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T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, September 2, 2010, Vol. 13, No. 173
Headlines
A U S T R A L I A
INTERSTAR TITANIUM: Fitch Affirms All Ratings on 2006-1 Notes
C H I N A
BANK OF SHANGHAI: Fitch Upgrades Issuer Default Rating to 'BB'
H O N G K O N G
BROADFIELD INT'L: Court to Hear Wind-Up Petition on October 6
CGF EN: Court to Hear Wind-Up Petition on October 13
ELITE RISE: Creditors' Proofs of Debt Due September 10
GAIN PROFIT: Court to Hear Wind-Up Petition on October 13
GOODREACH GARMENT: Court to Hear Wind-Up Petition on September 29
GROUP POWER: Court Enters Wind-Up Order
HAU LI: Creditors' Meeting Set for September 7
HOLTER INTERNATIONAL: Keung and Yeo Step Down as Liquidators
L.P. CONTRACTORS: Court Enters Wind-Up Order
PHOENIX (FASHION): Court to Hear Wind-Up Petition on September 29
PROSON DEVELOPMENT: Court Enters Wind-Up Order
REVER CREATIVE: Court Enters Wind-Up Order
SEAQUEST INT'L: Court to Hear Wind-Up Petition on October 20
STANFORD CAPITAL: Court Enters Wind-Up Order
SUNNY TECH: Court Enters Wind-Up Order
SUNNY TECH (FAR EAST): Court Enters Wind-Up Order
TRADEVENTURE INTERNATIONAL: Court Enters Wind-Up Order
UNISIGN LIMITED: Keng and Ching Appointed as Liquidators
UNITED PACIFIC: Creditors Get 14.3% Recovery on Claims
YINSON KNITTING: Haughey and Lai Step Down as Liquidators
I N D I A
ARUSH INDUSTRIES: ICRA Assigns 'LBB+' Rating to Bank Debts
CHIMANLAL FEIN: CRISIL Assigns 'BB' Rating to INR100MM Cash Credit
DUTTA ENGINEERING: CRISIL Assigns 'BB-' Rating to INR30MM Loan
ELVE CORPORATION: CRISIL Reaffirms 'P4' Rating on Various Debts
KINGFISHER AIRLINES: To Raise US$356 Million in India & Abroad
KOMOS AUTOMOTIVE: ICRA Reaffirms 'LBB+' Rating on INR20.32cr Loan
KUWER INDUSTRIES: CRISIL Places 'B+' Rating on Various Debts
MOKALBARI KANOI: Fitch Upgrades National Long-Term Rating to 'B+'
MAYUR ROLLER: ICRA Assigns 'LBB' Rating to INR2cr Bank Facilities
MAYUR VENEER: ICRA Assigns 'LBB+' Rating to INR5cr Bank Debts
NAVIN GEMS: Fitch Assigns National Long-Term Rating at 'D'
SATYAVAN SALES: ICRA Assigns 'LBB' Rating to INR7.5cr Bank Debts
STEER OVERSEAS: CRISIL Rates INR700MM Packing Credit at 'P4+'
I N D O N E S I A
MERPATI NUSANTARA: To Purchase 15 New Planes From China
J A P A N
J-CORE FL1: S&P Junks Rating on Class D Certificates from 'B-'
JAPAN AIRLINES: Files Turnaround Plan, Sees Bigger Work Force Cut
JLOC41 LLC: Fitch Downgrades Ratings on Six Classes of Notes
SHINSEI BANK: Moody's Assigns Rating on 2020 Subordinated Notes
K O R E A
SSANGYONG MOTOR: August 2010 Sales More Than Triple
N E W Z E A L A N D
LIGHTER QUAY: Nearly 100 Jobs Lost as Receivers Shut Westin Rooms
SOUTH CANTERBURY: Government May Sell SCF to Foreign Investors
SOUTH CANTERBURY: S&P Downgrades Issuer Credit Ratings to 'D/D'
WENSLEY DEVELOPMENTS: Faces Liquidation Petition From IRD
P H I L I P P I N E S
PHILIPPINE AIRLINES: Flight Crew to File Notice of Strike
T A I W A N
CATHAY DUN: Fitch Ratings on Various Beneficiary Certificates
V I E T N A M
ASIA COMMERCIAL: Fitch Downgrades Individual Rating to 'D/E'
BANK FOR INVESTMENT: Fitch Affirms Individual Rating at 'D/E'
TRAI THIEN: Posts US$537,304 Net Loss in June 30 Quarter
VIETCOMBANK: Fitch Downgrades Individual Rating to 'D/E'
VIETNAM BANK: Fitch Affirms Individual Rating at 'E'
- - - - -
=================
A U S T R A L I A
=================
INTERSTAR TITANIUM: Fitch Affirms All Ratings on 2006-1 Notes
-------------------------------------------------------------
Fitch Ratings has affirmed all ratings of notes issued by
Interstar Titanium Series 2006-1 Trust, and revised three Loss
Severity Ratings, as detailed below. The transaction is backed by
a pool of non-conforming Australian residential mortgages
originated by Interstar Non-Conforming Finance Pty Limited, and
sold by Challenger Inventory Financing Servicing Pty Limited as
approved seller.
-- AUD5.63 million Class A1 (ISIN AU3FN0002747) affirmed at
'AAAsf'; Outlook Stable; Loss Severity Rating revised to
'LS-3' from 'LS-2';
-- AUD1.17 million Class A2 (ISIN AU3FN0002754) affirmed at
'AAAsf'; Outlook Stable; Loss Severity Rating revised to
'LS-5' from 'LS-2';
-- AUD21.95 million Class B (ISIN AU3FN0002838) affirmed at
'AAsf'; Outlook Stable; Loss Severity Rating 'LS-2';
-- AUD14.55 million Class C (ISIN AU3FN0002853) affirmed at
'BBBsf'; Outlook Stable; Loss Severity Rating revised to
'LS-2' from 'LS-3'; and
-- AUD6.15 million Class D (ISIN AUSFN0002788) affirmed at
'BBsf'; Outlook Stable; Loss Severity Rating 'LS-3'.
The rating affirmations and Stable Outlooks reflect Fitch's view
that the available credit enhancement levels are sufficient to
support the notes at their current ratings, and that the credit
quality and performance of the loans in the current collateral
pool remain in line with the agency's expectations.
"The ratings are supported by high levels of subordination as the
transaction has paid down, and by a significant level of excess
spread reserve fund and excess income, which have been available
to meet losses when realized," says April Chen, Associate Director
in Fitch's Structured Finance team.
The Class A1 and A2 notes had paid down by 97.3% of their issuance
balances as at the end of May 2010, which in turn increased the
credit enhancement for each class by at least three times the
closing levels. As expected, delinquencies have been consistently
high during most of the life of this transaction, with
delinquencies of over 30 days past due at the end of May 2010
being 24.7%. Multiple foreclosures have occurred to date and are
expected to continue to occur within this transaction. The loss
data for the past 12 months has indicated a lower loss rate than
that experienced from mid-2007 to early 2009. The average number
sof days from possession to sale has also diminished.
The excess spread reserve fund has built-up to AUD 1.56 million
(around 3% of the current total outstanding mortgage balance) as
at the end of June 2010. In addition to the reserve fund, a
significant level of excess income has allowed all realized losses
to be reimbursed, while the cumulative loss rate is low at 0.36%
of the closing collateral balance. To date, no notes have been
charged off, and the excess spread reserve fund has not been
drawn.
Fitch has incorporated adjustments to loss severity assumptions,
based on historical loss data, in its default model and applied
stresses in the cash flow analysis.
=========
C H I N A
=========
BANK OF SHANGHAI: Fitch Upgrades Issuer Default Rating to 'BB'
--------------------------------------------------------------
Fitch Ratings upgraded Bank of Shanghai's Long-term Issuer Default
Rating and Support Rating Floor to 'BB' from 'BB-'. At the same
time, the agency has affirmed BoS' Short-term IDR at 'B',
Individual Rating at 'D' and Support Rating at '3'. The Outlook
is Stable.
The upgrades are based on the agency's view that the capacity of
the local and central governments to provide support to BoS in the
event of stress has qualitatively strengthened in recent years.
Since the agency began rating BoS in 2004, when a Long-term IDR of
'BB-' was conferred, the Shanghai government's annual fiscal
surplus has more than doubled, the central government's holdings
of foreign exchange reserves has increased four-fold to
CNY2.4 trillion in H110. At the same time government debt/GDP
remains a relatively low 24% (excluding local government debt).
BoS's largest shareholder is the Shanghai municipal government,
which, together with district-level units, holds a combined 39%
stake via a handful of wholly-owned corporate subsidiaries. With
an 8% market share of local loans and deposits, BoS is considered
to be an important financial entity in Shanghai. The agency
believes that the local government's efforts to transform the city
into an international financial centre also increase the
likelihood that BoS would receive support if required.
BoS's 'D' Individual Rating reflects its strong local franchise
and good management compared to other city commercial banks, but
is constrained by modest capitalization and concerns about the
medium-term outlook for asset quality across the industry; BoS has
among the smaller loan portfolios of Chinese banks. After very
rapid growth of 31% in 2009, loan growth moderated to a still-
robust 13% (un-annualized) in H110. Despite concerns about a
future deterioration in asset quality across the industry, thus
far, BoS's asset quality figures have been improving in tandem
with the economic rebound. NPLs and Special Mention loans stood
at 1.34% and 0.81% of total loans, respectively, in H110.
The tightened credit environment in 2010 has strengthened the
pricing power of Chinese banks in their lending business, boosting
BoS's net interest margin and RoAA to above 2.6% and 1%,
respectively, in H110 (2009: 2.4% and 0.87% ). However, fee
income is still well below that of listed banks.
BoS completed a CNY3.7bn equity private placement in H110,
resulting in a modest lift in capitalization. At end-H110, the
ratios of tangible equity/net loans, Tier 1 CAR, and Total CAR
stood at 10%, 9.3% and 10.9%, respectively (2009: 9.6%, 8.5% and
10.3%). Like all Chinese banks, BoS has a large mismatch of
maturities between assets and liabilities due to its large amount
of short-term deposit funding. That said, with a smaller loan
portfolio, BoS has a higher amount of liquid assets on hand to
cushion liquidity strains than other banks its size.
BoS's Long-term IDR is based on government support and is tied to
trends in the sovereign rating. The Individual Rating should
remain stable over the near term, but could be revised down in the
event of future asset quality deterioration across the industry.
================
H O N G K O N G
================
BROADFIELD INT'L: Court to Hear Wind-Up Petition on October 6
-------------------------------------------------------------
A petition to wind up the operations of Broadfield International
Limited will be heard before the High Court of Hong Kong on
October 6, 2010, at 9:30 a.m.
