/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150206.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, February 6, 2015, Vol. 16, No. 26 Headlines F R A N C E LABCO SA: Moody's Affirms 'B2' Corporate Family Rating SOCIETE NATIONALE: Two Companies Join Bidding Race G E R M A N Y HOLZ-IMPEX HS: Insolvency Proceedings Begins SOLAR-FABRIK AG: Court Arranges Provisional Protective Measures PATERNOSTER HOLDING: S&P Assigns Prelim. 'B' CCR; Outlook Stable N E T H E R L A N D S CLARE ISLAND: Moody's Affirms B3 Ratings on 2 Note Classes SPYKER NV: Obtains Bridge Funding; Wins Bankruptcy Appeal R U S S I A GAZPROM OAO: S&P Lowers Foreign Currency Ratings to 'BB+/B' MOSVODOKANAL JSC: S&P Lowers CCRs to 'BB+/B'; Outlook Negative RUSSIA: Must Cut Interest Rates or Face Wave of Bankruptcies VTB BANK: S&P Lowers Counterparty Credit Rating to 'BB+/B' S P A I N SNIACE SA: Court Approves Insolvency Settlement Proposal U N I T E D K I N G D O M AFREN PLC: S&P Lowers CCR to 'SD' on Payment Deferral ALLIEDPRA INTERNATIONAL: Goes Into Liquidation AMA TRADINGS: Court Winds Up Firm Over GBP1.56 Million Fraud ANGLO HOLT: Goes Into Administration, 52 Jobs Cuts CASTMASTER ROLL: Owes Creditors GBP500,000, Cuts 80 Jobs COPENSHIP: Dry Bulk Market Losses Prompt Bankruptcy ETHEL AUSTIN: Union Loses Compensation Bid GILBERT WEBB: High Court Enters Liquidation Order HEREFORD UNITED: Had Around 900 Creditors HOUSTON'S OF CUPAR: In Liquidation, Owes More Than GBP300,000 IMPERIAL ESCROW: High Court Winds Up Business LUCY ENTERPRISES: In Liquidation Following Fire MARUSSIA F1: Intends to Come Out of Administration on February 19 RECONDITIONED ENGINES: Court Shuts 3 Engine Reconditioning Firms X X X X X X X X * BOOK REVIEW: Lost Prophets -- An Insider's History ********* =========== F R A N C E =========== LABCO SA: Moody's Affirms 'B2' Corporate Family Rating ------------------------------------------------------ Moody's Investors Service has affirmed Labco S.A. B2 Corporate Family Rating (CFR) and B2-PD Probability of Default Rating (PDR) following the company's announcement of a proposed tap issue of EUR100 million senior secured notes. Concurrently, Moody's has affirmed the B3 rating on the senior secured notes due 2018. The rating outlook remains stable. The proceeds from the tap issue will be used to repay the majority of the drawn debt under the existing EUR128.25 million revolving credit facility which has been utilized to fund acquisitions including that of medical imaging and diagnostic company SDN S.p.A. ("SDN"), closed on 30 July 2014. Ratings Rationale The B2 Corporate Family Rating reflects Labco's (i) leading market position in the French clinical testing market complemented by still limited albeit growing diversification in neighboring countries such as Spain and Italy, (ii) its acquisition driven strategy within the backdrop of a consolidating market for laboratories, (iii) continued pricing pressures deriving from government driven cuts to tariffs and health care spend and (iv) high leverage because of debt funded acquisitions. Based on the last twelve months to September 30, 2014, leverage was high and relatively unchanged from previous years with Moody's adjusted debt-to-EBITDA of 6.2x. However, Moody's forecasts leverage to decrease towards 5.8x in 2015 because of the full year contribution to cash flows of recently acquired companies, notably SDN. The acquisition of SDN closed in July 2014 for a purchase price of EUR115 million; the company is an Italian leading provider of medical imaging and laboratory diagnostic services that will contribute around 13% to the group's pro forma EBITDA. Liquidity Moody's consider Labco's liquidity to be adequate. As of 30 September 2014 Labco had EUR82.7 million of cash and EUR80 million drawn under the EUR128.25 million RCF maturing in 2017. Following the proposed tap issue, Labco is expected to have full availability under the EUR128.25 million RCF. Headroom under the maintenance covenants of the RCF is adequate following a reset in October 2014. Furthermore, there are no material debt maturities before 2018 when the B3 rated senior secured notes come due. The rating on the existing notes is one notch below the corporate family rating reflecting their subordination to a sizeable super senior RCF. Outlook The stable outlook reflects Moody's expectation that Labco will generate positive free cash flows in the next 12 to 18 months and that Moody's adjusted debt-to-EBITDA will not exceed 6.0x in 2015. The stable outlook also assumes that Labco will continue to maintain a disciplined M&A strategy. What Could Change The Rating Up Although the upgrade is unlikely in the near term, positive pressure could be exerted on Labco's ratings if (1) the company's leverage ratio were to improve to around 5.0x; and (2) the company were able to continue to demonstrate sustained free cash flow generation and improved profitability. What Could Change the Rating Down Negative pressure on Labco's ratings could arise if (1) leverage were to exceed 6.0x for longer than Moody's expected; (2) its liquidity profile were to weaken; or (3) its profitability were to significantly deteriorate due to technology threats, competitive or pricing pressures. The principal methodology used in this rating was Business and Consumer Service Industry published in December 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. Headquartered in Paris, France, Labco S.A. is a pan-European network of medical laboratories. The company provides routine and semi-routine clinical testing services for individual patients through a network of 169 laboratories (excluding collection points) in seven European countries The company reported total revenue of EUR591.2 million in FYE December 2013, proforma for the acquisition of SDN. The company's shareholders are the founders of the company (16.73%), laboratory doctors (17.1%), existing and former senior management and affiliates (24.47%), and financial investors (41.7%), the largest being 3i Group plc with c.17.7% of Labco's share capital. SOCIETE NATIONALE: Two Companies Join Bidding Race -------------------------------------------------- Andrew Spurrier at IHS Maritime 360 reports that Greece's Attica group, parent of Superfast Ferries and Blue Star Ferries, is understood to have joined the bidding for SNCM (Societe Nationale Maritime Corse Mediterranee). There was no immediate confirmation from Attica but SNCM announced on Feb. 5 that an unnamed Greek company had submitted a bid for the bankrupt company, IHS Maritime 360 relays. The court-appointed administrators in charge of the company's affairs said that they had received five firm offers for the company and two letters of intent following the expiry of the extended deadline for offers on Feb. 2, IHS Maritime 360 relates. According to IHS Maritime 360, the three declared bidders are: the Mexican ferry company Baja Ferries, headed by Franco-Tunisian businessman Daniel Berrebi, a group of investors led by former chairman of the port of Marseilles, Christian Garin, and Corsican transport company boss Patrick Rocca. Other potential bidders are Swiss businessman Paul Moulia and, in addition to Attica, another unidentified Greek company, IHS Maritime 360 says, citing French press reports. SNCM said on Feb. 4 that all the bids were for the whole of the company's activities, comprising its Corsican and North African ferry businesses, but that all were conditional on approvals from the European Commission, the Corsican authorities, and the Marseilles court of commerce, IHS Maritime 360 notes. SNCM is a France-Corsica ferry operator. The company is 66% owned by Transdev, a public transport joint venture between water and waste group Veolia Environnement and state-bank CDC. ============= G E R M A N Y ============= HOLZ-IMPEX HS: Insolvency Proceedings Begins -------------------------------------------- EUWID reports that Holz-Impex HS is insolvent. Proceedings against the timber trader, which specialises in particular in Siberian larch and planed goods made from Nordic pine, commenced at the district court in Dusseldorf on Dec. 8, 2014, according to the report. According to EUWID, Business had already been terminated at the time of filing for insolvency in March 2014, which is why only one expert was appointed at that time and the event not publicised. During the commencement of insolvency proceedings, lawyer Ralf Zimmermann -- rechtsanwaelte@kebekus-zimmermann.de -- from the law firm Kebekus & Zimmermann GbR in Dusseldorf was appointed as insolvency administrator, EUWID dicloses. Holz Impex HS is a German import and timber-trading company. Among the range offered by Holz Impex HS were rough-planed boards, undedged sawnwood, decking, planed goods and to a lesser extent window scantlings, which were primarily delivered to clients as transfer orders from Russian and in some cases Scandinavian producers. SOLAR-FABRIK AG: Court Arranges Provisional Protective Measures --------------------------------------------------------------- A local court in Freiburg decided on Feb. 4, 2015 to arrange provisional protective measures regarding the assets of Solar- Fabrik AG, in response to the application submitted by the Management Board on Feb. 2 for the opening of the insolvency proceedings. In a further application, similar measures were also arranged regarding the assets of the wholly owned subsidiary Solar-Fabrik Wismar GmbH. The local court ordered Dr. Thomas Kaiser, Freiburg, of the law firm Kaiser & Sozien to provisional Trustees on the assets of the Solar-Fabrik AG and Dr. Uwe Rottler, Freiburg, of the law firm Kaiser & Sozien to provisional Trustees on the assets of the Solar-Fabrik Wismar GmbH ordered. Following the decision of the Supervisory Board on Jan. 29, 2015, the appointment of Thomas Oberle as a member of the management board of Solar-Fabrik AG becomes effective at this time. Solar-Fabrik AG -- http://www.solar-fabrik.de/home/?L=1-- is a German PV module manufacturer. PATERNOSTER HOLDING: S&P Assigns Prelim. 'B' CCR; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' long-term corporate credit rating to Paternoster Holding III GmbH (Pater III), the parent company of Germany-based component manufacturer Wittur International Holding GmbH (Wittur). The outlook is stable. At the same time, S&P assigned its preliminary 'B' issue rating to the EUR285 million senior secured facilities (comprising a EUR65 million revolving credit facility [RCF] and a EUR220 million term loan), in line with S&P's preliminary corporate credit rating. The facilities will be issued by Paternoster Holding IV GmbH (Pater IV), an intermediate holding company between Pater III and Wittur. The preliminary recovery rating on these facilities is '3', indicating S&P's expectation of recovery prospects at the higher end of our meaningful (50%-70%) recovery range. S&P also assigned its preliminary 'CCC+' issue rating to the EUR200 million senior notes due in 2023 and issued by Pater III, two notches below the corporate credit rating. The preliminary recovery rating on these notes is '6', reflecting their unsecured status and subordination to the senior secured debt facilities. All the ratings depend on S&P's review of the final transaction documentation. If S&P do not receive the final documentation within a reasonable time frame, or if the final documentation departs from materials S&P has reviewed, it reserves the right to withdraw or revise its ratings. Potential changes include, but are not limited to, use of loan proceeds, maturity, size, and conditions of the term loan, financial and other covenants, security, and debt ranking. Importantly, the preliminary ratings reflect S&P's assumption that the final documentation of the shareholder loan between Paternoster Holding I GmbH and its Luxembourg-based holding company Elevate (BC) S.ar.l. will meet S&P's requirements for treatment as equity under its criteria. The preliminary ratings on Pater III incorporate S&P's assumption that the following steps will be completed in the next few months: -- Funds advised and managed by the private equity firm Bain Capital will acquire 100% of Wittur's share capital for approximately EUR620 million, including repayment of exiting net debt and fees and expenses. The LBO is scheduled to close in March 2015. -- After the transaction closes, Bain Capital will own about 85% of the group