/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150925.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, September 25, 2015, Vol. 16, No. 190 Headlines E S T O N I A ALIMANTS OU: Is Insolvent, Cancels Pre-Booked Tours I T A L Y MANUTENCOOP FACILITY: S&P Affirms 'B' CCR, Outlook Negative L U X E M B O U R G SUNRISE SRL 1: S&P Affirms B+ Rating on Serie 2006 Class C Notes P O R T U G A L COMBOIOS DE PORTUGAL: S&P Raises ICR to 'BB+', Outlook Stable R U S S I A ANTALBANK LLC: Placed Under Provisional Administration GAZENERGOBANK OJSC: DIA to Oversee Rehabilitation Measures INVESTTORGBANK JSCB: DIA to Oversee Rehabilitation Measures RUSAL BRATSK: Fitch Assigns 'B+' IDR, Outlook Stable TUSAR JSC: Put Under Provisional Administration, License Revoked UTAIR: Unlikely to Follow Transaero Fate, Russian Gov't Says VOCBANK JSC: DIA to Oversee Rehabilitation Measures ZERNOBANK JSC: Placed Under Provisional Administration S P A I N REPSOL INT'L: Fitch Affirms 'BB+' Rating on Hybrid Instruments SPAIN: Catalonia Independence Vote to Hit Banking System U K R A I N E FERREXPO PLC: Fitch Puts 'CCC' IDR on CreditWatch Negative PRIVATBANK: S&P Lowers Counterparty Credit Ratings to 'SD' U N I T E D K I N G D O M ARROW GLOBAL: S&P Affirms 'BB-' Rating on Notes Due 2021 BRIDGE HOLDCO: Moody's Cuts Probability of Default Rating to Caa1 CITY LINK: Gov't Rejects Key Proposals on Employee Preference HARLEY CURTAIN: Enters Administration Following Cash Flow Woes X X X X X X X X * BOOK REVIEW: The Rise and Fall of the Conglomerate Kings ********* ============= E S T O N I A ============= ALIMANTS OU: Is Insolvent, Cancels Pre-Booked Tours --------------------------------------------------- Toomas Hobemagi at Baltic Business News reports that Estonian- based tour operator Alimants OU that operates under itur.ee website announced on September 17 that it is insolvent. According to the report, the Company has notified the consumer protection authority that it is unable to meet its obligations to customers. The report relates that Alimants has cancelled all pre-booked tours and said that 13 customers are at present abroad on a tour sold by the company. The company has a security deposit of EUR32,000 held in BTA Insurance Company SE. The funds will be used to pay for the return of passengers currently on tour and for refunding patients who have made prepayments, says Baltic Business News. ========= I T A L Y ========= MANUTENCOOP FACILITY: S&P Affirms 'B' CCR, Outlook Negative ----------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Italy-based facility services provider Manutencoop Facility Management SpA (MFM) to negative from stable. At the same time, S&P affirmed its 'B' long-term corporate credit rating on MFM. In addition, S&P affirmed its 'B' issue rating on MFM's EUR425 million senior secured notes (outstanding nominal value of EUR300 million). The recovery rating on the notes is '3', reflecting S&P's expectation of meaningful (50%-70%) recovery in the event of a payment default. The outlook revision reflects S&P's view of MFM's reduced liquidity flexibility. Although neutral on the credit metrics, in S&P's opinion, management's decision to buy back EUR80 million of bonds using its existing cash balance has reduced the group's ability to absorb adverse, high-impact events. Examples of these include a potential fine levied as a result of the legal investigations into MFM's contracts; a delay in a collection from the public sector relating to historical receivables outstanding; and higher-than-expected working capital swings, exceeding S&P's current assumption of EUR35 million. S&P forecasts that the group's cash balance will fall from EUR66 million as of June 30, 2015 to less than EUR2 million by Sept. 30, 2015, as S&P expects that the cash will be used to repay short-term debt of about EUR33 million. S&P forecasts that the rest will go toward the business' working capital needs. S&P understands that management is currently assessing options to sign additional long-term committed facilities. However, management has also publicly stated its intention to undertake further bond repurchases on the open market, subject to the availability of alternate long-term economically beneficial financing options. Therefore, S&P believes the group's liquidity could remain under pressure. S&P anticipates that the group's operating challenges over the next 12 months will continue due to intense pricing pressure and reduced contract wins. S&P anticipates that these could result in a decline in organic revenue. The recent announcement that the Judge of Brindisi has decided to indict the group chairman and CEO, Claudio Levorato, has no immediate effect on the group's liquidity but does represent a reputation risk for the business. S&P's base case assumes: -- GDP to modestly increase by 0.5% in 2015 and to increase by 1.0% in 2016. -- S&P's forecast of revenue decline of about 7% in fiscal 2015, due to competitive pricing pressure and a lower number of new contract wins. -- Stable EBITDA margins of about 8.8%-9.0% as the impact of the pricing pressure is offset by efficiency measures and a reduction in nonrecurring costs. -- Nonrecurring expenses of about EUR5 million for fiscal 2015, compared with EUR11 million in fiscal 2014. Based on these assumptions, S&P arrives at these credit measures: -- Reported EBITDA of about EUR80 million-EUR85 million per year for fiscal years 2015 and 2016 (including the impact of nonrecurring expenses and provision for risk). -- Adjusted ratio of debt to EBITDA of about 5.5x-6.0x over the same time frame. -- Modest free operating cash flow in 2015. The negative outlook reflects S&P's view that it could lower the rating on MFM if S&P assess that there is higher likelihood of a material shortfall in liquidity, and an absence of a credible management plan to address the situation. S&P could downgrade MFM if S&P revised down its liquidity score to "weak," in the event of adverse event risk. S&P could revise the outlook back to stable if MFM were to attain sufficient liquidity by maintaining a satisfactory undrawn credit facility that can provide some cushion against event risk. =================== L U X E M B O U R G =================== SUNRISE SRL 1: S&P Affirms B+ Rating on Serie 2006 Class C Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings in Sunrise S.r.l.'s series 1 2006 and series 2 2007. The affirmations follow S&P's review of the transaction's performance since its previous review in June 2014 and the application of its criteria for rating single-jurisdiction securitizations above the sovereign foreign currency rating. Total delinquencies as of the August 2015 payment date have decreased since S&P's previous review, and the rate of increase in the default rate has also significantly slowed. Overall, the transaction's performance has improved, mostly due to the originator's repurchasing of receivables from the securitized portfolio. Since closing, available excess spread has been sufficient to cover the principal receipt shortfalls due to loan defaults. The securitized pool's cumulative gross defaults since the series 2 2007 notes began amortizing in August 2012 are EUR43.96 million, equivalent to 4.40% of the end of the revolving period balance. The transaction has a split waterfall for interest and principal, but principal funds are available to pay the interest shortfalls. Interest payments on the series 2 2007's class B and C notes may be deferred if the cumulative net default rate since amortization exceeds 7.66% and 4.40%, respectively. If the respective trigger level is breached and either (i) the theoretical excess spread (calculated as interest available funds, adjusted for interest deferred on loans on payment holidays and net swap receipts, less the aggregate of certain senior expenses, notes coupons, and defaulted receivables, expressed as a ratio of the relevant receivables balance) is