Good Profit Development Limited filed the petition against the
company on August 4, 2010.
The Petitioner's solicitors are:
So, Lung & Associates
15th Floor, Ming An Plaza Phase 2
8 Sunning Road
Causeway Bay, Hong Kong
CGF EN: Court to Hear Wind-Up Petition on October 13
----------------------------------------------------
A petition to wind up the operations of CGF En Bio-Tech
International Company Limited will be heard before the High Court
of Hong Kong on October 13, 2010, at 9:30 a.m.
C & A Investment (Int'l) Company Limited filed the petition
against the company on August 9, 2010.
The Petitioner's solicitors are:
Kelvin Cheung & Co
Unit 101, 1st Floor
Hong Kong Trade Centre
161-167 Des Voeux Road
Central, Hong Kong
ELITE RISE: Creditors' Proofs of Debt Due September 10
------------------------------------------------------
Creditors of Elite Rise Investment Limited, which is in members'
voluntary liquidation, are required to file their proofs of debt
by September 10, 2010, to be included in the company's dividend
distribution.
The company's liquidators are Kong Chi How Johnson and Lo Siu Ki.
GAIN PROFIT: Court to Hear Wind-Up Petition on October 13
---------------------------------------------------------
A petition to wind up the operations of Gain Profit (HK) Limited
will be heard before the High Court of Hong Kong on October 13,
2010, at 9:30 a.m.
Hussain Shoukat filed the petition against the company on
August 9, 2010.
The Petitioner's solicitors are:
Lo, Wong & Tsui
Suites 1706-1708, 17th Floor
China Merchants Tower
Shun Tak Centre
168-200 Connaught Road
Central, Hong Kong
GOODREACH GARMENT: Court to Hear Wind-Up Petition on September 29
-----------------------------------------------------------------
A petition to wind up the operations of Goodreach Garment Trading
Limited will be heard before the High Court of Hong Kong on
September 29, 2010, at 9:30 a.m.
Wong Ka Man filed the petition against the company on July 28,
2010.
GROUP POWER: Court Enters Wind-Up Order
---------------------------------------
The High Court of Hong Kong entered an order on August 18, 2010,
to wind up the operations of Group Power Corporation Limited.
The official receiver is E T O'Connell.
HAU LI: Creditors' Meeting Set for September 7
----------------------------------------------
Creditors of Hau Li Loi Decoration & Design Eng. Limited will hold
their meeting on September 7, 2010, at 2:30 p.m., for the purposes
provided for in Sections 241, 242, 243, 244 and 255A of the
Companies Ordinance.
The meeting will be held at Room 204, 2/F., Malaysia Building, 50
Gloucester Road, Wanchai, in Hong Kong.
HOLTER INTERNATIONAL: Keung and Yeo Step Down as Liquidators
------------------------------------------------------------
Stephen Liu Yiu Keung and Yeo Boon Ann stepped down as liquidators
of Holter International Limited on July 26, 2010.
L.P. CONTRACTORS: Court Enters Wind-Up Order
--------------------------------------------
The High Court of Hong Kong entered an order on July 30, 2010, to
wind up the operations of L.P. Contractors & Construction (Group)
Limited.
The company's liquidator is:
Mat Ng
John Lees Associates
20/F Henley Building
5 Queen's Road
Central, Hong Kong
PHOENIX (FASHION): Court to Hear Wind-Up Petition on September 29
-----------------------------------------------------------------
A petition to wind up the operations of Phoenix (Fashion) Trading
Limited will be heard before the High Court of Hong Kong on
September 29, 2010, at 9:30 a.m.
Wong Ka Man filed the petition against the company on July 28,
2010.
PROSON DEVELOPMENT: Court Enters Wind-Up Order
----------------------------------------------
The High Court of Hong Kong entered an order on August 13, 2010,
to wind up the operations of Proson Development Limited.
The company's liquidator is:
Mat Ng
John Lees Associates
20/F Henley Building
5 Queen's Road
Central, Hong Kong
REVER CREATIVE: Court Enters Wind-Up Order
------------------------------------------
The High Court of Hong Kong entered an order on August 18, 2010,
to wind up the operations of Rever Creative Press Limited.
The official receiver is E T O'Connell.
SEAQUEST INT'L: Court to Hear Wind-Up Petition on October 20
------------------------------------------------------------
A petition to wind up the operations of Seaquest International
Investment Limited will be heard before the High Court of
Hong Kong on October 20, 2010, at 9:30 a.m.
Bank of China (Hong Kong) Limited filed the petition against the
company on August 17, 2010.
The Petitioner's solicitors are:
Gallant Y.T. Ho & Co
5th Floor, Jardine House
No. 1 Connaught Place
Central, Hong Kong
STANFORD CAPITAL: Court Enters Wind-Up Order
--------------------------------------------
The High Court of Hong Kong entered an order on August 18, 2010,
to wind up the operations of Stanford Capital Finance Limited.
The official receiver is E T O'Connell.
SUNNY TECH: Court Enters Wind-Up Order
--------------------------------------
The High Court of Hong Kong entered an order on August 18, 2010,
to wind up the operations of Sunny Tech Industrial Limited.
The official receiver is E T O'Connell.
SUNNY TECH (FAR EAST): Court Enters Wind-Up Order
-------------------------------------------------
The High Court of Hong Kong entered an order on August 18, 2010,
to wind up the operations of Sunny Tech (Far East) Industrial
Limited.
The official receiver is E T O'Connell.
TRADEVENTURE INTERNATIONAL: Court Enters Wind-Up Order
------------------------------------------------------
The High Court of Hong Kong entered an order to wind up the
operations of Tradeventure International Limited.
The company's liquidator is:
Mat Ng
John Lees Associates
20/F Henley Building
5 Queen's Road
Central, Hong Kong
UNISIGN LIMITED: Keng and Ching Appointed as Liquidators
--------------------------------------------------------
Stephen Liu Yiu Keung and David Yen Ching Wai on August 5, 2010,
were appointed as liquidators of Unisign Limited.
The liquidators may be reached at:
Stephen Liu Yiu Keung
David Yen Ching Wai
62/F One Island East
18 Westlands Road
Island East, Hong Kong
UNITED PACIFIC: Creditors Get 14.3% Recovery on Claims
------------------------------------------------------
United Pacific Enterprises Limited, which is in liquidation, will
pay the ordinary dividend to its creditors on September 17, 2010.
The company will pay 14.3% for ordinary claims.
The company's liquidator is:
Stephen Liu Yiu Keung
62/F One Island East
18 Westlands Road
Island East, Hong Kong
YINSON KNITTING: Haughey and Lai Step Down as Liquidators
---------------------------------------------------------
Darach E. Haughey and Lai Kar Yan (Derek) stepped down as
liquidators of Yinson Knitting Limited on August 12, 2010.
=========
I N D I A
=========
ARUSH INDUSTRIES: ICRA Assigns 'LBB+' Rating to Bank Debts
----------------------------------------------------------
ICRA has assigned an 'LBB+' rating to the INR7.25 crores fund
based limits of Arush Industries. ICRA has also assigned an A4+
rating to the INR2.50 crores non-fund based limits of AI. The
outlook on the long-term rating is stable. The ratings take into
account the highly competitive nature of the battery manufacturing
industry, exposure of AI's profitability to movement in raw
material prices and the likely impact on AI's profitability after
the current tax incentives expire. While assigning the ratings,
ICRA has also noted that AI is a newly set up firm and its
manufacturing operations are yet to stabilize.
The rating is also constrained by the risks inherent in
partnership firms like limited ability to raise capital and the
risk of dissolution. Nevertheless the ratings derive comfort from
AI's experienced management, the established track record of the
Okaya group in the battery business and the benefits enjoyed by
the firm from being a part of the Okaya group which include a
well- established brand image and a strong distribution network.
The rating also factors in the favorable capital structure as the
entire capital cost has been funded through equity infusion by
promoters. Going forward, the firm's ability to stabilize the
operations of the new unit and achieve desired production and
sales volumes remains the key rating sensitivity factor.
AI is a partnership firm promoted by Mr. OP Gupta and his family
members. The firm is a part of Microtek-Okaya Group which has
been in the business of power back-up solutions and manufacturing
of batteries for more than a decade. AI was set up in 2010 for
production of batteries and its components. The manufacturing
unit of the firm is located at Baddi in Himachal Pradesh and has a
production capacity of 3 lakh batteries per annum. The firm sells
batteries under the brand name 'Okaya'.
CHIMANLAL FEIN: CRISIL Assigns 'BB' Rating to INR100MM Cash Credit
------------------------------------------------------------------
CRISIL has assigned its 'BB/Stable' rating to Chimanlal Fein Paper
Pvt Ltd's bank facilities.
Facilities Ratings
---------- -------
INR100.0 Million Cash Credit BB/Stable (Assigned)
INR20.0 Million Letter of Credit/ BB/Stable (Assigned)
Bank Guarantee
The rating reflects Chimanlal's weak financial risk profile,
marked by high gearing and weak debt protection metrics,
geographically concentrated revenue profile, large working capital
requirements, and exposure to supplier concentration risks. These
rating weaknesses are partially offset by Chimanlal's established
market position and promoters' experience in paper trading
business, and the benefits that the company derives from having
long standing relationship with reputed customers.
Outlook: Stable
CRISIL believes that Chimanlal will continue to benefit from its
established market position and promoters' experience in paper
trading business, over the medium term. The rating outlook may be
revised to 'Positive' if Chimanlal reports more-than-expected
operating income growth and cash accruals, translating into large
accretion to the company's net worth and better liquidity.
Conversely, the outlook may be revised to 'Negative' in case the
company undertakes a large debt-funded capital expenditure
programme, leading to deterioration in its capital structure, or
its business volumes and profitability declines sharply, leading
to further strain on the company's financial risk profile,
particularly on liquidity.
About Chimanlal Fein
Chimanlal was incorporated as Bombay Calcutta Paper and General
Company Pvt Ltd by the Shah family in 1949. The company's name was
changed to the current one in June 1999. Mr. Hasit Shah is the
third-generation entrepreneur of the Shah family managing the
papers products trading business. Chimanlal is an authorized
distributor of paper products for The West Coast Paper Mills (West
Coast) Ltd and Asia Pulp and Paper (APP). Chimanlal's customers
include institutional buyers, including banks, financial
institutions, stationary retailers, and large printing and
publishing houses. The company operates from its head office in
Mumbai and a sales branch office in Bangalore.
Chimanlal reported a profit after tax (PAT) of INR1.8 million on
net sales of INR383 million for 2008-09 (refers to financial year,
April 1 to March 31), against a PAT of INR1.4 million on net sales
of INR391 million for 2007-08.
