/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150527.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 Wednesday, May 27, 2015, Vol. 16, No. 103 Headlines B U L G A R I A NAFTEX PETROL: Lovech Court Commences Insolvency Proceedings G E R M A N Y KUKA AG: Moody's Alters Outlook on 'Ba2' CFR to Positive G R E E C E GLOBUS MARITIME: E&Y Expresses Going Concern Doubt GREECE: Bailout Talks Show Little Progress as Deadline Looms N E T H E R L A N D S CAIRN CLO V: Moody's Rates EUR7.7MM Class F Notes (P)B2 CHAPEL 2007: Moody's Reviews Ca Ratings on 2 Notes for Upgrade HIGHLANDER EURO II: Moody's Affirms Ba1 Rating on Class D Notes R O M A N I A OLTCHIM SA: Posts EUR844K Loss in First Quarter Ended March 31 * ROMANIA: 60% of Big Companies Face Imminent Insolvency Risk S P A I N PESCANOVA SA: Creditors Back Restructuring Plan for 10 Units U K R A I N E MERCURY BANK: Deposit Guarantee Fund Extends Liquidation Period METINVEST: In Debt Negotiations with Creditors U N I T E D K I N G D O M WISE 2006-1: Moody's Lowers Rating on Class C Notes to Caa3 * UK: Supermarkets Fail to Pay Suppliers on Time, Research Shows * UK: Creates Conciliation Service to Settle Late Payment Dispute ********* =============== B U L G A R I A =============== NAFTEX PETROL: Lovech Court Commences Insolvency Proceedings ------------------------------------------------------------ Slav Okov at Bloomberg News reports that a court in Bulgarian town of Lovech starts insolvency proceedings on creditor's claim against Naftex Petrol. Creditors are claiming collateralized assets of Petrol Group as part of court enforcement, Bloomberg discloses. Naftex Petrol is Petrol's wholesale fuel distribution unit. ============= G E R M A N Y ============= KUKA AG: Moody's Alters Outlook on 'Ba2' CFR to Positive -------------------------------------------------------- Moody's Investors Service changed to positive from stable the outlook on the Ba2 corporate family rating and the Ba2-PD probability of default rating of KUKA AG. Concurrently, Moody's has affirmed these ratings. The rating action recognizes the steps KUKA has taken to further grow and diversify its business, while keeping its capital structure very strong and liquidity healthy. At the end of 2014 KUKA acquired Swisslog, a Swiss company active primarily in logistics and healthcare, for an equivalent of approximately EUR270 million, financed by a combination of cash and new equity. As such its Moody's adjusted debt/EBITDA and retained cash flow (RCF)/net debt remained at very healthy levels of 2.1x and 63% in 2014, respectively, even without any profit contribution from Swisslog in 2014. These levels position KUKA strongly in the Ba2 category. Swisslog will increase KUKA's still fairly small size and decrease its reliance on automotive industry and fairly concentrated customer base of large car manufacturers. Going forward, KUKA's dependence on the automotive industry will decrease to some 50% from over two thirds in 2013, with a focus shifted to inherently more stable end markets. Swisslog, with EBITA margin in low single digit in % terms, will however, initially dilute KUKA's profitability until synergies are realized. The positive outlook also reflects Moody's expectation that KUKA's automotive business will continue enjoying good momentum in the next 12-18 months, which will support healthy free cash flow generation during the period. For an upgrade to Ba1, the rating agency would expect to see a track record of Swisslog being successfully integrated, as exhibited by group EBITA margin, as adjusted by Moody's, moving back to current levels (8.2% in 2014) through 2016 and continued material free cash flow generation. Moody's would also look for continued track record of KUKA maintaining very conservative financial policies and a healthy liquidity profile with substantial headroom under its covenants at all times, while continuing with further diversification of its business. KUKA's Ba2 ratings remain constrained by its vulnerability to the inherent cyclicality of the automotive industry, which can cause volatility in operating profits and cash flow through the economic cycle. This volatility requires the maintenance of a sizeable liquidity cushion in order to cope with cyclical downturns. In addition, the group will need to maintain tight control over cost efficiency and working capital in a competitive environment. The Ba2 ratings also remain constrained by KUKA's relatively small size, high level of customer concentration, still somewhat limited diversification both in terms of industry as well as geography, and strong competition in its markets, with large competitors such as ABB Ltd. (A2 stable). More positively, the Ba2 ratings are supported by KUKA's strong competitive position in its relevant markets with, according to the company, a number one market position in robotics for the automotive industry worldwide, a number one market position in systems (e.g., body-in-white) in the US and number two in Europe, which KUKA has been able to protect over time. The ratings also reflect KUKA's high level of innovation and technology leadership as well as its long-standing customer relationships. The rating agency could consider upgrading KUKA's Ba2 ratings if the company were able to (1) further diversify its business profile in terms of end