/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150916.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, September 16, 2015, Vol. 16, No. 183 Headlines B E L G I U M LSF9 BALTA: S&P Assigns 'B' CCR & Rates EUR290MM Sr. Notes 'B' G E R M A N Y PRIME 2006-1 FUNDING: S&P Lowers Rating on Class E Notes to D * GERMANY: Corporate Insolvencies Decline in H1 2015 G R E E C E * Moody's: Greek RMBS Performance Remained Stable in 2Q I R E L A N D SLIABH BHREANDAIN: Several Buyers Interested in Kerry Spring N E T H E R L A N D S DALRADIAN EUROPEAN III: Moody's Affirms Ba3 Rating on Cl. X Notes P O R T U G A L BANCO ESPIRITO: Novo Banco Sale Faces Delay After Talks Collapse ENERGIAS DE PORTUGAL: Moody's Rates EUR750MM Hybrid Notes 'Ba2' ENERGIAS DE PORTUGAL: Fitch Rates Sub. Hybrid Securities 'BB' SAGRES STC: S&P Lowers Rating on Class D Notes to 'B-(sf)' R U S S I A FINANCIAL REINSURANCE: Bank of Russia Suspends Licenses GIVA INSURANCE: Bank of Russia Suspends Insurance Licenses S L O V E N I A SCT: Former Owner Faces Personal Bankruptcy S P A I N ABENGOA SA: S&P Affirms 'B+' Ratings, Outlook Stable U K R A I N E OSCHADBANK JSC: Fitch Lowers IDR to 'RD' Then Upgrades to 'CCC' U N I T E D K I N G D O M AMDIPHARM MERCURY: S&P Puts 'B+' CCR on CreditWatch Negative BSS: Owes More Than GBP6.4 Million to Pension Scheme GELDARDS COACHES: Goes Into Administration Following Major Fire MCCLURE NAISMITH: Creditors Unlikely to Recover "Small" Dividend REDCAR: May Go Into Administration After Missed Debt Repayments ********* ============= B E L G I U M ============= LSF9 BALTA: S&P Assigns 'B' CCR & Rates EUR290MM Sr. Notes 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services assigned 'B' long-term corporate credit rating to LSF9 Balta Investments S.a.r.l. (Balta), a holding company of Belgium-based rugs and carpet manufacturer Balta. The outlook is stable. At the same time, S&P assigned its 'B' long-term issue rating to LSF9 Balta Issuer S.A.'s EUR290 million senior secured notes and S&P's 'BB-' long-term issue rating to the EUR40 million super senior revolving credit facility (RCF). S&P has assigned a recovery rating of '4' to the notes, indicating its expectation of average (30%-50%) recovery prospects in the event of a payment default. S&P assigned a recovery rating of '1' to the RCF, indicating its expectation of very high (90%-100%) recovery in the event of a payment default. These ratings are in line with the preliminary ratings S&P assigned to LSF9 Balta Investments on July 20, 2015. The rating on Balta reflects S&P's assessments of the group's "weak" business risk profile and "highly leveraged" financial risk profile. The combination of these assessments leads to an anchor of 'b' or 'b-' under S&P's corporate criteria. S&P selected an anchor of 'b' based on our view that Balta's Standard & Poor's-adjusted debt-to-EBITDA and EBITDA interest coverage ratios are relatively strong compared with "highly leveraged" peers. S&P's base-case assumptions for Balta have not changed materially since S&P assigned the preliminary ratings on July 20, 2015. S&P continues to project that Balta's adjusted debt-to-EBITDA ratio will be in the 4.5x-5.0x range over the next 12-18 months, and that its adjusted EBITDA interest coverage will exceed 2.5x. S&P also expects that Balta's free operating cash flow (FOCF) will be relatively low in absolute terms at less than EUR15 million, owing to capital expenditures over 2015 and 2016. The stable outlook reflects S&P's view that Balta's strong market positions in its niche markets, combined with benefits drawn from past years' efficiency gains and cost savings, will enable it to generate growing revenues and EBITDA over the next 12-18 months. The stable outlook also reflects S&P's view that Balta's adjusted debt-to-EBITDA ratio will be around 4.5x-5x over the next 12-18 months and that its adjusted EBITDA interest coverage will exceed 2.5x. These are relatively strong levels for the 'B' rating, although S&P anticipates that Balta's FOCF will be relatively low in absolute terms at less than EUR15 million owing to large capex in 2015 and 2016. A positive rating action would depend on Balta's financial risk profile strengthening as a result of continuous profitable growth and a consistently improving operating cash flow base. S&P considers that an upgrade would depend on Balta's adjusted debt- to-EBITDA ratio being less than 4.5x on a sustainable basis and FOCF steadily increasing on the back of more moderate capex, all else being equal. S&P could take a negative rating action if Balta's credit ratios weaken to the extent that the EBITDA interest coverage falls below 2x, or if internally generated liquidity weakens through lower profitability or a greater-than-expected increase in capex or working capital. In S&P's view, the most likely cause of pressure on the operating performance of the group would be a loss of customers or due to a prolonged economic slowdown across Europe, constraining revenues. ============= G E R M A N Y ============= PRIME 2006-1 FUNDING: S&P Lowers Rating on Class E Notes to D ------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D(sf)' from 'CC(sf)' its credit rating on PRIME 2006-1 Funding Limited Partnership's class E notes. The downgrade reflects the issuer's failure to repay the remaining note principal balance on Aug. 31, 2015, the legal final maturity date. S&P's ratings in PRIME 2006-1 Funding Limited Partnership address the timely payment of interest and the repayment of principal no later than the legal final maturity date. The issuer did not fully repay the notes on Aug. 31, 2015. In S&P's most recent review of the transaction on April 27, 2015, it noted that the recovery proceeds from the defaulted assets in the transaction were unlikely to be sufficient to fully repay the class E notes' principal on the legal final maturity date. PRIME 2006-1 Funding Limited Partnership is a German transaction backed by a static portfolio of profit participation agreements. * GERMANY: Corporate Insolvencies Decline in H1 2015 ---------------------------------------------------- Alliance News reports that German business insolvencies declined in the first half of the year, a report released by Destatis showed. Local courts registered 11,558 business insolvencies, which was a decrease of 3.9% compared with the same period of last year, the report relays. In relation to the business insolvency requests, the prospective debts owed to creditors amounted to EUR8.9 billion in the first half of 2015. In the first six months of 2014, it totaled EUR14.6 billion, Alliance News discloses. =========== G R E E C E =========== * Moody's: Greek RMBS Performance Remained Stable in 2Q ------------------------------------------------------- The performance of the Greek residential mortgage-backed securities (RMBS) market was stable in the three months ended July 2015, according to the latest indices published by Moody's Investors Service. The 90+ day delinquencies of Greek RMBS transactions rose modestly to 7.3% of the current balance in July 2015, from 6.9% in April 2015. The index of cumulative defaults remained at 2.5% of the original pool balance in July 2015, compared to April 2015. The prepayment rate index increased slightly to 1.5% in July 2015, from 1.3% in April 2015. The outstanding pool balance of Greek RMBS transactions decreased by 2.6% in the quarter, to EUR2,095 million in July 2015 from EUR2,150 million in April 2015, with 6 outstanding repaying deals. On July 3, 2015, Moody's downgraded and placed on review for downgrade the ratings on 14 notes and placed on review for downgrade the ratings on five notes in eight Greek structured finance transactions. This follows the July 1, 2015 actions in which Greece's country ceiling was downgraded to Caa2 from B3 and Greece's sovereign rating was downgraded to Caa3 from Caa2. Greece's sovereign rating remains on review for downgrade. ============= I