DUTTA ENGINEERING: CRISIL Assigns 'BB-' Rating to INR30MM Loan
--------------------------------------------------------------
CRISIL has assigned its 'BB-/Stable/P4+' ratings to the bank
facilities of Dutta Engineering Works.
Facilities Ratings
---------- -------
INR30.0 Million Cash Credit BB-/Stable (Assigned)
INR10.0 Million Bank Guarantee P4+ (Assigned)
INR15.0 Million Letter of Credit P4+ (Assigned)
The ratings reflect Dutta's small scale of operations, modest
profitability, and significant customer concentration. These
rating weaknesses are partially offset by Dutta's promoter's
industry experience.
Outlook: Stable
CRISIL believes that Dutta will continue to benefit over the
medium term from its established relationships with customers and
promoters' industry experience. The outlook may be revised to
'Positive' if Dutta's revenues and cash accruals increase, driven
most likely by an increase in the firm's scale of operations.
Conversely the outlook may be revised to 'Negative' if the firm's
financial risk profile deteriorates, driven most likely by a
decline in margins or cash accruals, or stretched working capital
cycle adversely affecting liquidity and debt protection
indicators.
About Dutta Engineering
Dutta is a partnership firm, set up by Mr. B K Dutta and family in
1997. The firm is into fabrication, erection, and procurement of
components for heavy industries such as steel, cement, and power
industries. The firm has two fabrication units in Bhillai,
Chattisgarh.
Dutta reported, on provisional basis, a profit after tax (PAT) of
INR9.7 million on net sales of INR167.6 million for 2009?10
(refers to financial year, April 1 to March 31); it reported a PAT
of INR5.4 million on net sales of INR116.4 million for 2008?09.
ELVE CORPORATION: CRISIL Reaffirms 'P4' Rating on Various Debts
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Elve Corporation, which
is part of the Gajra group, continue to reflect the Gajra group's
weak financial risk profile, marked by high gearing, and exposure
to risks related to volatility in raw material prices and foreign
exchange rates. These rating weaknesses are partially offset by
the group's established market position in the automobile
replacement gears industry.
Facilities Ratings
---------- -------
INR110.00 Million Bill Discounting P4 (Reaffirmed)
INR75.00 Million Packing Credit P4 (Reaffirmed)
INR40.00 Million Letter of Credit P4 (Reaffirmed)
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of Elve, Gajra Gears Pvt Ltd and Gajra
Differential Gears Pvt Ltd, together referred to as the Gajra
group. This is because all the companies are in the same line of
business and are owned by the same promoter group. Also, there are
significant inter-party transactions within the group. More than
90 per cent of Elve's sales comes from GGPL and GDGPL.
About Gajra Group
Elve is part of the Gajra group. In 1950, the group set up Elve
as a partnership firm for trading in diesel engines and spares. In
1962, the group started GGPL and in 1991, GDGPL.
Elve is the exporting arm of the Gajra group and exports
automobile transmission gears and differential gears by procuring
it from GGPL and GDGPL. The firm caters to the replacement market
and has presence in around 14 countries including the US, Canada,
Germany, the UK and Malaysia.
GGPL manufactures automobile transmission gears engine gears, oil
pump gears, automatic transmission parts, gear box assemblies and
castings. 50 per cent of the sales are to Elve, 35 per cent to the
replacement market and 15 per cent to the original equipment
manufacturers (OEMs).
GDGPL manufactures a wide range of crown wheel and pinions, bevel
gears, bevel pinions, spider kit assemblies, and differential
cages for commercial vehicles. 50 per cent of its sales are to
Elve; the remaining is to the replacement market.
The Gajra group reported, on provisional basis, a profit after tax
(PAT) of INR0.10 million on net sales of INR1.05 billion for 2009-
10 (refers to financial year, April 1 to March 31); it reported a
net loss of INR12.60 million on net sales of INR1.51 billion for
2008-09.
KINGFISHER AIRLINES: To Raise US$356 Million in India & Abroad
--------------------------------------------------------------
Bloomberg News reports that Kingfisher Airlines Ltd. plans to
raise US$356 million selling shares to pare debt and help fund
expansion.
Citing an e-mailed statement from the carrier, Bloomberg relates
that Kingfisher seeks to collect as much as US$250 million from a
sale of global depositary receipts and INR5 billion ($106 million)
from a local equity offering. The plan should be completed in
three to four months, it said.
Bloomberg notes that Kingfisher, owned by India's biggest brewer,
is restructuring after the global recession and a slowdown in the
local economy forced it to slash capacity.
Bloomberg reports that United Breweries Holdings Ltd., the
airline's parent, also decided to convert loans of about
INR6.5 billion extended to Kingfisher into preference shares.
The Reserve Bank of India, the central bank, in July asked 13 of
the nation's top banks to formulate a common policy to restructure
debt at airlines, the Mint newspaper reported, citing minutes of a
meeting. The central bank wanted banks to form consortiums for
restructuring debt rather than provide on-time relief to
individual companies, it said.
The airline has tasked SBI Capital Markets Ltd. with the financial
restructuring. The company earlier appointed Citigroup Inc.,
Morgan Stanley, CLSA and UBS AG as bankers for a global depositary
receipt sale of about $200 million.
About Kingfisher Airlines
Headquartered in Mumbai, India, Kingfisher Airlines --
http://www.flykingfisher.com/-- formerly known as Deccan
Aviation Ltd., serves about 35 domestic destinations with a fleet
of more than 40 aircraft, including Airbus jets and ATR 72
turboprops. It maintains bases in major cities such as Delhi and
Mumbai. Kingfisher Airlines is a unit of UB Holdings, best known
for its United Breweries unit, and the carrier shares the
Kingfisher brand with a popular Indian beer. UB Holdings also
owns a stake in another domestic carrier, Air Deccan, whose
operations it combined with Kingfisher Airlines in mid-2008.
Kingfisher Airlines began flying in 2005.
* * *
Kingfisher Airlines posted three consecutive net losses of
INR21.40 billion, INR1.89 billion, and INR4.2 billion for the
FY2007 through FY2009.
KOMOS AUTOMOTIVE: ICRA Reaffirms 'LBB+' Rating on INR20.32cr Loan
-----------------------------------------------------------------
ICRA has reaffirmed 'LBB+' rating to INR20.32 crore1 term loan and
INR3.12 crore fund based limits of Komos Automotive India Private
Limited. The outlook on the long-term rating is stable The rating
re-affirmation takes into account the weak financial profile of
the company characterized by highly leveraged capital structure
and its exposure to currency fluctuations due to import of its
major raw material, which impacts margins.
The rating also takes into account the company's decreasing
operating margins due to the annual price reductions offered to
customer HMIL and low pricing flexibility on account of the
significant dependence on a single customer. The rating
positively factors in the relatively low order volatility from its
sole customer HMIL and its technological tie up with its parent
company resulting in high operating efficiency. KAIPL has strong
relations with HMIL by virtue of its parentage and is the sole
supplier of steering wheel for i10 and i20 models of HMIL
manufactured in India.
About Komos Automotive
Komos Automotive India Private Limited, a 100% subsidiary of Seco
Komos Korea (an auto ancillary catering to Hyundai Motor Company,
Korea) was setup in 2008 for manufacturing steering wheel, trims,
console and other plastic materials for catering to requirements
of Hyundai Motors India Limited in India.
Recent Results
As per the provisional financials, the company?s net loss for the
year 2009-10 stood at INR1.8 crore on an operating income of
INR62.5 crore.
KUWER INDUSTRIES: CRISIL Places 'B+' Rating on Various Debts
------------------------------------------------------------
CRISIL has assigned its 'B+/Stable/P4' ratings to the bank
facilities of Kuwer Industries Ltd.
Facilities Ratings
---------- -------
INR45.0 Million Cash Credit Limit B+/Stable (Assigned)
INR29.6 Million Proposed Long Term B+/Stable (Assigned)
Bank Facility
INR10.4 Million Rupee Term Loan B+/Stable (Assigned)
INR25.00 Million Letter of Credit P4 (Assigned)
The ratings reflect KIL's weak financial risk profile, marked by
small net worth and weak debt protection measures, and small scale
of operations. These rating weaknesses are partially offset by the
benefits that KIL derives from its promoters' experience in the
packaging industry.
Outlook: Stable
CRISIL believes that KIL will continue to benefit over the medium
term from its established marketing network and customer base.
However, the company's financial risk profile is expected to
remain weak during this period because of low profitability and
high interest charges. The outlook may be revised to 'Positive' if
the company registers more-than-expected cash accruals, leading to
improvement in its financial risk profile. Conversely, the outlook
may be revised to 'Negative' if the company reports lower-than-
expected profitability, leading to deterioration in its financial
risk profile.
About Kuwer Industries
Incorporated in 1993, KIL manufactures holographic films. Its
product range includes flexible packaging material (used in
packaging of food, pharmaceuticals, and consumer goods), textiles
(for decorative purpose on garments), and hologram stickers. The
company's plant in Noida (Uttar Pradesh) has capacity of 2400
tonnes per annum.
KIL reported a profit after tax (PAT) of INR2.2 million on net
sales of INR332 million for 2008-09 (refers to financial year,
April 1 to March 31), against a net loss of INR2.5 million on net
sales of INR170 million for 2007-08.
MOKALBARI KANOI: Fitch Upgrades National Long-Term Rating to 'B+'
-----------------------------------------------------------------
Fitch Ratings has upgraded India's Mokalbari Kanoi Tea Estate Pvt.
Ltd.'s National Long-term rating to 'B+(ind)' from 'B(ind)' with a
Stable Outlook. The agency has also upgraded MKTL's INR105m long-
term loans and its INR90 million fund-based limits (cash credit,
enhanced from INR70m) to 'B+(ind)' from 'B(ind)'. At the same
time, the agency has assigned a Short-term rating of 'F4(ind)' to
its INR0.6 million non-fund based limits.
MKTL's rating upgrade represents a significant improvement in its
financial performance in FY10 with EBIDTA margins of 24.9% (FY09:
15.5%), revenues of INR286.1 million (FY09: INR191.1 million), and
net leverage of 2.9x (FY09: 5.9x). Fitch notes that the company
benefited from the recent capex completed and better price
realizations for tea in FY10. The ratings are further supported
by the long experience of MKTL's promoters in the domestic tea
industry, its tea estates in Assam, and the favorable market
outlook over the short-to-medium term driven by the rising demand
and global production shortfall of tea.
The ratings continue to be constrained MKTL's relatively small
size, higher working capital requirements, and susceptibility of
its agricultural operations to climatic variations.
