/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/140530.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 Friday, May 30, 2014, Vol. 15, No. 106 Headlines C R O A T I A CROATIA: Recession No Impact on Moody's 'Ba1' Sovereign Rating F R A N C E RIVOLI PAN EUROPE: S&P Raises Rating on Class C Notes to 'B-' G E R M A N Y ALISON MIDCO: Moody's Assigns 'B3' Corporate Family Rating DEUTSCHE LUFTHANSA: Moody's Changes Ba1 Rating Outlook to Pos. STABILUS SA: Moody's Raises Corporate Family Rating to 'B2' VOERDE ALUMINIUM: Biz Has Been Bought by Trimet Aluminium I R E L A N D EUROCREDIT CDO V: S&P Lowers Rating on Class E Notes to 'B-' PIERSE CONTRACTING: Liquidator Seeks Director Restriction Orders SMURFIT KAPPA: Moody's Assigns Ba2 Rating to EUR500MM Sr. Notes I T A L Y SUNRISE SRL: Moody's Reviews 'B3' Note Ratings for Upgrade N E T H E R L A N D S HALCYON STRUCTURED 2007-1: S&P Cuts Rating on Class E Notes to B- R O M A N I A HIDROELECTRICA: Likely to Exit Insolvency in May or June 2015 ROMAVIA: May Face Insolvency in Third Quarter 2014 R U S S I A SOVCOMBANK: Moody's Withdraws B2 Deposit Ratings; Outlook Neg. S W E D E N COM HEM: S&P Puts 'B' Corp. Credit Rating on CreditWatch Positive U N I T E D K I N G D O M ECO-SYNERGIES LTD: High Court Winds Up Carbon Credit Companies WINDERMERE XI: S&P Cuts Ratings on 3 Note Classes to 'D' X X X X X X X X * BOOK REVIEW: American Economic History ********* ============= C R O A T I A ============= CROATIA: Recession No Impact on Moody's 'Ba1' Sovereign Rating -------------------------------------------------------------- In a report dated May 28, 2014, Moody's Investor Service said Croatia's Ba1 sovereign rating remains constrained by the impact of the country's long recession on its government's finances, but the country's EU entry could revive exports and investment. The rating agency's report is an update to the markets and does not constitute a rating action. Moody's assigned a negative outlook to Croatia's Ba1 sovereign rating in March 2014, reflecting the continued slow pace of Croatia's recovery from several years of recession, which has been exacerbated by competitiveness challenges and deleveraging. Moody's expects this delayed recovery to impede fiscal consolidation efforts, keeping Croatia's debt metrics weaker than in Ba-rated peers over the outlook horizon. Moreover, Croatia's high external debt, estimated at over 100% of GDP, increases its vulnerability to event risk. This risk, however, is somewhat mitigated by the improvement in Croatia's current account balance to a surplus of 1.2% of GDP in 2013 from a deficit of 8.7% in 2008 and its foreign-exchange reserves of around $17 billion, which provide a buffer against global financial volatility. Croatia's Ba1 rating is supported by its high institutional strength, as indicated by its performance on World Bank governance indicators. It also benefits from the country's high per capita incomes, relative to similarly rated peers, which are reflected in its domestic savings rate, which is also higher than the Ba-peer median. High domestic savings have supported the sovereign credit profile by providing a domestic market for government debt. Croatia's exports and growth have suffered due to the loss of the Central European Free Trade Agreement markets upon EU entry in 2013. However, based on the experience of prior EU entrants, Moody's expects Croatia to gain market share within the EU in the future. In addition, if access to EU structural funds leads to increased public and private investment, it would help revive growth over the next two to three years. Moreover, should the institutional mechanisms of the EU's Excessive Deficit Procedure facilitate fiscal consolidation, government debt ratios could improve from current levels over the next three to five years. The rating outlook could return to stable upon signs that a sustained economic recovery was on the horizon, and would be accompanied by materially narrower fiscal deficits and falling government debt ratios. On the other hand, a downgrade could follow from an assessment that Croatia's fiscal, growth and external vulnerability metrics will deteriorate over the rating horizon and remain significantly weaker than those of Ba1-rated-peers. =========== F R A N C E =========== RIVOLI PAN EUROPE: S&P Raises Rating on Class C Notes to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on RIVOLI Pan Europe 1 PLC's class A and B notes. At the same time, S&P has affirmed its rating on the class C notes. The rating actions follow S&P's review of the underlying loans' credit quality by applying its criteria for rating European commercial mortgage-backed securities (CMBS) transactions. The transaction is now backed by three loans secured on nine commercial properties in Spain, France, and the Netherlands. SANTA HORTENSIA LOAN (44% OF THE POOL) The securitized loan had an outstanding balance of EUR103.8 million in February 2014. It is secured on an office in Madrid. It failed to repay at loan maturity in January 2013. It is now in standstill to facilitate the property's disposal. The borrower recently agreed a new 10-year lease with IBM, which includes a break option after seven years. The new lease would facilitate an underlying property's disposal, in S&P's opinion. S&P has considered this in its analysis. The December 2013 property valuation of EUR120 million reflects a securitized loan-to-value (LTV) ratio of 87%. RIVE DEFENSE LOAN (30% OF THE POOL) The securitized loan had an outstanding balance of EUR69.8 million in February 2014. It is secured on an office in Nanterre, near La Defense (France). The issuer holds 50% of the whole loan. The remaining 50% ranks pari passu and is not part of this securitization. The loan failed to repay on its scheduled maturity date in July 2012 and is now in special servicing. As part of a safeguard plan agreed between the parties in July 2013, the loan maturity date is now July 2016. S&P understands that the special servicer is working closely with the borrower regarding an exit strategy to maximize recoveries. SFR currently occupies 94% of the underlying property, which has a weighted-average unexpired lease term of 4.6 years. The lease ends 1.9 years after the extended loan maturity date. The March 2013 valuation of EUR181.7 million reflects a whole loan LTV ratio of 77%. S&P considers the loan to be vulnerable to losses because the property market value is likely to decline if SFR decides to vacate at lease maturity. BLUE YONDER LOAN (26% OF THE POOL) The loan has an outstanding securitized balance of EUR60.5 million. It is secured on a portfolio of five offices, as well as one industrial and one mixed-use property in Schiphol Airport, Amsterdam. The loan has scheduled amortization and will mature in August 2015. KLM occupies all seven properties on a single lease, which expires in August 2018. In February 2014, the servicer reported a securitized LTV ratio of 40% (based on a December 2012 valuation). S&P has not assumed any losses in its expected-case scenario. S&P's ratings address the timely payment of interest and the full repayment of principal no later than the legal final maturity date in August 2018. Following S&P's review, it considers the available credit enhancement for the class A notes to be sufficient to mitigate the risk of losses from the underlying loans in a 'A-' rating stress scenario. S&P has therefore raised to'A- (sf)' from 'BBB- (sf)' its rating on the class A notes. S&P's analysis shows that the available credit enhancement for the class B notes is sufficient to mitigate the risk of losses from the underlying loans in a 'BB-' rating stress scenario. S&P has therefore raised to 'BB- (sf)' from 'B (sf)' its rating on the class B notes. S&P has affirmed its 'B- (sf)' rating on the class C notes, as it believes this class of notes continues to be exposed to principal losses. RATINGS LIST RIVOLI Pan Europe 1 PLC EUR479.8 mil commercial mortgage-backed floating-rate notes Rating Class Identifier To From A XS0278734644 A- (sf) BBB- (sf) B XS0278739874 BB- (sf) B (sf) C XS0278741771 B- (sf) B- (sf) ============= G E R M A N Y ============= ALISON MIDCO: Moody's Assigns 'B3' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service, has assigned a B3 Corporate Family Rating ("CFR") and a B3-PD Probability of Default Rating to Alison Midco S.a.r.l., an entity fully owned by Triton funds, and the holding company holding the shares of the air preheater business of Alstom which was recently spun off. Concurrently, Moody's has assigned a provisional (P)B2 rating to EUR310 million of first lien senior secured term loans, a provisional (P)B2 rating to a EUR40 million revolving credit facility and a provisional (P)Caa2 rating to EUR120 million of second lien senior secured loans borrowed by Alison Bidco S.a.r.l., Alison German Holding GmbH and Alison US LLC. The outlook on all ratings is positive. This is the first time that Moody's has rated Alison Midco S.a.r.l.. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect the rating agency's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavour to assign a definitive rating to the company's proposed senior secured and senior unsecured notes. The definitive rating may differ from the provisional rating. Assignments: Issuer: Alison Midco S.ar.l. Probability of Default Rating, Assigned B3-PD Corporate Family Rating, Assigned B3 Issuer: Alison BidCo S.a.r.l. Senior Secured First Lien Term Loan, Assigned (P)B2 Senior Secured First Lien Term Loan, Assigned a range of LGD3, 36 % Senior Secured Revolving Credit Facility, Assigned (P)B2 Senior Secured Revolving Credit Facility, Assigned a range of LGD3, 36 % Senior Secured Second Lien Term Loan, Assigned (P)Caa2 Senior Secured Second Lien Term Loan, Assigned a range of LGD5, 87 % Ratings Rationale The B3 CFR is constrained by (1) the group's small scale compared with other rated global heavy and general manufacturers; (2) limited operating history, as the group in its current form has not yet operated as a standalone entity; (3) high financial leverage as evidenced by Debt/EBITDA of above 6x proforma for the new capital structure, as adjusted by Moody's and taking into account expected profitability for the current financial year; (4) limited product diversification as 60% of revenues are generated with the Air Preheaters ('APH') division; (5) the cyclicality of demand for its products which depends mostly on the demand environment in the end-markets of its customers in the power, petrochemical and broader industrial sectors. While its products typically represent a small cost factor for the customer, these are typically installed in a larger power plant or petrochemical facility. Alison is exposed to customers delaying investments in case of deteriorating demand prospects or limited financing ability notwithstanding that Alison has more than 50% exposure to aftermarket sales, which have more stable demand patterns. In addition, the group's operating performance is vulnerable to cost overruns or delays in project execution given the fixed price nature of most of its contracts. However, these negatives are partially offset by the group's (1) strong competitive position in certain niche areas of the global steam auxiliary components market with a broad product portfolio, global production capability and reasonable end-market and geographic diversification, with some concentration on the power market and the US, Japan and Germany; (2) competitive position in a mature industry being supported by long-standing customer relationships, as well as existing technological know-how; (3) a sizeable aftermarket business (accounts for more than 50% of group turnover), which offers more revenues and earnings stability than the new equipment business and might bring further growth opportunities in emerging markets like China; (4) historically good profitability as indicated by an EBITDA margin of around 16% per financial year ending March 2014, which can be seen as a reflection of its strong competitive position, and (5) ability to generate modest amounts of positive free cash flow after interest payments and taxes as result of low maintenance capital expenditure and limited working capital needs. In 2013 Alison has received orders worth EUR 552 million, as compared to EUR 396 million in the previous year. This is expected to lead to strong growth in turnover in the current and next financial year. The rating incorporates the expectation that this will not lead to a deterioration in operating margins going forward, and that the turnover level, which is expected to be achieved in the current financial year will be sustained. Liquidity Moody's consider Alison's liquidity profile as adequate. The group will have EUR27 million of cash on balance sheet at closing of the transaction and access to an undrawn revolver of EUR40 million and to a EUR160 million LCs facility. Moody's expect Alison to be free cash flow generative at least in the next two years, which will support a build in cash on balance sheet and a reduction in gross debt through the legally binding cash sweep. Debt amortization under the group's lending facilities will be manageable. The financial covenant under the new facilities will be benign. There will be a net First lien leverage covenant whereby Net First Lien leverage needs to be below 6.0x when drawings under the revolving credit facility exceed 30% of the commitments. With Net First Lien debt of around EUR280 million (assuming approximately EUR30 million of cash on balance sheet at closing) EBITDA would have to drop to below EUR46 million for the covenant to be triggered (assuming that the revolver is 30% drawn), which is a very unlikely scenario. Structural Considerations The proposed financing package foresees an all bank secured first lien / second lien debt structure (EUR310 million / EUR120 million respectively). In addition Alison will also get access to a EUR40 million revolver and to a EUR160 million LCs facility. At least 80% of all non US entities will guarantee the debt issued by European borrowers. US entities will guarantee debt issued in US Dollars. Moody's also note that one Japanese entity (AKK Japan), which is currently not fully owned (99.9% ownership currently) will not guarantee the debt at closing. Triton will have to ensure that they get 100% ownership in AKK and that this entity becomes a guarantor to European borrowers. The group's Japanese operations accounted for 37% of non-current assets and 10% of group turnover for the fiscal year ended 31st March 2014. Despite the fact that AKK Japan will not be a guarantor from day 1 Moody's have decided to treat the debt structure as an all asset pledge structure as there is an obligation from Triton to have AKK Japan become a guarantor and to ensure that guarantors account for 80% of group assets and earnings. Under the terms of the First lien / Second lien legal documentation, Alison can increase indebtedness, make investments and restricted payments (several baskets of approximately 2.5% to 4% of consolidated assets) as long as total net leverage will remain below 6.25x (after such payments are made). Pro-forma reported net leverage at closing will be around 5.8x. Outlook The positive outlook assigned incorporates Moody's expectation that the company's strong order backlog and a solid aftermarket business will support revenue growth and EBITDA expansion in financial year 2015 and 2016 (ending March 31 2015 and March 31 2016 respectively). In addition, it also assumes that the group will generate positive free cash flow, which will be applied to debt reduction. Overall Moody's would expect leverage as measured by adjusted Debt/EBITDA to drop towards 5.5x over the next 12 to 18 months from a pro-forma level of above 6.0x paving the way for an upgrade to B2. What Could Change The Rating Up An upgrade would require improvement in financial leverage as measured by adjusted debt/EBITDA moving towards 5.5x with FCF/Debt maintained in the mid single digits. What Could Change The Rating Down Downgrade pressure could be exerted on the rating in the event of weaker operating performance leading to Debt/EBITDA to above 6.5x for an extended period of time and to negative free cash flow generation. The principal methodology used in these ratings was the Global Manufacturing Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Company profile Alison Midco Sarl is an auxiliary power equipment provider operating in new equipment and aftermarkets through three business units: Air Preheaters (APH) including air preheaters and gas-gas heaters for thermal power generation facilities; Heat Transfer Solutions (HTS) for a wide range industrial processes mainly in the petrochemical industry (Transfer Line Exchangers -- TLE, Waste Heat Steam Generators -- WHSG, High Temperature Products (HTP); Mills for minerals used in industrial applications. In FY 2014 Alison generated EUR406.5 million of normalized sales and a transaction scope adjusted EBITDA (as defined by the company) of EUR69 million (16.7% EBITDA margin). Alison is a carve-out from Alstom and is fully owned by Triton funds. DEUTSCHE LUFTHANSA: Moody's Changes Ba1 Rating Outlook to Pos. -------------------------------------------------------------- Moody's Investors Service has changed to positive from stable the outlook of Deutsche Lufthansa AG and subsidiaries. Concurrently, Moody's has affirmed all ratings. "We have changed Lufthansa's rating outlook to positive on the back of improvements to the company's credit metrics over the past year. Such improvements reflect Lufthansa's reduced leverage, as a result of lower reported debt, as well as a EUR1.1 billion reduction in the company's pension deficit," says Sven Reinke, a Moody's Vice President -- Senior Analyst and lead analyst for Lufthansa. "In addition, Moody's expect that Lufthansa's credit profile will benefit from an improving operating performance driven by the SCORE program and significantly lower exceptional items over the next couple of years." Ratings Rationale The rating action reflects significant improvements to Lufthansa's key credit metrics in 2013, despite a reduction in reported operating profit to EUR697 million from EUR839 million in 2012. Moody's notes that, excluding exceptional costs of EUR345 million (mainly driven by the SCORE restructuring costs), Lufthansa's