/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/130513.mbx 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 Monday, May 13, 2013, Vol. 16, No. 93 Headlines A U S T R A L I A ABC LEARNING: Former CFO Appears in Court For Deception Charges HEALTHLINX: In Administration After Termination of Funding Deal * Fitch Says Aussie Banks Need More Stable Funding to Meet Rules C H I N A GOLDEN WHEEL: Moody's Assigns B2 Rating to RMB600MM of Notes LAI FUNG: Consent Solicitation No Impact on B1 CFR, Says Moody's SPG LAND: Moody's Eyes Possible Upgrade for Caa1-Rated Debts SPG LAND: S&P Puts 'B-' Corp. Credit Rating on CreditWatch Pos. I N D I A ABIR INFRASTRUCTURE: CRISIL Assigns 'C' Rating to INR10MM Loan AUGUSTAN TEXTILE: CRISIL Reaffirms D Ratings on INR169.2MM Loans BASANTH WIND: CRISIL Assigns 'B+' Rating to INR120MM LT Loan BHASIN & COMPANY: CRISIL Raises Rating on INR110MM Loans to 'B' DJPR CONSTRUCTIONS: CRISIL Raises Rating on INR50MM Loan to 'BB-' DOLPHIN NUTRACEUTICALS: CRISIL Rates INR200MM Loan at 'B' INDIA: Asset Quality and Funding Risks Grow for Banks, Fitch Says INDIAN RECEIVABLE: Fitch May Cut PTCs Rating to 'BB' on Default KUN COMMERCIAL: CRISIL Assigns 'B+' Rating to INR300MM Term Loan PAL & PAUL: CRISIL Assigns 'B+' Ratings to INR250MM Loans PALMAR MILLS: CRISIL Upgrades Rating on INR91.5MM Loans to 'BB' REGALE BASMATI: CRISIL Rates INR150MM Cash Credit at 'B+' UTHAN EDUCATIONAL: CRISIL Ups Rating on INR255.5MM Loans to 'B+' J A P A N ARYSTA LIFESCIENCE: S&P Assigns 'B' CCR; Outlook Stable RENESAS ELECTRONICS: Annual Loss Widens to JPY167.58 Billion RESONA HOLDINGS: Says Bailout to End in a Few Years * JAPAN: Securities Firms' Sustainable Growth Uncertain * S&P Puts Ratings on 3 Japanese Tranches On CreditWatch Positive N E W Z E A L A N D ASCENSION WINE: Placed Into Voluntary Receivership DOMINION FINANCE: Director Pleads Guilty to FMA Charges HANOVER FINANCE: Serious Fraud Office Probe Cost NZ$1.1 Million - - - - - ================= A U S T R A L I A ================= ABC LEARNING: Former CFO Appears in Court For Deception Charges --------------------------------------------------------------- The Sydney Morning Herald reports that a senior ABC Learning Centres executive appeared in a magistrates court in Brisbane on May 10 charged with three counts of "authorizing false of misleading information". SMH relates that the former chief financial officer, James Black, was not required to enter a plea, but faces a maximum penalty of five years in jail for each charge, plus a potential penalty of AUD22,000 for each charge. According to the report, the Australian Securities and Investment Commission alleges Mr. Black gave, or authorized someone else to give, false or misleading information to an auditor from Pitcher Partners who was conducting a half-year review of ABC Learning Centres towards the end of 2006. The information was in three letters that contained false or misleading information about the terms of commission payments that a company called ABC Acquisitions was expected to receive, ASIC revealed on Friday, SMH relates. The report says the letters of engagement were contracts between three ABC related companies -- Learning Care Group in the UK, Learning Care Group in the US and ABC Development Learning Centres in New Zealand -- and ABC Acquisitions. The matter returns to the Brisbane Magistrates Court on June 21, 2013, SMH adds. About ABC Learning Based in Australia, ABC Learning Centres Limited provided childcare services and education in more than 1,200 centers in Australia, New Zealand, the United States and the United Kingdom. In November 2008, ABC Learning Centres Limited appointed Peter Walker and Greg Moloney of Ferrier Hodgson as voluntary administrators of the company and a number of its subsidiaries. Subsequent to the appointment of administrators, the company's banking syndicate appointed Chris Honey, Murray Smith and John Cronin of McGrathNicol as receivers. The Administrators filed a Chapter 15 petition for the Company (Bankr. D. Del. Case No. 10-11711) on May 26, 2010. Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor, represents the Petitioners in the Chapter 15 case. ABC's debts and assets were estimated to be between US$100 million and US$500 million. A separate Chapter 15 petition was filed for affiliate A.B.C. USA Holdings Pty Ltd., listing assets and debts of at least US$100 million. In June 2010, ABC Learning creditors in Australia voted to wind up the failed childcare provider. HEALTHLINX: In Administration After Termination of Funding Deal --------------------------------------------------------------- Yolanda Redrup at SmartCompany reports that HealthLinx collapsed following the termination of a key funding agreement. David Ross and Shanon Thomson from Hall and Chadwick has been appointed as administrators. Mr. Ross told SmartCompany HealthLinx owes unsecured creditors approximately $400,000. "The debt to unsecured creditors was not that extensive since it's a listed company, but they just couldn't pay it," the report quoted Mr. Ross as saying. Mr. Ross, the report notes, said the objective of the administration process it to get the company back up and running. SmartCompany notes that the company has been plagued with financial problems, and HealthLinx's 2012-13 half-year financial report shows the company recorded a loss of $2.7 million -- up 236% from the $825,997 loss it recorded in the previous corresponding period. The report relates that the company's total revenue for the six months was only $22,067. When the company's shares were suspended late last month, the directors alerted the ASX they were considering the financial position of the business after a funding arrangement failed to eventuate, the report notes. In December 2011, the report recalls that HealthLinx entered into a funding agreement with La Jolla Cove Investors for it to provide up to $9 million over three years. In mid-March, this agreement was terminated less than halfway through the agreed period, the report relates. HealthLinx reported a settlement agreement and mutual release was executed without penalty, the report notes. The report says that HealthLinx went on to "seek alternative funding for its operational activities", but these attempts failed and Ross says the termination of the funding arrangement signalled the collapse of the company. In August last year, the report recalls that the company tried to sell a number of its assets to Mane Cancer Diagnostics. But after due diligence and financing issues the sale agreement fell through in December 2012, the report relays. The business suffered further in late March this year when its non-executive chairman, Greg Rice, resigned, the report adds. The first meeting of creditors will be held on May 16, 2013. HealthLinx is a biomarker and diagnostic development business. * Fitch Says Aussie Banks Need More Stable Funding to Meet Rules ---------------------------------------------------------------- Australian banks need to continue to improve their funding mix to meet Basel III liquidity requirements, especially as the revised proposals from the Australian Prudential Regulation Authority (APRA) stick to the original implementation timetable and liquid asset definitions, Fitch Ratings says. "We expect banks to lengthen their wholesale funding to meet the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements, because deposit costs remain high and wholesale funding spreads have fallen in recent months. As a result, the improvement in loan-to-deposit ratios over the last five years, from a peak of around 170% to below 140%, may slow down -- and possibly even reverse for some banks. However, funding stability should continue to improve, with better asset/liability matching. "Adhering to the original timeframe to adopt the LCR in 2015 and NSRF in 2018, rather than a phased implementation as permitted under the revised Basel rules, should address a key negative ratings driver for Australian banks. Their reliance on wholesale funding, particularly from offshore markets, is high compared with international peers. This leaves them more exposed to a dislocation in international wholesale funding markets. We expect further improvements in funding profiles; but structural issues, such as Australia's compulsory pension scheme, mean wholesale funding is likely to remain important. "APRA's proposals to adopt some softer stress assumptions for the LCR under the Basel Committee's recent revisions are unlikely to change the banks' holdings of liquid assets to any great extent. The banks have already built substantial liquidity buffers against financial market stress. The revised rules appear to be a sensible recognition of the actual inflows and outflows experienced during times of stress. "The proposal not to exercise the discretion to allow some lower- rated corporate debt, equities and residential