less than 0%, or (ii) there are insufficient interest available funds to make up for periodic defaults, then interest will be diverted to fully repay the principal on the senior classes of notes. As a consequence of the deleveraging, available credit enhancement has substantially increased for series 1 2006's class C notes and series 2 2007's class A, B, and C notes since closing. The available credit enhancement for the series 2 2007 class A and B notes has increased to 84.00% and 46.40% from 10.21% and 4.18% at closing, respectively. Additionally, the available credit enhancement for the class C notes in both series has increased to 27.10% from 1.45% over the same period. While the available credit enhancement for series 2 2007's class A and B notes is commensurate with higher ratings than those currently assigned, S&P's RAS criteria caps its ratings on these classes of notes at six and four notches, respectively, above the unsolicited long-term rating on the Republic of Italy (BBB-/Stable/A-3). S&P has therefore affirmed its 'AA- (sf)' and 'A (sf)' ratings on the class A and class B notes, respectively. As of the August 2015 payment date, the transaction's net default ratio was 3.77%, compared with 3.16% at the end of May 2014. S&P believes that there is an increased likelihood of a breach of the 4.40% cumulative net default rate trigger and a subsequent deferral of the interest on the series 1 2006 and series 2 2007's class C notes. S&P has therefore affirmed its 'B+ (sf)' ratings on the class C notes in both series. S&P believes that the likelihood of a breach of the interest rate deferral trigger for the class B notes is remote in a 'A' rating scenario. The portfolio comprises three revolving pools of performing consumer loans (new vehicle loans, used vehicle loans, and personal loans). The series 2 2007 notes began amortizing in August 2012, whereas the series 1 2006 notes began amortizing in August 2011. Agos-Ducato is the originator of Italian auto asset-backed securities (ABS) transaction Sunrise's series 1 2006 and series 2 2007, which closed in June 2006 and May 2007, respectively. RATINGS LIST Sunrise S.r.l. Ratings Affirmed Class Rating EUR507.25 Million Limited-Recourse Asset-Backed Floating-Rate Notes Series 2 2007 A AA- (sf) B A (sf) C B+ (sf) EUR1.014 Billion Limited-Recourse Asset-Backed Floating-Rate Notes Due 2030 Series 1 2006 C B+ (sf) =============== P O R T U G A L =============== COMBOIOS DE PORTUGAL: S&P Raises ICR to 'BB+', Outlook Stable ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised its long-term issuer credit rating on Portuguese rail operator Comboios de Portugal E.P.E (CP) to 'BB+' from 'BB'. The outlook is stable. At the same time, S&P raised to 'BB+' from 'BB' its issue rating on CP's senior unsecured notes. The rating action follows S&P's upgrade of Portugal on Sept. 18, 2015. S&P equalizes its long-term rating on CP with that on Portugal, based on S&P's view of the almost certain likelihood that CP would receive timely and sufficient extraordinary support from the Portuguese government in the event of financial distress. S&P regards CP as a government-related entity (GRE) under S&P's criteria. S&P bases its assessment of the likelihood of government support on its view of CP's critical role for and integral link with Portugal. S&P believes CP's role for the Portuguese government is "critical" given that CP is virtually the only passenger rail transport provider in Portugal. In S&P's opinion, the company plays a key role in implementing the government's policy of fostering urban mobility in the country. S&P believes that, as such, CP provides a key public service that a private entity could not readily undertake and that the government itself would likely conduct if CP ceased to exist. S&P views CP's link with the government as "integral" given the company's 100% state ownership and its strong legal status as a public company. Moreover, CP operates under a strategy defined and monitored by the government. As an EPE, CP enjoys a stronger legal status than "sociedades anonimas" (public limited companies). Even though EPEs are generally subject to private law, they are not subject to the bankruptcy laws applicable to sociedades anonimas. Only the central government can liquidate an EPE. S&P assesses CP's stand-alone credit profile (SACP) at 'ccc+' based on S&P's view of the company's capital structure as unsustainable. S&P considers that its financial commitments and leverage remain untenable in the short-to-long term on a stand- alone basis, as the company cannot meet its financial requirements without government support. S&P continues to assess CP's business risk profile as "weak" due to its business model, which includes a large component of public service that is characterized by ongoing negative operating cash flow generation. This is due to limited operating efficiency, with insufficient subsidies from the state to cover below-cost tariffs. On the other hand, S&P recognizes the company's strategic position as the national railway operator, with only marginal competition. S&P still assesses CP's financial risk profile as "highly leveraged," given its very weak credit ratios and cash flow protection measures. The company has negative net worth due to the accumulation of persistent losses, and remains highly leveraged with debt of around EUR4.2 billion as Dec. 31, 2014. The stable outlook mirrors that on Portugal and reflects S&P's view that the government support that CP receives is unlikely to be challenged or to change in the foreseeable future. S&P could upgrade CP if the ratings agency raised its long-term rating on the Republic of Portugal. S&P could lower the rating on CP if S&P lowered its long-term rating on the Republic of Portugal. In addition, S&P could downgrade CP if it revised downward its view of the likelihood of extraordinary support from the Portuguese government. This could be the case if the general government were to exclude CP from its scope of consolidation or if the state budget no longer covered its future funding needs, which S&P currently views as unlikely. =========== R U S S I A =========== ANTALBANK LLC: Placed Under Provisional Administration ------------------------------------------------------ The Bank of Russia, by its Order No. OD-2536, dated September 24, 2015, revoked the banking license of Moscow-based credit institution CB Antalbank LLC from September 24, 2015. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, and application of supervisory measures envisaged by the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)", taking into account a real threat to the interests of creditors and depositors. Given the unsatisfactory quality of assets, CB Antalbank made inadequate assessment of the loan portfolio and the risks assumed. Proper credit risk assessment resulted in the current year in repeated occurrence of reasons for implementing insolvency (bankruptcy) prevention measures. Besides, the credit institution failed to meet the requirements of the supervisor's instructions aimed at restricting its activities. The Bank of Russia, by its Order No. OD-2537, dated September 24, 2015, appointed a provisional administration to CB Antalbank for the period until the appointment of a receiver pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. CB Antalbank is a member of the deposit insurance system. The revocation of banking license is an insured event envisaged by Federal Law No. 177-FZ "On Insurance of Household Deposits with Russian Banks' regarding the bank's obligations on deposits of households determined in accordance with the legislation. According to the financial statements, as of September 1, 2015, CB Antalbank LLC ranked 198th by assets in the Russian banking system. GAZENERGOBANK OJSC: DIA to Oversee Rehabilitation Measures ---------------------------------------------------------- The Bank of Russia