Court Winds Up Escort Agencies
-----------------------------------------------------
Two companies which charged advance fees to prospective clients
for jobs in adult films or escort services but failed to deliver,
have been wound up by the High Court in London on grounds of
public interest, following an investigation by the Insolvency
Service.
R.C.M.H. Limited and C&W Pictures Limited were wound up on
Sept. 4, 2013, following petitions from the Secretary of State for
Business, Innovation and Skills (BIS).
The investigation found that R.C.M.H. Limited ('RCMH') traded as
an escort agency using a number of trading styles including 'Class
& Whisper' and/or 'Client Connections'. Its newspaper and website
adverts offered 'potential escorts work'.
However, on contacting the company, clients were told they had to
pay advance fees to be registered for such introductions. One
client paid GBP40,000 in the expectation of getting escort work
with the company's 'elite', 'VIP' and 'aristocrat' customers. In
total RCMH received over of GBP440,000 into its bank account.
The investigation also found that C&W appeared to have traded
under the name 'Madam Extras' as a producer of adult films. The
company acted in a similar manner to RCMH and placed adverts on
its website and in newspapers looking for individuals wishing to
appear in adult films.
As was the case with RCMH, people contacting C&W were asked to pay
various advance fees in the expectation of obtaining such work and
associated earnings and royalties. The fees were variously
described as 'production costs' and 'insurance'.
C&W's bank account received almost GBP400,000 into it, and
payments of the same amount were made out of the account between 9
December 2011 to 27 September 2012, over half of which was
withdrawn in cash.
Clients of RCMH contacted by the investigators said that the
promised work rarely, if ever, materialised and that no refunds
were available, while clients of C&W said no work ever
materialised and no refunds were given.
In both cases, investigators could not find any records to show
the origins and use of the income in the bank accounts, although
considerable sums were withdrawn in cash. The companies ensured
that contacts were always by phone and no documents or contracts
were ever seen by the clients.
Both RCMH and C&W appear to have ceased trading in September 2012
but had not gone into liquidation.
In the absence of adequate accounting records or adequate
responses from those involved with the companies, the
investigators were unable to fully investigate the companies'
affairs.
The Official Receiver has been appointed liquidator and will now
conduct further investigations into both companies.
Company Investigations Supervisor at the Insolvency Service, Geoff
Hanna, said:
"The public needs to be on their guard against the activities of
companies which encourage people to part with cash on vague
promises of work or other services that may well not materialise."
"People need to do their own diligent research into such companies
and examine critically any claims made in adverts and on websites
offering introductions and other work."
"The Insolvency Service will continue to clamp down on companies
which deliberately mislead, often quite vulnerable people, in this
way."
SPIRIT ISSUER: Fitch Affirms 'BB' Ratings on Five Note Classes
--------------------------------------------------------------
Fitch Ratings has affirmed Spirit Issuer plc's notes at 'BB' and
revised the Outlook to Stable from Positive.
Key Rating Drivers
Overall, performance has been stable over the past year. Despite
combined estate EBITDA growth being negative to Fitch's base case
by around 1%, trailing-12-month (TTM) March 2013 EBITDA grew by
3.3% to GBP145.7 million. Performance continued to be driven by
the managed division, which achieved EBITDA growth of 10.4% vs.
8.4% base case, reaching GBP111.8 million, but was offset by a
14.6% decline in tenanted estate EBITDA to GBP33.9 million (driven
partially by disposals). Notably, the weaker tenanted performance
also carries less weight in the analysis as 77% of EBITDA is now
generated by the managed division. In relation to the WBS criteria
guideline forecast free cash flow (FCF) debt service credit ratio
(DSCR) rating levels, Spirit remains well positioned within the
'BB' category at 1.3x. The Outlook revision is underpinned by the
lower managed sales growth and on-going tenanted decline, in
addition to continuing weak industry fundamentals and economic
environment.
In terms of the managed estate, Fitch expects the recent three-
year c. GBP200 million capex program (the majority of which was
spent on the managed pubs) to continue to positively impact
performance over the medium term. However, during the past 12
months, sales per pub have increased by only 1.8%, and the trend
of growth at a declining rate since December 2011 (YoY TTM per pub
growth of 7.9%) is a credit negative. Nevertheless, if sales
growth remains weak, some comfort can be taken from the potential
for EBITDA growth via further margin improvement. Spirit's managed
division already generates sales per pub above comparable
transactions such as Marston's and Greene King (c. GBP910k per
annum vs. c. GBP810k) while EBITDA per pub remains lower by c. 16%
(margin 19.0% vs. c. 25%). Over the past 12 months, margins have
improved by 1.4ppt, and as Spirit continues to optimize its new
operating model independent from Punch Taverns (following the
demerger in August 2011), further uplift could occur. While this
is not yet embedded in the forecast cash flows, future
improvements could positively impact the FCF DSCR metrics.
Management has been attempting to stabilize the performance of the
tenanted estate by disposing of under-performing pubs (12%
reduction since March 2012) and growing sales per pub (1.9%
increase). This has allowed them to reduce tenant support over the
past two years. They have also recently launched a pilot scheme to
test a newly developed franchise agreement with six branded and
three unbranded pubs. However, they are lagging behind competitors
such as Marston's (c. 600 franchise pubs). Performance is expected
to decline gradually in the long-term under Fitch's base case.
The reported March 2013 annual FCF DSCR of 1.90x is forecast to
decrease significantly as principal payments begin in 2014, and
lease-adjusted FCF DSCR is expected to fluctuate around 1.3x (vs.