MKTL's ratings could be further upgraded if there is a substantial
increase in its volumes, along with a sustained net leverage of
below 2x and EBIDTA interest cover exceeding 3x. However, a
significant fall in MKTL's average realization or EBIDTA margins
and/ or an increase in its debt, which would lead to an increase
in its net leverage of beyond 3.5x, could put downward pressure on
the ratings.
MKTL, incorporated in 1981 as Opera Estates Pvt Ltd, changed its
name to Mokalbari Kanoi Tea Estate Pvt Ltd in 2005. It is
primarily involved in the cultivation of green tea leaves and
processing them into different types of black tea.
MAYUR ROLLER: ICRA Assigns 'LBB' Rating to INR2cr Bank Facilities
-----------------------------------------------------------------
ICRA has assigned an 'LBB' rating to the INR2.00 crore fund based
bank facilities of Mayur Roller Flour Mills Private Limit. ICRA
has also assigned an 'A4' rating to the INR18.00 crore non-fund
based bank facilities of MRFM. The outlook on the long-term
rating is stable. The ratings reflect MRFM's relatively small
scale of operations, highly competitive industry and the company's
weak financial profile characterized by low profitability and
depressed coverage indicators. The company's exposure to foreign
currency fluctuation risks related to imports and susceptibility
to fluctuations in prices of timber also impact the assigned
ratings. The ratings, however, factor in the track record of the
promoters in the plywood industry, low working capital intensity
of the business and an improvement in the business prospects for
the real estate sector, especially the residential segment.
ICRA also notes that other group entities, namely Mayur Ply
Industries Private Limited and Mayur Veneer & Plywood Industries
(MVPI, rated by ICRA at LBB+ (Stable)/ A4+) are engaged in
producing value?added items like plywood and veneer, respectively.
Sales to these entities, which account for a significant portion
of MRFM?s total turnover, reduce the demand risk to a certain
extent.
About Mayur Roller
Mayur Roller Flour Mills Private Limited, promoted by the Guwahati
based More family, was incorporated as a private limited company
in 1997. At present, the company is mainly engaged in trading of
timber logs and swan timber. The company has its warehouse near
Kolkata. Recent Results During 2008-09 the company reported a
profit after tax (PAT) of INR 0.11 crore on an operating income of
INR 30.10 crore. MRFM reported a profit before tax of INR0.23
crore (provisional) in 2009-10 on an operating income of INR46.58
crore (provisional).
MAYUR VENEER: ICRA Assigns 'LBB+' Rating to INR5cr Bank Debts
-------------------------------------------------------------
ICRA has assigned an 'LBB+' rating to the INR5.00 crore fund based
bank facilities of Mayur Veneer & Plywood Industries, a unit of
Amrit Supply Company Private Limited. ICRA has also assigned an
'A4+' rating to the INR30.10 crore non-fund based bank facilities
of MVPI. The outlook on the long-term rating is stable. The
ratings reflect MVPI's relatively small scale of operations and
high competition intensity in the industry leading to nominal
amount of absolute profits. The company's exposure to foreign
currency fluctuation risks related to imports and susceptibility
of margins to adverse movement in prices of timber also impact the
assigned ratings. The ratings also factor in the track record of
the promoters in the plywood industry, an improvement in the
business prospects for the real estate sector, especially the
residential segment and location of the manufacturing facility
close to the Kolkata port that reduces inward freight costs. In
addition, significant portion of total sales of MVPI to Mayur Ply
Industries Private Limited, the holding company of ASCPL, located
adjacent to MVPI also reduces MVPI?s outward freight costs.
Mayur Veneer. & Plywood Industries, a unit of Amrit Supply Company
Private Limited, promoted by the Guwahati based More family, was
incorporated in 1998. The company is mainly engaged in trading of
timber and manufacturing of veneer. The company has its
manufacturing facilities located near Kolkata. Recent Results
During 2008-09 ASCPL reported a profit after tax (PAT) of INR 0.81
crore on an operating income of INR51.29 crore. During 2009-10
MVPI reported a profit before tax (PBT) of INR 0.27 crore
(provisional) on an operating income of INR77.57 crore
(provisional).
NAVIN GEMS: Fitch Assigns National Long-Term Rating at 'D'
----------------------------------------------------------
Fitch Ratings has assigned India's Navin Gems a National Long-term
rating of 'D(ind)'. The agency has also assigned a 'D(ind)'
rating to Navin's INR390 million export packing credit limits and
an 'F5(ind)' rating to its INR940 million post shipment credit
limits.
The ratings primarily reflect delays by Navin in interest payments
(30-35days) over a year on account of pressure on its receivable
days and which continue till date. The company's higher working
capital requirements over the last few years have resulted in
substantial liquidity pressure. It is facing short-term pressures
on account of export receivables factoring due to delayed payments
from its customers. This resulted in a substantial increase in
its interest costs in FY09 and FY10. The ratings also reflect the
company's partnership nature, negative profitability margins and
high working capital requirements. The agency notes that Navin's
business is exposed to competition from various players in the
gems and jewellery sector. Its sales were adversely impacted due
to the economic slowdown that had impacted the European markets,
the key market for the company.
Fitch will continue to monitor Navin's progress and its ability to
meet its financial obligations. The agency believes that an
improvement in Navin's revenues and margins on a sustained basis
will lead to better liquidity position and timely interest
payments, which would act as positive ratings triggers.
In FY10, the company reported revenues of INR1,223.5 million
(FY09: INR2,341.8 million), an EBITDA of INR-44.1 million and
EBITDA margins of -3.6% (FY09: INR407.5 million and margins
17.4%). It reported a net profit of INR-100.5 million and profit
margins of -8.2% in FY10 (FY09: INR-21.9 million and margins of -
0.9%).
Incorporated in 1977, Navin is a partnership firm engaged in the
import of rough diamonds, their cutting and polishing as well as
the export of cut and polished diamonds.
SATYAVAN SALES: ICRA Assigns 'LBB' Rating to INR7.5cr Bank Debts
----------------------------------------------------------------
ICRA has assigned an 'LBB' rating to the INR7.5 crore, fund based
limits of Satyavan Sales Promotion Private Limited. ICRA has also
assigned an 'A4' rating to the INR7.5 crore non-fund based limits
of SSPPL. The outlook on the long term rating is stable. The
ratings of SSPPL are constrained by start up nature of operations
with the company having commenced trading operations only from
March 2010; moderately high financial risk profile characterised
by low return indicators and moderate coverage indicators on a
projected basis and high customer concentration risk. The ratings,
however factor in the long experience of the promoters in the
paper business and favorable demand growth prospects for the
industry.
Satyavan Sales Promotion Private Limited was incorporated in 1995
for investment in shares and other investments. In August 2008,
the company was acquired by Shri Vikas Kumar Agarwal and Shri
Pankaj Goel. In March 2010, the company altered its main object
to deal in trading of papers and waste paper, chemicals, fabrics,
baggasse, straw, Tanta & other agro based raw materials. The
company is currently engaged in trading of printing and writing
paper, waste paper and major agro based products like paddy husk
and wheat straw. The company has two associate companies, Neeraj
Paper Marketing Limited and Neeraj Paper Agencies Limited, which
are also involved in trading of paper products.
Recent Results
In 2009-10 (provisional numbers), SSPPL reported an operating
income of INR2.2 crore. The firm?s operating profit before
depreciation, interest and tax was INR0.05 crore. SSPPL?s reported
a profit after tax (PAT) of INR0.01 crore in 2009-10 (provisional
numbers).
STEER OVERSEAS: CRISIL Rates INR700MM Packing Credit at 'P4+'
-------------------------------------------------------------
CRISIL has assigned its 'P4+' rating to Steer Overseas Pvt Ltd's
bank facilities.
Facilities Ratings
---------- -------
INR700.0 Million Export Packing Credit P4+ (Assigned)
The rating reflects SOPL's moderate financial risk profile marked
by weak debt protection metrics, and susceptibility to changes in
regulations pertaining to iron ore exports. These rating
weaknesses are partially offset by the strong track record of
SOPL's promoter family in iron ore mining, and the benefits that
the company derives from operational linkages with other group
companies.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of SOPL and its 100 per cent subsidiary,
Global Up International Ltd. This is because both the companies
are under a common management, and have significant business and
financial linkages.
About Steer Overseas
Incorporated in 2004 by the Jagadish Misra faction of the Misra
family of Kolkata, SOPL is engaged in the export of iron ore lumps
and iron ore fines. The Misra family has been in the iron ore
mining business for more than 40 years. SOPL is currently managed
by Mr. Sourav Misra and Mr. Soham Misra, Mr. Jagadish Misra's
sons. In 2010, SOPL incorporated a 100 per cent subsidiary in Hong
Kong, GUIL, to primarily cater to the Chinese markets.
SOPL reported a provisional profit after tax (PAT) of INR26.4
million on net sales of INR3.5 billion for 2009-10 (refers to
financial year, April 1 to March 31), as against a PAT of
INR5 million on net sales of INR2.1 million for 2008-09.
=================
I N D O N E S I A
=================
MERPATI NUSANTARA: To Purchase 15 New Planes From China
-------------------------------------------------------
The Jakarta Post reports that State-owned Enterprises Minister
Mustafa Abubakar said he expects the purchase of 15 new aircraft
from China for state-run Merpati Nusantara airline to be settled
by end of the year.
Merpati Nusantara has reportedly received US$232 million in loans
from the Chinese government and Exim Bank of China to buy the
aircraft, the report says.
About Merpati Nusantara
Headquartered in Jakarta, Indonesia, PT Merpati Nusantara
Indonesia -- http://www.merpati.co.id/-- is a state-owned
carrier that services predominantly international routes.
Merpati Nusantra has been suffering from massive debts and soaring
costs, and is now under a restructuring program of the Asset
Management Company (PPA), the state-sanctioned agency tasked to
restructure ailing state firms, the Troubled Company Reporter-Asia
Pacific reported on Feb. 25, 2009, citing Jakarta Globe. The
company has a total debt of IDR2.2 trillion to two other state
firms, plus around IDR800 billion it owes as part of employee
layoff settlements, following the dismissal of up to 1,300 workers
on a voluntary basis.
=========
J A P A N
=========
J-CORE FL1: S&P Junks Rating on Class D Certificates from 'B-'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'CCC (sf)' from 'B-
(sf)' its rating on class D of the J-CORE FL1 Trust Certificate
transaction. At the same time, Standard & Poor's affirmed its
ratings on classes C, E, and X issued under the same transaction.
The class A and B trust certificates were redeemed on the trust
distribution date in April 2008. Under the J-CORE FL1
transaction, a total of ?16.6 billion trust certificates were
issued in December 2006.