normalized operating result improved significantly by 62% in 2013. However, the rating agency does not necessarily adjust for such exceptional costs in its credit metrics. The improvement in Lufthansa's credit metrics was driven by a reduction in reported gross- and net debt. More importantly, however, it reflected a EUR1.1 billion decrease in the company's pension deficit. This reduction was driven by a further cash injection into the pension fund of EUR700 million, a good return on pension fund assets and an increase in the discount factor. Overall, adjusted gross debt lowered from EUR16.1 billion in 2012 to EUR14.6 billion in 2013. Debt/EBITDA reduced to 4.7x at fiscal year-end (FYE) 2013 from 5.5x at FYE2012 and retained cash flow (RCF)/net debt improved to 25.4% in 2013 from 21.0% in 2012. Lufthansa is now considered to be solidly positioned in the Ba1 rating category. Lufthansa's current ratings reflect, in part, its diversified route network, the diversity of its business segments and its solid liquidity position. However, the ratings also reflect the weakening in its credit metrics in fiscal year (FY) 2011 and FY2012 on account of higher fuel prices, as well as the increase in the pension deficit and relatively high earnings volatility that is characteristic for passenger airlines industry. However, Moody's expects that the recent stability in fuel prices, alongside its forecast of slightly falling oil prices, will support industry profitability. Lufthansa's metrics deteriorated in 2011 and 2012, partly as a result of significantly higher fuel costs, as well as the increase in the pension deficit. The company's reported operating result fell from EUR1.02 billion in 2010 to EUR820 million in 2011 and remained largely flat at EUR839 million in 2012. On an adjusted basis, gross leverage deteriorated to 5.5x at FYE2012, which the rating agency considered high for the rating. Moody's notes that Lufthansa has forecast that (1) its operating results will improve significantly in 2014, to between EUR1.3 billion and EUR1.5 billion; (2) normalized operating profit will rise to between EUR1.68 billion and EUR1.88 billion on the back of the SCORE project, which aims to lower unit costs (i.e., CASK ex currency, ex fuel) by approximately 4%; and (3) fuel expense will fall by EUR400 million. In Q1 2014, Lufthansa reported a reduced seasonal operating loss of EUR 245 million versus a loss EUR 359 million in Q1 2013 despite a 2.5% revenue decline that was largely driven by negative currency effects. Lufthansa confirmed the operating profit target for FY2014 but also stated that the negative impact in earnings from strike effects are yet to be compensated in the course of the financial year. For FY2015, Lufthansa has set an operating profit target of EUR2.65 billion, which includes EUR350 million from changes to the aircraft depreciation policy. Moody's considers Lufthansa's targets to be ambitious and notes that its ability to achieve such targets is subject to prevailing market conditions, including the oil price. Lufthansa's credit profile could strengthen materially over the next 12-18 months should Lufthansa achieve its profit targets. The company's liquidity remains solid, based on cash and equivalents of EUR3.7 billion, undrawn committed short-term credit lines of EUR755 million and short-term debt of EUR556 million as at the end of Q1 2014. Moody's notes that Lufthansa retains a minimum liquidity target of EUR2.3 billion. Rationale For Positive Outlook The positive rating outlook reflects improved credit metrics in 2013, improved operating profitability in Q1 2014 and Moody's current expectation that the SCORE project will continue to underpin Lufthansa's earnings growth and could improve its financial profile over time to levels commensurate with a Baa3 rating. The company has indicated that SCORE will contribute EUR1.2 billion to earning in the current fiscal year and further EUR0.9 billion in 2015, which could result in sustainable improvements in operating performance and leverage. What Could Change The Rating Up/Down Upward pressure could be exerted on the rating if Lufthansa delivers the intended operating profit targets for the next couple of years. Quantitatively, for positive pressure on the rating, Moody's would expect to see gross leverage to lower close to or below 4.0x with RCF/net debt remaining at least at 25%. Although not expected in light of the action, the rating could come under negative pressure if gross adjusted leverage were to trend back to above 5.0x on a continued basis. Given the company's current strategy, Moody's believes that a deterioration in metrics would likely be the result of external competition or significantly higher fuel costs. Principal Methodology The principal methodology used in these ratings was the Global Passenger Airlines published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Deutsche Lufthansa AG, headquartered in Cologne, Germany, is the leading European airline in terms of revenues. In FY2013 it reported revenues and an operating result of EUR30.0 billion and EUR697 million, respectively. STABILUS SA: Moody's Raises Corporate Family Rating to 'B2' ----------------------------------------------------------- Moody's Investors Service, upgraded the Corporate Family Rating (CFR) of Stabilus S.A. (formerly known as Servus HoldCo S.a.r.l) to B2 from B3. At the same time the rating agency affirmed the Probability of Default Rating at B2-PD and the instrument rating assigned to the Senior Secured Notes issued by Servus Luxembourg Holding S.C.A. on 7 June 2013 at B2 and changed to positive from stable the outlook on all ratings. List of affected ratings Upgrades: Issuer: Stabilus S.A. Corporate Family Rating, Upgraded to B2 from B3 Issuer: Servus Luxembourg Holding S.C.A. Senior Secured Regular Bond/Debenture Jun 15, 2018, Upgraded to a range of LGD3, 48 % from a range of LGD4, 50 % Affirmations: Issuer: Stabilus S.A. Probability of Default Rating, Affirmed B2-PD Issuer: Servus Luxembourg Holding S.C.A. Senior Secured Regular Bond/Debenture Jun 15, 2018, Affirmed B2 Outlook Actions: Issuer: Stabilus S.A. Outlook, Changed To Positive From Stable Issuer: Servus Luxembourg Holding S.C.A. Outlook, Changed To Positive From Stable Ratings Rationale The rating action was prompted by the reorganization of the group structure alongside the initial public offering of the shares of Stabilus and the early redemption of around EUR60 million of the Senior Secured Notes. As a result of this reorganization, which consisted of a number of complex internal transactions, Stabilus' total debt position (as adjusted by Moody's) was significantly reduced to EUR330 million (pro-forma March 31, 2014) compared to EUR664 million prior to IPO through the elimination of subordinated profit participation loans, thereby reducing Moody's adjusted leverage from around 10x to 4.4x. The rating is mainly supported by (i) Stabilus' very strong market position for gas springs across most geographical regions and end market applications in a very consolidated market environment, (ii) the high barriers to entry to Stabilus' markets through (a) the capital intensity of the business, which would require sizeable investments to replicate the company's business model, (b) the long standing customer relationships of Stabilus with major auto OEMs and industrial customers, (c) the very consolidated nature of the gas spring market, which would leave very little market space for new entrants, and (d) the economies of scale required to be able to be profitable in a price competitive market, which would make it difficult for new entrants to penetrate the market on a small scale and which is reflected by the high profitability with an EBITDA margin of 16.2% per March 2014, (iii) the group's geographically diversified and large scale production base with a high level of automation in high labor countries, and (iv) its exposure to non- automotive related applications accounting for around 35% of total turnover, which should help reducing somewhat the dependency on the automotive industry for Stabilus. The rating of Stabilus remains constrained by (i) the group's relatively small size with revenues of EUR487 million during the last twelve month period ended 31 March 2014, and the limited product diversification, (ii) a geographical concentration on developed economies with Europe and the Americas accounting for 83% of turnover notwithstanding some of the turnover realized in Europe is ultimately exported by customers of Stabilus to emerging markets, (iii) the group's exposure to cyclical end industries, and (iv) its capital intensity due to the high automation level of its production asset base notwithstanding that Stabilus' capital expenditures have been significantly above depreciation levels over the last four years to 30 September 2013. The increased market share of various designs of automatic tailgate opening system is a threat to core gas spring applications. Stabilus has entered the market of automatic tailgate systems already back in 2002 and since refined the product offering and is selling these systems under the product name Powerise. However, the appearance of automatic