and management will own the remaining 15%. Pater IV will issue the EUR220 million seven-year floating- rate senior secured loan and the EUR65 million six-year RCF. -- Pater III will issue the EUR200 million eight-year fixed- rate senior notes. -- From the proceeds, the group will repay all its debt and pay EUR464 million to its previous owners. S&P bases its analysis on the credit metrics of Wittur, given that it is the group's main operating entity. The preliminary ratings reflect S&P's view of Wittur's business risk profile as "weak" and its financial risk profile as "highly leveraged," as S&P's criteria define these terms. S&P's assessment of Wittur's business risk profile reflects its positioning in a fragmented niche industry in the capital goods sector, as well as its limited product diversification and strong customer concentration. S&P's assessment is constrained by Wittur's relatively small scale. Still, S&P views positively the company's strong market positions in its niche business line, its good reputation, the growth potential of its end markets, and the strength and long-standing nature of its customer relations. The business risk profile is also supported by the company's international manufacturing footprint and management's focus on cost optimization. S&P's assessment of Wittur's financial risk profile reflects S&P's expectation that the company's adjusted gross debt-to- EBITDA ratio will exceed 6x in 2015 and be slightly below 6x in 2016. At year-end 2015, S&P estimates that Pater III's adjusted debt will be about EUR475 million. This comprises the EUR420 million new debt to be issued at the LBO's closing, a pension deficit of about EUR9 million, operating leases of about EUR5 million, and vendor financing structured as a deferred consideration of about EUR40 million. S&P treats the vendor loans as debt because the draft documentation does not meet its criteria for equity treatment. Importantly, the preliminary ratings reflect S&P's assumption that the final documentation of the shareholder loan between Paternoster Holding I GmbH and its Luxembourg-based holding company Elevate (BC) S.ar.l. will meet S&P's requirements for treatment as equity under its criteria. Failure to satisfy these requirements could prompt S&P to lower its ratings on Pater III. In S&P's base case, it assumes: -- Modest GDP growth in Europe of 1% in 2015 and 1.4% in 2016. China's economy will likely be more dynamic, with GDP growth of about 7% annually in 2015 and 2016. -- Group annual revenue growth of about 5% in 2015 and approximately 7% in 2016. -- 10-30 basis points in annual EBITDA margin improvements over 2015 and 2016, with adjusted EBITDA margin trending upward to 13%-14%. -- Annual capital expenditures of just EUR11.5 million. -- No dividends or sizable acquisitions. Based on these assumptions, S&P arrives at these adjusted credit measures for Wittur: -- Debt to EBITDA exceeding 6x for 2015 and at less than 6x in 2016. -- Funds from operations (FFO) to debt at about 5% for 2015 and 2016. -- EBITDA interest coverage of between 2.0x and 2.5x in 2015 and 2016. The stable outlook reflects Wittur's strong niche market position in an industry with favorable growth prospects. S&P also expects that Wittur will improve its EBITDA margin over the next few years. Under S&P's base case, it assumes that debt to EBITDA will improve to less than 6x by end of 2016. In addition, S&P projects that the FFO and EBITDA cash interest coverage ratios will remain above 2x and that Wittur will continue to generate positive FOCF. S&P could lower the ratings if Wittur's liquidity weakened following a sudden drop in demand from one of its main customers, or it had reputational or quality problems. S&P could also consider a downgrade if the documentation for Bain Capital's shareholder loan did not satisfy our criteria for treatment as equity, or if Wittur's operating performance deteriorated, leading to an increase in adjusted debt to EBITDA to above 7x without near-term prospects of reduction. A downgrade could also result from Wittur's inability to maintain FFO and EBITDA cash interest coverage ratios above 2x or if FOCF was to turn negative. S&P could raise the ratings if Wittur's debt to EBITDA fell below 5x, although S&P thinks this is highly unlikely in the short term. ===================== N E T H E R L A N D S ===================== CLARE ISLAND: Moody's Affirms B3 Ratings on 2 Note Classes ---------------------------------------------------------- Moody's Investors Service has taken various rating actions on the following notes issued by Clare Island B.V.: EUR110.5 Million (current outstanding balance EUR79.4M) Class II Senior Floating Rate Notes, Upgraded to Aaa (sf); previously on Dec 16, 2013 Confirmed at Aa2 (sf) EUR15 Million Class III-A Mezzanine Fixed Rate Notes, Upgraded to Baa1 (sf); previously on Dec 16, 2013 Confirmed at Ba2 (sf) EUR17 Million Class III-B Mezzanine Floating Rate Notes, Upgraded to Baa1 (sf); previously on Dec 16, 2013 Confirmed at Ba2 (sf) EUR8.3 Million Class IV-A Mezzanine Fixed Rate Notes, Affirmed B3 (sf); previously on Dec 16, 2013 Affirmed B3 (sf) EUR18.2 Million Class IV-B Mezzanine Floating Rate Notes, Affirmed B3 (sf); previously on Dec 16, 2013 Affirmed B3 (sf) Clare Island B.V., issued in March 2002, is a Collateralised Loan Obligation ("CLO") backed by a portfolio of high yield European loans. It is predominantly composed of senior secured loans. This transaction passed its reinvestment period in March 2010. Ratings Rationale According to Moody's, the rating actions taken on the notes result from the deleveraging since last rating action in December 2013. Since the last rating action, the classes I and II notes have paid down EUR97.7 million. The class I has now been fully redeemed and therefore its rating has been withdrawn. The class II has a outstanding notional amount of EUR79.4 million which represents 71.9% of its initial balance. As a result of such deleveraging, the over-collateralization (OC) ratios have increased. As of the trustee report dated November 2014, the Senior, Class III and Class IV OC ratios are reported at 191.4%, 136.4%, and 110.2%, respectively, versus December 2013 levels of 142.9%, 121.0% and 107.4% respectively. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having a performing par of EUR142.0 million, principal proceeds balance of EUR7.6 million, defaulted par of EUR3.9 million, a weighted average default probability of 24.4% (consistent with a WARF of 3795), a weighted average recovery rate upon default of 47.9% for a Aaa liability target rating, a diversity score of 19 and a weighted average spread of 4.1%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed a recovery of 50% for the 93.9% of the portfolio exposed to first-lien senior secured corporate assets upon default and of 15% for the remaining non-first-lien loan corporate assets upon default. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. 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. Factors That Would Lead to an Upgrade or Downgrade of the Rating: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate in the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs were within two notches of the base-case results. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the note, in light of 1) uncertainty about credit conditions in the general economy and 2) the exposure to concentration of lowly- rated debt maturing in 2015, which may create challenges for issuers to refinance. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: * Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. * Around 40% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. * Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. SPYKER NV: Obtains Bridge Funding; Wins Bankruptcy Appeal --------------------------------------------------------- Justin Cupler at Insider Car News reports that Spyker has received the bridge funding it was expecting and won an appeal to convert the bankruptcy back to a moratorium of payment. The conversion is retroactive, Insider Car News says, citing legal documents. With the bridge funding, Spyker plans to be out of its moratorium of payment status "in a matter of weeks", Insider Car News notes. Additionally, the brand plans to restart its B6 Ventor -- an entry-level sports car -- venture and it plans to pursue merging with a U.S.-based manufacturer of electric aircraft that will hopefully spawn all-electric Spyker cars in the future, Insider Car News discloses. Spyker NV -- http://www.spykernv.com/-- is a Netherlands-based holding company engaged in the automobile industry sector. As of December 31, 2011, the Company, formerly Swedish Automobile NV, operated within one business segment, namely Spyker Sports Car. The Spyker Sports Car segment comprises the design, development, production and sale of motorcars and Grand Turismo (GT) racing under the Spyker brand name. The Company markets its products in Europe and the Middle East, the United States and Asia. As of December 31, 2011, the Company had such wholly owned subsidiaries, as Spyker Automobielen B.V., Spyker Squadron B.V., Spyker Events & Branding N.V., Spyker Holding B.V., Spyker of North Americal LLc and Spyker Cars UK Ltd, as well as owned 51% shares of Spyker of China Ltd and had shareholding in other companies. On December 18, 2014, Spyker, one-time owner of Sweden's Saab, declared bankruptcy on after failing to secure a critical bridging loan it had hoped would help it refinance and restructure. =========== R U S S I A =========== GAZPROM OAO: S&P Lowers Foreign Currency Ratings to 'BB+/B' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it has taken various actions on Russian corporations in the commodity exports, telecom, and infrastructure and utility sectors following the downgrade of Russia on Jan. 26, 2015. At the same time, S&P removed all the ratings from CreditWatch, where it placed them with negative implications on Dec. 30, 2014. These actions are on S&P's long- and short-term corporate credit ratings and issue ratings on debt, unless otherwise stated: Commodity producers (exporters): -- S&P lowered the foreign currency (FC) ratings on Gazprom OAO to 'BB+/B' from 'BBB-/A-3' and the local currency (LC) ratings to 'BBB-/A-3' from 'BBB/A-2'. The outlooks are negative. S&P lowered its ratings on Gazprom Neft JSC and OAO Novatek to 'BB+' from 'BBB-'. The outlooks are negative. S&P has also lowered its national scale ratings on these companies to 'ruAA+' from 'ruAAA'. -- S&P lowered its ratings on Oil Company Rosneft OJSC to 'BB+' from 'BBB-'. The outlook is negative. -- S&P affirmed its 'BBB-' and 'ruAAA' ratings on OAO LUKOIL and Uralkali OJSC. The outlooks are negative. -- S&P affirmed its 'BB+' and 'ruAA+' ratings on NLMK OJSC. The outlook is stable. -- At the same time, S&P revised its outlooks on OAO Severstal, Polyus Gold International Ltd., and Eurasia Drilling to negative from stable and affirmed S&P's 'BB+' ratings. -- S&P also revised its outlook on Alrosa OJSC to negative from stable and affirmed its 'BB-/B' ratings. Telecom operators: -- S&P lowered its ratings on Mobile TeleSystems OJSC (MTS) to 'BB+' from 'BBB-'. The outlook is negative. -- S&P lowered its FC rating on MegaFon OJSC to 'BB+' from 'BBB-' and affirmed the 'BBB-' LC rating. The outlooks are negative. The 'ruAAA' Russia national scale rating was affirmed. -- S&P revised its outlook on Rostelecom OJSC to negative from stable and affirmed its 'BB+' rating. Infrastructure and utility companies: -- S&P lowered its FC rating on OAO AK Transneft to 'BB+ from BBB-' and the LC rating to 'BBB-' from 'BBB'. The outlooks are negative. -- S&P lowered its FC rating on Russian Railways JSC and its subsidiaries to 'BB+' from 'BBB-' and S&P's LC ratings to 'BBB-' from 'BBB'. The outlooks are negative. S&P affirmed its 'ruAAA' national scale rating on Russian Railways. -- S&P lowered its ratings on JSC Federal Passenger Company to 'BB+' from 'BBB-'. The outlook is negative. -- S&P lowered its ratings on Federal Grid Co. of the Unified Energy System to 'BB+' from 'BBB-'. The outlook is negative. S&P also lowered its Russia national scale rating to 'ruAA+' from 'ruAAA'. -- S&P lowered its ratings on JSC Rosseti to 'BB+/B' from 'BBB-/A-3'. The outlook is negative. The Russia national scale rating was lowered to 'ruAA+' from 'ruAAA'. -- S&P lowered its