/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150416.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, April 16, 2015, Vol. 16, No. 74 Headlines B U L G A R I A CORPORATE COMM'L: Bulgaria Court to Proceed with Trial F R A N C E TOUAX SCA: S&P Affirms, Then Withdraws 'B' Corp. Credit Rating G E R M A N Y HEIDELBERGER DRUCKMASCHINEN: Moody's Rates EUR200MM Notes Caa1 HEIDELBERGER DRUCKMASCHINEN: S&P Rates EUR200MM Notes 'CCC+' I R E L A N D PARTHOLON CDO I: S&P Affirms 'CCC+' Ratings on 2 Notes Classes TRANSAERO ENGINEERING: Exits High Court Protection K A Z A K H S T A N ALFA BANK: Fitch Affirms 'B+' IDR; Outlook Stable N O R W A Y HURTIGRUTEN: S&P Assigns 'B' CCR; Outlook Stable R U S S I A MECHEL OAO: Sberbank Plans to File Bankruptcy Lawsuit METALLOINVEST JSC: Moody's Says Lower Costs to Offset Weak Prices TATARSTAN REPUBLIC: Moody's Affirms 'Ba2' LT Issuer Rating S P A I N ABENGOA FINANCE: Moody's Assigns B2 Rating to New EUR375MM Notes S W E D E N NATIONAL ELECTRIC: Exits Bankruptcy Protection After Writedown U K R A I N E METINVEST BV: Fitch Lowers IDR to Restricted Default UKRAINE: Jaresko Urges Creditors to Take Part in Debt Talks U N I T E D K I N G D O M BAKEAWAY: Sells Business , 60 Jobs Saved DEBEN TRANSPORT: Expected to Go Into Administration ENRON CORP: PwC Completes Administration in the UK GEORGE AND DRAGON: Bid to Turn Bodmin Pub Into Flats MIZZEN MEZZCO: Fitch Affirms 'B+' Issuer Default Rating PAPERLINX UK: Sale May be 'Imminent' PHONES4U: Secured Creditors May Recover Up to 24% of Claims ********* =============== B U L G A R I A =============== CORPORATE COMM'L: Bulgaria Court to Proceed with Trial ------------------------------------------------------ Focus Information Agency, citing the Bulgarian National Radio (BNR), reports that Sofia City Court is to proceed with the trial over the insolvency of Corporate Commercial Bank (CorpBank). The news agency says the trial was suspended for nearly five months due to the administrative argument around bank's license revoking. According to the report, the trial over the license of the bank ended up without a concrete decision of the Supreme Administrative Court since seven supreme administrative judges and two judges with the three-judge panel and five with the five- judge panel ruled that the major shareholders in the bank had no legal interest to appeal against the decision of the central bank on the license revoking. After the termination of the trial by the Supreme Administrative Court, without being approach and at his own initiative Judge Ivo Dachev with Sofia City Court renewed the trial on CorpBank's insolvency and set a date for it, Focus Information Agency says. All interested state institutions and the major shareholders were summoned for April 15's court hearing. The trial will be heard behind closed doors, the report notes. About Corporate Commercial Bank AD Corporate Commercial Bank AD is the fourth largest bank in Bulgaria in terms of assets, third in terms of net profit, and first in terms of deposit growth. Bulgaria's central bank placed Corpbank under its administration and suspended shareholders' rights in June 2014 after a run drained the bank of cash to meet client demands. =========== F R A N C E =========== TOUAX SCA: S&P Affirms, Then Withdraws 'B' Corp. Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B' long-term corporate credit rating on Touax S.C.A., a France-based lessor and third-party manager of marine, cargo containers, modular units, railcars, and barges. S&P subsequently withdrew the rating at the company's request. The outlook was stable at the time of the withdrawal. At the same time, S&P withdrew the 'B+' and 'B' long-term issue ratings on the company's proposed EUR35 million revolving credit facility (RCF) and proposed EUR200 million senior secured notes, respectively, as the proposed transaction did not go ahead. The ratings have been withdrawn following the company's decision not to proceed with the senior secured notes offering and to continue exploring other financing options. The company intended to use the proceeds of the offering to repay debt. At the time of withdrawal, the ratings on Touax reflected S&P's view of its 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 Touax's business risk profile is constrained by the cyclical, competitive, and fragmented nature of some of its end markets and its position as a small-to-midsize player in most of its global business segments. In S&P's view, these weaknesses are partially offset by the group's diversified business model and robust asset coverage. S&P's assessment of Touax's financial risk profile reflects S&P's view of the company's "highly leveraged" capital structure and "adequate" liquidity position. Under the current capital structure, S&P forecasts that Touax's Standard & Poor's-adjusted weighted-average funds from operations (FFO) to debt will be about 8%-9% and EBITDA interest coverage about 2.0x-2.5.x over the next two years. Debt to EBITDA will gradually decline to about 6x-7x over the forecast period from about 10x as of year- end 2014 (based on S&P's calculation of Touax's adjusted debt of around EUR492 million). At the time of the withdrawal, the stable outlook reflected S&P's view that Touax's operating performance will remain robust, with the company at least maintaining current EBITDA levels and utilization rates. ============= G E R M A N Y ============= HEIDELBERGER DRUCKMASCHINEN: Moody's Rates EUR200MM Notes Caa1 -------------------------------------------------------------- Moody's Investors Service assigned a Caa1 (LGD4-63%) rating to the EUR200 million senior unsecured notes with a seven-year tenor launched by Germany based printing equipment manufacturer Heidelberger Druckmaschinen AG on April 3, 2015. The assigned rating is in line with Moody's rating on the group's existing senior unsecured notes maturing April 2018 which remains unchanged at Caa1 (LGD4-63%). The outlook on the ratings is stable. The group's corporate family rating (CFR) of B3 remains unchanged. Proceeds from the issue of the new unsecured notes will be used to redeem around EUR185 million of Heidelberger Druck's existing 9.25% senior unsecured notes plus accrued interest and to pay an applicable call premium as stipulated in the bond documentation as well as related transaction fees and expenses. Following the refinancing, Heidelberger Druck's capital structure will consist of EUR200 million and EUR114 million of unsecured notes (maturing 2022 and 2018, respectively), EUR60 million and EUR59 million worth of convertible notes (maturing 2017 and 2022, respectively) as well as a senior secured revolving credit facility totaling EUR277 million and maturing 2017 which was mainly undrawn as of December 31, 2014. The refinancing aims to reduce Heidelberger Druck's finance costs and to extend the group's debt maturity profile, and therefore is positive for its rating. Heidelberger Druck's B3 CFR continues to balance its (1) challenging industry environment; (2) negative profitability at its equipment business, which is offset by a profitable services segment; (3) sizeable restructuring measures from portfolio optimization; against (4) the group's strong competitive position as worldwide leading manufacturer of sheet-fed offset printing presses and related equipment with a high share of recurring revenues from services and consumables; and (5) expected cost savings owing to its "Focus" efficiency and portfolio optimization programs. Heidelberger Druck's liquidity profile is adequate. As of December 31, 2014, the group's available cash sources comprised cash on balance sheet of EUR221 million (of which EUR35 million are subject to foreign exchange restrictions) and access to a committed and largely undrawn EUR277 million revolving credit facility maturing in June 2017. These funding sources together with expected balanced free cash flow generation before restructuring cash outflows are sufficient to cover the group's short term debt maturities of around EUR22 million (excluding interest on the bond and convertible already captured in free cash flow expectations) per December 2014, day-to-day cash needs (estimated at 3% of revenues) as well as spending requirements associated with restructuring measures over the next 12-18 months. In Heidelberger Druck's capital structure the senior secured revolving credit facility as well as the senior unsecured notes (due April 2018 and April 2022) benefit from guarantees of certain group entities representing approximately 75% of total assets. Moreover, Heidelberger Druck's capital structure consists of EUR60 million and EUR59 million senior unsecured convertible notes due July 2017 and March 2022 (unrated). The Caa1 ratings assigned to Heidelberger Druck's senior unsecured notes is one notch below the group's B3 CFR and reflect their junior ranking in Moody's priority of debt analysis behind sizeable amounts of senior secured debt. The instrument