R E L A N D ============= SLIABH BHREANDAIN: Several Buyers Interested in Kerry Spring ------------------------------------------------------------ Aodhan O'Faolain and Ray Managh at The Irish Times report that several parties are interested in acquiring the troubled bottled mineral water company Kerry Spring Water, the High Court heard on September 7. In July, the High Court appointed insolvency practitioner Myles Kirby as provisional liquidator of Sliabh Bhreandain Teo, trading as Kerry Spring, which runs its manufacturing facility at Ballyferriter, Dingle, Co Kerry. According to the report, the company had sought the appointment of a liquidator stating that it had a deficit of EUR1.1million and was clearly insolvent. Mr. Justice Michael White on Sept. 7 confirmed Mr. Kirby's appointment as liquidator and formally ordered the winding up of the company, the report says. The Irish Times relates that Solicitor Gavin Simons of Amoss Solicitors, for the company, told the court there were several parties interested in acquiring the business. According to the Irish Times, Mr. Simons said that, since his appointment Mr. Kirby had, in the interest of all parties, continued to run the business as a going concern. He said Mr Kirby hoped a sale would be concluded by the end of the month, the report relays. Previously, the court heard the company had sought the appointment of a liquidator on a number of grounds, including the fact that one of its main customers, Dunnes Stores, had decided to stop ordering from Kerry Spring Water, says the Irish Times. This had "a devastating effect" on the company, which had more than 35 employees, the report states. The report says the court had heard that Dunnes Stores had made its decision out of a common problem of an odour from the bottled water and had claimed there had been several complaints about this. The court heard there was no health and safety issue and it was Kerry Spring Water's view that the Dunnes Stores decision to discontinue its orders had been a disproportionate act, adds the Irish Times. ===================== N E T H E R L A N D S ===================== DALRADIAN EUROPEAN III: Moody's Affirms Ba3 Rating on Cl. X Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has taken rating actions on the following classes of notes issued by Dalradian European CLO III B.V.: EUR36M (current balance EUR20.3M) Class B Deferrable Secured Floating Rate Notes due 2023, Affirmed Aaa (sf); previously on Feb 27, 2015 Affirmed Aaa (sf) EUR27M Class C Deferrable Secured Floating Rate Notes due 2023, Upgraded to Aaa (sf); previously on Feb 27, 2015 Upgraded to Aa1 (sf) EUR28.125M Class D Deferrable Secured Floating Rate Notes due 2023, Upgraded to A3 (sf); previously on Feb 27, 2015 Upgraded to Baa3 (sf) EUR16.875M (current balance EUR12.066M) Class E Deferrable Secured Floating Rate Notes due 2023, Upgraded to Ba2 (sf); previously on Feb 27, 2015 Affirmed B1 (sf) EUR6.5M Class X Combination Notes due 2023, Affirmed Ba3 (sf); previously on Feb 27, 2015 Affirmed Ba3 (sf) Dalradian European CLO III B.V., issued in March 2007, is a multi-currency collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans managed by Elgin Capital LLP, a wholly owned subsidiary of N M Rothschild & Sons Limited. Pursuant to full redemption of the Class A-1 Variable Funding Notes in October 2014, non-Euro assets in the portfolio are unhedged. As per the July 31, 2015 trustee report, the unhedged assets amount to GBP 5.9 million and USD 13.4 million respectively. RATINGS RATIONALE According to Moody's, the rating actions taken on the notes are the result of further deleveraging since the last rating action in February 2015 which was based on the December 2014 report. Rated liabilities paid down by EUR 37.8 million on the April 2015 payment date, resulting in an increase in over-collateralization (OC) ratios across the capital structure. As per the trustee report dated July 2015, Class B, Class C, Class D, and Class E OC ratios are reported at 495.07%, 212.29%, 133.10%, and 114.74% compared to December 2014 levels of 229.71%, 156.83%, 117.88, and 106.53%, respectively. Over this period, the reported average credit quality of the portfolio as measured by the weighted average rating factor (WARF) worsened a little from 2330 to 2435, the diversity score reduced from 17 to 13, and the weighted average spread held steady at around 3.8%. The rating of the Combination Notes address the repayment of the Rated Balance on or before the legal final maturity. For Class X the 'Rated Balance' is equal at any time to the principal amount of the Combination Note on the issue date minus the aggregate of all payments made from the issue date to such date, either through interest or principal payments. The Rated Balance may not necessarily correspond to the outstanding notional amount reported by the trustee. 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 of EUR79.79 million and GBP14.48 million, a weighted average default probability of 19.2% (consistent with a WARF of 2650 over a weighted average life of 4.68 years), a weighted average recovery rate upon default of 48.10% for a Aaa liability target rating, a diversity score of 12 and a weighted average spread of 3.81%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed a recovery of 50% on 94.57% of the portfolio exposed to first-lien senior secured corporate assets upon default, and 15% on the 5.43% exposed to non-first-lien loan corporate assets. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. Factors that would lead to an upgrade or downgrade of the rating: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate for the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs that were unchanged for Classes B and C, and within one notch of the base-case results for Classes D and E. 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 because of embedded ambiguities. Additional uncertainty about performance is due to the following: * Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales 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. * Around 11% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. As part of its base case, Moody's has stressed large concentrations of single obligors bearing a credit estimate as described in "Updated Approach to the Usage of Credit Estimates in Rated Transactions," published in October 2009 and available at http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461 * Foreign currency exposure: As noted earlier, there are unhedged GBP and USD assets in the portfolio. Volatility in foreign exchange rates will have a direct impact on interest and principal proceeds available to the transaction, which can affect the expected loss of rated tranches. 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. =============== P O R T U G A L =============== BANCO ESPIRITO: Novo Banco Sale Faces Delay After Talks Collapse ---------------------------------------------------------------- Peter Wise, Martin Arnold and Arash Massoudi at The Financial Times report that Portugal is preparing to cancel a multibillion- euro auction of Novo Banco, the so-called good bank carved out of the ruins of Banco Espirito Santo, after failing to strike a deal with Chinese and US bidders. According to the FT, people familiar with the talks said the sale of the country's third-largest lender is expected to be delayed until after next month's election in Portugal and the results of European Central Bank stress tests of Novo Banco due later this year. "It's better to make a good sale at the right time than to dispose of Novo Banco in a hurry, resulting in higher costs for the financial system," the FT quotes Antonio Pires de Lima, Portugal's economy minister, as saying. Lisbon will have to apply for an extension to the two-year deadline for selling Novo Banco if the sale process drags on beyond August 2016, the FT notes. According to the FT, any funding shortfall found by the