mortgage-backed securities to come into the definition of high-quality liquid assets is consistent with APRA's conservative approach to bank regulation. The revised Basel rules allow for a new 'Level 2B' category of assets, which we expect to be typically less liquid under distressed conditions. Some compositional change in liquidity buffers may occur once APRA's proposals are finalised. "To address a shortage of government bonds and other qualifying liquid assets, the central bank will provide a committed liquidity facility for the purposes of meeting LCR requirements. We expect there could be changes to the quantity of banks' liquid assets once the framework for this facility and its size for each bank are set by APRA. Banks are expected to take all reasonable steps to meet their LCR requirements before relying on the facility." APRA released its second consultation on Basel III liquidity implementation on May 13, outlining its proposed rules. ========= C H I N A ========= GOLDEN WHEEL: Moody's Assigns B2 Rating to RMB600MM of Notes ------------------------------------------------------------ Moody's Investors Service assigned a definitive B2 senior unsecured rating to the RMB600 million, 11.25%, three-year notes issued by Golden Wheel Tiandi Holdings Co. Ltd. Golden Wheel's B2 corporate family rating remains unchanged. The ratings outlook is stable. Ratings Rationale: Moody's definitive rating is at the same level as the provisional (P)B2 rating assigned on April 18, 2013. The final terms and conditions of the bond are consistent with Moody's expectations. Golden Wheel plans to use the proceeds from the issuance to fund new property projects, and for general corporate purposes. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. Golden Wheel is an integrated commercial and residential property developer, owner and operator focusing on developing projects in Jiangsu and Hunan provinces. These developments are physically connected or in close proximity to metro stations or other transportation hubs. The company leases and manages shopping malls owned by third parties. As of end-2012, the company had a total land bank of 347,080 sqm in gross floor area located in Nanjing, Yangzhou and Zhuzhou. LAI FUNG: Consent Solicitation No Impact on B1 CFR, Says Moody's ---------------------------------------------------------------- Moody's Investors Service sees no immediate impact from Lai Fung Holdings Limited's consent solicitation on its B1 corporate family rating and senior unsecured debt ratings. The ratings outlook remains stable. The company announced on May 7 2013 a proposed consent solicitation with respect to amendments on important provisions including limitations on indebtedness, limitation on restricted payments, definitions of subsidiary and joint-venture guarantees, and removal of cross-default acceleration clauses, all pertaining to its $200 million bond due in 2014. The purposes of the amendments are to align the covenants of the 2014 bond with its newly issued CNH bond and syndicated loan concluded in March 2013. "If the consent is approved by bondholders, it would relax numerous restrictions on the company's ability to raise funding and engage in joint ventures with subsidiaries and sister companies," says Lina Choi, a Moody's VP/Senior Analyst, adding, "Lai Fung would therefore be better equipped to pursue its business expansion plans without encountering any liquidity bottlenecks." Lai Fung's latest business strategy is to invest its resources in expanding its investment property portfolio in China, where it already has high quality assets providing a stable rental income stream. "While added financial flexibility is a positive development for Lai Fung's business expansion strategy, the company has yet to show a more established track record in building and maintaining a growing investment property portfolio," says Choi, also lead analyst for Lai Fung. The proposal has no effective impact on existing bondholders as Lai Fung has deposited funds in an escrow account which are to be used to make contractual and principal payments for the bond until and including April 2014. Moody's notes potential risks associated with portfolio expansion, and will monitor Lai Fung's progress very closely. With Lai Fung's added financial strength, Moody's will watch for any signs of aggressive land purchases or participation in non- core/non-strategic joint venture projects. The principal methodology used in this rating was Global Homebuilding Industry Methodology published in March 2009. Lai Fung Holdings Ltd., a member of the Lai Sun Group, focuses on mid-market property development and investments in Guangzhou, Shanghai and Zhongshan. It is 47.47%-owned by eSun Holdings Limited (unrated), a Lai Sun Group company, and is controlled by the Lam family, which has interests in property, garment, and entertainment businesses through a number of listed companies in Hong Kong. CapitaLand Group, a property company under Temasek Holdings (Private) limited (Aaa stable), also has a 20% interest in Lai Fung. The company has a development land bank with attributable gross floor area ("GFA") of around 0.9 million sqm. It also has a portfolio of investment properties with attributable GFA of approximately 218,000 sqm. SPG LAND: Moody's Eyes Possible Upgrade for Caa1-Rated Debts ------------------------------------------------------------ Moody's Investors Service placed SPG Land (Holdings) Ltd's B3 corporate family rating and Caa1 senior unsecured ratings under review for upgrade. Ratings Rationale: The rating review follows the announcement made by SPG Land on May 8, 2013 that it has entered into a share-subscription agreement and an investment agreement with Gluon Xima International Limited. Gluon Xima International is an indirect wholly-owned subsidiary of Greenland Holding Group, which is a major China-based property conglomerate. SPG Land will -- upon fulfillment of certain conditions in the agreements and the approval of its shareholders -- receive about HKD3.0 billion. The company intends to apply the net proceeds for general corporate purposes, repayment of loans, and/or payment of special dividends. Moody's believes the agreements are positive for SPG Land due to an expected consequent improvement in its credit profile and the expected demonstration of support from its new parent, Greenland. "If the transaction concludes, SPG Land will be able to improve its liquidity upon receiving HKD3.0 billion in new investments from Greenland," says Lina Choi, a Moody's Vice President and Senior Analyst. Given its substantial short-term debt -- 60% of total debt, or RMB3.9 billion -- and the tight availability of bank credit for property developers, SPG Land had started asset disposals during 2012. Greenland's capital injection of HKD3.0 billion, if successfully completed, will help mitigate SPG Land's liquidity pressures. "The expected increase in its equity base will reduce SPG Land's debt leverage," adds Choi. "Its net gearing ratio is forecasted by the company to improve to 49% from 120% for proforma end-2012." "Moreover, as indicated, Greenland, a larger scale developer, will become the largest shareholder of SPG Land with a 60% shareholding. This will strengthen the company's operation and financial support," says Choi. The transaction comprises two major parts: - SPG Land will issue new shares to Greenland with the ultimate shareholding of the acquirer reaching 60%. The shareholding of SPG Land's chairman and exiting major shareholder, Mr. David Wang, will be diluted to 14%. - SPG Land will also make a bonus issue of new shares to existing shareholders. Shareholders may choose to receive ordinary shares or Non-Voting Convertible Preference Shares ("CPS"). According to the company, Chairman Wang will elect to receive CPS only to ensure that the public float of the resulting entity remains above 25%. CPS will also be issued to Greenland, such that it will hold 60% of ordinary shares in the resulting entity on a fully diluted basis. Greenland has no listed subsidiary in Hong Kong. By contrast, SPG Land has existing property assets and operations of reasonable scale, and is accordingly positioned to receive further asset injections. After the transaction the company will be renamed Greenland Hong Kong Ltd, and Greenland has undertaken that it will be its only listed vehicle in Hong Kong for the next three years in the real estate development/investment business. Moody's anticipates the investment by Greenland, a major China- based property conglomerate with broader investment experience and stronger financial capacity than SPG Land, will help improve the latter's operations and push its development capabilities to the next level. Other benefits from the transaction include SPG Land's ability to dispose of loss-making businesses. Specifically, prior to Greenland's capital investment, SPG Land will sell its 50% interest in the Peninsula Hotel Shanghai to exiting Chairman David Wang for HKD1.3 billion. Moody's notes that this asset has shown losses for the past two years and has an off-balance sheet liability of RMB2.5 billion. Moody's review will focus on (a) the progress of the transaction; (b) the final financial profile of Greenland Hong Kong Ltd (ex-SPG Land) if the transaction completes; and (c) the company's new business strategy under Greenland. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. SPG Land is principally engaged in the development of large-scale, high-end residential communities, city center integrated projects, and travel & leisure projects that target the middle-to-high-end customer segment. At 31 December 2012, the company held a land bank of 4.7 million sqm across Shanghai, Kunming, Huangshan, Suzhou, Changshu, Wuxi, Haikou, Ningbo and Taiyuan. Gluon Xima International Limited is incorporated in Hong Kong and is an indirect wholly-owned subsidiary of Greenland Holding Group and independently operated. Greenland Holding Group is headquartered in Shanghai and is a comprehensive enterprise group whose main businesses include real estate development, energy, and finance activities. As a leading developer in the China real estate market, Greenland Holding Group operates real estate projects in over 70 cities across 25 provinces. Greenland Holding Group is also wholly-owned by the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government. SPG LAND: S&P Puts 'B-' Corp. Credit Rating on CreditWatch Pos. --------------------------------------------------------------- Standard & Poor's Ratings Services said that it had placed its 'B-' long-term corporate credit rating and 'cnB-' long-term Greater China regional scale rating on China-based property developer SPG Land Holdings Ltd. on CreditWatch with positive implications. S&P also placed its 'CCC+' long-term issue rating and 'cnCCC+' Greater China regional scale rating on SPG Land's outstanding senior unsecured notes on CreditWatch with positive implications. "We placed the ratings on CreditWatch to reflect our view that SPG Land's business and financial risk profiles are likely to improve following Greenland Holding Group's proposed acquisition of the company," said Standard & Poor's credit analyst Frank Lu. Greenland is an unlisted China-based company that the Shanghai government owns. In S&P's view, Greenland's credit profile is much stronger than that of SPG Land. SPG Land is likely to gain significant support from Greenland if it becomes the sole listed offshore platform of Greenland. The proposed transactions will require approval from shareholders and regulators. Both SPG Land and Greenland expect the transaction to be completed within 90 days. The transaction was announced on May 9, 2013. "We aim to resolve the CreditWatch within the next three months after we have more clarity on whether the transaction will go ahead and to what extent it will support SPG Land's credit profile," said Mr. Lu. S&P may raise the rating on SPG Land by at least one notch if it believes that the company's credit profile will improve materially as a result of parental support from Greenland. ========= I N D I A ========= ABIR INFRASTRUCTURE: CRISIL Assigns 'C' Rating to INR10MM Loan -------------------------------------------------------------- CRISIL has assigned its 'CRISIL C/CRISIL A4' ratings to the bank facilities of Abir Infrastructure Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long-Term 10.0 CRISIL C (Assigned) Bank Loan Facility Letter of Credit 917.5 CRISIL A4 (Assigned) Bank Guarantee 2700.0 CRISIL A4 (Assigned) Bank Guarantee 600.0 CRISIL A4 (Assigned) Bank Guarantee 682.5 CRISIL A4 (Assigned) Cash Credit 1000.0 CRISIL C (Assigned) The ratings reflect AIPL's stretched financial flexibility due to high working capital requirements and exposure to risks associated with delay in overall execution of projects. These rating strengths are partially offset by healthy order book position and above average financial risk profile of the company. Abir Infrastructure Private Limited was set up in the year 2005 by Mr. Y.Y. Butchi Babu and Mr. K. Gnyandeep and began operations in 2007. The company is engaged in construction activity in infrastructure sector with focus on power sector. The company provides engineering, procurement and construction services on turnkey basis primarily in hydro-electric power (HEP) and thermal power (TP) sector. For 2011-12 (refers to financial year, April 1 to March 31), AIPL reported a profit after tax (PAT) of INR545.5 million on net sales of INR10.7 billion; AIPL reported a PAT of INR742.3 million on net sales of INR11.8 billion for 2010-11. AUGUSTAN TEXTILE: CRISIL Reaffirms D Ratings on INR169.2MM Loans ---------------------------------------------------------------- CRISIL's ratings on the bank facilities of Augustan Textile Colours Ltd continue to reflect instances of delay by ATCL in servicing its term loan; the delays have been caused by the company's weak liquidity. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 13.4 CRISIL D (Reaffirmed) Cash Credit 60.0 CRISIL D (Reaffirmed) Long-Term Loan 80.0 CRISIL D (Reaffirmed) Proposed Long-Term 15.8 CRISIL D (Reaffirmed) Bank Loan Facility ATCL has a below-average financial risk profile, marked by a small net worth, small scale of operations with limited revenue diversity, and its operating profitability is susceptible to competitive pressures in the textiles industry. However, ATCL benefits from its promoter's industry experience. Update For 2011-12 (refers to financial year, April 1 to March 31), ATCL reported operating income of INR337 million and operating margin of 16.5 per cent. However, during 2012-13, the company is expected to report muted revenue growth and is expected to clock revenues of around INR350 million. ATCL's financial risk profile remains weak, marked by a small net worth, high gearing, and weak debt protection metrics. As on March 31, 2012, the company reported a net worth of about INR51 million and gearing of about 2.4 times. The gearing of the company is expected to remain high over the medium term as it has capital expenditure plans of INR60 million to be executed during 2013-14 which would be partly funded vide debt of INR50 million. The high debt level in the capital structure has resulted in weak debt protection metrics, with the company reporting interest coverage ratio of less than 2.0 times during 2011-12. The liquidity of the company remains weak, driven by high month-end average bank limit utilisation of about 100 per cent for the 12 months ended December 2012. During 2011-12, ATCL reported a profit after tax (PAT) of INR12.4 million on net sales of INR337 million, against a net loss of INR7.5 million on net sales of INR222 million in 2010-11. Set up in 2005 in Coimbatore (Tamil Nadu), ATCL undertakes printing, bleaching, and dyeing of fabric and yarn. BASANTH WIND: CRISIL Assigns 'B+' Rating to INR120MM LT Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term bank facility of Basanth Wind Farm (BWF; part of the Basanth group). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long-Term Loan 120 CRISIL B+/Stable The rating reflects the susceptibility of the Basanth group's operations to the regulatory environment, its small scale of operations, and segmental concentration in its revenue profile. These rating weaknesses are partially offset by the extensive experience of the Basanth group's promoters in the wind energy business. For arriving at its ratings, CRISIL has combined the business and financial risk profiles of BWF, Kshema Builders & Developers (KBD), Kairaly Securities (KS), and Kshema Windfarm Services (KWS), together referred to as the Basanth group. This is because all the entities are in similar line of business and are managed by the same proprietor. Furthermore, there is fungible cash flow between these entities, and the management has indicated that the entities will support one another financially as and when required. Outlook: Stable CRISIL believes that the Basanth group's credit risk profile will remain stable, backed by promoters' extensive industry experience over the medium term. The outlook may be revised to 'Positive' if the group diversifies its business risk profile, and achieves substantial and sustained growth in revenues, leading to higher- than-expected cash accruals and a consequent improvement in the financial risk profile. Conversely, the outlook may be revised to 'Negative' in case the group reports deterioration in its profitability and pressure on its revenues, or larger-than- expected working capital borrowings, leading to pressure on its liquidity. The Basanth group, which comprises Tamil Nadu-based entities BWF, KBD, KS, and KWS, is the windmill power project business. The group is promoted and managed by Mr. Satish Basant. BHASIN & COMPANY: CRISIL Raises Rating on INR110MM Loans to 'B' --------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Bhasin & Company to 'CRISIL B/Stable' from 'CRISIL D', while upgrading its rating on the short-term bank facilities to 'CRISIL A4' from 'CRISIL D'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3 CRISIL A4 (Upgraded from 'CRISIL D') Letter of Credit 7 CRISIL A4 (Upgraded from 'CRISIL D') Overdraft Facility 60 CRISIL B/Stable (Upgraded from 'CRISIL D') Proposed Long-Term 38.1 CRISIL B/Stable (Upgraded Bank Loan Facility from 'CRISIL D') Term Loan 11.9 CRISIL B/Stable (Upgraded from 'CRISIL D') The rating upgrade reflects improvement in Bhasin & Company's liquidity, as reflected in the clearing of default on the term loans contracted by the company. The improvement in liquidity is primarily driven by receipts of loans and advances extended to Dev Arjuna Promoters and Developers (P) Ltd and infusion of around INR13 million of interest-free unsecured loans by promoter partners. The company had extended loans and advances of around INR56 million to Dev Arjuna as on March 31, 2012. In 2013-14 (refers to financial year, April 1 to March 31), the firm received back around INR23.5 million of these loans and advances. Further by July 2013, firm is expected to receive another around INR25 million of these loans and advances, which will support the overall liquidity profile. Rating upgrade also underscores the improvement in the working capital management of the firm. Bhasin & Company's liquidity is expected to improve further on account of expected improvement in scale of operations, leading to sufficient cash accruals vis-a-vis its debt obligations and better working capital management. The rating on Bhasin & Company's bank facilities continue to reflects the firm's small scale of operations and below-average financial risk profile, marked by a small net worth, weak debt protection metrics, and high gearing. These rating weaknesses are partially offset by the extensive experience of Bhasin and Company's promoter in the hosiery garments business and its established relationships with reputed clients. Outlook: Stable CRISIL believes that Bhasin & Company will continue to have small scale of operations and weak financial risk profile over the medium term. The outlook may be revised to 'Positive' if the company's liquidity improves further, driven by more-than-expected increase in the operating income and profitability, thereby resulting in increase in net cash accruals or capital infusion by the promoters. Conversely, the outlook may be revised to 'Negative' in case of increase in financial exposure to Dev Arjuna and/or if the company incurs large, debt-funded capex or the firm's working capital requirements increase significantly, leading to deterioration in its financial risk profile, particularly its liquidity. About Bhasin & Company Bhasin & Company was established as a proprietorship firm in 1950 by the late Mr. Ramlal Bhasin. Mr. Balraj Kumar Bhasin manages the operations of the firm and is assisted by his son, Mr. Mohnish Bhasin. Bhasin & Company is engaged in the production and sales of hosiery products and copper, nickel and silver medals. The firm's sales are completely made to the national armed forces and the business is completely tender-based. Bhasin reported a profit after tax (PAT) of INR 2.42 million million on net sales of INR343.5 million for 2011-12, against a PAT of INR2.76 million on net sales of INR324.5 million for 2010- 11. DJPR CONSTRUCTIONS: CRISIL Raises Rating on INR50MM Loan to 'BB-' ----------------------------------------------------------------- CRISIL has upgraded its ratings on the bank facilities of DJPR Constructions Pvt Ltd to 'CRISIL BB-/Stable/CRISIL A4+' from 'CRISIL B+/Stable/CRISIL A4'. The upgrade follows enhancement in DJPR's rated facilities to INR90 million from INR60 million. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 40 CRISIL A4+ (Upgraded from 'CRISIL A4') Cash Credit 50 CRISIL BB-/Stable (Upgraded from 'CRISIL B+/Stable') The upgrade reflects improvement in DJPR's financial risk profile and liquidity and sustainability of its business risk profile supported by its moderate order book position. DJPR's financial risk profile and liquidity have improved over the past 12 to 15 months on account of improvement in its receivables cycle and higher-than expected cash accruals. During the initial rating exercise, DJPR's liquidity was under pressure because of delays in receiving payments from its Niloufer Hospital project leading to high bank limit utilisation. Over the past few months, however, the payments from the aforementioned project have been supported by timely sanctioning of funds from central government, which, along with higher-than-expected cash accruals, have supported company's liquidity. The company's cash credit limit, over the past twelve months through March 2013, had average utilisation of 71 per cent (it remained more than 90 per cent utilised during 2011-12 [refers to financial year, April 1 to March 31]). Furthermore, on account of better-than-expected profitability and cash accruals and lower-than-expected working capital requirements, DJPR had moderate debt as on March 31, 2012, leading to improvement in gearing and debt protection metrics resulting in the overall improvement in its financial risk profile. The company as on March 31, 2012, had gearing of around 1.55 times vis-�-vis gearing of over 3 times a year ago. Gearing is estimated to improve further as on March 31, 2013, on account of moderate debt levels and improving net worth. The company had comfortable debt protection metrics as reflected in interest coverage and net cash accruals to total debt (NCATD) ratios of 4.0 times and 0.33 times, respectively, for 2011-12; the ratios are expected to remain comfortable for 2012-13, too. During 2012-13, DJPR is expected to register year-on-year revenue growth of 30 per cent over the previous year; it registered revenue of INR307.2 million during 2011-12 in line with CRISIL's expectation. Moderate order book position and extended orders for its existing projects have driven revenue growth during the ongoing year. CRISIL believes that DJPR's business risk profile will benefit over the medium term from the moderate order book position of around INR1085.3 million of the company, which provides revenue visibility for DJPR over the medium term. It recorded operating margin of 10.3 per cent during 2011-12 higher than CRISIL's expectation, which has supported its profitability during the year. The company's margin is estimated to be 9 per cent during 2012-13. Over the medium term, too, operating margin is expected to be in the range of 9 to 10 per cent. The ratings continue to reflect DJPR's moderate financial risk profile, marked by moderate gearing and comfortable debt protection metrics, and the benefits that the company derives from its promoters' extensive experience in the civil construction industry and its moderate order book position. These rating strengths are partially offset by DJPR's modest scale of operations in the intensely competitive civil construction industry and its working-capital-intensive operations. Outlook: Stable CRISIL believes that DJPR will continue to benefit over the medium term from its promoters' extensive industry experience and its moderate order book. The outlook may be revised to 'Positive' if the company scales up its operations significantly while maintaining its profitability leading to better-than-expected cash accruals. Conversely, the outlook may be revised to 'Negative' if DJPR reports deterioration in its financial risk profile, particularly its liquidity, most likely caused by larger-than- expected working capital requirements or delays in project execution and receivables, or if it undertakes large debt-funded capital expenditure. About DJPR Constructions DJPR undertakes civil construction contracts primarily for the construction of buildings from government entities in Andhra Pradesh and Karnataka. It was set up in 2009-10 by Mr. D J Prakasa Rao and his son, Mr. D Sasibhushan. The company acquired the civil construction business of Mr. Prakasa Rao's former proprietorship concern, D J Prakasa Rao, which was undertaking the same business since the 1980s, in April, 2010. DJPR reported profit after tax (PAT) of INR16 million on total operating income of INR307 million for 2011-12 against PAT of INR7 million on total operating income of INR172 million for 2010-11. DOLPHIN NUTRACEUTICALS: CRISIL Rates INR200MM Loan at 'B' --------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the bank facilities of Dolphin Nutraceuticals India Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long-Term 200.0 CRISIL B/ Stable (Assigned) Bank Loan Facility The rating reflects DNIPL's exposure to the risks associated with implementation, and stabilisation of