ratings also reflect the agency's view that, in a default scenario, the revolving credit facility would be largely used for cash drawings or guarantees. The senior unsecured notes rank ahead of the group's convertible notes which do not benefit from any group guarantees. The loss-given-default (LGD) assessment for Heidelberger Druck also takes into consideration trade payables which rank pari passu with the senior secured debt. Both Heidelberger Druck's underfunded pension obligations and short- term leasing commitments for capital and operating leases rank at the same level as the senior unsecured notes. The stable outlook reflects Moody's expectation that cost savings resulting from the group's restructuring initiatives and portfolio optimization measures will support further modest improvements in Heidelberger Druck's profitability as well as free cash flows (before restructuring cash outflows) around breakeven levels in fiscal year 2014/15. While its current leverage ratio of 6.1x adjusted debt/EBITDA (as of LTM December 31, 2014) positions Heidelberger Druck solidly in its rating category, upward pressure on the ratings would require a sustained track record of profitability improvements and positive free cash flow generation as well as a significant reduction of restructuring charges. In addition, the stable outlook incorporates that Heidelberger Druck will maintain its adequate liquidity profile with sufficient headroom under financial covenants. Positive rating pressure could evolve if Heidelberger Druck is able to sustainably generate positive free cash flows and continue to improve operating profitability, thereby supporting a sustainable reduction in its Moody's adjusted leverage below 6.5x debt/EBITDA and EBITA/interest expense above 1x. Negative pressure on the ratings could be exerted if the group is unable to sustain the positive trend in its operating profitability and improve free cash flow (before restructuring cash outflows) generation over the coming quarters. Any evidence of insufficient headroom under financial covenants could also result in a downgrade of the ratings. The principal methodology used in this rating was Global Manufacturing Companies published in July 2014. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Based in Heidelberg, Germany, Heidelberger Druckmaschinen AG ("Heidelberger Druck", B3 stable) is the leading global manufacturer of sheet-fed offset printing presses primarily used in the advertising and packaging printing segments. Main competitors include unrated Koenig & Bauer and Komori. In the 12 months ended December 31, 2014, the group generated revenues of approximately EUR2.3 billion. Heidelberger Druck operates under three business segments: (1) Heidelberg Equipment (approximately 61% of revenues in FY 2013/14); (2) Heidelberger Services (around 39% of revenues); and (3) Heidelberger Financial Services (less than 1% of revenue). HEIDELBERGER DRUCKMASCHINEN: S&P Rates EUR200MM Notes 'CCC+' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned an issue rating of 'CCC+' to Germany-based printing equipment manufacturer Heidelberger Druckmaschinen AG's proposed EUR200 million senior unsecured notes due 2022. The recovery rating is '6'. S&P's existing 'CCC+' issue rating on the EUR114 million (previously EUR355 million) senior unsecured notes due 2018 is unchanged. The recovery rating is also unchanged at '6'. S&P expects Heidelberger Druckmaschinen to use the proceeds of the proposed EUR200 million unsecured note issuance and the EUR59 million unrated convertible notes to repay around EUR241 million of the existing EUR355 million unsecured notes due 2018. The remainder of the proceeds (EUR18 million) will fund fees and expenses related to the note issuances. The proposed unsecured notes will have similar terms and conditions as the existing unsecured notes. RECOVERY ANALYSIS S&P's recovery rating on the unsecured notes is constrained by the significant amount of prior-ranking debt (including a EUR277 million secured revolving credit facility and pension liabilities). S&P's hypothetical default scenario assumes lower demand because of a recession and increased competition, combined with rising raw material prices that the company cannot pass on to customers. S&P values the group on a going-concern basis, given its long- standing customer relationships and niche market share. SIMPLIFIED WATERFALL -- Gross enterprise value at default: EUR440 million -- Administrative costs: EUR22 million -- Net value available to creditors: EUR418 million -- Priority claims: EUR567 million -- Senior unsecured debt claims: EUR327 million* -- Recovery expectation: 0%-10% * All debt amounts include six months' prepetition interest. ============= I R E L A N D ============= PARTHOLON CDO I: S&P Affirms 'CCC+' Ratings on 2 Notes Classes -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+ (sf)' ratings on Partholon CDO I PLC's class C-1 and C-2 notes. At the same time, S&P has withdrawn its 'AAAp (sf)' rating on the class R combination notes. The rating actions follow S&P's assessment of the transaction's performance based on the March 1, 2015 trustee report data, S&P's credit and cash flow analysis, and recent transaction developments. S&P has also applied its current counterparty criteria and its corporate cash flow collateralized debt obligation (CDO) criteria. Since S&P's Dec. 11, 2012 review of the transaction, it has observed further deleveraging of the structure, which has increased the available credit enhancement for the class C-1 and C-2 notes (the most senior classes of notes outstanding). The collateral pool's weighted-average spread has also decreased to 3.22% from 3.34%. The proportion of assets rated in the 'CCC' category ('CCC+', 'CCC', or 'CCC-') and assets that S&P considers to be rated below 'CCC-' ('CC', 'SD', and 'D') have decreased in notional terms, but increased in percentage terms (due to the low pool factor). The class C par coverage tests comply with the required trigger under the transaction documents. S&P has subjected the capital structure to its cash flow analysis, based on the methodology and assumptions outlined in S&P's corporate cash flow CDO criteria to determine the break- even default rate (BDR) at each rating level. S&P used the reported portfolio balance that it considered to be performing, the reported weighted-average spread, and the weighted-average recovery rates that S&P considered to be appropriate. Taking into account the observations outlined and the increased credit enhancement, the results of S&P's cash flow analysis suggest higher ratings for the class C-1 and C-2 notes. S&P has however affirmed its ratings on these classes of notes based on the maximum ratings achievable under the largest obligor default test. The portfolio is currently highly concentrated, with only eight performing obligors, and the credit protection available to the class C-1 and C-2 notes could be diluted by the performance of individual obligors. For example, the top obligor accounts for 23.5% of the current portfolio and if it were to default, the credit enhancement available to the rated notes would face significant erosion. The largest obligor test is a supplemental stress test that S&P outlines in its corporate cash flow CDO criteria. This test aims to address event and model risk by assessing whether a CDO tranche has sufficient credit enhancement (not counting excess spread) to withstand specified combinations of underlying asset defaults based on the ratings on the underlying assets. The test assumes a flat recovery of 5%. Furthermore, the class C interest coverage test, as of the March trustee report, is failing and the ratio is well below 100.0%, which means the portfolio is not generating sufficient interest proceeds to pay the interest amounts due on the class C notes. Therefore, principal proceeds are being diverted to compensate for the shortfall of interest amounts due on the rated notes. Nonpayment of timely interest when due on the class C notes is an event of default under the transaction documents. S&P has also observed that 10 out of the 13 performing assets in the portfolio (accounting for 75% of the portfolio) have maturity dates after the legal final maturity of the notes. Therefore, the portfolio is likely to be liquidated when the notes reach legal maturity, to redeem the class C-1 and C-2 notes. Consequently, the notes could be exposed to market value risk at maturity. In S&P's view, the 'CCC+ (sf)' ratings on the class C-1 and C-2 note are commensurate with the risks outlined above. S&P has also withdrawn its 'AAAp (sf)' rating on the class R combination notes, based on the trustee report's confirmation that the notes have fully redeemed. Partholon CDO I is a cash flow corporate collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. RATINGS LIST Class Rating Rating To From Partholon CDO I PLC EUR437.425 Million Fixed-Rate, Floating-Rate, and Zero-Coupon