/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150515.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, May 15, 2015, Vol. 16, No. 95 Headlines A R M E N I A AMERIABANK: Fitch Publishes 'B+' Long-Term IDR; Outlook Negative A U S T R I A CARINTHIA: Austrian Finance Minister Rules Out Insolvency B E L G I U M CARMEUSE HOLDING: S&P Affirms Then Withdraws 'BB' LT CCR D E N M A R K NUNAMINERALS A/S: Greenland Court to Declare Bankruptcy G R E E C E GREECE: Slips Back Into Recession, Varoufakis Brings Up Debt Swap I R E L A N D ORWELL PARK: Fitch Assigns 'B(EXP)sf' Rating to Class E Notes PERMANENT TSB: S&P Affirms 'B+' Long-Term Rating, Off Watch Neg P O R T U G A L LUSITANO SME NO.1: Fitch Raises Class C Notes Rating to 'B-sf' R U S S I A ASKO-LIFE: Bank of Russia Suspends Insurance License POKROVITEL: Put Under Provisional Administration; License Revoked REGIONAL INSURANCE: Bank of Russia Suspends License S P A I N CM BANCAJA 1: Fitch Affirms 'CCsf' Rating on Class E Notes U K R A I N E AZOVMASH: In Debt Restructuring Talks with Banks-Creditors U N I T E D K I N G D O M PAPERLINX: Sells UK Packaging Arm to Antalis REACT ENERGY: Files Petition to Appoint Examiner in High Court SPHERE & TURRET: In Administration; Fife Stores Closed TEN SQUARE: In Administration; 84 Jobs Affected THE EMPORIUM: Shuts Down, More Than 100 Stall-Holders Locked Out X-SUBSEA HOLDING: James Fisher Acquires Assets X X X X X X X X * BOOK REVIEW: The Money Wars ********* ============= A R M E N I A ============= AMERIABANK: Fitch Publishes 'B+' Long-Term IDR; Outlook Negative ---------------------------------------------------------------- Fitch Ratings has published the Long-term Issuer Default Rating (IDR) rating of Ameriabank at 'B+' with a Negative Outlook. KEY RATING DRIVERS Ameriabank's IDRs are driven by its Viability Rating (VR) of 'b+'. The VR reflects the bank's high dollarization of the balance sheet, significant risk concentrations, rapid recent growth in a fairly high-risk environment and an only moderate loss absorption capacity under pressure from an upward revaluation of FX- denominated assets. The ratings also consider the bank's so far reasonable financial metrics, sizeable liquidity buffer, manageable refinancing risks and solid domestic franchise. The bank's Support Rating Floor of 'No Floor' and '5' Support Rating reflect Fitch's view that the Armenian authorities have limited financial flexibility to provide extraordinary support to banks, if necessary, given the banking sector's large foreign- currency liabilities relative to the country's international reserves. Potential support from the private shareholders is also not factored into the ratings, as it cannot be reliably assessed. The Negative Outlook on the bank's Long-term IDR is driven by a weaker operating environment in Armenia, characterized by a stagnating economy (we expect Armenia to fall into a mild recession in 2015), devaluation pressures and higher interest rates. In Fitch's view, this is likely to negatively impact the bank's margins, asset quality, performance and potentially capitalization. Ameriabank has leading positions in domestic lending (13% market share), trade finance and liabilities to customers (12%), despite keen competition in the market. The bank's profitability is solid, with return on average equity (ROAE) of 17.8% and return on average asset (ROAA) of 2.1% in 2014, underpinned by growing lending, stable funding costs and only moderate loan impairment charges (LICs). Fitch expects profitability metrics to weaken in 2015, due to higher LICs as loans season in a challenging environment, while funding costs are likely to rise, in line with sector trends. At end-2014, the share of non-performing loans (NPLs, over 90 days overdue) was a low 2.3% of the total portfolio, in part reflecting recent rapid loan expansion. Reserve coverage of NPLs was low at 41%, reflecting high reliance on collateral. Significant credit risks also arise from concentrations (the top 25 groups of borrowers accounted for 36% of gross loans or 2.5x of Fitch Core Capital at end-2014) and from high FX lending (86% of the total), mostly to unhedged borrowers, whose debt servicing capacity could have been affected by the recent devaluation of the AMD and recessionary environment. In this context, the bank's loss absorption capacity is viewed as only moderate. Fitch estimates that at end-1Q15, the bank could have increased its loan impairment reserves/gross loans ratio only to 3.5%, without breaching the regulatory capital adequacy limit of 12%. Annual pre-impairment profit (equal to 3.8% of gross loans in 2014) offers additional moderate loss absorption. Non-deposit funding is significant (42% of end-2014 liabilities), of which nearly half comes from International Financial Institutions (IFIs), providing long-term funds to the bank. Annual refinancing requirements are manageable in 2015 and onwards, while the bank keeps a large amount of highly liquid assets (mostly cash and equivalents, but also including a portion of unencumbered government securities) equivalent to a quarter of the bank's assets (40% of which is foreign currency liquidity) or around 60% of customer deposits at end-1Q15. RATING SENSITIVITIES The bank's credit metrics remain sensitive to the performance of the economy and stability of the local currency. The ratings could be downgraded if the weaker operating environment translates into a marked deterioration in the bank's asset quality, performance and capital metrics. Stabilisation of the country's economic prospects would reduce downward pressure on the ratings. The rating actions are as follows: Ameriabank Long-term IDR: published at 'B+', Outlook Negative Short-term IDR: published at 'B' Viability Rating: published at 'b+' Support Rating: published at '5' Support Rating Floor: published at 'No Floor' ============= A U S T R I A ============= CARINTHIA: Austrian Finance Minister