on Sept. 21 approved amendments to the plan for participation of the state corporation Deposit Insurance Agency in bankruptcy prevention of Kaluga-based OJSC Gazenergobank. The Agency held a tender to select an investor who proposed the most favorable conditions for bankruptcy prevention financing of Gazenergobank. Resulting the tender the open joint-stock company Joint-stock commercial bank of support to commerce and business OJSC SKB-bank has been selected. The participation plan provides taking over Gazenergobank by the Investor, as well as its reorganization through merger with SKB- bank. INVESTTORGBANK JSCB: DIA to Oversee Rehabilitation Measures ----------------------------------------------------------- The Bank of Russia on Sept. 21 approved amendments to the plan for participation of the state corporation Deposit Insurance Agency in bankruptcy prevention of Moscow-based INVESTMENT TRADE BANK JSCB Investtorgbank (PJSC). In accordance with the decision taken, initially JSCB ROSSIYSKY CAPITAL (PJSC) was engaged as an investor to carry out financial rehabilitation of Investtorgbank. Investtorgbank was provided with funds to maintain liquidity in the amount sufficient for its continuous operation and for the recovery of timely settlements with the creditors. The Agency will hold a tender to select an investor to carry out financial rehabilitation of the bank. The winner will be the entity to offer the most favorable conditions for Investtorgbank financial rehabilitation. RUSAL BRATSK: Fitch Assigns 'B+' IDR, Outlook Stable ----------------------------------------------------- Fitch Ratings has assigned Russia-based OJSC Rusal Bratsk, United Company RUSAL's fully consolidated subsidiary, a Long-term Issuer Default Rating of 'B+'. The Outlook is Stable. Bratsk's senior unsecured rating has been assigned at 'B'/RR5. The Recovery Rating of 'RR5' and consequent notching down of the senior unsecured debt by one notch from the IDR reflects the significant amount of prior-ranking secured debt in the Rusal Group's debt portfolio. KEY RATING DRIVERS Parental Support Bratsk's 'B+' IDR is supported by the creditworthiness of its parent Rusal, as well as strong legal, operational and strategic ties between the two entities. Bratsk's aluminium smelter represents approximately 30% of the Rusal Group's aluminium output and is the group's bond issuing entity. Bonds issued by Bratsk benefit from an irrevocable offer provided by Rusal and suretyships of alumina refinery Rusal Achinsk and Krasnoyarsk aluminium smelter. Aluminium Market Rebalancing Required Demand for aluminium has increased at an average rate of 7% per annum since 2008 and is expected to keep rising in excess of 5% per annum until 2018. The low prices experienced by producers since 2009 are, in our opinion, a function of excess supply and warehousing issues rather than a lack of demand. For example, the negative trend in LME aluminium prices seen so far in 2015 primarily reflects a surge in Chinese semis exports. While evidence in recent months suggests that export levels may have peaked in the short-term, a sustainable increase in the LME price will require further permanent smelter curtailments or shutdowns. Competitive Cost Position Rusal is simultaneously benefiting from (i) the results of its cost-saving measures launched in 2013 (idling of 650kt of its least efficient assets) and (ii) a highly favourable FX position following the recent rouble devaluation, positively affecting its cash costs (55%-60% of Rusal's cash costs are rouble-denominated). As a result, Rusal has moved to the 1st quartile of the global aluminum cost curve and has seen improved profitability from 2014. Additionally, most of Rusal's smelters, including Bratsk, are located in Siberia and benefit from comparatively cheap electricity prices. The Boguchanskaya HPP joint venture power plant (part of the BEMO project) was launched at the end of 2014, contributing further to maintaining low-cost electricity procurement for the group. Vertically Integrated Business Model Rusal operates throughout the aluminum value chain with bauxite mining, alumina and aluminum production. The company's project in Guinea (Dian Dian) will also make Rusal 100% self-sufficient in bauxite. This provides the company with significant control over its costs structure, and its exposure to market dynamics. Leading Market Position Despite the idling of 650kt of capacity in 2013/14, Rusal remains one of the world's largest aluminium producer, with over 3,600kt of aluminium output in 2014 (7% of the global demand). Stake in Norilsk Nickel Rusal owns 27.8% of the world's largest nickel producer, Norilsk Nickel (BBB-/Negative). The market value of that stake (before premium) was USD7.4 bil. as at end-June 2015, or 75% of Rusal's total indebtedness, providing a significant potential source of funds to repay debt. Additionally, Norilsk Nickel has historically paid out significant dividends to its shareholder, and is now committed to distributing 50% of its EBITDA but no less than USD2bn annually starting from 2016 and during the period of the current shareholder agreement (i.e. USD556 mil./year minimum payable to Rusal). Fitch estimates such dividends to equal USD820 million/ year on average over the same period, contributing materially to Rusal's debt service. High Group Debt Burden Rusal has been highly leveraged since its purchase of a 25% stake in Norilsk Nickel in 2008. The company has benefitted from strong support from its bank group (particularly Russian state-owned Sberbank) and has consistently reduced its leverage level throughout the period, to USD10.2 bil. in 2014 (Fitch-adjusted) and to USD9.4 billion at end-1H15 from USD14.5 billion in 2009. Further deleveraging remains a key priority for the company, which foresees possible acceleration in repayments from potential upsides from Norilsk Nickel dividends. Under Fitch's conservative aluminum price assumptions funds from operations (FFO) gross leverage will remain in the range of 3.5x-4x range over up to 2018. Corporate Governance In line with Fitch's approach for other Russian corporates, it has notched Bratsk's IDR down by two notches to reflect the legal and governance environment and structures present in Russia. Limited Liquidity Post-2016 Overall liquidity for Rusal remains adequate. Under Fitch's current mid-cycle aluminium price assumptions Rusal can cover its entire debt service until 2016, mostly from free cash flow ((FCF) after dividends received from Norilsk Nickel) but also from cash on balance sheet. However, the company will have to roll-over maturities in 2017 and 2018 if the all-in aluminum price (LME price plus physical premiums) remains under USD2,250/t (in 2014 all-in company's realized price stood at USD2,246/t). As at 30 June 2015 cash balances amounted to USD904 mil. KEY ASSUMPTIONS -- Fitch Aluminum LME base prices: USD1,743/t in 2015, USD1,700/t in 2016, USD1,800 in 2017. Aluminum premiums to average USD230/t for the period -- In Fitch's forecasts it has used these RUB/USD exchange rates: 60 in 2015, 65 in 2016 and 55 thereafter -- Fitch's assumption is for stable volumes (3,638 kt annually) RATING SENSITIVITIES Positive: Future developments that could, individually or collectively, lead to positive rating actions include: -- Clear signs of stabilization of aluminum market fundamentals as reflected in a sustained improvement in aluminum prices -- Sale of Norilsk Nickel's shares with proceeds used for deleveraging of Rusal Group -- Improvement of credit metrics for Rusal on a sustained basis including FFO gross leverage below 3.5x and EBITDA margin of more than 20% Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- FFO gross leverage sustained above 4.0x with limited or no prospect for deleveraging -- EBITDA margin sustainably below 10% FULL LIST OF RATING ACTIONS OJSC Rusal Bratsk -- Long-term IDR 'B+'; Outlook Stable -- Senior