1.4x previous year), reaching a forecast minimum of 1.1x in 2026
(also approaching this level during 2015). These point-in-time
stresses, caused by the uneven debt profile following the
prepayment of 29.2% (GBP364.9 million) of the initial debt prior
to FY12, are partly mitigated by the transaction's credit
enhancement, such as the liquidity facility (currently covering
around 25 months of debt service, although this is expected to
reduce to around 10 months by 2025 due to the amortizing structure
of the facility) and the potentially significant amount of trapped
cash that could accumulate by then (given the RPC covenant level
of 1.7x, which includes an annuity style amortization schedule).
Rating Sensitivities
Any significant change in performance could impact the ratings if
the resulting forecast metrics moved significantly above or below
Fitch's UK WBS criteria recommended 'BB' category ranges (on a
Spirit managed/tenanted EBITDA weighted basis) of 1.25x-1.40x.
Summary Of Credit
Spirit is a whole business securitization of 646 managed pubs and
468 leased and tenanted pubs across the UK owned and operated by
Spirit Pub Company plc.
The rating actions are as follows:
GBP144.7m Class A1 notes due 2028: affirmed at 'BB'; Outlook
revised to Stable from Positive
GBP188.6m Class A2 notes due 2031: affirmed at 'BB'; Outlook
revised to Stable from Positive
GBP116.7m Class A3 notes due 2021: affirmed at 'BB'; Outlook
revised to Stable from Positive
GBP216.6m Class A4 notes due 2027: affirmed at 'BB'; Outlook
revised to Stable from Positive
GBP167.3m Class A5 notes due 2034: affirmed at 'BB'; Outlook
revised to Stable from Positive
* UK: Pace of High Street Closures Slows in First Half of 2013
--------------------------------------------------------------
Andrea Felsted at The Financial Times reports that retailers with
more than six stores across the UK shut 18 stores a day in the
first half of this year, but the pace of closures is slowing,
offering a glimmer of hope to the high street.
PwC, the professional services firm, and the Local Data Company, a
retail information provider, said net store closures -- openings
minus closures -- fell from more than 20 a day in the first half
of 2012 to 18 a day in the first half of this year, the FT
relates.
"It's getting marginally better, but not markedly better," the FT
quotes a Mike Jervis, insolvency partner and retail specialist at
PwC, as saying.
The study of 500 town centers across the UK showed that 3,366
outlets closed in the first half of this year, compared with 3,157
openings, a net reduction of 209 shops, the FT discloses.
In the first half of 2012, the net number of stores that closed
was almost 1,000, after 2,670 stores opened, but 3,623 stores
closed, the FT relates.
Mr. Jervis, as cited by the FT, said most of the closures in the
first half of this year were a result of the spate of retail
casualties in early 2013, including HMV, Blockbuster, Jessops and
Republic.
===============
X X X X X X X X
===============
* Moody's Changes Outlook on Baltic Area Banking System to Stable
-----------------------------------------------------------------
The outlook for the banking systems in the three Baltic countries,
Estonia, Latvia and Lithuania, has been changed to stable from
negative, says Moody's Investors Service in a new Banking System
Outlook entitled "Banking System Outlook: Baltics."
The outlook's key drivers are (1) the improving macroeconomic
environment; (2) falling problem loan levels; (3) recovering
profitability as loan demand slowly picks up; (4) the positive
impact on capitalization of the improved asset quality and
profitability; and (5) low reliance on market funding.
Moody's expects that GDP growth will continue in all three
countries, which, combined with low inflation will create a strong
macroeconomic platform for the banking systems. The rating agency
expects growth of 3.0%, 3.8% and 3.2% over 2013 in Estonia, Latvia
and Lithuania, respectively. The improvement over the past few
years was driven by increased competitiveness as a result of real
wage decreases which, given the high unemployment rates across the
region, are unlikely to rise significantly during the outlook
period. However, high unemployment in itself creates negative
pressures on debt repayment ability.
Moody's says that with many of the region's larger banks having
undertaken severe write-downs during the financial crisis, problem
loan levels are now falling, although absolute levels remain high.
Improvements in problem loans levels have prompted write-backs
that have underpinned some of the recent profitability
improvements. Such write-backs will likely reduce in the future
although profitability will be helped by slowly increasing loan
demand. The combination of improving asset quality, profitability,
and increasing regulatory requirements will also help keep capital
levels high.
The wholesale funding risk seen in many European banking systems
is less pronounced in the Baltic countries where on aggregate,
banks are funded through deposits and down-streamed parental
funds. Moody's sees no current indication that banks will look to
increase their market funding in the short term, due to a lack of
need in the case of the parental-funded larger banks and
insufficient scale to access funding markets for many of the
smaller banks. Instead, Moody's views potential deposit
instability and parent bank commitment to the Baltics as risks
with respect to funding.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Oct. 3-5, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Wardman Park, Washington, D.C.
Contact: http://www.turnaround.org/
Nov. 1, 2013
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Atlanta Marriott Marquis, Atlanta, Ga.
Contact: 1-703-739-0800; http://www.abiworld.org/
Dec. 2, 2013
BEARD GROUP, INC.
19th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York, N.Y.
Contact: 240-629-3300 or http://bankrupt.com/
Dec. 5-7, 2013
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Terranea Resort, Rancho Palos Verdes, Calif.
Contact: 1-703-739-0800; http://www.abiworld.org/
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
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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.
This material is copyrighted and any commercial use, resale or
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