Rules Out Insolvency --------------------------------------------------------- Michael Shields at Reuters reports that Austrian Finance Minister Hans Joerg Schelling said the cash-strapped province of Carinthia will not go bust. "No one wants Carinthia to go bust. It is the worst of all solutions, and I rule out from my perspective that it comes to an insolvency," he told Austrian broadcaster ORF on April 30. Carinthia, home province of lender Hypo Alpe Adria, has been hit hard by the bank's failure, the report notes. It is pressing to regain access to borrowing through the federal treasury to avoid running out of cash, and is trying to get Vienna to share the load of more than EUR10 billion (US$11.2 billion) in Hypo debt guarantees it granted, according to the report. Mr. Schelling has offered to help but only if Carinthia adopts financial reforms, says Reuters. Pressed on whether he could exclude the possibility 100 percent, he said: "For me, I rule this out 100 percent," Reuters relays. ============= B E L G I U M ============= CARMEUSE HOLDING: S&P Affirms Then Withdraws 'BB' LT CCR -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Belgian lime producer Carmeuse Holding S.A. We subsequently withdrew the rating at the company's request, said S&P. At the time of the withdrawal, the outlook was stable. On May 1, 2015, Carmeuse fully repaid, in advance, its EUR450 million high-yield bonds due in 2018, replacing it with bank debt at favorable conditions. As a result, Carmeuse has no outstanding rated or public debt, and it asked S&P to withdraw all our ratings. At the time of withdrawal, the rating and stable outlook reflected S&P's core assumption that Carmeuse will be able to sign new, material, long-term bank lines in the short term that help refinance its bridge loan and other debts, while ensuring EUR100 million of availability. S&P said, "The rating reflected our view of Carmeuse's business risk profile as "satisfactory," stemming from the company's strong market position as one of the largest players in the highly fragmented and regional lime market, with 2014 revenues of EUR1.1 billion. Our business risk assessment also captured the company's supportive profitability, with an EBITDA margin higher than 20% and stay-in-business capital expenditure at about 50% of EBITDA. These strengths are, however, partly offset by Carmeuse's exposure to cyclical end markets such as steel, accounting for 21% of revenues in 2013, and building and construction, accounting for 41%. Another constraint relates to the capital-intensive nature of limestone production. "The rating also captured our assessment of Carmeuse's financial risk profile as "significant," given our assumption of funds from operations (FFO) to debt at about 25%, and our view that the company's growth-oriented strategy will likely fully or almost fully absorb free operating cash flow (FOCF) or result in some debt-funded growth capital expenditure or acquisitions. The stable outlook at the time of the withdrawal reflected the balance between a degree of financial leeway at Carmeuse, against the potential for negative FOCF in 2015 as a result of peak capital expenditures due to high investments for expansion. "Under our base-case scenario, we forecast adjusted FFO to debt of about 25% for Carmeuse in 2015, which we saw as commensurate with the rating." ============= D E N M A R K ============= NUNAMINERALS A/S: Greenland Court to Declare Bankruptcy ------------------------------------------------------- NunaMinerals A/S confirmed in the April 19, 2015 company announcement no. 11 that the meeting at which the Court of Greenland can declare bankruptcy is scheduled to take place on Friday, May 15, 2015. Announcement No. 11 reveals that the Company's Board of Directors have decided on filing bankruptcy for NunaMinerals. Prior to the publication of the announcement regarding NunaMinerals' filing for bankruptcy, a letter proposal was made by Greenland Mining Management Ltd. (GMM) on certain conditions. The Government of Greenland, however, as the largest shareholder in NunaMinerals, did not find the proposal acceptable. Subsequently, GMM worked out a new model for NunaMinerals' operations, which is currently being discussed with the government and NunaMinerals. Whether such ongoing discussions may lead to a last minute solution for restructuring NunaMinerals' activities is still very uncertain at this point in time. The Board of Directors will provide a further update to the market as soon as there are any further developments. =========== G R E E C E =========== GREECE: Slips Back Into Recession, Varoufakis Brings Up Debt Swap ----------------------------------------------------------------- The Wall Street Journal's Marcus Walker reports that Greece slipped back into recession in the first quarter, European Union data confirmed on May 13, showing how the confrontation between the Athens government and its creditors and uncertainty about the country's ability to pay its debts is taking a fresh toll on its battered economy. Greek gross domestic product fell 0.2% in the first quarter compared with the previous quarter, according to seasonally adjusted data from the EU's statistics arm, Eurostat, The Journal discloses. That followed a 0.4% contraction in the fourth quarter from the third. Recessions in Europe are commonly defined as two or more successive quarterly contractions in GDP, The Journal relays. Political uncertainty has been weighing on Greece's economy since late 2014, reversing a tentative recovery that began early last year, The Journal notes. Greece's snap elections in January, which resulted in the election of a new government led by the radical-left Syriza party, have led to a monthslong standoff between Athens and its lenders -- the rest of the eurozone and the International Monetary Fund -- about the conditions of fresh bailout aid, The Journal relates. Uncertainty about whether