The transaction's remaining specified bond (the specified bond,
which originally represented about 8.3% of the total initial
issuance amount of the trust certificates, is backed by a regional
retail property) defaulted in March 2010. Since then, the
servicer has been engaged in collection procedures relating to the
specified bond.
S&P downgraded class D because S&P lowered its assumption with
regard to the likely collection amount from the transaction's
remaining specified bond considering the status of the collection
procedure of the servicer. S&P currently assume that the value of
the property that S&P revised this time is about 45% of its
initial underwriting value.
At the same time, S&P affirmed its 'AAA (sf)' rating on class C
because: (1) the loan-to-value (LTV) ratio (outstanding balance of
class C/assumed value of the property) is low; and (2) a certain
level of redemption payments are likely to be made to the class C
trust certificates by the transaction's legal final maturity date
using cash flow from the collateral property.
J-CORE FL1 is a multi-borrower CMBS (commercial mortgage-backed
securities) transaction. The trust certificates were originally
backed by three Tokkin loans extended to Tokkin trustees that each
owns one specified bond backed by real estate trust beneficial
interests and by one additional nonrecourse loan, which is backed
by Tokkin beneficial interests and real estate trust beneficial
interests. The transaction was arranged by Deutsche Securities
Inc. ORIX Asset Management & Loan Services Corp. acts as the
servicer for this transaction.
The ratings address the full payment of interest and the ultimate
repayment of principal by the transaction's legal final maturity
date in April 2012 for the class C to E trust certificates and the
timely payment of available interest for the class X trust
certificates.
Rating Lowered
J-CORE FL1 Trust Certificate
JPY16.6 billion floating-rate trust certificates due April 2012
Class To From Initial Issue Amount
----- -- ---- --------------------
D CCC (sf) B- (sf) ?1.0 bil.
Ratings Affirmed
Class Rating Initial Issue Amount
----- ------ --------------------
C AAA (sf) JPY1.6 bil.
E CCC (sf) JPY0.2 bil.
X AAA (sf) JPY16.6 bil. (Initial notional
principal)
JAPAN AIRLINES: Files Turnaround Plan, Sees Bigger Work Force Cut
-----------------------------------------------------------------
Japan Airlines Corp. filed with the Tokyo District Court, Civil
Department No. 8, a plan outlining its strategy to exit from
bankruptcy.
The turnaround plan, filed August 31, is an aggressive
restructuring plan that speeds up a major cut in its work force
and slashes unprofitable routes, Yoshio Takahashi at The Wall
Street Journal reported. The plan was filed seven months after
JAL filed for Japan's biggest non-financial bankruptcy protection
in January this year. The plan, according to the Journal, is
"tougher" than the turnaround plan JAL submitted when it sought
bankruptcy protection.
The outline of JAL's original plan was to seek a debt waiver
amounting to JPY730 billion while its state-back restructuring
promoter agreed to put up JPY300 billion to turn round the
airline's negative net worth of JPY870 billion. The original plan
also forecasted a fiscal year 2010 loss of JPY33.7 billion and an
operating profit of JPY49.7 billion for the fiscal year through
2012, according to Dow Jones.
In the current plan, JAL intends to refinance its current debt
load of about JPY300 billion by the end of March 2011, the Journal
said citing a person familiar with the matter, ensuring months of
protracted negotiations with its main lenders in months to come.
In June, people familiar with the JAL bankruptcy told Dow Jones
that the airline will probably seek JPY100 billion, or roughly
US$1.1 billion, more in financial assistance.
JAL's operating profit is expected to improve to JPY117.5 billion
in the fiscal year through March 2013 from an operating loss of
JPY133.7 billion in the last fiscal year ended March 2010, the
Journal related. However, its revenue is projected to decline 15%
to JPY1.273 trillion in the fiscal year to March 2013 from
JPY1.495 trillion in the last fiscal year, as it will reduce
flight services.
The Enterprise Turnaround Initiative Corp., which supports
JAL's restructuring, will inject JPY350 billion into JAL's
international flight service unit, larger than its earlier plan
of JPY300 billion, the Journal said. JAL, the newspaper added,
will ask for a debt waiver of JPY521.5 billion from its lenders.
The Journal noted that the new plan was short on details about how
JAL would increase its revenue in the coming years -- a crucial
factor amid increased competition from low-cost carriers and other
international airlines as both Narita International Airport and
Haneda Airport, the main gateways into Tokyo, expand their
capacity. The former flag carrier, the Journal related, said it
was considering launching a low-cost airline subsidiary, but
declined to elaborate.
Under the latest plan, JAL aims to cut its work force by about
16,000 staff to about 32,600 by March 31, 2011. In the initial
plan submitted in January, JAL aimed to cut 15,600 jobs over three
years.
In the new plan, JAL intends to scrap a combined 49 unprofitable
international and domestic routes and flights by the end of March
2013, which, according to the Journal, is a more drastic cut than
the reduction of 31 routes and flights reduction targeted in the
same time frame under its initial plan.
"This is the start of JAL's restructuring," the Journal quoted
Kazuo Inamori, JAL chairman, as saying at a news conference. "We
will work [on restructuring] hard so that we can post better
numbers than we are targeting."
Poor Management Led to JAL Bankruptcy
Mismanagement and a lack of risk awareness caused JAL to file for
bankruptcy protection in January, Kyodo News said on August 18
citing a draft report by a panel studying JAL's management
practices says. The five-member panel preparing the report,
however, said it is difficult to place criminal or civil liability
on former heads of the carrier, sources said. The report was to
be submitted soon to JAL's bankruptcy administrator.
The panel said management failed to detect that the airline was in
financial crisis because of the firm's compartmentalized
administrative structure in terms of corporate planning, sales and
marketing, and other operations, Kyodo News said, further citing
sources.
According to Kyodo News, JAL set up the compliance investigation
panel March 2 made up of third-party members who were tasked with
examining past management practices. The panel, Kyodo News
related, said JAL was tardy in implementing massive restructuring
efforts to improve its balance sheet when it was seeing a decline
in passengers due to the Sept. 11, 2001, terrorist attacks in the
United States and then the epidemic of severe acute respiratory
syndrome, or SARS.
The panel plans to report that JAL needs to change its corporate
culture and no longer act with the complacency that it was the
country's flag carrier, Kyodo News said.
JAL commenced a corporate reorganization process in the Tokyo
District Court on January 19, 2010, under the Corporation
Reorganization Act of Japan. In connection with the commencement
of the Japan proceeding, the Tokyo District Court appointed Eiji
Katayama of the Abe, Ikubo & Katayama law firm and the government-
backed Enterprise Turnaround Initiative Corporation of Japan as
JAL's trustees.
JAL filed parallel proceedings on the same day in the United
States under Chapter 15 of the U.S. Bankruptcy Code. Mr. Katayama
was appointed foreign representative. Ryan Blaine Bennett, Esq.,
and James H.M. Sprayregen, P.C., Esq., at Kirkland & Ellis LLP, in
New York, serve as counsel to the Foreign Representative.
JLOC41 LLC: Fitch Downgrades Ratings on Six Classes of Notes
------------------------------------------------------------
Fitch Ratings has downgraded six classes of JLOC41 LLC notes due
February 2015, and removed three classes from Rating Watch
Negative. The transaction is a Japanese multi-borrower type CMBS
securitization. The rating actions are:
-- JPY2,804 million* Class A downgraded to 'BBB+sf' from 'A+sf';
Outlook Negative; Off RWN;
-- JPY538 million* Class B downgraded to 'BB-sf' from 'BBB-sf';
Outlook Negative; Off RWN;
-- JPY860 million* Class C-2 downgraded to 'CCCsf' from 'B-sf';
Off RWN; assigned a Recovery Rating of 'RR5';
-- JPY0 million* Class C-3 downgraded to 'Dsf' from 'CCCsf'
Recovery Rating revised to 'RR6' from 'RR5';
-- JPY356 million* Class D-1 downgraded to 'Csf' from 'CCCsf';
Recovery Rating revised to 'RR6' from 'RR5';
-- JPY690 million* Class D-2 affirmed at 'CCsf'; Recovery Rating
of 'RR6'; and
-- JPY0 million* Class D-3 downgraded to 'Dsf' from 'CCsf';
Recovery Rating of 'RR6'.
* as of August 30, 2010
Class C-1 was paid in full in August 2010.
The downgrades of classes A, B and C-2 follow the revaluation of
the underlying properties backing one defaulted loan. Fitch has
further revised the net cash flow estimations downwards for two of
the four collateral properties now backing this loan, since the
current occupancy rates of these are low, and market rents have
declined considerably during the past six months. As a result,
the agency has adopted total values for the underlying properties
which are on average 49.7% lower than the initial valuations.
Since the credit of classes A and B will continue to be affected
by the value of the properties with low occupancy rates, Fitch has
assigned Negative Outlooks to classes A and B. Fitch has resolved
the RWN status on classes A, B and C-2, since the likelihood of
further negative rating actions has reduced, given the
conservative property valuations adopted.
The downgrade of Class D-1 to 'Csf' reflects Fitch's view that
this class will inevitably default. All collateral properties
backing another defaulted loan have recently been sold, but the
total recovery amount from the sales proceeds is not anticipated
to be enough for the full redemption of this class. Principal on
this class has been partially repaid by the sales proceeds.
Currently, a small amount of reserved cash remains at the borrower
of this loan, but most of the amounts will be applied for the
payment of tax and sales costs. In contrast, the Class C-1 notes
were paid in full on the most recent payment date, as a result of
proceeds from property sales applied to the principal repayment of
the notes.
The downgrade of classes C-3 and D-3 to 'Dsf' reflect the fact
that the outstanding principal balance of these classes was
written down to zero on the most recent payment date. The Class
C-3 noteholder, exercising its option, purchased the defaulted
loan backing the two classes at a price not sufficient to redeem
these classes. The loan was backed by one collateral property at
the time it was sold.
Fitch assigned ratings to this transaction in June 2008. At
closing, the notes were ultimately secured by three loans
collateralised by 31 properties. All underlying loans have
defaulted, and one of them has been sold. Currently one
underlying loan backed by four collateral properties remains,
together with a second loan the collateral property backing which
has now been sold.
SHINSEI BANK: Moody's Assigns Rating on 2020 Subordinated Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a (P)Baa2 rating to the
Euro-Denominated Fixed to Floating Rate Callable Subordinated
Notes due 2020 issued by Shinsei Bank, Limited.
At the same time, Moody's has placed this rating on review for
possible downgrade.
Rating Rationale
Shinsei's above-mentioned senior subordinated debt is rated
(P)Baa2, one notch below the bank's debt rating of Baa1.
