/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/080808.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, August 8, 2008, Vol. 9, No. 157 Headlines A U S T R I A ABAZOSKI KG: Claims Registration Period Ends August 21 BALMANIAN LLC: Claims Registration Period Ends August 21 FACILITY PLUS: Claims Registration Period Ends August 19 GARGYAN KEG: Claims Registration Period Ends August 19 GEROMICHALOS LLC: Claims Registration Period Ends August 19 B E L A R U S TURKCELL ILETISIM: Inks Deal to Buy 80% of Belarus Telecom B U L G A R I A KREMIKOVTZI AD: Sofia Court Commences Insolvency Proceedings F R A N C E AKERYS HOLDINGS: Moody's Lowers Corporate Family Rating to B1 DELPHI CORP: GM Says Delphi-Related Charges Reach US$11 Billion DELPHI CORP: Court Rejects Appaloosa Bid to Dismiss Lawsuit DELPHI CORP: Court Extends Plan-Filing Deadline to October 31 G E R M A N Y BESTATTUNGSHAUS MINDEN: Claims Registration Period Ends Aug. 17 DEUTSCHE GESELLSCHAFT: Claims Registration Period Ends August 16 EDV RESSOURCEN: Claims Registration Period Ends August 15 ELTCON ELEKTRO: Claims Registration Period Ends August 15 EMSLAND GUSSASPHALT: Claims Registration Period Ends August 18 EO LOGISTIK: Claims Registration Period Ends August 15 EUROHOME MORTGAGES: Fitch Puts Class X Loan Rating on Watch Neg. FACH-WERK HANDWERKSGEMEINSCHAFT: Claims Filing Ends August 15 HORSE EVENT: Claims Registration Period Ends August 15 KEMATEN COSMETICS: Claims Registration Period Ends August 15 MARBAR GASTRONOMIE: Claims Registration Period Ends August 17 NKG GRUNDSTUECKS: Creditors' Meeting Slated for August 18 PROSIEBENSAT.1 MEDIA: Q2 2008 Group EBITDA Up 28% to EUR203.7MM I R E L A N D PFIZER CORK: To Close Business After Failed Asset Sale I T A L Y EUROHOME MORTGAGES: Fitch Puts Class X Loan Rating on Watch Neg. K A Z A K H S T A N DARHAN JSC: Creditors Must File Claims by September 24 ENERGO COMPLECT: Claims Deadline Slated for September 23 IDEAL PLUS: Claims Filing Period Ends September 19 INTERNATIONAL BUSINESS: Creditors' Claims Due on September 23 LTD OIL: Claims Registration Ends September 19 MEHOS LLP: Creditors Must File Claims by September 19 VESTA ELECTRIC: Claims Deadline Slated for September 19 K Y R G Y Z S T A N RUK-ENERGY+K LLC: Creditors Must File Claims by September 12 L U X E M B O U R G ORCO PROPERTY: Moody's Lowers Corporate Family Rating to Caa1 R O M A N I A * Romanian Banking Industry Facing Increased Risks, S&P Reports R U S S I A ARKAIM LLC: Court Starts Bankruptcy Supervision Procedure BAYKAL-TEKH-CENTRE: Names A. Efremova as Administrative Receiver BIORANTA CJSC: Names N. Prilepin as Administrative Receiver OCEAN CJSC: Proofs of Claim Filing Deadline Set September 5 OFFSET PAPERS: Court Starts Bankruptcy Supervision Procedure PBB LPN: Fitch Assigns 'B-' Long-Term Note Rating STROY-TORG-SERVICE: Court Starts Bankruptcy Supervision Process TEPLO-ENERGO-SERVICE: Court Sets Supervision Hearing November 19 SEVERSTAL OAO: Completes US$775 Million Esmark Inc. Acquisition SEVERSTAL OAO: Metiz Unit Acquires Redaelli Tecna SpA TNK-BP INT'L: S&P Chips Long-Term Credit & Sr. Debt Rating to BB ULYANOVSKIY MECHANICAL: Court Sets Supervision Hearing Sept. 4 * S&P Revises Russian Banking Industry's Country Risk Assessment S P A I N MARTINSA-FADESA: Appointed Administrators Resume Work * Fitch: Mortgage Interest Payment Shock to Affect Spanish RMBS S W I T Z E R L A N D GENERAL MOTORS: Overall Truck Sales Decline 41.5% in July 2008 GENERAL MOTORS: Says Delphi-Related Charges Reach US$11 Billion GENERAL MOTORS: Can Participate in Delphi Suit vs. Appaloosa SEMGROUP LP: May Draw US$150 Million from BofA's DIP Financing T U R K E Y DOGAN YAYIN: Fitch Holds 'BB-' LT Local & Foreign Currency IDRs HURRIYET: Fitch Holds 'BB' ID Rating with Stable Outlook TURKCELL ILETISIM: Earns US$426.4 Mln for 2nd Qtr Ended June 30 TURKCELL ILETISIM: Inks Deal to Buy 80% of Belarus Telecom U K R A I N E ATOL-PLUS LLC: Creditors Must File Proofs of Claim by August 16 FUND OF ASSISTANCE: Creditors Must File Claims by August 20 KRUG-AUTO LLC: Creditors Must File Proofs of Claim by August 20 MOD OJSC: Creditors Must File Proofs of Claim by August 20 LAVANDA LLC: Creditors Must File Proofs of Claim by August 20 TCHIBES LLC: Creditors Must File Proofs of Claim by August 20 TECHNICS SERVICE: Creditors Must File Proofs of Claim by Aug. 16 TOUR-POLOZ: Creditors Must File Proofs of Claim by Aug. 20 UTEK LLC: Creditors Must File Proofs of Claim by August 16 UZ AND ME: Creditors Must File Proofs of Claim by August 20 U N I T E D K I N G D O M BANBURY PERSONNEL: Brings in Liquidators from Tenon Recovery BORDERFOAM LTD: Joint Liquidators Take Over Operations CSRL MECHANICAL: Taps Liquidators from Vantis DIAMOND LIFESTYLE: Ian S. Carr Leads Liquidation Procedure FEDERAL MOGUL: T&N Asbestos Victims to Get GBP2 Mln in Payments GEMINI PRODUCTIONS: Calls in Liquidators from Tenon Recovery GENERAL TRADING: Administrators Sell Business as Going Concern ITV PLC: First Half 2008 EBITA Down 20% to GBP121 Million ITV PLC: S&P Cuts Long-Term Corp. Credit Rating to BB+ from BBB- NORTEL NETWORK: Posts US$251 Mln Net Loss for First Half 2008 REFCO INC: Ex-CEO Phillip Bennett Settles with US SEC S & E CLEANING: Taps Liquidators from Tenon Recovery SITE SPACE: Claims Filing Period Ends October 31 SYNCORA: Moody's Puts B2 IFSR Under Review for Possible Upgrade SYNCORA HOLDINGS: Closes XL Capital & Merrill Lynch Transactions STORE TO DOOR: Appoints Liquidators from Vantis * IMF Cuts the United Kingdom's 2008 Growth Forecast to 1.4% * S&P Says EEMEA Utilities to Face Economic Challenges Ahead * Consumer Spending Downturn to Hit UK Retail & Leisure Sectors * UK Pension Funds Has GBP41BB Net Deficit in Mid-July, LCP Says * BOOK REVIEW: American Express ********* ============= A U S T R I A ============= ABAZOSKI KG: Claims Registration Period Ends August 21 ------------------------------------------------------ Creditors owed money by KG Abazoski have until Aug. 21, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Katharina Widhalm-Budak Favoritenstrasse 22/12a 1040 Vienna Austria Tel: 513 10 37 Fax: DW 22 E-mail: widhalm-budak@anwaltsteam.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:10 a.m. on Sept. 4, 2008, for the examination of claims at: The Trade Court of Vienna Room 1707 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on June 30, 2008, (Bankr. Case No. 2 S 75/08d). BALMANIAN LLC: Claims Registration Period Ends August 21 -------------------------------------------------------- Creditors owed money by LLC Balmanian have until Aug. 21, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Arno Maschke Mariahilfer Strasse 50 1070 Vienna Austria Tel: 523 62 00 Fax: 526 72 74 E-Mail: maschke@sup.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:10 a.m. on Sept. 4, 2008, for the examination of claims at: The Trade Court of Vienna Room 1707 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on July 1, 2008, (Bankr. Case No. 2 S 77/08y). FACILITY PLUS: Claims Registration Period Ends August 19 -------------------------------------------------------- Creditors owed money by LLC Facility Plus have until Aug. 19, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Ute Toifl Tuchlauben 12/20 1010 Vienna Austria Tel: 535 46 11-0 Fax: 535 46 11-11 E-mail: office@thr.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:00 a.m. on Sept. 2, 2008, for the examination of claims at: The Trade Court of Vienna Room 1606 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on June 30, 2008, (Bankr. Case No. 4 S 100/08w). GARGYAN KEG: Claims Registration Period Ends August 19 ------------------------------------------------------ Creditors owed money by KEG Gargyan have until Aug. 19, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Susanne Fruhstorfer Seilerstatte 17 1010 Vienna Austria Tel: 512 5776 Fax: 512 5776 50 E-mail: office@fg-lawyers.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:30 a.m. on Sept. 2, 2008, for the examination of claims at: The Trade Court of Vienna Room 1606 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on June 30, 2008, (Bankr. Case No. 4 S 102/08i). GEROMICHALOS LLC: Claims Registration Period Ends August 19 ----------------------------------------------------------- Creditors owed money by LLC Geromichalos have until Aug. 19, 2008, to file written proofs of claim to the court-appointed estate administrator: Dr. Stephan Riel Landstrasser Hauptstrasse 1/2 1030 Vienna Austria Tel: 713 44 33 Fax: 713 10 33 E-mail: kanzlei@jsr.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:15 a.m. on Sept. 2, 2008, for the examination of claims at: The Trade Court of Vienna Room 1606 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on June 30, 2008, (Bankr. Case No. 4 S 101/08t). ============= B E L A R U S ============= TURKCELL ILETISIM: Inks Deal to Buy 80% of Belarus Telecom ---------------------------------------------------------- Turkcell Iletisim Hizmetleri A.S. has signed a sale-and-purchase agreement to acquire a 80% stake in Belarusian Telecommunications Network (BeST). The completion of the transaction will be subject to the fulfillment of the conditions set forth in the SPA. The stake will be acquired from the State Committee on Property of the Republic of Belarus for US$500 million. The payment is expected to be realized in three tranches of which US$300 million is expected to be paid on the closing date, which is expected to be 30 days after the signature date and additional US$100 million tranches are expected to be paid on Dec. 31, 2009 and 2010 respectively. An additional payment of US$100 million shall be made when BeST records a full-year positive net income for the first time. Turkcell CEO Sureyya Ciliv noted, "The acquisition of BeST represents an opportunity for Turkcell to gain access to a market with a growth potential. Belarus is an attractive emerging market within Turkcell's growth geography with its young and well educated population and steadily growing economy. We are also happy to be starting our operations with an already established third operator in Belarus. We believe we can use our complimentary skills we gained in Ukraine and CIS very effectively in Belarus to differentiate BeST as soon as possible." About Turkcell Headquartered in Instanbul, Turkey, Turkcell Iletisim Hizmetleri A.S. -- http://www.turkcell.com.tr/eng-- provides high-quality mobile voice and data services through its own GSM network. The company also operates in the Ukraine through its indirect subsidiary Astelit, in Azerbaijan, Kazakhstan, Georgia and Moldova through its associate Fintur, and in Northern Cyprus through its wholly owned subsidiary Kibris Telekom. * * * Turkcell Iletisim Hizmetleri continues to carry Ba2 foreign currency and domestic currency corporate family ratings with positive outlook from Moody's Investors Service. The agency affirmed the ratings in February 2008. Turkcell also continues to carry BB foreign currency long-term corporate credit rating with positive outlook from Standard & Poor's Ratings Services. Turkcell continues to carry Fitch Ratings' BB foreign currency Issuer Default rating with stable outlook, and BB+ local currency Issuer Default rating with positive outlook. =============== B U L G A R I A =============== KREMIKOVTZI AD: Sofia Court Commences Insolvency Proceedings ------------------------------------------------------------ The Sofia City Court has commenced insolvency proceedings against Kremikovtzi AD after declaring it bankrupt, Bloomberg News reports citing Bulgaria's Ministry