tailgate systems has also opened the market to new competitors, which are not competing with Stabilus in gas springs. This is also highlighted by the lower market share of Stabilus in the Powerise market. The rating incorporates the expectation that Stabilus will grow its market share in Powerise going forward. Stabilus' leverage of 4.4x proforma for the recent IPO positions the company strongly in the B2 rating category. Stabilus' liquidity profile for the twelve months period ending in March 2015 is considered to be adequate. Estimated liquidity needs of EUR75 million, primarily comprising of Capital expenditures, transaction costs for the IPO and the reorganization measures, working capital needs and working cash required to run the business, are well covered by approximately EUR66 million funds from operations, EUR33 million cash on hand, and full availability under the company's EUR25 million super senior revolving credit facility. The positive outlook incorporates Moody's expectation that Stabilus' operating performance and cash flow generation will be sustained at levels seen in H1 of financial year 2013/14. The positive outlook also assumes that the capital structure of the group will gradually improve from current levels assuming limited external growth activities and taking into account the announced dividend policy with a 20-40% payout ratio. Finally the positive outlook assumes that the company will maintain an adequate liquidity profile going forward. Moody's would consider upgrading Stabilus in case the company is able to reduce leverage sustainably towards 4.0x Debt / EBITDA, to maintain EBITA margin sustainably above 10% and to maintain FCF/Debt in the mid single digits. Negative pressure on the rating would build if leverage would materially exceed 5.0x Debt / EBITDA, if EBITA margin would drop below 8% or if Stabilus would generate negative free cash flow leading to a deterioration of the liquidity position of the group. Moody's understand that operating entities representing at least 80% of consolidated EBITDA provide upstream guarantees and that noteholders and lenders benefit from share pledges over entities also accounting for at least 80% of consolidated EBITDA. Therefore Moody's have positioned these instruments ahead of pension obligations and future minimum lease payments. Considering the preferred access to collateral the super senior revolving credit facility has been given the highest rank in the waterfall of debt. Given the relatively small size of the revolving credit facility compared to the overall indebtedness of the group pro-forma of the refinancing Moody's has ranked the trade payable at the same level as the senior secured guaranteed notes in line with standard practice. The principal methodology used in these ratings was the Global Automotive Supplier Industry published in May 2013. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Established in 1934, Stabilus S.A. (formerly known as Servus HoldCo S.a.r.l) is a leading manufacturer of gas springs, hydraulic vibration dampers and electromechanical opening and closing systems for the automotive industry and other industrial / consumer products applications. Stabilus operates 11 manufacturing plants in nine countries, employs around 4,160 people, generated revenues of EUR486.6 million and reported an EBITDA of EUR91 million (adjusted by the company for one-time effects) for the twelve month period ended March 31, 2014. VOERDE ALUMINIUM: Biz Has Been Bought by Trimet Aluminium --------------------------------------------------------- Reuters reports that Germany's Trimet Aluminium said on May 28 it had purchased Voerde Aluminium. Trimet said it would continue production at Voerde and retain the plant's 280 personnel, Reuters relates. The takeover talks involving Trimet had been reported on May 26. Financial terms of the deal were not disclosed, Reuters notes. Voerde, which produces 115,000 tonnes of aluminium annually, went insolvent in 2012, blaming high German electricity prices. According to the news agency, Trimet owner and supervisory board chairman Heinz-Peter Schlueter said the German government's recent decision to continue to give financial relief for high energy prices to power-intensive industries had been a key enabling the takeover. Trimet expected continued strong aluminium demand in Europe, Mr. Schlueter, as cited by Reuters, added. "With the Voerde location, we will be able to serve the rising demand," the report quotes Mr. Schlueter as saying. Voerde creditors had voted to continue production at the plant until the end of 2014 while a search for a buyer continued, adds Reuters. ============= I R E L A N D ============= EUROCREDIT CDO V: S&P Lowers Rating on Class E Notes to 'B-' ------------------------------------------------------------ Standard & Poor's Ratings Services raised its credit ratings on Eurocredit CDO V PLC's class A-1, A-2, A-3, B, and C notes. At the same time, S&P has lowered its ratings on class D and E notes. The rating actions follow S&P's assessment of the transaction's performance using data from the March 12, 2014 trustee report. Eurocredit CDO V has been amortizing since the end of its reinvestment period in September 2012. Since S&P's previous review on Nov. 13, 2012, the aggregate collateral balance has decreased by 39.69% to EUR317.5 million from EUR526.5 million. "We subjected the capital structure to a cash flow analysis to determine the break-even default rate (BDR) for each rated class at each rating level. The BDR represents our estimate of the maximum level of gross defaults, based on our stress assumptions, that a tranche can withstand and still fully repay the noteholders. In our analysis, we used the portfolio balance that we consider to be performing (EUR317,517,495), the current and covenanted weighted-average spread (2.65% and 3.87%, respectively), and the weighted-average recovery rates calculated in line with our corporate collateralized debt obligations (CDOs) criteria. We applied various cash flow stresses, using our standard default patterns, in conjunction with different interest rate and currency stress scenarios," S&P said. S&P has observed that EUR193.57 million of the class A-1 and A-2 notes have paid down since its previous review. In S&P's view, this has increased the available credit enhancement for the class A-1, A-2, A-3, B, and C notes. The weighted-average spread has increased to 387 basis points (bps) from 363 bps over the same period. S&P has observed that the non-euro-denominated assets currently make up 14.13% of the total performing assets. These assets are hedged by drawing in the same currency from the multicurrency revolving liabilities to create a natural hedge. The transaction has American-style currency call options, which hedge any currency mismatches. "We have also applied our non-sovereign ratings criteria. We have considered the transaction's exposure to sovereign risk because some of the portfolio's assets -- 12.18% of the transaction's total collateral balance -- are based in Spain and Italy. In 'AAA' and 'AA+' rating scenarios, we have limited credit to 10% of the transaction's collateral balance, to correspond to assets based in these sovereigns in our calculation of the aggregate collateral balance," S&P noted. In S&P's opinion, the available credit enhancement for the class A-1, A-2, A-3, B, and C notes is commensurate with higher ratings than previously assigned. S&P has therefore raised its ratings on the class A-1, A-2, A-3, B, and C notes. S&P's ratings on the class D and E notes are constrained by the application of the largest obligor default test, a supplemental stress test that S&P introduced in its 2009 corporate CDOs criteria. S&P has therefore lowered to 'B+ (sf)' from 'BB+ (sf)' its rating on the class D notes, and lowered to 'B-(sf)' from 'B+ (sf)' its rating on the class E notes. Eurocredit CDO V is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. The transaction closed in September 2006 and is managed by Intermediate Capital Group PLC. RATINGS LIST Class Rating Rating To From Eurocredit CDO V PLC EUR606 Million Senior Secured Deferrable Floating-Rate Notes Ratings Raised A-1 AAA (sf) AA+ (sf) A-2 AAA (sf) AA+ (sf) A-3 AAA (sf) AA+ (sf) B AA+ (sf) A+ (sf) C BBB+ (sf) BBB (sf) Ratings Lowered D B+ (sf) BB+ (sf) E B- (sf) B+ (sf) PIERSE CONTRACTING: Liquidator Seeks Director Restriction Orders ---------------------------------------------------------------- Tom Lyons at The Irish Times reports that the liquidator of Pierse Contracting began a High Court action seeking restriction orders against nine of its former directors under section 150 of the Companies Act, 1990, on Wednesday. Pierse went bust in 2010 leaving a deficit of EUR212 million, making it one of the biggest collapses of the bust, The Irish Times recounts. About EUR50 million was owed by Pierse to unsecured creditors, including subcontractors, The Irish Times states. The directors at the time of the company's collapse included founder Ged Pierse, former chief executive Charles Norbert "Nobbie" O'Reilly and finance director Fearghal O'Nolan, The Irish Times notes. Its other directors were Kieran Duggan, a