Unsecured 'B'/RR5 TUSAR JSC: Put Under Provisional Administration, License Revoked ---------------------------------------------------------------- The Bank of Russia, by its Order No. OD-2480, dated September 18, 2015, revoked the banking license of Moscow-based credit institution JSC TUSARBANK from September 18, 2015. The Bank of Russia took such an extreme measure -- revocation of the banking license -- due to the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, all capital adequacy ratios below 2%, non-ability to meet monetary obligations to its creditors and the application of measures envisaged by the Federal Law 'On the Central Bank of the Russian Federation (Bank of Russia)'. TUSARBANK implemented high-risk lending policy and did not create loss provisions adequate to the risks assumed. Due to a poor quality of assets, which did not generate sufficient cash flow, TUSARBANK did not execute its obligations to depositors. Besides, after TUSARBANK complied with the supervisor's requirement to create loss provisions adequate to the risks assumed, the bank's capital adequacy ratios were reduced to a critical level. In these circumstances, guided by Article 20 of the Federal law "On Banks and Banking Activities", the Bank of Russia performed its obligation and revoked the banking license from the credit institution. By its Order No. OD-2481, dated September 18, 2015, the Bank of Russia appointed a provisional administration to TUSARBANK for the period until the appointment of a receiver pursuant to the Federal Law "On the Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. TUSARBANK is a member of the deposit insurance system. The revocation of the banking license is an insured event as stipulated by Federal Law No. 177-FZ "On the Insurance of Household Deposits with Russian Banks' in respect of the bank's retail deposit obligations, as defined by legislation. As of September 1, 2015, JSC TUSARBANK ranked 191st by assets in the Russian banking system. UTAIR: Unlikely to Follow Transaero Fate, Russian Gov't Says ------------------------------------------------------------ TASS reports that the Russian government sees no rationale for UTair airline to follow the fate of Transaero, which was merged with Russia's flagship air carrier Aeroflot. "UTair is unlikely to follow Transaero fate given the sum of requested state guarantees and the company's position on the market. We don't see that /UTair/ may follow the fate of Transaero," TASS quotes a federal official familiar with the situation as saying on Sept. 21. Last week, Vedomosti business daily wrote that an inter-agency committee at the Economic Development Ministry approved state guarantees worth US$9.5 billion (US$144 million) to be granted to UTair, and the issue now should be approved by the government commission, TASS relates. At the end of 2014, dozens of lawsuits against UTair and its subsidiaries were filed to various courts, TASS relays. The total amount of creditor claims is more than RUR9 billion (US$143.76 million), TASS discloses. Several creditors filed claims to recognize UTair Airlines as bankrupt, TASS notes. Moscow International Airport CEO Vnukovo Vitaly Vantsev said Utair's debt to Vnukovo decreased by 22% to RUR700 million (US$10.27 million) in one year. According to TASS, Mr. Vantsev said that despite serious current payments, Utair manages to repay older debts, which is "completely fine with the airport." "This is generally better than losses. Writes-off in bankruptcy are the worst that can be A long-term cooperation during restructuring is better," Mr. Vantsev, as cited by TASS, said. UTair is an airline with its head office at Khanty-Mansiysk Airport in Russia. It operates scheduled domestic and some international passenger services, scheduled helicopter services (e.g. from Surgut) plus extensive charter flights with fixed-wing aircraft and helicopters in support of the oil and gas industry across Western Siberia. VOCBANK JSC: DIA to Oversee Rehabilitation Measures --------------------------------------------------- The Bank of Russia on Sept. 21 approved amendments to the plan for participation of the state corporation Deposit Insurance Agency in bankruptcy prevention of Nizhny Novgorod-based JSC Volga-Oka Commercial Bank. VOCBANK was initially provided with funds to maintain liquidity in the amount sufficient for timely settlements with the creditors and its continuous operation. The plan envisages a tender to select an investor to carry out financial rehabilitation of the bank. The winner will be the entity to offer the most favorable conditions for VOCBANK financial rehabilitation. ZERNOBANK JSC: Placed Under Provisional Administration ------------------------------------------------------ The Bank of Russia, by its Order No. OD-2534, dated September 24, 2015, revoked the banking license of Barnaul-based credit institution JSC Zernobank from September 24, 2015. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, application over the year of supervisory measures envisaged by the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)", and taking account of a real threat to the interests of creditors and depositors. Due to the unsatisfactory quality of assets not generating sufficient cash flows, starting this September, Zernobank systematically failed to timely honor its obligations to creditors. The management and owners of the bank did not take measures to normalize its activities and recover its financial status. Due to the increasing threat to the interests of creditors and depositors and in order to preserve bankruptcy assets, the Bank of Russia decided to revoke the banking license of the credit institution. The Bank of Russia, by its Order No. OD-2535, dated September 24, 2015, appointed a provisional administration to JSC Zernobank for the period until the appointment of a receiver pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. Zernobank is a member of the deposit insurance system. The revocation of banking license is an insured event envisaged by Federal Law No. 177-FZ "On Insurance of Household Deposits with Russian Banks" regarding the bank's obligations on deposits of households determined in accordance with the legislation. According to the financial statements, as of September 1, 2015, JSC Zernobank ranked 392nd by assets in the Russian banking system. ========= S P A I N ========= REPSOL INT'L: Fitch Affirms 'BB+' Rating on Hybrid Instruments -------------------------------------------------------------- Fitch Ratings has affirmed Spanish oil and gas company Repsol, S.A.'s Long-term Issuer Default Rating (IDR) at 'BBB'. Fitch has also affirmed subsidiary Talisman Energy Inc.'s Long-term IDR at 'BBB-'. The Outlooks are Stable. Repsol's ratings are supported by the company's sound business diversification with a strong downstream segment and a larger and more geographically diversified upstream segment after the acquisition of Talisman. The ratings are constrained by high leverage relative to peers and uncertainty over the profitability of upstream production, mainly in North America and the North Sea. Fitch views the strategic and operational ties between Repsol and Talisman as strong, but due to the lack of direct debt guarantees and cross default clauses in Repsol's debt documentation, we rate Talisman, using a top-down approach, one notch below Repsol's rating. KEY RATING DRIVERS Larger Upstream with Talisman The acquisition of Talisman in May 2015 has significantly increased Repsol's hydrocarbon production profile. Average oil and gas production (including JVs) stood at 525 thousand barrels of oil equivalent per day (kboepd) in 2Q15, 55% higher yoy. Output stood at 660kboepd in June 2015 once Talisman production was fully accounted for. Talisman's assets are mainly located in developed countries, which contributed to an increase in oil and gas production from OECD countries in total output to 