ratings on RusHydro (OJSC) to 'BB/B' from 'BB+/B'. The outlook is stable. The Russia national scale rating was lowered to 'ruAA' from 'ruAA+'. -- S&P lowered its ratings on Interregional Distributive Grid Co. of Center JSC to 'BB-/B' from 'BB/B'. The outlook is stable. The Russia national scale rating was lowered to 'ruAA-' from 'ruAA'. -- S&P lowered its ratings on Moscow United Electric Grid Co. JSC to 'BB-' from 'BB'. The outlook is stable. The Russia national scale rating was lowered to 'ruAA-' from 'ruAA'. -- S&P revised its outlooks on AO Sovcomflot and DME Ltd. to negative from stable and affirmed the respective 'BB+' and 'BB+/B' ratings. For the Russian exporters, the rating actions reflect S&P's analysis of whether these companies could withstand a sovereign default and be rated higher than the sovereign. As a result of this analysis, S&P affirmed its ratings on LUKOIL, Uralkali, and NLMK, primarily to reflect S&P's view that, even in a stress scenario, these companies' stressed foreign-currency-denominated revenues could allow them to continue servicing their foreign currency debt. S&P takes into account their solid liquidity, including manageable debt maturity profiles compared with their cash balances, and free cash flow generation capacity. These companies join the list of other Russian companies, namely Norilsk Nickel and PhosAgro, which in our view, could survive a default of Russia. At the same time, S&P lowered its ratings on Gazprom, Gazpromneft, and NOVATEK because S&P thinks these companies are unlikely to withstand a sovereign default. In the case of Gazprom and its subsidiary Gazprom Neft, this is largely because of likely negative intervention from the government, which these financially strong companies could be subject to if the sovereign runs into financial difficulty. NOVATEK does not pass S&P's stress test primarily because of its focus on the Russian market and lower amount of hard currency revenues. S&P's one-notch downgrade of Rosneft stems from S&P's view that the company's stand-alone credit profile (SACP), which S&P continues to assess at 'bb', is weaker than that of Gazprom, Gazprom Neft, or NOVATEK. At the same time, S&P revised the outlook on Severstal to negative because the company has a lower share of exports than its peer NLMK. S&P lowered its foreign currency ratings on Russian non-exporters previously rated 'BBB-' because S&P believes these companies would unlikely survive an event that restricts the free flow of cash, such as a moratorium on external debt repayment, limited access to foreign currency, or a sovereign default. That said, S&P affirmed its local currency ratings on some companies with little or no debt denominated in hard currency. COMMODITY EXPORTERS: Gazprom OAO The downgrade follows a similar action on Russia. Although S&P thinks that, on a stand-alone basis, Gazprom could withstand a sovereign default, S&P sees a high likelihood of negative government intervention on the sovereign's hypothetical path to default. S&P continues to assess Gazprom's SACP at 'bbb-' and the likelihood of extraordinary support for Gazprom as "extremely high," based on Gazprom's "critical" role for, and very "strong" link with, the government. As per S&P's criteria, a company that has strong linkages with the government cannot be rated higher than the sovereign. This is because S&P assumes that the government could use its power to intervene negatively, which could include burdening the company with additional taxes, dividends, or other liabilities. The negative outlook on Gazprom mirrors that on the sovereign rating. Gazprom Neft JSC The downgrade of Gazprom Neft follows that of Russia and Gazprom. Although S&P maintains its assessment of Gazprom Neft's SACP at 'bbb-', the rating continues to be capped by that on the parent Gazprom. The negative outlook on Gazprom Neft mirrors that on Gazprom. Oil Company Rosneft OJSC The downgrade follows a similar action on the sovereign. S&P continues to see a "very high" likelihood that the Russian government would provide timely and sufficient extraordinary support to Rosneft if the company experiences financial distress. However, because S&P assess Rosneft's SACP at 'bb', the downgrade of Russia triggered the one-notch downgrade of Rosneft, according to S&P's criteria for rating government-related entities (GREs). The negative outlook on Rosneft mirrors that on the sovereign. OAO LUKOIL The affirmation reflects S&P's view that LUKOIL could withstand a sovereign default and therefore could be rated one notch above the foreign currency rating and T&C assessment on Russia. S&P thinks LUKOIL's sizeable hard currency revenue stream from exports, and some flexibility on capital expenditures and dividends, could allow it to service its foreign currency debt even if Russia were to default. That said, S&P could change its approach if the company's hard currency liquidity resources declined while its hard currency short-term maturities increased. The negative outlook on LUKOIL mirrors that on Russia. OAO NOVATEK The downgrade reflects the lowering of the sovereign ratings rather than S&P's view of NOVATEK's stand-alone credit quality. S&P believes that in the event of a sovereign default, NOVATEK's capacity to service its obligations, in particular debt denominated in foreign currency, could be materially impaired. Importantly, the company sells all of its gas and a portion of its liquids in the domestic market. S&P therefore believes that a severe sovereign stress would hamper its operations to a greater extent than companies where the majority of revenues come from exports. S&P notes that NOVATEK's share of export revenues will likely increase meaningfully in the coming years as production from its joint ventures, Sever, Energia, and Terneftegaz, ramps up. Consequently, S&P will periodically review this stress test, particularly if sanctions were lifted. NOVATEK's current placement on the sanction list is, in S&P's view, an obstacle to current and future access to capital for Yamal or other projects. The negative outlook mirrors that on Russia. OAO Severstal Although S&P affirmed its ratings on Severstal, S&P revised the outlook to negative from stable. This reflects S&P's view that Severstal cannot be rated higher than the T&C assessment on Russia, as per S&P's criteria, because it generates only one- third of its revenues from exports. At the same, S&P continues to assess Severstal's SACP at 'bb+', reflecting the company's high margins, low and decreasing debt leverage, and sound liquidity. NLMK OJSC The rating affirmation and stable outlook on Russian steel producer NLMK reflect S&P's view that the company could withstand a sovereign default. This is because more than half of the company's revenues are generated from exports in hard currency, whereas its costs are largely in local currency. NLMK has significantly benefited from the Russian ruble devaluation, which has further supported its already high margins and strong credit ratios. The company also has a material liquidity cushion. Eurasia Drilling Co. The outlook revision follows the rating action on Russia. As per S&P's criteria, Eurasia, being a non-exporter, cannot be rated higher than the sovereign rating and the T&C assessment on Russia. Therefore, S&P revised the outlook on Eurasia Drilling to negative, which mirrors the outlook on Russia. S&P maintains its assessment of Eurasia's SACP at 'bb+', supported by the company's strong credit metrics and leading positions in the Russian oilfield services market. Alrosa OJSC The outlook revision reflects the negative outlook on Russia, indicating that the rating could be lowered if Russia is downgraded. S&P's assessment of Alrosa's SACP remains unchanged at 'b+'. S&P continues to see a "moderate" likelihood that the Russian government would provide timely and sufficient extraordinary support to Alrosa in the event of financial distress. Polyus Gold International Ltd. The outlook revision primarily reflects S&P's view that Polyus Gold cannot be rated higher than the 'BB+' T&C assessment on Russia because it does not currently export its products. It also takes into account the heightened risk that Polyus, whose assets are in Russia where it also generates all its revenues, might be susceptible to Russia's economic slowdown over the medium term. In S&P's view, the demand for gold is less likely to be affected by deterioration of the domestic economy. However, the company has a limited track record of exporting its products and maintaining cash balances in offshore accounts. S&P could lower the rating on Polyus over the coming 12 months if the sovereign rating were lowered, with potential implications on Polyus' liquidity. Moreover, S&P would consider a downgrade if Polyus' adjusted ratio of funds from operations to debt dropped below 30%, without near-term prospects of improvement, or if its discretionary cash flow was negative. This could be triggered by a deviation from Polyus' currently moderate financial policy, such as through a material acquisition or dividend. Uralkali OJSC The rating affirmation on Uralkali reflects two major factors: -- First, S&P believes that Uralkali should be able to withstand a hypothetical sovereign default scenario, as described in "Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions," published Nov. 19, 2013. Those criteria allow S&P to rate Uralkali up to one notch above the sovereign credit rating and T&C assessment. This reflects, among other factors, the company's strong export focus, with about 75% of revenues from exports. S&P also considers that most of its cash will likely remain in dollars. -- Second, S&P assumes that Uralkali's EBITDA will be high (at least US$1.65 billion) in 2015 and 2016, helped by a weak ruble, which cuts costs substantially; virtually flat export potash prices; and volumes of at least 10.5 million tons (compared with 12 million in 2014). The lower volumes take into account S&P's assumption that the S-2 mine, where operations stopped at the end 2014 because of a brine inflow, will not be producing. Moreover, S&P believes the company will reduce leverage in 2015 to below the maximum set in its financial policy. As a result, net debt to EBITDA should be below 2x, after likely exceeding this level in 2014. S&P also anticipates strong discretionary cash flow from 2015 and the retention of large cash dollar balances at all times, while the company proactively refinances much of the significant debt maturing in 2015 and 2016 with long-term committed bank lines. The negative outlook reflects risks to S&P's base case and modest rating leeway, notably since we believe Uralkali's credit metrics were weak for the rating in 2014. TELECOM OPERATORS: Mobile TeleSystems (OJSC) (MTS) The downgrade and assignment of a negative outlook follow the rating action on the sovereign, and reflect that S&P do not expect MTS to be able to withstand a sovereign default. This is because MTS does not have any export revenues; it generates about 90% of its revenues in Russia. That said, S&P maintains its assessment of MTS' SACP at 'bbb-', supported by a "satisfactory" business risk profile and a "modest" financial risk profile. MegaFon OJSC The lowering of S&P's foreign currency rating on MegaFon follows the rating action on Russia and the downward revision of S&P's T&C assessment. As a non-exporter, MegaFon cannot be rated higher than the sovereign, according to S&P's criteria. At the same time, S&P has affirmed the 'BBB-' local currency rating because S&P believes that MegaFon will be able to service its local currency liabilities in case of a sovereign default. MegaFon's foreign-currency-denominated debt, whose share is low, is related to facilities backed by export credit agencies and long-term funding for equipment purchases. In S&P's view, the repayment of this debt is unlikely to be accelerated in such a scenario. In addition, MegaFon has meaningful hard currency cash balances outside Russia, which S&P assumes the company will keep. Nonetheless, S&P notes the strength of MegaFon's metrics, with above-average profitability, adjusted debt to EBITDA of about 1.0x, and a solid liquidity position, supported by significant cash balances and availability of committed lines. MegaFon generates positive FOCF, and we do not foresee any debt increase in S&P's base case, even assuming a marginal weakening of