markets, customer base and geographies; and (2) build on a track record of robust operating performance through the cycle, as exemplified by the ability to generate positive FCF even in an adverse economic environment, while maintaining a solid liquidity cushion and strong capital structure. Moody's could downgrade KUKA's Ba2 ratings if its adjusted gross debt/EBITDA were to rise above 3.0x on a sustained basis (2.0x for the 12-month period to March 2015), for instance driven by a more aggressive approach with regard to shareholder distribution or debt-financed growth. In addition, negative rating pressure could result if (1) KUKA's EBITA margins were to fall below 5% (8.2% in 2014) as a result of the deterioration of its market position or weakening operational efficiency; (2) KUKA's last-12- month FCF turned negative for a prolonged period of time; or (3) its liquidity position weakened. The principal methodology used in these ratings 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. Headquartered in Augsburg, Germany, KUKA AG focuses on robot- supported automation of manufacturing processes and is active in the mechanical and plant engineering sector. After the acquisition of Swisslog end of 2014 the group started operating under three divisions: KUKA Robotics (approximately 30% of group revenues on a pro-forma basis), KUKA Systems (approximately 50%) and Swisslog (roughly 20%). In 2014, KUKA generated revenues of around EUR2.1 billion (excluding Swisslog). KUKA is publicly listed, with Voith GmbH (Baa3 negative), being its largest shareholder holding around 25% stake. =========== G R E E C E =========== GLOBUS MARITIME: E&Y Expresses Going Concern Doubt ----------------------------------------------------- In Globus Maritime Limited's annual report for the year ended Dec. 31, 2014, Ernst & Young (Hellas) Certified Auditors Accountants S.A. expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company reports that it is probable not to be able to meet certain of the restrictive covenants included in certain of its bank loan agreements and meet scheduled debt principal repayments within 2015. As of Dec. 31, 2014, the Company was not in compliance with the security value requirement contained in the Kelty Loan Agreement that requires the market value of the m/v Energy Globe (formerly called m/v Jin Star) and any additional security provided, including the minimum liquidity with the lender, to be equal or greater than 130% of the aggregate principal amount of debt outstanding under the Kelty Loan Agreement. In such circumstances, upon request from the lender, in order to remedy this non-compliance, the Company must either provide the lender acceptable additional security with a net realizable value at least equal to the shortfall, or prepay an amount that will eliminate the shortfall, which as of Dec. 31, 2014 is estimated to be $2.1 million. All the Company's loan arrangements contain cross-default provisions that provide that if it's in default under any of its loan arrangements, the lender of another loan arrangement can declare a default under its other loan arrangement, which could result in default of all of its loan arrangements. Because of the presence of cross-default provisions in the Company's loan arrangements, the refusal of any lender to grant or extend a waiver could result in most of its indebtedness being accelerated, notwithstanding that other lenders have waived covenant defaults under their respective loan arrangements. As of April 30, 2015, the Company was in breach with the minimum liquidity requirement of maintaining at least US$5.0 million contained in its Credit Facility and the DVB Loan Agreement, and the minimum liquidity requirement contained in the HSH Loan Agreement. As of April 30, 2015, none of the Company's lenders had declared an event of default under the relevant loan agreements for which the Company was not in compliance as of December 31, 2014 or currently. However, if these breaches are not remediated, they could constitute potential events of default that may result in the lenders requiring immediate repayment of the loans. The Company reported net income of US$3.21 million on US$26.4 million of time charter revenue in 2014, compared with net income of US$5.68 million on US$29.43 million of time charter revenue in the prior year. The Company's balance sheet at Dec. 31, 2014, showed US$152 million in total assets, US$88.8 million in total liabilities and total stockholders' equity of US$63.3 million. A copy of the Form 20-F filed with the U.S. Securities and Exchange Commission is available at: http://is.gd/ohJF2P Headquartered in Athens, Greece, Globus Maritime Limited owns, operates and manages a fleet of dry bulk vessels that transport iron ore, coal, grain, steel products, cement, alumina and other dry bulk cargoes internationally. The Company conducts its operations through Globus Shipmanagement Corp. GREECE: Bailout Talks Show Little Progress as Deadline Looms ------------------------------------------------------------ Nikos Chrysoloras and Rebecca Christie at Bloomberg News report that there has been little convergence in talks between Greece and its creditors as time runs out to secure a deal before the country needs to make payments to the International Monetary Fund in early June. According to Bloomberg, people familiar