former banker with Anglo Irish Bank, Martin Murphy, Michael O'Reilly, Michael McNamara, Matthew Duggan and Brendan Cahalin, according to the report. According to The Irish Times, liquidator Simon Coyle, an accountant from Mazars, said in an affidavit on Wednesday he was applying for restriction orders because he believed Pierse's directors should have realised sooner it "should cease trading and taken appropriate action to liquidate the company". "Instead, the company continued to trade for a further 12 months, incurring fresh liabilities without ultimately clearing the creditor backlog, bank borrowings or establishing a clear plan to deal with property loans." In his affidavit, Mr. Coyle, as cited by The Irish Times, said that if the firm's directors had ordered the company to cease trading in April 2009, then "the group would not have incurred losses of EUR24.5 million in the year to April 30th, 2010, when the group's actual turnover was EUR144 million compared to the budget of EUR259.6 million". He said Pierse lost another EUR1.9 million in the three months to July 2010, when the company unsuccessfully tried to restructure itself via examinership, The Irish Times relays. Directors who are contesting the move by Mr. Coyle, are yet to set out their position in full in the ongoing case, The Irish Times notes. Pierse Contracting was once Ireland's second biggest construction company. SMURFIT KAPPA: Moody's Assigns Ba2 Rating to EUR500MM Sr. Notes --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the proposed issuance of EUR500 million senior notes by Smurfit Kappa Acquisitions, an indirect subsidiary of Smurfit Kappa Group plc. The group's Ba2 corporate family rating remains unchanged. The outlook on all ratings is positive. The proceeds from the proposed issuance and existing cash on balance sheet will be used for a prepayment of the outstanding EUR500 million senior notes maturing in 2019 as they become callable in November 2014 at 103.875%. Assignments: Issuer: Smurfit Kappa Acquisitions Senior Notes, Assigned Ba2 Senior Notes, Assigned a range of LGD4, 50% Ratings Rationale The assignment of the Ba2 instrument rating to the proposed senior notes mirrors the pari passu ranking with existing debt instruments that carry the same rating. The group's existing and proposed senior notes rank also pari passu with the senior credit facility. SKG's Ba2 Corporate Family Rating (CFR) takes into account the group's (i) leading market positions for paper-based packaging in Europe and Latin America, reflected in its size with revenues of about EUR8.0 billion generated in the last twelve months ending March 2014; (ii) its good geographic diversification with operations both in Western Europe and the Americas (composing the US and certain Latin American countries); (iii) strong and relatively stable operating margins through the cycle, supported by its integrated containerboard and corrugated operations; (iv) track record of solid free cash flow generation and the application of FCF to debt reduction, as well as (v) solid financial flexibility including a well spread maturity profile with no major near term debt maturities. At the same time, the rating is constrained by (i) the cyclical and highly competitive nature of the industry, which leaves little room for differentiation and the resulting commodity character of large parts of SKG's product portfolio; (ii) the group's low segmental diversification as a result of its focus on kraftliner, testliner and corrugated packaging products; and (iii) leverage in terms of Debt/EBITDA on a Moody's adjusted basis with about 3.9x point in time per March 2014. The positive outlook reflects Moody's assumption of Smurfit Kappa being able to improve profitability levels in 2014 on the back of higher box prices, continued volume growth and good cost control. This, coupled with lower debt levels and interest cost savings following recent refinancing exercises should allow SKG to achieve credit metrics over the next couple of quarters that are commensurate with a Ba1 rating, such as Debt/EBITDA improving towards 3.5x and retained cash flow/debt improving towards 20%. SKG's rating could be upgraded if it were to realize improvements in leverage (as adjusted by Moody's) falling towards 3.5x Debt/EBITDA on a sustained basis with RCF/ debt improving towards 20%. Negative rating pressure could build if leverage (as adjusted by Moody's) moves to materially above 4x Debt/EBITDA on a sustainable basis or RCF/ debt falls to the low teens, or if SKG would be unable to generate positive free cash flows. Also, a large debt-financed acquisition or material increases in shareholder distributions could negatively impact the company's rating given current macroeconomic uncertainties. The principal methodology used in this rating was the Global Paper and Forest Products Industry published in October 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Smurfit Kappa Group plc is Europe's leading manufacturer of containerboard and corrugated containers as well as specialty packaging, The group holds also the leading position for its major product lines in Latin America. SKG generated revenues of EUR 8.0 billion in the last twelve months ending March 2014. ========= I T A L Y ========= SUNRISE SRL: Moody's Reviews 'B3' Note Ratings for Upgrade ---------------------------------------------------------- Moody's Investors Service has placed on review for possible upgrade the ratings of six notes in three Italian asset-backed securities (ABS) consumer transactions due to deleveraging. The affected notes are Class B of Golden Bar (Securitisation) S.r.l. Series 2011-2, Class B-2012-1 of Golden Bar (Securitisation) S.r.l. Series 2012-1 and Series 1B, Series 2B, Series 1C and Series 2C of Sunrise S.r.l. Ratings Rationale The rating action primarily reflects (1) the deleveraging in the Italian ABS transactions and the resulting high level of credit enhancement; (2) the fact that performance is still in line with expectations although deteriorating in Golden Bar (Securitisation) S.r.l Series 2012-1 and (3) the fact that other risk factors have either stabilized or improved since the last review e.g., Italy's Baa2 government bond rating outlook was changed to stable in February 2014 and the servicer's parent, Santander Consumer Finance S.A., had its senior unsecured rating upgraded to Baa1 in March 2014 in the two Golden Bar transactions. The rapid amortization in the three transactions has prompted a significant deleveraging in their capital structures. This is the key driver for placing on review the ratings of these transactions. The credit enhancement under Class B in Golden Bar (Securitisation) S.r.l Series 2011-2 increased to 61% from 36.5% on the closing date. The credit enhancement under Class B-2012-1 in Golden Bar (Securitisation) S.r.l Series 2012-1 increased to 40.8% from 25% on the closing date. In Sunrise S.r.l, the credit enhancement under Series 1 B, Series 1 C, Series 2 B and Series 2 C increased to 20.5% from 3.7% on the closing date, to 7.1% from 1%, to 20.5% from 3.7% and to 7.1% from 1% respectively. The performance of the three transactions is in line with Moody's expectations. 90+ delinquency on the current pool stands at very similar levels in all three deals, respectively 2.42% for Golden Bar (Securitisation) S.r.l Series 2011-2, 2.54% in Golden Bar (Securitisation) S.r.l Series 2012-1 and 2.53% in Sunrise Srl. The cumulative defaults on original pool plus replenishments for the two Golden Bar transactions currently stand at 5.14% and 6.75% respectively. The Sunrise Srl transaction cumulative default rate is more stable with current levels at 2.58%. Recently, both Golden Bar transactions benefitted from the support of Santander Consumer Bank S.p.A through the repurchase of defaulted loans (the aforementioned cumulative default rates include the repurchased defaulted loans). For Golden Bar (Securitisation) S.r.l Series 2011-2, the current default rate assumption is 10% of the current portfolio balance, the fixed recovery rate is 10% and the coefficient of variation (CoV) is 43% which, combined with the key collateral assumptions, corresponds to a portfolio credit enhancement of 24%. For Golden Bar (Securitisation) S.r.l Series 2012-1, the current default rate assumption is 16% of the current portfolio balance, the fixed recovery rate is 10% and the CoV is 35% which, combined with the key collateral assumptions, corresponds to a portfolio credit enhancement of 39.9%. For Sunrise Srl, the current default rate assumption is 4.5% of the current portfolio balance, the fixed recovery rate is 15% and the CoV is 62.2% which, combined with the key collateral assumptions, corresponds to a portfolio credit enhancement of 18%. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to a downgrade of the ratings affected by the action would be (1) worse-than-expected performance of the underlying collateral; (2) deterioration in the credit quality of the counterparties; and (3) an increase in Italy's sovereign risk. Factors or circumstances that could lead to an upgrade of the ratings affected by the action would be the better-than-expected performance of the underlying assets, further deleveraging and a decline in both counterparty and sovereign risk. The principal methodology used in these ratings was "Moody's Approach to Rating Consumer Loan ABS Transactions" published in May 2013. List of affected ratings: Issuer: Golden Bar (Securitisation) S.r.l. Series 2011-2 EUR95M Class B Notes, Baa1 (sf) Placed Under Review for Possible Upgrade; previously on Oct 13, 2011 Assigned Baa1 (sf) Issuer: Golden Bar (Securitisation) S.r.l. Series 2012-1 EUR56.5M Class B - 2012-1 Notes, Baa3 (sf) Placed Under Review for Possible Upgrade; previously on Jul 23, 2012 Assigned Baa3 (sf) Issuer: Sunrise Srl EUR60.2M Series 1 B Notes, Ba1 (sf) Placed Under Review for Possible Upgrade; previously on Jun 12, 2013 Confirmed at Ba1 (sf) EUR28.7M Series 1 C Notes, B3 (sf) Placed Under Review for Possible Upgrade; previously on Jun 12, 2013 Confirmed at B3 (sf) EUR30.25M Series 2 B Notes, Ba1 (sf) Placed Under Review for Possible Upgrade; previously on Jun 12, 2013 Confirmed at Ba1 (sf) EUR12.25M Series 2 C Notes, B3 (sf) Placed Under Review for Possible Upgrade; previously on Jun 12, 2013 Confirmed at B3 (sf) ===================== N E T H E R L A N D S ===================== HALCYON STRUCTURED 2007-1: S&P Cuts Rating on Class E Notes to B- ----------------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions in Halcyon Structured Asset Management European CLO 2007-1 B.V. Specifically S&P has: -- Raised its ratings on the class A2 and C notes; -- Lowered its rating on the class E notes; and -- Affirmed its ratings on the class A1, B, D, and variable funding notes (VFN). The rating actions follow S&P's performance review of the transaction, in which it conducted its credit and cash flow analysis using data from the trustee report dated Feb. 28, 2014 and applied its relevant criteria. Since S&P's previous review on Feb 24, 2012, the transaction has benefited from various developments. The VFN and the class A notes partially amortized after the end of the reinvestment period in July 2013. The portfolio's weighted-average spread has increased to 4.52% from 3.41% since S&P's previous review. The scenario default rates (SDRs) are also lower now, due to the portfolio's shorter time to maturity. The class A1 to D notes are now passing their overcollateralization tests. In S&P's previous review, all of the tranches passed this test. A deterioration in credit enhancement and the portfolio's credit quality have subdued the transaction's positive developments. Since S&P's previous review, the available credit enhancement for all tranches has decreased, mainly due to losses on defaulted assets. The portfolio's credit quality has deteriorated slightly, as the portfolio's percentage of assets in the 'CCC' category (debt obligations of obligors rated 'CCC+', 'CCC', or 'CCC-') has increased to 8.19% from 4.32%. The portfolio's defaulted assets have also increased over the same period to 2.96% from 1.45%. The largest obligor accounts for 2.91% of the portfolio. The portfolio has 81 obligors, with an average exposure of 1.27%. The transaction's exposure to assets domiciled in Ireland, Italy, and Spain amounts to 16.33% of the portfolio's aggregate balance. S&P applied its nonsovereign ratings criteria when considering ratings on the notes at six notches above the rating on the relevant sovereign. As of February 2014, 13.66% of the portfolio is non-euro- denominated, down from 20.61% as of S&P's previous review. The issuer funded these assets by issuing the VFN at closing. The Issuer also entered into an option with Deutsche Bank AG to mitigate the related foreign exchange exposure. As the option agreement's downgrade provisions are not in line with S&P's current counterparty criteria, its current counterparty criteria constrain S&P's ratings on the tranches at one notch above its long-term 'A' issuer credit rating on the option provider. For rating scenarios above this level, S&P's cash flow analysis would have to show that the available credit enhancement for the notes is sufficient to withstand losses, if the counterparty fails to perform and the transaction is exposed to foreign currency risk. "We conducted our cash flow analysis to determine the break even default rate (BDR) for each class of notes at each rating level. We used the portfolio balance that we consider to be performing, the reported weighted-average spread, and the weighted-average recovery rates calculated in accordance with our 2009 criteria for corporate collateralized debt obligations. We applied various cash flow stress scenarios using our standard default patterns and timings for each rating category assumed for each class of notes, combined with different interest stress scenarios as outlined in our criteria," S&P said. "In addition to our cash flow analysis, we applied our supplemental tests, which address event and model risk. These tests are in addition to the credit and cash analyses. Our supplemental tests assess whether a CDO tranche is projected to have sufficient credit enhancement to pass the applicable thresholds at different liability rating levels," S&P added. S&P also tested the sensitivity of all classes of notes by applying high and low correlation and lower recovery sensitivity tests at each rating level. Since the transaction entered its amortization phase in July 2013, S&P believes the portfolio is exposed to the risk of a weighted-average spread reduction. Therefore, in scenarios above S&P's original ratings on the notes, it assumed the portfolio of assets paid a covenanted weighted-average spread of 2.80%, instead of the current weighted-average spread of 4.52%. S&P's ratings on the class A1 and A2 notes and the VFN address the timely payment of interest and the ultimate payment of principal. S&P's ratings on the class B to E notes address the ultimate payment of principal and interest. Based on the factors above, S&P's cash flow analysis indicates that the available credit enhancement for class A2 and C notes is commensurate with higher ratings than previously assigned. S&P has therefore raised its ratings on these classes of notes. S&P's cash flow analysis indicate that the available credit enhancement for the class A1, B, D notes, and the VFN to be commensurate with our currently assigned ratings. S&P has therefore affirmed its ratings on these classes of notes. Although S&P's cash flow analysis indicates a higher rating on the class E notes, its supplemental test showed that they passed at a lower rating level. S&P has therefore lowered its rating on the class E notes. Halcyon Structured Asset Management European CLO 2007-1 is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans granted to primarily speculative-grade corporate firms. The transaction closed in May 2007 and Halcyon Loan Investors L.P. is the manager. RATINGS LIST Class Rating Rating To From Halcyon Structured Asset Management European CLO 2007-1 B.V. EUR600 Million Senior Secured Variable Funding Floating-Rate Notes Ratings Raised A2 AA (sf) AA- (sf) C BBB+ (sf) BBB (sf) Ratings Lowered E B- (sf) B+ (sf) Ratings Affirmed VFN AA+ (sf) A1 AA+ (sf) B A+ (sf) D BB+ (sf) VFN-Variable funding notes. ============= R O M A N I A ============= HIDROELECTRICA: Likely to Exit Insolvency in May or June 2015 ------------------------------------------------------------- Luiza Ilie at Reuters reports that Remus Borza, Hidroelectrica's manager, will likely exit insolvency in May or June 2015, then carry out a stock market listing in the second half of that year. The company was first forced into insolvency in 2012 by a severe drought and a string of loss-making contracts, under which it sold the bulk of its output below market prices, causing losses of US$1.4 billion over six years, Reuters relates. The company underwent a restructuring, cancelled the deals and exited insolvency late last year while turning a profit, Reuters recounts. But contract holders challenged their cancellation and a court ruling pushed the firm back into insolvency earlier this year, Reuters notes. Before it exits that status again, it needs to address the cancelled contracts and figure out what penalties it will incur, Reuters says. The latest court ruling dashed plans to launch a stock market flotation of 15 percent by July of this year, a plan the leftist government had agreed with the International Monetary Fund under a EUR4 billion aid deal, Reuters relays. Gabriel Dumitrascu, head of the energy ministry's privatization department, told Reuters he did not anticipate a shorter deadline for the firm to exit insolvency. Hidroelectrica is Romania's largest power producer. ROMAVIA: May Face Insolvency in Third Quarter 2014 -------------------------------------------------- Romania-Insider, citing Mediafax, reports that Romavia will become insolvent in the third quarter of this year, as it has due debts of some EUR10 million. The Romanian Government paid the company's previous debts, shrunk its activity but also signed off on unjustified expenses, Romania-Insider relates. The company had its air operation certificate suspended as the company lacked money to lease planes, Romania-Insider relays. This led Romavia to lose its exclusivity in organizing