The Baa1 derives from the combination of its D+ BFSR (baseline
credit assessment of Ba1), systemic support input of Aaa (JGB,
plus two notches) for Japan, and Moody's assessment -- based on
its importance as a bank operating nationwide in Japan -- that the
probability of systemic support is "very high."
Shinsei Bank, Limited, headquartered in Tokyo, had consolidated
assets of JPY10.9 trillion as of June 30, 2010.
Regulatory Disclosures
Moody's Investors Service adopts all necessary measures so that
the information it uses in assigning a credit rating is of
sufficient quality and from reliable sources; however, Moody's
Investors Service does not and cannot in every instance
independently verify, audit or validate information received in
the rating process.
=========
K O R E A
=========
SSANGYONG MOTOR: August 2010 Sales More Than Triple
---------------------------------------------------
Ssangyong Motor Co. said Wednesday its sales in August more than
tripled from a year earlier, helped by strong overseas demand for
its large sport utility vehicles, according to Yonhap News Agency.
The news agency discloses that the company sold a total of 6,534
vehicles last month, compared with 2,012 units a year earlier.
The company's sales slumped in August 2009 amid a prolonged strike
and occupation of its plant by workers that lasted nearly 100 days
from May to August, the report says.
According to Yonhap, Ssangyong's domestic sales increased 166%
from a year earlier to 2,506 units last month, and its exports
rose 242% to 4,028 units, including 360 knockdown kits.
About Ssangyong Motor
Headquartered in Kyeonggi-Do, South Korea, Ssangyong Motor Co.
Ltd. -- http://www.smotor.com/-- is a manufacturer of automobiles
primarily engaged in production of sports utility vehicles (SUVs)
and recreational vehicles (RVs). The company's production is
grouped into four lines: SUVs under brand names REXTON, KYRON and
ACTYON; sports utility trucks (SUTs) under the brand name ACTYON
Sports; passenger cars under brand name Chairman, and multi-
purpose vehicles (MPVs) under the brand name Rodius. It also
provides automobile parts such as coolers, diesel engines and
others.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 12, 2009, Ssangyong Motor Co. filed for receivership with the
Seoul Central District Court to stave off a complete collapse. In
February, the Seoul Central District Court accepted Ssangyong's
application to rehabilitate under court protection. The court
named former Hyundai Motor Co. executive Lee Yoo-il and Ssangyong
executive Park Young-tae to run the automaker.
A TCR-AP report on Sept. 16, 2009, said Ssangyong Motor submitted
a revival plans to the Seoul Central District Court seeking
capital reduction and a debt-for-equity swap by creditor. A South
Korean bankruptcy court approved in December Ssangyong Motor's
restructuring plan despite opposition by some bondholders, the
TCR-AP reported on Dec. 18, 2009.
====================
N E W Z E A L A N D
====================
LIGHTER QUAY: Nearly 100 Jobs Lost as Receivers Shut Westin Rooms
-----------------------------------------------------------------
The New Zealand Herald reports that about 100 staff at the Westin
hotel in Auckland lost their jobs as most rooms there are shut
down.
According to the report, receivers of Lighter Quay Hotel
Management -- the company involved with the Westin Hotel complex
-- said on Wednesday that the five-star hotel would continue to
operate at a reduced capacity.
KordaMentha said facilities such as the spa, bar, cafe and
conference facilities, along with 77 of the hotel's 170 rooms
would remain available, the report relates.
Receiver Michael Stiassny said the court action taken by the unit
owners and the resulting reduction in the number of rooms had
meant full staff levels could not be sustained, the report adds.
There had been no option but to work through a redundancy process
affecting 99 employees.
The report, citing a group who represented the owners of more than
110 rooms at the Westin hotel, says the owners had tried to engage
the receivers in dialogue that would see the hotel continue to
operate at full capacity. The NZ Herald relates they had also
made an indicative offer to purchase the assets controlled by
KordaMentha, but as that was effectively rejected without proper
response -- those rooms would now close.
About Lighter Quay
Lighter Quay Hotel Management manages Auckland's five-star, NZ$130
million, 172-room Westin hotel.
As reported in the Troubled Company Reporter-Asia Pacific on
July 2, 2010, BusinessDay.co.nz said Michael Stiassny and Brendon
Gibson of KordaMentha have been appointed as receivers to Lighter
Quay Hotel Management by major creditor Bank of Scotland
International, which has security from a loan agreement made in
September 2007. Lighter Quay Hotel Management is owned by
property developer Nigel McKenna, whose company Melview
Developments built the hotel and surrounding Lighter Quay
development at Auckland's Viaduct Harbour. The company also owes
money to more than 100 investors, many of them Asian, who bought
rooms in the hotel and leased them to the management company.
SOUTH CANTERBURY: Government May Sell SCF to Foreign Investors
--------------------------------------------------------------
New Zealand's Prime Minister John Key said Wednesday that South
Canterbury Finance may be sold off to foreign investors,
stuff.co.nz reports.
Mr. Key said the government intended to sell SCF assets and
confirmed the finance firm is in ongoing discussions with
potential buyers, the report relates.
"There are certainly a number of parties that have approached the
company before it went into receivership indicating they have an
interest to buy either all of the assets or some of the assets,
but whether that actually materialise into a deal that we could
consider we are some way off making that decision at the moment --
but there's no question there is interest in assets previously
owned by SCF and that's because a lot of their assets are actually
performing very well," stuff.co.nz quoted Mr. Key as saying.
The government did not consider itself as being in the business of
running a finance company, the report adds.
According to the report, Mr. Key also warned that other finance
companies may go under and the government would continue to look
after investors by keeping the guarantee on investments in place.
Mr. Key said SCF got itself into trouble by lending money to
people who could not pay it back and on assets that had no value,
the report adds. Many of the loans were now bonfire material, he
said.
About South Canterbury
Based in New Zealand, South Canterbury Finance Limited (NZE:SCFHA)
-- http://www.scf.co.nz/-- is engaged in the provision of
financial services. The Company's principal activities are
borrowing funds from public and institutional investors and on-
lending those funds to the business, plant and equipment,
property, rural and consumer sectors. It typically advances funds
by means of hire purchase, floor plans, leasing of plant, vehicles
and equipment, personal loans, business term loans and revolving
credit facilities, mortgages against property, and other financial
instruments, including consumer loan insurance. Southbury Group
Limited holds a controlling interest in the Company. Its
subsidiaries include Ashburtin Finance Ltd, Auckland Finance Ltd,
Canterbury Finance Ltd, Coversure Guarantee Ltd, Face Finance Ltd,
Helicopter Nominees Ltd, Hotnchurch Ltd, Otage Finance Ltd,
Palmerston North Finance Ltd, Rental cars Ltd, ZSCFG Systems Ltd,
Walkato Finance Ltd and Wellington Finance Ltd.
On August 31, 2010, Trustees Executors Limited, as trustee for
South Canterbury Finance charging group, appointed Kerryn Downey
and William Black of McGrathNicol as receivers of the charging
group's secured assets.
"As Trustee, we have had South Canterbury Finance under heightened
surveillance since 2008. As part of that, SCF was granted a
Trustee waiver in February 2010 to allow it time to recapitalise.
Unfortunately, the Company's Directors have advised us that they
have not been successful with respect to a recapitalisation and
requested us to appoint a receiver. At this point we, as Trustee,
agree that it is the best interests of debenture, deposit and bond
holders to do that," said Yogesh Mody, Southern Regional Manager
for Trustees Executors Limited.
SOUTH CANTERBURY: S&P Downgrades Issuer Credit Ratings to 'D/D'
---------------------------------------------------------------
On Aug. 31, 2010, Standard & Poor's Ratings Services lowered its
local-currency issuer credit ratings on New Zealand finance
company South Canterbury Finance Ltd. to 'D/D' from 'CC/C'. At
the same time, S&P lowered the 'CC' rating on SCF's bond issues to
'D'.
The rating action follows the announcement by SCF's trustee,
Trustees Executors Ltd., that it has appointed a receiver at the
request of SCF's directors. The directors' decision stems from
SCF's inability to complete a recapitalization and restructure
that would have enabled SCF to certify with its trustee that it
meets various financial covenant requirements under its debenture
trust deed for the financial year ended June 30, 2010. The
trustees had granted SCF a trust deed breach waiver, which is set
to expire.
SCF's 'CC/C' ratings--prior to being lowered to 'D'--highlighted
that there was a strong possibility SCF could default on its
obligations. The 'CC/C' ratings recognized a material weakening
of SCF's liquidity and cash position such that SCF was in danger
of running out of cash. The rating also recognized the lack of
progress in recapitalization efforts heading toward the covenant
breach waiver deadline of Aug. 31, 2010. Standard & Poor's noted
in its release dated Aug. 20, 2010, that the lack of progress in
recapitalization had compromised SCF's business viability.
Although Standard & Poor's acknowledged that recapitalization and
restructuring efforts were being progressed, no rating benefit
from these efforts was ever factored into the rating.
Ratings List
Downgraded; CreditWatch/Outlook Action
South Canterbury Finance Ltd.
To From
-- ----
Counterparty Credit Rating D/D CC/Watch Neg/C
South Canterbury Finance Ltd.
To From
-- ----
Senior Secured (3 issues) D CC/Watch Neg
WENSLEY DEVELOPMENTS: Faces Liquidation Petition From IRD
---------------------------------------------------------
The Southland Times reports that the Inland Revenue Department has
applied to liquidate Wensley Developments The Marina Ltd in the
Invercargill High Court.
The hearing was adjourned until late October to give the parties
time to work out a payment plan, the report says.
The Southland Times states that the move follows the liquidation
of Wensley Development Ltd last year, the holding company behind
the 28-unit Marina Baches apartments and several other Queenstown
apartment developments.
=====================
P H I L I P P I N E S
=====================
PHILIPPINE AIRLINES: Flight Crew to File Notice of Strike
---------------------------------------------------------
BusinessWorld Online reports that flight Attendants and stewards
of Philippine Airlines will file a notice of strike early next
week, after rejecting last month an PHP80-million compensation
package from the management.
Andy Ortega, vice-president of PAL-Flight Attendants' and
Stewards' Association of the Philippines, told BusinessWorld the
group's officers would wrap up meetings with members this week.
BusinessWorld says talks over a new collective bargaining
agreement are in a stalemate as the union claims the PHP80-million
package is not enough for 1,600 flight attendants and stewards.
PAL claims it cannot afford a bigger package because of financial
difficulties.
BusinessWorld relates PAL spokeswoman Ma. Cielo C. Villaluna said
the management respects the decision of the flight attendants and
stewards, but reminded them of the negative consequences of a
strike.