with the matter said talks to release bailout funds the country needs to pay the IMF almost EUR1.6 billion (US$1.75 billion) next month have made little progress in recent days. The first of the transfers is due June 5, Bloomberg notes. German Chancellor Angela Merkel and French President Francois Hollande last week set a target of reaching a deal by the end of May, a goal that Prime Minister Alexis Tsipras's spokesman Gabriel Sakellaridis said on May 25 can still be reached, Bloomberg relates. Mr. Sakellaridis, as cited by Bloomberg, key sticking points remain in areas such as budget targets, sales-tax rates, pension and labor market rules. "Unfortunately, a lot of time has been lost," Bloomberg quotes European Central Bank Governing Council member Ardo Hansson as saying in Tallinn, Estonia. "An agreement where underlying principles aren't undermined would be in everyone's interest, but so far it has been progressing very arduously." According to Bloomberg, Greece's standoff with lenders is likely to be a major topic on the sidelines of a Group of seven gathering starting today, May 27, in Dresden, Germany, for finance ministers and central bank governors. Greece has seen liquidity evaporate, pushing the economy back into recession, Bloomberg relays. Record deposit withdrawals and the state's increasing difficulty in meeting debt payments have renewed doubts about the country's ability to stay in the euro, Bloomberg states. The ECB is scheduled to hold a weekly conference call today, May 27, to review the liquidity situation of Greek banks, as well as the discount it applies to the collateral the lenders pledge in exchange for emergency cash, Bloomberg discloses. The banks have lost access to capital markets, forcing them to rely on EUR80 billion of emergency assistance to stay afloat, Bloomberg notes. The ECB can restrict those funds, if it judges that beneficiary lenders are not solvent or don't have enough eligible collateral, Bloomberg states. ===================== N E T H E R L A N D S ===================== CAIRN CLO V: Moody's Rates EUR7.7MM Class F Notes (P)B2 ------------------------------------------------------- Moody's Investors Service assigned the following provisional ratings to notes to be issued by Cairn CLO V B.V.: -- EUR181,800,000 Class A Senior Secured Floating Rate Notes due 2028, Assigned (P)Aaa (sf) -- EUR25,200,000 Class B-1 Senior Secured Floating Rate Notes due 2028, Assigned (P)Aa2 (sf) -- EUR7,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2028, Assigned (P)Aa2 (sf) -- EUR18,750,000 Class C Senior Secured Deferrable Floating Rate Notes due 2028, Assigned (P)A2 (sf) -- EUR15,750,000 Class D Senior Secured Deferrable Floating Rate Notes due 2028, Assigned (P)Baa3 (sf) -- EUR20,200,000 Class E Senior Secured Deferrable Floating Rate Notes due 2028, Assigned (P)Ba2 (sf) -- EUR7,700,000 Class F Senior Secured Deferrable Floating Rate Notes due 2028, Assigned (P)B2 (sf) Moody's issues provisional ratings in advance of the final sale of financial instruments, but these ratings only represent Moody's preliminary credit opinions. Upon a conclusive review of a transaction and associated documentation, Moody's will endeavor to assign definitive ratings. A definitive rating (if any) may differ from a provisional rating. Moody's provisional rating of the rated notes addresses the expected loss posed to noteholders by the legal final maturity of the notes in 2028. The provisional ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Cairn Loan Investments LLP, has sufficient experience and operational capacity and is capable of managing this CLO. Cairn V CLO is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured loans and senior secured bonds and up to 10% of the portfolio may consist of unsecured senior loans, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be at least 65% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. CLI will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four-year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk and credit improved obligations, and are subject to certain restrictions. In addition to the seven classes of notes rated by Moody's, the Issuer will issue EUR 32.15m of subordinated notes which will not be rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Moody's modelled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in February 2014. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's encompasses the assessment of stressed scenarios. Moody's used the following base-case modeling assumptions: - Par amount: EUR 300,000,000 - Diversity Score: 36 - Weighted Average Rating Factor (WARF): 2750 - Weighted Average Spread (WAS): 3.95% - Weighted Average Coupon (WAC): 5.25% - Weighted Average Recovery Rate (WARR): 43.00% - Weighted Average Life (WAL): 8 years. Together with the set of modelling assumptions above, Moody's conducted additional sensitivity analysis, which was an important component in determining the provisional rating assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on each of the rated notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal: Percentage Change in WARF: WARF + 15% (to 3163 from 2750) Ratings Impact in Rating Notches: - Class A Senior Secured Floating Rate Notes: 0 - Class B-1 Senior Secured Floating Rate Notes: -1 - Class B-2 Senior Secured Fixed