of Energy and Economy. The court has appointed a temporary bankruptcy administrator for the bankrupt steelmaker. "The court's decision will give Kremikovtzi the chance to restore its output to full capacity and generate sufficient financial resources to help it meet European Union anti- pollution requirements," the Bloomberg News cites the ministry in an e-mail. The court also ruled that Kremikovtzi's insolvency started on Dec. 31, 2005. It also set the first creditors meeting on Sept. 26, 2008. The company's largest local creditors include Bulgargas, the National Electricity Co. and State Railways. Insolvency Starting Date Volker Schwich, an executive at ArcelorMittal, told Bloomberg News that setting the insolvency date back to 2005 would affect the interest of the bondholders. Kremikovtzi issued in 2006 around EUR325 million in bonds, which the company had defaulted. Houlihan Lokey Howard & Zukin, which represents the bondholders, said its clients is urging the Bulgarian government and the court to carry out the proceedings "in a fair and transparent manner and that bondholders' rights be respected," Bloomberg News says. Houlihan's clients, including York Credit Opportunities Fund LP and QVT Fund, currently control Kremikovtzi's collateralized assets. As appeared in the TCR-Europe on July 31, 2008, the High Court of England and Wales issued a decision ordering Kremikovtzi to repay EUR347 million in principal and interest due to Law Debenture Trust Corporation, trustee for the company's seven- year 12% notes due 2013. Law Debenture claimed Kremikovtzi breached the terms of the notes, which made them immediately payable. The trustee further claimed Kremikovtzi failed to pay interest to noteholders despite receiving notices from March to May. In its ruling, the High Court ordered that Kremikovtzi reclassify the principal and interest due as a short-term liability. Sale The commencement of insolvency proceedings against Kremikovtzi signaled the start of a bidding war for a 71% stake in the steelmaker between ArcelorMittal and Vorskla Steel AG. Both firms said they would acquire the stake if Kremikovtzi is declared insolvent. Meanwhile, bondholders might step in if the stake sale fails. "If no suitable bidders come forward to buy the plant in bankruptcy, bondholders intend to implement their own restructuring plan," Justin Holland of Houlihan told Bloomberg News. About Kremikovtzi Headquartered in Sofia, Bulgaria, Kremikovtzi AD -- http://www.kremikovtzi.com/-- is a single-site steel producer in Bulgaria that reported BGN896 million in revenues in 2006. It explores and produces iron and ore fields. The Sofia City Court appointed administrators April 30, 2008, at Kremikovtzi AD in relation with the steel mill's deteriorating financial position. As of Dec. 31, 2007, the company had BGN1.63 billion (US$1.3 billion) in total debts. * * * Kremikovtzi AD carries Moody's Investors Service corporate family rating of Caa3 with a developing outlook. =========== F R A N C E =========== AKERYS HOLDINGS: Moody's Lowers Corporate Family Rating to B1 ------------------------------------------------------------- Moody's Investors Service has downgraded to B1 from Ba3 the corporate family rating of Korreden S.A., the ultimate holding company for the French homebuilder Akerys. At the same time, Moody's downgraded to B3 from B1 the rating of the EUR300 million of Senior Floating-Rate Notes dues 2014 issued by Akerys Holdings SA, a finance subsidiary of Korreden. The company's probability of default rating (PDR) is now B1. LGD assessment remains unchanged at LGD5 (77.49%). The outlook for all ratings is negative. The rating downgrades reflect the further reduction in the number of reservations for Akerys' apartments and rising rate of cancellations for Q3 2008, which have led to a notable year-on- year decrease in notarized sales. This, in turn, has caused the company's profitability, cashflow and interest coverage to weaken. We do not see a recovery in the French buy-to-let housing market beginning before well into 2009 as consumer confidence has greatly diminished and affordability is a thorny issue in this market. This rating actions conclude the rating review initiated in March 2008 and maintained in June. At its downgraded level, the B1 corporate family rating assigned to the group's ultimate parent company, Korreden S.A., continues to reflect Akerys' leading position in the buy-to-let segment of the homebuilding market and its good geographic diversification. The ratings also factor in the supportive legal framework for homebuilding in France and the group's conservative risk- management guidelines, which restrict the level of speculative development undertaken. Moody's also recognizes that Akerys benefits from its integrated business model, which yields more stable cash flows than a pure homebuilder due to the recurring nature of some of its ancillary businesses such as financial products brokerage and real estate services. The ratings also incorporate the group's projections for positive free cash flow over the coming financial year, its current solid liquidity position and management's proactive and cautious management of inventory levels. The negative outlook reflects the possibility that, despite long-term demographic factors supporting the need for housing in France, there could be a continued deterioration in demand. The rating outlook could be stabilized if there is evidence of a recovery in the French housing market that supports a return to improved sales volumes leading towards a more comfortable liquidity position and improved financial strength indicators, with interest cover (EBITA/gross interest expense) being sustained at 3.0x. Moody's adds that downward pressure on the rating would result in the event that a further reduction in sales volumes leads to a build-up of unsold inventory and/or a deterioration of its liquidity position and/or poorer margins such that the company's financial strength and capital structure are weakened with net debt to EBITDA deteriorating to levels above 6.5x or interest cover weakening to below 1.5x or total debt to total capitalization increases to above 65%. Debt affected: Akerys Holdings SA backed senior secured notes to B3 from B1 The last rating action for Korreden SA was June 16, 2008 when the corporate family rating was downgraded to Ba3 from Ba2 and placed on review for possible further downgrade. Headquartered in Toulouse, France, Akerys is the largest player in the buy-to-let segment of the French homebuilding market with 8,571 housing units sold in 2006/07. The group's main shareholder is investment holding company Qualis SCA, with a 76% interest. In 2006/07, the group reported revenues of EUR815 million. DELPHI CORP: GM Says Delphi-Related Charges Reach US$11 Billion ------------------------------------------------------------- General Motors Corp. said charges related to Delphi Corp. has reached approximately US$11,000,000,000. In a presentation furnished to securities analysts, GM said made a US$2,753,000,000 adjustment to its Delphi reserve, "primarily due to updated estimates related to Delphi's ongoing reorganization." The adjustment reflects higher expected obligations (e.g. net pension liabilities) and additional uncertainty around nature, value and timing of GM recoveries. GM's one-time losses due to Delphi have totaled US$3,484,000,000 for the first half of 2008. GM, which contributes to over 30% of Delphi's revenues, reported a net loss of US$15,471,000,000 or US$27.33 per share for the second quarter of 2008. The quarterly loss, according to Bloomberg News, is the third biggest in its 100-year history. "Second quarter charges of US$2.8 billion and year to date charges of US$3.5 billion were recorded for increased liabilities under our Delphi Benefit Guarantee Agreements, primarily due to expectations of increased obligations and updated estimates reflecting the nature, value and timing of our recoveries upon Delphi's emergence from bankruptcy," GM said in its news release. A former unit of GM, Delphi was set to emerge from bankruptcy in mid-April but obtained problems with its US$2,550,000,000 exit equity financing from Appaloosa Management, L.P. The plan of reorganization of Delphi, which has been confirmed by the U.S. Bankruptcy Court for the Southern District of New York, provides that GM will receive cash, notes and other securities in exchange for the consideration it provided to Delphi under their agreements. Appaloosa backed out from their investment agreement after Delphi sought US$2,825,000,000 of its US$6,100,000,000 exit debt financing from GM, its biggest customer. GM said that its second quarter results were primarily driven by several factors: -- significant losses in GM North America (GMNA) due to continuing U.S. industry volume declines and shifts in vehicle mix, the long strike at American Axle and large lease-related charges; -- a number of special charges associated with GM's ongoing restructuring actions; and -- continued losses at GMAC Financial Services (GMAC) and updated estimates regarding recoveries and expectations of assumed benefit obligations in the Delphi bankruptcy. Excluding expenses considered by GM to be one-time, including its adjustment to reserves for bankrupt Delphi Corp., the loss was US$6,300,000,000, or US$11.21 a share. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total US$21,000,000,000 and it still has access to US$5,000,000,000 under its undrawn U.S. credit facilities. About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total US$21,000,000,000 and it still has access to US$5,000,000,000 under its undrawn U.S. credit facilities. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed USUS$11,446,000,000 in total assets and USUS$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide USUS$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Rejects Appaloosa Bid to Dismiss Lawsuit ----------------------------------------------------------- As widely reported, Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York declined to approve Appaloosa Management, L.P., et al.'s request for dismissal of Delphi Corp.'s US$2,550,000,000 lawsuit against them. Delphi has accused Appaloosa and other investors of defrauding the Court by stating that they had every intention of performing under the Equity Purchase and Commitment Agreement. Appaloosa, however, argued that Delphi cannot seek specific performance because it is currently unable to perform under the conditions- precedent of the EPCA, including obtaining commitment to its US$6,100,000,000 debt financing and the completion of the rights offering. The Wall Street Journal reported that Judge Drain dismissed a portion of Delphi's complaint, but he rejected most of the defendants' arguments. Judge Drain also allowed Delphi to pursue its fraud claim against the Appaloosa-led group. The ruling allows Delphi to continue its bid to force the Plan Investors to make good on the equity investment, WSJ's David McLaughlin said. The Plan Investors had also pointed to provision in the EPCA which provide that the aggregate liability of the the Plan Investors for any reason, including, for any willful breach, prior to December 10, 2007, will not exceed US$100,000,000, and for any acts occurring thereafter, will not exceed US$250,000,000. Judge Drain, however, declined to cap damages at the EPCA at US$250,000,000. General Motors previously said that the terms and conditions of a new or modified plan, which it is negotiating with Delphi and the Official Committee of Unsecured Creditors, will depend in part on the amount of Delphi's recovery in the litigation. According to Bloomberg News, Judge Drain dismissed almost all claims Delphi made against Goldman Sachs Group Inc. and said any damages award against the parents of investors Harbinger Del- Auto Investment Co. Ltd. and Pardus DPH Holding LLC should be capped. Goldman Sachs & Co. previously stated that it had not obligation to close on the EPCA if other parties, including Appaloosa, failed to perform their obligations under the agreement. Bloomberg's Christopher Scinta added that the Court also turned aside Delphi's effort to subordinate in priority (or disallow) any claims the investors, other than Appaloosa, hold against Delphi. Judge Drain, according to the same report, also denied part of Delphi's fraud claim against Appaloosa, though he told Delphi attorneys they can revise their complaint by the end of the week to seek reinstatement of that claim. GM Allowed to Join As Party-In-Interest Judge Drain also overruled the Plan Investors' objection to General Motors Corporation's participation as party-in-interest in the Adversary Proceedings. According to Bloomberg News, Judge Drain said Delphi will not settle the adversary cases without "obtaining input" ahead of time from GM. Like A-D Acquisition Holdings, LLC, and Appaloosa Management L.P. and other defendants to Delphi's US$2,550,000,000 complaint, UBS Securities LLC expressed opposition to General Motors' participation as party-in-interest. General Motors, in response, to the objections, clarified that it does not seek to intervene, but instead simply requests to be afforded admission to participate as a monitor in the Adversary Proceedings. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that the role sought by GM is subsumed within the greater rights that would be afforded to GM were it to exercise its right to intervene as a party to the Adversary Proceedings. In no way, then, does GM's proposal circumscribe any party's rights or deprive them of any protectable interests, he asserts. GM also emphasized that it does not seek to propose settlement of the dispute or take ownership of the Debtors' claims, nor is GM asserting rights that are derivative of another party's rights in the Chapter 11 cases, Mr. Kessler stressed. GM, Delphi and the Official Committee of Unsecured Creditors have agreed to terms of GM's participation in the Adversary Proceedings. Their stipulation, which has been approved by Judge Drain, provides that: (1) Weil, Gothshal and Manges, counsel of GM, will be served with all pleadings and other papers in accordance with Rule 5 of the Federal Rules of Civil Procedure and Rule 7005 of the Federal Rule of Bankruptcy Procedure; (2) GM, through its counsel, may participate in the Adversary Proceedings in a monitoring role, and will be permitted to: (i) appear before the Court on any matter, including at hearings and, as appropriate, chambers conferences; (ii) attend mediation sessions and other formal settlement negotiations, subject to any restrictions by the mediator; and (iii) participate in the discovery process, including attendance at depositions, access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits. (3) GM will sign and comply with the confidentiality restrictions in the Stipulation and Agreed Protective Order Governing Production and Use of Confidential and Highly Confidential Information entered in the Adversary Proceedings; (4) GM will have access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits; (5) Weil Gotshal, on behalf of GM, will be authorized to evaluate the Adversary Proceedings. Neither Weil Gotshal nor GM will use materials provided pursuant to the Stipulation and Order for any other purpose; (6) The agreement is without prejudice to: (i) GM seeking further participation rights in the Adversary Proceedings; (ii) any party opposing the motion; (iii) any party seeking greater restrictions; and (iv) GM opposing restrictions; (7) The agreement is without prejudice to GM seeking to share discovery materials with GM personnel in connection with testimony by the personnel at depositions, hearings or trial, and if the parties cannot agree, the dispute may be presented to the Court; and (8) Delphi will not settle either of the Adversary Proceedings without obtaining input in advance from GM. Delphi lawyers will confer with GM's lawyers on a regular and timely basis concerning the Adversary Proceedings. The Stipulation will be effective for only so long as the Global Settlement Agreement and Master Restructuring Agreement entered into between General Motors and Delphi are not terminated. About GM Based in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. At March 31, 2008, GM's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. Standard & Poor's has cut GM's credit rating to B-, six levels below investment grade, as falling U.S. sales have required the automaker to use more cash. GM says that its readily-available cash assets total US$21,000,000,000 and it still has access to US$5,000,000,000 under its undrawn U.S. credit facilities. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed USUS$11,446,000,000 in total assets and USUS$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide USUS$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court Extends Plan-Filing Deadline to October 31 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Delphi Corp. and its debtor-affiliates' exclusive periods to: (a) file a plan of reorganization through and including Oct. 31, 2008; and (b) solicit acceptances of that Plan through and including Dec. 31, 2008. As reported by the Troubled Company Reporter on July 29, 2008, John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, recalled that on April 4, 2008, the Debtors announced that although they had met the conditions required to substantially consummate the Plan, including obtaining US$6,100,000,000 of exit financing, Delphi's Plan Investors refused to participate in a closing. As disclosed in the Troubled Company Reporter on May 7, 2007, the Debtors obtained an extension, subject to certain exceptions, of their exclusive right under Section 1121 of the Bankruptcy Code to file one or more reorganization plans until 30 days after substantial consummation of the Plan and the exclusive right to solicit and obtain acceptances for those plans 90 days after substantial consummation of the plan by entry of the Order Under Section 1121(d) of the Bankruptcy Code. The Order, however, extended the Debtors' exclusive right to file a plan, as between the Debtors and the Statutory Committees, through and including Aug. 31, 2008, and the right to solicit a plan, as between the Debtors and the Statutory Committees, through and including Oct. 31, 2008, Mr. Butler said. On May 16, 2008, Delphi filed complaints for damages and specific performance against the Plan Investors who refused to participate in the closing that would have led to Delphi's successful emergence from Chapter 11. The Debtors nevertheless continue to work with their stakeholders to achieve their goal of emerging from Chapter 11 as soon as practicable, Mr. Butler said. Out of an abundance of caution and to ensure clarity with their stakeholders, including their customers and suppliers, the Debtors seek an extension of the Exclusive Periods to prevent any lapse in exclusivity between the Debtors and the Statutory Committees, Mr. Butler clarified. Mr. Butler explained that a further extension of the Exclusive Periods is justified by the significant progress the Debtors have made toward emerging from Chapter 11. After obtaining confirmation of the First Amended Plan, the Debtors secured exit financing and met all other conditions to the effectiveness of the Plan and Investment Agreement and were prepared to emerge from Chapter 11. Since April 30, 2008, Mr. Butler noted, the Debtors have continued to make progress toward emerging from Chapter 11 in three major areas: (i) The Debtors have engaged in a reaffirmation process with respect to the business plan contained in the Disclosure Statement. That process includes an analysis, among other things, of the impact of an unprecedented increase in global commodity costs and reduction of projected North American automobile industry production volumes; (ii) The Debtors have explored their exit financing possibilities in capital markets that remain turbulent; and (iii) The Debtors have entered into complex negotiations with the Statutory Committees and General Motors Corp. with respect to potential modifications of the Plan that will enable Delphi to emerge from chapter 11 as soon as reasonably practicable, thereby moving forward so that the Debtors can focus solely on their business operations and mitigate the damages caused by the Plan Investors. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed USUS$11,446,000,000 in total assets and USUS$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide USUS$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) ============= G E R M A N Y ============= BESTATTUNGSHAUS MINDEN: Claims Registration Period Ends Aug. 17 --------------------------------------------------------------- Creditors of Bestattungshaus Minden GmbH have until Aug. 17, 2008, to register their claims with court-appointed insolvency manager Georg Welslau. Creditors and other interested parties are encouraged to attend the meeting at 10:00 a.m. on Sept. 19, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Bielefeld Hall 4065 Fourth Floor Gerichtstrasse 66 33602 Bielefeld Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Georg Welslau Marienstr. 62 32427 Minden Germany The District Court of Bielefeld opened bankruptcy proceedings against Bestattungshaus Minden GmbH on June 30, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Bestattungshaus Minden GmbH Stiftsallee 31 32425 Minden Germany DEUTSCHE GESELLSCHAFT: Claims Registration Period Ends August 16 ---------------------------------------------------------------- Creditors of Deutsche Gesellschaft fuer Finanzwesen mbH have until Aug. 16, 2008, to register their claims with court- appointed insolvency manager Matthias Sticher. Creditors and other interested parties are encouraged to attend the meeting at 10:30 a.m. on Aug. 13, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Eschwege Meeting Hall 2 First Floor Friedr.-Wilh.-Strasse 39 37269 Eschwege Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Matthias Sticher Herkulesstrasse 3-7 45127 Essen Germany The District Court of Eschwege opened bankruptcy proceedings against Deutsche Gesellschaft fuer Finanzwesen mbH on June 19, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Deutsche Gesellschaft fuer Finanzwesen mbH Reichensachser Strasse 19B 37269 Eschwege Germany EDV RESSOURCEN: Claims Registration Period Ends August 15 --------------------------------------------------------- Creditors of Edv Ressourcen Consulting Overath GmbH have until Aug. 15, 2008, to register their claims with court-appointed insolvency manager Joachim Klein II. Creditors and other interested parties are encouraged to attend the meeting at 11:30 a.m. on Sept. 9, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Cologne Meeting Hall 142 First Floor Luxemburger Str. 101 50939 Cologne Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Joachim Klein II Hansaring 79-81 50670 Cologne Germany The District Court of Cologne opened bankruptcy proceedings against Edv Ressourcen Consulting Overath GmbH on July 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Edv Ressourcen Consulting Overath GmbH Attn: Helmut Overath, Manager Zehnthof 31 50129 Bergheim Germany ELTCON ELEKTRO: Claims Registration Period Ends August 15 --------------------------------------------------------- Creditors of ELTCON Elektro- und Schaltschrankanlagen-Bau GmbH have until Aug. 15, 2008, to register their claims with court- appointed insolvency manager Klaus W. Gerling. Creditors and other interested parties are encouraged to attend the meeting at 9:40 a.m. on Sept. 15, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Cologne Meeting Hall 1240 12th Floor Luxemburger Str. 101 50939 Cologne Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Klaus W. Gerling Mediapark 6 B 50670 Cologne Germany The District Court of Cologne opened bankruptcy proceedings against ELTCON Elektro- und Schaltschrankanlagen-Bau GmbH on June 5, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: ELTCON Elektro- und Schaltschrankanlagen-Bau GmbH Liebigstr. 