ECB stress test, which is expected to be completed within weeks, is likely to be addressed by Novo Banco raising money via an initial public offering or the sale of a minority stake. Of three shortlisted bidders for Novo Banco, two Chinese groups -- Anbang Insurance and Fosun International -- declined to increase their initial binding offers, which were considered too low by the Bank of Portugal, the FT relays, citing people familiar with the talks. People familiar with the process said the Chinese groups had attached too many conditions to their bids, including on the amount of capital they would put in to meet the demands of the ECB stress test, the FT notes. "The Bank of Portugal will close this auction and begin a new one, but only after the ECB stress tests determine how much fresh capital Novo Banco needs," the FT quotes Luis Marques Mendes, a former leader of the ruling Social Democrat party, as saying on Portuguese television. There were "at least two big Spanish banks" interested in participating in the new sales process and potentially "a European group" considering merging Novo Banco with Portugal's Banco BPI, Mr. Marques Mendes, a commentator seen as close to government circles, as cited the FT, said. Portuguese bankers have also been pressing the government to postpone the sale, the FT states. Novo Banco received EUR4.9 billion in fresh capital from Portugal's bank resolution fund, which was boosted by a EUR3.9 billion state loan for the purpose, the FT relates. The fund is owned by all the country's banks and is Novo Banco's sole shareholder, the FT discloses. According to the FT, if the sale of Novo Banco fails to raise the EUR4.9 billion book value of its equity capital, any shortfall would have to be borne proportionately by all Portuguese banks. About Banco Espirito Santo Banco Espirito Santo is a private Portuguese bank based in Lisbon, Portugal. It is 20% owned by Espirito Santo Financial Group. ENERGIAS DE PORTUGAL: Moody's Rates EUR750MM Hybrid Notes 'Ba2' --------------------------------------------------------------- Moody's Investors Service has assigned a definitive Ba2 long-term rating to the EUR750 million 5.375% Fixed to Reset Rate Subordinated Notes due 2075 (the Hybrid) issued by EDP - Energias de Portugal, S.A. (EDP, Baa3 stable). The outlook on the rating is stable, in line with that of EDP's senior unsecured debt ratings. RATINGS RATIONALE The Ba2 rating assigned to the Hybrid is two notches below EDP's senior unsecured issuer rating of Baa3, reflecting the features of the Hybrid. The instrument has a long-dated maturity (60 years), is deeply subordinated and EDP can opt to defer coupons on a cumulative basis. In Moody's view, the Hybrid has equity-like features that allow it to receive basket 'C' treatment (i.e., 50% equity or "hybrid equity credit" and 50% debt for financial leverage purposes). EDP's Baa3/Prime-3 ratings take into account the company's strategic position as Portugal's largest utility, and that its diversified business and geographical mix helped moderate earnings volatility notwithstanding the difficult domestic operating environment in the euro periphery. They also factor in (1) that the Portuguese economy has been on an improving trend since early 2014, after three years of contraction; (2) signs that the tariff deficit borne by Portugal's electricity system is gradually stabilizing, and the lower likelihood that further regulatory cuts will be needed; (3) the continued support of its strategic shareholder, China Three Gorges Corporation; and (4) the group's solid liquidity. The rating incorporates a number of risks, which include: (1) the negative effect of the continuing drought on the profitability, liquidity and capitalization of the group's Brazilian operations; (2) the residual risk that a change in economic and market conditions (and therefore variables including the pace of electricity demand recovery, access tariff increases, and the level of renewable energy system costs) causes the tariff deficit to resume growing beyond 2015, and reduces the appetite for monetization of receivables; and (3) the group's relatively high dividend payout and leverage. Overall, however, the Baa3 reflects our view that these risks are manageable, and can be accommodated at an investment grade rating. RATIONALE FOR STABLE OUTLOOK The stable outlook on EDP's ratings is based upon EDP's continued and consistent delivery of EBITDA growth, capital discipline and deleveraging in accordance with its strategic plan, such that RCF/net debt is sustainably in the low double digits and FFO/net debt in the mid-teens by 2015/16. WHAT COULD CHANGE THE RATING UP/DOWN As the Hybrid rating is positioned relative to another rating of EDP, a change in either (1) Moody's relative notching practice or (2) the Baa3 senior unsecured rating of EDP, could affect the Hybrid rating. The ratings could be upgraded in the event that improving conditions were to be reflected in more rapid and extensive de- leveraging than currently contemplated, such as would be reflected in RCF/net debt in the mid-teens and FFO/net debt of around 20% on a sustainable basis. The ratings could be downgraded if deleveraging were to be significantly delayed or there were a significant downturn in the company's operating environment, as would be evidenced by RCF/net debt and FFO/net debt in single digits and the low-teens respectively. The principal methodology used in this rating was Unregulated Utilities and Unregulated Power Companies published in October 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. EDP - Energias de Portugal, S.A. based in Lisbon, Portugal, is the country's largest vertically integrated utility. The company also has interests in Spain, Brazil and the US. It is active in the renewables sector through EDP Renovaveis, S.A. In 2014, EDP had revenues of EUR16.3 billion. ENERGIAS DE PORTUGAL: Fitch Rates Sub. Hybrid Securities 'BB' ------------------------------------------------------------- Fitch Ratings has assigned EDP - Energias de Portugal, S.A.'s (EDP, BBB-/Stable) deeply subordinated hybrid securities a final rating of 'BB'. The securities qualify for 50% equity credit. The rating reflects the highly subordinated nature of the notes, which Fitch considers to have low recovery prospects in a liquidation or bankruptcy scenario. The equity credit reflects the equity-like characteristics of the instruments including subordination, maturity in excess of five years and deferrable interest coupon payments. Equity credit is limited to 50% given the notes' cumulative interest coupon, a feature considered more debt-like in nature. Fitch understands from the company that hybrid capital will be a long-term strengthening tool for EDP's capital structure. The EUR750 million hybrid capital has a limited weight relative to total debt. The hybrid proceeds are being used for general corporate purposes. The notes' rating and assignment of equity credit are based on Fitch's hybrid methodology, "Treatment and Notching of Hybrids in Non-Financial Corporate and REIT Credit Analysis". KEY RATING DRIVERS FOR THE NOTES Deep Subordination and Deferral Option The notes are rated two notches below EDP's Long-term Issuer Default Rating given their deep subordination and consequently, the lower recovery prospects in a liquidation or bankruptcy scenario relative to the senior obligations of the issuer, and the deferral option. 