operations, of its project this rating weakness is partially offset by the potential growth prospects of the nutraceuticals industry over the medium term. Outlook: Stable CRISIL believes that DNIPL will continue to benefit over the medium term from the growth prospects of the nutraceuticals industry. The outlook may be revised to 'Positive', in case the company registers sustained improvement in its scale of operations and profitability, post the successful stabilisation of its operations. Conversely, the outlook may be revised to 'Negative' in case DNIPL faces time or cost overrun in the implementation of its project resulting in lower-than-expected cash accruals, or in case of the lengthening of its working capital cycle, resulting in weakening of its liquidity and its debt servicing ability. DNIPL was set up in February 2013 by Mr. Kiran Mahale, his family members and business associates. The company is expected to commence production in December 2013; it is expected to cultivate and process spirulina algae, which is useful in reducing blood cholesterol, prevention of vitamin A deficiency, and anaemia. DNIPL has entered into technical collaboration with Green Bubble Algal Works Pvt Ltd. INDIA: Asset Quality and Funding Risks Grow for Banks, Fitch Says ----------------------------------------------------------------- The central bank's recent rate cuts are unlikely to ease asset- quality pressures to any great extent or help Indian banks correct their funding imbalances, Fitch Ratings says. The banks' latest results show a continued decline in overall asset quality as the economic downturn persists. The infrastructure sector is likely to be the biggest risk for Indian banks in the year ending March 2014 (FY14), putting pressure on asset quality and exacerbating structural funding mismatches. The pace of infrastructure restructuring is likely to accelerate, as the start dates of projects under construction are delayed over the next 18 months. Infrastructure (including power and telecom) accounted for around 23% of corporate debt restructurings at end-March 2013, up from 20.5% a year ago. Lending to the sector has been aggressive since FY08; and despite some moderation in FY13, it represents the largest single-sector concentration for Indian banks. Fitch says "We believe that key structural impediments - such as the availability of fuel, rising input costs and government clearances - will be hard to resolve in the short term despite recent government initiatives to tackle them. However, the outlook could improve in the medium term if some recently announced policies are effective. "In the meantime, we expect restructured loans to keep rising faster than NPLs and assets. The pace of NPL accretion is slowing, thanks to the central bank's cumulative monetary easing in FY13. However, the central bank's concerns about inflationary pressures and the twin deficit means there is limited scope for further monetary easing after Friday's 25bp rate cut. A slower-than- expected recovery could cause NPL growth to pick up again. We estimate gross NPLs will approach 4.2% for FY13 and 4.4% in FY14 as bad loans start to level off, with very gradual easing of cyclical pressures. "The long-term nature of infrastructure assets leaves banks more exposed to asset/liability mismatches, particularly as deposit- gathering has not kept pace with credit growth. The persistent negative real interest rates have channelled domestic savings into alternative investments, and the banking system loans-to-deposit ratio has risen to 78% in March from 72% at FYE10. "We believe that reliance on costly short-term funding, such as certificates of deposit and bulk deposits, will remain high. This dependence raises refinancing risks and the volatility of funding costs, although stable customer deposits still account for a significant proportion of the system's total funding." Small- and medium-sized Indian banks with concentrated regional profiles and limited deposit franchises are likely be most at risk if stress levels increase. Most large banks, with diversified loan portfolios and better funding profiles, should be able to absorb stress through profits alone. However, a few large entities may experience pressure on their standalone credit profiles if both funding and asset quality show further signs of deterioration. The gross NPL ratio for Indian banks rose to 3.7% for the third quarter ending December 2012, with restructured loans accounting for an additional 6% during the same period. The Q4 reporting season is under way. INDIAN RECEIVABLE: Fitch May Cut PTCs Rating to 'BB' on Default --------------------------------------------------------------- Fitch Ratings has assigned Indian Receivable Trust January 2013 B pass-through certificates (PTCs) final ratings as follows: INR837.2m Series A1 PTCs due March 2014: 'BBB-sf'; Stable Outlook INR763m Series A2 PTCs due March 2015: 'BBB-sf'; Stable Outlook INR495.3m Series A3 PTCs due February 2017: 'BBB-sf'; Stable Outlook Key Rating Drivers The transaction is a static securitisation of new commercial vehicles loans denominated in Indian rupee (INR) originated by Tata Motors Finance Limited (TMF) which is also the servicer. The ratings are based on credit enhancement (CE) of 14.3% of the initial principal balance, the origination, servicing, collection and recovery expertise of TMF, as well as the legal and financial structure of the transaction. The ratings address timely payment of interest and principal in accordance with the payout schedule in the transaction document. The CE comprises a first loss credit facility (FLCF) and a second loss credit facility (SLCF). The FLCF is in the form of fixed deposits held with IDBI Bank Limited (BBB-/Negative/F3) by Fitch, in the name of the originator with a lien marked in favor of the trustee. The SLCF is currently in the form of an irrevocable & unconditional guarantee provided by Axis Bank Limited (BBB-/Negative/ F3) by Fitch. Rating Sensitivities Fitch assessed the base case default rate, recovery rate, time to recovery and prepayment rate based on the originator's historical data. These factors, together with the portfolio's weighted average yield, were stressed in Fitch's ABS cashflow model to assess whether the transaction CE level was sufficient for the current rating level. Fitch also assessed the commingling risk of the servicer and the liquidity sufficiency for timely payment of PTCs. The transaction is not exposed to interest rate or foreign currency risks since both the assets and the PTCs are fixed-rate and are denominated in INR. Fitch also conducted rating sensitivity tests. An increase in the base-case default rate by 30%, while keeping other risk factors constant, may result in a two-notch downgrade of the PTCs to 'BBsf'. The collateral pool assigned to the trust at par had an aggregate outstanding principal balance of INR2.1bn and consisted of 2,931 loans as of 31 December 2012. The tranche thickness percentage (TT%), defined as the ratio of the issue size of the PTCs to the initial collateral pool balance, is 100%. The tranche thickness loss multiple, which is calculated as the TT% divided by Fitch's base case loss expectation, is 62.2x. KUN COMMERCIAL: CRISIL Assigns 'B+' Rating to INR300MM Term Loan ---------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the term loan facility of Kun Commercial Vehicles Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 300 CRISIL B+/Stable The rating reflects KCVPL's start-up nature of operations, geographical concentration in its revenue profile, and the susceptibility of its operations to intense competition in the automotive dealership industry. These rating weaknesses are partially offset by the extensive experience of KCVPL's promoters in the automotive industry and their financial flexibility. Outlook: Stable CRISIL believes that KCVPL will benefit over the medium term from promoters' established track record in the automotive dealership business. The outlook may be revised to 'Positive' if KCVPL significantly scales up its operations while maintaining its profitability, resulting in sustained improvement in its cash accruals and capital structure. Conversely, the outlook may be revised to 'Negative' if KCVPL is unable to stabilize its operations in a timely manner, thereby impacting its cash accruals, or if it undertakes a large, debt-funded capital expenditure programme, adversely impacting its financial risk profile. Set up in 2011, KCVPL is an authorized dealer of commercial vehicles of Daimler India Commercial Vehicles Pvt Ltd (rated 'CRISIL AA/Stable'). The operations of the company are managed by Mr. Subramania Suresh. PAL & PAUL: CRISIL Assigns 'B+' Ratings to INR250MM Loans --------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank facilities of Pal & Paul Builders Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Overdraft Facility 139 