29%, from 12% for Repsol, prior to the acquisition. In Fitch's view, the acquisition therefore supports Repsol's credit profile and partly mitigates the company's historical reliance on Latin America. Challenges Remain The acquisition of Talisman brings also a number of challenges for Repsol. Fitch downgraded Talisman to 'BBB-' from 'BBB' in September 2014 due to its weakened production and reserve profiles, fairly high finding, development & acquisition costs, increased exposure to natural gas, remaining non-core asset sale obstacles and potentially higher leverage metrics without targeted asset sales. A prolonged weakness in oil and gas prices may also put pressure on Talisman's unconventional oil and gas production in North America and assets in the North Sea, which have higher production costs. Stretched Credit Metrics in 2016 Under Fitch oil and gas price deck (USD55/bbl in 2015, USD65/bbl in 2016 and USD75/bbl in 2017 and USD80/bbl long-term and NBP gas prices of USD6/mcf in 2015 and 2016, USD7/mcf in 2017 and USD8/mcf long-term), we expect stretched credit metrics in 2016 with funds from operations (FFO) adjusted net leverage of around 3.2x, before recovering to below 3.0x in 2017, a level commensurate with the 'BBB' rating level. This is under the assumption that the upstream segment will see improved results in 2016 as more favorable hydrocarbon prices will offset lower downstream margins. Fitch expects that further improvement in the upstream segment results post-2016 and a stable contribution of the downstream segment will result in deleveraging. Strategic Update Key Fitch expects that the combined entity to have greater flexibility regarding the timing and allocation of capital expenditure. Coupled with strong vertical integration, this should help maintain a healthy balance sheet with FFO adjusted net leverage below the 3.0x threshold for a 'BBB' rating. Repsol recently announced it plans to maintain upstream capex in 2016 on a similar level compared with 2015 despite higher oil and gas output. The company also increased its estimate for synergies from Talisman acquisition to USD350 million from USD220 million. Fitch also includes in its forecasts the planned disposals of EUR0.9 billion in 2015-2016 and issue of EUR3 billion of hybrid notes in 2H15-2016, which should further mitigate weaker upstream segment results and the impact of Talisman acquisition. Yet, Fitch will only be able to fully assess the impact of Talisman acquisition on Repsol's ratings once the company announces its updated strategy in 4Q15. Strong Refining Margins in 2015 Repsol's upstream business faced headwinds in 1H15 due to the weak oil prices and no production from Libya. The weaker upstream results were mitigated by downstream performance, which benefitted from higher utilization rates and improved refining margins. Lower fuel prices, coupled with GDP growth, resulted in higher global demand for fuel products. With output from the new refineries in the Middle East lower than initially expected, in 1H15 European refiners experienced refining margins last seen before the financial crisis of 2008. Repsol has increased its earnings guidance for the downstream segment twice so far in 2015, most recently to EUR3.2 billion- EUR3.4 billion, vs. EBITDA of EUR1.3 bil. in 2014. Although Fitch views the current exceptionally positive refining environment as temporary, we still expect downstream performance in 2016-2018 to be stronger than in the last two years, supporting Repsol's business and financial profile. Top-Down Approach to Talisman Fitch expects Repsol will reinforce Talisman's near-term capitalization and liquidity position. Talisman's ratings are therefore driven by the subsidiary's linkage with Repsol due to their strong strategic and operational ties. At the same time, the lack of direct debt guarantees and hence strong legal ties are reflected in Talisman being rated one notch below Repsol's via Fitch's top-down rating approach. KEY ASSUMPTIONS -- Fitch's key assumptions within our rating case for the issuer include: -- Brent prices of USD55/bbl in 2015, USD65/bbl in 2016, USD75/bbl in 2017 and USD80/bbl long-term -- West Texas Intermediate (WTI) prices of USD50/bbl in 2015, USD60/bbl in 2016 and USD70/bbl long term -- EUR5 billion capex in 2016 -- EUR0.9 billion divestments in 2015-2016 -- EUR3 billion of hybrid bond issue in 2H15-2016 RATING SENSITIVITIES Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- FFO adjusted net leverage of around 2.5x and FFO fixed charge cover of 8x (2014: 2.8x) on a sustained basis. -- Stable FFO margin greater than 10% (2014: 4%). -- Capex at no more than 100% operating cash flow. Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- FFO adjusted net leverage above 3.0x and FFO fixed charge cover of 6x and below on a sustained basis. LIQUIDITY At June 30, 2015, Repsol had a cash position of EUR2.5 billion (excluding cash at JV) and undrawn credit lines amounting EUR5.8 billion against short-term debt of EUR4.8 billion (excluding EUR2.7 billion of related-party balances). Fitch expects Repsol to issue EUR3 billion of hybrid facilities in 2H15- 2016 as part of its financing for the acquisition of Talisman. This will improve the debt maturity profile of Repsol. The company issued EUR2 bil. hybrid facilities in 1H15. FULL LIST OF RATING ACTIONS Repsol S.A. Long-term IDR affirmed at 'BBB'; Outlook Stable Senior unsecured debt affirmed at 'BBB' Short-term IDR affirmed at 'F3' Repsol International Finance Senior unsecured debt affirmed at 'BBB' Commercial paper affirmed at 'F3' Hybrid capital instruments affirmed at 'BB+' Talisman Energy Inc. Long-term IDR affirmed at 'BBB-'; Outlook Stable Senior unsecured debt affirmed at 'BBB-' Short-term IDR affirmed at 'F3' Commercial paper affirmed at 'F3' Cumulative perpetual preferred stock: 'BB' rating withdrawn as the instrument was bought by Repsol upon the Talisman acquisition SPAIN: Catalonia Independence Vote to Hit Banking System -------------------------------------------------------- Mehreen Khan at The Telegraph reports that Spain's central bank governor has warned the Catalan region will be automatically ejected from the eurozone and its banking system brought to collapse, if voters choose to back independence for the region this weekend. Luis Maria Linde, head of the Bank of Spain, said the region would not be able keep the single currency and its position in the European Union as a whole would be under threat should it decide to break away from Spain, The Telegraph relates. "The exit from the euro is automatic, the exit from the European Union is implied," The Telegraph quotes Mr. Linde as saying. According to The Telegraph, Catalan banks would also "stop having access to the European Central Bank's facilities", cutting off the last remaining link between the financial system and the eurozone. Latest polls show the region's separatist movement, led by president Artus Mas, is on course for a narrow win in local elections at the weekend, The Telegraph notes. A majority in the Catalan parliament would set the separatists on course to launch a full-blown referendum on independence, The Telegraph states. Mr. Linde added the central government could also impose capital controls on the banking system, The Telegraph relates. Spain's banking association has also warned of the profound legal uncertainty that would hit lenders in the event of Catalan secession, The Telegraph relays. ============= U K R A I N E ============= FERREXPO PLC: Fitch Puts 'CCC' IDR on CreditWatch Negative ---------------------------------------------------------- Fitch Ratings has placed Ferrexpo plc's Long-term Issuer Default Rating and senior unsecured ratings of 'CCC' on Rating Watch Negative. The Recovery Rating on the senior unsecured rating is 'RR4'. Ferrexpo's Short-term IDR is affirmed at 'C'. The rating action follows the announcement by the National Bank of