50% Equity Treatment The securities qualify for 50% equity credit as they meet Fitch's criteria with regard to deep subordination, remaining effective maturity of at least five years, full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics, affording EDP greater financial flexibility. The interest coupon deferrals are cumulative, which results in 50% equity treatment and 50% debt treatment of the hybrid notes by Fitch. This is a feature similar to debt-like securities and reduces the company's financial flexibility. According to Fitch's criteria, the agency would reduce the equity credit of 50% to 0% five years before the effective remaining maturity date. Effective Maturity Date While the notes maturity is 2075, Fitch treats the day on which the replacement language expires as an effective maturity date. Under the instrument's terms, this date coincides with the second step-up date. From this date, the coupon step-up is within Fitch's aggregate threshold rate of 100bps, but the issuer will no longer be subject to replacement language. The replacement language discloses the company's intent to redeem the instrument at any call date, up to the second step-up date, with the proceeds of a similar instrument. The second step-up date is defined as 2036 for five-year and a half non-call hybrid, if the issuer is rated below investment grade by another rating agency 30 days before the first call date. Otherwise, the second step-up date would be 2041 for five- year and a half non-call hybrid. Early Redemption The issuer has the option to redeem the notes on the first call date in 2021, five years after the first call date and on any coupon payment date thereafter. In addition, there are extraordinary call rights in case of adverse changes to tax or rating agency treatment as well as a call right in case of minimum outstanding amounts and a change of control or gross-up event. The change of control, if followed by an event-driven downgrade, is designed to trigger an interest rate increase of 500bps as a way to compensate the creditors. However, the issuer would have the right to redeem the notes in this instance. Fitch's view is that the change of control provision cannot force an event of default as redemption is designed as an option for the issuer and not a right of the creditor, while the 500bps increase is within the limit according to our methodology. Full Ability to Defer EDP can opt to defer coupons on a cumulative basis without any constraint at a given time. The company will be obliged to make a mandatory settlement of deferred interest payments if it chooses to pay cash dividends or make other distributions on junior instruments, including parity securities interest payment, or repurchase of share capital or equally ranked securities. KEY RATING DRIVERS FOR EDP Resilient Operations EDP's 1H15 results confirmed the resilience of the business model and the benefits of diversification, with a 1% yoy increase in recurring EBITDA. This is despite weaker generation in Iberia and Brazil than in 1H14, markedly due to less rain, and positive impact on USD-based earnings from a weaker EUR/USD foreign exchange. Fitch expects funds from operations (FFO) adjusted net leverage to be 5x in 2015, after including the positive impact for the 50% equity content on its EUR750m hybrid issue, which is within our leverage guidelines. The leverage forecast also reflects successful tariff deficit (TD) monetization and good progress in EDP's disposal plan. High Share of Regulated EBITDA EDP's business profile benefits from a high share of regulated or contracted activities (91% of EBITDA in 1H15; 89% in 2014) compared with European utilities peers. However, by 2017 when most long-term contracted revenues in Portugal are liberalized, EDP's exposure to full merchant risk in Iberia will increase to 25% of total EBITDA from 11% in 2014. Long-term contracted generation in Iberia will be at a low 1% of total volume until the PPA/CMEC contracts are terminated, or long-term contracted plants are transferred to the liberalized market. Iberian Tariff Deficit on Track Fitch expects the total stock of electricity tariff deficit (TD) in Portugal to have peaked in 2014 (EUR5.3 billion) and to be stable in 2015 before shrinking. Fitch forecasts EDP's regulatory receivables will be flat in 2015, before declining on the back of an underlying improving trend and EDP's active TD securitization. Fitch expects no TD in Spain in 2014 and a surplus in 2015. In a financially more balanced and sustainable electricity system Fitch would expect regulatory and political risk to decrease but further intervention cannot be ruled out while economic recovery in Spain and Portugal remains fragile. Fitch has assumed that measures implemented to address the TD issue will remain in place, including extending the extraordinary energy sector tax in Portugal. Higher Visibility on Investments EDP is on course to dispose of its EUR2 billion of minorities to China Three Gorges (EDP's main shareholder, A+/Stable), including co-investments, of which EUR1.3 billion has been committed or completed. In addition, the EUR700 million asset rotation plan is over 70% completed. These will help reduce leverage and capex needs. EDP's management strategy for 2014-2017 is to cut capex, focus on favorable markets such as North America for renewables and cost- competitive generation technologies such as new hydro assets in Portugal and contracted capacity (PPAs) in Brazil. This strategy is in line with management's low-risk approach to cope with a complex market, both domestically and internationally. Debt Reduction Strategy One of the key targets of EDP's 2014-2017 management strategy is to reduce net debt (adjusted by regulatory receivables) to EBITDA to about 3.0x in 2017 from 4.0x in 2013. The company expects this improvement to come from lower net investments and new capacity additions. Fitch's rating case shows FFO adjusted net leverage trending below 5x from 2015 from 5.6x in 2013. Fitch's leverage calculation does not deduct outstanding TD receivables from net debt until these receivables have been monetized, for instance through TD securitization. KEY ASSUMPTIONS -- EBITDA at EUR3.7 billion in 2015 and low single-digit CAGR for 2015 to 2017, driven by wind & hydro organic growth and efficiency improvements. -- Average capex EUR1.3 billion per year for 2015-2017 -- Stable dividends of EUR0.185 per share (floor) -- Around EUR500 million of additional disposals up to 2017. -- Excess free cash flow (FCF) (after dividends) deployed for de-leveraging. -- Stable Portuguese regulatory receivables on balance sheet for 2015 before moderately declining in 2016 and 2017. This implies EDP will continue with TD securitization over the same period. No new TD in Spain. -- New EUR750 million hybrid issue with 50% of equity content in 2015, improving FFO adjusted net leverage by 0.1x. No coupon deferral in 2015-2017. RATING SENSITIVITIES Positive: An upgrade of the issuer is unlikely in the short term unless leverage improves sooner than 2016. Other future developments that may lead to positive rating action include: -- A sustained return to positive FCF driven by stronger recovery of demand and prices on the Iberian electricity market. -- The consolidation of the new regulatory framework both in Spain and Portugal showing a sustainable narrowing of the TD in both countries. -- FFO adjusted net leverage trending towards 4.5x and FFO interest coverage above 4.0x on a sustained basis. Negative: Future developments that may lead to negative rating action include: -- Slower-than-expected deleverage leading to FFO adjusted net leverage above 5.0x and FFO interest coverage below 3.5x on a sustained basis. -- Substantial deterioration of the operating environment or further government measures that substantially reduce cash flows. -- A downgrade of the sovereign by three notches to 'B+', which would likely lead to a one-notch downgrade of EDP's Long-term ratings, although this is a remote possibility given the positive trajectory of Portugal's sovereign rating (BB+/Positive). LIQUIDITY As of end-June 2015 committed facilities plus cash on hand amounted to EUR5 billion, versus debt maturities of EUR4.3 billion up to 2016. Fitch expects the company to generate moderate positive FCF in 2015 and 2016. During 1H15 EDP refinanced high-cost bank debt and extended average debt maturity to 4.6 years. EDP's liquidity is sufficient to cover its refinancing