CRISIL B+/Stable Proposed Long-Term 111 CRISIL B+/Stable Bank Loan Facility The rating reflects PPBL's exposure to risks and cyclicality inherent in the real estate sector in India and average financial risk profile. These rating weaknesses are partially offset by the company's diversified revenue profile and its promoters' extensive experience in the real estate industry. Outlook: Stable CRISIL believes that PPBL will maintain its credit risk profile aided by its promoters' extensive experience in the real estate business. The outlook may be revised to 'Positive' if the company strengthens its business risk profile by improving its scale of operation and expanding its geographical reach. Conversely, the outlook may be revised to 'Negative' if there is deterioration in its financial risk profile either on account of lower-than- expected profitability, or larger-than-expected working capital requirements. Incorporated in 1980, PPBL, based in Delhi, was promoted by Mr. D S Pal. The company operates in the real estate development and hospitality sector; it owns Hotel Palm Greens as well as some service apartments in Delhi. PALMAR MILLS: CRISIL Upgrades Rating on INR91.5MM Loans to 'BB' -------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Palmar Mills Pvt Ltd to 'CRISIL BB/Stable' from 'CRISIL BB- /Stable', while reaffirming the rating on the company's short-term facilities at 'CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL BB/Stable (Upgraded from 'CRISIL BB-/Stable') Letter of Credit 15 CRISIL A4+ (Reaffirmed) Long-Term Loan 71.5 CRISIL BB/Stable (Upgraded from 'CRISIL BB-/Stable') The rating upgrade reflects CRISIL's belief that the financial risk profile of PMPL will continue to improve over the medium term, backed by improving cash accruals and absence of any large, debt-funded capital expenditure (capex) plans. PMPL's gearing is estimated at 1.1 times as on March 31, 2013 and is expected to improve to around 0.7 times over the medium term. The company does not have any debt-funded capex plans and is also focussing on continuing to manage its working capital cycle efficiently, which is expected to lead to lower debt levels and reduced interest expense. The interest coverage and net cash accruals to total debt ratios, estimated at 2.8 times and 0.2 times for 2012-13 (refers to financial year, April 1 to March 31), are expected to remain over 3 times and 0.3 times, respectively, over the medium term. The ratings reflect PMPL's established position in the cotton yarn market, supported by its promoters' extensive industry experience. This rating strength is partially offset by PMPL's small, but steadily improving, scale of operations, and susceptibility to volatility in raw material prices and sub-par power scenario in the state. Outlook: Stable CRISIL believes that PMPL will continue to benefit from its promoters' industry experience over the medium term. The outlook may be revised to 'Positive' if PMPL reports a significant and sustained improvement in its scale of operations and resultant cash accruals, favorably impacting its business risk profile. Conversely, the outlook may be revised to 'Negative' if PMPL undertakes any large debt-funded capital expenditure programme, or registers a significant decline in its revenues and operating margin, leading to deterioration in its financial risk profile. Established in 1989, PMPL manufactures and sells cotton yarn (30 per cent of revenues) and polyester yarn (70 per cent) in 30s and 40s counts. The company's units are located at Lakshmipuram and Sithyankotai (Tamil Nadu). REGALE BASMATI: CRISIL Rates INR150MM Cash Credit at 'B+' ---------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term bank facility of Regale Basmati India Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 150 CRISIL B+/Stable The ratings reflect the company's below-average financial risk profile, marked by a modest net worth and weak debt protection metrics, its modest scale of operations, and weak profitability. These rating weaknesses are partially offset by the benefits that RBIL derives from its promoter's extensive experience in the rice milling industry along with their funding support. Outlook: Stable CRISIL believes that RBIL will continue to benefit over the medium term from its promoter's extensive experience in the rice industry and their funding support. The outlook may be revised to 'Positive' in case there is improvement in the company's business and financial risk profiles due to more-than-expected ramp-up in its scale of operations and profitability. Conversely, the outlook may be revised to 'Negative' in case of deterioration in the company's financial risk profile, particularly its liquidity, due to lower-than-expected cash accruals, stretch in working capital cycle, or any debt-funded capital expenditure programme. RBIL is engaged in the export of parboiled basmati rice (including PUSA and 1121 variety) to Middle-East countries. The company was incorporated in 2000 with the name Shailesh Properties Ltd, to undertake trading in real estate. However, the company did not have any significant operations till 2010-11 (refers to financial year, April 1 to March 31). In October 2012, the company's name was changed to RBIL, and it started exporting parboiled basmati rice. The company does not own any processing facilities and outsources the milling to a third party company. The company is based out of its office in Kotkapura (Punjab). UTHAN EDUCATIONAL: CRISIL Ups Rating on INR255.5MM Loans to 'B+' ---------------------------------------------------------------- CRISIL has upgraded its rating on the bank facilities of Uthan Educational Society to 'CRISIL B+/Stable' from 'CRISIL D'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Overdraft Facility 30.0 CRISIL B+/Stable (Upgraded from 'CRISIL D') Term Loan 47.8 CRISIL B+/Stable (Upgraded from 'CRISIL D') Proposed Term Loan 177.7 CRISIL B+/Stable (Upgraded from 'CRISIL D') The upgrade in rating reflects timely servicing of term loan by UES. UES's credit risk profile improved significantly over the past year, backed by increasing cash accruals, driven by increase in scale of operations and the absence of significant capital expenditure (capex) programmes. The cash accruals have increased to INR65.9 million in 2012-13 (refers to financial year, April 1 to March 31) as compared to INR49.6 million in 2011-12 owing to increased occupancy and commencement of second shift for its engineering courses; this has resulted in improved liquidity profile. The rating upgrade also factors in the improvement in UES's financial risk profile, marked by decline in the society's gearing because of reduction in debt levels on account of repayments, coupled with increase in corpus owing to higher accretion to reserves and fund infusion by members of the society. CRISIL believes that UES will sustain its capital structure over the medium term, backed by the absence of any debt-funded capex. Furthermore, with increase in intake for two of its courses, coupled with commencement of second shift for one course, CRISIL believes that UES will maintain its liquidity over the medium term, marked by improved cash accruals, which are expected to be sufficient to meet all its maturing debt obligations. CRISIL's ratings on UES's bank facilities reflect the society's modest scale of operations, geographical concentration, and susceptibility to unfavorable changes in regulatory policies associated with educational institutions. These weaknesses are partially offset by UES's established position in the education sector in Faridabad (Haryana), and the benefits expected from the healthy demand prospects in the sector. Outlook: Stable CRISIL believes that UES will continue to benefit over the medium term from its strong brand position in Faridabad and the surrounding areas, and its members' extensive experience in the education sector. The outlook may be revised to 'Positive' if the society reports significantly higher-than-expected revenues, most likely through higher-than-expected occupancy levels for its courses. An improvement in UES's operating margin, leading to more-than-expected cash accruals, further enhancing its business risk profile, may also result in a 'Positive' outlook. Conversely, the outlook may be revised to 'Negative' if UES reports lower- than-expected profitability, leading to low cash accruals constraining its business risk profile or the society's capital structure deteriorates, most likely because of larger-than- expected debt-funded capex, or its fee and hostel receipts decline because of lower occupancy levels at its college and hostels. UES was established in Haryana in 1999; it offers BTech, MTech, MBA and MCA courses. UES belongs to the Manav Rachna group of institutes founded by Dr. O P Bhalla. The group runs five other educational societies and a deemed university in Faridabad