Notes Ratings Affirmed C-1 CCC+ (sf) C-2 CCC+ (sf) Rating Withdrawn R comb NR AAAp (sf) Comb--Combination notes. NR--Not rated. TRANSAERO ENGINEERING: Exits High Court Protection -------------------------------------------------- Barry O'Halloran at The Irish Times reports that Transaero Engineering Ireland was set to exit High Court protection on April 15 after a three-month examinership succeeded in rescuing the business. Michael McAteer -- michael.mcateer@ie.gt.com -- of Grant Thornton was appointed as examiner to Transaero in January after it ran into difficulties as a result of its Russian parent being unable to pay debts due to the Shannon operation, The Irish Times relates. The company confirmed on April 14 that the High Court has approved the completion of its examinership and that it was set to exit the process at midday on April 15, The Irish Times discloses. Transaero Engineering Ireland is an aircraft maintenance specialist. =================== K A Z A K H S T A N =================== ALFA BANK: Fitch Affirms 'B+' IDR; Outlook Stable ------------------------------------------------- Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDRs) of JSC SB Alfa Bank Kazakhstan (ABK) at 'B+' and AsiaCredit Bank JSC (ACB) at 'B'. The Outlooks are Stable. KEY RATING DRIVERS - IDRs, VRs, NATIONAL AND DEBT RATINGS The banks' IDRs and National Ratings are based on the banks' individual strength, which in turn is reflected in their Viability Ratings (VRs). The VRs reflect the banks' small, albeit growing, franchises, relatively moderate loss absorption capacity (tighter at ACB) in light of fast recent growth and seasoning loan book, and high concentrations on both sides of the balance sheet. The VRs also take into account the banks' reasonable liquidity positions, strong profitability (ABK), and track record of equity injections provided by the shareholder and the agency's expectation that these will continue (ACB). Seasoning of the loan book has resulted in an increase in non- performing loans (NPLs, 90 days overdue) at ABK to 5.2% at end- 9M14 (1.2% at end-2013) and at ACB to 9.7% at end-2014 (2013: 4.1%). ABK also had about 6% of restructured loans compared with only 0.6% at ACB. However, ACB has weaker coverage, with unreserved NPLs amounting to 39% of its Fitch core capital (FCC) at end-2014, while ABK's NPLs were 1.2x covered by reserves. The increase in ACB's NPLs was mainly driven by two large defaults (together KZT5 billion or 5% of gross end-2014 loans). In Fitch's view, both exposures may require additional provisioning given the low current level of reserves of 3% and 18%, respectively, at end-2014. A further 0.5x FCC was extended to related parties or in transactions that in Fitch's view, have questionable economic value for the bank, although most of these were reasonably secured by collateral. The risk profile of the largest exposures is generally better at ABK, although Fitch identified one big (KZT20.2 billion; 0.7x of FCC) potentially risky exposure to a microfinance company, of which KAZT11.5 billion is reportedly backed by cash and KZT8.7bn is a receivable related to a portfolio of retail loans purchased from ABK in 4Q14. The nature of this relationship is not very clear to Fitch, as well as whether the bank retains any risks, even if indirect, from the portfolio of sold loans. Fitch expects asset quality pressure to persist in 2015 as a result of the slowdown in Kazakhstan's economy. At the same time, the potential tenge devaluation will likely have a manageable impact on the banks' asset quality, as FX lending was moderate at around 20% of gross loans at ABK and 9% at ACB at end-2014. Capitalization is moderate, with a total regulatory capital ratio of 13.2% at ABK (down by 2.6 ppts in 2014) and 14.1% at ACB (down by 7.6 ppts). ABK supports capitalization through earnings generation (ROE of 27% in 9M14), while ACB's modest profitability (ROE of 7% in 2014) means that it relies heavily on capital injections from the shareholder. Fitch estimates that the impact on capital ratios of a 30% tenge devaluation would likely be negligible for ACB and about 1.5 ppts for AKB (due to an open short FX position of 27% of equity at end-2014). Both banks maintain a reasonable liquidity cushion sufficient to withstand significant customer accounts outflows (20% at ABK at end-2014 and 28% at ACB at end-1M15). However, depositor concentration level is higher at ACB (top 20 made up 73% of customer funding at end-2014) compared with ABK (47%) and therefore the former is more vulnerable to sudden outflows of the largest accounts. ABK's liquidity position additionally benefits from a KZT9 billion (4% of liabilities) unutilized credit line from Alfa Bank Russia (ABR, BB+/Negative). The banks' senior unsecured local debt ratings are aligned with their Long-term local currency IDRs and National Long-term ratings. KEY RATING DRIVERS - ABK's SUPPORT RATING The Support Rating of '4' reflects Fitch's view of the limited probability of support that might be forthcoming from ABR and/or other group entities, if needed. In Fitch's view, support may be forthcoming in light of the common branding, potential reputational risk of any default at ABK and the small cost of any support that may be required. At the same time, Fitch views ABR's propensity to provide support as limited because (i) it holds shares in ABK on behalf of ABH Holdings S.A.(ABHH), to which it has ceded control and voting rights through a call option, under which ABHH may acquire 100% of ABK from ABH Financial Limited (entity controlling 100% of ABR) until end-December 2016; (ii) limited operational integration between ABK and ABR; and (iii) ABR's tight regulatory capital preventing it from providing capital to the subsidiary. Support from other Alfa Group entities, in Fitch's view, also cannot always be relied on due to ABK's small size. As a result, support could be withheld under certain circumstances, especially in a systemic financial crisis in Kazakhstan. Fitch notes ABHH's failure to provide full support to its Ukraine-based subsidiary PJSC Alfa-Bank (ABU; CCC) in 2008. However, the agency believes there is a lower probability of Alfa Group not supporting ABK, relative to ABU. This is reflected in ABK's higher Support Rating '4' compared with ABU's of '5'. KEY RATING DRIVERS - ACB's SUPPORT RATING AND SUPPORT RATING FLOOR ACB's Support Rating of '5' reflects Fitch's view that support from the bank's private shareholder, although possible, cannot be reliably assessed. The Support Rating Floor of 'No Floor' is based on ACB's low systemic importance. RATING SENSITIVITIES Strengthening of their franchises while maintaining reasonable asset quality and performance would be positive for the banks' ratings. A downgrade could result from deterioration of asset quality and capitalization, as well as (although less likely) significant deposit outflows, absent of sufficient and timely equity and/or liquidity support from shareholders. The rating actions are: JSC SB Alfa Bank Kazakhstan: Long-term foreign currency IDR affirmed at 'B+'; Outlook Stable Short-term foreign currency IDR affirmed at 'B' Long-term local currency IDR affirmed at 'B+'; Outlook Stable National Long-term rating affirmed at 'BBB(kaz)'; Outlook Stable Viability Rating affirmed at 'b+' Support Rating affirmed at '4' Senior unsecured debt: affirmed at 'B+', Recovery Rating 'RR4' National senior unsecured debt rating: affirmed at 'BBB(kaz)' JSC AsiaCredit Bank Long-term foreign currency IDR: affirmed at 'B'; Outlook Stable Short-term foreign currency IDR: affirmed at 'B' Long-term local currency IDR: affirmed at 'B'; Outlook Stable National Long-term rating: affirmed at 'BB(kaz)'; Outlook Stable Viability Rating: affirmed at 'b' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Senior unsecured debt: affirmed at 'B', Recovery Rating 'RR4' National senior unsecured debt rating: affirmed at 'BB(kaz)' =========== N O R W A Y =========== HURTIGRUTEN: S&P Assigns 'B' CCR; Outlook Stable ------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Silk Bidco AS, the immediate parent company of Norway-based cruise line operator, Hurtigruten (together, Hurtigruten). The outlook is stable. At the same time, S&P assigned its 'BB-' issue rating and '1' recovery rating to the group's EUR65 million super senior revolving credit facility (RCF) due 2020 and S&P's 'B' issue rating to the group's EUR455 million senior secured notes due 2022. The recovery rating on the notes is '4', indicating S&P's expectation of average (30%-50%) recovery prospects in the event of a payment default. S&P's recovery expectations on the notes are at the higher half of the 30%-50% range. S&P's ratings reflect its view of Hurtigruten's business risk profile as "weak" and financial risk profile as "highly leveraged," as S&P's criteria define the terms. S&P combines these factors to derive an anchor of 'b'. S&P's other credit considerations have no impact on the rating