needs over the next 24 months. FULL LIST OF RATINGS EDP - Energias de Portugal, S.A. Long-term IDR of 'BBB-', Outlook Stable Short-term IDR of 'F3' Senior unsecured rating of 'BBB-' Subordinated hybrid capital securities assigned rating of 'BB' EDP Finance BV Long-term IDR of 'BBB-', Outlook Stable Short- term IDR of 'F3' Senior unsecured rating of 'BBB-' Hidroelectrica del Cantabrico, S.A. Long-term IDR of 'BBB-', Outlook Stable Short- term IDR of 'F3' SAGRES STC: S&P Lowers Rating on Class D Notes to 'B-(sf)' ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB+ (sf)' and 'BB (sf)' credit ratings on SAGRES STC - Douro Mortgages No.1's class A and B notes, respectively. At the same time, S&P has lowered to 'B+ (sf)' from 'BB (sf)' and to 'B- (sf)' from 'BB- (sf)' its ratings on the class C and D notes, respectively. Upon publishing its updated criteria for Portuguese residential mortgage-backed securities (RMBS criteria), S&P placed those ratings that could potentially be affected "under criteria observation". Following S&P's review of this transaction, its ratings that could potentially be affected by the criteria are no longer under criteria observation. The rating actions follow S&P's credit and cash flow analysis of the most recent transaction information that it has received as of June 2015. S&P's analysis reflects the application of its RMBS criteria. Credit enhancement, excluding loans in arrears for more than 12 months, has remained stable since S&P's previous review. Class Available credit enhancement (%) A 6.01 B 3.99 C 2.15 D 0.61 This transaction features an amortizing reserve fund, which currently represents 1.60% of the outstanding balance of the notes and is at its target level. Severe delinquencies of more than 90 days at 0.52% are on average lower for this transaction than S&P's Portuguese RMBS index. Total arrears peaked at 1.8% in June 2012. Since 2013, arrears have decreased and have stabilized at about 1.1%. Arrears remain below the Portuguese RMBS delinquency index. In March 2015, there was a slight increase in arrears to 1.5%, but this has come down to 1.1% on the latest payment date. Defaults are defined as mortgage loans in arrears for more than 360 days in this transaction. Cumulative defaults, at 1%, are also lower than in other Portuguese RMBS transactions that S&P rates. Prepayment levels remain low and the transaction is unlikely to pay down significantly in the near term, in S&P's opinion. After applying S&P's RMBS criteria to this transaction, its credit analysis results show an increase in the weighted-average foreclosure frequency (WAFF) and an increase in the weighted- average loss severity (WALS) for each rating level. Rating level WAFF (%) WALS (%) AAA 15.01 16.18 AA 11.09 13.23 A 8.98 8.32 BBB 6.57 6.15 BB 4.13 4.80 B 3.40 3.71 The increase in the WAFF is mainly due to the geographic concentration and the use of the weighted-average original loan- to-value (OLTV) ratio in the WAFF calculation. A penalty of 1.25x is applied on 56.55% of the pool as province concentration in Cavado, Grande Lisboa, Setubal, Grande Porto, Oeste, and Alentejo Litoral exceeds the limit set by the RMBS criteria. In addition to this, 23.06% of the pool is located in Lisbon, which attracts a 1.10x penalty unless the previous 1.25x province penalty is already applied. At the same time, seasoning partially offsets the negative effect of geographic concentration and the weighted-average OLTV ratio. This is because S&P's updated criteria give greater credit to well-seasoned pools. Douro Mortgages No. 1 has a weighted-average seasoning of 12.08 years, which means that most of the loans will have a 0.5x adjustment. The increase in the WALS is mainly due to the application of S&P's revised market value decline assumptions and the indexing of its valuations under its RMBS criteria. The overall effect is an increase in the required credit coverage for each rating level. Following the application of S&P's RMBS criteria, its current counterparty criteria, and considering its criteria for rating single-jurisdiction securitizations above the sovereign foreign currency rating (RAS criteria), S&P has determined that its assigned rating on each class of notes in this transaction should be the lower of (i) the rating as capped by S&P's RAS criteria, (ii) the rating that the class of notes can attain under S&P's RMBS criteria, and (iii) the rating as capped by S&P's current counterparty criteria. In this transaction, S&P's unsolicited long-term rating on the Republic of Portugal (BB/Positive/B) constrains its ratings on the class A and B notes. Under S&P's RAS criteria, it applied a hypothetical sovereign default stress test to determine whether a tranche has sufficient credit and structural support to withstand a sovereign default and so repay timely interest and principal by legal final maturity. S&P's RAS criteria designate the country risk sensitivity for RMBS as "moderate". Under S&P's RAS criteria, this transaction's notes can therefore be rated four notches above the sovereign rating, if they have sufficient credit enhancement to pass a minimum of a "severe" stress. However, as not all of the conditions in paragraph 44 of the RAS criteria are met, S&P cannot assign any additional notches of uplift to the ratings in this transaction. The class A notes have sufficient available credit enhancement to withstand the stresses that are commensurate with a 'BBB+' rating level under S&P's RMBS criteria. These notes can withstand the severe stress under S&P's RAS criteria, and are consequently eligible for a four-notch rating uplift above the sovereign. S&P has therefore affirmed its 'BBB+ (sf)' rating on the class A notes. The class B notes fail S&P's RAS stress, and are therefore ineligible for a rating uplift above its rating on the sovereign. They have sufficient available credit enhancement to withstand the stresses that are commensurate with a 'BB' rating level under S&P's RMBS criteria. S&P has therefore affirmed its 'BB (sf)' rating on the class B notes. Banco BPI S.A. (BB-/Negative/B) provides an interest rate swap to the transaction. In S&P's analysis of the class A and B notes, it do not give credit to this swap. Under S&P's current counterparty criteria, if it deems a swap provider to be ineligible, the rating on any supported class of notes is capped at the long-term issuer credit rating (ICR) on the swap provider. Consequently, S&P's ratings on the class A and B notes are delinked from the ICR on the swap provider. The available credit enhancement for the class C and D notes is insufficient to withstand any additional stresses under S&P's RAS criteria and it can therefore apply no uplift above the sovereign rating. However, S&P believes that their available credit enhancement is commensurate with 'B+ (sf)' and 'B- (sf)' ratings, respectively, based on S&P's RMBS criteria. S&P has therefore lowered to 'B+ (sf)' from 'BB (sf)' and to 'B- (sf)' from 'BB- (sf)' its ratings on the class C and D notes, respectively. In S&P's analysis of the class C and D notes, it gives credit to the swap. Thus, the ratings on these classes of notes are weak- linked to the ICRs on the swap providers. S&P also considers credit stability in its analysis. To reflect moderate stress conditions, S&P adjusted its WAFF assumptions by assuming additional arrears of 8% for one- and three-year horizons. This did not result in S&P's rating deteriorating below the maximum projected deterioration that it would associate with each relevant rating level, as outlined in S&P's credit stability criteria. In S&P's opinion, the outlook for the Portuguese residential mortgage and real estate market is not benign and S&P has therefore increased its expected 'B' foreclosure frequency assumption to 3.33% from 2.00%, when it applies its RMBS criteria, to reflect this view. S&P bases these assumptions on its expectation of modest economic growth, continuing high unemployment, and