credit metrics related to weaker Russian economic growth. Rostelecom OJSC The affirmation reflects S&P's assessment of Rostelecom's SACP at 'bb+', which continues to reflect the company's leading positions in the Russian fixed-line telephony market and moderate debt leverage. However, S&P revised the outlook to negative because of its view that the company could not withstand a sovereign default. In S&P's view, Rostelecom might not have sufficient liquidity in a sovereign default scenario to service its debt obligations. INFRASTRUCTURE AND UTILITY COMPANIES: OAO AK Transneft The downgrade follows a similar action on Russia. S&P continues to see an "extremely high" likelihood that the Russian government would provide timely and sufficient extraordinary support to Transneft in the event of financial distress, and S&P assess Transneft's SACP at 'bbb'. The foreign currency rating on Transneft will continue to be capped by the foreign currency long-term sovereign rating and T&C assessment on Russia. The local currency rating on Transneft will remain in line with the long-term local currency rating on Russia. The negative outlook reflects that on the sovereign. In accordance with S&P's criteria for GREs and rating above the sovereign, a one-notch downgrade of Russia will result in a similar rating action on Transneft, all else being equal. Russian Railways JSC The downgrade follows a similar action on Russia. S&P continues to see an "extremely high" likelihood that the Russian government would provide timely and sufficient extraordinary support to Russian Railways in the event of financial distress, and assess the company's SACP at 'bbb-'. The negative outlook reflects that on the sovereign. In accordance with S&P's criteria for GREs and rating above the sovereign, a one-notch downgrade of Russia will result in a similar rating action on Russian Railways, all else being equal. S&P assumes that the foreign currency rating on the company will remain capped by the foreign currency long-term sovereign rating and T&C assessment on Russia. The local currency rating on Russian Railways will stay in line with the long-term local currency sovereign rating. S&P could revise the outlook to stable if the outlook on the sovereign rating were revised to stable. JSC Federal Passenger Company (FPC) The downgrade follows a similar action on Russia. S&P continues to see a "high" likelihood that the Russian government would provide timely and sufficient extraordinary support to FPC in the event of financial distress, and assess the company's SACP at 'bb+'. The negative outlook reflects S&P's expectation that the ratings on FPC will remain capped by the foreign currency sovereign ratings on Russia. In accordance with S&P's criteria for GREs and rating above the sovereign, the lowering of the foreign currency sovereign ratings by one notch will result in a similar rating action on FPC. S&P could revise the outlook to stable if the outlook on the sovereign rating were revised to stable. Federal Grid Co. of the Unified Energy System (FGC) The downgrade follows a similar action on Russia. S&P continues to see a "very high" likelihood that the Russian government would provide timely and sufficient extraordinary support to FGC in the event of financial distress, and assess the company's SACP at 'bb+'. The negative outlook reflects S&P's expectation that the ratings on FGC will continue to be capped by the foreign currency sovereign ratings on Russia. In accordance with S&P's criteria for GREs, the lowering of the foreign currency sovereign ratings by one notch will likely result in a similar rating action on FGC, all else being equal. JSC Rosseti The downgrade follows a similar action on Russia. S&P continues to see a "very high" likelihood that the Russian government would provide timely and sufficient extraordinary support to Rosseti in the event of financial distress, and assess the company's SACP at 'bb-'. The negative outlook mirrors that on Russia. In line with S&P's criteria for GREs, if the local currency sovereign rating is lowered by one notch, all else being equal, it will result in a similar rating action on Rosseti. RusHydro (OJSC) The downgrade follows a similar action on Russia. S&P continues to see a "moderately high" likelihood that the Russian government would provide timely and sufficient extraordinary support to RusHydro in the event of financial distress. The stable outlook reflects RusHydro's good competitive position, supported by its low cost base, thanks to a significant hydro generation asset base, proven access to capital markets, and the "moderately high" likelihood of extraordinary financial support from the government. These factors, S&P believes, should offset the execution and funding risks associated with the group's ambitious investment program, negative FOCF, pressure from the regulatory framework, and weak profitability of its thermal power generation subsidiary RAO Energy System of East. Given that S&P assess RusHydro's SACP at 'bb', S&P expects RusHydro to maintain a Standard & Poor's-adjusted debt-to-EBITDA ratio of less than 3.0x over the next two years, as well as adequate liquidity and some flexibility in its investment program. In accordance with S&P's criteria for GREs, if the local currency long-term sovereign rating is lowered by one notch, this is unlikely to result in a similar rating action on RusHydro, all else being equal. Interregional Distributive Grid Co. of Center JSC (IDGC of Center) The downgrade follows a similar action on Russia. S&P continues to see a "moderate" likelihood that the Russian government would provide timely and sufficient extraordinary support to IDGC of Center in the event of financial distress. The stable outlook reflects S&P's opinion that the risks related to IDGC of Center's negative FOCF generation, sizable investment program, ability to collect receivables, and cost overruns will be mitigated by the company's moderate projected leverage, adequate liquidity management, and state support. S&P assumes the company will maintain its adequate liquidity and debt maturity profiles. The outlook also reflects S&P's expectations that the company will remain largely state controlled over the medium term, and that its strategic importance to the local governments it serves will not diminish. In accordance with S&P's criteria for GREs, if the local currency long-term sovereign rating is lowered by one notch, this is unlikely to result in a similar rating action on IDGC of Center, all else being equal. Given the SACP assessment of 'bb-', S&P expects IDGC of Center will maintain a Standard & Poor's-adjusted debt-to-EBITDA ratio of less than 3.0x, with very temporary deviations of up to 3.5x. Moscow United Electric Grid Co. JSC (MOESK) The downgrade follows a similar action on Russia. S&P continues to see a "moderate" likelihood that the Russian government would provide timely and sufficient extraordinary support to MOESK in the event of financial distress, and assess the company's SACP at 'bb-'. The stable outlook reflects S&P's view that MOESK's strong competitive position, currently low financial leverage, and demonstrated access to local capital markets should offset the risks associated with an ambitious capital expenditure program and projected negative cash flow generation. S&P also assumes MOESK will maintain both adequate liquidity and its debt maturity profile. To be in line with an SACP of 'bb-', S&P expects MOESK's Standard & Poor's-adjusted debt-to-EBITDA ratio to be less than 3.0x on a sustainable basis, with very temporary deviations of up to 3.5x. In accordance with S&P's criteria for GREs, if the local currency long-term sovereign rating is lowered by one notch, this is unlikely to result in a similar rating action on MOESK, all else being equal. AO Sovcomflot The outlook revision follows S&P's rating action on Russia and S&P's review of Sovcomflot's liquidity in the context of its large vessel newbuilding program and the resulting ongoing funding needs, and its regular or mandatory debt repayments, which combined weigh on the company's liquidity profile. S&P currently assess Sovcomflot's liquidity profile as "adequate," as defined in S&P's criteria. S&P notes, however, that Sovcomflot's liquidity is highly dependent on the company performing in line with S&P's base-case scenario and that it has ready, uninterrupted access to ship financing, in particular given the accelerating capital expenditure requirements for vessels due for delivery in 2015-2017. S&P understands that Sovcomflot is taking proactive measures to bolster its liquidity sources, such as a rollover of bullet loans to extend its debt maturity profile, disposals of ageing vessels, securing financing for vessels on order, and spreading out its payment schedule to shipyards. S&P believes that these measures, if completed, will improve the company's liquidity coverage, which is essential, in particular, if its performance were below that in S&P's base case. The negative outlook reflects that on the sovereign rating and Sovcomflot's tightening liquidity coverage. S&P could lower the rating on Sovcomflot if S&P lowered the rating on Russia, all else remaining equal. S&P could also lower the rating if it saw a lower likelihood of support for Sovcomflot from the government or if Sovcomflot's SACP deteriorated, such that the ratio of liquidity sources to uses fell to less than 1.2x. This could happen, for example, if Sovcomflot were unlikely to retain ready access to ship financing, experienced delays in obtaining necessary funding, or generated significantly lower EBITDA than in our base case, due for instance to lower-than-anticipated charter rates. DME Ltd. The outlook revision is to reflect the negative outlook on Russia and indicates that S&P could lower the rating on DME if it revised the T&C assessment downward. It also reflects the increased risk of declining passenger numbers at the airport as a result of the economic slowdown in Russia, which could lead to weaker profitability for DME in the next 12-18 months. S&P considers that the depreciation of the ruble, primarily against the U.S. dollar and the euro, is likely to continue to dampen Russian consumer demand for travelling abroad, as has been the case in recent months. S&P's updated forecast for DME in 2015 anticipates a decline of about 15% in international passengers at Domodedovo and domestic passenger growth staying flat, translating into an overall passenger traffic decline of about 8%. An advantage for DME is that it generates about 45% of its revenues in foreign currency, helping it to service foreign- currency-denominated debt, and the lion's share of its cash balances is held at foreign banks. S&P could lower the ratings on DME and its subsidiaries in the next 12 months if S&P was to revise the T&C assessment on Russia downward and there were no clear signs of stabilization in the country's economy. These factors would indicate to S&P limited prospects for improvement in traffic growth at the airport, and therefore a weaker operating performance. S&P could also downgrade DME if it it believed that its ratio of funds from operations to debt could fall below 45% on a sustained basis. S&P could revise the outlook to stable if it revised the outlook on Russia to stable. S&P views the likelihood of an upgrade as limited in the short term, due to the political and regulatory risks associated with doing business in Russia. RATINGS LIST Ratings Affirmed; Outlook Action To From OAO LUKOIL Uralkali OJSC Corporate Credit Rating BBB-/Negative/-- BBB-/Watch Neg /-- Russia National Scale ruAAA ruAAA/Watch Neg/-- OAO Severstal Corporate Credit Rating BB+/Negative/-- BB+/Stable/-- Russia National Scale ruAA+ ruAA+ Rostelecom OJSC AO Sovcomflot Polyus Gold International Ltd. Corporate Credit Rating BB+/Negative/-- BB+/Stable/-- Alrosa OJSC Corporate Credit Rating BB-/Negative/B BB-/Stable/B Eurasia Drilling Co. Corporate Credit Rating BB+/Negative/B BB+/Stable/B Russia National Scale ruAA+ ruAA+ DME Ltd. Corporate Credit Rating BB+/Negative/B BB+/Stable/B Ratings Affirmed NLMK OJSC Corporate Credit Rating BB+/Stable/-- Russia National Scale ruAA+ Downgraded To From Gazprom OAO Corporate Credit Rating Foreign currency BB+/Negative/B BBB-/Watch Neg/A-3 Local currency BBB-/Negative/A-3 BBB/Watch Neg/A-2 Gazprom Neft JSC Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- Russia