32-34 50823 Cologne Germany Attn: Andreas Guennewig Buelowstr. 74 50733 Cologne Germany EMSLAND GUSSASPHALT: Claims Registration Period Ends August 18 -------------------------------------------------------------- Creditors of Emsland Gussasphalt GmbH & Co. KG have until Aug. 18, 2008, to register their claims with court-appointed insolvency manager Clemens Sandhaus. Creditors and other interested parties are encouraged to attend the meeting at 2:00 p.m. on Aug. 27, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Lingen (Ems) Hall Z 17 New Building Burgstrasse 28 49808 Lingen (Ems) Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Clemens Sandhaus Alter Pferdemarkt 2 49808 Lingen (Ems) Germany Tel: 0591/80037-65 Fax: 0591/80037-11 The District Court of Lingen (Ems)opened bankruptcy proceedings against Emsland Gussasphalt GmbH & Co. KG on June 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Emsland Gussasphalt GmbH & Co. KG Attn: Friedhelm Borgmann, Manager Industriestrasse 14 49832 Freren Germany EO LOGISTIK: Claims Registration Period Ends August 15 ------------------------------------------------------ Creditors of EO Logistik GmbH have until Aug. 15, 2008, to register their claims with court-appointed insolvency manager Dr. Philipp Grub. Creditors and other interested parties are encouraged to attend the meeting at 10:30 a.m. on Sept. 5, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Pforzheim Room 142 Lindenstr. 8 75175 Pforzheim Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Philipp Grub Humboldtstr. 16 70178 Stuttgart Germany The District Court of Pforzheim opened bankruptcy proceedings against EO Logistik GmbH on June 17, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: EO Logistik GmbH Attn: Ebrahim Omidwar, Manager Baumgartenstr. 6 75217 Birkenfeld Germany EUROHOME MORTGAGES: Fitch Puts Class X Loan Rating on Watch Neg. ---------------------------------------------------------------- Fitch Ratings has placed Eurohome Mortgages 2007-1 plc, a pan- European RMBS transaction originated by Deutsche Bank AG and Deutsche Bank Mutui S.p.A., on Rating Watch Negative. This reflects Fitch's concerns surrounding the extent of the levels of arrears and defaults seen in the Italian portfolio, as well as the portion of terminated loans in the German pool. The rating actions are: -- Class A (ISIN XS0309227279) 'AAA' on RWN -- Class B (ISIN XS0309230497) 'AA' on RWN -- Class C (ISIN XS0309232196) 'A' on RWN -- Class D (ISIN XS0309232600) 'BBB' on RWN -- Class E (ISIN XS0309233244) 'BBB' on RWN -- Class X (ISIN XS0309234309) 'BB+' on RWN -- German Mortgage Early Repayment Certificates (ISIN XS0309236007) affirmed at 'AAA'; Outlook Stable -- Italian Mortgage Early Repayment Certificates (ISIN XS0309788031) affirmed at 'AAA'; Outlook Stable Fitch has requested from Deutsche Bank a full loan-by-loan breakdown of the two pools of mortgages to conduct a full analysis. The agency expects to resolve the RWN within the next three months. Further information will also be requested from Deutsche Bank to help facilitate this analysis. Investor reports for August 2008 show that there has been a draw on the reserve fund to the amount of EUR813,177. The draw was due to the provisioning for defaulted loans in the Italian part of the pool, which for the last quarter were in the amount of EUR1.2 million, bringing the cumulative balance of defaulted loans to 0.75% of the Italian pool, i.e. 0.49% of the total pool. Loans in arrears by more than three months in the Italian pool have been increasing since close and as of June 2008, they stood at 6.02% of the Italian portfolio outstanding. In the German portfolio, reported terminated loans represent 7.56% of the current portfolio outstanding, while loans with one or more missed payments make up 8.29% of the German portfolio outstanding. To date, neither of the two pools has reported any losses. FACH-WERK HANDWERKSGEMEINSCHAFT: Claims Filing Ends August 15 ------------------------------------------------------------- Creditors of Fach-Werk Handwerksgemeinschaft GmbH have until Aug. 15, 2008, to register their claims with court-appointed insolvency manager Dr. Juergen Spliedt. The District Court of Charlottenburg will verify the claims set out in the insolvency manager's report at 9:25 a.m. on Oct. 10, 2008, at: The District Court of Charlottenburg Hall 218 Second Floor Amtsgerichtsplatz 1 14057 Berlin Germany Creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Juergen Spliedt Uhlandstr. 165/166 10719 Berlin Germany The District Court of Charlottenburg opened bankruptcy proceedings against Fach-Werk Handwerksgemeinschaft GmbH on May 16, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Fach-Werk Handwerksgemeinschaft GmbH Mansfelder Str. 62 10709 Berlin Germany HORSE EVENT: Claims Registration Period Ends August 15 ------------------------------------------------------ Creditors of Horse Event International GmbH have until Aug. 15, 2008, to register their claims with court-appointed insolvency manager Dr. Helmut Eisner. Creditors and other interested parties are encouraged to attend the meeting at 2:00 p.m. on Sept. 16, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Mosbach Room 12 Lohrtalweg 2 74821 Mosbach Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Helmut Eisner Josef-Schmitt-Str. 10 97922 Lauda-Koenigshofen Germany Tel: 09343/627590 The District Court of Mosbach opened bankruptcy proceedings against Horse Event International GmbH on July 14, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Horse Event International GmbH Attn: Josef Hoefling, Manager Wiesengrund 16 97956 Werbach-Brunntal Germany KEMATEN COSMETICS: Claims Registration Period Ends August 15 ------------------------------------------------------------ Creditors of Kematen cosmetics Deutschland GmbH have until Aug. 15, 2008, to register their claims with court-appointed insolvency manager Dr. Thomas Kaiser. Creditors and other interested parties are encouraged to attend the meeting at 10:00 a.m. on Sept. 2, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Freiburg Hall I Holzmarkt 2 Freiburg Germany The Court will verify the claims set out in the insolvency manager's report at 11:00 a.m. on Sept. 15, 2008, at: Paulussaal Dreisamstr. 3 79098 Freiburg Germany Creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Thomas Kaiser LG-Fach 37 Wilhelmstr. 1b 79098 Freiburg Germany Tel: 0761/703940 Fax: 0761/7039410 The District Court of Freiburg opened bankruptcy proceedings against Kematen cosmetics Deutschland GmbH on July 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Kematen cosmetics Deutschland GmbH Attn: Bernhard Scholz and Martin Scholz, Managers Ludwig-Kegel-Str. 15 79853 Lenzkirch Germany MARBAR GASTRONOMIE: Claims Registration Period Ends August 17 ------------------------------------------------------------- Creditors of MarBar Gastronomie Eventmarketing und Beratungsgesellschaft mbH have until Aug. 17, 2008, to register their claims with court-appointed insolvency manager Christina Combecher. Creditors and other interested parties are encouraged to attend the meeting at 11:45 a.m. on Sept. 24, 2008, at which time the insolvency manager will present his first report on the insolvency proceedings. The meeting of creditors will be held at: The District Court of Marburg/Lahn Hall 157 Universitatsstrasse 48 35037 Marburg/Lahn Germany The Court will also verify the claims set out in the insolvency manager's report during this meeting, while creditors may constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Christina Combecher Jahnstrasse 18 35066 Frankenberg Germany Tel: 06451/71919-22 Fax: 06451/7191921 The District Court of Marburg/Lahn opened bankruptcy proceedings against MarBar Gastronomie Eventmarketing und Beratungsgesellschaft mbH on July 4, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: MarBar Gastronomie Eventmarketing und Beratungsgesellschaft mbH Elisabethstrasse 14 35037 Marbur Germany NKG GRUNDSTUECKS: Creditors' Meeting Slated for August 18 --------------------------------------------------------- The court-appointed insolvency manager for NKG Grundstuecks GmbH & Co. Morusstrasse 30 KG, Dr. Joachim Heitsch will present his first report on the Company's insolvency proceedings at a creditors' meeting at 11:55 a.m. on Aug. 18, 2008. The meeting of creditors and other interested parties will be held at: The District Court of Charlottenburg Hall 218 Second Floor Amtsgerichtsplatz 1 14057 Berlin Germany The Court will also verify the claims set out in the insolvency manager's report at 11:30 a.m. on Dec. 8, 2008, at the same venue. Creditors have until Oct. 9, 2008, to register their claims with the court-appointed insolvency manager. The insolvency manager can be reached at: Dr. Joachim Heitsch Berliner Str. 117 10713 Berlin Germany The District Court of Charlottenburg opened bankruptcy proceedings against NKG Grundstuecks GmbH & Co. Morusstrasse 30 KG on July 10, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: NKG Grundstuecks GmbH & Co. Morusstrasse 30 KG Uhlandstrasse 7-8 10623 Berlin Germany PROSIEBENSAT.1 MEDIA: Q2 2008 Group EBITDA Up 28% to EUR203.7MM --------------------------------------------------------------- ProSiebenSat.1 Media AG released its consolidated interim financial statements for second quarter 2008. The ProSiebenSat.1 Group's consolidated revenues for second quarter 2008 were up EUR250.3 million, or 45.4 percent, to EUR801.9 million. Recurring EBITDA, at EUR203.7 million, outperformed the prior-year figure by 28.0 percent (Q2 2007: EUR159.1 million). Reduced revenues in German TV were compensated by the consolidation of the SBS Broadcasting Group from July 2007. Based on pro forma figures for the combined Group, Group revenues were down 4.0 percent, to EUR801.9 million (Q2 2007 pro forma: EUR835.6 million). Recurring EBITDA decreased 16.6 percent to EUR203.7 million (Q2 2007 pro forma: EUR 244.3 million). As disclosed in April, the Group's business performance was adversely affected in the second quarter by a lack of acceptance of the new German ad sales model. This led to a loss of revenues in Germany. The European Soccer Championship also reduced ad bookings in the second quarter across the ProSiebenSat.1 footprint. "The first half of the year was not an easy time for the ProSiebenSat.1 Group," Guillaume de Posch, CEO of ProSiebenSat.1 Media AG commented. The reasons are clear: part of the market did not accept the German ad sales model. With the model as revised in May, we are confident we will begin to regain market share in the second