special flights, the report notes. According to Romania-Insider, the company had overdue payments of some EUR8.4 million at the end of 2013. Romavia is a Romanian state-owned aviation company. =========== R U S S I A =========== SOVCOMBANK: Moody's Withdraws B2 Deposit Ratings; Outlook Neg. -------------------------------------------------------------- Moody's Investors Service has withdrawn Sovcombank's B2 long-term local and foreign currency deposit ratings, the bank's Not Prime short-term local and foreign currency deposit ratings and the E+ standalone bank financial strength rating (BFSR), equivalent to a b2 baseline credit assessment. At the time of the withdrawal, the bank's B2 deposit ratings carried a negative outlook, while the outlook on the E+ BFSR was stable Ratings Rationale Moody's has withdrawn the rating for its own business reasons. =========== S W E D E N =========== COM HEM: S&P Puts 'B' Corp. Credit Rating on CreditWatch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' long-term corporate credit rating on Sweden-based cable operator NorCell 1B AB (publ) (Com Hem) on CreditWatch with positive implications. S&P also placed its 'B' issue rating on Com Hem's senior secured debt and its 'CCC+' issue rating on its unsecured debt on CreditWatch positive. S&P placed its ratings on Com Hem on CreditWatch positive to reflect its view that, if successful, the IPO and the debt reduction could improve S&P's assessment of the company's financial risk profile. "We notably expect adjusted debt-EBITDA ratio to decline to 6x or lower compared with 8.4x at year-end 2013. This is based on the company's future financial policy targeting a reported leverage of 3.5x-4x. Our main adjustment to Com Hem's debt is the addition of a Swedish krona (SEK) 3.1 billion subordinated shareholder loan and SEK1.4 billion in operating lease adjustments. Furthermore, we do not apply any adjustment for surplus cash, in accordance with our methodology, because the company is owned by a financial sponsor," S&P said. Credit ratios, notably coverage ratios, will also benefit from a reduction in the company's currently high average interest cost. "Our assessment of Com Hem's business risk profile remains supported by its established position in Sweden, with connections to 1.83 million households in a country of 4.6 million households. Moreover, Com Hem has a stable and diverse customer base of landlords for its basic cable TV access business, with a low churn rate, and high barriers to entry associated with the landlord model. Com Hem also has a well-invested and upgraded hybrid-fiber-coaxial DOCSIS 3.0 network that offers Internet speeds of 500 megabits per second in 92% of its coverage area, high profitability with a Standard & Poor's-adjusted EBITDA margin exceeding 50%, and some growth opportunities thanks to increasing penetration in its coverage area of digital TV supported by the TiVo platform (only 33% of Com Hem's subscribers have digital TV) and recent expansion toward the corporate segment (notably with the acquisition of Phonera, a virtual telecom operator focused on the corporate segment, in April 2014)," S&P said. These strengths are partly offset by severe competition from various technology platforms in multidwelling areas. Com Hem competes with much larger operators TeliaSonera AB and Telenor ASA, which use several alternative technologies including digital subscriber lines and fiber networks. "We aim to resolve the CreditWatch placement after completion of the IPO, which we understand could take place over the next three months, and after we meet with the group's management to discuss its strategy, financial policy, and long-term capital structure plans. We could raise the corporate credit rating and issue ratings by one or two notches," S&P noted. A successful IPO and leverage reduction toward 6x could support a one-notch upgrade. However, the CreditWatch resolution will also depend on the ownership and capital structure, including the residual share of Com Hem's stock owned by financial sponsors, controlling shareholders' exit strategy, and the potential refinancing or equity conversion of shareholder loans, which currently represent about 1.4x leverage in S&P's adjusted calculation. S&P could raise the ratings by two notches if it believed that Com Hem's Standard & Poor's-adjusted leverage were likely to rapidly trend down to below 5x, with coverage of debt by free cash flow of more than 5% following the IPO, or a clear exit path to below 40% ownership by the financial sponsors. =========================== U N I T E D K I N G D O M =========================== ECO-SYNERGIES LTD: High Court Winds Up Carbon Credit Companies -------------------------------------------------------------- A web of 13 companies involved in a scheme to sell carbon credits to the public for investment that raised over GBP19 million have been wound up in the High Court on grounds of public interest, following an investigation by the Insolvency Service. At the web's centre was Eco-Synergies Ltd, a wholesaler of Voluntary Emission Reduction ("VER") carbon credits, which it supplied to other, often related companies to market to the public for investment. Such investments were sold to the public using false claims contained in slick brochures, among other methods. Welcoming the court's winding up decisions Chris Mayhew, Company Investigations Supervisor at the Insolvency Service, said: "Eco-Synergies Ltd was at the centre of and controlled this web of companies in this patently bad scheme to sell carbon credits to the public for investment. The use of associates was central to its "pioneering" business model. The credits were sold at such inflated prices that an unnatural increase in value would be required before investors could break even let alone see a return on their investment". "Essentially investors including vulnerable individuals and often repeat victims who were urged to buy more and more credits have lost their money. "I would urge anyone cold called and offered hot air by callous individuals to simply hang up the call. "Nobody should be left in any doubt that the Insolvency Service will act whenever we discover there are serious failings and such businesses should therefore note that working together with other regulators, we will be coming after you". The investigation uncovered that carbon credits sourced by Eco- Synergies Ltd for an average of 65p per credit were then sold to investors by the web of ostensibly unrelated companies at an overall mark up of up to 869%. The investigation revealed that investors had paid some GBP19 million for carbon credits shown to have cost Eco-Synergies Ltd some GBP2.3 million. Eco-Synergies Ltd described itself as a carbon market pioneer and claimed to be "The voluntary carbon specialists". This company provided bespoke assistance to the outer web companies thereby enabling those companies to sell carbon credits to the public for investment. Eco-Synergies Ltd benefitted from the sales made to the public by such companies as it supplied the credits to them at a mark up stressing to them that they themselves could expect returns in excess of 60%, telling them "You simply complete a trade and we will do the rest". A presentation brochure to the web companies recovered by the investigation describes Eco-Synergies Ltd as, among other things: * the largest wholesale supplier of carbon credits in the market with 25+ active trading agents, * that it settled between 1-2 million credits a month, * had a monthly turnover of GBP5m+ * had spent GBP200,000 on legal fees to ensure its system and contracts were "watertight" and * would train your staff on the market and how to sell this product successfully. The brochure's "Case Study" focused on one associated company MH Carbon Limited which Eco-Synergies Ltd exclusively supplied and worked with directly to sell out credits for them. The company described MH Carbon Limited as, among other things: * one of the market leaders and the largest in terms of revenue floor of this type in London, * that it settled between 400,000-500,000 credits a month and * had average monthly sales of GBP2 million. Mr. Gavin Manerowski, an initial shareholder of Eco-Synergies Ltd, was a director of MH Carbon Limited which, together with the other marketing companies, made false and misleading statements to the public to persuade them to invest in carbon credits. Mr. Manerowski, together with Mr. Richard Beese, Mr. David White and Mr. Jonathan Cocks also established a non trading company Eco-Synergies Nominees Ltd to hold the credits purchased by the public on trust for investors. Eco-Synergies Nominees Ltd did not oppose the winding up action and afterwards the professional director and secretary of the company served notice of their intention to resign their appointments. Custodian and trust services were provided to the scheme by an FCA authorised trust company that shortly before the winding up hearing wrote to investors informing them of the winding up petition issued against Eco-Synergies Nominees Ltd that was not being opposed. WINDERMERE XI: S&P Cuts Ratings on 3 Note Classes to 'D' -------------------------------------------------------- Standard & Poor's Ratings Services raised its credit rating on Windermere XI CMBS PLC's class A notes. At the same time, S&P has lowered its ratings on the class B and C notes, and has affirmed its 'D (sf)' ratings on the class D and E notes. The rating actions follow S&P's review of the credit quality of the transaction's remaining loan under its European commercial mortgage-backed securities (CMBS) criteria. S&P's review follows the full repayment of the Long Acre loan (GBP111.0 million) on the April 2014 interest payment date (IPD) along with the full repayment of the Devonshire House loan (GBP191.9 million) on the January 2014 IPD. The cash manager used these repayments to redeem the class A notes. At the same time, following the completion of the workout of the Westville loan, principal losses were applied to the class C and D notes on the April 2014 IPD. The Government Income Portfolio loan is the sole remaining loan in the transaction. It was originated in July 2006 with a maturity date of October 2010, which was subsequently extended until October 2012. The borrower was not in a position to repay the loan on the extended maturity date. The servicer restructured the loan and extended the final repayment date for up to three additional periods (October 2013, October 2014, and April 2015), subject to certain extension conditions. The loan is currently secured on 13 office properties located across a number of regional areas of the U.K., down from 22 properties at closing. The properties are of secondary nature and provide a total net lettable area of 52,216 sq m. The regional spread of assets is diverse, with four in the North West, three in Yorkshire, two in the West Midlands, two in the East of England, and two in the South West. The total portfolio market value (as of May 2012) is GBP49.1 million with the three major assets located in Plymouth (18.0% of total market value), Rochdale (15.3%), and Ipswich (13.3%). Based on the May 2012 valuation, the loan-to-value ratio is 150.1%. The portfolio is predominantly let to U.K. Government agencies, which together account for 81.1% of the current contractual income. A further 18.9% of the current income is provided by Trillium Property GP Ltd., a property outsourcing company providing services to the U.K. Government. Although occupancy levels have been relatively high, with a current vacancy rate of 0.21%, the portfolio has a weak lease profile with a short weighted-average remaining lease term of 3.64 years. S&P also believes that the properties are over- rented and would likely require considerable capital expenditures before being re-let, if the U.K. Government were to vacate. In view of these factors, S&P has assumed losses on the loan in its expected-case scenario. S&P's ratings in Windermere XI CMBS address the timely payment of interest and payment of principal not later than the legal final maturity date (April 2017). Following the full repayment of the Long Acre and Devonshire House loans, S&P considers that the available credit enhancement for the class A notes has increased. However, the transaction's short tail period partially constrains S&P's rating on the class A notes. S&P's analysis indicates that the available credit enhancement for the class A notes is sufficient to address its principal loss expectations under its 'A+' rating level scenario. S&P has therefore raised to 'A+ (sf)' from 'BB+ (sf)' its rating on the class A notes. In S&P's opinion, the class B notes' creditworthiness has deteriorated. S&P believes that the class B notes are now exposed to principal losses from the remaining underlying loan in its expected-case scenario. S&P has therefore lowered to 'CCC (sf)' from 'B (sf)' its rating on the class B notes. S&P has also lowered to 'D (sf)' from 'CCC (sf)' its rating on the class C notes. This class of notes experienced principal losses in April 2014 following the liquidation of the Westville loan. This loan repaid at a loss of GBP46.6 million. The cash manager applied these losses to the class C and D notes. S&P has affirmed its 'D (sf)' ratings on the class D and E notes as they experienced principal losses on prior payment dates. Windermere XI CMBS is a CMBS transaction that closed in August 2007 and has a legal final maturity of April 2017. The transaction is currently secured on a sole remaining loan backed by various commercial office real estate throughout a number of regional U.K. locations. RATINGS LIST Windermere XI CMBS PLC GBP707.767 mil commercial mortgage-backed floating-rate notes Rating Rating Class Identifier To From A 97320MAA8 A+ (sf) BB+ (sf) B 97320MAB6 CCC (sf) B (sf) C 97320MAC4 D (sf) CCC (sf) D 97320MAD2 D (sf) D (sf) E 97320MAE0 D (sf) D (sf) =============== X X X X X X X X =============== * BOOK REVIEW: American Economic History ---------------------------------------- Author: Seymour E. Harris, editor Publisher: Beard Books Softcover: 560 pages List Price: $34.95 Review by Gail Owens Hoelscher Order your personal copy today and one for a colleague at http://www.beardbooks.com/beardbooks/american_economic_history.html A classic text on a fascinating topic by a host of notable authors is again in print. American Economic History is a collection of 15 studies of the economic development of the United States from about 1800 to the late 1950s, written by 20 prominent and diverse 20th century thinkers. The authors show America to be, in the words of contributor Arthur Schlesinger, Jr., ". . . a compact example of the growth of an underdeveloped country into a great and rich industrial state." The chapters are divided into four topics: major issues, policy issues, determinants of income, and regional growth. The section on major issues includes an compelling discussion by Mr. Schlesinger called "Ideas and the Economic Process." In it, he claims that the contribution to our unprecedented growth by the "unfettered individual," the "genius" personage of the American businessman, has been exaggerated, while the roles of public policy and the influx of ideas and capital from abroad have been diminished. Mr. Schlesinger concludes that "(t)he ability to change one's mind (which is easier in a society in which people have the freedom to think, inquire and speculate) turns out, in the last analysis, to be the secret of American economic growth, without which resources, population, climate and the other favoring factors would have been of no avail." To complete this section, Alfred H. Conrad discusses income growth and structural change over time, and Peter B. Kenan undertook a statistical survey of growth in population, transportation, output, wealth, and industry. The second part deals with policy. J. G. Gurley and E. S. Shaw discuss the history of U.S. monetary policy, concluding that "the failure to manufacture enough money may bring on recession and stultify economic growth, (but) it is also clear . that merely manufacturing money is not enough." Mr. Harris devotes a chapter to fiscal policy, defined as an attempt "to adapt tax, spending, and debt policies to the needs of the economy." He agrees with Herbert Hoover, in that "when the private economy was foundering, it was the task of the government to increase the total amount of purchasing power at the disposal of the people," and the "medicine for recession was to cut taxes and increase the total amount of spending." Asher Achinstein chronicles economic fluctuations in the U.S., and Douglass C. North the role of the U.S. in the international economy. G. A. 193Lincoln, W. Y. Smith, and J. B. Durst recount the effects of war and defense on the economy. Part Three deals with determinants of income. In it are thorough discussions of population and immigration (Elizabeth W. Gilboy and Edgar M. Hoover); patterns of employment (Stanley Lebergott); natural resource policies ( Joseph L. Fisher and Donald J. Patton); transportation (Merton J. Peck); trade unionism and collective bargaining (Lloyd Ulman); and agriculture (John D. Black). The writers discuss the historic linkages between and among population growth, construction, and transportation growth. Messrs. Fisher and Patton lament the lack of serious effort to conserve resources until the first quarter of the 20th century. Professor Ulman concludes that collective bargaining contributed much to the growth of fringe benefits. Professor Black charts the decline in relative importance of the agricultural sector. The book ends with a chapter on regional income trends, 1840-1950, by Richard A. Easterlin. Seymour E. Harris (1897-1974), earned undergraduate and doctoral degrees from Harvard University. He was chairman of the Department of Economics at Harvard and the University of California, San Diego. Advisor to numerous government officials, he was editor of the Review of Economics and Statistics from 1943 to 1964 and associate editor of the Quarterly Journal of Economics from 1947 to 1974. ********* 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. 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Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2014. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. 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