National Scale ruAA+ ruAAA/Watch Neg/-- OAO NOVATEK Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- Russia National Scale ruAA+ ruAAA/Watch Neg/-- Oil Company Rosneft OJSC Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- OAO AK Transneft Corporate Credit Rating Foreign currency BB+/Negative/-- BBB-/Watch Neg/-- Local currency BBB-/Negative/-- BBB/Watch Neg/-- Russian Railways JSC Corporate Credit Rating Foreign currency BB+/Negative/-- BBB-/Watch Neg/-- Local currency BBB-/Negative/-- BBB/Watch Neg/-- Russia National Scale ruAAA ruAAA MegaFon OJSC Corporate Credit Rating Foreign Currency BB+/Negative/-- BBB-/Watch Neg/-- Local Currency BBB-/Negative/-- BBB-/Watch Neg/-- Russia National Scale ruAAA ruAAA/Watch Neg/-- Federal Grid Co. of the Unified Energy System Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- Russia National Scale ruAA+ ruAAA/Watch Neg/-- JSC Rosseti Corporate Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- Mobile TeleSystems (OJSC) Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- JSC Federal Passenger Company Corporate Credit Rating BB+/Negative/-- BBB-/Watch Neg/-- RusHydro (OJSC) Corporate Credit Rating BB/Stable/B BB+/Watch Neg/B Russia National Scale ruAA ruAA+/Watch Neg/-- Interregional Distributive Grid Co. of Center JSC Corporate Credit Rating BB-/Stable/B BB/Watch Neg/B Russia National Scale ruAA- ruAA/Watch Neg/-- Moscow United Electric Grid Co. JSC Corporate Credit Rating BB-/Stable/-- BB/Watch Neg/-- Russia National Scale ruAA- ruAA/Watch Neg/-- NB: This list does not include all the ratings affected. MOSVODOKANAL JSC: S&P Lowers CCRs to 'BB+/B'; Outlook Negative -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit ratings on Mosvodokanal JSC to 'BB+/B' from 'BBB-/A-3'. At the same time, S&P lowered its long-term corporate credit rating on Vodokanal St. Petersburg to 'BB' from 'BB+' and affirmed the 'B' short-term rating. The outlook on the ratings on both Russian water utility companies is negative. S&P also lowered the Russia national scale rating on Mosvodokanal to 'ruAA+' from 'ruAAA' and the Russia national scale rating on Vodokanal St. Petersburg to 'ruAA' from 'ruAA+'. At the same time, S&P removed all ratings from CreditWatch with negative implications, where they had been placed on Dec. 30, 2014. The rating action on Mosvodokanal followed a similar rating action on the City of Moscow. In S&P's view, there is still a very high likelihood that the city government would provide timely and sufficient extraordinary support to Mosvodokanal in the event of financial distress. S&P continues to assess Mosvodokanal's stand-alone credit profile (SACP) as 'bb+'. The rating action on Vodokanal St. Petersburg follows a similar rating action on the City of St. Petersburg. In S&P's view, there is still a very high likelihood that the city government would provide timely and sufficient extraordinary support to the company in the event of financial distress. S&P continues to assess Vodokanal St. Petersburg's SACP as 'bb-'. The negative outlook on both companies reflects that on their respective cities. In accordance with S&P's criteria for government-related entities (GREs), if it was to lower its rating on the related city by one notch, S&P would likely take a similar rating action on the company, all else being equal. RATINGS LIST To From Mosvodokanal JSC Corporate Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+/--/-- ruAAA/Watch Neg/-- Vodokanal St. Petersburg Corporate Credit Rating BB/Negative/B BB+/Watch Neg/B Russia National Scale ruAA/--/-- ruAA+/Watch Neg Senior Unsecured BB BB+/Watch Neg RUSSIA: Must Cut Interest Rates or Face Wave of Bankruptcies ------------------------------------------------------------ Virginia Harrison at CNN Money reports that Anatoly Aksakov, president of Russia's regional banking association and deputy chairman of parliament's financial markets committee, on Jan. 12 said Russia will be hit by a wave of bankruptcies unless it cuts interest rates very soon. "Bankers believe that keeping the situation as it stands will cause a wave of bankruptcies, not only credit institutions but also a number of businesses and companies," CNN quotes Mr. Aksakov as saying in a letter to the central bank. Mr. Aksakov, as cited by CNN Money, said lower rates would allow banks to lend more to companies and individuals. The comments signal deepening stress in Russia's financial sector, CNN Money states. The government has attempted to shore up the banking sector with a series of handouts, spending billions to prop up lenders including VTB, Gazprombank and the failed Trust Bank, CNN Money discloses. BNP Paribas on Jan. 12 said Russia's banks may need an overwhelming amount of support this year, CNN Money notes. VTB BANK: S&P Lowers Counterparty Credit Rating to 'BB+/B' ---------------------------------------------------------- Standard & Poor's Ratings Services said that it had taken various negative rating actions on 20 Russia-related financial institutions and four Russia-related privately-owned entities. GOVERNMENT-RELATED ENTITIES S&P downgraded the following government-related entities (GREs) and members of GRE groups. The downgrades reflect the government's decreasing capacity to provide timely and sufficient extraordinary support to these GREs, as well as possible pressures on their financial profiles owing to the worsening operating and economic environment in Russia. S&P downgraded VTB Bank JSC, a GRE with very high likelihood of support, to 'BB+/B' and 'ruAA+'. The ratings on these core group members are equalized with those on VTB Bank JSC: -- Bank of Moscow OJSC -- VTB-Leasing -- VTB-Leasing Finance -- VTB Capital PLC -- VTB Insurance Ltd. The following have high strategic importance to the VTB group, and the ratings on these group members are one notch below those on VTB Bank JSC: -- VTB Bank (Kazakhstan) -- VTB Bank (Austria) AG -- VTB Bank (France) SA S&P downgraded Gazprombank, a GRE with high likelihood of support, and its core group member Gazprombank (Switzerland) Ltd. to 'BB+/B'. S&P downgraded VEB-leasing OJSC, a core member of the Vnesheconombank group, to 'BB+/B'. S&P downgraded TENEX-Service, a member of Atomic Energy Power group with high strategic importance), to 'BB/B', following the downgrade of the parent Atomic Energy Power Corp. JSC on Jan. 29, 2015. The outlooks on all these entities are negative, mirroring the outlook on either the sovereign or the parent, and indicating the risk of lower capacity from the government to support banks. The outlook on Gazprombank also reflects increasing pressure on the entity's financial profile, notably on its capital position. MEMBERS OF LARGE FOREIGN GROUPS OPERATING IN RUSSIA S&P downgraded the following members of large foreign groups operating in Russia because of S&P's view of the increasing operating environment risks in Russia and the fact that these entities do not meet S&P's criteria for being rated higher than Russia, given that they are predominantly exposed to the Russian market, remain vulnerable to economic and operating conditions in Russia and transfer and convertibility risk, and are considered to be either "highly strategic" or "strategic" rather than "core" subsidiaries of their respective parents. S&P therefore caps the long- and short-term ratings on the following entities at the level of S&P's foreign currency sovereign ratings on Russia: -- Raiffeisenbank ZAO -- BNP Paribas ZAO -- ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia) -- JSC Sumitomo Mitsui Rus Bank -- ZAO UniCredit Bank -- ZAO INDUSTRIAL AND COMMERCIAL BANK OF CHINA -- Rusfinance Bank The outlooks on all these entities are negative, mirroring the outlook on the sovereign, and indicating the increasing challenges of the Russian operating environment. PRIVATELY OWNED BANKS Although S&P acknowledges that the government is taking extensive measures to support large and midsize public and private banks through additional liquidity and capital injections, S&P believes that the government's capacity to provide timely and sufficient extraordinary support to banks might diminish further in the future if public finances continue to deteriorate. S&P therefore has lowered the ratings on these private banks, which S&P considers to have high systemic importance: -- S&P downgraded JSC Alfa-Bank to 'BB/B'. S&P no longer incorporate any notches for timely and sufficient extraordinary government support into S&P's ratings of Alfa-Bank. -- S&P downgraded ABH Financial Ltd., the Cyprus-based nonoperating holding company that owns Alfa-Bank, to 'B+/B'. The two-notch rating differential is due to structural subordination. The outlooks on these two entities are negative, reflecting the possibility of a further downgrade in the next 12-24 months if S&P sees that the bank's financial profile is significantly deteriorating due to tougher operating conditions, notably its asset quality. S&P notes at the same time that Alfa-Bank has so far proven more resilient to the deteriorating environment than peers, and S&P expects this trend to continue in 2015. S&P revised its outlooks on two privately owned Russian banks that S&P considers to have moderate systemic importance to negative from stable: -- CREDIT BANK OF MOSCOW -- Promsvyazbank OJSC The negative outlook on these two entities reflects the high chance of a downgrade because of reducing extraordinary government support in the case of another sovereign downgrade. S&P is affirming the ratings on these two entities. RATINGS LIST Downgraded; CreditWatch Action To From VTB Bank JSC Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- Bank of Moscow OJSC VTB-Leasing Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- VTB-Leasing Finance Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- VTB Capital PLC Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 VTB Insurance Ltd. Counterparty Credit Rating Local currency BB+/Negative/-- BBB-/Watch Neg/-- Financial Strength Rating Local currency BB+/Negative/-- BBB-/Watch Neg/-- Russia National Scale ruAA+ ruAAA/Watch Neg/-- VTB Bank (Kazakhstan) Counterparty Credit Rating BB/Negative/B BB+/Watch Neg/B Kazakhstan National Scale kzA+ kzAA-/Watch Neg/-- VTB Bank (Austria) AG VTB Bank (France) SA Counterparty Credit Rating BB/Negative/B BB+/Watch Neg/B Gazprombank Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- Gazprombank (Switzerland) Ltd. Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 VEB-leasing OJSC Counterparty Credit Rating Foreign Currency BB+/Negative/B BBB-/Watch Neg/A-3 Local Currency BBB-/Negative/A-3BBB/Watch Neg/A-2 Russia National Scale ruAAA ruAAA TENEX-Service Counterparty Credit Rating BB/Negative/B BB+/Watch Neg/B Russia National Scale ruAA ruAA+/Watch Neg/-- Raiffeisenbank ZAO Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- BNP Paribas ZAO Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- ZAO Bank of Tokyo-Mitsubishi UFJ (Eurasia) JSC Sumitomo Mitsui Rus Bank Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- ZAO UniCredit Bank Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 ZAO INDUSTRIAL AND COMMERCIAL BANK OF CHINA Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- Rusfinance Bank Counterparty Credit Rating BB+/Negative/B BBB-/Watch Neg/A-3 Russia National Scale ruAA+ ruAAA/Watch Neg/-- JSC Alfa-Bank Counterparty Credit Rating BB/Negative/B BB+/Watch Neg/B Russia National Scale ruAA ruAA+/Watch Neg/-- ABH Financial Ltd. Counterparty Credit Rating B+/Negative/B BB-/Watch Neg/B Ratings Affirmed; Outlook Action CREDIT BANK OF MOSCOW Promsvyazbank OJSC Counterparty Credit Rating BB-/Negative/B BB-/Stable/B Note: This list does not include all the ratings affected. ========= S P A I N ========= SNIACE SA: Court Approves Insolvency Settlement Proposal -------------------------------------------------------- Reuters reports that the Commercial Court in Madrid approves insolvency settlement proposal for Sniace S.A., Celltech SLU, and Viscocel SLU. The Board of Directors of Sniace, S.A., during meeting held on Sept. 6, 2013, unanimously agreed to request the Commercial Court of Madrid to grant the declaration of bankruptcy of Sniace, S.A, after it has reached the conviction that it is not feasible to reach an agreement or to obtain new financial support after having filed the communication -- ruled in article 5 bis of the Creditors Meeting Law (Ley Concursal 22/2003, de 9 de Julio), related to the Pre-Bankruptcy, last June 26, 2013 and in the three months following said date. Likewise, the respective Boards of Directors of the branch companies, Viscocel, S.L.U and Celltech, S.L.U. have passed and adopted the same decision to file the request to the Commercial Court of Madrid to grant the declaration of bankruptcy. Sniace SA -- http://www.sniace.com/-- is a Spain-based company primarily active in the chemical sector. The Company's main activities are structured into five divisions: Cellulose, Viscose, Electricity Generation, Biofuels and Forestry. =========================== U N I T E D K I N G D O M =========================== AFREN PLC: S&P Lowers CCR to 'SD' on Payment Deferral ----------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term corporate credit rating on Afren PLC, a U.K.