outcome. Hurtigruten is a cruise line and local transportation operator that generates about 85% of its revenues from its Norwegian Coast segment. In S&P's opinion, Hurtigruten's business risk profile is primarily constrained by the concentration risk of its operations, which focus on the Norwegian West Coast, and to a lesser extent on Arctic and Antarctic routes. Unfavorable weather conditions in these regions lead to a higher risk of cancellations and lower average occupancy rates compared with other cruise operators that are able to change their itineraries for more popular destinations when adverse weather hits or a natural disaster occurs. S&P notes that Hurtigruten's profitability has been volatile historically due to its relatively low occupancy rates of about 60%-70%, when compared with other cruise operators that S&P rates. This is mainly due to Hurtigruten's obligations with regards to service frequency under its coastal service contract with the Norwegian government. The group uses the same fleet of vessels for providing "expedition" type cruise services to vocational travelers in Norway, which enhances its profitability and cash flow generation, but demonstrates a pronounced intra- year seasonality pattern. Hurtigruten's fleet consists of 12 vessels, 11 of which are required for the group to meet its contractual service frequency obligations and related to the number of ports connected. If, for any reason, a ship had to be removed from regular service, even temporarily, the reduced fleet could jeopardize the group's ability to meet the minimum service requirements as per the contract. Still, Hurtigruten's business risk profile benefits from its well-recognized brand and over 120 years history of operations, which together with the established fleet of specialized vessels provide barriers to entry and an advantage over its competitors. Hurtigruten also has a diverse customer base from developed countries with a high propensity to spend while on vacation such as Germany, the U.K, and the U.S. Additional support stems from Hurtigruten's visibility of earnings due to pre-agreed payments from the state in relation to the company's coastal service contract, which accounts for about 20% of the company's revenue. In addition, advanced booking underpins about 50% of its revenue and is accompanied by sizable deposits of about 20%-30% of the total consideration. S&P's "highly leveraged" assessment of Hurtigruten's financial risk profile reflects S&P's view of the company's Standard & Poor's-adjusted debt metrics and its financial policy following the company's acquisition by Silk Bidco, of which private equity firm TDR Capital indirectly owns 90%. Following the transaction, Hurtigruten's capital structure includes EUR455 million senior secured notes and a EUR65 million super senior RCF. In addition, Hurtigruten has issued about Norwegian krone (NOK) 1.8 billion (EUR200 million) of interest free preferred equity certificates (PECs) to TDR Capital. Although S&P views the PECs as debt-like under S&P's criteria, it recognizes their cash-preserving function and deep subordination in the capital structure. S&P also factors into its adjusted debt metrics about NOK260 million (EUR30 million) in relation to the company's sale and leaseback of two vessels. For the three years following the transaction, S&P calculates that Hurtigruten's Standard & Poor's-adjusted debt-to-EBITDA ratio (including PECs) on a weighted-average basis will be 7.8x, adjusted funds from operations (FFO) to debt will be about 7.7%, and adjusted EBITDA interest coverage will be about 2.5x. Excluding these debt-like instruments, Hurtigruten's financial risk profile will still remain in line with S&P's "highly leveraged" category, with debt to EBITDA of about 5.9x by Dec. 31, 2015, and 5.5x on average over the next three years. In S&P's opinion, Hurtigruten mitigates the currency risk of euro-denominated debt by generating about 35% of sales in euros. That said, if the euro materially appreciates versus the krone, the difference could constrain the group's leverage metrics. The stable outlook reflects S&P's expectation that Hurtigruten's planned cost-saving and revenue enhancing measures will result in solid earnings growth and sustained free operating cash flow generation. S&P sees a debt-to-EBITDA ratio, excluding the PECs, of about 5x-6x (total adjusted debt to EBITDA of 7x?8x) and EBITDA to interest coverage of higher than 2x as commensurate with the current rating. S&P could lower the ratings if Hurtigruten does not see EBITDA growth, causing weaker credit ratios. This could result from factors such as unforeseen accidents related to one or more of the group's vessels; an inability to increase earnings from vocational tourist offering; or execution risks related to cost- saving initiatives. S&P could also lower the ratings if the financial-sponsor owner implements aggressive financial policy measures leading to a material increase in cash-pay leverage in the company. In particular, a downgrade would be triggered if the EBITDA-to-interest coverage ratio drops to 2x or lower. Likewise, any deterioration in Hurtigruten's liquidity could also lead to a downgrade. S&P believes that an upgrade is unlikely in the next 12 months, mainly due to high debt levels, incorporating up to NOK1.8 billion of PECs. However, S&P could raise the ratings if TDR Capital's financial policy for Hurtigruten appears to be more conservative than S&P currently expects, such that the adjusted debt-to-EBITDA ratio falls and stays below 5.0x, and the risk of releveraging is low. A strengthening of the group's business risk profile would also prompt S&P to consider an upgrade. =========== R U S S I A =========== MECHEL OAO: Sberbank Plans to File Bankruptcy Lawsuit ---------------------------------------------------- According to Reuters' Vladimir Soldatkin, RIA news agency quoted Sberbank's head, German Gref, as saying on April 15 that Russia's top lender, Sberbank, plans to file a bankruptcy lawsuit against Mechel after talks on restructuring the steel producer's debt failed. Russian officials have been looking at ways to help indebted Mechel, controlled by businessman Igor Zyuzin, for months and have proposed several schemes, Reuters relates. Mechel OAO is a Russian metals and mining group. METALLOINVEST JSC: Moody's Says Lower Costs to Offset Weak Prices ----------------------------------------------------------------- Russia's largest regional supplier of high-quality iron ore, JSC Holding Company Metalloinvest (Metalloinvest, Ba2 stable), is in a strong position to weather weaker iron ore prices in 2015 after recent rouble devaluation reduced the cash costs of its products and lowered leverage to 2.4x as of year-end 2014 from 3.0x a year earlier, says Moody's Investors Service. "The reduction in Metalloninvest's cash costs and leverage will help it offset sliding iron ore prices, which Moody's anticipate will be lower on average in 2015 than in 2014 as the world's largest mining companies expand capacity," says Denis Perevezentsev, a Moody's Vice President -- Senior Analyst and author of the report. Rouble devaluation reduced the dollar value of Metalloinvest's rouble-denominated debt, which made up 46% of the total as of 31 December 2013. This contributed to a 25% drop in the Moody's adjusted total debt to $5 billion as of Dec. 31, 2014, and led to the subsequent reduction in leverage levels. The weak rouble, modest capital expenditure requirements and cost cutting will allow the company to generate solid EBITDA and positive free cash flows in 2015-16. In addition, the company's remaining 3.2% stake in OJSC MMC Norilsk Nickel (Ba1 negative) provides a further cushion in the event of stress as it would be able to sell the shares, currently valued at about US$0.9 billion, to reduce leverage by about 0.3x. Last year Metalloinvest reduced its stake in Norilsk Nickel from 5% and used the money to repay a RUB25 billion rouble bond in March 2015. The biggest risks to the company over the next two years come from a strengthening of the rouble, which would limit its cost advantage and reduce EBITDA, as well as its shareholder-friendly financial policy, as potential higher-than-expected 2016 dividends and shareholder loans could reduce free cash flow and push up leverage levels beyond Moody's guidance. Russia's recession and a potential further slide in iron ore prices also pose risks. TATARSTAN REPUBLIC: Moody's Affirms 'Ba2' LT Issuer Rating ---------------------------------------------------------- Moody's Investors Service confirmed the Ba2 long-term issuer rating of the Russian Republic of Tatarstan. The outlook on the rating is negative. This action concludes the review for downgrade that Moody's initiated on Dec. 22, 2014. The rating confirmation is triggered by the successful completion of Tatarstan's and SINEK management's plan to increase the guarantee on OAO Svyazinvestneftekhim's (SINEK, Ba2 