Greece's government might default on its debts this summer, potentially leading to the country's exit from the euro, has unnerved businesses, consumers and bank depositors, The Journal states. The country now finds itself back in the downturn that has wiped out a quarter of its economic output since 2008, according to The Journal. Debt Swap Lefteris Papadimas and Renee Maltezou at Reuters report that Greece's finance minister on May 14 said repayment of what Greece owes to the European Central Bank should be pushed into the future, but it is not an option because it fills ECB chief Mario Draghi's "soul with fear". Yanis Varoufakis said Mr. Draghi, president of the European Central Bank, cannot risk irritating Germany with such a debt swap because of Berlin's objection to his bond-buying program, Reuters relates. Mr. Varoufakis first raised the idea of swapping Greek debt for growth-linked or perpetual bonds when his leftist government came to power earlier this year, but Athens has since dropped the proposal after it got a cool reception from euro zone partners, Reuters recounts. The outspoken minister, who has been sidelined in talks with European Union and International Monetary Fund lenders, brought it up again on May 14, saying EUR27 billion of bonds owed to the ECB after EUR6.7 billion worth are repaid in July and August should be pushed back, Reuters discloses. "What must be done (is that) these 27 billion of bonds that are still held by the ECB should be taken from there and sent overnight to the distant future," Reuters quotes Mr. Varoufakis as saying. "How could this be done? Through a swap. The idea of a swap between the Greek government and the ECB fills Mr. Draghi's soul with fear. Because you know that Mr. Draghi is in a big struggle against the Bundesbank, which is fighting against QE. Mr. Weidmann in particular is opposing it." Mr. Varoufakis was referring to the ECB's quantitative easing (QE) or bond-buying plan and Bundesbank President Jens Weidmann's unabashed criticism of it, Reuters notes. Mr. Varoufakis, as cited by Reuters, said the bond-buying plan is "everything for Mr. Draghi" but that "allowing such a swap of our own new bonds with these bonds . . . would feed Mr. Weidmann with excuses to create problems with the ECB's QE." ============= I R E L A N D ============= ORWELL PARK: Fitch Assigns 'B(EXP)sf' Rating to Class E Notes ------------------------------------------------------------- Fitch Ratings has assigned Orwell Park CLO Limited notes expected ratings, as follows: Class A-1: 'AAA(EXP)sf'; Outlook Stable Class A-2: 'AA+(EXP)sf'; Outlook Stable Class B: 'A(EXP)sf'; Outlook Stable Class C: 'BBB(EXP)sf'; Outlook Stable Class D: 'BB+(EXP)sf'; Outlook Stable Class E: 'B(EXP)sf'; Outlook Stable Subordinated notes: not rated The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Orwell Park CLO Limited is an arbitrage cash flow collateralized loan obligation (CLO). KEY RATING DRIVERS 'B'/'B-' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B'/'B- ' range. The agency has public ratings or credit opinions on all but one of the obligors in the identified portfolio. The covenanted maximum Fitch weighted average rating factor (WARF) for assigning expected ratings is 34. The WARF of the identified portfolio is 32.8. High Recovery Expectations The portfolio will comprise a minimum 90% senior secured obligations. The covenanted minimum weighted average recovery rate (WARR) for assigning expected ratings is 67.5%. The WARR of the identified portfolio is 72.0%. Diversified Asset Portfolio Unlike other CLO 2.0s, this transaction contains a covenant that limits the top 10 obligors in the portfolio to 20% of the portfolio balance. This ensures that the asset portfolio will not be exposed to excessive obligor concentration. Limited Interest Rate Risk Exposure Fitch modelled both a 5% and a 0% fixed-rate bucket in its analysis, and the rated notes can withstand the interest rate mismatch associated with both scenarios. Participation Agreement At closing, the issuer will enter into a participation agreement with Blackstone/GSO Corporate Funding Limited (the seller) regarding the initial portfolio assets. The seller has granted the issuer a fixed charge over the initial portfolio assets while the title is being transferred to the issuer. A fixed charge over such financial assets is difficult to establish, given the lack of control. However, Fitch received a legal opinion that the fixed charge in this case is likely to be upheld, given the control over the accounts of the seller. TRANSACTION SUMMARY Net proceeds from the notes issue will be used to purchase a EUR400 million portfolio of mostly European leveraged loans and bonds. The portfolio is managed by Blackstone/GSO Debt Funds Management Europe Limited. The reinvestment period is scheduled to end in 2019. The transaction documents may be amended subject to rating agency confirmation or noteholder approval. Where rating agency confirmation relates to risk factors, Fitch will analyze the proposed change and may provide a rating action commentary if the change has a negative impact on the ratings. Such amendments may delay the repayment of the notes as long as Fitch's analysis confirms the expected repayment of principal at the legal final maturity. If in the agency's opinion the amendment is risk-neutral from a rating perspective Fitch may decline to comment. Noteholders should be aware that confirmation is considered to be given if Fitch declines to comment. RATING SENSITIVITIES A 25% increase in the obligor default probability would lead to a downgrade of up to three notches for the rated notes. A 25% reduction in expected recovery rates would lead to a downgrade of up to three notches for the rated notes. DATA ADEQUACY The majority of the underlying assets have ratings or credit opinions from Fitch. Fitch has relied on the practices of the relevant Fitch groups to assess the asset portfolio information. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. PERMANENT TSB: S&P Affirms 'B+' Long-Term Rating, Off Watch Neg --------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B+' long-term counterparty credit rating on Permanent TSB PLC (PTSB). "At the same time, we removed the ratings from CreditWatch, where we had initially placed them with negative implications on Oct. 30, 2014. The outlook is positive. We also affirmed the short-term counterparty credit rating at 'B'," S&P said. The affirmation of the ratings reflects our view that the successful completion of the bank's capital raise -- comprising EUR400 million common equity plus EUR125 million additional tier 1 (AT1) securities -- combined with its deleveraging commitments to the European Commission (EC), substantially reduce downside risks to our combined view of the bank's capital and risk positions. We calculate PTSB's risk-adjusted capital (RAC) ratio before diversification adjustments to be 7.8% at end-2014. This represents a significant increase from 6.3% at end-2013, primarily reflecting a decline in Standard & Poor's risk-weighted assets (RWAs) due to an improvement in our view of economic risk in Ireland, some reduction in exposures, and a narrowing of PTSB's statutory pre-tax loss to EUR48 million in 2014 from EUR668 million in 2013. We expect that the RAC ratio will increase further to the 8.5%-9% range by end-2016, a projection that enables us to raise our assessment of capital and earnings to "adequate" from "moderate," as our criteria define these terms. The key assumptions underpinning this forecast are as follows: As a result of the capital raise, total adjusted capital (TAC), the numerator of the RAC ratio, benefits from the additional EUR400 million common equity and the issuance of EUR125 million AT1 securities. The AT1 securities receive intermediate equity credit in line with our criteria. The notes are perpetual instruments and have loss absorption features on a going-concern basis as the bank has the ability to suspend coupons at any time. In line with the EC restructuring plan, disposal of the group's EUR6.5 billion of buy-to-let (BTL) loans from its U.K. CHL portfolio at a discount of 10% of the book value, plus approximately EUR80 million of transaction costs, results in a large statutory loss in 2015 and to a lesser extent in 2016. These disposal losses are partly offset by disposal gains on the sale of the EUR1.7 billion commercial real estate (CRE) portfolio. Overall net interest margin (NIM) continues its trajectory of gradual improvement on the back of lower funding costs and improved margins on new lending, which serve to mitigate the continued drag on margins from tracker mortgages. Loan loss rates remain slightly below 40 basis points (bps) over the forecast horizon, reflecting a lower level of new defaults, adequate provision coverage of nonperforming loans (NPLs), and the disposal of noncore portfolios. Importantly, we do not at this time assume any further provision releases resulting from changes in house price assumptions. Standard & Poor's RWAs decline to reflect announced deleveraging measures. That said, reductions in RWAs lag the decline in gross loans because the U.K. CHL portfolio attracts a lower risk weight relative to Irish mortgage assets. S&P said, "Our assessment of PTSB's risk position as "adequate" continues to reflect our view that the risk weights applied to PTSB's Irish mortgage exposures are sufficiently conservative to capture the risk profile of the loan book. It further reflects our view that unlike other Irish peers, PTSB avoided the worst elements of Irish commercial real estate (CRE) lending. Post the deleveraging measures, PTSB's predominant exposures will be in Irish owner-occupier and BTL mortgages. In this context, we consider that PTSB's reported provision coverage of NPLs at end- 2014 of the core residential mortgage portfolio at 45% is broadly in line with industry norms. Although PTSB's reported headline NPL ratio remains high at 26% (at end-2014), we note the progress PTSB has made to engage with customers and agree on restructuring solutions. Finally, the pace of new defaults slowed materially in 2014 to EUR861 million from EUR1,869 million in 2013. "We have revised upward our assessment of PTSB's liquidity to "moderate" from "weak". This reflects our view that PTSB's liquidity position has improved, with reduced usage of ECB funding (to 15% of total funding in 2014 from 34% in 2011), retirement of a EUR3.1 billion own use bond in late 2014, and the repayment of a EUR1.4 billion medium-term note in early March 2015. PTSB no longer has large or unusual liquidity needs and should be in a position to maintain its current liquidity profile under benign market conditions, in our view. "As a result of the improvement in PTSB's liquidity assessment, we have revised up the stand-alone credit profile (SACP) to 'b+' from 'b'. Nevertheless, we have not raised the issuer credit rating at this time due to the application of a negative notch of adjustment. This adjustment factor reflects the following: Notwithstanding the capital raise, PTSB has some way to go in returning to steady-state, sustainable profitability. The bank is unlikely to be profitable before the second half of 2016 and to report full-year profits before 2017. This compares unfavorably to larger peers Bank of Ireland (BOI) and Allied Irish Banks (AIB), which returned to profitability in 2014. "Despite the progress in addressing NPLs, the high stock of NPLs (and our expectation of a gradual decline) represents tail risk if the Irish economic recovery falters. PTSB's future asset quality evolution is to a large extent predicated on a continuation of Irish macroeconomic recovery, in our view. The positive outlook indicates the likelihood that we could raise the rating (and remove the negative adjustment notch) over the next one to two years