half. Strategically, we are on track following last years takeover of the SBS Broadcasting Group. We are systematically investing in our core business free TV across Europe, and developing and purchasing attractive content. We have not only diversified our revenue sources geographically, we are also using all electronic distribution channels. Here our portfolio is constantly expanding. Building up a fully digital technological platform is a further important step in making ProSiebenSat.1 Europes leading TV group." Business performance in Q2 2008:SBS consolidated since July 2007 The ProSiebenSat.1 Group's consolidated revenues rose by 45.4 percent in Q2 2008, to EUR801.9 million. The first consolidation of SBS, with a contribution of EUR293.0 million, contributed a significant part of the total revenue increase of EUR250.3 million. Recurring EBITDA was EUR203.7 million, outperforming the previous years figure by EUR44.6 million, or 28.0 percent. The first consolidation of SBS contributed EUR76.5 million to earnings. EBITDA increased by 19.2 percent, to EUR189.3 million (Q2 2007: EUR158.8 million). Earnings in Q2 2008:Pro forma figures for 2007 Based on a pro forma calculation for the second quarter, recurring EBITDA was down 16.6 percent to EUR203.7 million (Q2 2007 pro forma: EUR244.3 million). EBITDA, at EUR189.3 million, was 17.7 percent below the previous years equivalent (Q2 2007 pro forma: EUR229.9 million). Lower revenues reduced the consolidated operating profit. Higher costs also affected the figure. Total costs rose by EUR15.7 million overall, to reach EUR657.2 million. This figure includes non-recurring costs of EUR 18.8 million (Q2 2007 pro forma: EUR15.5 million) that mainly arose in the second quarter because of reorganization measures and portfolio adjustments. Segment performance in Q2 2008 Free TV in German-Speaking Europe segment: External revenues decreased by EUR 43.5 million, or 8.8 percent, to EUR 452.3 million. As anticipated, difficulties in the German TV business had an impact on profits for the quarter. In Austria, the ProSiebenSat.1 Group saw TV advertising revenues grow. In Switzerland, despite negative effects on Group TV advertising revenues due to Euro 2008, the figure held steady at last years level. Part of the decline in revenues in the German market was compensated by savings on operating costs. Recurring EBITDA was down 22.3 percent, to EUR115.8 million (Q2 2007: EUR 149.1 million). Despite the European Soccer Championship, the German stations maintained a high audience share of 29.0 percent (Q2 2007: 29.5 percent). Free TV International segment: Based on a pro forma calculation, external revenues in the international free TV business rose by 2.8 percent, to EUR214.7 million (Q2 2007 pro forma: EUR 208.9 million). Most of the increase came from higher advertising revenues. Additionally, higher distribution proceeds and the new stations launched last year also sped up revenue growth. But an increase in operating costs caused recurring EBITDA to decline 11.4 percent to EUR54.4 million (Q2 2007 pro forma: EUR 61.4 million). Particular factors were higher programming costs and startup costs for new stations. EBITDA, at EUR53.6 million, was up 16.8 percent from the previous years figure (Q2 2007 pro forma: EUR45.9 million). The prior-year figure includes one- time expenses from the integration of ProSiebenSat.1 and SBS. Diversification segment: Based on a pro forma comparison, external revenues rose by EUR4.0 million, or 3.1 percent, to EUR134.9 million. Recurring EBITDA was down EUR1.1 million, to EUR32.5 million (3.3 percent). EBITDA decreased EUR0.3 million, to EUR35.7 million (0.8 percent). The decline in profits was caused in part by lower call TV revenues from 9Live in Germany. Outlook for 2008 ProSiebenSat.1 continues to target a recurring EBITDA for 2008 at a similar level to the reported pro forma figures for 2007, despite difficulties in the German market. Efficiency enhancements and synergies from the integration of SBS and ProSiebenSat.1 will contribute here. "Any long-term forecast for the TV advertising market must be tentative," Mr. de Posch said. "We would like to emphasize that our profit target depends on trading conditions which are more than usually uncertain. This is partly due to low visibility in the advertising market, and partly to the overall economic development of the countries in which we operate. Nevertheless, the Group on the right track in terms of both operations and strategy. We have taken decisive action to streamline our portfolio and improve our competitiveness in the German market. Through Group-wide efficiency enhancement programs, we plan to save EUR 70 million on costs this year against the originally budgeted figures. We expect to realize our efficiency targets in the second half, and generate significant savings, without jeopardizing our long-term growth objectives." The Group is aiming to reduce its financial debt both out of growing profits and out of the proceeds from divestments. Subject to approval by the antitrust authorities, the sale of C More, at an enterprise value of about EUR320 million, is expected to close in the second half of the year. About ProsiebenSat.1 Headquartered in Munich, Germany, ProsiebenSat.1 Media AG -- http://en.prosiebensat1.com/-- broadcasts and produces TV programs through 24 commercial TV stations, 24 premium Pay TV channels and 22 radio network. In June 2007, the ProSiebenSat.1 Group acquired SBS Broadcasting Group. The company employs around 6,000 Europe-wide. * * * ProsiebenSat.1 Media AG continues to carry Moody's Investors Service's Ba1 senior unsecured and corporate family ratings. ============= I R E L A N D ============= PFIZER CORK: To Close Business After Failed Asset Sale ------------------------------------------------------ Pfizer Cork Limited will be shut down after its U.S.-based parent, Pfizer Inc., failed to find a buyer for the business, Quentin Fottrell writes for The Wall Street Journal. According to the report, the company's management has decided to close the plant by the end of 2009 when it failed to sell the site as a going concern for the last 18 months. Around 180 employees are expected to be affected by the closure. Located at Inchera, Little Island, in Cork, Ireland, Pfizer Cork Limited � http://www.pnu.com/-- is a pharmaceutical company. ========= I T A L Y ========= EUROHOME MORTGAGES: Fitch Puts Class X Loan Rating on Watch Neg. ---------------------------------------------------------------- Fitch Ratings has placed Eurohome Mortgages 2007-1 plc, a pan- European RMBS transaction originated by Deutsche Bank AG and Deutsche Bank Mutui S.p.A., on Rating Watch Negative. This reflects Fitch's concerns surrounding the extent of the levels of arrears and defaults seen in the Italian portfolio, as well as the portion of terminated loans in the German pool. The rating actions are: -- Class A (ISIN XS0309227279) 'AAA' on RWN -- Class B (ISIN XS0309230497) 'AA' on RWN -- Class C (ISIN XS0309232196) 'A' on RWN -- Class D (ISIN XS0309232600) 'BBB' on RWN -- Class E (ISIN XS0309233244) 'BBB' on RWN -- Class X (ISIN XS0309234309) 'BB+' on RWN -- German Mortgage Early Repayment Certificates (ISIN XS0309236007) affirmed at 'AAA'; Outlook Stable -- Italian Mortgage Early Repayment Certificates (ISIN XS0309788031) affirmed at 'AAA'; Outlook Stable Fitch has requested from Deutsche Bank a full loan-by-loan breakdown of the two pools of mortgages to conduct a full analysis. The agency expects to resolve the RWN within the next three months. Further information will also be requested from Deutsche Bank to help facilitate this analysis. Investor reports for August 2008 show that there has been a draw on the reserve fund to the amount of EUR813,177. The draw was due to the provisioning for defaulted loans in the Italian part of the pool, which for the last quarter were in the amount of EUR1.2 million, bringing the cumulative balance of defaulted loans to 0.75% of the Italian pool, i.e. 0.49% of the total pool. Loans in arrears by more than three months in the Italian pool have been increasing since close and as of June 2008, they stood at 6.02% of the Italian portfolio outstanding. In the German portfolio, reported terminated loans represent 7.56% of the current portfolio outstanding, while loans with one or more missed payments make up 8.29% of the German portfolio outstanding. To date, neither of the two pools has reported any losses. =================== K A Z A K H S T A N =================== DARHAN JSC: Creditors Must File Claims by September 24 ------------------------------------------------------ The Specialized Inter-Regional Economic Court of Karaganda has declared JSC Darhan insolvent. Creditors have until Sept. 24, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of Karaganda Jambyl Str. 9 Karaganda Kazakhstan ENERGO COMPLECT: Claims Deadline Slated for September 23 -------------------------------------------------------- LLP Energo Complect Akb has declared insolvency. Creditors have until Sept. 23, 2008, to submit written proofs of claims to: LLP Energo Complect Akb Micro District Aksai-3b, 11-8 Almaty Kazakhstan IDEAL PLUS: Claims Filing Period Ends September 19 -------------------------------------------------- The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP Ideal Plus Ltd. insolvent. Creditors have until Sept. 19, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of South Kazakhstan Ilyaev Str. 24 Shymkent South Kazakhstan Kazakhstan Tel: 8 (7252) 53-48-34 8 (7252) 54-02-36 INTERNATIONAL BUSINESS: Creditors' Claims Due on September 23 ------------------------------------------------------------- LLP International Business Club has declared insolvency. Creditors have until Sept. 23, 2008, to submit written proofs of claims to: LLP International Business Club Manas Str. 4/2 Almaty Astana Kazakhstan LTD OIL: Claims Registration Ends September 19 ---------------------------------------------- The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP LTD Oil Group insolvent. Creditors have until Sept. 19, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of South Kazakhstan Ilyaev Str. 24 Shymkent South Kazakhstan Kazakhstan Tel: 8 (7252) 53-48-34 8 (7252) 54-02-36 MEHOS LLP: Creditors Must File Claims by September 19 ----------------------------------------------------- The Specialized Inter-Regional Economic Court of Mangistau has declared LLP Mehos insolvent on June 27, 2008. Creditors have until Sept. 19, 2008, to submit written proofs of claims. For more information, please contact: Tel: 8 (7292) 26-35-14 8 (7292) 41-58-26 8 701 537 15-59 VESTA ELECTRIC: Claims Deadline Slated for September 19 ------------------------------------------------------- The Specialized Inter-Regional Economic Court of West Kazakhstan has declared LLP Vesta Electric Ltd. insolvent on June 20, 2008. Creditors have until Sept. 19, 2008, to submit written proofs of claims to: The Specialized Inter-Regional Economic Court of West Kazakhstan Moldagulova Str. 9-18 Uralsk West Kazakhstan Kazakhstan Tel: 8 (7112) 51-77-10 =================== K Y R G Y Z S T A N =================== RUK-ENERGY+K LLC: Creditors Must File Claims by September 12 ------------------------------------------------------------ LLC Ruk-Energy+K has declared insolvency. Creditors have until Sept. 12, 2008, to submit written proofs of claim to: LLC Ruk-Energy+K Ahunbaev Str. 119 Bishkek Kyrgyzstan Tel: (+996 312) 51-16-89 =================== L U X E M B O U R G =================== ORCO PROPERTY: Moody's Lowers