"We always believe that this matter should be resolved in the
negotiating table for the best interest of all the parties
involved," the report quoted Ms. Villaluna as saying.
Launches Flights to India
Philippine Airlines is all set to mount direct flights to India in
the first quarter next year in a bid to develop a new tourist
market, The Manila Standard Today reports.
PAL president and chief operating officer Jaime Bautista said the
carrier would launch thrice-weekly flights to New Delhi in March
of 2011 using Airbus 330, according to the Manila Standard.
The report says PAL stopped flying to India in the 1950s but now
sees good prospects to bring back the service due to the influx of
Indian tourists to Manila and Cebu.
About Philippine Airlines
Philippine Airlines -- http://www.philippineairlines.com/-- is
the Philippines' national airline. It was the first airline in
Asia and the oldest of those currently in operation. With its
corporate headquarters in Makati City, Philippine Airlines flies
both domestic and international flights. First taking off in
1941, the carrier has grown into a fleet of about 40 aircraft
(including five Boeing 747-400s) flying to more than 20 domestic
points and about 30 foreign destinations.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
April 21, 2010, the Manila Bulletin said that the Philippine
Airlines is to spin off its three non-core units as a last resort
to avoid bankruptcy. PAL will spin off its three non-core units:
inflight catering services; airport services, including ground
handling, cargo handling and ramp handling; and call center
reservations, the Manila Bulletin said. The PAL Employees Union
estimated that 2,000 to 4,000 employees assigned to those
departments could be retired. PAL said competition from overseas
carriers, slower global economic growth, and higher oil prices had
prompted the airline to slash its non-core businesses. The
carrier had approached several investors but failed to secure
financial help, and equity had dropped to a worrisome US$1.1
million as of February 2010, according to the Manila Standard.
The TCR-AP, citing BusinessWorld Online, reported on July 28,
2010, that Philippine Airlines announced a narrower loss for its
fiscal year that ended March 2010 to $14.3 million, from the
previous year's $297.8 million, but warned of still weak demand
for international flights.
===========
T A I W A N
===========
CATHAY DUN: Fitch Ratings on Various Beneficiary Certificates
-------------------------------------------------------------
Fitch Ratings has affirmed the ratings of the beneficiary
certificates issued by Taiwan's Cathay Dun Nan Commercial Building
Real Estate Asset Trust, which is entrusted with part of the Dun
Nan Commercial Building. The agency has simultaneously removed
the REAT's Class A and B beneficiary certificates from Rating
Watch Negative and assigned a Negative Outlook to Class C. The
rating actions are:
-- TWD1,167.5 million Class A Beneficiary Certificates affirmed
at 'AAA(twn)'; Off RWN; Outlook Stable;
-- TWD285 million Class B Beneficiary Certificates affirmed at
'A(twn)'; Off RWN; Outlook Stable; and
-- TWD310 million Class C Beneficiary Certificates affirmed at
'BB(twn)'; Outlook Negative.
The resolution of RWN is based on the fact that most of the
leasing agreements that have expired so far in 2010 have now been
renewed. Although lower rents have been offered to most of these
tenants upon renewal, the level of discount was less than
expected. As such, the uncertainties caused by the high portion
of leases expiring in 2010 (about 31% of gross monthly rental
income) have largely been eliminated. The resulting net operating
income remains sufficient to support the current ratings.
Furthermore, the transaction benefits from the availability of
various reserves which will provide liquidity in the event of any
temporary shortfall. The ratings on Class A, B and C have
therefore been affirmed.
A Negative Outlook has been assigned to Class C due to Fitch's
concern about the persistent low occupancy rate of the entrusted
property, at 74.1% as of end-July 2010. It is possible that some
tenants, accounting for less than 8% of gross monthly rental
income, may terminate their leases upon expiry in 2011. If these
tenants decide not to renew their leases in 2011 and no new
tenants take the resulting vacant area, the NOI generated by the
entrusted property would only be sufficient to maintain the
existing ratings on Class A and B, but not on Class C.
As of end-May 2010, the debt service coverage ratio (DSCR),
defined as actual cash flow for debt service divided by actual
debt service interest expenses, stood at 2.59x and has been above
the DSCR trigger of 2x since closing. If the transaction's DSCR
falls below 2.0x, the interest due to the subordinated certificate
holders will be trapped in the low DSCR reserve account and may be
released only if the DSCR trigger level is restored.
The legal final maturity date is December 2013. The beneficiary
certificates are ultimately backed by cash flows generated by the
entrusted property, as well as the land and property value.
=============
V I E T N A M
=============
ASIA COMMERCIAL: Fitch Downgrades Individual Rating to 'D/E'
------------------------------------------------------------
Fitch Ratings has downgraded Vietnam's Asia Commercial Bank's
Individual Rating to 'D/E' from 'D' and removed it from Rating
Watch Negative. Fitch has also affirmed ACB's support rating at
'5'.
The downgrade reflects ACB's substantially weakened balance sheet,
given excessive strong loan growth. Fitch estimates that, by end-
September 2010, ACB's capital adequacy ratio would be lower than
the new regulatory minimum of 9% (with effect from 1 October
2010). ACB plans to raise equity capital of VND1.6trn (16% of
equity at mid-2010) and issue subordinated bonds (VND3trn) by end-
October 2010 to restore its capitalization.
However, Fitch expects the bank's capitalization to be
insufficient in maintaining strong loan growth for a higher market
share, and to adequately cushion against potential high credit
costs. Also, the timing and success of such capital raisings
could be tested by strong demand from the entire system seeking
additional capital. Furthermore, Fitch notes that ACB's excessive
strong loan growth would continue to pressure its liquidity and
its underlying loan quality.
ACB maintained its excessive loan growth in H110 with a 42% yoy
increase in loans. Fitch notes that the bank's target for 2010 is
54%, which implies a likely acceleration in lending in H210, and
that, if achieved, would equate to growth of 464% over 2006 to
2010). ACB is currently expanding credit much faster than its
rated state-owned banks; its CAR under Vietnamese Accounting
Standards (VAS) weakened substantially to 9% by mid-2010 (end-
2008: 12.4%). This is despite the conversion of convertible bonds
of VND1.3trn (13% of end-2009) by the bank's single largest
shareholder, Standard Chartered Bank, and all other
bondholders/shareholders, and earnings retention through issue of
dividend shares in 2009.
Exceptionally high growth of 125% in foreign currency loans by mid
2010 (34% of total loans) since end-2009 increased the
vulnerability of the bank's liquidity and loan quality to
inflationary pressure and market confidence on the Vietnamese
dong. Also, the bank's excessively strong loan growth resulted in
its loan-to-deposit ratio rising to 74% at mid-2010 (end-2008:
54%), although it is still lower than its domestic peers.
ACB's reported NPL ratio under VAS at mid-2010 was low at 0.37%
(with 94% of special mention loans and below covered by reserves).
Also, the bank has minimal exposure to property development
projects and the troubled state-owned Vietnam Shipping Industry
Group. However, Fitch considers ACB's reported loan quality to be
understated, given quite generous loan classification under VAS,
continued excessive loan growth, and the interest subsidy program.
Fitch expects provisioning charges to increase, given the
inherently volatile environment the bank operates in, and subdued
demand from the US and Europe.
The bank reported an annualized ROAA of 1.17% in H110 (2009:
1.61%), due to margin pressure and closure of its gold trading
floor in February 2010. Fitch expects the bank's profitability to
remain under pressure in H210 and 2011, given high competition for
deposits, likely increase in provisioning costs, and closure of
the gold trading floor (the latter had contributed a sizeable
amount of trading income to its profits).
Fitch may downgrade ACB's Individual Rating if there is a material
deterioration in capitalization and its underlying loan quality.
ACB's rating could be upgraded if the bank is recapitalized well
above the new regulatory minimum mainly through core capital on a
sustainable basis, if its underlying loan quality substantially
improves, and concerns on ACB's vulnerability to inflationary
pressure and market confidence on the dong substantially subside.
ACB is Vietnam's largest private bank with about 5% system-wide
assets at end-2009.
BANK FOR INVESTMENT: Fitch Affirms Individual Rating at 'D/E'
-------------------------------------------------------------
Fitch Ratings has affirmed Bank for Investment and Development of
Vietnam's Individual Rating at 'D/E'. Also, the agency affirmed
BIDV's support rating at '4'.
The affirmation of the Individual Rating reflects the challenges
for BIDV, which exhibits limited balance sheet strength arising
from excessively strong loan growth, weak asset quality, high loan
concentration to the construction sector (around 23% of total
loans), and weak underlying liquidity. BIDV remains under
pressure due to increasing risk of higher credit costs due to
underlying weak loan quality and weakened liquidity. Also, Fitch
expects BIDV, along with other Vietnamese banks, to continue to
face a difficult environment, particularly given the Vietnamese
government's weakening ability to manage/control inherently
volatile market conditions when needed.
Despite continued excessive loan growth of 20% year-on-year in
H110 (131% for three and half years to mid-2010), BIDV's capital
adequacy ratio improved to 10.89% at mid-2010 (end-2009: 9.53%)
under Vietnamese Accounting Standards -- above the new regulatory
minimum of 9% -- which will come into effective from 1 October
2010. According to International Financial Reporting Standards,
CAR rose to 8.99% from 7.50% over the same period, on account of
the Vietnam government's capital injection of VND5.3trn (38% of
equity at end-2009) in H110. However, Fitch believes the bank's
capital would be insufficient to adequately cushion against likely
higher credit costs and support its excessively strong loan
growth. In this regard, Fitch notes that the government is
strongly encouraging the banking system to grow loan assets by up
to 25% in 2010 to fund strong economic growth, meaning there is a
risk of BIDV's loan growth remaining elevated in H210 and even
beyond.
The bank's loan quality remains weak, despite it having been
masked by excessively strong loan growth and the interest subsidy
program. Based on IFRS, special mention and below loans were
18.2% of total loans (just 24% covered by reserves) at end-2009,
with loan concentration skewed towards the riskier construction
sector. Also, Fitch sees a possibility of the bank being hit by
its exposure to troubled state-owned Vietnam Shipping Industry
Group. Although BIDV has not yet disclosed the extent of its
exposure to Vinashin. Fitch expects the bank's loan quality to
remain under pressure at least over the next one to two years,
particularly given an inherently volatile operating environment
amid subdued US and European economies.
BIDV reported a return on average asset of 1.54% in H110
(annualized) compared to 1.13% in 2009, due to much lower loan
loss provisioning. Fitch expects the bank's profitability to
remain under pressure in H210 and 2011, given the intense
competition for deposits and likely increase in provisioning
costs.
