/raid1/www/Hosts/bankrupt/TCREUR_Public/141107.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, November 7, 2014, Vol. 15, No. 221
Headlines
D E N M A R K
OW BUNKER: Files In-Court Restructuring Procedure for Two Units
F I N L A N D
TALVIVAARA SOTKAMO: To File for Bankruptcy on Lack of Funding
G E R M A N Y
HOKAWE HOLZKRAFTWERK: Bankruptcy Auction Scheduled for Dec. 22
TALISMAN-7 FINANCE: S&P Cuts Ratings on 2 Note Classes to 'D'
ULTIMA INTERMEDIATE: Moody's Raises Corp. Family Rating to 'B2'
G R E E C E
GREECE: Eurozone Leaders Weigh on Plan to Allow Bailout Exit
I R E L A N D
DECO 17-PAN EUROPE: S&P Withdraws 'BB+' Rating on Class B Notes
NEWHAVEN CLO: Moody's Assigns 'B2' Rating to EUR11MM Cl. F Notes
NEWHAVEN CLO: Fitch Assigns 'B-sf' Rating to Class F Notes
I T A L Y
WASTE ITALIA: Fitch Assigns 'B-(EXP)' Issuer Default Rating
L U X E M B O U R G
LEYNE STRAUSS-KAHN: Says Firm Insolvent After Add'l. Commitments
N E T H E R L A N D S
CONTEGO CLO II: Fitch Assigns 'B-sf' Rating to Class F Notes
ONTEX GROUP: S&P Assigns 'BB-' Corporate Credit Rating
P O R T U G A L
ATLANTES MORTGAGE: Moody's Raises Rating on Class D Notes to 'B3'
ESPIRITO SANTO: ES Control Declared Bankrupt by Luxembourg Court
U N I T E D K I N G D O M
CATERHAM SPORTS: Dell Partnership Scrapped
HPM & ADDO: Keiran Bayley Buys Firm, Saves 30 Jobs
INKLAND: Faces Lay offs After HPM and Addo Administration
QUAY HOTEL AND SPA: Sold for More Than GBP7 Million
SCOTSCAPE LIMITED: In Administration Due to Losses
WINDERMERE VIII: S&P Lowers Rating on Class C Notes to 'D(sf)'
* UK: Insolvency Risk Falls in Most of Business Sectors, R3 Says
X X X X X X X X
* BOOK REVIEW: Competitive Strategy for Health Care Organizations
*********
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D E N M A R K
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OW BUNKER: Files In-Court Restructuring Procedure for Two Units
---------------------------------------------------------------
Following a Nov. 5, 2014 announcement regarding fraud in
Singapore and significant risk management loss, the board of
directors of O.W. Bunker disclosed that it has not been able to
find a solution with the syndicate banks. On this basis, it has
been decided to file for commencement of in-court restructuring
procedure in the subsidiaries O.W. Bunker & Trading A/S and O.W.
Supply & Trading A/S at the probate court in Aalborg. The main
operational activities of the group are located in these
companies, which are expected to be insolvent.
The purpose of the in-court restructuring procedure is to
establish an overview of whether a basis for continued operations
of the companies can be established, including a basis for
injecting further capital or other similar solution.
For the time being, the financial impact cannot be assessed,
however, it must be assumed that the group's equity is lost.
In-court restructuring procedure is aimed at debtors who are
insolvent but where there is a chance that all or part of the
debtor's business may be able to continue operations after the
completion of a restructuring. The procedure is intended to
provide a tool for management and creditors alike, offering the
possibility of rescuing an insolvent business, and thereby
preserving its assets, rather than proceeding straight to the
filing of a bankruptcy petition.
OW Bunker is a global marine fuel (bunker) company founded in
Denmark.
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F I N L A N D
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TALVIVAARA SOTKAMO: To File for Bankruptcy on Lack of Funding
-------------------------------------------------------------
Kati Pohjanpalo and Firat Kayakiran at Bloomberg News report that
Talvivaara Sotkamo, the operational unit of Talvivaara Mining
Co., will file for bankruptcy as efforts to secure interim
funding failed.
According to Bloomberg, the Espoo-based parent said in a
statement the lack of short-term working capital prevents a long-
term solution. It also said Nyrstar NV faces a EUR176 million
(US$220 million) impairment charge if a Talvivaara supply deal is
terminated, Bloomberg relates.
Talvivaara Mining was halted on Nasdaq OMX Helsinki, while
Nyrstar, the world's largest refined-zinc producer, was suspended
in Brussels after dropping almost 4%, Bloomberg recounts.
Talvivaara has sought funds from creditors and investors since
filing for a corporate reorganization in November 2013 to try to
avoid bankruptcy, Bloomberg relays. The company has suffered
from falling prices and a slow ramp-up at its mine in northern
Finland, Bloomberg discloses. Talvivaara on Nov. 6 said Pekka
Jaatinen, administrator of the corporate restructuring, has given
his consent to the filing, Bloomberg notes.
The company needed at least EUR100 million to EUR200 million,
Bloomberg says, citing a plan for an eight-year restructuring
proposal filed in September that would have cut unsecured debts
by 97%, Bloomberg states. Talvivaara Mining is seeking to secure
enough money to buy the mining operations, associated assets and
rights from the bankruptcy estate, according to Bloomberg.
"Nyrstar intends to work closely with the bankruptcy trustee upon
appointment and is continuing to work proactively with key
stakeholders to determine the best approach," Bloomberg quotes
the Brussels-based company as saying. "The company will continue
to offer operational support to Talvivaara Sotkamo."
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G E R M A N Y
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HOKAWE HOLZKRAFTWERK: Bankruptcy Auction Scheduled for Dec. 22
--------------------------------------------------------------
Bernsau Brockdorff Insolvenz-und Zwangsverwalter GbR has put up
the assets of HOKAWE Holzkraftwerk Eberswalde GmbH, including
movable assets superstructures and real estate (including an
associated substation), for bankruptcy auction at 11:00 a.m. on
December 22, 2014.
Technical data of the wood-fired power plant:
-- annual full load hours: 7,800-8,000 h/a
-- effective output of generator: 20 MW
-- annual electrical output: 160,000 MWh/a
-- fuel throughput: approximately 20-25 t/h
-- thermal output of the boiler: 68.3 MW
-- wood requirements: 160,000 to 200,000 t/a
Other information and data:
-- real estate size: total of 47,456 m
-- 20 years of payments guaranteed by the Renewable Energies
Act (2006-2026)
-- power in-feed: 20 MW(without own needs)
It is technically feasible to sell heat of up to 120,000 MWh/a.
More data and information are available through e-mail
info@industriewert.de or through the Web site,
www.industriewert.de
TALISMAN-7 FINANCE: S&P Cuts Ratings on 2 Note Classes to 'D'
-------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Talisman-7 Finance Ltd.
Specifically, S&P has:
-- Withdrawn its rating on the class A notes;
-- Raised its rating on the class B notes;
-- Affirmed its rating on the class C notes; and
-- Lowered its ratings on the class D, E, F, G, H, I, and J
notes.
The rating actions follow the full repayment of the class A notes
on the Oct. 2014 interest payment date (IPD).
Talisman-7 Finance is a 2007-vintage securitization of 10 loans
that are secured on German commercial properties, with notes
totaling EUR1.8.billion. Since closing, two loans have fully
repaid. The notes have an outstanding balance of EUR429.2
million and their legal final maturity date is in April 2017.
All of the eight remaining loans are in special servicing.
THE MOZART LOAN (47% OF THE POOL BALANCE)
The whole loan's balance is EUR381.0 million, with a senior loan
of EUR266.7 million. The portion of the senior loan securitized
in this transaction amounts to EUR200.1 million. The loan was
restructured in 2011 and the servicer extended the maturity date
until April 2015. The loan is secured on 22 commercial
properties, primarily comprising offices. The special servicer
has sold 79 properties since 2010. Based on an Oct. 2013
valuation of EUR133.4 million, the senior loan-to-value (LTV)
ratio is 199.9%.
S&P has assumed that the loan experiences losses in its 'B'
rating stress scenario.