-headquartered oil and gas exploration and production company, to 'SD' (selective default) from 'CC'. At the same time, S&P lowered its long-term issue rating on the company's senior secured bonds maturing in 2016 to 'D' from 'CC'. S&P also affirmed the 'CC' long-term issue rating on the company's senior secured bonds maturing in 2019 and 2020. S&P downgraded Afren because it failed to pay its obligations under both its US$300 million revolving credit facility (Ebok facility) and its bonds maturing in 2016 on time (S&P understands the amount outstanding on the bond is US$253 million). The company obtained from the lenders of the US$300 million revolving credit facility a deferral of the US$50 million amortization payment due Jan. 31, 2015, to Feb. 27, 2015. S&P also understands Afren is using a 30-day grace period under the bonds due 2016 to postpone payment of US$15 million of interest due on Feb. 1, 2015. S&P considers that the deferral of Afren's debt payment obligations is tantamount to a default, and we think that there is a high likelihood that Afren will fail to make the principal and interest payments in February 2015. Still, Afren has not defaulted on its other bonds maturing in 2019 and 2020, which account for more than 50% of its outstanding total debt. S&P has therefore lowered its long-term rating on Afren to 'SD', reflecting its view of its default on some of its debt instruments; rather than a default on all or a substantial part of its debt. S&P believes Afren's ability to continue to operate effectively will be hampered, particularly because the appointments of key managers are still pending after the dismissals of the CEO and COO last year and because oil prices are currently low. The decline in oil prices is complicating Afren's liquidity and debt restructuring, in S&P's view. Seplat, a Nigerian exploration and production company, has approached Afren regarding a potential merger. Seplat has until Feb. 13, 2015, to make a formal offer. However, the deadline has shifted twice, and S&P thinks it could be pushed back again in the future. S&P will take into account this potential major development in any future rating actions. ALLIEDPRA INTERNATIONAL: Goes Into Liquidation ---------------------------------------------- meetpie.com reports that Destination management company (DMC) AlliedPRA's holding company AlliedPRA International has gone into liquidation. Begbies Traynor (Central) LLP were appointed as joint liquidators of AlliedPRA International Limited at a general meeting on Friday, January, 30, according to meetpie.com. A meeting of creditors will be convened for Thursday, February 12, where a vote on the appointment will take place. Begbies Traynor added that no further announcements would be made ahead of this meeting. AlliedPRA International has subsidiaries in America, France, Italy, Spain and Monaco. The company is itself a subsidiary of Allied International Holdings. On February 2, AlliedPRA announced its European offices would wind down operations and move to a 'partnership model' -- a spokeswoman later admitted that there would be redundancies, the report notes. "The scale of business needed to maintain a consolidated DMC in Europe is not achievable in today's economic climate, and therefore to protect clients and deliver programs in the fashion they expect and deserve, we are transitioning to a partnership model. This will allow us to better compete and serve the best interest of our clients globally," the report quoted AlliedPRA's North America President Denise Dornfeld as saying. "We value our long-standing, respected client partnerships and will ensure we make this transition as smooth as possible and will keep key members of staff on our accounts. As a valued DMC partner, we are honoring every deposit acquired by AlliedPRA," Mr. Dornfeld added. AMA TRADINGS: Court Winds Up Firm Over GBP1.56 Million Fraud ------------------------------------------------------------ Birmingham-based AMA Tradings Limited (AMA) was wound up in the public interest on Jan. 13, 2015, at Manchester High Court, for operating as a vehicle for fraud. The petition to wind-up the company was presented by the Secretary of State for Business, Innovation & Skills and followed an investigation by the Insolvency Service Investigations showed that AMA was initially incorporated as AMA Electronics Limited in June 2012 and remained dormant until purchased by its current director in March 2014, and the name changed to AMA and a set of false accounts for the previous year were filed giving a vastly inflated picture of AMA's finances, including that it had combined profits of GBP1.6 million. The company then made a number of attempts to obtain goods on credit, including a BMW motor vehicle on finance. In reality, AMA's bank account showed that there had only been GBP1,000 through the account. Investigators also found that a major waste management company had received an email, purportedly from a supplier and advising of a change to their bank details. The new account details were those of AMA's bank account and resulted, on Oct. 15, 2014, in the fraudulent diversion of GBP1.562 million into the account. Before the fraud was uncovered, an amount of GBP594,398 was then electronically transferred out in a series of 119 transactions conducted on the same day. The winding up petition was not defended by the company. Commenting on the case, Scott Crighton, Group Leader with Companies Investigations North, part of the Insolvency Service, said: "This company operated with complete disregard for the rules of legitimate business. "During its life, the company provided no services to justify its existence and appears to have been used as nothing more than a means of perpetrating fraud. Those responsible for such companies should be aware that the Insolvency Service can and will come after them with all the resources at its disposal." AMA Tradings Ltd was incorporated on June 27, 2012 and was ordered into compulsory liquidation on Jan. 13, 2015. The petition to wind AMA up was issued on Nov. 27, 2014. The company was based at 52 Blucher Street, Birmingham. ANGLO HOLT: Goes Into Administration, 52 Jobs Cuts -------------------------------------------------- Construction Enquirer reports that West Midlands-based contractor Anglo Holt Construction has gone into administration. Accountants from Baker Tilly are now in charge of the company which has ceased trading with the loss of 52 jobs, according to Construction Enquirer. The report notes that the news follows days of uncertainty surrounding the firm after its head office was closed and sites shut. Work was suspended on Anglo Holt's eight live contracts on Jan. 30 and 52 of the firm's 67 employees have now been made redundant, the report relates. "The company had been suffering cashflow difficulties as a result of substantial contract losses over the last 18 months, leading to a working capital shortfall and resulting in an inability to meet supplier and subcontractor payments," the report quoted Baker Tilly as saying. The report notes that one subcontractor owed cash said: "It's just so horribly predictable. They stopped paying a few weeks ago then started dodging us every time we asked for our money." "Now this happens and all the suppliers will be the ones to miss out again," the subcontractor added. Credit reference agency Top Service has been monitoring the company closely. A spokeswoman said: "We have been receiving an increasing amount of calls and managed to recover GBP70,000 for one of our clients before the company went into administration," the report relays. Latest accounts filed by the company for the year to April 2013 show it made a GBP237,000 pre-tax profit on a turnover of GBP44.5 million, the report relays. The report notes that Administrator Guy Mander -- guy.mander@bakertilly.co.uk -- said: "The cashflow issues were such that the directors had little choice but to place the company into administration. "We have appointed independent quantity surveyors to review the company's contract base and we are currently liaising with the various customers to seek value and the best overall position for stakeholders on each contract," the report quoted Mr. Mander as saying. "Regrettably, we have had to make 52 staff redundant and our specialist employee team has been assisting them both with making their claims from the redundancy payments office and offering general support and advice," Mr. Mander added. CASTMASTER ROLL: Owes Creditors GBP500,000, Cuts 80 Jobs -------------------------------------------------------- The Star reports that Castmaster Roll, a Sheffield manufacturing firm that collapsed into administration with the loss of nearly 80 jobs, owes more than GBP500,000 to creditors. More than 140 local and national companies are owed money in the wake of the collapse of Castmaster Roll, based at the Eagle Foundry in Attercliffe, according to The Star. The report notes that the business went into administration in October and as no new buyer could be found, all 78 workers have lost their jobs and the firm's assets are being sold. The firm had reported a trading loss for three years in a row before going into administration, including a GBP400,000 loss for the year ending January 31, 2014, the report relates. The report discloses that details included in the papers of administrator KPMG show GBP502,353 was owed to different companies at the time of administration. The Star relays that the firm's report said delayed and non- payment of invoices had put the company under 'significant pressure from its creditors' in the months prior to administration. A report also revealed that between KPMG's appointment in October and December 5, it claimed costs of more than GBP324,000 for handling the administration, The Star notes. KPMG said it is uncertain how much money, if any, will be returned to unsecured creditors as a sale of assets is yet to be concluded, The Star discloses. Administrators have also said they are 'continuing to assess the causes of the company's failure,' The Star says. It comes after Sheffield MP Clive Betts called for a 'thorough investigation' into how Castmaster Roll failed, The Star relays. The firm produced iron and steel quality rolls, discs and sleeves for the manufacturing and food processing industry. The Stevenson Road site became a roll maker about 95 years ago. It was known as Davy Roll but, after going into receivership, was reborn as Castmaster Roll in 2003, taken over by new owner Mel Farrar. COPENSHIP: Dry Bulk Market Losses Prompt Bankruptcy --------------------------------------------------- Ole Mikkelsen at Reuters reports that Copenship Chief Executive Michael Fenger said the company has filed for bankruptcy in Copenhagen after losses in the dry bulk market. Copenship had been operating over 50 chartered small-sized dry- bulk vessels carrying goods such as grain, iron ore and timber, Reuters discloses. "We have done what we could to raise the funds to save the company, but we have reached a point where there is not more to do," Mr. Fenger was quotes saying in a text message to Reuters on Feb. 4. "First of all, we have found ourselves in an extremely bad dry cargo market. Secondly, there are several counterparties that have caused us losses, and then thirdly there are different insurance cases that could hit us." Insolvency administrator Per Astrup Madsen from Copenhagen law firm Lett said the vessels will be handed back to owners, Reuters relates. Copenship is a privately-owned shipping company. ETHEL