Ukraine (NBU) to declare insolvent Ferrexpo's transactional bank, Bank Finance and Credit JSC (Bank F&C). Bank F&C is a related party ultimately controlled by Ferrexpo's largest shareholder Kostyantin Zhevago. Out of Ferrexpo's total cash balance of USD280 million as at September 16 approximately USD174 million was held at Bank F&C and has now been frozen for an indeterminate period. The RWN reflects uncertainty regarding the ultimate recoverability of funds at Bank F&C. Previously Fitch had factored in that this cash could become temporarily or permanently unavailable due to the inherently weak financial system in Ukraine, but had assumed it as "non -restricted" and available for operational purposes in our base rating case. The insolvency of Bank F&C is also, in our view, likely to prolong Ferrexpo's current discussions with Pre- Export Finance (PXF) lenders regarding a reduction in monthly amortization requirements and an extension of maturity dates. Absent access to the cash held at Bank F&C, an extension of PXF maturities/amortization or other measures to boost liquidity we estimate that Ferrexpo will deplete its remaining cash reserves over the next six to 12 months, depending on movement in iron ore prices over this period. KEY RATING DRIVERS Ukrainian Risk Exposure Ferrexpo's operating base is in Ukraine. The country has recently experienced high domestic inflation, combined with significant currency depreciation (more than 50% in 2014 vs. USD and greater than 100% YTD), a brief electricity supply disruption and a delay in VAT repayment by the state. The ongoing military conflict in the Donbass region has not directly impacted Ferrexpo's operations and transport infrastructure due to their location in the Poltava region, approximately 425km north of Donetsk. Liquidity Limited by Debt Maturities Lack of access to funds held at Bank F&C materially weakens Ferrexpo's liquidity profile. In the absence of access to this cash, an extension of PXF maturities/amortization or other measures to boost liquidity we estimate that Ferrexpo will deplete its remaining cash reserves over the next six to 12 months depending on movement in iron ore prices over this period. Ferrexpo continues to generate positive free cash flow (FCF) and is currently negotiating an extension of PXF maturities and a re- profiling of required amortization. An extension of PXF maturities offers the potential to put the company's liquidity on a more sustainable basis. However, the outcome of ongoing negotiations with the banks is difficult to predict. In July 2015 Ferrexpo exchanged its USD286 million 2016 notes for USD100 million cash consideration and USD186 million of new notes maturing in 2019. Decreasing but Still Robust Profitability Fitch expects the company's profitability profile to remain robust in 2015, with nearly a 30% EBITDA margin. This is despite an expected significant reduction in revenues (down 30% yoy), offset by currency depreciation. The ongoing low iron ore prices and cost inflation will, however, erode the EBITDA margin in 2016, which Fitch expects to improve over the medium term (between 25% and 34%). Assuming the company succeeds in re-negotiating its PXF maturities, Fitch forecasts funds from operations (FFO)-adjusted gross leverage to remain flat in 2015 at 3.7x (vs. 3.6x in 2014), before peaking above 4.0x in 2016 (under Fitch's updated iron ore price deck). This is forecast to stabilize at around 2.0x thereafter, due to the expected modest improvement in iron ore prices over the longer term and absolute debt reduction. Low Iron Ore Price Environment Year-to-date 62% iron ore prices have averaged USD61 per tonne, down approximately 50% yoy, reflecting oversupply in the market and a slowdown in demand from the Chinese steel industry. Fitch's modeling assumption is for iron ore prices to average USD50 per tonne in 2H15 and 2016, below the 2014 average price of USD97 per tonne, which will negatively impact the company's earnings and credit metrics. As a pellets producer, Ferrexpo will continue to benefit from a premium over the benchmark 62% iron ore price, which has widened over the past six months. Ferrexpo recently completed its USD2 billion modernization and expansion program and remains on track to produce approximately 12 million tonnes of 65% Fe pellets per year by 2016. Competitive Cost Producer Ferrexpo's cost position has moved down to the top of the first quartile of the global cost curve. In 2014 and 1H15, cash costs improved significantly compared with the previous two years, due to rising volumes from the ramp-up of the Yeristovo mine and currency depreciation (50% of operating costs are linked to the hryvnia). Costs had decreased 27% as of 1H15 and reached USD33 per tonne, down from USD46 in 2014. Energy costs represent approximately 50% of total costs and should contribute to further cost savings, due to recent falls in global oil prices. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Ferrexpo include: -- Fitch iron ore price deck: USD56/t in 2015 (based on 1H 15 realized price), USD50/t in 2016, USD60/t in 2017, USD60/t in the long term -- Forecast price premium for pellets based on 1H15 realized premium -- Production volumes in line with management's expectations: 12mt p.a. iron ore pellets by 2016 -- USD/UAD 22 in 2015 RATING SENSITIVITIES Changes to Ukraine's Country Ceiling, which may accompany a change to its sovereign rating, would likely result in a corresponding action on Ferrexpo's ratings. Fitch would expect to the resolve the Rating Watch upon completion of current negotiations with PXF lenders and clarification regarding the likelihood of the company being able to access cash held at Bank F&C. Negative: Future developments that could lead to negative rating action include: -- Downgrade of sovereign rating -- Weakening of Ferrexpo's liquidity position due to lower ongoing cash flows caused by lower- than-expected iron ore prices. Positive: Future developments that could lead to positive rating action include: -- Positive action on the sovereign rating. FULL LIST OF RATING ACTIONS Ferrexpo plc --Long-term IDR 'CCC' placed on Rating Watch Negative --Short-term IDR 'C' affirmed Ferrexpo Finance plc -- Senior unsecured rating 'CCC' placed on Rating Watch Negative; 'RR4' PRIVATBANK: S&P Lowers Counterparty Credit Ratings to 'SD' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its long- and short- term counterparty credit ratings on Ukraine-based PrivatBank to 'SD' from 'CC/C'. The downgrade follows PrivatBank's signing of a supplemental loan agreement on Sept. 8, 2015, regarding US$200 million bonds due September 2015. As part of the agreement, PrivatBank changed the interest rate to 10.25% from 9.375% on the bonds and extended the maturity date to Jan. 15, 2016, from Sept. 23, 2015. The maturity of the 2015 bonds can be further extended to Jan. 2018, upon agreement on restructuring with holders of the bank's Feb. 2016, maturing bonds, which should be reached on or before Jan. 5, 2016. S&P regards the agreed extension of the 2015 bonds as a distressed exchange, which is tantamount to a selective default, as per S&P's criteria. This is based on S&P's understanding that the investors would not receive the full value of the bonds on time as originally agreed. S&P expects that extension of the 2015 bonds will be a selective default -- as opposed to a general default -- and so far S&P is aware of no other debt obligations currently in default. However, S&P is continuing to monitor the situation in case a general default occurs. PrivatBank has initiated the extension of two Eurobond maturities in light of the very difficult economic situation in Ukraine, as well as in accordance with the requirements of the National Bank of Ukraine (NBU) to increase its capitalization and ease pressure on the country's currency market. After the payment of a coupon on Sept. 23, 2015, following the