THE HAYDN LOAN (16% OF THE POOL BALANCE)
The whole loan's balance and the securitized balance is EUR66.5
million. The loan failed to repay at maturity in Jan. 2012 and
the borrower filed for insolvency in May 2012. The loan is
secured on two offices. S&P understands that the sale of one of
the offices is ongoing. Based on a Dec. 2013 valuation of
EUR28.7 million, the securitized loan's LTV ratio is 232.0%.
S&P has assumed that the loan experiences losses in its 'B'
rating stress scenario.
THE WAGNER LOAN (15% OF THE POOL BALANCE)
The whole loan's balance is EUR89.7 million, with a securitized
loan of EUR65.3 million. The loan has been in special servicing
since Aug. 2010 and matured in Jan. 2012. The property is under
forced administration. The special servicer and borrower are
discussing a borrower-led sale of the property. The loan is
secured on a 36-building technology park located in Bergisch-
Gladbach,Germany. Based on a Dec. 2012 valuation of EUR35.4
million, the securitized loan's LTV ratio is 185.0%.
S&P has assumed that the loan experiences losses in its 'B'
rating stress scenario.
THE BRUCKNER LOAN (7% OF THE POOL BALANCE)
The whole loan's balance and the securitized balance is EUR52.7
million. The loan has been in special servicing since Jan. 2013
after an LTV ratio covenant breach. The loan is secured on 36
multi-family properties located primarily in eastern Germany.
Based on a Dec.2013 valuation of EUR45.8 million, the LTV ratio
is 115.0%.
S&P has assumed that the loan experiences losses in its 'B'
rating stress scenario.
THE BRAHMS LOAN (5% OF THE POOL BALANCE)
The sale of the property securing this loan closed on Jan. 30,
2014. The issuer used the EUR22.8 million proceeds to pay down
the loan on the April 2014 IPD.
The loan is still outstanding at EUR20.6 million, as insolvency
proceedings are ongoing until the end of 2014. Remaining
proceeds for distribution from the insolvency administrator are
expected to be minimal.
Given the insolvency proceedings, S&P has assumed that the
remaining securitized loan's balance will not be repaid.
THE HANDEL LOAN (4% OF THE POOL BALANCE)
The whole loan's balance and the securitized balance is EUR15.1
million. The loan failed to repay on its extended maturity date
in 2012 and was restructured in Jan. 2013, with the goal of
selling all of the properties by Jan. 2015. The loan was
originally secured on seven properties. Due to property sales,
the loan is now secured on one office. The LTV ratio is 457.1%,
based on a June 2012 valuation of EUR3.3 million.
S&P has assumed that the loan experiences losses in its 'B'
rating stress scenario.
REMAINING LOANS (2% OF THE POOL BALANCE)
The Schubert loan (2% of the pool) entered special servicing in
April 2013 after breaching the LTV ratio covenant. The loan is
secured on a single-let office in Chemnitz, Germany. S&P has
assumed that the loan experiences losses in its 'B' rating stress
scenario.
The Hof loan (0.1% of the pool) has a remaining securitized
balance of EUR522,000 after the borrower and the special servicer
entered into a discounted pay-off. The borrower will only pay
the remaining loan balance if the sole tenant does not vacate by
June 30, 2015. S&P has assumed total losses on the remaining
outstanding securitized balance.
RATING RATIONALE
S&P's ratings in Talisman-7 Finance address the timely payment of
interest (payable quarterly in arrears) and the payment of
principal no later than the April 2017 legal final maturity date.
Loan repayments have created negative carry in the transaction
whereby the interest collected from the loans is not enough to
pay issuer expenses and interest on the notes. The class G, H,
I, and J notes have experienced interest shortfalls, but the
available funds cap only applies for the class I and J notes.
Following the full repayment of the class A notes on the Oct.
2014 interest payment date, S&P has withdrawn its rating on the
class A notes
Although the available credit enhancement for the class B and C
notes is sufficient to mitigate the risk of principal losses from
the underlying loans in higher rating stress scenarios, S&P has
made adjustments in its analysis to account for the significant
number of defaulted loans and the level of potential expected
losses. In line with the results of S&P's analysis, it has
raised its rating on the class B notes, and has affirmed its
rating on the class C notes.
In S&P's opinion, the class D, E and F notes' repayment continues
to depend on favorable economic conditions. Therefore, in line
with S&P's criteria for assigning 'CCC' category ratings, it has
lowered its ratings on the class D, E, and F notes.
S&P has lowered to 'D (sf)' its ratings on the class G and H
notes because they have experienced interest shortfalls and S&P
expects them to experience principal losses.
S&P has lowered to 'CC (sf)' from 'CCC- (sf)' its ratings on the
class I and J notes because principal losses on these tranches
are a virtual certainty, as the issuer has not allocated losses
yet, following the sale of the property securing the Brahms loan.
RATINGS LIST
Talisman-7 Finance Ltd.
EUR1.826 bil commercial mortgage-backed floating-rate notes
Rating Rating
Class Identifier To From
A XS0304910762 NR BBB+ (sf)
B XS0304911141 BB+ (sf) BB- (sf)
C XS0304911224 B- (sf) B- (sf)
D XS0304911901 CCC+ (sf) B- (sf)
E XS0304912388 CCC (sf) CCC+ (sf)
F XS0304912891 CCC- (sf) CCC+ (sf)
G XS0304912974 D (sf) CCC (sf)
H XS0304913352 D (sf) CCC- (sf)
I XS0304913436 CC (sf) CCC- (sf)
J XS0304913949 CC (sf) CCC- (sf)
NR--Not Rated.
ULTIMA INTERMEDIATE: Moody's Raises Corp. Family Rating to 'B2'
---------------------------------------------------------------
Moody's Investors Service has upgraded to B2 from B3 the
Corporate Family Rating (CFR) and to B2-PD from B3-PD the
Probability of Default Rating (PDR) of Ultima Intermediate S.a
r.l., the intermediate holding company of Germany-based advanced
insulation and engineered foams provider Armacell. Concurrently,
Moody's upgraded to B1 (LGD3-36%) from B2 (LGD3-34%) the ratings
on the group's first lien credit facilities and to Caa1 (LGD5-
84%) from Caa2 (LGD5-86%) the rating on the group's second lien
term loan. The outlook on the ratings remains stable.
List of Affected Ratings
Issuer: Ultima Intermediate S.a.r.l. (Armacell)
Upgrades:
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
US$185M Senior Secured Bank Credit Facility (Foreign Currency)
Jul 2, 2020, Upgraded to B1 from B2
US$65M Senior Secured Bank Credit Facility (Foreign Currency)
Jul 2, 2018, Upgraded to B1 from B2
EUR120M Senior Secured Bank Credit Facility (Local Currency)
Jul 2, 2020, Upgraded to B1 from B2
US$85M Senior Secured Bank Credit Facility (Foreign Currency)
Jan 2, 2021, Upgraded to Caa1 from Caa2
Outlook Actions:
Outlook, Remains Stable
Ratings Rationale
The upgrade to B2 reflects Armacell's sustained robust operating
and financial performance over the last twelve months translating
into Moody's adjusted credit metrics which position the group
appropriately in the B2 rating category. As of June 30, 2014,
Armacell's profitability on a twelve months trailing basis
improved to an adjusted EBITA margin of 12.1% (11.3% in 2012),
while adjusted leverage reduced to around 6.3x debt/EBITDA which
is better than Moody's had expected at rating initiation in June
last year. The rating action also acknowledges the group's well
balanced and further strengthened geographic reach with faster
growing APACI (Asia, Pacific, India) markets now accounting for
around 26% (+4% yoy) of sales generated in the group's advanced
insulation segment in the first half 2014. The constant healthy
growth in volumes in these regions (China in particular) and
continued solid performance in the higher margin American, PET
and Engineered Systems businesses helped to compensate the
recently slowing activity across many European countries. Moody's
projects Armacell to maintain its strong profitability with
adjusted EBITA margins above 12% which will further improve debt
credit metrics such as debt/EBITDA reducing below 6x and interest
coverage (defined as EBITA/interest expense) approaching 2.5x
over the next 12-18 months (all ratios incorporating Moody's
standard adjustments). These metrics together with Moody's
expectation of Armacell to continue generating modest positive
free cash flows (including capex of around 4% of group sales)
solidly support the assigned B2 CFR.