Rate Notes: -1 - Class C Senior Secured Deferrable Floating Rate Notes: -2 - Class D Senior Secured Deferrable Floating Rate Notes: -1 - Class E Senior Secured Deferrable Floating Rate Notes: -1 - Class F Senior Secured Deferrable Floating Rate Notes: 0 Percentage Change in WARF: WARF +30% (to 3575 from 2750) - Class A Senior Secured Floating Rate Notes: -1 - Class B-1 Senior Secured Floating Rate Notes: -3 - Class B-2 Senior Secured Fixed Rate Notes: -3 - Class C Senior Secured Deferrable Floating Rate Notes: -3 - Class D Senior Secured Deferrable Floating Rate Notes: -1 - Class E Senior Secured Deferrable Floating Rate Notes: -1 - Class F Senior Secured Deferrable Floating Rate Notes: -1 The principal methodology used in this rating was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. CLI 's investment decisions and management of the transaction will also affect the notes' performance. CHAPEL 2007: Moody's Reviews Ca Ratings on 2 Notes for Upgrade -------------------------------------------------------------- Moody's Investors Service placed on review for upgrade its ratings in four transactions backed by loans that the now- bankrupt Dutch DSB Bank N.V. originated: Monastery 2004-I B.V. and Monastery 2006-I B.V., which are residential mortgage-backed securities (RMBS); and Chapel 2003-I B.V. and Chapel 2007 B.V., which are asset-backed securities transactions (ABS). At the same time, Moody's has placed its ratings on the interest rate swap in Chapel 2003-I B.V. and the liquidity facility in Chapel 2007 B.V. on review for upgrade. The review placements follow 1) a pay-out from the DSB Bank N.V. bankruptcy estate, representing a 74% recovery on the special- purpose vehicle's (SPV) counterclaims; 2) current bankruptcy trustees's expectation of borrowers compensations relating to due care claims linked to DSB Bank N.V.'s lending and intermediation practices, which are lower than previously assumed by Moody's; and 3) in Monastery 2006-I B.V. and Monastery 2004-I B.V. senior notes, the review reflects a lower risk of payment disruptions, as mitigants support payment continuity in case of servicer disruption. Borrowers claimed that DSB Bank N.V. did not exercise due care when it, among other things, 1) originated the loans, claiming that the bank allowed loan-to-value (LTV) and debt-to-income ratios that were too high; and 2) sold unnecessary or inappropriately priced insurance products. Due care claims are a legal matter between DSB Bank N.V. and the borrowers, but any claim that is granted a compensation either through a court verdict or through a settlement between the parties exposes securitization SPVs to set-off risk. The framework agreement ratified in November 2014 allows borrowers to offset compensation amounts against their outstanding loan balance and any arrears amounts they might have. This framework has removed a high level of uncertainty regarding 1) the potential amount of the compensations; and 2) the timeline for these compensations. Intertrust Management B.V., director of the SPVs, provided Moody's with expectations of due care claims amounts for all four transactions based on (a) the number of claims already received; (b) the influx of new claims; and (c) the reduced timeline for borrowers to submit their due-care claims: EUR55 million in Chapel 2003-I B.V.;EUR52 million in Chapel 2007 B.V.; EUR6 million in Monastery 2004-I B.V. and EUR13 million in Monastery 2006-I B.V. The revised expectations of due care claims amounts are below the maximum due care claims amounts provided by the bankruptcy trustee in September 2011: EUR75 million in Chapel 2003-1 B.V., EUR85 million in Chapel 2007 B.V., EUR10 million in Monastery 2004-I B.V. and EUR15 million in Monastery 2006-I B.V. Given that borrowers have already made -- and settled -- part of these due care claims, the remaining amounts represent a potential future loss of 6.6% of Chapel 2003-I B.V.'s current pool balance, 3.9% for Chapel 2007 B.V., 0.3% for Monastery 2004- I B.V. and 0.5% for Monastery 2006-I B.V. The remaining potential loss amounts, combined with losses that have already occurred following the due care claims, are lower than Moody's previously assumed. The issuers have counter-claimed the compensation amounts set off against the loans in the respective portfolios from DSB Bank N.V.'s bankruptcy estate. The bankrupt entity obtained a loan (preferred ranking) from Dutch banks, which allowed it to make a material payment distribution in December 2014. This results in a total pay-out of 74% on due care claims to date. Chapel 2007 B.V. already received a 74% pay-out applicable to claims already filed in the bankruptcy on the last payment date in April 2015. The other three transactions should reflect this pay-out on the next payment date, by the end of June 2015. The growth in delinquencies is slowing down in all four portfolios. Delinquencies for more than 90 days has decreased since Q1 2014 in Chapel 2003-I B.V. to currently 1.98% of the current pool balance from 3.00%, and in Chapel 2007 B.V. to 1.38% from 3.11%. The high losses associated with due care claims contributed to the depletion of the reserve fund and the build-up in the unpaid principal deficiency in Chapel 2003-1 B.V. and Chapel 2007 B.V..90+ day delinquencies decreased to 3.32% of the current pool balance from 3.74% in