Corporate Family Rating to Caa1 ------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of Orco Property Group S.A. to Caa1 from B3 and the national scale rating to Ba2.cz from Ba1.cz. The outlook for all ratings is negative. The downgrade reflects the further weakening of the company's financial fundamentals in the first quarter of 2008, together with signs that the some of the property markets in Eastern Europe in which Orco is active have either stagnated or started to decline. The Probability of Default Rating was lowered to Caa2 from B3, reflecting Moody's assumption of an above average recovery rate (LGD3 - 35%) for this asset-rich company. This rating actions conclude the rating review initiated on June 17, 2008. When Orco's rating was initially assigned in October 2006, the corporate family rating took into account Moody's expectation that Orco would begin to generate recurring operating profits (excluding surpluses arising from the re-valuation of investment properties); it has yet to do so. Further pressure on the rating arose from increasing losses from operations in the first quarter of 2008 together with continued negative funds from operations and high leverage (debt to recurring EBITDA). Furthermore, residential sales volumes and commercial property values are showing signs of easing in some of the markets in which Orco operates. The negative outlook reflects Orco's heightened business risk profile resulting from its exposure to speculative commercial property developments and homebuilding that could lead to liquidity problems as some of the real estate markets in which it operates in Eastern and Central Europe begin to slow. As inflation levels are rising in Eastern Europe, hikes in interest rates are expected, which may then have a negative impact on the demand for both residential and commercial property and a slowdown in lettings and sales of newly completed developments. The rating outlook could be stabilized by the reduction of leverage or an improvement in recurring income to the point where interest and working capital are covered by the company's cash-flow generation, translating into positive funds from operations and interest cover (EBITA/ gross interest expense) being sustained above 1.0x Moody's adds that downward pressure could be exerted on the ratings should Orco continue with a business model that leaves the company with (i) negative funds from operations (i.e. excluding any fair value gains or losses), (ii) an inability to improve interest coverage towards 1.0x, (iii) a continuing high level of debt to EBITDA, or (iv) an inadequate liquidity profile. Moody's previous rating action on Orco Property Group was on June 17, 2008, when the agency downgraded the corporate family rating to B3, the national scale rating to Ba1.cz and maintained the ratings on review for possible further downgrade. Headquartered in Luxembourg, Orco Property Group S.A. is a diversified residential and commercial property developer and investment manager in Central and Eastern Europe and ranks as the third-largest residential developer in Prague, Czech Republic. The group had total assets of EUR2.9 billion at 31 March 2008. ============= R O M A N I A ============= * Romanian Banking Industry Facing Increased Risks, S&P Reports --------------------------------------------------------------- In a published report titled, "Bank Industry Risk Analysis: Romanian Banks Advancing On FDIs, Economic Growth, Facing Increased Risks" Standard & Poor's Ratings Services says that several years of healthy economic growth and accumulating wealth in the economy, and massive foreign investments in the banking sector have created a solid funding base for credit acceleration in the Romanian banking sector. "Standard & Poor's has revised Romania's bank industry to Group 7 from Group 8, reflecting stronger banking penetration and services coverage, and advancing banking technologies. These were to a large extent led by the import of Western banking technologies, EU convergence requirements, and the start-up of the adoption of Basel II principles," said S&P's credit analyst Elena Romanova. The strengthened regulatory framework from the National Bank of Romania (foreign currency, BBB-/Negative/A-3; local currency, BBB/Negative/A-3) has, in S&P's view, provided a better mechanism for managing potential systemic problems, should they occur. Moreover, EU accession in January 2007 provides a strong anchor for the enhancement of banking regulations. Despite these improvements, however, the banking industry country risk in Romania is still higher than that of its peers (Bulgaria, Croatia, Hungary, Lithuania, and Poland). This is due to accumulating economic imbalances, negative spillovers from global financial market tensions, deteriorating operating flexibility due to the increasing scarcity of deposits and capital, high reliance on funding from parental foreign banks, balance sheet currency mismatches, and the country's still-weak (although progressing) legal and supervisory framework. =========== R U S S I A =========== ARKAIM LLC: Court Starts Bankruptcy Supervision Procedure --------------------------------------------------------- The Arbitration Court of Chelyabinsk commenced bankruptcy supervision procedure against LLC Arkaim (TIN 7425745443) and appointed E. Bogdanov as interim receiver. The case is docketed under Case No. A76-27459/2008- 36-332. Creditors have to submit proofs of claim to: E. Bogdanov, Interim Receiver Chkalova Str. 21 390029 Ryazan Russia The Court is located at: The Arbitration Court of Chelyabinsk Vorovskogo Str. 2 454091 Chelyabinsk Russia The Debtor can be reached at: LLC Arkaim Yubileynyj Per. 22 Kizilskoe Chelyabinsk Russia BAYKAL-TEKH-CENTRE: Names A. Efremova as Administrative Receiver ---------------------------------------------------------------- The first creditors meeting of CJSC Baykal-Tekh-Centre has resolved to place the company under financial rehabilitation and appointed A. Efremova as administrative receiver. The Arbitration Court of Buryatiya has sanctioned the creditors' resolution. The case is docketed under Case No. A10-4689/07. Creditors have to submit proofs of claim to: A. Efremova, Administrative Receiver Apt. 62 Gagarina Str. 77A Ulan-Ude 670024 Buryatiya Russia The Debtor can be reached at: CJSC Baykal-Tekh-Centre Rabochaya Str. 37 Severobaykalskiy Severobaykalsk 671701 Buryatiya Russia BIORANTA CJSC: Names N. Prilepin as Administrative Receiver ----------------------------------------------------------- The first creditors meeting of CJSC Bioranta has resolved to place the company under financial rehabilitation and appointed N. Prilepin as administrative receiver. The Arbitration Court of Moscow has sanctioned the creditors' resolution. The case is docketed under Case No. A40-63976/ 07-101-127B. The Court is located at: The Arbitration Court of Moscow Novaya Basmannaya Str. 10 Moscow Russia The Debtor can be reached at: CJSC Bioranta Michurinskiy Pr. 36 117192 Moscow Russia OCEAN CJSC: Proofs of Claim Filing Deadline Set September 5 ----------------------------------------------------------- The first creditors meeting of CJSC Ocean has resolved to place the company under financial rehabilitation and appointed N. Egorova as administrative receiver. The Arbitration Court of Orenburg has sanctioned the creditors' resolution. The case is docketed under Case No. A47-951/ 2008-14GK. Creditors have until Sept. 5, 2008, to submit proofs of claim to: N. Egorova, Administrative Receiver Tel/Fax: (3532) 78-38-44 Gaya Str. 23a 460000 Orenburg Russia The Court is located at: The Arbitration Court of Orenburg 9th January Str. 64 460046 Orenburg Russia The Debtor can be reached at: CJSC Ocean Office 304 Tomilinskaya Str. 237 460005 Orenburg Russia OFFSET PAPERS: Court Starts Bankruptcy Supervision Procedure ------------------------------------------------------------ The Arbitration Court of St. Petersburg and Leningrad commenced bankruptcy supervision procedure against CJSC Kamennogorskaya Factory of Offset Papers and appointed K. Dudoladov as interim receiver. The case is docketed under Case No. A56-12745/2008. Creditors have to submit proofs of claim to: K. Dudoladov, Interim Receiver Office 2 Building 2 Lomonosova Pr. 92 163000 Arkhangelsk Russia The Court is located at: The Arbitration Court of St. Petersburg and the Leningrad Hall 113 Suvorovskiy Pr. 50/52 St. Petersburg Russia The Debtor can be reached at: CJSC Kamennogorskaya Factory of Offset Papers Leningradskoe Shosse 54 Kamennogorsk Vyborgskiy 188950 Leningrad Russia PBB LPN: Fitch Assigns 'B-' Long-Term Note Rating ------------------------------------------------- Fitch Ratings has assigned PBB LPN Issuance Limited's upcoming notes issue an expected Recovery Rating of 'RR4' and expected Long-term rating of 'B-'. The final ratings of the issue are contingent upon the receipt of final documentation conforming materially to information already received. The proceeds from the issue will be used to finance a loan to Russia's Probusinessbank, rated Long-term Issuer Default 'B-' with Positive Outlook, Short-term IDR 'B', Individual 'D', Support '5' and National Long-term 'BB+(rus)' with Positive Outlook. The notes are to be issued under the loan participation program established in July 2005 and rated Long-term 'B-' for issues with initial maturities of more than one year and Short-term 'B' for issues with initial maturities of up to one year. The program limit was increased to US$750 million in March 2007, following a rise to US$200 million in November 2006 from the original limit of US$100 million. There have been no other significant changes to terms and conditions of issues under the program. The issuer's claims under the loan agreement will rank at least equally with the claims of other senior unsecured creditors of PBB, save those whose claims are preferred by any bankruptcy, insolvency, liquidation or similar laws of general application. Under Russian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-2007, retail depositors accounted for 31% of PBB's total liabilities, according to the bank's IFRS accounts. PBB is a medium-sized Russian bank, with consolidated assets of RUB57 billion at end-2007. The bank is owned by senior management and small number of private equity funds, with 65.5% and 34.5% stakes, respectively. It activities are concentrated on SME and retail lending. STROY-TORG-SERVICE: Court Starts Bankruptcy Supervision Process --------------------------------------------------------------- The Arbitration Court of Krasnodar commenced bankruptcy supervision procedure against CJSC Stroy-Torg-Service and appointed S. Bystrova as interim receiver. The case is docketed under Case No. A32-3152/2008-38/69-B. Creditors have to submit proofs of claim to: S. Bystrova, Interim Receiver Post User Box 5327 350003 Krasnodar-3 Russia The Court is located at: The Arbitration Court of Krasnodar Krasnaya Str. 6 Krasnodar Russia The Debtor can be reached at: S. Bystrova, Interim Receiver Post User Box 5327 350003 Krasnodar-3 Russia TEPLO-ENERGO-SERVICE: Court Sets Supervision Hearing November 19 ---------------------------------------------------------------- The Arbitration Court of Kareliya commenced bankruptcy supervision procedure against LLC Company Teplo-Energo- Service and appointed N. Raykov as interim receiver. The case is docketed under Case No. A26-2700/2008. Creditors have to submit proofs of claim to: N. Raykov, Interim Receiver Lenina Pr. 22-A Petrozavodsk Kareliya Russia The Court will convene