The upgrade of Armacell's guaranteed first lien credit facilities
to B1 from B2 and second lien term loan to Caa1 from Caa2 result
directly from the higher CFR, a key driver in Moody's loss given
default analysis.
Armacell's B2 CFR also incorporates (1) the group's leading
position in a niche market with attractive longer-term growth
prospects driven by the steady growth in demand for more energy-
efficient products and solutions, e.g., in the building
construction and transportation sectors; (2) Armacell's ability
to generate relatively high margins and positive free cash flows
through the cycle, despite the cyclicality of its end-markets
(e.g., industrial, building and construction, transportation and
automotive); and (3) a track record of the current management
team operating in an LBO environment.
More negatively, the rating remains constrained by (1) Armacell's
very high adjusted leverage; (2) the exposure to volatile raw
material prices and hence the need to fully adjust product
pricing in a timely manner; and (3) the relatively small size of
the business and rather limited product and end-market
diversification.
Liquidity Profile
Moody's considers Armacell's liquidity as adequate. As of 30
September 2014, the group had access to EUR21 million cash on
balance sheet, internally generated funds before working capital
movements of around EUR40 million per annum, and approximately
EUR33 million funds available under its committed USD65 million
revolving credit facility (maturing 2018). These cash sources
sufficiently cover all expected cash outflows over the next 12-18
months including capital expenditures of around EUR19 million
p.a., working capital needs (estimated seasonally swings in net
working capital of c.EUR15 million), as well as minor debt
repayments. While Armacell's loan documentation contains a
springing financial covenant (first lien leverage ratio), Moody's
expects the group to maintain solid headroom under this covenant
at all times.
Rating Outlook
The stable outlook reflects Moody's expectation of Armacell to
maintain its current strong profitability and to progressively
improve leverage to below 6x adjusted debt/EBITDA, based on the
steady growth in earnings in an overall supportive business
environment across all end-markets, including a recovering
European building sector.
What Could Change the Rating
An upgrade in the near term appears unlikely at this stage as the
rating remains primarily constrained by the group's very high
financial leverage. However, Moody's might consider upgrading
Armacell if (1) leverage reduces to around 5x debt/EBITDA; and
(2) interest coverage improves to 2.5x EBITA/interest expense on
a Moody's adjusted and sustainable basis.
Downward pressure on Armacell's rating would evolve if (1) the
group was unable to reduce adjusted debt/EBITDA to below 6x; (2)
interest coverage weakened below 1.5x adjusted EBITA/interest
expense; and (3) free cash flow turned negative in any financial
year. Moreover, a deterioration in the group's liquidity profile
would exert negative rating pressure.
Principal Methodology
The principal methodology used in this rating was the Global
Manufacturing Companies published in July 2014. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Ultima Intemediate S.a r.l. is an intermediate holding company of
the Armacell group, headquartered in Mnster, Germany. Armacell
is a global producer of engineered foams used primarily for
insulation across building and industrial applications. In the
twelve months ended June 30, 2014, the group generated EUR419
million in net sales and reported EBITDA (excluding unusual
items) of EUR68 million with more than 2,500 employees in 30
countries worldwide. Armacell is owned by UK-based private equity
firm Charterhouse Capital Partners which acquired the business
from Investcorp in June 2013.
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G R E E C E
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GREECE: Eurozone Leaders Weigh on Plan to Allow Bailout Exit
------------------------------------------------------------
Peter Spiegel and Kerin Hope at The Financial Times report that
eurozone leaders are weighing a plan to allow Greece to exit its
four-year-old bailout at the end of the year by converting nearly
EUR11 billion of unused rescue funds into a backstop for Athens
for when it raises cash from the markets on its own.
According to the FT, the plan, which was set to be discussed at a
meeting of eurozone finance ministers in Brussels on Nov. 6,
would allow Antonis Samaras, Greek prime minister, to declare an
end to the quarterly reviews by the hated "troika" of bailout
monitors ahead of parliamentary elections, which could come as
early as March.
At the same time, backers of the plan believe it would give
financial markets the security of knowing Athens could draw on
the credit line in an emergency, the FT says.
The credit line would come from the eurozone's EUR500 billion
rescue fund, meaning it would still require monitoring from
Brussels, albeit less onerous than at present, the FT discloses.
Mr. Samaras's hopes of a "clean exit" from Greece's EUR172
billion second bailout -- which would mean no line of credit or
additional outside monitoring -- were dashed last month when
Greek bonds were sold off in a mini-panic after he announced his
intention to finish the bailout at the end of the year without
any follow-on program, the FT relates.
"A completely clean exit is highly unlikely," the FT quotes the
EU official as saying.
Greek officials are scrambling to finalize the remaining required
economic reforms so they can agree the exit plan by December, the
FT notes.
Gikas Hardouvelis, the Greek finance minister, was expected to
request the EUR11 billion credit line at the Nov. 6 meeting, the
FT states. According to the FT, a senior Greek government
official said Greece is looking to raise EUR6 billion-EUR9
billion on its own for next year.
The biggest remaining stumbling block remains the role of the
International Monetary Fund in the plan, the FT states. Unlike
the EU, whose Greek bailout runs out of cash this year, the IMF
program is due to run into 2016, the FT notes.
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I R E L A N D
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DECO 17-PAN EUROPE: S&P Withdraws 'BB+' Rating on Class B Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its credit ratings on
DECO 17 - Pan Europe 7 Ltd.'s class A2 and B notes.
S&P has withdrawn its ratings following the receipt of the Oct.
2014 cash manager report, which confirms that the class A2 and B
notes fully repaid.
DECO 17 - Pan Europe 7 is a 2007-vintage securitization of four
loans, which are secured on German commercial real estate
properties.
RATINGS LIST
DECO 17 - Pan Europe 7 Ltd.
EUR1.249 bil commercial mortgage-backed floating-rate notes
Rating
Class Identifier To From
A2 XS0337051824 NR A (sf)
B XS0337052046 NR BB+ (sf)
NR--Not Rated.
NEWHAVEN CLO: Moody's Assigns 'B2' Rating to EUR11MM Cl. F Notes
----------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by Newhaven CLO,
Limited:
EUR206,750,000 Class A-1 Senior Secured Floating Rate Notes due
2028, Definitive Rating Assigned Aaa (sf)
EUR5,000,000 Class A-2 Senior Secured Fixed Rate Notes due 2028,
Definitive Rating Assigned Aaa (sf)
EUR6,000,000 Class B-1 Senior Secured Floating Rate Notes due
2028, Definitive Rating Assigned Aa2 (sf)
EUR29,000,000 Class B-2 Senior Secured Fixed Rate Notes due
2028, Definitive Rating Assigned Aa2 (sf)
EUR22,750,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2028, Definitive Rating Assigned A2 (sf)
EUR20,100,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2028, Definitive Rating Assigned Baa3 (sf)
EUR22,800,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2028, Definitive Rating Assigned Ba2 (sf)
EUR11,000,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2028, Definitive Rating Assigned B2 (sf)
Ratings Rationale
Moody's definitive rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2028. The definitive ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Sankaty Advisors,
Limited ("Sankaty"), has sufficient experience and operational
capacity and is capable of managing this CLO.
Newhaven is a managed cash flow CLO. At least 90% of the
portfolio must consist of secured senior obligations and up to
10% of the portfolio may consist of unsecured senior loans,
second-lien loans, mezzanine obligations and high yield bonds.
The portfolio is 65% ramped up as of the closing date and is
comprised predominantly of corporate loans to obligors domiciled
in Western Europe. The remainder of the portfolio will be
acquired during the six month ramp-up period in compliance with
the portfolio guidelines.
Sankaty will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk obligations and credit improved obligations, and are subject
to certain restrictions.
In addition to the eight classes of notes rated by Moody's, the
Issuer issued EUR 38,000,000 of subordinated notes. Moody's has
not assigned a rating to this class of notes.
The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.
Factors that would lead to an upgrade or downgrade of the rating:
The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Sankaty's investment decisions
and management of the transaction will also affect the notes'
performance.