review for downgrade) $250 million bond due in August 2015, which is unconditionally and irrevocably guaranteed by the republic. SINEK is an investment holding company -- 100% owned by the Republic of Tatarstan -- which manages an investment portfolio of key companies, in which Tatarstan has either controlling or blocking stakes (along with golden shares). The rating action is driven by the Republic of Tatarstan government's increase of its guarantee on the SINEK bond to RUB21.9 billion (US$421 million) from RUB13 billion (US$250 million). The final guarantee documentation, which includes the new guarantee increase, was signed on April 10, 2015. The increase eliminates the uncertainty (which was a reason for the rating review) surrounding the ability of the Tatarstan government to address a covenant breach of SINEK's bond. If not remedied, the breach would have resulted in a potential claim on the guarantee which could have drained the republic's liquidity. In December 2014, SINEK breached the covenant on its bond given that the rouble denominated guarantee failed to cover the minimal required amount of bond repayments (in US Dollars). The breach occurred as a result of the significant devaluation of the Russian rouble, which fell by 42% during 2014. Moody's notes that the republic's new debt burden after the guarantee increase will still be consistent with the current rating level. As a result of the guarantee increase, the Net Direct and Indirect Debt (NDID) to operating revenues ratio will likely increase to 62-67% in 2015 from approximately 57% in 2014. At the same time, over 60% of NDID will still be represented by the long-term government soft loans with the first repayment date in 2023. The negative outlook reflects the potential for the further deterioration of Tatarstan's credit profile in an environment of increased systemic risk as reflected in the negative outlook on the Russian government bond rating. In addition, the potential for a further weakening of the sovereign's creditworthiness could affect the federal government's willingness and ability to provide on-going and extraordinary support to regional and local governments. Given the negative outlook, an upgrade of the rating is unlikely. If systemic pressures abate, the negative outlook will likely be changed to stable, provided there is no significant deterioration in Tatarstan's budget performance. Further deterioration in the sovereign's credit quality or the deterioration in the republic's credit profile could exert downward pressure on the rating of the Republic of Tatarstan. Successful resolution of the covenant breach via increase of the guarantee required the publication of this credit rating action on a date that deviates from the previously scheduled release date in the sovereign release calendar. Specific economic indicators as required by EU regulation are not applicable for this entity. On April 13, 2015, a rating committee was called to discuss the rating of the Tatarstan, Republic of. The main points raised during the discussion were: The issuer has become decreasingly susceptible to event risk. The principal methodology used in this rating was Regional and Local Governments published in January 2013. The weighting of all rating factors is described in the methodology used in this rating action, if applicable. ========= S P A I N ========= ABENGOA FINANCE: Moody's Assigns B2 Rating to New EUR375MM Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B2 (LGD3) rating to Abengoa Finance S.A.U.'s proposed EUR375 million senior unsecured notes. The B2 instrument rating reflects the pari passu ranking of the notes with Abengoa's existing senior unsecured indebtedness. The proposed notes will, like the existing senior unsecured debt, benefit from a parent guarantee from Abengoa S.A. (Abengoa) and guarantees from Abengoa's material operating subsidiaries. Concurrently Moody's has assigned a definitive B2 rating to Abengoa Greenfield, S.A.'s senior unsecured 2019 notes. Abengoa's B2 corporate family rating with a stable outlook remains unchanged. Abengoa intends to use the net issuance proceeds to repay the EUR500 million senior unsecured notes due in March 2016 at or prior to maturity, hence the transaction itself will have no impact on Abengoa's net consolidated or net corporate leverage. Abengoa's B2 ratings, are constrained by high leverage ratios, both at the corporate level (e.g., gross corporate leverage of around of 7.5x debt/EBITDA estimated as of December 2014, including non-recourse debt in process) as well as at the consolidated level (10.7x Moody's adjusted net debt/EBITDA as of December 2014), above our expectations for a B2. However, Moody's anticipate improvements in consolidated leverage due to the deconsolidation of Abengoa Yield and projects under construction transferred to the newly created joint venture with EIG (unrated), "Abengoa Project Warehouse 1", which is not yet reflected in our rating triggers. On April 9, 2015, Abengoa announced that note holders of a EUR400 million convertible bond due 2019 have elected to accept an offer from Abengoa to convert an aggregate principal amount of EUR238 million into class B shares. Cash outflows in connection with the conversion amount to EUR60 million. The conversion will reduce gross corporate leverage by around 0.2x turns of 2014 reported corporate EBITDA of around EUR960 million. While Abengoa's gross corporate leverage is expected to remain high in the context of other B2 rated companies, the recent conversion evidences Abengoa's willingness to reduce leverage on a gross basis. The B2 ratings are also constrained by (1) the group's very high complexity and the extensive use of financial instruments, such as confirming lines or factoring, which are not reflected in reported corporate leverage; (2) missing track record of positive free cash flow at the corporate level; (3) constant refinancing needs requiring continued access to capital markets; (4) the technical challenges the E&C segment faces to complete advanced installations on time and on budget; and (5) the company's need for continued regulatory support or stability with regards to solar energy generation or power transmission activities in all markets. These challenges are partially offset by (1) Abengoa's substantial scale, with revenues of EUR7.1 billion in 2014 coupled with good business and geographical diversification; (2) the group's order backlog of EUR8.6 billion as of March 2015; (3) potential for positive FCF at the corporate level supported by a substantial asset base of concessions in operation and under construction with a relatively high intrinsic value; and (4) Abengoa's good track record of project execution. Negative pressure could be exerted on Abengoa's ratings if the company fails to reduce its leverage both on a corporate and consolidated basis to, for example, a Moody's-adjusted net consolidated debt/EBITDA ratio of around 8.0x (10.7x in 2014) or a gross corporate debt/EBITDA ratio of below 7.0x in the next 12- 18 months (around 7.5x estimated for 2014, including non-recourse debt in process). In the event that Abengoa fails to achieve these metrics, Moody's will take into account the company's liquidity position, its ability to generate sustainably positive FCF at the corporate level, the quality of Abengoa's investments, its financial strategy and the maturity of its concession portfolio. The ratings could also be downgraded if Abengoa fails to maintain non-recourse debt in process exposure at a manageable level. Moody's could upgrade the ratings if Abengoa further details its disclosure on the information on its structure, financing instruments and liquidity situation. An upgrade would also require building a further track record of successful concession asset rotation through ABY, leading to sustainable positive FCF at the corporate level and deleveraging, both at the corporate and consolidated level, for instance with a track record of Moody's-adjusted net consolidated debt/EBITDA comfortably below 7.0x and gross corporate leverage comfortably below 6.0x. In addition, upward rating pressure would require the maintenance of a solid liquidity profile. The principal methodology used in these ratings was Construction Industry published in November 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. Abengoa S.A. is a vertically integrated environment and energy group whose activities range from engineering and construction, and the utility-type operation (via concessions) of solar energy plants, electricity transmission networks and water treatment plants to industrial production activities such as biofuels. Headquartered in Seville, Spain, on a consolidated basis Abengoa generated EUR7.1 billion of revenues in 2014. =========== S W E D E N =========== NATIONAL ELECTRIC: Exits Bankruptcy Protection After Writedown -------------------------------------------------------------- dpa reports that the Vanersborg District