Monastery 2004-I B.V. and from 3.82% in Monastery 2006-I B.V. since Q1- 2014. Following DSB Bank N.V.'s bankruptcy, the bankruptcy trustees entered into a sub-delegation agreement with Quion (not rated). The servicing transfer took place successfully in June 2013. DSB Bank N.V. continues to service the due care claims, with the bankruptcy trustee committed to run-off the portfolio for the next five years. Liquidity facilities represent 3.5% Chapel 2007 B.V., 4.0% of Chapel 2007 B.V., 4.6% of Monastery 2004-I B.V. and 3.5% of Monastery 2006-I B.V.'s note balance. Moody's believes that the liquidity is sufficient to support interest payments on the notes in case of servicer disruption. Moody's have therefore placed Monastery 2004-I B.V. and Monastery 2006-I B.V.'s class A2 notes on review for upgrade. During the review process, Moody's will reassess the loss expectations on the securitized pool for all transactions based on updated estimation of due care claims and potential expected pay-outs and will take into account the collateral performance. Moody's rates the interest rate swap Baa3 (sf) in Chapel 2003-I B.V. and the liquidity facility Baa2 (sf) in Chapel 2007 B.V. These ratings measure the expected losses to the counterparties if the respective issuer is unable to honor its obligations under the referenced financial contracts by maturity. Repayment of the interest rate swap in Chapel 2003-I B.V. and the liquidity facility in Chapel 2007 B.V. rank senior to the rated notes in the payment waterfall. They are linked to the performance of the underlying assets. Therefore, Moody's has placed these counterparty instrument ratings on review for upgrade. The principal methodology used in rating Monastery 2004-I B.V. and Monastery 2006-I B.V. was Moody's Approach to Rating RMBS Using the MILAN Framework published in January 2015. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Please see Moody's Approach to Rating RMBS Using the MILAN Framework for further information on Moody's analysis at the initial rating assignment and the on-going surveillance in RMBS. The principal methodology used in rating Chapel 2003-I B.V. and Chapel 2007 B.V. was Moody's Approach to Rating Consumer Loan- Backed ABS published in January 2015. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include 1) better-than-expected collateral performance; 2) deleveraging of the capital structure 3) lower than- anticipated ultimate borrower compensation amounts; and 4) higher-than-anticipated recovery on the SPV's counterclaims. Factors or circumstances that could lead to a downgrade of the ratings include 1) worse-than-expected collateral performance; 2) deterioration in the notes' available credit enhancement; 3) deterioration in the credit quality of the transaction counterparties; and 4) higher- than-anticipated ultimate borrower compensation amounts. Issuer: Chapel 2003-I B.V. -- EUR890 million A Notes, B2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Downgraded to B2 (sf) -- Interest Rate Swap, Baa3 (sf) Placed Under Review for Possible Upgrade; previously on Jun 5, 2014 Assigned Baa3 (sf) Issuer: Chapel 2007 B.V. -- EUR300 million A2 Notes, B3 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Downgraded to B3 (sf) -- EUR13.8 million B Notes, Ca (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Downgraded to Ca (sf) -- EUR23.5 million C Notes, Ca (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at Ca (sf) -- Liquidity Facility Rating, Baa2 (sf) Placed Under Review for Possible Upgrade; previously on Jun 4, 2013 Assigned Baa2 (sf) Issuer: Monastery 2004-I B.V. -- EUR604.5 million A2 Notes, A2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at A2 (sf) -- EUR24.5 million B Notes, A2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at A2 (sf) -- EUR21.5 million C Notes, A3 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at A3 (sf) -- EUR8.5 million D Notes, Ba2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at Ba2 (sf) -- EUR10.5 million E Notes, Caa2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at Caa2 (sf) Issuer: Monastery 2006-I B.V. -- EUR663.6 million A2 Notes, A2 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at A2 (sf) -- EUR28 million B Notes, Baa1 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at Baa1 (sf) -- EUR28.7 million C Notes, B3 (sf) Placed Under Review for Possible Upgrade; previously on Dec 2, 2011 Confirmed at B3 (sf) HIGHLANDER EURO II: Moody's Affirms Ba1 Rating on Class D Notes --------------------------------------------------------------- Moody's Investors Service has taken the following rating actions on the following notes issued by Highlander Euro CDO II B.V. / Highlander Euro CDO II (Cayman) Ltd.: Issuer: Highlander Euro CDO II B.V. -- EUR479.5 million (EUR285.2 million outstanding) Class A Primary Senior Secured Floating Rate Notes due 2022, Affirmed Aaa (sf); previously on Apr 24, 2014 Upgraded to Aaa (sf) -- EUR56 million Class B Primary Senior Secured Floating Rate Notes due 2022, Upgraded to Aaa (sf); previously on Apr 24, 2014 Upgraded to Aa2 (sf) -- EUR42 million Class C Primary Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to A2 (sf); previously on Apr 24, 2014 Upgraded to A3 (sf) -- EUR28 million Class D Primary Senior Secured Deferrable Floating Rate Notes due 2022, Affirmed Ba1 (sf); previously on