Loss and Cash Flow Analysis:
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
February 2014. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.
Par Amount: EUR350,000,000
Diversity Score: 36
Weighted Average Rating Factor (WARF): 2800
Weighted Average Spread (WAS): 3.80%
Weighted Average Coupon (WAC): 5.70%
Weighted Average Recovery Rate (WARR): 42.0%
Weighted Average Life (WAL): 8.0 years.
WAS test incorporates the WAC test, with the minimum fixed coupon
set up at 5.70%.
Stress Scenarios:
Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the definitive rating assigned
to the rated notes. This sensitivity analysis includes increased
default probability relative to the base case. Below is a summary
of the impact of an increase in default probability (expressed in
terms of WARF level) on each of the rated notes (shown in terms
of the number of notch difference versus the current model
output, whereby a negative difference corresponds to higher
expected losses), holding all other factors equal.
Percentage Change in WARF: WARF + 15% (to 3220 from 2800)
Ratings Impact in Rating Notches:
Class A-1 Senior Secured Floating Rate Notes: 0
Class A-2 Senior Secured Fixed Rate Notes: 0
Class B-1 Senior Secured Floating Rate Notes: -2
Class B-2 Senior Secured Fixed Rate Notes: -2
Class C Senior Secured Deferrable Floating Rate Notes: -2
Class D Senior Secured Deferrable Floating Rate Notes: -1
Class E Senior Secured Deferrable Floating Rate Notes: -1
Class F Senior Secured Deferrable Floating Rate Notes: 0
Percentage Change in WARF: WARF +30% (to 3640 from 2800)
Class A-1 Senior Secured Floating Rate Notes: -1
Class A-2 Senior Secured Fixed Rate Notes: -1
Class B-1 Senior Secured Floating Rate Notes: -3
Class B-2 Senior Secured Fixed Rate Notes: -3
Class C Senior Secured Deferrable Floating Rate Notes: -3
Class D Senior Secured Deferrable Floating Rate Notes: -2
Class E Senior Secured Deferrable Floating Rate Notes: -2
Class F Senior Secured Deferrable Floating Rate Notes: -3
Methodology Underlying the Rating Action:
The principal methodology used in this rating was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
February 2014.
NEWHAVEN CLO: Fitch Assigns 'B-sf' Rating to Class F Notes
----------------------------------------------------------
Fitch Ratings has assigned Newhaven CLO Limited's notes final
ratings, as:
EUR206.75 million Class A1: 'AAAsf'; Outlook Stable
EUR5 million Class A2: 'AAAsf'; Outlook Stable
EUR6 million Class B1: 'AA+sf'; Outlook Stable
EUR29 million Class B2: 'AA+sf'; Outlook Stable
EUR22.75 million Class C: 'A+sf'; Outlook Stable
EUR20.1 million Class D: 'BBB+sf'; Outlook Stable
EUR22.8 million Class E: 'BBsf'; Outlook Stable
EUR11 million Class F: 'B-sf'; Outlook Stable
EUR38 million Subordinated notes: not rated
Newhaven CLO Limited is an arbitrage cash flow collateralized
loan obligation (CLO).
KEY RATING DRIVERS
'B'/'B-' Portfolio Credit Quality
Fitch expects the average credit quality of obligors to be in the
'B'/'B-' range. Fitch has credit opinions on 100% of the
identified portfolio. The covenanted maximum Fitch weighted
average rating factor for assigning the ratings is 33.
High Recovery Expectations
At least 90% of the portfolio will comprise senior secured
obligations. Recovery prospects for these assets are typically
more favorable than for second-lien, unsecured, and mezzanine
assets. Fitch has assigned Recovery Ratings to all of the assets
in the identified portfolio.
Maturity Extension Risk
The deal deviates from other European CLOs as the collateral
manager has the discretion to vote in favor of maturity
extensions up to a cumulative limit of 25% of the initial target
par balance, with the caveat that the extended maturity is no
later than 18 months before the maturity of the notes.
Fitch believes that limiting the extended maturity to 18 months
before the maturity of the notes would prevent the introduction
of long-dated assets in the portfolio, therefore exposing the
transaction to market value risk. Fitch also got comfort from
the fact that the asset manager will only be allowed to vote in
favor of an amendment to avoid distressed situations in the
manager's judgment, caused by limited access to refinancing by
the obligors in the portfolio.
Fitch run a sensitivity analysis assuming an increased weighted
average life (WAL) of 8.5 years from the covenanted 8 years WAL,
assuming a 25% maturity amendment of 2 years on average. Fitch
considered the resulting impact on the ratings immaterial.
Exposure to Unhedged Non-Euro-Denominated Assets
The transaction is allowed to invest up to 5% of the portfolio in
non-euro-denominated assets. Unhedged non-euro-denominated
assets are limited to a maximum exposure of 2.5% of the portfolio
subject to principal haircuts, and any other non-euro-denominated
assets will be hedged with FX forward agreements from settlement
date up to 90 days. The manager can only invest in unhedged or
forward-hedged assets if after the applicable haircuts, the
aggregate balance of the assets is above the reinvestment target
par balance. Investment in non-euro-denominated assets hedged
with perfect asset swaps as of the settlement date is allowed up
to 30% of the portfolio.
TRANSACTION SUMMARY
Net proceeds from the note issue will be used to purchase a
EUR350m portfolio of mostly European leveraged loans and bonds.
The portfolio will be managed by Sankaty Advisors Limited. The
transaction will have a four year re-investment period scheduled
to end in 2018.
The transaction documents may be amended subject to rating agency
confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will analyze the
proposed change and may provide a rating action commentary if the
change has a negative impact on the ratings. Such amendments may
delay the repayment of the notes as long as Fitch's analysis
confirms the expected repayment of principal at the legal final
maturity.
If in the agency's opinion the amendment is risk-neutral from a
rating perspective Fitch may decline to comment. Noteholders
should be aware that confirmation is considered to be given if
Fitch declines to comment.
RATING SENSITIVITIES
A 25% increase in the expected obligor default probability would
lead to a downgrade of up to three notches for the rated notes.
A 25% reduction in expected recovery rates would lead to a
downgrade of up to four notches for the rated notes.
=========
I T A L Y
=========
WASTE ITALIA: Fitch Assigns 'B-(EXP)' Issuer Default Rating
-----------------------------------------------------------
Fitch Ratings has assigned Waste Italia SpA an expected Long-term
Issuer Default Rating (IDR) of 'B-(EXP)' with a Stable Outlook
and its senior secured notes expected 'B-(EXP)'/'RR4' ratings.
The expected ratings reflect the envisaged capital and group
structure following the issuance of EUR200 million senior secured
notes by Waste Italia to refinance existing debt and fund
acquisitions. The final ratings are contingent upon the receipt
of final documentation conforming materially to information
already received. Failure to issue the notes would result in the
withdrawal of the IDR and any instrument ratings.
The expected rating reflects Waste Italia's leading position in a
relatively supportive market segment, while cash flows are
sensitive to waste volumes and pricing. Replacing landfill
capacity is central to generating cash flow, with recent and
pending acquisitions partly funded out of the planned EUR200
million bond proceeds. Waste Italia does not expect to pay a
dividend and growth capex is fully discretionary.
Fitch views the overall diversification and scale of Waste Italia
as remaining limited following the acquisition of Geotea and the
business plan as entailing substantial execution risks.
Moreover, the company has to establish a record of providing
prospective bondholders with transparent and comparable
information. While prospective (2014-2017) funds from operations
(FFO) based credit ratios are relatively strong for the rating,
these qualitative factors are rating constraints. In addition,
although some debt amortization will likely occur based on a
mandatory prepayment offer relating to excess cash flow, we view
the sizeable bullet bond maturity as a potential weakness due to
long-term uncertainty on remaining landfill capacity.
KEY RATING DRIVERS
Strong Market Position & Supportive Market Segment
Waste Italia has a strong market position in special non-
hazardous waste in north west Italy and volumes have historically
displayed greater stability than other segments such as hazardous
or urban waste. Industrial customers remain responsible for
waste up to disposal underlining the importance of strong
customer relationships. Although contract lives are relatively
short (typically 6-12 months), a presence throughout the value
chain is a competitive advantage and contract renewal rates are
around 98%. However, special waste is unregulated and Waste
Italia is relatively undiversified by geography or by technology.