AUSTIN: Union Loses Compensation Bid ------------------------------------------ Express & Star reports that the Union of Shop, Distributive and Allied Workers (Usdaw) has lost the latest round of a legal bid to win compensation for thousands of workers at two high-street companies which went into administration. Usdaw has been taking action on behalf of 3,200 former employees of Woolworths and 1,200 ex-workers at Ethel Austin who did not receive any money because they worked in stores with fewer than 20 staff, Express & Star discloses. An opinion by the Advocate General of the European Court of Justice on Feb. 5 went against Usdaw's case, although a final decision will be made by the court later this year, Express & Star relates. "It is disappointing that we have not been able to persuade Advocate General Wahl of the merits of our case, which is morally and logically robust," Express & Star quotes John Hannett, Usdaw's general secretary, as saying. "However, this is only an opinion and we are now pinning our hopes on the final judgment." "We believe Advocate General Wahl is mistaken not to take account of the internal structure of companies in giving his opinion and has not considered mass insolvency situations." Ethel Austin was a Liverpool clothing chain. It went into administration for the fifth time in January 2013. Insolvency practice XL Business Solutions was appointed to handle the administration. GILBERT WEBB: High Court Enters Liquidation Order ------------------------------------------------- Gilbert Webb Estates Limited, which marketed residential-sized plots of undeveloped land at a site in Cheshunt, Hertfordshire, to the public for sale as an investment opportunity has been ordered into liquidation by the High Court on grounds of public interest following an Insolvency Service investigation. The company was found to have continued a land banking scheme previously carried on by Complete Building Systems Limited and other companies whose affairs have also been investigated and brought to an end by the Insolvency Service for ripping off the public. The investigation into Gilbert Webb Estates Limited showed that the company targeted investors -- including recovering cancer sufferers -- were misled into buying near-worthless plots of land by claiming that investing in the land was more secure than pension plans, equities or ISA's. The company falsely claimed to be regulated by the FCA and that investors could expect short term gains of between 200-400 per cent. The company's now defunct website claimed: "At Gilbert Webb Estates Ltd we have gathered together over 100 years of collective experience in property acquisition, development and building together with our surveyors, architects and solicitors. "We adhere to the same principals (sic) used by major developers and construction companies. The one golden rule is location, location, location. "Our land brokers are fully conversant with all aspects of land acquisition, and development. We identify and after much deliberation purchase sites that hit our exacting selection criteria. "With a strong track record as a commodity and exceptionally high growth potential, analysts agree that strategically placed land should be included in every astute investor's portfolio." The investigation found that the majority of the GBP1.5 million received from investors, being some GBP959,000, was withdrawn in cash from the company's account. Welcoming the Court's winding up decision, Company Investigations Supervisor Chris Mayhew said: "This was a bare-faced scam on pensioners who have lost out financially and otherwise, unlike those behind the company who peddled near worthless plots of land to the public for investment. "Contrary to the company's claims, the only collective expertise was the skill to part people from their money. "The Insolvency Service has strong enforcement powers and we will not hesitate to use them to take action against rotten companies whose activities, as here, can devastate lives in particular older and vulnerable investors who may suffer emotionally and psychologically from the impact of incurring significant financial loss and lose confidence to manage their own affairs." Gilbert Webb Estates Ltd was incorporated on Feb. 29, 2012. The registered office from incorporation to March 29, 2012 was 8 Stamford Drive, Bromley, Kent, BR2 OXF and thereafter 2nd Floor, Berkeley Square House, Berkeley Square, London, W1J 6BD to present date. The sole recorded director throughout has been Mr. Bradley James Mortimer. No secretary is shown to have been appointed. The company's share capital is shown to be 1 share of GBP1 held by Mr Mortimer. No accounts or Annual Returns have been filed. The company's now defunct website was www.gilbertwebbestates.com HEREFORD UNITED: Had Around 900 Creditors ----------------------------------------- Paul Rogers at Hereford Times reports that the Hereford United Football Club owed money to around 900 creditors, the Insolvency Service have said. Bristol-based Mitzi Mace is the official receiver and liquidator dealing with the former club, the report says. Hereford Times notes that 90 years of football at Edgar Street came to an end just before Christmas when cash-strapped United were wound up at the Royal Courts of Justice over unpaid debts. Owner and chairman Andy Lonsdale had promised to invest GBP1 million into Hereford United but he did not arrive at the hearing, claiming he was stuck in traffic, according to the report. Hereford Times relates that Ade Daramy, Insolvency Service media manager, said the company had about 900 creditors. "A notice will be going out for a meeting of creditors," the report quotes Mr. Daramy as saying. "Some assets -- mainly chairs and tables -- have been recovered but they are not likely to generate much. "At this stage, it does not appear there is much that can be auctioned. There are a few sports equipment and memorabilia that may interest some fans, but there is nothing of substantial value. "They didn't own any of the buildings because they were leased." Hereford Times says Mr. Daramy added the directors of the limited company have been contacted and will have to provide individual statements of what led to the company's liquidation and other related matters, as required by law. "Once that has been done, we can issue more up to date details," Mr. Daramy said. Mr. Daramy also confirmed that, after the Insolvency Service's investigations had been completed, the limited company would be dissolved and deleted from Companys House's register, Hereford Times adds. Hereford United Football Club is an English association football club based in the city of Hereford. HOUSTON'S OF CUPAR: In Liquidation, Owes More Than GBP300,000 ------------------------------------------------------------- thecourier.co.uk reports that a north Fife steel fabrication company has gone into liquidation with debts of more than GBP300,000. The demise of Houston's of Cupar has left the high-profile Dundee businessman who tried to rescue the ailing company angry and disappointed, according to thecourier.co.uk. The report notes that Hermann Twickler, managing director of PressureFab and a former Scottish Business Leader of the Year, blamed the company's demise on a property leasing dispute which he believed could have been avoided. A petition to wind-up Houston's was granted at Dundee Sheriff Court to Robert Duncan Kay, landlord of the Cupar factory, the report relays. Liquidator Matthew Purdon -- matt.henderson@jcca.co.uk -- of Henderson, Johnston, Carmichael was appointed and has calculated the firm's debts to creditors at GBP299,986 as part of a total deficiency of GBP303,219, the report notes. Mr. Henderson considers there is no prospect of any creditor receiving a dividend, the report relays. The report discloses that Mr. Twickler took over the loss-making Houston's in the winter of 2013, hoping its subsea engineering experience would complement PressureFab's steel fabrication capabilities and win more orders. Houston's, which was to be renamed PressureFab Subsea was in financial difficulties, and Mr. Twickler arranged emergency funding to pay the wages of the 25 personnel and some of the bills, the report notes. The report relays that the subsidiary began to recover until Mr. Twickler said he learned that the lease for the Cupar Muir premises was not due to run out until 2019, four years later than he had understood. Negotiations to find a new tenant -- Houston's workforce had been moved to the PressureFab factory in Dundee -- failed, and Mr. Kay sued for GBP480,000 unpaid rent from Mr. Twickler for the remainder of the six-year lease, the report relays. The report discloses that Mr. Twickler said the sum was impossible for Houston's to raise, prompting Mr. Kay to sue for Houston's liquidation. "I think the unpaid rental sum was unrealistic given that the premises were re-let after a few months," the report quoted Mr. Twickler as saying. "I didn't know about the six-year lease when I took over, but the deal had to be done quickly and there wasn't time for me to do due diligence. If the deal hadn't been done quickly 25 people would have lost their jobs that Christmas," Mr. Twickler said, the report relays. "Through PresureFab, I provided nearly GBP400,000 of support to Houston's because I wanted the company to succeed. I committed far more than the GBP28,000 stated as being due to me in the list of creditors," Mr. Twickler said, the report notes. Mr. Twickler added: "I still believe that it would have been possible to save Houston's, and I am angry that this did not happen. I am also disappointed that more than 30 creditors have lost money." The biggest creditor was Gemini Corrosion Services of Montrose, which was owed GBP58,257. It declined to comment. IMPERIAL ESCROW: High Court Winds Up Business --------------------------------------------- An escrow service provider company, based in Nottingham, was wound up by the High Court on Jan. 21, 2015, following an investigation by the Insolvency Service. Imperial Escrow Ltd offered an escrow facility for a small number of clients, two of whom, Denver Trading AG, a Swiss registered company, and Denver Trading Ltd, a Seychelles registered company (collectively 'the Denver companies'), sold rare earth metal oxides to members of the public as an investment product through a network of UK based sales agent companies. The Denver companies, along with Imperial Escrow Ltd, were placed into provisional liquidation by the High Court on Dec. 19, 2013, following petitions presented by the Secretary of State. The Denver companies were subsequently compulsorily wound up on Aug. 27, 2014, after it was found that serious misrepresentations were made to members of the public as to prospective investment returns from the purchase and onward sale of rare earth metal oxides. Imperial Escrow Ltd was used by the Denver companies to bank their customer remittances. On collection of those remittances transfers were made to Denver companies sales agents, usually representing 40% to 50% of customer fees, and the remaining balances were typically paid to offshore bank accounts controlled by the individuals who managed and controlled the Denver companies, Christopher John Sabin and Tobias Alexander Ridpath. Commenting on the winding-up of the company, David Hill, a Chief Investigator with the Insolvency Service, said: "This formally brings to an end the activities of this company, linked to companies that, in truth were peddling near worthless investments. "The Insolvency Service will not allow rogue companies to rip-off vulnerable and honest people and will investigate abuses and close down companies if they are found to be operating or about to operate, against the public interest." The sole director of Imperial Escrow Ltd, Rizvan Mian, acted on the instructions of Mr. Sabin and Mr. Ridpath. At the date that Imperial Escrow Ltd was placed into provisional liquidation, it held GBP1.1 million in escrow accounts on behalf of the Denver companies. The court was sufficiently concerned that those monies were at risk from the continued trading of the company, so ordering the company to be placed into provisional liquidation, where control of those company's assets, including its bank accounts, were transferred into the custody of the Official Receiver. Imperial Escrow Ltd claimed that the GBP1.1 million it