if PTSB's pre-provision earnings capacity and statutory profitability improve faster than we currently expect. "We could revise the outlook to stable if we perceive that PTSB's earnings capacity and profitability will continue to materially lag the wider industry." =============== P O R T U G A L =============== LUSITANO SME NO.1: Fitch Raises Class C Notes Rating to 'B-sf' -------------------------------------------------------------- Fitch Ratings has upgraded Lusitano SME No.1 plc's class C notes and affirmed the class A and B notes, as follows: Class A notes affirmed at 'A+sf'', Outlook Stable Class B notes affirmed at 'AAAsf', Outlook Stable Class C notes upgraded to 'B-sf' from 'CCCsf', Outlook Stable Lusitano SME No.1 plc is a cash flow securitization of a EUR862.6 million revolving pool of loans granted to Portuguese small and medium enterprises by Novo Banco. In accordance with the transaction documents, the revolving period ended in February 2010. KEY RATING DRIVERS The upgrade of the class C notes reflects their increase in credit enhancement as a result of the continuing amortization of the underlying portfolio. Over the past year, the class A notes have paid down to 0.8% and the class B and C to 64.7% of their original balance. The class A notes have been affirmed at 'A+sf' as their rating is capped at six notches above the sovereign rating of Portugal (BB+/Positive/B). The Stable Outlook also reflects the 'A+sf' transaction rating cap due to payment interruption risk from the highly volatile reserve fund. The class B notes have been affirmed at 'AAAsf' as the tranche is guaranteed by the European Investment Fund (EIF; AAA/Stable/F1+). The reserve fund is highly volatile and was below its target level as of August and November 2014 payment data, leading to sequential amortization of the notes. In January 2015, the reserve fund was at its required amount and so the notes switched to pro-rata amortization for the fourth times since the inception of the transaction. Further pro-rata amortization is possible if the reserve fund remains at its required amount. Concentration risk has increased as the portfolio pays down. As of the January 2015 investor report, the number of performing obligors in the pool has decreased to 247 from 335 as of the last review and the top 10 obligors have increased to 37.7% from 31.5% of the performing balance. In Fitch's view, the available protection for the rated notes adequately addresses the concentration risk. RATING SENSITIVITIES Fitch incorporated several stress tests to analyze the ratings' sensitivity to a change in the underlying scenarios. The first test simulated an increase of the default probability by 25%, whereas the second test reduced recovery assumptions by 25%. Both tests indicated that the class C notes would be downgraded to 'CCCsf' or below should either scenario materialize. The class A and B notes would not be impacted given the high credit enhancement available and the guarantee of the EIF on the class B notes. =========== R U S S I A =========== ASKO-LIFE: Bank of Russia Suspends Insurance License ---------------------------------------------------- By its Order No. OD-998, dated May 7, 2015, the Bank of Russia suspended the insurance license of Insurance Company ASKO-Life, a limited liability company. The decision is taken due to the insurer's failure to duly meet the Bank of Russia instruction, particularly, financial stability and solvency requirements in terms of creating insurance reserves, procedure and conditions to invest equity and insurance reserve funds. The decision becomes effective the day it is published in the Bank of Russia Bulletin. The suspension of license prohibits the insurance agent from entering into new contracts of insurance and introducing amendments resulting in increase in insurance agent's obligations under the current contracts. The insurance company must accept notifications of claim and meet its obligations. POKROVITEL: Put Under Provisional Administration; License Revoked ----------------------------------------------------------------- The Bank of Russia took a decision to appoint a provisional administration to the insurance company Insurance House Pokrovitel, a limited liability company. The decision to appoint a provisional administration was taken due to the suspension of the Company's insurance license (Bank of Russia Order No. OD-1034, dated 12 May 2015). The powers of the executive bodies of the Company are suspended. Igor Rekunov, member of the non-profit partnership Far-Eastern Interregional Self-Regulatory Organisation of Professional Receivers, has been appointed as a head of the provisional administration. REGIONAL INSURANCE: Bank of Russia Suspends License --------------------------------------------------- By its Order No. OD-997, dated May 7, 2015, the Bank of Russia suspended the insurance license of Regional Insurance Centre, a limited liability company. The decision is taken due to the insurer's failure to duly meet the Bank of Russia instructions, particularly, financial stability and solvency requirements in terms of creating insurance reserves, procedure and conditions to invest equity and insurance reserve funds. The decision becomes effective the day it is published in the Bank of Russia Bulletin. The suspension of license prohibits the insurance agent from entering into new contracts of insurance and introducing amendments resulting in increase in insurance agent's obligations under the current contracts. The insurance company must accept notifications of claim and meet its obligations. ========= S P A I N ========= CM BANCAJA 1: Fitch Affirms 'CCsf' Rating on Class E Notes ---------------------------------------------------------- Fitch Ratings has upgraded CM Bancaja 1, FTA's class B notes and affirmed the others as follows: EUR8.8 million class B (ES0379349014): upgraded to 'AA+sf' from 'Asf'; Outlook Stable EUR14 million