While EU waste policy favors incineration over landfill, Italian
landfill looks set to continue to grow, based on cost advantages
and the difficulty in obtaining permits for incineration. With
the acquisition of Geotea, Waste Italia has also entered the
market for urban waste and for hazardous waste, albeit at low
relative shares.
Replacing Landfill Capacity Key for Cash Flow
Fitch estimates landfill accounting for approximately two-thirds
of EBITDA, replenishing capacity is central to generating future
cash flow to either grow the business or reduce net leverage
toward the proposed notes' maturity. This can be achieved
organically and 25% additional capacity was permitted in 1H14 at
Albonese or via acquisitive growth. The acquisition of
substantial capacity, notably at Geotea, hinges on the expected
refinancing and bond issue, and would increase remaining landfill
life to 6.9 from 3 years. The company's ability to maintain
long-term landfill capacity is central to its credit profile, but
we note that this is subject to a successful permit process,
which is outside the company's control. Waste Italia has been
active in this business for a considerable time and is
experienced in dealing with the permit process.
Additional Cash Flow Sensitivities
In addition to the available landfill capacity, cash flows are
sensitive to waste volumes which trend with Italian economic
activity, and, in a highly fragmented market, competitive pricing
pressures. However, Waste Italia's partnership structure outside
north west Italy gives some flexibility to the cost base. With
trade receivables averaging around 30% of revenues, there is also
customer counterparty risk. Waste Italia reviewed payment terms
in 2013 and now requires customer payment within 60 days. Beyond
maintenance capex of EUR6m p.a. to maintain landfill life, growth
capex is fully discretionary.
RCF and Bond Refinancing Provide Liquidity
Waste Italia aims to refinance all of its existing bank debt
(EUR76.9 million) with the proposed issue of EUR200 million
senior secured notes and a shareholder capital contribution of
EUR44.5 million from the parent company, Kinexia S.p.A. The
proceeds will also fund recent acquisitions, in particular
landfill companies, Faeco (EUR40.6 million) and Geotea
(EUR84.3 million). Liquidity is also expected to be further
enhanced by a EUR15 million RCF, which is presently under
negotiation and the draft bond offering document provides for a
further EUR10 million (EUR25 million in total) of super senior
debt that could be raised without this being subject to the fixed
charge coverage or leverage test. According to the draft terms
and conditions of the RCF, a leverage covenant becomes effective
once a threshold of 30% of utilization is exceeded. Breaches do
not constitute an event of default while equity cure
possibilities exist. The group also uses non-recourse factoring;
but the programs are moderate (EUR10.1 million for Waste Italia
and EUR1.4 million for Faeco). Waste Italia does not plan to pay
dividends and Fitch has assumed no dividend payments in its
rating case.
Capital Structure and Corporate Governance
While Fitch views Waste Italia's strategy to enhance the lifetime
of the remaining landfill capacity and diversification into other
waste treatment areas and types of waste as a means of defending
and improving its business profile, the pace of expansion in 2014
is regarded as aggressive. Fitch calculates FFO adjusted net
leverage on a pro-forma basis for 2014 at 4.6x. However, de-
leveraging is strongly dependent on further growth, which
requires both volumes and prices to increase. Fitch views some
volume increases as possible, but in a competitive and low
inflation environment, is cautious on pricing. Moreover, Fitch
considers there is potential execution risk in strategy and
regards the sizeable long-term bullet maturity as not fully
matching the decreasing landfill capacity that would organically
decrease in the absence of new permissions.
In Fitch's ratings case, we forecast FFO adjusted net leverage to
be around 4.3x in 2015 and 2016. Corporate governance aspects
resulting from the relationship with Kinexia, in particular some
management overlap and a high level of debt at Kinexia's other
subsidiaries, are a potential risk. However, this is mitigated
by adequate contractual protection in the proposed terms and
conditions of the bond.
The terms of the bond include a mandatory cash flow offer of
EUR2.5 million in 2015 and the greater of EUR5 million and 50% of
excess cash flow in 2016 and the greater of EUR15 million and 50%
of excess cash flow for 2017 and 2018, defined as EBITDA less
changes in working capital, capital spending, cash interest and
tax.
RATING SENSITIVITIES
Positive: Future developments that could lead to positive rating
action include:
-- FFO adjusted net leverage below 4x (gross below 4.5x) and
FFO interest coverage above 3.5x on a sustained basis.
-- Successful implementation of the business plan, including
receipt of landfill permissions as planned and reaching
EBITDA of at least EUR60 million.
-- Further diversification of revenue streams, lower reliance
on landfill.
-- Faster than anticipated reduction of total debt, bringing
the capital structure more in line with the remaining
landfill capacity time.
Negative: Future developments that could lead to negative rating
action include:
-- Significantly weaker than expected operating performance.
-- Substantial landfill permitting delay, potentially at Verde
Imagna, resulting in remaining useful life of 3.5 years or
less.
-- Significant deterioration of key credit ratios (FFO
adjusted net leverage above 5x, FFO interest cover trending
to 2.5x) and negative free cash flow.
-- Changes in financial policy, leading to substantial
dividend outflows and to the loss of cash reserves to fund
landfill capacity or deleveraging.
===================
L U X E M B O U R G
===================
LEYNE STRAUSS-KAHN: Says Firm Insolvent After Add'l. Commitments
----------------------------------------------------------------
Stephanie Bodoni and Fabio Benedetti-Valentini at Bloomberg News
report that Leyne, Strauss-Kahn & Partners (MLLSK) said it is
insolvent following the discovery of "additional commitments"
that threaten the investment firm's ability to recover after the
death of co-founder Thierry Leyne last month.
Mr. Leyne, 49, a French-Israeli entrepreneur who started LSK &
Partners with Dominique Strauss-Kahn last year, fell to his death
in Tel Aviv on Oct. 23 in an apparent suicide, Bloomberg
recounts. New information that has emerged since "called into
question the continuation of the company," LSK & Partners, as
cited by Bloomberg, said in an e-mailed statement on Nov. 5,
without giving details.
"LSK discovered additional commitments within the group, which
they were unaware of and which aggravate its delicate financial
situation," Bloomberg quotes the company's board of directors as
saying in the statement. "The board found that the new
information called into question the continuation of the company
LSK, whose credit is irreparably compromised" and "decided to
proceed and make a declaration of insolvency."
Mr. Leyne had been in a dispute with Insch Capital Management SA,
a hedge fund based in Lugano, Switzerland, which alleged his firm
made unauthorized trades with its money before his death,
Bloomberg relays.
A spokesman for the Luxembourg courts said on Nov. 5 that LSK has
submitted a request for voluntary bankruptcy, Bloomberg relates.
LSK & Partners, its unit Assya Asset Management Luxembourg SA and
Mr. Leyne were ordered on Oct. 3 by a Luxembourg judge to pay
EUR2 million (US$2.5 million) to the local unit of Baloise
Holding AG, Bloomberg recounts. The insurance company had sued
the group over the repayment of shares in LSK & Partners,
Bloomberg discloses.
A Luxembourg court last week granted Assya Asset Management a
suspension of payments until Nov. 17, Bloomberg relays.
Leyne, Strauss-Kahn & Partners is a financial-services firm based
in Luxembourg.
=====================
N E T H E R L A N D S
=====================
CONTEGO CLO II: Fitch Assigns 'B-sf' Rating to Class F Notes
------------------------------------------------------------
Fitch Ratings has assigned Contego CLO II B.V. notes final
ratings, as:
Class A: 'AAAsf'; Outlook Stable
Class B: 'AA+sf'; Outlook Stable
Class C: 'Asf'; Outlook Stable
Class D: 'BBBsf'; Outlook Stable
Class E: 'BBsf'; Outlook Stable
Class F: 'B-sf'; Outlook Stable
Subordinated notes: not rated
Contego CLO II B.V. is an arbitrage cash flow collateralized loan
obligation (CLO).