Apr 24, 2014 Affirmed Ba1 (sf) Issuer: Highlander Euro CDO II (Cayman) Ltd. -- EUR3 million Class C Secondary Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to A2 (sf); previously on Apr 24, 2014 Upgraded to A3 (sf) -- EUR2.5 million Class D Secondary Senior Secured Deferrable Floating Rate Notes due 2022, Affirmed Ba1 (sf); previously on Apr 24, 2014 Affirmed Ba1 (sf) -- EUR24.5 million (EUR20.7 million outstanding) Class E Secondary Senior Secured Deferrable Floating Rate Notes due 2022, Affirmed Ba3 (sf); previously on Apr 24, 2014 Affirmed Ba3 (sf) The rating actions on the notes are primarily a result of the improvement in over-collateralization ratios over the last four quarterly payment dates. Since the last rating action in April 2014 the Class A notes have amortized by approximately EUR175.55M or 36.6% of their original outstanding balance. Additionally as reported by the trustee in April 2015 the cash balance in the principal account is EUR33.7 million. As a result of the deleveraging, over-collateralization has increased. As of the trustee's April 2015 report, the Class A/ B, Class C, Class D and Class E over-collateralization ratios were 135.30%, 120.47%, 112.26% and 106.87% compared with 122.60%, 113.38%, 107.97% and 104.21% respectively, as of the trustee's April 2014 report. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having a performing par and principal proceeds balance of EUR461.59 million, defaulted par of EUR1.2 million, a weighted average default probability of 19.7% over 4.92 years weighted average life (consistent with a 10 year WARF of 2635), a weighted average recovery rate upon default of 47.20% for a Aaa liability target rating, a diversity score of 33 and a weighted average spread of 3.94%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed that 92.61% of the portfolio exposed to first- lien senior secured corporate assets would recover 50% upon default, while the 1.15% non-first lien corporate assets and 6.22% structured finance assets would recover 15% and 11.5% respectively upon default. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. The principal methodology used in this rating was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. In addition to the base-case analysis, Moody's conducted a sensitivity analyses on the estimated average recovery rate on future defaults. As the portfolio is increasingly becoming less granular the expected loss of the pool could potentially be more exposed to variation in future recovery rates on defaulted assets. Moody's ran a model whereby it decreased the weighted average recovery rate upon default by 5%; the model generated outputs which are within one notch of the base case. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the note, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Additional uncertainty about performance is due to the following: (1) Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. (2) Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. ============= R O M A N I A ============= OLTCHIM SA: Posts EUR844K Loss in First Quarter Ended March 31 -------------------------------------------------------------- Romania-Insider.com reports that Oltchim SA recorded in the first quarter of the year a EUR844,000 loss, 15 times lower than in the same period last year. The loss amounted to EUR12.6 million in the first three months of 2014. Romania-Insider.com discloses that Oltchim's operating income reached EUR39.9 million in the first quarter of this year while the financial one amounted to EUR228,000. Its operating expenses totaled EUR40.3 million while the financial costs reached EUR443,000. The producer's receivables amounted on March 31 to EUR15.1 million and its debts totaled EUR837,000, down 0.3% year-on-year, the report relays. The report says Economy Minister Florin Tudose said earlier this month that three companies are interested in buying Oltchim. Two of them are Chinese and one is European, the report notes. Oltchim SA is a Romanian chemical producer. As reported in Troubled Company Reporter-Europe on Feb. 1, 2013, SeeNews said a court in the southwestern Romanian county of Valcea declared Oltchim insolvent. According to SeeNews, Oltchim said in a statement the court appointed a consortium made up of Rominsolv SPRL and BDO Business Restructuring SPRL as its temporary administrator. The state-controlled company filed for insolvency on Jan. 24, 2013. * ROMANIA: 60% of Big Companies Face Imminent Insolvency Risk ------------------------------------------------------------- Romania-Insider.com reports that about 60% of the companies with assets of over EUR1.5 million are under imminent insolvency risk or in difficulty, said Andrei Cionca, general manager of insolvency firm CITR Group. Mr. Cionca said that in the first three months of 2015, the number of insolvent companies in Romania halved year-on-year. However, 86% of these were companies with no activity, the report relates. "The drop in the insolvency number is an inconclusive quantitative indicator about the state of the Romanian economy," he added, cited by local Mediafax, the report relay. "The companies which were in difficulty and went through insolvency haven't significantly recovered." ========= S P A I N ========= PESCANOVA SA: Creditors Back Restructuring Plan for 10 Units ------------------------------------------------------------ Undercurrent News reports that Pescanova's creditors have backed the restructuring proposal for all ten subsidiaries that filed for voluntary proceedings last year, including Bajamar Septima and Frinova, announced the Spanish financial regulator CNMV. According to the report, breaded and battered fish processor Frinova has avoided liquidation after the majority of creditors (94.37%) voted for the banks' bailout plan, which states that creditors will recover just 4% of their share in the subsidiary's debt. Among the creditors that have backed the restructuring of Frinova are the US bank Morgan Stanley, holding a debt of EUR42 million, Undercurrent News relates citing local newspaper Faro de. In the second creditors' meeting, held on May 22, Pescanova has also seen subsidiaries Pescafina Bacalao, Insuina, Novapesca Trading and Pescapuerta saved from liquidation, as creditors have backed their restructuring plan, the report states. Undercurrent News relates that Pescanova, on May 21, had the first creditors' meeting, in which Bajamar Septima, Frigodis, Frivipesca Chapela and Fricamar also had their restructuring proposal supported by creditors. Bajamar Septima, which it was also feared would face a liquidation in case majority of creditors did not support the bailout plan, received the support from 80.91% of creditors, the report notes. The write-off stated in the proposal for the shrimp processor was 95.9% of its debt. Creditor banks -- or the so-called "G7", that is, Bank Sabadell, Popular, Caixabank, Abanca, BBVA, Bankia and UBI Banca -- hold 31.6% of Bajamar Septima's debt, adds Undercurrent News. Pescanova SA is a Galicia-based fishing company. The company catches, processes, and packages fish on factory ships. It is one of the world's largest fishing groups. Pescanova filed for insolvency on April 15, 2013, on at least EUR1.5 billion (US$2 billion) of debt run up to fuel expansion before economic crisis hit its earnings. The Pontevedra mercantile court in northwestern Galicia accepted Pescanova's insolvency petition on April 25. The court ordered the board of directors to step down and proposed Deloitte as the firm's administrator. ============= U K R A I N E ============= MERCURY BANK: Deposit Guarantee Fund Extends Liquidation Period --------------------------------------------------------------- Ukrainian News Agency reports that the Deposit Guarantee Fund said it has prolonged the liquidation of Mercury Bank until June 11, 2016 inclusive. The decision was taken by the DGF on May 21, 2015, Ukrainian News relates. Viktor Kulish will remain in his role as the bank's provisional administrator, Ukrainian News notes. On May 14, 2014, the DGF took the bank into provisional administration for the period of three months until June 13, Ukrainian News recounts. On June 12, 2014, the DGF launched the liquidation of the bank, Ukrainian News relays. Mercury Bank is based in Kharkiv. METINVEST: In Debt Negotiations with Creditors ---------------------------------------------- Interfax-Ukraine reports that Metinvest CEO Yuriy Ryzhenkov said the company is holding negotiations on the possibility of postponing the fulfillment of its liabilities which expire up until January 2016 with its creditors. "We ask our creditors to give us a chance of postponing the fulfillment of our liabilities for the whole debt of US$3 billion, comprehend the situation at the company and give respite to us until January 31, 2016," Interfax-Ukraine quotes Mr. Ryzhenkov as saying. He said that this concern the entire debt of the group, Interfax- Ukraine notes. While commenting on talks with 2015 note holders who do not support debt restructuring, Mr. Ryzhenkov, as cited by Interfax- Ukraine, said that there is no clarity regarding a meeting of note holders on June 1, 2015. He said that in late 2014, Metinvest proposed restructuring the notes, and 80% of note holders supported the proposal, Interfax- Ukraine relates. The negotiations are being held with 20% of the holders, Interfax-Ukraine discloses. "The rest of them bought the securities with a discount and now they want to receive the whole sum," Mr. Ryzhenkov, as cited by Interfax-Ukraine, said. He said that this troubled sum includes less than 5% of the total debt of the group and 10% of the debt on 2015 notes, Interfax- Ukraine relays. Metinvest is Ukraine's largest mining and metal group. =========================== U N I T E D K I N G D O M =========================== WISE 2006-1: Moody's Lowers Rating on Class C Notes to Caa3 ----------------------------------------------------------- Moody's Investors Service downgraded its ratings of three classes of notes issued by Wise 2006-1 PLC, and the rating of a Super Senior Credit Default Swap entered into by Dexia Credit Local: Issuer: Dexia Credit Local - Super Senior Credit Default Swap WISE 2006-1 PLC -- GBP1436.25 million (current outstanding balance GBP1370 million) Super Senior Swap Notes, Downgraded to Aa2 (sf); previously on Jan 20, 2009 Downgraded to Aa1 (sf) Issuer: WISE 2006-1 PLC -- GBP30 million Class A Credit-Linked Notes due 2058, Downgraded to B1 (sf); previously on Jan 20, 2009 Downgraded to Ba3 (sf) -- GBP22.5 million Class B Credit-Linked Notes due 2058, Downgraded to Caa1 (sf); previously on Jan 20, 2009 Downgraded to B3 (sf) -- GBP11.25 