at 10:00 a.m. on Nov. 19, 2008, to hear the case. The Debtor can be reached at: LLC Company Teplo-Energo-Service Sulazhgorskiy Kirpichnyj 1A Petrozavodsk Kareliya Russia SEVERSTAL OAO: Completes US$775 Million Esmark Inc. Acquisition --------------------------------------------------------------- OAO Severstal has completed its acquisition of Esmark Incorporated, a manufacturer and distributor of flat rolled and other steel products. The acquisition was completed pursuant to the merger of Severstal Wheeling Acquisition Corp., a wholly owned subsidiary of Severstal, with and into Esmark. Esmark, as the surviving corporation in the merger, is now a wholly-owned subsidiary of Severstal and has been renamed "Severstal Wheeling Holding Company." The offering period for Severstal's tender offer for all outstanding shares of Esmark expired at 10:00 a.m., Eastern Daylight Time, on Monday, Aug. 4, 2008, with a total of 38,767,487 Esmark shares being validly tendered in the offer and not withdrawn, representing approximately 94.17% of the outstanding shares of common stock of Esmark. All shares that were validly tendered during the tender offer have been accepted for purchase, and Severstal paid for all validly tendered and delivered shares on Aug. 4, 2008. Following the expiration of the period, on Aug. 4, 2008, Severstal effected a merger to complete the acquisition of Esmark without a vote or meeting of Esmark stockholders pursuant to the short-form merger procedure available under Delaware law. In the merger, each outstanding Esmark share not tendered and purchased in the offer (other than shares in respect of which appraisal rights are validly exercised under Delaware law) were converted into the right to receive the same US$19.25 per share price, without interest and less any required withholding taxes, that was paid in the tender offer. As a result of the merger, Esmark's common stock will cease to be traded on the NASDAQ Global Select Market. The acquisition has a total equity value of US$775 million and is expected to be accretive in 2009 based on current projections of costs and prices. With the completion of the tender offer and consummation of the merger, Severstal acquired all of Esmark�s businesses, including: * Wheeling-Pittsburgh Steel Corporation (to be renamed "Severstal Wheeling, Inc.") * Esmark Steel Services Group, Inc. (to be renamed "Northern Steel Group, Inc.") * Remaining 50% ownership of the joint venture Mountain State Carbon, a blast furnace coking coal production facility in West Virginia Gregory Mason, CEO of Severstal International and COO of OAO Severstal, commented, "The acquisition of Esmark represents a significant step in Severstal's North American growth strategy. Not only does the addition of Esmark bring considerable stand- alone growth potential while also creating synergies with our existing US plants, it solidifies Severstal's position as one of the leading integrated steel companies in the fast consolidating North American market. We are now poised to be a leading producer and supplier of domestically produced steel to a region that has a consistent demand for high quality products." Merrill Lynch acted as lead financial advisor, Citi acted as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel, to Severstal. MacKenzie Partners, Inc. served as Information Agent for the tender offer. About Severstal Headquartered in Cherepovets, Russia, OAO Severstal -- http://www.severstal.com/-- is the country's largest steel producer, with steel production of 17.1 million tons in 2005. The Company owns Severstal North America, the fifth largest integrated steel maker in the U.S. with 2005 production of 2.7 million tons, and Lucchini, Italy's second largest steel group with 2005 production of 3.5 million tons. Severstal is one of the world's lowest cost and most profitable steel producers, with 2005 EBITDA per ton of around EUR150 per ton. * * * OAO Severstal continues to carry Ba2 Corporate Family, Senior Unsecured Debt and Probability-of-Default ratings from Moody's Investor Service, which said the the outlook on all ratings is stable. Moody's raised the company's ratings to its current level in October 2007. The company also carries BB long-term Foreign and Local Issuer Credit ratings from Standard & Poor's, which said the outlook is stable. Severstal carries BB- Issuer Default and Senior Unsecured ratings from Fitch, which said the outlook is positive. SEVERSTAL OAO: Metiz Unit Acquires Redaelli Tecna SpA ----------------------------------------------------- Severstal-metiz, a unit of OAO Severstal, has acquired 100% of the shares of the Italian company Redaelli Tecna S.P.A., considered to be the World market leader in the design and production of speciality wire ropes As result of this transaction the Wire Ropes division of Redaelli Tecna becomes a part of Severstal-metiz. This division includes Cordati (wire ropes production site located in Gardone), Tensoteci (a technical engineering business) and Teci (a distribution chain in Italy). The other two divisions -- Tecnasud (a PC strands production site) and Sodetal (a steel cord producer) -- were split off and acquired by other buyers beforehand and will operate under their own brands, not associated with Redaelli. The purchase of the Redaelli wire rope business will allow Severstal-metiz to extend its product portfolio through the inclusion of speciality wire ropes of complex construction produced by the Italian company and the development of wire rope service and engineering using Redaelli�s expertise. It will also offer Severstal-metiz new opportunities for effective Worldwide distribution. At present Redaelli will continue its business activity in line with current plans and an integration team involving personnel from both Severstal-metiz and Redaelli will develop future plans in order to capture the synergies between the two companies. Olga Naumova, CEO of Severstal-metiz, said: "Redaelli perfectly complements the Severstal-metiz rope division -� a key element of our strategy to develop niche markets. Redaelli is renowned for the quality of its high-tech products and projects and we intend to take advantage of this brand and supplement it with our own knowledge, experience and qualifications." About Severstal Headquartered in Cherepovets, Russia, OAO Severstal -- http://www.severstal.com/-- is the country's largest steel producer, with steel production of 17.1 million tons in 2005. The Company owns Severstal North America, the fifth largest integrated steel maker in the U.S. with 2005 production of 2.7 million tons, and Lucchini, Italy's second largest steel group with 2005 production of 3.5 million tons. Severstal is one of the world's lowest cost and most profitable steel producers, with 2005 EBITDA per ton of around EUR150 per ton. * * * OAO Severstal continues to carry Ba2 Corporate Family, Senior Unsecured Debt and Probability-of-Default ratings from Moody's Investor Service, which said the the outlook on all ratings is stable. Moody's raised the company's ratings to its current level in October 2007. The company also carries BB long-term Foreign and Local Issuer Credit ratings from Standard & Poor's, which said the outlook is stable. Severstal carries BB- Issuer Default and Senior Unsecured ratings from Fitch, which said the outlook is positive. TNK-BP INT'L: S&P Chips Long-Term Credit & Sr. Debt Rating to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its long-term corporate credit and senior unsecured debt ratings on TNK-BP International Ltd. to 'BB' from 'BB+', reflecting S&P's concerns over the group's protracted shareholder dispute. At the same time, S&P affirmed its 'B' short-term corporate credit rating on the group. The outlook is negative. The '3' recovery ratings on the group's unsecured debt issues remains unchanged. A '3' recovery rating indicates S&P's expectation of meaningful (50%-70%) recovery for debt holders in the event of a payment default. TNK-BP's total financial debt at end-June 2008 amounted to US$8.1 billion. The downgrade reflects S&P's significant concerns over the major governance issues at TNK-BP in light of the stalemate between 50/50 partners BP PLC (AA+/Negative/A-1+) and AlfaAccessRenova (AAR; not rated), notwithstanding TNK-BP's robust cash flow generation forecast for 2008, and adequate liquidity at end-June 2008. "The downgrade also reflects the increased unpredictability of TNK-BP's strategic direction and financial policies, heightened risk of future control issues and of adverse legal and regulatory actions -- including possible litigation by minorities -- in the context of Russia's weak legal institutional environment, the likely negative impact on TNK- BP's operations of the departure of 148 technical staff and several senior managers, and the risk of delays to new strategic investments," said S&P's credit analyst Karl Nietvelt. The current dispute is likely to reduce production in 2009, bearing in mind TNK-BP's highly mature production assets and the need to apply technology to sustain output. Even if shareholders manage to agree on a new management team in the short term, the stability of the current shareholder structure is likely to remain an issue. "The negative outlook is based on our concerns over the company's strategic and financial direction, given the protracted shareholder dispute," said Mr. Nietvelt. Even if shareholders were to agree on a new management team and board structure in the short term, uncertainty is likely to remain as long as the two shareholders diverge. In support of the current rating is the strong financial performance bolstered by record oil prices and Russian refining margins. Liquidity should also remain adequate to cover maturing debt, assuming manageable dividend payouts. A downgrade could be triggered by further unforeseen risks, such as lack of control issues, increased litigation, or country- related risk factors. In case of a stabilized ownership structure and a return to clearly agreed strategic and financial policies, S&P would reevaluate TNK-BP's credit quality and potential rating upside. ULYANOVSKIY MECHANICAL: Court Sets Supervision Hearing Sept. 4 -------------------------------------------------------------- The Arbitration Court of Ulyanovsk commenced bankruptcy supervision procedure against LLC Building Complex Ulyanovskiy Mechanical Factory and appointed A. Avilov as interim receiver. The case is docketed under Case No. A72-2219/08-26/21-B. Creditors have to submit proofs of claim to: A. Avilov, Interim Receiver Office 313 Suvorova Str. 111a 440000 Penza Russia The Court will convene at 9:30 a.m. on Sept. 4, 2008, to hear the case at: The Arbitration Court of Ulyanovsk Zheleznodorozhnaya Str. 14 432063 Ulyanovsk Russia The Debtor can be reached at: LLC Building Complex Ulyanovskiy Mechanical Factory Moskovskoe Shosse 94 432026 Ulyanovsk Russia * S&P Revises Russian Banking Industry's Country Risk Assessment ---------------------------------------------------------------- Standard & Poor's Ratings Services has revised its Banking Industry Country Risk Assessment (BICRA) on The Russian Federation to Group 7 from Group 8. ("Banking Industry Country Risk Assessment On Russia Revised To Group 7 From Group 8," published on RatingsDirect.) At the same time, S&P changed its assessment of the Russian government's propensity to provide support to private sector banks to "supportive" from "support uncertain." S&P also affirmed its estimate of the incidence of gross problematic assets in the Russian financial system under a