and Gurgaon. ========= J A P A N ========= ARYSTA LIFESCIENCE: S&P Assigns 'B' CCR; Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services said it has assigned its 'B' long-term corporate credit rating to Japan-based crop protection provider Arysta LifeScience Corp. and U.S. subsidiary Arysta LifeScience SPC LLC. The outlook is stable. At the same time, S&P assigned its 'B' issue-level ratings to the proposed $1.1 billion secured first-lien term loan facility and a $150 million secured first-lien revolving facility for the U.S. subsidiary, which has been established for the transaction. S&P is also assigning its 'CCC+' issue-level rating to a proposed $555 million secured second-lien term loan facility for the subsidiary. S&P's long-term corporate credit rating on Arysta reflects its "fair" business risk profile, which S&P base on its status as one of the world's 10 largest makers of crop protection products despite its niche focus; concentration of its business in the cyclical agrochemical industry; its small size and small product portfolio relative to top global peers; its strength in registration and formulation, which tempers volatility in earnings to some extent; and its industry-average profitability. S&P assess the company's financial risk profile as "highly leveraged," reflecting very high reliance on debt despite a low capital intensive business model, S&P's assessment of the company's liquidity as "adequate," and a likelihood the company will generate sufficient free operating cash flow to cover annual debt payments. S&P also incorporates into its assessment the Permira funds and management's 100% ownership of Arysta and Arysta's dependence on its owner's intention for its financial policy. In S&P's base-case scenario, it believes the company's total debt to EBITDA in fiscal 2014 is likely to improve gradually to mid-5.0x from 6.3x in fiscal 2012. EBITDA excludes nonfinancial related cash discounts. Arysta LifeScience SPC will refinance all of the group's existing debt using the proposed term loans and the revolving facility. After the refinancing, the group will have no other debt. Therefore, S&P assigns the issue-level rating on the secured first-lien term loan and the revolving facility at the same level as the corporate credit rating, because priority liabilities comprise no more than 15% of total assets on a consolidated basis. S&P sets the issue-level rating on the secured second-lien term loan two notches below the corporate credit rating on Arysta. S&P considers the secured second-lien term loan junior to the first lien debt and thereby to have relatively poor prospects of recovery in the event of a default. The two-notch subordination reflects S&P's view that the priority liabilities, including first lien debt, exceed 30% of the group's total assets. Arysta and related subsidiaries will guarantee the term loans and the revolving facility. The outlook is stable. Despite the cyclical nature of the crop protection industry, S&P believes the strengths in registration and formulation that Arysta uses to keep its product portfolio relatively fresh are likely to underpin its average profitability relative to its industry peers. Considering its high use of debt and gradual debt repayments, S&P believes the company is likely to maintain a "highly leveraged" financial risk profile for the next 12 months despite gradual improvement in earnings and profit. The company has a low conversion rate of EBITDA to FFO. Thus, if S&P was to consider an upgrade, it would focus on the company's ability to improve FFO. S&P is likely to upgrade the company if its FFO improves materially--as a result of a materially higher conversion ratio of EBITDA to FFO--and debt declines significantly. S&P's upgrade trigger includes FFO to debt above 12% and total debt to EBITDA (EBITDA excludes nonfinancial related cash discounts) below 5x, both on a sustained basis. On the other hand, S&P is likely to lower its ratings if the company faces more severe competition and the strength of its niche business and profitability erode, in turn producing a likelihood that total debt to EBITDA will rise to close to 6.5x. RENESAS ELECTRONICS: Annual Loss Widens to JPY167.58 Billion ------------------------------------------------------------ The Japan Times reports that Renesas Electronics Corp.'s group net loss expanded to JPY167.58 billion in the business year ended in March on sluggish sales and hefty restructuring costs. Renesas posted a JPY62.60 billion loss the year before, the report says. The report relates that the company said that its group operating loss had narrowed to JPY23.22 billion, compared with JPY56.75 billion the previous year, on sales of JPY785.76 billion, down 11.0 percent. According to the report, the company did not release its earnings projection for the current business year but said it will do so after Innovation Network Corp. of Japan, a government-backed corporate turnaround body, and eight of its top clients, including Toyota Motor Corp., complete their investments in the company. Renesas is set to receive investments worth JPY150 billion to improve its deteriorating financial profile, the Japan Times notes. The company also announced that its board had decided to name Omron Corp. Chairman Hisao Sakuta as its chief executive officer and chairman. Mr. Sakuta is expected to assume the posts after a general shareholders' meeting slated in June, the report adds. About Renesas Electronics Based in Tokyo, Japan, Renesas Electronics Corp. -- http://am.renesas.com/-- manufactures semiconductor systems for mobile phones and automotive applications. For the fiscal year that ended March 31, 2012, the chip maker reported a net loss of JPY62.60 billion and revenue of JPY883.11 billion. In the previous fiscal year when the company was created, it reported a net loss of JPY115.02 billion, The Wall Street Journal reported. In February, shareholders of Renesas Electronics Corp. approved a JPY150 billion investment plan from a government-backed fund and eight companies to accelerate restructuring steps, he Japan Times Online reported. RESONA HOLDINGS: Says Bailout to End in a Few Years --------------------------------------------------- The Japan Times reports that Resona Holdings Inc. is negotiating with the Financial Services Agency to repay JPY871.6 billion in public funds it received in a state-backed bailout within a few years, sources said. By next March, the report relates, Resona plans to repay most of the JPY450 billion that was injected into the banking group via purchases of preferred shares to rescue and effectively nationalize it in 2003. The report says it is also expected to gradually buy back JPY160 billion worth of other government-held shares from a previous bailout, but the December 2014 deadline for converting some of these preferred shares into common stock may be postponed. The remaining JPY261.6 billion in public funds is represented by state-held common shares the government may sell, depending on stock market conditions, the report notes. Resona may buy back some of them. As of September 2003, the Resona group had �3.128 trillion in public funds to repay for its nationalization. Resona has slowly whittled that down over the course of a decade by accumulating retained earnings to repay the money. About Resona Holdings Japan-based Resona Holdings Inc. -- http://www.resona-gr.co.jp/ -- is a holding company. Through its subsidiaries and associated companies, the company is engaged in general banking, trust operation, credit card and financial services. The company is comprised of 15 domestic subsidiaries and 21 overseas subsidiaries, as well as two associated companies. It has operations in Japan, the United Kingdom, Indonesia, Thailand and the Cayman Islands. Bloomberg News said Resona Holdings in 2010 planned to repay as much as JPY900 billion of government bailout funds using proceeds from a share sale and internal reserves. The Tokyo-based bank on Nov. 5, 2010, registered to sell as much as JPY600 billion of common stock this. It plans to use money from the sale, plus JPY300 billion of reserves, to buy back preferred stock from the government and retire the shares to avoid potential dilution, Bloomberg noted. The bank is under pressure to repay a 2003 bailout to regain independence and compete with its bigger rivals, according to Bloomberg. * JAPAN: Securities Firms' Sustainable Growth Uncertain -------------------------------------------------------- Japan's large securities companies have benefitted from the new government's growth strategy as well as expansion of monetary easing measures, but the sustainability of performance remains in question, Fitch Ratings says. Ultimately, top-line profitability is still susceptible to investor confidence -- which may fade if the government's policy fails to stimulate real and lasting economic growth. Year-end results