million Class C Credit-Linked Notes due 2058, Downgraded to Caa3 (sf); previously on Jan 20, 2009 Downgraded to Caa2 (sf) The transaction is a synthetic project finance CDO with an underlying portfolio consisting of GBP denominated PFI and regulated utility bonds, each guaranteed by one of seven monolines. The rating actions are primarily a result of the deterioration in the credit quality of the underlying reference portfolio since March 2015. The deterioration in credit quality is largely attributable to the downgrade of the fixed rate guaranteed senior secured bonds issued by Peterborough (Progress Health) plc, a UK based PFI project in the healthcare sector. Peterborough (Progress Health) plc's bonds were initially downgraded to Baa3, on review uncertain, from Baa1 in March 2015; and subsequently further downgraded to Ba3, on review for downgrade, on April 2, 2015. Deterioration in the credit quality is observed through a higher average credit rating of the portfolio (as measured by the weighted average rating factor "WARF"). In particular, the WARF (as calculated by Moody's) has increased to 307.2 as of May 2015 from 229.4 in March 2015. The principal methodology used in this rating was "Moody's Approach to Rating Collateralised Debt Obligations Backed by Project Finance and Infrastructure Assets" published in October 2013. In addition to the base case analysis, Moody's conducted sensitivity analysis on key parameters for the rated notes. Moody's considered a model run where a project with the largest exposure amounting to a 15% of the underlying portfolio, was treated as defaulted. This run generated an output that was within one notch of the base case result. Uncertainty about performance is due to the following: - Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the underlying portfolio. Moody's has assumed the average life of the bonds as reported however legal final maturity could be up to 41 years. - Construction Risk: Around 23% of projects are still in their construction phase. Uncertainty around a successful transition to operation phase could lead to deterioration in the underlying credit quality of the reference portfolio. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating. * UK: Supermarkets Fail to Pay Suppliers on Time, Research Shows ---------------------------------------------------------------- Tracy Ewen, managing director of IGF Invoice Finance, comments on research from Experian revealing that supermarkets are taking more than a month longer than agreed terms to settle debts with suppliers "The payment terms that many suppliers in the UK are subject to are not fit for purpose -- with supermarkets in particular the worst offenders in taking too long to pay their suppliers. Clearly, for many small businesses this isn't a sustainable practice, yet it is a reality that they have very little power to change. The intense cashflow pressures that these firms face should be enough to push the government to adopt the stronger regulatory stance set out in Sajid Javid's Enterprise Bill, which seeks to stop such abuses of power by some of the UK's larger companies. If nothing changes, we may see small companies fold unnecessarily. The macroeconomic impact of this could have damaging repercussions for the economy as a whole. For those firms mired in long payment terms, there are options available that cover the gap between work completed and money in the bank. It's therefore important for firms to thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations." * UK: Creates Conciliation Service to Settle Late Payment Dispute ----------------------------------------------------------------- Secretary of State for Business Sajid Javid on May 19 confirmed the creation of a Small Business Conciliation Service to help settle disputes between small and large businesses, especially over late payment practices. This will form part of the government's new Enterprise Bill. Charles Wilson, CEO of Lovetts the commercial debt recovery legal firm welcomes the move but fears the service will help only a small proportion of firms struggling with late payment of their invoices. Mr. Wilson says: "Just 1% of the debts coming to us for legal intervention are disputed so while this measure is a step in the right direction, it is not really addressing the problem. "Javid needs to focus his efforts on persuading late paying businesses that it is in their economic interests to pay on time. Late payers rely on the reluctance of their suppliers to take firm action against them -- Javid has acknowledged this. The government needs to help small businesses to use the tools and late payment law already available to them to claim late payment compensation and interest. Under the Late Payment law, they can make claims for debts going back six years. In addition, more realistic recoverable legal costs would further discourage late payers from risking court claims, and encourage the new culture that business so badly needs. "Both these measures will send a strong message to habitual late payers that it doesn't pay to delay. If more big businesses were aware of the legal claim their suppliers have to interest, costs and compensation I believe there would be a major change in late payment practices in the UK." ********* 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 * * *