held on behalf of the Denver companies were monies that belonged to those companies. However, Registrar Jones in the High Court said that it was essential that the client funds were dealt with properly after investigation by the Official Receiver. LUCY ENTERPRISES: In Liquidation Following Fire ----------------------------------------------- Daily Echo reports that the company which ran fashionable Poole restaurant Cafe Shore is in liquidation, five months after the business was wrecked by fire. The Sandbanks business never reopened after the blaze which took hold last August, according to Daily Echo. Lucy Enterprises, which traded as Cafe Shore, is now in liquidation and a creditors' meeting was held on Feb. 2. The report notes that Cafe Shore was engulfed by smoke last August when an electrical fault caused the blaze. In a press release last August, Cafe Shore manager Emily Davies thanked the fire service and her staff for their response to the fire, the report relays. "We are not sure when we will be 100 per cent up and running again. Communication at this point is vital. We will be posting official real time updates on our Facebook page," the report quoted Mr. Davies as saying. Despite management tweeting in September that the cafe would be open for Christmas parties -- and that customers should "watch this space for exciting developments" -- the business has still not reopened, the report notes. The report says that Mark Liddle of insolvency adviser entity, the Mark Liddle Partnership, which is handling the liquidation, said: "There was a fire last summer which made Cafe Shore cease trading. There was no generation of income. That's the reason the company is going into liquidation." Lucy Enterprises is not the first company running the cafe to be wound up, the report says. In March 2013, Cafe Shore Ltd went into liquidation with debts of GBP404,000, the report discloses. But Cafe Shore itself remained open, run by Cafe Shore Holdings Ltd, under directors Ben and Julia Brafman, who also own Lucy Enterprises, the report relays. The report notes that Roger Williams, president of Poole Chamber of Trade and Commerce, said the cafe's prominent location needed a "venue of some substance." "I would like to see a local operator take that on and try to create something that would be beneficial to the tourist industry and the local community alike," the report quoted Mr. Williams as saying. MARUSSIA F1: Intends to Come Out of Administration on February 19 ----------------------------------------------------------------- Danielle Joynson at Sports Mole reports that the Marussia Formula One racing team has announced that it intends to come out of administration on February 19. Following financial struggles, the team plunged into administration last October and missed the final three races of the 2014 season, according to Sports Mole. Since then, the Oxfordshire-based outfit has reportedly been in talks with an interested party, and Marussia's return to the grid looks positive, the report notes. Joint administrator Geoff Rowley released a statement saying that "investment into the business will be made" via a company voluntary arrangement before the Australian Grand Prix in March, he report relates. According to Sky Sports News, Marussia are expected to receive prize money in excess of GBP30 million from the 2014 campaign, which has made them more attractive to a potential buyer, the report adds. RECONDITIONED ENGINES: Court Shuts 3 Engine Reconditioning Firms ---------------------------------------------------------------- Three connected companies who carried on business as vehicle engine reconditioning and repairers were wound up by the High Court on Jan. 19, 2015, following an investigation by the Insolvency Service. Reconditioned Engines Ltd (REL), Unique Engines Ltd (UEL), and latterly 1ST Choice Engines Ltd, were the latest trading guises in a long line of companies offering engine reconditioning and repair services to the public, dating back to 1982. REL and UEL both traded from the same premises at Units 9 to 11, Saxon Way, Harmondsworth. REL traded for a period of approximately 10 months, between October 2012 and August 2013. REL's director, Roy Dart, gave an undertaking to the High Court in June 2013 that he would seek to place REL into voluntary liquidation by August 27, 2013. Mr Dart failed to comply with that undertaking. The business of REL was then effectively transferred to UEL, who continued to trade for a matter of months before it was evicted from its trading premises in October 2013 after it had failed to pay rent and other bills. The company was abandoned at that time, with customers vehicles left on site for the landlord and its agents, along with the police, to repatriate to their owners. In total, the 3 companies had generated over 350 complaints in their brief trading histories, with common threads of complaint across the companies, namely: * unwarranted inflation of quotes after vehicles were taken into respective companies' possession, work repaired to an unsatisfactory standard and excessive retention of vehicles * A number of those complaints featured allegations of threats, intimidation and assault on customers by respective company staff 1ST Choice Engines Ltd traded from premises at Unit 5, Perth Industrial Estate, Slough, SL1 4XX, a large warehouse sized building, where customer vehicles were kept whilst under repair. The investigation found that the recorded director and shareholder of the company, Gary Driscoll, played little or no part in the management of the company. The company was instead managed by Paul Dockerill. 1ST Choice Engines Ltd was placed into provisional liquidation on Dec. 16, 2014, following a petition presented by the Secretary of State. The Official Receiver was appointed provisional liquidator at that time, and has administered the affairs of the company since that time, with the business of the company shut down by the Official Receiver on Dec. 17, 2014. On that same day, Thames Valley Police executed search warrants at the business premises and a number of other addresses, where arrests were made. They subsequently issued a press release, which commented favourably on the co-ordinated approach between Government agencies. 1st Choice Engines Limited and its predecessors REL and UEL all used common websites to promote their business, including the following: www.reconditioned-engines.co.uk www.saabengines.co.uk www.rangeroverengines.co.uk www.engine-shop.co.uk www.remanufactured-engines.co.uk 1st Choice Engines Ltd and its predecessors all operated the same business model, whereby it offered lead in engine reconditioning quotes substantially less than comparable businesses offering engine reconditioning services, along with a relatively inexpensive nationwide vehicle recovery to site service. However, once customer vehicles were in the possession of the company this led to a consistent pattern whereby those lead in quotes were often doubled and more. The basis for those increases was remarkably similar in many cases, irrespective of the actual condition of the engines in need of repair. The practice of all the companies was to significantly inflate final quotes without due cause. Where customers declined or refused to accept the falsely inflated quotes, they were faced with their vehicle engines being left dismantled in pieces in the boot and back seats of their vehicles, along with a bill for the company having dismantled the engine. Customers' vehicles were in essence held to ransom by the company and customers were effectively left with little choice other than to pay the inflated fees. Those who did object to the company's sales practices and questionable workmanship in those cases where the company claimed to have undertaken repairs, often found themselves on the receiving end of threats, intimidation and assault by staff. Customers had little or no financial redress, as the company and its predecessors operated on a cash basis. Commenting on the winding up of the 3 companies, David Hill, a chief investigator with the Insolvency Service, said, "These companies operated in a way designed to draw in and then rip-off investors. "There should be no doubt that the Insolvency Service will continue to take robust action whenever serious failings are discovered and in particular against contemptible companies as in this case, preying on customers." =============== X X X X X X X X =============== * BOOK REVIEW: Lost Prophets -- An Insider's History ---------------------------------------------------- Author: Alfred L. Malabre, Jr. Publisher: Beard Books Softcover: 256 pages List Price: $34.95 Review by Henry Berry Order your personal copy today at http://is.gd/KNTLyr Alfred Malabre's personal perspective on the U.S. economy over the past four decades is firmly grounded in his experience and knowledge. Economics Editor of The Wall Street Journal from 1969 to 1993 and author of its weekly "Outlook" column, Malabre was in a singular position to follow the U.S. economy in recent decades, have access to the major academic and political figures responsible for economic affairs, and get behind the crucial economic stories of the day. He brings to this critical overview of the economy both a lively, often provocative, commentary on the picture of the turns of the economy. To this he adds sharp analysis and cogent explanation. In general, Malabre does not put much stock in economists. "In sum, the profession's record in the half century since Keynes and White sat down at Bretton Woods [after World War II] provokes dismay." Following this sour note, he refers to the belief of a noted fellow economist that the Nobel Prize in this field should be discontinued. In doing so, he also points out that the Nobel for economics was not one originally endowed by Alfred Nobel, but was one added at a later date funded by the central bank of Sweden apparently in an effort to give the profession of economists the prestige and notice of medicine, science, literature and other Nobel categories. Malabre's view of economists is widespread, although rarely expressed in economic circles. It derives from the plain fact that modern economists, even hugely influential ones such as John Meynard Keynes, are wrong as many times as they are right. Their economic theories have proved incomplete or shortsighted, if not basically wrong-headed. For example, Malabre thinks of the leading economist Milton Friedman and his "monetarist colleagues" as "super salespeople, successfully merchandising.an economic medicine that promised far more than it could deliver" from about the 1960s through the Reagan years of the 1980s. But the author not only cites how the economy has again and again disproved the theories and exposed the irrelevance of wrong-headedness of the policy recommendations of the most influential economists of the day. Malabre also lays out abundant economic data and describes contemporary marketplace and social activities to show how the economy performs almost independently of the best analyses and ideas of economists. Malabre does not engage in his critiques of noted economists and prevailing economic ideas of recent decades as an end in itself. What emerges in all of his consistent, clear-eyed, unideological analysis and commentary is his own broad, seasoned view of economics-namely, the predominance of the business cycle. He compares this with human nature, which is after all the substance of economics often overlooked by professional and academic economists with their focus on monetary policy, exchange rates, inflation, and such. "The business cycle, like human nature, is here to stay" is the lesson Malabre aims to impart to readers interested in understanding the fundamental, abiding nature of economics. In Lost Prophets, in language that is accessible and jargon-free, this author, who has observed, written about, and explained economics from all angles for several decades, persuasively makes this point. In addition to holding a top position at The Wall Street Journal, Malabre is also the author of the books, Understanding the New Economy and Beyond Our Means, which received the George S. Eccles Prize from the Columbia Business School as the best economics book of 1987. ********* 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 2015. 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 * * *