KEY RATING DRIVERS
'B'/'B-' Portfolio Credit Quality
Fitch assesses the average credit quality of obligors to be in
the 'B'/'B-' range. The agency has credit opinions and public
ratings on 91.2% and 6.9%, respectively, of the identified
portfolio. Only one asset is not rated by Fitch. The Fitch-
weighted average rating factor of the identified portfolio is
32.7%, compared with the covenanted maximum of 33.5%.
High Recovery Expectations
At least 90% of the portfolio will comprise senior secured loans.
Recovery prospects for these assets are typically more favorable
than for second-lien, unsecured, and mezzanine assets. Fitch has
assigned Recovery Ratings to 98.1% of the identified portfolio.
The Fitch-weighted average recovery rate of the identified
portfolio is 73%, compared with the covenanted minimum of 68%.
Payment Frequency Switch
The notes pay quarterly, while the portfolio assets can reset to
semi-annual. The transaction has an interest-smoothing account,
but no liquidity facility. A liquidity stress for the non-
deferrable class A and B notes, stemming from a large proportion
of assets resetting to semi-annual in any quarter, is addressed
by switching the payment frequency on the notes to semi-annual,
subject to certain conditions.
Limited Interest Rate Risk
Fixed-rate assets cannot exceed 2.5% of the portfolio, while the
liabilities pay floating-rate. Consequently, the impact of
unhedged interest rate risk caused by the exposure to these
assets is small.
Low Weighted Average Spread
The asset manager has indicated the expected minimum weighted
average spread test will be 3.7% as of the closing date.
TRANSACTION SUMMARY
Net proceeds from the note issue are being used to purchase a
EUR350m portfolio of mostly European leveraged loans. The
portfolio will be managed by N.M. Rothschild & Sons Limited. The
transaction will have a four-year re-investment period scheduled
to end in 2018.
The transaction documents may be amended subject to rating agency
confirmation or noteholder approval. Where rating agency
confirmation relates to risk factors, Fitch will analyze the
proposed change and may provide a rating action commentary if the
change has a negative impact on the ratings. Such amendments may
delay the repayment of the notes as long as Fitch's analysis
confirms the expected repayment of principal at the legal final
maturity.
If in the agency's opinion the amendment is risk-neutral from a
rating perspective Fitch may decline to comment. Noteholders
should be aware that confirmation is considered to be given if
Fitch declines to comment.
RATING SENSITIVITIES
A 25% increase in the obligor default probability would lead to a
downgrade of up to three notches for the rated notes.
A 25% reduction in expected recovery rates would lead to a
downgrade of up to four notches for the rated notes.
ONTEX GROUP: S&P Assigns 'BB-' Corporate Credit Rating
------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Belgium-based hygienic disposables
manufacturer Ontex Group N.V.
At the same time, S&P assigned an issue rating of 'BB-' to the
EUR100 million revolving credit facility (RCF), EUR250 million
senior secured notes, and EUR380 million term loan A to be issued
by Ontex Group. S&P also assigned a recovery rating of '4' to
the proposed debt, reflecting its expectation of average (30%-
50%) recovery for debtholders in the event of a payment default.
The ratings on the proposed debt are subject to S&P's review of
the final documentation.
Ontex is simplifying its organizational structure and has created
a new holding company, Ontex Group N.V., above the existing Ontex
IV S.A. Accordingly, S&P is assigning a corporate credit rating
to Ontex Group, which S&P views as the new top company for the
group. S&P equalizes its rating on Ontex Group with that on
Ontex IV.
S&P considers Ontex IV to be a "core" group entity under S&P's
group rating methodology because:
-- It is unlikely to be sold, in S&P's view;
-- It shares the brand name;
-- It has the same management team as Ontex Group; and
-- Incentives exist to induce strong support from senior group
management in good times and under stressful conditions.
S&P assess of Ontex Group's business risk profile as "fair" and
its financial risk profile as "aggressive," the same as S&P's
assessments for Ontex IV.
S&P understands that Ontex will use the senior secured notes and
the term loan A to refinance all its existing debt.
S&P's issue and recovery ratings on Ontex's existing facilities
are unchanged. S&P expects to withdraw these ratings when the
facilities have been repaid with the proposed debt issuance.
The stable outlook on Ontex reflects S&P's expectation that the
group's debt to EBITDA ratio will likely remain in the 4.0x-5.0x
range over the medium term, which S&P considers to be
commensurate with the 'BB-' rating. It also reflects S&P's view
that the group will likely report stable operating performance
over the next two years. S&P anticipates that Ontex's adjusted
EBITDA margin will remain higher than 10% over the next two years
and that free cash flow will be positive.
S&P could lower the rating if Ontex's performance deteriorates,
and gross margins become more volatile such that the debt to
EBITDA ratio approaches 5.0x on a sustainable basis. This could
result from declining operating performance caused by intensified
competition or a combination of increased costs associated with
securing growth in markets outside of Western Europe, a delayed
recovery of increased input costs, and persistently high
restructuring costs and capex. It could also result from the
termination of various small contracts.
Under the existing ownership, a positive rating action is
dependent on Ontex improving its operating performance to such an
extent that it can sustain debt to EBITDA between 3.0x-4.0x on a
fully adjusted basis. S&P considers that this could occur if the
group's revenues grow by 7%-9% and its EBITDA margin is well
above 12% over the medium term. In S&P's view, this would depend
on Ontex stabilizing growth in markets outside of Western Europe
at value-adding profit margins, while also being able to quickly
recover any rise in input costs or foreign exchange impact
through price increases and a reduction in restructuring and
capex costs.
===============
P O R T U G A L
===============
ATLANTES MORTGAGE: Moody's Raises Rating on Class D Notes to 'B3'
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of seven notes
in two Portuguese residential mortgage-backed securities (RMBS)
transactions: Atlantes Mortgage No.1 Plc and Azor Mortgages
Public Limited Company. This rating action is prompted by the
increase in the country ceiling to A3.
The rating upgrades follow the upgrade of the Portuguese
sovereign rating to Ba1 from Ba2 on July 25, 2014 and the
resulting increase of the local-currency country ceiling to A3
from Baa1 which reflects the strong government commitment to
fiscal consolidation and the reduced susceptibility to even risk
associated with lower government liquidity and banking sector
risk.
The rating action concludes the review of the notes placed on
review for upgrade, following either the first upgrade of the
Portuguese sovereign rating this year to Ba2 on May 9, 2014 or
the second upgrade to Ba1 on July 25, 2014.
Ratings Rationale
The rating actions reflect (1) the increase in the Portuguese
local-currency country ceiling to A3 and (2) sufficiency of
credit enhancement in the affected transactions; for the revised
rating levels.
-- Reduced Sovereign Risk
The Portuguese sovereign rating was upgraded to Ba1 in July 2014,
which resulted in an increase in the local-currency country
ceiling to A3. The Portuguese country ceiling, and therefore the
maximum rating that Moody's will assign to a domestic Portuguese
issuer including structured finance transactions backed by
Portuguese receivables, is A3 (sf).
The increase of credit enhancement combined with the reduction in
sovereign risk has prompted the upgrade of the notes.
-- Key collateral assumptions
The key collateral assumptions have not been updated for any of
the two transactions as part of this review. The performance of
the underlying asset portfolios remain in line with Moody's
assumptions. Moody's also has a stable outlook for Portuguese
RMBS transactions.
-- Exposure to Counterparties
Moody's rating analysis also took into consideration the exposure
to key transaction counterparties. Including the roles of
servicer, account bank, and swap provider.
The rating action takes into account servicer commingling and
set-off exposure to BANIF-Banco Internacional do Funchal, S.A.
(Caa1/NP).
Moody's also assessed the exposure to Credit Suisse International
(A1/P-1) and Citibank, N.A. (London Branch) (A2/(P)P-1) as swap
counterparties of Atlantes Mortgage No.1 Plc and Azor Mortgages
Public Limited company respectively.
Principal Methodology
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
March 2014.
Factors that would lead to an upgrade or downgrade of the
ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) further reduction in sovereign risk, (2)
performance of the underlying collateral that is better than
Moody's expected, (3) deleveraging of the capital structure and
(4) improvements in the credit quality of the transaction
counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2)
performance of the underlying collateral that is worse than
Moody's expects, (3) deterioration in the notes' available credit
enhancement and (4) deterioration in the credit quality of the
transaction counterparties.