sluggish house price appreciation for the remainder of 2015 and 2016. On the back of the weak macroeconomic conditions, S&P doesn't expect the performance of the transactions in its Portuguese RMBS index to significantly improve in 2015. S&P expects severe arrears in the portfolio to remain at their current levels, as there are a number of downside risks. These include weak economic growth and high unemployment. On the positive side, S&P expects interest rates to remain low. SAGRES STC - Douro Mortgages No.1 is a Portuguese RMBS transaction, which closed in November 2005 and securitizes first- ranking mortgage loans. Banco BPI originated the pool, which comprises loans backed by properties in Portugal. RATINGS LIST SAGRES STC - Douro Mortgages No.1 EUR1.509 Billion Mortgage-Backed Floating-Rate Securitisation Notes Class Rating Rating To From Ratings Affirmed A BBB+ (sf) B BB (sf) Ratings Lowered C B+ (sf) BB (sf) D B- (sf) BB- (sf) =========== R U S S I A =========== FINANCIAL REINSURANCE: Bank of Russia Suspends Licenses ------------------------------------------------------- The Bank of Russia, by its Order No. OD-2392 dated September 10, 2015, suspended the reinsurance licenses of Financial Reinsurance Company, LLC. The decision is taken due to the insurer's failure to duly follow a Bank of Russia instruction, namely, its non-compliance with the requirements of financial sustainability and solvency in terms of securing insurance reserves, procedure and conditions to invest capital and insurance reserve funds. The decision becomes effective the day it is published in the Bank of Russia Bulletin. Suspended license of the insurance agent shall mean a prohibition on entering into insurance contracts, and also on amending respective contracts resulting in increase in the existing obligations of the insurance agent. GIVA INSURANCE: Bank of Russia Suspends Insurance Licenses ---------------------------------------------------------- The Bank of Russia, by its Order No. OD-2393 dated September 10, 2015, suspended insurance and reinsurance licenses of GIVA Insurance Company, LLC. The decision is taken due to the insurer's failure to duly follow Bank of Russia instructions, namely, its non-compliance with the requirements of financial sustainability and solvency in terms of securing insurance reserves, procedure and conditions to invest capital and insurance reserve funds. The decision becomes effective the day it is published in the Bank of Russia Bulletin. Suspended license of the insurance agent shall mean a prohibition on entering into insurance contracts, and also on amending respective contracts resulting in increase in the existing obligations of the insurance agent. The insurance agent shall accept applications on the occurrence of insured events and perform its obligations. =============== S L O V E N I A =============== SCT: Former Owner Faces Personal Bankruptcy ------------------------------------------- STA reports that Slovenia's Ljubljana District Court launched on Sept. 14, 2015, a procedure to put Ivan Zidar, SCT's former boss, into personal bankruptcy. As reported by the Troubled Company Reporter on June 17, 2011, Slovenia Times reported that the District Court launched receivership proceedings at SCT, which withdrew its proposal for debt restructuring following months of efforts to stave off bankruptcy. SCT is a construction company based in Slovenia. ========= S P A I N ========= ABENGOA SA: S&P Affirms 'B+' Ratings, Outlook Stable ---------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' ratings on Spanish engineering and construction company Abengoa S.A. The outlook is stable. At the same time, S&P affirmed the 'B+' issue rating on the senior unsecured notes issued by Abengoa, Abengoa Finance S.A.U., and Abengoa Greenfield, S.A. The recovery rating on these notes remains unchanged at '4', indicating S&P's expectation of average (30%-50%) recovery prospects for noteholders in the event of a payment default. S&P's recovery expectations are in the lower half of this range. The affirmation reflects S&P's view that, despite revising its capex upward for fiscal 2015 (ending Dec. 31, 2015), Abengoa still exhibits "adequate" liquidity under S&P's criteria. S&P notes that management continues to press on with plans to raise funds and bolster liquidity via a EUR650 million rights issue and asset disposal program. Abengoa recently revised upward its capex projections for the remainder of fiscal 2015. This relates primarily to flagship projects in South America, where it has become more challenging for Abengoa to secure further tranches of nonrecourse debt finance to continue building. S&P understands that Abengoa has therefore decided to complete these projects with its own cash and then refinance the assets once they are operational; this is why it is undertaking credit-positive cash raising measures (including the rights issue and asset disposals). On the other hand, the higher capex has weakened Abengoa's ratios -- specifically OCF to debt -- much more than S&P had previously assumed. This is why S&P is revising the financial risk profile to "highly leveraged" from "aggressive." S&P continues to assess Abengoa's business risk as "fair," despite the fact that it excludes the concession business. S&P's view of Abengoa's competitive position also benefits from reputed technical abilities and proprietary technology, especially in the solar power generation business. S&P assess Abengoa's management and governance as "fair." Management continues to execute and deliver on numerous initiatives as it works toward a more asset-light business model. However, S&P notes that its communication with the investor community has been poor in the past. S&P continues to view Abengoa's corporate structure as complex. S&P's base case assumes: -- Muted 1% economic growth in the eurozone, where the group generates 25% of its total revenues, but stronger growth in the U.S. of 2.4% and in Asia-Pacific of 5.7%. -- A strong E&C backlog of EUR8.6 billion (2x of 2014 division revenues) and increasing revenues from the concession business, albeit partially offset by muted performance of the Bioenergy segment. -- Corporate EBITDA to EUR0.9 billion-EUR0.95 billion in 2015. Based on these assumptions, S&P arrives at these core credit measures, which are on the border of the "aggressive" and "highly leveraged" financial risk profile categories: -- Debt to EBITDA of just less than 5x. -- Funds from operations (FFO) to debt of 11%-12%. The stable outlook reflects S&P's view that Abengoa will continue to successfully execute projects and dispose of assets as management moves toward an "asset light" business model. S&P considers ratings upside to be limited at this stage given the element of execution risk associated with the planned EUR650 million rights issue and asset sales. Also, increased capex and significantly negative OCF to debt means that the group's financial risk profile will likely remain "highly leveraged" for the next 12-18 months. S&P is also mindful that project funding conditions in some of Abengoa's key markets, such as Brazil, have become tougher and that this trend may continue over the medium term. Absent the completion either of the rights issue or the planned asset sales, Abengoa's liquidity will come under pressure just after S&P's 12-month rating horizon. In this case, S&P could lower its ratings on the group. S&P could also consider a downgrade if the group were to financially support any concession assets. S&P could also lower the rating if future working capital demands and/or capex rose higher than S&P's base case, resulting in Abengoa's liquidity position weakening to "less than adequate". ============= U K R A I N E ============= OSCHADBANK JSC: Fitch Lowers IDR to 'RD' Then Upgrades to 'CCC' -------------------------------------------------------------- Fitch Ratings has downgraded JSC State Savings Bank of Ukraine's (Oschadbank) Long-term foreign currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'C' and then upgraded it to 'CCC'. The rating actions follow the completion of the bank's external debt restructuring. KEY RATING DRIVERS IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT Fitch downgraded Oschadbank's Long-term and short-term foreign currency IDRs to 'RD' from 'C' following the completion of the restructuring of its USD700 million and USD500 million eurobonds due in March 2016 and March 2018, respectively. The restructuring terms included the extension of these bonds' maturity and increase in coupon rates. In accordance with Fitch's distressed debt exchange (DDE) criteria, a DDE is deemed to have occurred if a restructuring imposes a material reduction in terms (including extension of maturity) compared with the original contractual terms of an entity's financial obligations, and the restructuring is conducted to avoid bankruptcy, insolvency or intervention proceedings, or a payment default. The downgrade of Oschadbank's IDR reflects Fitch's view that the bank's debt restructuring terms meet these criteria. The affirmation of the bank's Viability Rating (VR) at 'ccc', the upgrade of the foreign currency Long-term IDR to 'CCC' and the assignment of 'CCC' ratings to the new senior unsecured debt issues reflect Fitch's assessment of the bank's standalone credit profile following its debt restructuring. In particular, the debt exchange (which affected USD1.2 billion of eurobonds, accounting for 20% of end-1H15 liabilities) has contributed to a significant lengthening of the bank's external debt maturity profile, thereby reducing refinancing risks. In Fitch's view, the bank's foreign currency liquidity at end-1H15 (comprising cash and equivalents and short-term interbank placements) was sufficient to meet near-term wholesale funding maturities even prior to the restructuring. However, Fitch also notes that stability of the bank's highly dollarized deposit base is key to maintaining FX liquidity. The bank's VR and IDRs also consider its (i) reasonable liquidity in local currency, underpinned by holdings of unpledged government securities eligible for refinancing with the National Bank of Ukraine (15% of end-1H15 assets); (ii) stabilization trends in deposit funding, supported by the growing share of public sector accounts (16% at end-1Q15; end-2014: 10%); (iii) reasonable 95% coverage by specific reserves of non-performing loans (NPLs; loans more than 90 days overdue; end-1H15: 25% of loans); and (iv) the bank's compliance with prudential capital requirements (end-8M15: regulatory capital ratio of 13.9% vs. minimum level of 10%). The ratings remain constrained by the highly stressed operating environment, and resultant pressure on the bank's credit metrics and performance. Credit risks are also heightened by the large borrower concentrations and the material share of FX lending (43% of net loans), mostly to effectively unhedged borrowers, whose debt servicing capacity has been significantly constrained by the recent large hryvnia (UAH) devaluation. Most of these exposures either became NPLs or have been restructured to contribute to the large stock of restructured/rolled-over exposures (end-1H15: 50% of loans, including a restructured loan, 15% of loans, to NJSC Naftogas of Ukraine; CC). These were only modestly provisioned, creating potential for significant future increases in credit losses. Recovery prospects will depend on the performance of the domestic economy and the stability of the UAH. The large exposure to the sovereign through government debt holdings (domestic debt, mostly UAH-denominated, and so not part of the expected sovereign debt restructuring) and public sector more generally (together at 5.5x Fitch Core Capital at end-1Q15) results in a significant correlation between the credit profiles of Oschadbank and the sovereign. Additional loss absorption capacity is limited. At end-8M15, the bank could have increased its impairment reserves by only 5% without breaching regulatory capital requirements. Pre- impairment profit was negative in 2014-1Q15, meaning that Oschadbank is likely to need further capital support if performance does not improve and recognition of asset quality problems continues. The latter is also likely as a result of the regulatory asset quality review and capital stress test, which is expected to be finalised in the coming weeks. SUPPORT RATING AND SUPPORT RATING FLOOR The bank's Support Rating (SR) of '5' and Support Rating Floor (SRF) of 'No Floor' reflect Fitch's view of the Ukrainian authorities' still limited ability to provide support to the bank, in particular in foreign currency, in case of need, as indicated by the sovereign's 'C' Long-term foreign currency IDR. However, the propensity to provide support to the bank remains high, in our view, in particular in local currency, given the bank's 100% state ownership, policy role, high systemic importance, and the track record of capital support for the bank under different governments. RATING SENSITIVITIES IDRS, VR, NATIONAL RATINGS AND SENIOR DEBT The bank's VR, IDRs and senior debt ratings would not be downgraded in case of a further sovereign downgrade/debt restructuring, as the bank's low ratings already reflect very high levels of credit risk. However, the bank's IDRs and debt ratings could be downgraded in case of transfer and convertibility restrictions being imposed, which would restrict its ability to service its obligations. The bank's ratings are also likely to be downgraded if further deterioration in asset quality results in capital erosion, without sufficient support being provided by the authorities, or if deposit outflows sharply erode the bank's liquidity, in particular in foreign currency. Stabilization of the sovereign's credit profile and the country's economic prospects would reduce pressure on the ratings. SUPPORT RATING AND SUPPORT RATING FLOOR The SR could be upgraded and the SRF revised upwards if Fitch markedly revises its view of the authorities' ability to provide timely support to the bank, in particular, in foreign currency. However, this is unlikely in the near term, given the country's weak external finances and expected sovereign external debt restructuring. The rating actions are: Long-term foreign currency IDR: downgraded to 'RD' from 'C'; then upgraded to 'CCC' Long-term local currency IDR: affirmed at 'CCC' Cancelled senior unsecured debt of SSB No.1 PLC [XS0594294695, XS0906434872]: affirmed and withdrawn at 'C', Recovery Rating 'RR4' Newly issued senior unsecured debt of SSB No.1 PLC [XS1273033719, XS1273034444, XS1273034360]: assigned at 'CCC', Recovery Rating 'RR4' Short-term foreign currency IDR: downgraded to 'RD' from 'C'; then upgraded to 'C' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Viability Rating: affirmed at 'ccc' National Long-term rating: affirmed at 'AA-(ukr)'; Outlook Stable =========================== U N I T E D K I N G D O M =========================== AMDIPHARM MERCURY: S&P Puts 'B+' CCR on CreditWatch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services placed on CreditWatch with negative implications its 'B+' long-term corporate credit rating on U.K.