Court on April 15 said National Electric Vehicle Sweden (NEVS), the owner of struggling carmaker Saab, has exited bankruptcy protection after securing a write-down of debt owed to suppliers. The Chinese-backed consortium, which took over the ailing carmaker in 2012, initiated the reorganization process in August, dpa recounts. NEVS spokesman Mikael Ostlund told dpa that after the write-down of SEK300 million (US$34 million), NEVS remains with a debt of about SEK400 million. Exiting the bankruptcy protection "means that NEVS is in a better position in ongoing talks" with potential partners, he said after the ruling by the Vanersborg District Court went into effect, dpa notes. One of the unnamed firms is interested in part ownership of the consortium, while another was considering future technical cooperation including a platform being developed by NEVS, dpa discloses. About NEVS National Electric Vehicle Sweden AB (NEVS) is a Swedish holding company. NEVS is majority owned by British Virgin Islands- registered, Hong Kong-based, National Modern Energy Holdings Ltd., an energy company with operations in China, Macau, and Hong Kong. NEVS bought bankrupt carmaker Saab in 2012. On Aug. 29, 2014, NEVS convinced a Swedish court to grant it creditor protection while it buys time to finalize negotiations for funding. ============= U K R A I N E ============= METINVEST BV: Fitch Lowers IDR to Restricted Default ---------------------------------------------------- Fitch Ratings has downgraded Metinvest B.V.'s Long-term Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'CCC', following the company's disclosure of a continuing payment default under its pre-export financing (PXF) facilities for a total USD113 million. The company's senior unsecured rating applicable to its 2015, 2017 and 2018 notes has been downgraded to 'C'/'RR6' from 'CCC'/'RR4'. KEY RATING DRIVERS Uncured Payment Default to PXF Lenders Metinvest had four outstanding PXF facilities as of March 31, 2015 for an aggregate amount of USD1.1 billion. The company's financial results have been substantially weakened by the economic and political situation in Ukraine as well as the ongoing weakness in steel and commodity prices. Since August 2014, the company has been trying to refinance or extend its 2015 PXF maturities. However, negotiations with lenders were unsuccessful. Metinvest obtained a one-month deferral of its February 2015 installment, but failed to receive all lenders' approval to roll over this deferral into May, despite approval from the majority of its lenders. Metinvest failed to make a principal payment due in March, with lenders subsequently issuing the company with a reservation of rights letter. Since then, Metinvest has stopped discussions around waiving March and April maturities and instead intends to negotiate a broader rescheduling of PXF maturities and its Eurobonds. Consent Solicitation Metinvest disclosed its default on April 8, 2015, in a consent solicitation sent to bondholders. In addition to the existing payment default, the proposed extension of maturity for the 2015 bonds under the consent solicitation would constitute a distressed debt exchange (DDE) in accordance with Fitch's criteria. If agreed by creditors, this would result in Metinvest's IDR being maintained at 'RD'. Metinvest has requested that its 2015, 2017 and 2018 bondholders waive their rights to call a cross default. The maturity date of the 2015 bonds would also be extended to Jan. 31, 2016. The effectiveness of this waiver would be conditional upon (i) the waivers being granted under all three instruments (75% threshold of the quorum at the noteholders meeting); and (ii) no acceleration being triggered by any of the bonds and PXF creditors. Answers are expected by May 1. Upon approval, 10% of the 2015 bond maturities will be prepaid (on May 20) and a waiver fee will be paid to all bondholders (0.5% for the 2015 notes and 0.25% for the 2017 and 2018 notes). If the consent solicitation is agreed, the company will not be permitted to make any dividend payments or other restricted payments from 20 May 2015 to 31 January 2016. Negotiation with PXF Lenders The PXF lenders have not called a default at this stage, and the core lenders are now forming a coordinating committee (CoCom) aimed to discuss potential options of restructuring/rescheduling of maturities. The formation of the CoCom has not yet been finalized. Negotiations around the conclusion of a standstill and waiver agreement, meant to ease discussions around potential restructuring/rescheduling, are expected to be held between Metinvest and members of the CoCom. Exposure to Ukraine The rating reflects Metinvest's exposure to Ukraine as the source of its raw materials, the location of its major plants, and its significance as an end-market for its products. It also indicates high exposure to geopolitical risks in the Donbas region, where the company's main assets are located, generating significant risk of further operational disruption. Metinvest, as other Ukrainian corporates, does not have access to international markets for refinancing of upcoming maturities and can only rely on its internally generated cash flows. Insufficient Liquidity Metinvest is due to make a further USD549m of debt repayments under its PXF facilities up to Jan. 31, 2016. It does not expect to be able to make these payments in full, or to refinance the facilities. As of February 2015, the company operated with around USD150m of unrestricted cash, significantly less than the USD300 million it considers appropriate in the ordinary course of its business. Lastly, the company is exposed to a significant risk of a further decrease in limits or additional drawing restrictions imposed by its trade finance banks, in line with recent withdrawals from several of them over 2014, reducing the outstanding amount to USD349 million as of Feb. 28, 2015 from USD911 million in FY13. Damaged Operations Reduce Cash Generation Military actions in the Donetsk region continue to severely impact the company's main metallurgical assets and the regional transport infrastructure. The company's Ilyich and Azovstal steel plants (78% of total crude steel production) have been operating at 60%-80% of their capacity while the Yenakiive steel plant (22% of total crude steel production) was halted for two months in 2014 and has continued to experience disruptions in 2015. The Avdiivka coke-processing plant was also halted in August 2014 and stopped again in February 2015. Overall, steel production volume decreased by 40% in 2H14 vs. 1H14. The company's iron ore mining activities are operating normally. Supplies of coking coal are increasingly dependent on third-party supplies, mainly due to the higher cost of internal coal supplies and/or disruptions at Metinvest's Ukrainian mines (mainly at Krasnodon coal mine). Profitability Under Pressure Leading to Debt Servicing Difficulties in 2015 The steep reduction in mining profitability since 2H14 due to depressed iron ore prices, as well as the relative decline in steel prices will mean that the company will only make interest and coupon obligations for 2015. USD1.5 billion Debt Maturities Repaid in 2014 For FY14, the company reported USD2.7 billion EBITDA, an 18% increase yoy, mainly due to hryvnia devaluation and lower raw materials and energy costs. The steel division contributed USD1.1 billion to total EBITDA while the mining division contributed USD1.8 billion (USD500 million lower yoy). Available FCF was used to repay USD1.5 billion debt maturities in FY14. As of end-2014, total debt was USD3.2 billion vs. USD4.3 billion in FY13. The company paid USD388 million in dividends and made a discretionary prepayment of USD75 million under a USD444 million shareholder loan in 2H14. KEY ASSUMPTIONS -- Fitch iron ore price deck: USD65/t in 2015, USD75/t in 2016, USD80/t in the long term -- USD/UAH 25 in 2015 -- Production volumes in line with 2H14 results -- No dividends payments -- USD500m capex in 2015 -- USD220m interest payments in 2015 RATING SENSITIVITIES Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- Metinvest entering into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure Positive: Following the possible financial restructuring and once sufficient information is available, the 'RD' rating will be revised to reflect the appropriate IDR for the issuer's post- exchange capital structure, risk profile and prospects in accordance with relevant criteria. Full List of Rating Actions Long-Term IDR: downgraded to 'RD' from'CCC' Short-Term IDR: downgraded to 'RD' from 'C' Senior unsecured rating: downgraded to 'C'/RR6 from 'CCC'/R4 Long-Term local currency IDR: downgraded to 'RD' from 'CCC' Short-Term local currency IDR: downgraded to 'RD' from 'C' National Long-Term Rating: downgraded to 'RD' (ukr) from 'BBB'(ukr) National Short-Term Rating: downgraded to 'RD' (ukr) from 'F3' UKRAINE: Jaresko Urges Creditors to Take Part in Debt Talks ----------------------------------------------------------- William Mauldin at The Wall Street Journal reports that Ukraine Finance Minister Natalie Jaresko has a warning for creditors of the war-torn country: Come to the table now to restructure US$40 billion in debt or face the risks of an uncertain economic, political and military climate down the road. The American-born finance chief, in an interview, said that if creditors don't emerge and begin earnest and transparent negotiations on the debt before a deadline for an agreement at the end of May, they could face a series of risks to Ukraine's stability, The Journal relates. According to The Journal, she noted the potential for further deterioration in Ukraine's economy, a revived conflict between Kiev and Russia-backed separatists, or even a Ukrainian parliament weary of paying debt accumulated during the rule of the country's fugitive former president, Viktor Yanukovych. "They're misunderstanding, first of all, the depth of the economic-financial distress that the country is in today," The Journal quotes Ms. Jaresko as saying. If the situation in Ukraine deteriorates, Ms. Jaresko, as cited by The Journal, said, calls could grow to forsake payments on the country's outstanding debt, a step the government didn't want to take. Ms. Jaresko, visiting Washington for a gathering of the International Monetary Fund, said she has had constructive talks with individual creditors but can only negotiate effectively on restructuring the debt with a clearly defined group, The Journal relays. She dismissed a proposal put forward recently by a group of creditors that includes Franklin Templeton Investments, the largest private holder of Ukraine's debt, according to The Journal. =========================== U N I T E D K I N G D O M =========================== BAKEAWAY: Sells Business , 60 Jobs Saved ---------------------------------------- Northants Telegraph reports that the jobs of 60 employees of a Corby firm that went into administration have been saved. Pastry maker Bakeaway struggled with a surge in orders over Christmas, which caused cashflow problems and lead to the company seeking the protection of administration, according to Northants Telegraph. The report relates that restructuring and advisory firm, FRP Advisory, has sold the business and accompanying assets of Bakeaway Limited out of administration securing the jobs of all 60 staff. The buyer, House of Vantage Limited, a newly incorporated holding company, will continue to trade the business under the Bakeaway brand name, the report notes. Established in 2011, Bakeaway produces and supplies own brand baking products including a wide range of pastries and baked goods to supermarkets. Bakeaway's products are manufactured in the UK and sourced, where possible, from sustainable ingredients. "We are delighted to have secured the future of this well-known Corby-based pastry-making business, securing all 60 jobs in the process while ensuring vital a continuity of management under a new company structure," the report quoted Nathan Jones, director and joint administrator at FRP Advisory, as saying. "Bakeaway has grown rapidly since it was formed four years ago but strong Christmas trading just put too much strain on cashflow under its old corporate structure threatening the long-term survival of an otherwise thriving firm. The immediate sale of the business out of administration has ensured minimal disruption to Bakeaway customers and suppliers for whom it remains very much business as usual," Mr. Jones said, the report relates. "Bakeaway will continue to operate from the same premises in Corby. We wish everyone involved with the on-going Bakeaway business every success in the future," Mr. Jones added. DEBEN TRANSPORT: Expected to Go Into Administration --------------------------------------------------- East Anglian Daily Times reports that Deben Transport is based at Felixstowe port and staff have been told that it is facing financial difficulties. No one could be contacted at its headquarters at Fagbury Road in Felixstowe, but staff at its Manchester depot are expecting the arrival of administrators, according to East Anglian Daily Times. The report relates that Mark Dixon, senior transport operator in charge of customer services at Trafford Park, said he had been told at the weekend that the company had gone into administration. The report discloses that Mr. Dixon, who has worked for the company for 20 years, described the staff in Manchester as "bitter and angry" about the situation. The company was formed in 1987 by Paul Dawson, and grew significantly -- it is believed to employ about 200 lorry drivers and have about 50 office staff. It is also thought to use a further 100 owner-drivers on freelance contracts. ENRON CORP: PwC Completes Administration in the UK --------------------------------------------------- Ellie Clayton at Economia reports that more than a decade after the collapse of Enron, PricewaterhouseCoopers has announced it has now completed its administration of the group's UK companies. In 2001, the spectacular collapse of the energy giant cost 21,000 jobs. Its former chief executive, Jeffrey Skilling, is now serving a 14-year sentence, after being convicted in 2006 on 19 counts of securities fraud, conspiracy, insider trading and lying to auditors, the report says. The firm's accountants, Arthur Andersen, were eventually dissolved after it helped Enron hide losses in its subsidiaries. Several accountants were found to have overstated financial reports, cash flows and earnings, according to Economia. Economia relates that in what Tony Lomas, a PwC partner who oversaw the administration, described as the "biggest and most complex insolvency the world has ever seen", PwC has squeezed a total of US$2 billion of dividends from the eight separate Enron Group companies it has overseen and declared insolvency proceedings in the UK and Europe complete. Economia says the job included resolving major commercial disputes, running significant businesses, selling high value assets and agreeing significant and complex claims. It managed the groups' interests in two UK power stations, selling 7% of the UK's annual gas supply for a four-year period and completed the first ever sale of a credit derivatives book out of insolvency, the report says. It also negotiated the claims for hundreds of creditors and more than 1,000 employees, Economia states. Economia quotes Mr. Lomas as saying that: "14 years later, final dividends from the remaining companies were declared, bringing the dividend total to GBP2 billion and we arranged for the significant sum of unclaimed dividends to be shared between a number of different charities at the very end. Following the final dividend payment, the remaining insolvency proceedings are now complete." About Enron Corp. Based in Houston, Texas, Enron Corporation filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 01-16033) on Dec. 2, 2001, following controversy over accounting procedures that caused its stock price and credit rating to drop sharply. Enron hired lawyers at Togut Segal & Segal LLP; Weil, Gotshal & Manges LLP; Venable; Cadwalader, Wickersham & Taft, LLP for its bankruptcy case. The Official Committee of Unsecured Creditors in the case tapped lawyers at Milbank, Tweed, Hadley & McCloy LLP. The Debtors won confirmation of their Plan in July 2004, and the Plan was declared effective on Nov. 17, 2004. After approval of the Plan, the new board of directors decided to change the name of Enron Corp. to Enron Creditors Recovery Corp. to reflect the current corporate purpose. ECRC's sole mission is to reorganize and liquidate certain of the operations and assets of the "pre- bankruptcy" Enron for the benefit of creditors. ECRC has been involved in the MegaClaims Litigation, an action against 11 major banks and financial institutions that ECRC believes contributed to Enron's collapse; the Commercial Paper Litigation, an action involving the recovery of payments made to commercial paper dealers; and the Equity Transactions Litigation, which ECRC filed against Lehman Brothers Holdings, Inc., UBS AG, Credit Suisse and Bear Stearns to recover payments made to the four banks on transactions involving Enron's stock while the company was insolvent. GEORGE AND DRAGON: Bid to Turn Bodmin Pub Into Flats ---------------------------------------------------- Cornish Guardian reports that the smoking ban and cheap alcohol sold in supermarkets has been blamed for the demise of a Bodmin pub. The George and Dragon in St. Nicholas Street has been closed for two years and now there is a planning application to turn the building into six self-contained apartments, according to Cornish Guardian. The report recalls that the Grade II listed structure is owned by Nicholas Kenlay from Helston, who purchased it from St Austell Brewery in 2007 when he was a director of Dude Bars Ltd, a company that went into administration in January 