completion of the consent solicitation process, S&P plans to remove PrivatBank from 'SD' and raise the issuer credit rating. Before S&P do this, it will also complete a forward-looking review taking into account the benefits realized from the restructuring as well as any other interim developments. In particular, S&P will take into account the bank's plans to undertake restructuring of bonds due February 2016. "Our assessment of PrivatBank's stand-alone credit profile (SACP) stands unchanged at 'ccc', reflecting the bank's "adequate" business position, "weak" capital and earnings, "adequate" risk position, and "weak" funding and liquidity profile. The bank continues to rely on the NBU for liquidity assistance to address continuing deposit outflows. Our assessment also reflects our view that the planned Eurobond restructuring will have stifled investors' confidence, resulting in the bank having noticeably weaker liquidity than other Ukrainian banks. That said, we understand that PrivatBank is currently honoring its obligations to its depositors," S&P said. S&P does not rate any debt issued by PrivatBank. =========================== U N I T E D K I N G D O M =========================== ARROW GLOBAL: S&P Affirms 'BB-' Rating on Notes Due 2021 -------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'BB-' long-term issue rating on Arrow Global Finance PLC's euro- denominated, floating-rate notes due 2021, which are subject to a proposed tap. Arrow Global Finance, the issuer, is a wholly owned subsidiary of U.K.-based purchaser of distressed debt, Arrow Global Group PLC (the group). The recovery rating of '2' on the notes is unchanged, reflecting S&P's expectation of substantial recoveries for noteholders, in the lower half of the 70%-90% range, in the event of default. The rating is subject to S&P's review of the final documentation for the tap. S&P understands that the group will use the proceeds to repay part of the outstanding amounts under the revolving credit facility (RCF) and fund related fees and expenses. S&P also understands that the notes will continue to be secured by a first-ranking interest on all the shares of Arrow Global Group's main subsidiaries and substantially all of its assets. S&P considers that this security package is similar to the package for Arrow Global Finance's existing senior secured debt. In S&P's view, the proposed tap issue does not affect Arrow Global Group's financial risk profile. S&P's issuer credit rating on the group (B+/Stable/--) is unaffected. The recovery rating is '2', indicating that S&P expects the holders of the existing senior secured notes to recover between 70%-90% of principal, at the lower end of the range, in the event of a payment default. S&P used a liquidation-value approach to analyze the combined group's recovery prospects, given the likelihood that the business would not retain value as an operating entity after a bankruptcy. S&P's calculation starts with the valuation of the group's receivables, to which it applies a 25% discount, in line with the approach S&P follows for Arrow Global Group's rated U.K. peers. S&P also assumes that the RCF would be drawn up to 85% of its limit to purchase additional receivables, on which the 25% discount would also apply. Moreover, S&P discounted the group's total receivables by an additional 3% to take into account administrative expenses upon liquidation. The collateral value available to senior secured noteholders (after the above haircuts) is net of the full recovery on the RCF drawdown. BRIDGE HOLDCO: Moody's Cuts Probability of Default Rating to Caa1 ----------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family Rating (CFR) and Probability of Default Rating (PDR) of Bridge HoldCo 4 Ltd, the ultimate holding company for the Bridon Group (Bridon) to Caa1 and Caa1-PD, from B3 and B3-PD respectively. Moody's has also lowered to B3, from B2, the ratings on the USD286 million senior secured first lien term loan and the USD40 million senior secured revolving credit facility and to Caa3, from Caa2, the rating on the USD111 million senior secured second lien term loan of Bridge Finco LLC. The outlook on all ratings is negative. RATINGS RATIONALE "The downgrade reflects a materially weaker than expected operating performance over the past few months driven by a severe downturn in demand for ropes from the oil and gas industry," says Anke Rindermann, a Moody's Associate Managing Director and lead analyst for Bridon. "Owing to the significant decline in operating profit, Bridon's leverage will likely increase to levels above our prior expectation and above the allowed maximum for full access to its Revolving Credit Facility (RCF) over the next few quarters, although we understand from management that the 30% unrestricted portion of the RCF is deemed to be sufficient at this point" added Ms. Rindermann. While the significant drop in the oil price is the primary driver of the weak trading conditions, Bridon is also experiencing a reduction in demand across some other segments but primarily in its oil and gas segment. In the last six months, the number of operational rigs serving the offshore oil industry has declined by over 10% with the global utilization rate now in the mid-50s (in percentage terms). In the onshore industry, the number of operational rigs has declined by around 33% on a global basis since January 2015, and by almost 50% in North America. Similarly, weaker demand from industrial end markets as well as a weaker than expected recovery in demand from mining customers further contributed to current trading remaining well below our initial expectations. As a result of this weak profitability, key financial indicators are expected to be considerably worse than our forecast in July 2015, when the outlook on Bridon's ratings was changed to stable (from positive). Moody's now anticipates that leverage (as measured by debt / EBITDA) at the end of 2015 will be significantly higher than 10x and this could well rise further in 2016. Based on our assumption for reported EBITDA (of around GBP18-20 million), Moody's anticipates that Bridon will likely breach the financial covenant included within its Revolving Credit Facility (RCF) documentation within the next few quarters. The covenant, which is tested when drawings under the RCF exceed 30% of the committed amount, stipulates that first lien net debt/EBITDA must be below 6.95x. As a consequence, and absent either a waiver from the banks or a reduction in leverage, Moody's expects that Bridon's liquidity profile will materially decline. Nevertheless, Moody's notes as positive Bridon's measures to improve cash flow through a reduction in operating expenditure and cuts to capital expenditure. In addition, working capital is also expected to decrease and should mitigate a need to draw the RCF at least in 2015. WHAT COULD CHANGE THE RATING -- UP/DOWN Given the negative outlook, Moody's considers a rating upgrade to be unlikely within the next 12-18 months. However, the outlook could be stabilized if Bridon undertakes measures to improve its liquidity situation or if leverage is able to be reduced below 7x debt / EBITDA on a sustained basis. Conversely, the rating could be downgraded if Bridon fails to generate positive free cash flow in 2015 and beyond or is unable to improve its liquidity. Bridge Holdco 4 Ltd (Bridon) is a globally active manufacturer and supplier of specialist high quality wire rope. Key product lines include wire rope and strand, fibre rope and wire, specialist installations and inspection services, supplying global customers in the oil & gas, mining, industrial, marine and infrastructure sectors. The company focuses on safety or mission/performance critical ropes, requiring high technological know-how and innovation capabilities. In the last twelve months ending June 2015, Bridon generated revenues of GBP245 million. Bridon is owned by funds