class C (ES0379349022): affirmed at 'BBsf', Outlook Stable EUR13.2 million class D (ES0379349030): affirmed at 'Bsf'; Outlook Negative EUR13.8 million class E (ES0379349048): affirmed at 'CCsf'; RE 0% CM Bancaja 1, FTA is a cash flow securitization of a static pool of loans to Spanish SMEs granted by Caja de Ahorros de Valencia Castellon y Alicante (Bancaja, now part of Bankia S.A., BBB- /Negative/F3). The issuer is represented by Titulizacion de Activos SGFT, SA (the Sociedad Gestora), a securitization fund management company incorporated under the laws of Spain. KEY RATING DRIVERS The transaction has significantly deleveraged over the past 12 months, with the class A notes having been paid in full and class B notes representing only 34.7% of its original balance. This has increased the credit enhancement (CE) for the class B C and D notes by 27.4%, 16.4% and 6.0% to 105.0%, 66.0% and 29.4%, respectively. The upgrade of the class B notes to 'AA+sf' is due to the high level of CE. Their rating is capped at six notches above the sovereign rating of Spain (BBB+/Stable/F2). The performing portfolio factor decreased to 6.6% from 9.2% at last review and the number of obligors decreased to 35 from 47. The largest obligor accounts for 14.1% of the transaction and the 10 largest obligors make up 60% of the transaction. As the pool has amortized it has become heavily concentrated. The affirmation reflects both the increased CE and portfolio concentration. The Negative Outlook on the class D notes reflects the notes' exposure to underlying obligor concentration and reliance on future recoveries to pay back noteholders. Current defaults have increased to 14.2% from 8.2% of the outstanding balance (not including defaults) at last review. This is due to a combination of new defaults and smaller outstanding balance as the loans are being paid down. Large obligors move in and out of the delinquency buckets, causing volatile performance over the lifetime of the deal. Loans that are in arrears by 90+ days and by 180+ days have decreased to 0% from16.3% and 2.5% of the outstanding balance, respectively. Both buckets were 1.5% two years ago. The weighted average recovery rate is 48% of the total defaults since closing in September 2005. The reserve fund is slightly under-funded at EUR10.6m with a target amount of EUR13.8m. RATING SENSITIVITIES Fitch has run two sensitivity scenarios. We increased the default probability by 25% and reduced the recovery rate by 25%. Both resulted in a one-notch downgrade of the class D notes. ============= U K R A I N E ============= AZOVMASH: In Debt Restructuring Talks with Banks-Creditors ---------------------------------------------------------- Interfax-Ukraine reports that Azovmash has held negotiations with banks-creditors as part of the plan to restructure its credit liabilities, and a draft "Memorandum of Non-Aggression" has been sent to the banks. Agreements on the extension of payment terms for the period which are enough for restructuring were signed with large banks Ukrainian banks -- Ukreximbank, VTB and Subsidiary Bank of Sberbank of Russia, Interfax-Ukraine says, citing an open letter written by Azovmashinvest Holding Director Keimpe Reitsma to Mariupol Mayor Yuriy Khotlubei, which has been posted on Azovmash's website. The letter said "Unfortunately, we cannot reach an understanding with public JSC Alfa-Bank. We continue working", Interfax-Ukraine relays. Mr. Reitsma, as cited by Interfax-Ukraine, said the company plans to hold a second round of talks in May and expects that the debt restructuring parameters will be reached with all banks and the "Memorandum of Non-Aggression" will be signed. Azovmash is a Ukraine-based heavy engineering company. =========================== U N I T E D K I N G D O M =========================== PAPERLINX: Sells UK Packaging Arm to Antalis -------------------------------------------- Nic White at ProPrint reports that Paperlinx has managed to sell a third piece of its crumbling UK business, offloading the packaging supplies arm to rival Antalis. Meanwhile, senior Paperlinx executives across Europe are jumping ship or being pushed overboard as the company prepares to downsize back to the Asia Pacific, with company secretary Michelle Wong and chief financial officer Joost Smallenbroek both departing, according to ProPrint. The report notes that the three packaging subsidiaries were some of the few parts of the British operation not sent into administration six weeks ago, and are therefore likely still in decent shape despite being up for sale since the rest of it collapsed. According to sister magazine PrintWeek, all 63 staff have been retained and will continue to serve the primarily local client base, all within a 45km radius of the three businesses, the report notes. Antalis Managing Director David Hunter said the three companies have combined turnover of more than GBP20 million (A$39 million), and that he and his team were 'thrilled to bits' at securing the business, the report relays. "We were interested from day one. We looked at all the opportunities Paperlinx had to offer, and had wide-ranging discussions with Deloitte. But these three packaging businesses were the bits we were really interested in," the report quoted Mr. Hunter as saying. REACT ENERGY: Files Petition to Appoint Examiner in High Court -------------------------------------------------------------- REACT Energy plc on May 13 disclosed that the directors of REACT and its related companies Newry Biomass Limited, Enfield Biomass Limited, Reforce Energy Limited, Grass Door Limited and Plymouth Biomass Limited have applied to the High Court in Dublin to seek the appointment of an examiner. REACT and related companies are now under the protection of the court under the examinership procedure. Under Irish Law, the examinership process provides court protection to enable the appointed examiner of companies to put together a