2010. Despite refurbishing the pub, it was losing thousands of pounds a year due to a lack of customers, said Mr. Kenlay, forcing him to close it in 2013, the report notes. The report discloses that Mr. Kenlay felt the best option now was to convert the building into flats. "Despite my best attempts, I do not believe the George and Dragon can be run profitably as a public house,'' Mr. Kenlay has told Cornwall Council's planning department, the report relays. "I believe there are several reasons for this: the smoking ban, the availability of cheap alcohol in supermarkets and the general change in public habits, which has caused the closure of thousands of pubs in the UK," Mr. Kenlay added. The report notes that Mr. Kenlay said the conversion work would retain the character of the building externally. The George and Dragon Inn, built in the early 19th century, is one of 16 Bodmin public houses mentioned in Pigot's Directory of Cornwall published in 1830. Bodmin Town Council's planning committee was due to discuss the application and make recommendations to Cornwall Council, the report adds. MIZZEN MEZZCO: Fitch Affirms 'B+' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has affirmed Mizzen Mezzco Limited UK's (MML) Long-term Issuer Default Rating (IDR) 'B+'. The Outlook on the Long-term IDR is Stable. The long-term rating of the GBP200 million senior notes issued by its indirect 100%-held subsidiary, Mizzen Bondco Limited, is affirmed at 'B-'/'RR6'. KEY RATING DRIVERS - IDR MML, a holding company, is the ultimate 100%-parent of Premium Credit Limited (PCL), a leading provider of third-party insurance premium finance. The Long-term IDR of MML is based on Fitch's assessment of the overall credit risk profile of PCL, its only operating entity, and the ability of this operating entity to upstream dividends to its shareholder. As this dividend flow is the only source of funds available to service MML's and its subsidiary's Mizzen Bondco's debt obligations, our rating also considers the structural subordination of these entities' debt to all indebtedness and other senior obligations of PCL. Fitch's assessment of PCL's creditworthiness considers PCL's 25 years of experience in the premium finance sector as well as its strong market position, which has benefited over the last decade from sector consolidation and high barriers to entry. PCL's strong competitive advantage includes, among other factors, the long-term stable nature of its intermediary relationships and niche lending markets. Asset quality at PCL is robust and underpinned by the strong risk management of assets and subsequent low level of loan losses. The short-term nature of its loans supports the company's flexibility in dealing with problem assets while its strong recovery and collection processes help to narrow actual losses. Earnings are stable and reflect a high level of repetitive business, with low levels of attrition and low loan impairment charges. Nonetheless, Fitch views PCL's earnings as undiversified and highly dependent on lending volumes, which, in turn is highly dependent on a small number of intermediaries. Costs are also high, reflecting its business model. The company is highly leveraged and, because of the high level of dividends up-streamed to its parent, internal capital generation is weak. This places the company at risk from any large unexpected losses and is a factor of higher importance in assessing the overall creditworthiness of the company. Furthermore, it relies on just two sources of wholesale funds, rendering its overall funding profile undiversified and subject to investor confidence. Maturities are also lumpy, with a securitization facility due to mature at end-2017 and all other senior debt in 2021. Again, Fitch views the weakness of the company's funding profile as a factor of higher importance. High leverage and high refinancing risk are overall negative rating drivers in our assessment of PCL's creditworthiness. RATING SENSITIVITIES - IDR As MML's Long-term IDR is notched off our assessment of the creditworthiness of PCL, it is mainly sensitive to a change in our view of PCL's creditworthiness. Positive rating drivers include a reduction in leverage as well as improved diversification of funding sources and reduced refinancing risk. Negative rating drivers include increased risk appetite, particularly if the company materially grows its non-recourse book, which could lead to a deterioration of asset quality. Furthermore, MML's Long-term IDR would be sensitive to an increase in holding company double leverage to levels above 120% (end-2014: 95%), which is currently not our base case, or to constraints on the ability to upstream dividends from PCL to the holding company. KEY RATING DRIVERS AND SENSITIVITIES - Mizzen Bondco's Senior Debt The senior notes are rated two notches below MML's 'B+' Long-term IDR, reflecting the limited recovery for senior creditors as indicated by the 'RR6' Recovery Rating. The low recovery expectations are mainly driven by their deep subordination to the securitization facility, which encumbers the majority of receivables. The securities' rating is primarily sensitive to any movement in their anchor rating, MML's Long-term IDR, and to potential changes to recovery prospects. PAPERLINX UK: Sale May be 'Imminent' ------------------------------------ ProPrint reports that a deal to salvage something from the wreckage of Paperlinx UK could be imminent, with two bids being considered by administrators, sources close to the situation. According to ProPrint sister magazine PrintWeek, one of the potential buyers is Spanish paper manufacturer Lecta, though neither the company nor administrators at Deloitte would comment on the report. The news comes as the April 15 deadline for Paperlinx to sell its Belgium, Netherlands, and Luxembourg business rapidly approaches, when financier ING will pull funding, ProPrint relates. Chief executive Andy Preece told ProPrint on April 2 that Paperlinx was in formal talks with multiple potential buyers, but there was no binding proposal on the table. The report relates that Paperlinx shares remain in a trading halt while the company scrambles to give the market any good news to stop a likely run on its stocks, which are already at rock bottom. Printweek said an unnamed rival paper merchant executive said Lecta had been increasing the volume of its products sold via Paperlinx at the same time as other mills were backing away from the merchant, the report discloses. Lecta has mills in Italy, France and Spain, owns Garda Cartiere, Torraspapel and Condat, and makes the Regency grade supplied by Paperlinx, the report notes. PrintWeek also says Paperlinx operations serving the narrow reel and wide-format markets have also been linked to potential buyers, but the names remain highly speculative. As far as the Australian operation goes, Preece says the local Spicers business -- the country's biggest paper merchant -- is profitable and completely insulated from the dire European situation, the report notes. There does not seem to be any panic among Australian printers, though they are watching the situation with interest, the report discloses. Meanwhile, printers and paper manufacturers out of pocket from the UK collapse are already giving up on ever seeing a penny, with one manufacturer setting aside EUR3.7 million to cover its share of the loss, the report relays. Those taking a hit include the East Lancashire Railway in Britain, which paid Paperlinx GBP18,000, raised through donations and bequests, for glazing on a new station canopy the day before the companies were placed into administration, according to a local newspaper, the report adds. PHONES4U: Secured Creditors May Recover Up to 24% of Claims ----------------------------------------------------------- Daniel Thomas at The Financial Times reports that close to GBP170 million owed to unsecured creditors in Phones4U will be almost entirely wiped out, according to the first progress report into the group's demise by administrator PricewaterhouseCoopers. PwC, as cited by the FT, said unsecured creditors to the retail chain are owed about GBP168 million but are only likely to receive 0.4p for every pound. These include HM Revenue & Customs, which is owed about GBP75 million in VAT and corporation tax, the FT notes. However, creditors who own Phones4U's GBP430 million worth of senior secured notes, which are listed on the Irish stock exchange, "may recover" 20% to 24% of their money, as their debt ranks higher up the legal ladder for repayment priority in an insolvency, the FT says. Phones4U was the largest retail failure on Britain's high street since the demise of Comet in 2012, the FT recounts. It collapsed into administration after EE and Vodafone decided to stop selling phone contracts through the chain in September last year, the FT relays. Phones4U was a mobile phone retailer. ********* 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 * * *