managed by Ontario's Teachers Pension Plan. CITY LINK: Gov't Rejects Key Proposals on Employee Preference ------------------------------------------------------------- Logistics Manager reports that the government has rejected a proposal that employees should be given preference in the order of payments of an insolvent business. The report relates that the recommendation was made by Parliament's Scottish Affairs and Business, Innovation and Skills Committees following the insolvency of City Link last Christmas. According to Logistics Manager, a joint report published by Parliament's Scottish Affairs and Business, Innovation and Skills Committees published in March said the processes for company insolvency did not offer sufficient protection to workers, suppliers and contractors and the balance should be shifted. In particular, it recommended that the government update the order of payments in the Insolvency Act 1986 to give preference to all of a company's workers, regardless of whether or not they are directly employed and that consideration is given as to how best to deal with employees and small sub-contractors and suppliers, the report says. However, in the government's response, Sajid Javid, secretary of state for business, innovation & skills, said: "Any change to the preference given to a particular group in an insolvency would have to be at the expense of other creditors. So, for example, if those who were self-employed were given preferential status of the same kind as employed workers, this would mean that less money would be available for other creditors such as consumers and suppliers (which may be small businesses). This could in turn mean that such creditors would be more reluctant to extend credit to a company in difficulty, Logistics Manager relays. "The Government does not consider a sufficient case has been made for changing the long-established order of priority in this respect," the report quotes Mr. Javid as saying. The report says the committees also called on the government to bring forward proposals to tackle "bogus self-employment". In response, Mr. Javid argued that many individuals in so called 'bogus self-employment' will have employment protections regardless of what their contracts say, the report relays. "However, the government recognises that an individual's employment status is not always easy to determine and is considering these issues further," Mr. Javid, as cited by Logistics Manager, said. The committees' other recommendations were less controversial and the government said it was still looking at them, the report adds. About City Link City Link Limited was a Coventry-based courier and parcels delivery company. Hunter Kelly, Charles King and Tom Lukic of Ernst & Young were appointed Joint Administrators of City Link Limited and City Link (Properties) No.1 Limited, on Dec. 24, 2014. HARLEY CURTAIN: Enters Administration Following Cash Flow Woes ------------------------------------------------------------- Begbies Traynor on Sept. 21 disclosed that an East Sussex construction business that provided curtain walling to major building projects throughout the UK has been placed in administration. Julie Palmer and Simon Campbell from business rescue and recovery specialist Begbies Traynor's Salisbury office were jointly appointed to handle the administration of Harley Curtain Wall Ltd. on September 8, 2015. The company, which was based in Crowborough and launched in 1996, also specialized in windows, doors, structural glazing and rainscreen cladding systems. Projects included high- and low-rise apartment and office complexes. A total of 11 people employed by the firm have been made redundant and various assets have been sold to Harley Facades Ltd, which was incorporated in 2010. Ms. Palmer, regional managing partner at Begbies Traynor, said: "Unfortunately, after reviewing all options we were left with little choice but to close the business. The firm had entered difficulty due to cash flow problems." Harley Curtain Wall Ltd. reported revenue of GBP6.4 million in 2014 and was renowned for high quality work throughout the UK and investing in its employees. =============== X X X X X X X X =============== * BOOK REVIEW: The Rise and Fall of the Conglomerate Kings ---------------------------------------------------------- Author: Robert Sobel Publisher: Beard Books Softcover: 240 pages List Price: $34.95 Review by David Henderson Order your personal copy today at http://is.gd/1GZnJk The marvelous thing about capitalism is that you, too, can be a Master of the Universe. If you are of a certain age, you will recall that is the name commandeered by Wall Street bond traders in their Glory Days. Being one is a lot like surfing: you have to catch the crest of the wave just right or you get slammed into the drink, and even the ride never lasts forever. There are no Endless Summers in the market. This book is the behind-the-scenes story of the financial wizards and bare-knuckled businessmen who created the conglomerates, the glamorous multi-form companies that marked the high noon of postWorld War II American capitalism. Covering the period from the end of the war to 1983, the author explains why and how the conglomerate movement originated, how it mushroomed, and what caused its startling and rapid decline. Business historian Robert Sobel chronicles the rise and fall of the first Masters of the Universe in the U.S. and describes how the era gave rise to a cadre of imaginative, bold, and often ruthless entrepreneurs who took advantage of a buoyant stock market to create giant enterprises, often through the exchange of overvalued paper for real assets. He covers the likes of Royal Little (Textron), Text Thornton (Litton Industries), James Ling (Ling-Temco-Vought), Charles Bludhorn (Gulf & Western) and Harold Geneen (ITT). This is a good read to put the recent boom and bust in a better perspective. While these men had vastly different personalities and processes, they had a few things in common: ambition, the ability to seize opportunities that others were too risk-averse to take, willing bankers, and the expansive markets of the 1960s. There is something about an expansive market that attracts and creates Masters of the Universe. The Greek called it hubris. The author tells a good joke to illustrate the successes and failures of the period. It seems the young son of a Conglomerateur brings home a stray mongrel dog. His father asks, "How much do you think it's worth?" To which the boy replies, "At least $30,000." The father gently tries to explain the market for mongrel dogs, but the boy is undeterred and the next afternoon proudly announces that he has sold the dog for $50,000. The father is proudly flabbergasted, "You mean you found some fool with that much money who paid you for that dog?" "Not exactly," the son replies, "I traded it for two $25,000 cats." While it lasted, the conglomerate struggles were a great slugfest to watch: the heads of giant corporations battling each other for control of other corporations, and all of it free from the rubric of "synergy." Nobody could pretend there was any synergy between U.S. Steel and Marathon Oil. This was raw capitalist power at work, not a bunch of fluffy dot.commies pretending to defy market gravity. History repeats itself, endlessly, because so few people study history. The stagflation of the 1970s devalued the stock of conglomerates and made it useless a currency to keep the schemes afloat. The wave crashed and waiting on the horizon for the next big wave: the LBO Masters of the 1980s. Robert Sobel was born in 1931 and died in 1999. He was a prolific chronicler of American business life, writing or editing more than 50 books and hundreds of articles and corporate profiles. He was a professor of business history at Hofstra University for 43 years and he a Ph.D. from NYU. ********* 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 * * *