scheme of arrangement with creditors with a view to allowing the companies to trade as sustainable businesses post the examinership. REACT and related companies have sought to enter examinership with the objective of restructuring the business to create a sustainable business model which is currently hampered due to funding issues arising from inter alia disputes with landlords and legal actions by certain creditors. The decision to seek examinership follows the suspension of funding discussions with a strategic investor which resulted from a dispute with the landlord on its Enfield site, related difficulties in financing the repowering of its Newry site and actions taken by certain creditors of REACT and related companies. An Independent Accountants' Report from Grant Thornton on REACT and related companies has concluded that it is possible for a sustainable and profitable business to emerge from the examinership process based on a restructuring of REACT and related companies. Altair Group Investment Limited, an existing loan note holder, is prepared to support REACT throughout the examinership process and together with a third party strategic investor have indicated that they would be prepared to invest in REACT to facilitate a scheme of arrangement for the restructured business. REACT also disclosed that as part of the examinership process it has issued a loan note to Altair Group Investment Limited ("Altair") for up to EUR500,000. The proceeds of the loan note will be used to fund the examinership process. The loan note is repayable 14 business days after the end of the examinership period and carries an annual interest rate of 9%. REACT has also signed a Deed of Amendment and Confirmation with Altair the purpose of which is to confirm that the security attaching to the one year GBP1.5 million 9% Secured Loan Note issued to Altair announced on June 24, 2014 comprising a first charge held by REACT in its project operating and development companies, also attaches to further monies advanced by Altair to REACT. REACT Energy plc is a developer and operator of energy infrastructure using clean technologies in the UK and Ireland. The Group was founded in 2005 and listed on the Alternative Investment Market in October 2008. SPHERE & TURRET: In Administration; Fife Stores Closed ------------------------------------------------------ Lori Cormack at Fife Today reports that Sphere & Turret called in administrators on May 13. In Fife, stores in Kirkcaldy, Leven, Glenrothes and Dunfermline have closed, while shops in Forfar, Clydebank, Kirkintilloch, Broughty Ferry, Arbroath and Cumbernauld have also shut down, Fife Today relates. It is believed at least five staff members at that store have been left without a job, with hundreds more across Scotland now unemployed as well, Fife Today discloses. Sphere & Turret is one of Scotland's largest retailers. It has 16 stores across Scotland. TEN SQUARE: In Administration; 84 Jobs Affected ----------------------------------------------- John Mulgrew at Belfast Telegraph reports that a number of staff have been let go at Belfast hotel Ten Square following its administration, with the business owing creditors more than GBP4 million. Now a detailed statement of proposals from the administrators EY has outlined the extent of the business's debts, Belfast Telegraph relays. The hotel -- which was run under the company name of Yorkshire House Ltd. -- had its debt bought from the National Asset Management Agency, the Republic's bad bank, by Promontoria Eagle Ltd. last July, Belfast Telegraph recounts. But the company was "unable to meet its debt when they fell due" and despite "debt restructuring arrangements" being discussed with the directors "negotiations were unsuccessful", Belfast Telegraph notes. That led to administrators being appointed, Belfast Telegraph relays. According to Belfast Telegraph, it owes Promontoria Eagle Ltd., a company which is linked to Cerberus, almost GBP3 million. Yorkshire House Limited also guarantees debt out to Promontoria by its parent company Killynether Ltd., amounting to more than GBP15 million, Belfast Telegraph says, citing administrators. It had employed 84 full and part-time staff, but administrators have said that "unfortunately it has been necessary to make a number of staff redundant" since taking the wheel at the hotel, Belfast Telegraph relates. The four-star venue is now being operated by Ireland's largest hotel firm, Dalata, and being run as normal, Belfast Telegraph discloses. Creditors are now owed around GBP4.2 million from Ten Square, which the report says amounts to "at least 10% of the total debts of the company", Belfast Telegraph notes. According to Belfast Telegraph, the administrators' report also states: "It is highly unlikely that there will be sufficient funds available to enable a distribution to the unsecured creditors other than by virtue of the prescribed act". Ten Square occupies a Grade 1 listed building within Donegall Square called Yorkshire House. THE EMPORIUM: Shuts Down, More Than 100 Stall-Holders Locked Out ---------------------------------------------------------------- Darren Slade at Bournemouth Echo reports that a new indoor shopping attraction has closed at short notice, leaving more than 100 stall-holders locked out. The Emporium opened last month in the former Mostyn's curtain factory in Bridge Street, Christchurch. But the business became insolvent after its two directors had a "falling out" and it has stopped trading, the report relates. According to the report, the business opened on April 18, bringing together arts and crafts businesses in a "village fete-style" atmosphere. It was opened without planning permission, leaving Christchurch councillors to consider a retrospective application, the report says. Bournemouth Echo relates that Gemma Laurent, partner with Bournemouth-based insolvency adviser Mark Liddle Partnership, said a "falling