-based pharmaceutical company Amdipharm Mercury Debtco Ltd. (AMCO) and its 'B+' issue ratings on AMCO's senior facilities. S&P is placing its corporate credit rating and issue ratings on CreditWatch following the recent announcement that Concordia Healthcare Corp. has reached a definitive agreement to acquire AMCO for US$3.3 billion. S&P's 'B' rating on Concordia is not affected by the acquisition as the acquisition is consistent with S&P's expectation that it would make acquisitions to expand its product portfolio. Although the acquisition meaningfully expands Concordia's size, scale, breadth of product offerings, and geographic reach, S&P continues to assess its business risk profile as "weak," given its relatively small scale and short track record compared with its higher-rated peers. Concordia will use a mix of debt and equity to fund acquisitions, but S&P estimates that pro forma leverage will increase significantly to about 6x-7x over the next year, from under 5x as of June 30, 2015. That said, this level remains in line with S&P's assessment of its financial risk profile as "highly leveraged." S&P aims to resolve the CreditWatch placement upon successful completion of the acquisition by Concordia, which is expected to be in the fourth quarter of 2015. S&P expects to align its corporate credit rating on AMCO with that on Concordia. BSS: Owes More Than GBP6.4 Million to Pension Scheme ---------------------------------------------------- David Ainsworth at Civil Society reports that helpline charity BSS, which went into administration in July with the potential loss of more than 400 jobs, owes more than GBP6.4 million to its pension scheme. The charity owes a total of GBP7.65 million, most of it to its pension fund, Civil Society relays, citing a statement of affairs. However it expects to raise only GBP2.49 million from the sale of its assets, leaving a shortfall of GBP5.16 million, Civil Society notes. The charity was a member of two different defined benefit pension schemes -- its own scheme and the Scottish Voluntary Sector Pension Scheme, a multi-employer scheme, Civil Society discloses. The statement of affairs includes payments of only GBP133,000 on employee arrears of wages and holiday pay, according to Civil Society. At the time of administration, it was originally announced that parts of the charity would continue to operate and administrators have refused to confirm whether the entire charity will close and enter liquidation, Civil Society recounts. A statement of administrators' proposals has been filed with Companies House but has not yet been made public, Civil Society states. In its most recent accounts, for the period to March 2014, the charity, as cited by Civil Society, said it had faced an extremely difficult trading environment, and had made considerable redundancies. BSS employed 436 people, according to its most recent accounts, and ran helplines and contact centers for charities and others, according to Civil Society. GELDARDS COACHES: Goes Into Administration Following Major Fire --------------------------------------------------------------- Nick Hill at BDaily reports that Geldards Coaches Limited was forced to appoint joint administrators of Begbies Traynor in Leeds on Sept. 11. In August 2015, there was a fire at the company's premises off Whitehall Road in Farnley, which destroyed half of a coach repair workshop and damaged three vehicles, BDaily recounts. "Unfortunately, it is commonplace for companies subjected to a major fire not to survive and this is the case here," BDaily quotes Bob Maxwell, one of the joint administrators appointed to the company, as saying. The administrators are now looking for a buyer for the business, BDaily discloses. Geldards Coaches Limited is a West Yorkshire coach company. The largest privately owned bus company in the region, Geldards Coaches was founded in 1991 and has a fleet of around 50 vehicles and 50 staff, according to BDaily. MCCLURE NAISMITH: Creditors Unlikely to Recover "Small" Dividend ---------------------------------------------------------------- Mark Latham at Herald Scotland reports that creditors of McClure Naismith, which went into administration last month, are unlikely to recover much more than a "small dividend" when the company's affairs are finally wound up. Tom MacLennan of FRP Advisory said that McClure Naismith, one of Scotland's oldest commercial law practices, owed around GBP2 million to suppliers, the HMRC and its bank when it went into administration two weeks ago, but the full extent of the firm's debts would only become clear once landlord and employee claims (such as redundancy payments in lieu of notice) had been resolved, Herald Scotland relates. That process would likely take several months, at which point the total debt of the company would likely be "substantially" more than the GBP2 million of debt already accounted for, Herald Scotland says. Of McClure Naismith's 135 person workforce, 95 have now found new jobs since the firm went into administration, Herald Scotland discloses. In addition to those who have found new jobs, 13 staff have been retained by the administrators to help with transitional matters, Herald Scotland notes. According to Herald Scotland, McClure Naismith's Glasgow headquarters are expected to be vacated by the end of the month. A creditors' meeting is expected to be held in Edinburgh or Glasgow in late October, Herald Scotland states. It is likely to be around 18 months before the administration of the firm is settled, Herald Scotland relays. McClure Naismith is a Glasgow-based law firm. REDCAR: May Go Into Administration After Missed Debt Repayments --------------------------------------------------------------- Ben Marlow at The Telegraph reports that Redcar, one of the UK's biggest steel plants, is locked in a desperate bid for survival following a series of missed debt repayments to its banks. According to The Telegraph, the Thai owners of the historic Redcar plant on Teesside failed to pay back several loans totaling around GBP80 million to lenders in June and were given a short-term stay of execution until the end of September to find the money. Failure to stump up the cash could result in the 160-year-old site, which employs more than 2,000 workers and 1,000 contractors in a region where unemployment is among the highest in the country, being put into administration after a long battle with huge losses, The Telegraph says. It is understood PwC is on stand-by to handle any insolvency, The Telegraph notes. A total of four loans were scheduled to be settled at the end of June but Sahaviriya Steel Industries, which rescued Redcar in 2011, failed to meet any of them, The Telegraph discloses. The majority of SSI's 11 banks agreed to extend the repayment for three months and SSI then immediately entered into a fresh set of negotiations to try to get another stay of execution until the end of the year, The Telegraph relays. The company's perilous financial situation was laid bare in its most recent quarterly financial statement, which covered the period to the end of June and was filed with the Thai stock exchange on Aug. 15, The Telegraph states. As of that date, the company had only managed to obtain a letter of intent from its lenders, rather than any firm agreement for a second extension, according to The Telegraph. Debt negotiations of this nature are always complicated but the number of lenders SSI has -- and the failure to get all of them to agree to the first extension -- is likely to make discussions particularly difficult, The Telegraph states. The stock exchange document also reveals SSI had to borrow around GBP30 million in the form of an interest-free loan from an unnamed company director, The Telegraph relates. Redcar has struggled consistently with big losses since being mothballed by previous owners Tata Steel in 2010, The Telegraph recounts. A year later, faced with imminent closure, SSI rescued the operations in a GBP290 million deal and relit the furnace in April 2012, The Telegraph relays. However, the plant has been reliant on continued financial backing from its parent and the support of a handful of senior banks ever since, The Telegraph notes. It racked up losses of GBP194 million in 2013, had bank loans totaling US$792 million and the Thai owners pumped in US$121 million, the latest in a series of cash injections. It is thought SSI has ploughed as much as ú1bn into the company. Redcar owns the second-largest blast furnace in Europe, which at full capacity is capable of turning out up to 400 slabs of steel a day and 3.5m tons a year. ********* 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 * * *