show that aggregate net operating revenue for the five largest securities firms -- Nomura Holdings, Daiwa Securities Group, SMBC Nikko Securities, Mitsubishi UFJ Morgan Stanley Securities and Mizuho Securities -- rose by over 22% in the year ended March (FYE13). Over a third was generated in the last quarter ending March (Q4FYE13) when market conditions turned favorable. The full-year trading gains were particularly strong, rising by 43% yoy. Fees and commissions were up more modestly, by 12%. Prime Minister Abe's new economic policy and the Bank of Japan's additional monetary easing provided a boost to equity values and trading volume during Q4FYE13. In Q4FYE13, the Nikkei 225 rose by 19%, and total trading volume on the Tokyo Stock Exchange was up by nearly 60% compared with the previous quarter. The securities firms have earned wider spreads on client activities, helped by the upward momentum and greater volatility. However, it remains uncertain whether the market will be able to maintain a long-term positive trend without clear evidence of recovery in the real economy - and, therefore, corporate earnings. The recent rapid rise in equity prices could result in greater downside risk, and may dampen investor appetite for further risk- taking. A prolonged slump in overseas business prompted Nomura and Daiwa to restructure their global strategies over the past few years. We believe the timely reallocation of the sales force as they wind down unpromising business areas will continue to be critical for enhancing overall operating efficiency. * S&P Puts Ratings on 3 Japanese Tranches On CreditWatch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it has placed its ratings on three Japanese synthetic collateralized debt obligation (CDO) transactions on CreditWatch with positive implications. The CreditWatch positive placements reflect the tranches' synthetic rated overcollateralization (SROC) levels, which exceeded 100% with sufficient SROC cushions at higher ratings than the current ratings as of April 30, 2013. S&P intends to review these tranches by the end of this month. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this credit rating report are available at: http://standardandpoorsdisclosure-17g7.com RATINGS PLACED ON CREDITWATCH POSITIVE Corsair (Jersey) No. 2 Ltd. Series 46 credit default swap To From Amount BBsrp (sf)/Watch Pos BBsrp (sf) JPY3.0 bil. Signum Vanguard Ltd. Class A secured fixed rate credit-linked loan series 2005-04 To From Amount B- (sf)/Watch Pos B- (sf) JPY4.0 bil. Class A secured floating rate credit-linked loan series 2005-06 To From Amount BpNRi (sf)/Watch Pos BpNRi (sf) JPY3.0 bil. ==================== N E W Z E A L A N D ==================== ASCENSION WINE: Placed Into Voluntary Receivership -------------------------------------------------- Georgina Bond at NBR Online reports that Ascension Wine Estate has been placed into receivership. According to the report, the landmark winery on Matakana Rd was put into voluntary receivership on May 6 when owners Darryl and Bridget Soljan asked the bank to call in the receivers. The Soljans are the fifth-generation of the Soljan family, of Yugoslav origins, to grow grapes and make wine for a living, the report says. NBR reports that receiver Andrew McKay -- amckay@corpfin.co.nz -- from Corporate Finance said his team will continue to trade the business, and functions and events booked at the venue will go ahead. Ascension Wine Estate is a winery and popular events venue in Matakana, north of Auckland. The home vineyard makes a range of red, white and sparkling wine under the Ascension label. DOMINION FINANCE: Director Pleads Guilty to FMA Charges ------------------------------------------------------- APNZ reports that failed Dominion Finance director Ann Butler has pleaded guilty to seven charges of making untrue statements to prospective investors. Ms. Butler appeared briefly in the High Court at Auckland on Friday, the report relates. She had no comment to make to APNZ as she left court and is due for sentencing next month. APNZ adds that the Financial Markets Authority said Ms. Butler was the 27th finance company director to be convicted in proceedings taken by FMA and the first of the Dominion Finance directors to enter a guilty plea. About Dominion Finance Based in Auckland, New Zealand, Dominion Finance Holdings Limited was engaged in the provision of financial services through the raising of debenture stock. The company operated through its wholly owned subsidiaries Dominion Finance Group Limited and North South Finance Limited, and investment vehicle Dominion Investment Fund Limited. Both Dominion Finance Group Limited and North South Finance Limited accepted debenture stock investments and apply them (in conjunction with its own funds) towards the provision of certain loans and other financial accommodation. Dominion Finance was put into receivership in September 2008 owing about NZ$176.9 million to more than 5,900 investors. It was put into liquidation by the High Court at Auckland in May 2009. Associate Judge Faire appointed William Black and Andrew Grenfell of McGrathNicol as liquidators of the firm. Receiver Rod Partington of Deloitte said the liquidation application will not affect the progress of the receivership. North South Finance went into receivership in July 2010. In total, the group is estimated to owe creditors NZ$400 million. HANOVER FINANCE: Serious Fraud Office Probe Cost NZ$1.1 Million ---------------------------------------------------------------- BusinessDesk.co.nz reports that the Serious Fraud Office investigation into failed company Hanover Finance cost the regulator about NZ$1.1 million. The SFO said it spent about NZ$600,000 on its own staff and overheads and a further NZ$505,111 on advisers during the 32-month investigation, the report relates. The office earlier said it won't lay charges against any of the firm's directors or owners because it had exhausted all avenues of investigation and found nothing to meet its threshold to pursue a prosecution, according to the report. "Investigations of this scale are expensive and time consuming," the report quotes acting SFO chief executive Simon McArley as saying. "However it is essential that we are able to make the commitment to this scale of investigation so that a credible deterrent to offending is maintained." The SFO has completed 15 investigations arising out of the collapse of the finance company sector. "That collapse had a profound impact on many New Zealanders and rocked confidence in the integrity of our savings institutions and financial markets," Mr. McArley, as cited by BusinessDesk.co.nz, said. The SFO delivered a positive outcome in the majority of cases, helping rebuild confidence. About Hanover Finance Hanover Finance Limited -- http://www.hanover.co.nz/-- was New Zealand's third-largest privately-owned finance company with total assets of NZ$796 million at December 31, 2007. The company was established in 1984 to provide finance to the rural sector and began lending to property developers and investors in 1995. The loan portfolio has been gradually downsized since 2006 as a result of a more cautious approach to lending in the face of retail funding constraints. Hanover Finance's investors in December 2008 voted in favor of the company's Debt Restructure Proposals, including a plan to fully repay NZ$552.6 million principal it owes over five years. However, Hanover Finance said in November 2009 it is no longer likely to fully repay investors under a debt restructuring plan due to a deterioration in the commercial property development market, a TCR-AP report on Nov. 12, 2009, said. In December 2009, investors agreed to swap their Hanover interests for shares in Allied Farmers Ltd. The Serious Fraud Office commenced an investigation into the affairs of Hanover Finance Ltd in September 2010 after considering complaints received from the Securities Commission, Allied Farmers and others. The Financial Markets Authority, on March 30, 2012, filed civil proceedings against directors and promoters of Hanover Finance Ltd, Hanover Capital Ltd, and United Finance Ltd. Proceedings under the Securities Act have been filed against Mark Hotchin, Eric Watson, Greg Muir, Sir Tipene O'Regan, Bruce Gordon and Dennis Broit. They relate to statements made in the December 2007 prospectuses, subsequent advertising, and the March 2008 prospectus extension certificate. SFO on April 30 said it has completed its investigation of Hanover Finance, bringing to an end its investigations into the 2007/08 finance company collapses. That process, which saw SFO investigate 15 separate companies, resulted in criminal prosecutions in relation to nine companies. Overall, 23 individuals have faced charges laid by SFO. ********* 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. 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