out between the directors" had led to the rent going unpaid. "The business is insolvent. It can't pay its debts when they fall due," the report quotes Ms. Laurent as saying. "It has not been trading long, but there has been a dispute between the directors." The two directors involved in the dispute were 50-50 shareholders in the business, the report notes. "We have been instructed by one of the directors, Leslay-Ann Simmons. She's unable to make any decision to instruct us to put the business into liquidation without the consent of the other director. You need 75 per cent of shareholders to agree," Ms. Laurent, as cited by Bournemouth Echo, as saying. "She has asked us to try to find a resolution." Bournemouth Echo relates that the insolvency advisers would be aiming to contact the other director, Simon O'Sullivan, to see whether the business could resume trading or would have to fold. According to the report, Ms. Laurent said the company employed two full-time staff and there were 117 stall-holders. "The company took all the sales proceeds and then paid out to each trader based on a commission," she said. She understood the business was a week in arrears paying the stall holders, the report adds. X-SUBSEA HOLDING: James Fisher Acquires Assets ---------------------------------------------- StockMarketWire.com reports that James Fisher & Sons has purchased the assets and intellectual property rights of X-Subsea Holding Limited for a total consideration of GBP14.8 million Headquartered in Aberdeen, X-Subsea went into administration on April 27, following the collapse of its Norwegian parent company Reef Subsea AS, according to StockMarketWire.com. The report notes that X-Subsea was a world leading designer and operator of specialized excavation, trenching and dredging equipment, which is rented and operated worldwide for subsea operations in the oil & gas, telecoms and renewable energy sectors. It was the main competitor of James Fisher Mass Flow Excavation, operating from bases in Aberdeen, Dubai, Singapore, and the Gulf of Mexico. Its equipment and tools, many of which are patented, are used in challenging environments to prevent damage to pipelines, cables, structures and the environment, the report adds. =============== X X X X X X X X =============== * BOOK REVIEW: The Money Wars ----------------------------- Author: Roy C. Smith Publisher: Beard Books Softcover: 370 pages List Price: $34.95 Review by David Henderson 121 Get your own personal today at http://www.amazon.com/exec/obidos/ASIN/1893122697/internetbankrupt Business is war by civilized means. It won't get you a tailhook landing on an n aircraft carrier docked in San Diego, but the spoils of war can be glorious to behold. Most executives do not approach business this way. They are content to nudge along their behemoths, cash their options, and pillage their workers. This author calls those managers "inertia ridden." He quotes Carl Icahn describing their companies as run by "gross and widespread incompetent management." In cycles though, the U.S. economy generates a few business warriors with the drive, or hubris, to treat the market as a battlefield. The 1980s saw the last great spectacle of business titans clashing. (The '90s, by contrast, was an era of the investment banks waging war on the gullible.) The Money Wars is the story of the last great buyout boom. Between 1982 and 1988, more than ten thousand transactions were completed within the U.S. alone, aggregating more than $1 trillion of capitalization. Roy Smith has written a breezy read, traversing the reader through an important piece of U.S. history, not just business history. Two thirds of the way through the book, after covering early twentieth century business history, the growth of financial engineering after WWII, the conglomerate era, the RJR-Nabisco story, and the financial machinations of KKR, we finally meet the star of the show, Michael Milken. The picture painted by the author leads the reader to observe that, every now and then, an individual comes along at the right time and place in history who knows exactly where he or she is in that history, and leaves a world-historical footprint as a result. Whatever one may think of Milken's ethics or his priorities, the reader will conclude that he is the greatest financial genius this country has produced since J.P. Morgan. No high-flying financial era has ever happened in this country without the frothy market attracting common criminals, or in some cases making criminals out of weak, but previously honest men (and it always seems to be men). Something there is about testosterone and money. With so many deals being done, insider trading was inevitable. Was Michael Milken guilty of insider trading? Probably, but in all likelihood, everybody who attended his lavish parties, called "Predators' Balls," shared the same information. Why did the Justice Department go after Milken and his firm, Drexel Burnham Lambert with such raw enthusiasm? That history has not yet been written, but Drexel had created a lot of envy and enemies on the Street. When a better history of the period is written, it will be a study in the confluence of forces that made Michael Milken's genius possible: the sclerotic management of irrational conglomerates, a ready market for the junk bonds Milken was selling, and a few malcontent capitalist like Carl Icahn and Ted Turner, who were ready and able to wage their own financial warfare. This book is a must read for any student of business who did not live through any of these fascination financial eras. Roy C. Smith is a professor of entrepreneurship, finance and international business at NYU, and teaches on the faculty there of the Stern School of Business. Prior to 1987, he was a partner at Goldman Sachs. He received a B.S. from the Naval Academy in 1960 and an M.B.A. from Harvard in 1966. ********* 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 * * *