List of Affected Ratings:
Issuer: Atlantes Mortgage No.1 Plc
EUR462.5 million Class A Notes, Upgraded to A3 (sf); previously
on Aug 7, 2014 Upgraded to Baa1 (sf) and Remained On Review for
Possible Upgrade
EUR22.5 million Class B Notes, Upgraded to Baa2 (sf); previously
on May 29, 2014 Ba2 (sf) Placed Under Review for Possible Upgrade
EUR12.5 million Class C Notes, Upgraded to Ba3 (sf); previously
on May 29, 2014 B3 (sf) Placed Under Review for Possible Upgrade
EUR2.5 million Class D Notes, Upgraded to B3 (sf); previously on
Jul 5, 2013 Confirmed at Caa1 (sf)
Issuer: Azor Mortgages Public Limited Company
EUR253 million Class A Notes, Upgraded to A3 (sf); previously on
Aug 7, 2014 Baa1 (sf) Placed Under Review for Possible Upgrade
EUR19 million Class B Notes, Upgraded to A3 (sf); previously on
May 29, 2014 Ba1 (sf) Placed Under Review for Possible Upgrade
EUR9 million Class C Notes, Upgraded to Ba1 (sf); previously on
May 29, 2014 Ba3 (sf) Placed Under Review for Possible Upgrade
ESPIRITO SANTO: ES Control Declared Bankrupt by Luxembourg Court
----------------------------------------------------------------
algarvedailynews.com reports that the court of Luxembourg said in
a statement that it declared Espirito Santo SA Control bankrupt,
adding that the failure of the company was due to it being unable
to meet its payments and its "credit standing was at issue," i.e.
the company was unable to access further credit.
The same statement read the court has appointed Karin Guillaume
as the overseeing legal eagle and Alain Rukavina as the
insolvency manager, algarvedailynews.com relates.
The insolvency of Espirito Santo Control is the fifth group
company in less than a month to be declared bankrupt by the court
under whose wing they sought refuge from their creditors and from
the financial storm triggered by the failure of Banco Espirito
Santo, algarvedailynews.com notes.
Espirito Santo Control is at the top of the Espirito Santo Group
as it holds 56.5% of Espirito Santo International, which in turn
owns 100% of Rioforte, algarvedailynews.com states.
About Espirito Santo
Espirito Santo Financial Group SA is the owner of about 20% of
Banco Espirito Santo SA.
Banco Espirito Santo is a private Portuguese bank based in
Lisbon, Portugal.
In August 2014, Banco Espirito Santo was split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets. A total of EUR4.9 billion in fresh capital is
being injected into this "good bank", which will subsequently be
offered for sale. It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.
Also in August 2014, Espirito Santo Financial Portugal, a unit
fully owned by Espirito Santo Financial Group, filed under
Portuguese corporate insolvency and recovery code.
In August 2014, Espirito Santo Financiere SA, another entity of
troubled Portuguese conglomerate Espirito Santo International SA,
filed for creditor protection in Luxembourg.
In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.
===========================
U N I T E D K I N G D O M
===========================
CATERHAM SPORTS: Dell Partnership Scrapped
------------------------------------------
Austin Business Journal reports that Dell Inc.'s once highly
touted relationship as the technical computing muscle behind the
U.K.'s Caterham Formula 1 racing team has been scrapped following
the team's recent financial hardships.
The Round Rock-based computing company is owed more than US$1.1
million, Austin Business Journal relates citing British media
reports.
All content related to the Dell/Caterham partnership has been
scrubbed from Dell's website, though there are still videos and
other content describing it on the website for Intel Corp., which
was also involved in the deal, Austin Business Journal says.
According to the report, Dell had provided mobile data centers to
collect real-time race data at tracks all over the world for the
team, which is facing financial difficulties and did not compete
in last month's United States Grand Prix at Austin's Circuit of
The Americas.
The Twitter account for Dell Inside Racing hasn't been updated
since late July, when reports of Caterham's financial
difficulties began to surface, the report says. It is the second
team to fall under extreme financial hardships and pull out of
competition in recent weeks, causing some to question whether the
sport is becoming too financially exclusive, Austin Business
Journal notes.
As reported in the Troubled Company Reporter-Europe on Oct. 23,
2014, The Financial Times said Caterham Sports Limited, the maker
of the Caterham Formula One car, has fallen into administration,
threatening the future of the racing franchise.
London-based accountants Smith & Williamson were on Oct. 17
appointed administrators to Caterham Sports, the Oxfordshire-
based manufacturer that designs and builds the F1 cars,
the FT related.
The cash-strapped team's dismal on-track performance has been
more than matched by its corporate travails, the FT states.
Caterham F1, formerly known as Lotus Racing and run under a
license held by parent company 1 Malaysia Racing Team, has yet to
win a point in five years of competition and currently sits at
the foot of the FIA championship, the FT said.
HPM & ADDO: Keiran Bayley Buys Firm, Saves 30 Jobs
--------------------------------------------------
prolificnorth.co.uk reports that a last minute rescue deal has
saved 30 jobs at North East print firm, HPM & Addo.
The printing firm went into administration, but its assets have
been bought by former Addo boss, Keiran Bayley, according to
prolificnorth.co.uk.
The report notes that HPM has been around for 125 years, and in
March, it entered into a partnership with Addo in Darlington.
While there was no formal merger, they brought their operations
together under one roof, in the hope of injecting more revenue
into HPM, the report relates.
Mr. Bayley was the managing director of Addo, while Richard
Mortimer, the managing director of HPM Group became chairman of
the new company. Mr. Mortimer retired in September.
However, the loss of a number of major contracts, not least a
deal to produce Middlesbrough Football Club's match day programs,
led to financial difficulties and efforts to find a backer to
take control of its banking facilities failed, the report
discloses.
Mr. Bayley was able to step in after securing finance to buy the
assets and in doing so save 30 of the 42 jobs, the report notes.
"When we found out HPM were in trouble earlier in the year we
felt if we put both operations under one roof we could turn the
business around and save all the jobs in jeopardy," Mr. Bayley
explained, the report notes.
"It was unfortunate that we couldn't shake off HPM's struggles
and, with significant pressure from the bank, it eventually meant
the end of what was a print company with real heritage.
Unfortunately the business model for staffing levels in relation
to turnover simply didn't stack up. Ultimately we were faced with
the difficult choice of making 12 redundancies or 42," the report
quoted Mr. Bayley as saying.
"We could spend an eternity looking back and picking the bones
out of what could have been but the pure fact is there is a print
business in Newton Aycliffe with 30 employees that wants to look
to the future, grow, invest and contribute to what is a wonderful
region," Mr. Bayley added.
It's been confirmed that the HPM name has now disappeared, with
the company re-emerging as Addo Printing.
INKLAND: Faces Lay offs After HPM and Addo Administration
---------------------------------------------------------
Insider Media Limited reports that County Durham-based Inkland is
facing the prospect of laying off staff after one of its clients
went into administration, its boss said.
The company supplied HPM and Addo with printing consumables
including ink and printing plates, according to Insider Media
Limited.
However, with HPM and Addo going into administration on Oct. 31,
Inkland will only get a fraction of what it is owed, the report
notes.
While the company has not confirmed how much it is owed, it is
believed to be more than GBP100,000, the report relates.
Director Steve Wilson said he now refuses to do business with
Addo Printing, which claims it has secured 30 jobs in buying HPM
and Addo while also acquiring its assets, after being taken for a
"serious amount of money," the report notes.
"The managing director of Addo Printing, who was the managing
director of HPM and Addo, has been in touch to seek our co-
operation in supplying the new company," the report quoted Mr.
Wilson as saying. "But we're being taken for a serious amount
of money and we're not prepared to do business with them," Mr.
Wilson said.
"It is fair to say 30 jobs have been saved, but what about the
other impacts a pre-packed deal like this has on suppliers dealt
the blow of a bad debt?," Mr. Wilson said, the report relays.