Meanwhile, the bank's liquidity has weakened, evidenced by a high
loan-to-deposit ratio of 100% as of mid-2010 (92% excluding
Official Development Assistance and state-directed loans) and
heavy dependence on less sticky corporate deposits. In
particular, Fitch estimates that growth in foreign currency loans
was exceptionally high in H110, which would in turn increase the
vulnerability of the bank's liquidity and loan quality to
inflationary pressure and market confidence on the Vietnamese
dong.
Fitch would consider downgrading BIDV's Individual Rating in the
event of material deterioration in its capitalization, further
deterioration in loan quality (under IFRS), and notable weakening
of its LTD ratio. On the contrary, the bank's rating could be
upgraded in the event of these: were it to maintain capitalization
well above the new regulatory minimum on a sustainable basis; its
loan quality under IFRS substantially improves; and its LTD ratio
is managed down through growth in retail deposits.
BIDV is 100%-owned by the Vietnamese government and is the second
largest bank in the system with about 10% of system-wide assets at
end-2009. Privatization of the bank still remains uncertain.
TRAI THIEN: Posts US$537,304 Net Loss in June 30 Quarter
--------------------------------------------------------
Trai Thien USA Inc., formerly known as Develocap, Inc., filed its
quarterly report on Form 10-Q, reporting a net loss of US$537,304
on US$3.6 million of revenue for the three months ended June 30,
2010, compared with net income of US$220,234 on US$2.2 million of
revenue for the same period of 2009.
As of June 30, 2010, the Company has US$736,680 available cash and
cash equivalents and suffers from negative working capital of
US$11.0 million and overdue borrowings of US$6.7 million.
The Company's balance sheet at June 30, 2010, showed
US$29.0 million in total assets, US$17.8 million in total
liabilities, and stockholders' equity of US$11.2 million.
ZYCPA Company Limited, in Hong Kong, China, expressed substantial
doubt about the Company's ability to continue as a going concern,
following its 2009 results. The independent auditors noted that
the Company has committed and contracted for the construction of 8
vessels in Vietnam with a combined carrying capacity of 54,200
deadweight tons in the aggregate value of approximately
US$73 million (equivalent to VND1.356 trillion), which are
expected to be delivered between 2010 and 2011, and that as of
December 31, 2009, the Company has available US$102,484 cash and
cash equivalents and suffered from negative working capital of
US$6.4 million and negative operating cash flow of US$2.0 million.
The independent auditors said that the Company may not have
sufficient working capital to meet with these capital commitments.
A full-text copy of the Form 10-Q is available for free at:
http://researcharchives.com/t/s?6a69
Based in Ho Chi Minh City, Vietnam, Trai Thien USA Inc. (formerly
known as Develocap, Inc.) was incorporated under the laws of the
State of Nevada on January 23, 2004. The Company operates its
chartered and owned vessels in the ocean transportation in
Vietnam, through its variable interest entity, Trai Thien, which
is registered as a joint stock company under the Enterprise Law of
the Socialist Republic of Vietnam on June 11, 2007, which
primarily charters vessels from the ship-owners and operates the
vessels in the ocean transportation of a broad range of major and
minor bulk cargoes including iron ore, coal, grain, cement and
fertilizer, along Asian shipping routes.
VIETCOMBANK: Fitch Downgrades Individual Rating to 'D/E'
--------------------------------------------------------
Fitch Ratings has downgraded Joint Stock Commercial Bank for
Foreign Trade of Vietnam's Individual Rating to 'D/E' from 'D' and
removed the rating from Rating Watch Negative. Also, the agency
affirmed Vietcombank's Support Rating at '4'.
The downgrade reflects Vietcombank's substantially weakened
balance sheet arising from excessively strong loan growth and
fragile underlying loan quality. Also, Fitch believes that the
credit profile of Vietcombank is comparable to its 'D/E'-rated
Vietnamese state-owned banks, even though the bank's loan-to-
deposit ratio is among the lowest of them. Furthermore, Fitch
believes Vietcombank's Individual Rating remains under pressure,
due to increasing risk of high credit costs arising from
underlying weak loan quality and already limited capitalization.
Also, Fitch expects Vietcombank, along with other Vietnamese
banks, to continue to face a difficult environment, particularly
given the Vietnamese government's weakening ability to
manage/control inherently volatile market conditions when needed.
Vietcombank reported excessive loan growth of 26% in 2009 (2006 to
mid-2010: 118%), although the growth rate decelerated to 12.7%
year-on-year in H110, due to capital constraints. However, Fitch
notes that there is a risk of Vietcombank's loan growth
accelerating in H210, given the government's strong encouragement
to grow loans by up to 25% in 2010 as a means of supporting
economic growth. The bank's capital adequacy ratio under
Vietnamese Accounting Standards was a marginal 8.45% at mid-2010,
below the new regulatory minimum of 9%, due to come into effect
from October 1, 2010. Vietcombank reportedly raised VND1.12trn
(6% of equity at mid-2010) in August 2010, but Fitch is of view
that the bank's capitalisation (even after taking the new capital
raisings into account) would not be adequate to cushion against
likely higher credit costs and support its excessively strong loan
growth. It still remains uncertain as to when and to what extent
the bank could secure further capital given strong demand from the
entire system seeking additional capital from a domestic market
with limited supply capacity.
The bank's LTD ratio increased to 84% at mid-2010 from 72% at end-
2008, due to continued excessive growth, but as noted above, it is
still lower than most of its domestic peers. However, Fitch
estimates that growth in foreign currency loans was exceptionally
high in H110, which would in turn increase the vulnerability of
the bank's liquidity and loan quality to inflationary pressure and
market confidence on Vietnamese dong.
Non performing loan and special mention loan (SML) ratios were
high at 4.15% and 15.9% respectively, at mid-2010 (with just 16%
of SML and NPL covered by reserves) as reported under VAS. While
the audited 2009 International Financial Reporting Standards
(IFRS) accounts are not available yet, Fitch estimates that
problematic loans under IFRS would be higher than under VAS.
Also, the bank could potentially be hit by its exposure to the
troubled state-owned Vietnam Shipping Industry Group (16% of
equity). As such, Fitch considers Vietcombank's reported loan
quality to be understated, with underlying loan quality masked
somewhat by excessive loan growth and the interest subsidy
program. Meanwhile, Vietcombank reported an annualized return on
average asset of 1.17% in H110 versus 1.61% in 2009. Fitch
expects the bank's profitability to remain under pressure in H210
and 2011, given the intense competition for deposits and likely
increase in provisioning costs.
Fitch will consider downgrading the bank's Individual Rating in
the event of continued under-capitalization, further deterioration
in loan quality (under IFRS), and notable weakening of its LTD
ratio. On the contrary, Vietcombank's rating could be upgraded,
if the bank is recapitalized well above the new regulatory minimum
on a sustainable basis and its loan quality under IFRS
substantially improves.
Vietcombank is 90.7%-owned by the Vietnamese government and is the
third largest bank in the system with about 8% of system-wide
assets at end-2009.
VIETNAM BANK: Fitch Affirms Individual Rating at 'E'
----------------------------------------------------
Fitch Ratings has affirmed Vietnam Bank for Agriculture and Rural
Development's Individual Rating at 'E'. At the same time, the
agency affirmed Agribank's support rating at '4'.
The affirmation reflects Fitch's view that the bank continues to
be challenged by limited balance sheet strength arising from
excessive strong loan growth, weak asset quality, high loan
concentration to the riskier agricultural/rural sectors (60% of
its total loans), and weak liquidity. In this regard, Agribank
remains under considerable pressure, due to an increasing risk of
higher credit costs arising from very weak underlying loan quality
and weakening liquidity. Also, Fitch expects Agribank to continue
to face a difficult operating environment, particularly given the
Vietnamese government's weakening ability to manage/control
inherently volatile market conditions the banks operate in, when
needed.
Agribank reported excessive loan growth of 25.0% in 2009 (2006 to
mid-2010: 107%), although the growth rate decelerated to 7.4% yoy
in H110 owing to capital constraints. However, Fitch notes that
the government is strongly encouraging the banking system to grow
loan assets by up to 25% in 2010, which indicates a risk of
Agribank's loan growth again accelerating in H210.
The bank's capital adequacy ratio under Vietnamese Accounting
Standards was estimated at around 8% at mid-2010, below the new
regulatory minimum of 9% (due to come into effect from 1 October
2010) even after the government's capital injection of VND10.2trn
(29% of equity at end-2009) in February 2010. Fitch notes that
until the most recent injection, Agribank had been benefitting
from regulatory forbearance, since its CAR under VAS was below the
current regulatory minimum of 8%. Nevertheless, Fitch is of view
that the recent capital injection would still be insufficient to
adequately cushion against potential high credit costs and support
its strong loan growth. Agribank reportedly proposed that the
government inject additional capital, but it remains unclear when
and how well the bank would be further capitalised.
Agribank's loan quality remains very weak, despite it having been
somewhat masked by excessive strong loan growth and the interest
subsidy program. Based on VAS, special mention and below loans
were already high at 20% of total loans (9% covered by reserves)
at end-2009. Moreover, while the 2009 audited IFRS accounts are
not yet available, Fitch estimates that problematic loans under
IFRS would be at least 3x higher than reported ones. Fitch
expects the bank's loan quality to remain under pressure at least
over the next one to two years, given an inherently volatile
operating environment amidst subdued U.S. and European economies,
and its exposure to the troubled state-owned Vietnam Shipping
Industry Group (reportedly 9% of equity at end-2009).
Agribank reported a low annualised ROAA of 0.53% in H110 (2009:
0.42%) as the bank had to fulfill social policy for the country's
agricultural sector. Fitch expects the bank's profitability to be
under pressure in H210 and 2011, given high competition for
deposits and likely increase in provisioning costs. The bank's
liquidity also remains weak, with a high loan-to-deposit ratio of
109% at mid-2010. Based on Fitch's estimates, growth in foreign
currency loans was exceptionally high in H110, which would then
increase vulnerability of the bank's liquidity and loan quality to
inflationary pressure and market confidence on the Vietnamese
dong.
Fitch would consider upgrading Agribank's Individual Rating if the
bank's capital ratio rises substantially to well above the new
regulatory minimum on a sustainable basis, and if its loan quality
under IFRS significantly improves, while managing down its LTD
ratio through larger retail deposits.
Agribank is 100%-owned by the government and is the second-largest
bank in the system with 16% and 18% of system-wide assets and
liabilities at end-2009, respectively.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP 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 Tuesday
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-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. 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.
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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-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland, USA. Valerie C. Udtuhan, Marites O. Claro,
Rousel Elaine T. Fernandez, Joy A. Agravante, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2010. All rights reserved. ISSN: 1520-9482.
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