"We are likely to face the prospect of losing employees as a
result and we are just one of the creditors in this position,"
Mr. Wilson said, the report relates.
The report discloses that Mr. Wilson added that the company's
financial year ended recently and, while it was set to be the
most profitable since he took over 14 years ago, it will now be
its "worst on record".
Inkland employs ten people at its Aycliffe factory and has an
annual turnover of GBP3 million.
QUAY HOTEL AND SPA: Sold for More Than GBP7 Million
---------------------------------------------------
News North Wales reports that uncertainty over the future of a
Deganwy hotel has been settled after it was sold for more than
GBP7 million.
The Quay Hotel and Spa was purchased by Inspire Ltd after its
previous parent company, Albermarle Leisure, went into
administration with PricewaterhouseCoopers in February, according
to News North Wales.
The report notes that Fiona Gresty, business development manager
for the Quays Hotel and Spa, called the development a positive
step forward.
"We are delighted to be working with Inspire and are looking
forward to the stability, investment and community spirit that
Inspire Ltd will bring. This is great news for staff and
customers of the hotel," the report quoted Ms. Gresty as saying.
"Inspire will be looking at the hotel, evaluating the business
and making a plan to assess any areas which need development, but
there will be no changes immediately," Ms. Gresty said, the reort
relays.
The Quay Hotel and Spa has been open since 2006 and has 74
bedrooms, each categorised as classic, superior, executive, suite
or penthouse.
SCOTSCAPE LIMITED: In Administration Due to Losses
--------------------------------------------------
Sarah Cosgrove at hortweek.com reports that Scotscape Limited has
gone into administration.
Administrators FRP Advisory was appointed on October 17,
following losses in the commercial team, which was shut down in
September, according to hortweek.com.
The report notes that company directors Peter Waterer and Trevor
Kenward were made redundant along with 11 other members of the
commercial division and Scotscape founder and managing director
Angus Cunningham took on the role of company secretary,
previously held by Waterer.
A Scotscape spokeswoman said that the other Scotscape divisions
continue to trade as Scotscape Group Limited, the report relates.
"The remaining 45 members of Scotscape staff look forward to
renewed growth within the remits of our successful living wall,
living wall maintenance, irrigation, green roofs and domestic
landscaping and landscape maintenance divisions," the report
quoted the spokesman as saying.
WINDERMERE VIII: S&P Lowers Rating on Class C Notes to 'D(sf)'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'D(sf)' from
'CC(sf)' its credit rating on Windermere VIII CMBS PLC's class C
notes. At the same time, S&P has affirmed its 'D (sf)' ratings
on the class D and E notes. S&P will withdraw its 'D (sf)'
ratings on the class C, D, and E notes within 30 days.
The rating actions reflect the issuer's principal loss allocation
to the class C and D notes following the completion of the
liquidation of the Amadeus Portfolio in Sept. 2014.
On the October 2014 interest payment date (IPD), the issuer
applied principal losses of GBP11.3 million to the class C notes
and GBP10.5 million to the class D notes.
As a result of the issuer's principal loss allocation, S&P has
lowered to 'D (sf)' from 'CC (sf)' its rating on the class C
notes, in line with its criteria. At the same time, S&P has
affirmed its 'D (sf)' rating on the class D notes following
further principal loss allocations. S&P has also affirmed its 'D
(sf)' rating on the class E notes as they remain in default after
having full principal losses allocated to the notes on the July
2014 IPD.
Given that the note balance is now GBP0, S&P will withdraw its 'D
(sf)' ratings on the class C, D, and E notes within 30 days.
Windermere VIII is a U.K. true sale commercial mortgage-backed
securities (CMBS) transaction, which closed in Aug. 2006 with a
note balance of GBP1.04 billion. The underlying pool initially
comprised eight loans secured on 52 commercial properties in
England, Scotland, and Wales.
RATINGS LIST
Windermere VIII CMBS PLC
GBP1.038 bil commercial mortgage-backed floating-rate notes
Rating
Class Identifier To From
C 973208AE1 D (sf) CC (sf)
D 973208AF8 D (sf) D (sf)
E 973208AG6 D (sf) D (sf)
* UK: Insolvency Risk Falls in Most of Business Sectors, R3 Says
----------------------------------------------------------------
The Star reports that Since September, eight of 13 sectors
analysed in Yorkshire and the Humber showed a decrease in the
'normal risk of insolvency', according to body R3.
Those that saw a rise in risk were manufacturing (3.3 per cent),
hotels (7.5 per cent), property (1 per cent), professional
services (0.4 per cent) and transport (0.06 per cent), reflecting
national averages, The Star relates.
===============
X X X X X X X X
===============
* BOOK REVIEW: Competitive Strategy for Health Care Organizations
-----------------------------------------------------------------
Title: Competitive Strategy for Health Care Organizations:
Techniques for Strategic Action
Authors: Alan Sheldon and Susan Windham-Bannister
Publisher: Beard Books
Softcover: 190 pages
List Price: $34.95
Review by Francoise C. Arsenault
Order your personal copy today at http://bit.ly/1nqvQ7V
Competitive Strategy for Health Care Organizations: Techniques
for Strategic Action is an informative book that provides
practical guidance for senior health care managers and other
health care professionals on the organizational and competitive
strategic action needed to survive and to be successful in
today's increasingly competitive health care marketplace. An
important premise of the book is that the development and
implementation of good competitive strategy involves a profound
understanding of change. As the authors state at the outset:
"What may need to be done in today's environment may involve
great departure from the past, including major changes in the
skills and attitudes of staff, and great tact and patience in
bringing about the necessary strategic training."
Although understanding change is certainly important in most
fields, the authors demonstrate the particular importance of
change to the health care field in the first and second chapters.
In Chapter 1, the authors review the three eras of medical care
(individual medicine, organizational medicine, and network
medicine) and lay the groundwork for their model for competitive
strategy development. Chapter 2 describes the factors that must
be taken into account for successful strategic decision-making.
These factors include the analysis of the environmental trends
and competitive forces affecting the health care field, past,
current, and future; the analysis of the competitive position of
the organization; the setting of goals, objectives, and a
strategy; the analysis of competitive performance; and the
readaptation of the business, if necessary, through positioning
activities, redirection of strategy, and organizational change.
Chapters 3 through 7 discuss in detail the five positioning
activities that are part of the model and therefore critical to
the development and implementation of a successful strategy:
scanning; product market analysis; collaboration; restructuring;
and managing the physician. The chapter on managing the physician
(Chapter 7) is the only section in the book that appears dated
(the book was first published in 1984). In this day of physician-
owned hospitals and physician-backed joint ventures, it is
difficult to envision the physician in the passive role of "being
managed." However, even the changing role of physicians since the
book's first publication correlates with the authors' premise
that their model for competitive strategic planning is based
exactly on understanding and anticipating change, which is no
better illustrated than in health care where change is measured
not in years but in months. These middle chapters and the other
chapters use a mixture of didactic presentation, graphs and
charts, quotations from famous individuals, and anecdotes to
render what can frequently be dry information in an entertaining
and readable format.
The final chapter of the book presents a case example (using the
"South Clinic") as a summary of many of the issues and strategic
alternatives discussed in the previous chapters. The final
chapter also discusses the competitive issues specific to various
types of health care delivery organizations, including teaching
hospitals, community hospitals, group practices, independent
practice associations, hospital groups, super groups and
alliances, nursing homes, home health agencies, and for-profits.
An interesting quote on for-profits indicates how time and change
are indeed important factors in strategic planning in the health
care field: "Behind many of the competitive concerns . . . lies
the specter of the for-profits. Their competitive edge has lain
until now in the excellence of their management. But developments
in the past half-decade have shown that the voluntary sector can
match the for-profits in management excellence. Despite
reservations that may not always be untrue, the for-profit sector
has demonstrated that good management can pay off in health care.
But will the voluntary institutions end up making the same
mistakes and having the same accusations leveled at them as the
for-profits have? It is disturbing to talk to the head of a
voluntary hospital group and hear him describe physicians as his
potential competitors."
*********
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.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Ivy B. Magdadaro, 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. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
202-362-8552.
* * * End of Transmission * * *