reasonable scenario of economic recession at 35%-50%. "These actions reflect Russia's increased political and regulatory commitment to ensure the stability of the banking sector," said S&P's credit analyst Ekaterina Trofimova, "as highlighted by the Central Bank of Russia's effective management of liquidity pressures related to the global credit crunch since summer 2007." "Certain structural factors also have contributed to an improvement in the banking sector's risk profile, including greater customer and business line diversification, lengthening track record of good performance, better overall management, and decreasing dependence on opportunistic gains and capital markets income," added Ms. Trofimova. The improving creditworthiness of the Russian Federation (foreign currency BBB+/Positive/A-2; local currency A- /Positive/A-2) greatly reduces the potential of a repeat of the catastrophic sovereign local currency default of 1998. Banks also benefit from the better creditworthiness of Russian industrial companies, including in non-resource-based sectors; ample domestic liquidity (boosted by high energy revenues); stronger private consumption; and greater accumulated wealth in the country. Russia's BICRA and gross problematic assets range remain higher than those of certain comparable markets. This is due to two broad factors: (1) institutional weakness and (2) aggressive credit expansion financed by foreign borrowings. Weaknesses in the legal and supervisory framework in Russia create risks for banks. There remains a lack of transparency of bank and corporate ownership, and opposition from parties with vested interests constrains progress in bank reform. High single-party concentrations in loans and deposits remain. "Credit has expanded at a breakneck pace for several years, increasing the potential for a disorderly period of readjustment if Russia's economic expansion slows considerably or becomes negative," said Ms. Trofimova. The fact that Russian banks have financed a material part of the growth with foreign borrowings creates additional liquidity and currency risks for the sector. The BICRA reflects the strengths and weaknesses of a country's banking system relative to those in other countries. BICRAs classify countries into 10 groups ranging from the strongest banking systems (Group 1) to the weakest (Group 10) from the perspective of country risk. ========= S P A I N ========= MARTINSA-FADESA: Appointed Administrators Resume Work ----------------------------------------------------- Three administrators have been appointed to manage the finances and operations of Martinsa-Fadesa S.A., Reuters reports. According to Reuters, the Mercantile Court of La Coruna has named Antonia Magdaleno; the Comision Nacional del Mercado de Valores named Angel Martin Torres of KPMG; and creditor-bank Bankinter S.A. named Antonio Moreno Rodriguez as administrators. Martinsa-Fadesa said the administrators have met and will convene again to discuss the supervision of the company. Martinsa-Fadesa filed for opening of administration procedures at the Mercantile Court of La Coruna after it failed to a secure a EUR150 million loan -- a requirement for its EUR4 billion debt refinancing agreement with creditor banks. The company had sought a waiver for the loan, TCR-Europe reported on July 16, 2008. Martinsa said it had insufficient cash-flow to meet interest payments and pay suppliers. The company owes more than EUR5 billion to creditors. The property group attributed its financial troubles to "clear recession that the Spanish economy is suffering at the moment." Martinsa is holding talks with union over 200 job cuts. The company employs around 880 people. Headquartered in Corunna, Spain, Martinsa-Fadesa SA -- http://www.martinsafadesa.com/-- develops residential and commercial property projects, including hotels, shopping centers and golf courses, as well as industrial projects, among others. The company also operates in Portugal, Romania, Hungary, Ireland, France, Bulgaria, Mexico, the Dominican Republic, the Czech Republic, Slovakia, and Poland. * Fitch: Mortgage Interest Payment Shock to Affect Spanish RMBS --------------------------------------------------------------- Fitch Ratings says mortgage interest payment shock stemming from rising unemployment and interest rate re-sets will continue to weigh on Spanish RMBS performance and contribute to an increase in negative rating actions in H208. Transactions that face the greatest risk of performance deterioration are recent vintages with loans originated at historically low rates. These also comprise a high percentage of first-time homebuyer loans which, due to affordability constraints, carry higher leverage, including higher loan-to- value ratios, weaker debt-to-income coverage, and other product flexibility features. "Many of the performance catalysts, such as strong domestic economic growth, steadily rising home prices, relatively low interest rates, and abundant liquidity from the financial sector - which drove the exceptional Spanish RMBS performance between 1997 and end-2007 -ended in H108," says Rui J Pereira, Managing Director and Head of the Structured Finance team in Madrid. Over 95% of the Spanish mortgage market consists of variable- rate loans that re-set on an annual or semi-annual basis to an interest rate over 12-month Euribor or the reference index for mortgage loans. Given these mortgage products generally do not have any limitations on the 'step-up' in rate or increase on monthly mortgage payment, Spanish mortgage borrowers are significantly exposed to 'payment shock' or the risk that they will face higher payments once their mortgage loan re-sets. Also, up until recently, few lenders stressed borrower payment capacity by incorporating an interest rate stress as part of their underwriting process, which means few lenders assessed the degree of cushion borrowers have to affordability shocks. As a result of the ECB's hawkish monetary policy stance, as well as continued credit market volatility, mortgage reference interest rates have climbed significantly in recent years and have thus placed additional pressure on Spanish consumer finances. Borrowers who took up variable-rate mortgage loans three years ago at historically low rates have seen monthly mortgage payments increase in excess of 40% in the year to date. According to recent operational reviews, this has been a key factor in the deterioration of Spanish RMBS performance in recent quarters, particularly for those loans originated in recent years when rates were at historical lows. Although the new Spanish mortgage law released in December 2007 contains provision to encourage lenders to offer fixed-rate mortgages, Fitch does not expect a meaningful shift in product mix to take place. This is because variable-rate mortgages with current interest rates remain priced well below the fixed-rate alternative, and affordability-constrained borrowers remain focused on minimizing their monthly mortgage payments in the short term. As a result, given the long amortization profile of mortgage products and continuing inflation concerns, Spanish borrowers could face even higher interest rates and thus remain exposed to further payment shock. Nevertheless, a sharp increase in interest rates could still cause borrowers to examine the risk-reward dynamic of variable-rate mortgage products. ===================== S W I T Z E R L A N D ===================== GENERAL MOTORS: Overall Truck Sales Decline 41.5% in July 2008 -------------------------------------------------------------- General Motors Corp. reported Friday its July 2008 sales results, highlighted by continued strong performance in small and midsize cars and crossovers. GM dealers in the United States delivered 235,184 vehicles in July, down 26.7 percent. Weak industry conditions caused by a challenging U.S. economic environment, higher fuel prices and inventory shortages in critical segments such as compact cars contributed to the overall sales decline for the month. "In July, we saw strong performance once again in our launch products, including the Cadillac CTS, Chevrolet Malibu, Saturn Astra, and Pontiac Vibe and G8. In addition, we continued to see strong retail demand for our fuel efficient Chevrolet Aveo and HHR, Saturn Vue and Buick Enclave. So, despite an overall weak market, there are pockets of strength," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing. "Obviously, the weakness in the truck market persisted in July, yet we continue to hold share due to our fuel economy leadership in many truck segments despite dramatic competitive incentive spending increases." Overall, GM truck sales in July declined 41.5 percent. Chevrolet cars continued to show strength in the marketplace with Malibu total sales up 79 Percent, Aveo up 17 percent and Cobalt up 4 percent compared with last July. Cadillac CTS dominated the mid-car luxury category with sales increasing 38 percent compared with the same month a year ago. Pontiac met consumers' needs for fuel efficient vehicles with a performance edge with G5 sales up 17 percent, Vibe up 7 percent and G6 up 6 percent compared with July 2007. Saturn's award-winning Aura midsize car saw a sales increase of 24 percent with the two-seat Sky selling 14 percent more vehicles than July last year. Astra monthly sales of more than 1,500 vehicles were the best to date, and show a 75 percent increase compared with June 2008 (Astra was not available last July). GM's popular midsized crossovers -- Buick Enclave, GMC Acadia and Saturn Outlook -- together accounted for more than 11,600 vehicle sales in the month. GM hybrid vehicles continue to gain in popularity in the marketplace with 228 hybrid Chevrolet Tahoe and 123 GMC Yukon 2- mode SUVs delivered. There were 349 Chevrolet Malibu, 29 Saturn Aura and 362 Vue hybrids sold in July. For the month, a total of 1,091 hybrid vehicles were delivered, with 5,467 hybrids sold so far this year. "We're working hard to change perceptions and gain awareness of GM as the leader in advanced propulsion technology and fuel efficiency," Mr. LaNeve added. "Customers can experience that each time they visit a dealer's showroom to see the full lineup -- including five hybrid models -- that provide industry-leading value, great fuel economy and the best warranty coverage of any full-line automaker. We don't just talk about technology, fuel efficiency and value -- we have the cars and trucks available today to back it up." GM has aggressively managed inventories to low levels. In July, only about 747,000 vehicles were in stock -- a three-year low -- down about 201,000 vehicles (21 percent) compared with last July. There were about 236,000 cars and 511,000 trucks in inventory at the end of July. Certified Used Vehicles July 2008 sales for all certified GM brands, including GM Certified Used Vehicles, Cadillac Certified Pre-Owned Vehicles, Saturn Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, were 41,594 vehicles, down 2 percent from July 2007. Year-to-date sales are 298,137 vehicles, down nearly 6 percent from the same period last year. GM Certified Used Vehicles, the industry's top-selling certified brand, posted July sales of 35,799 vehicles, down 4 percent from a strong July 2007 sales performance. Cadillac Certified Pre- Owned Vehicles sold 3,700 vehicles, up 22 percent. Saturn Certified Pre-Owned Vehicles sold 1,164 vehicles, down 24 percent. Saab Certified Pre-Owned Vehicles sold 770 vehicles, up 21 percent, and HUMMER Certified Pre-Owned Vehicles sold 161 vehicles, up 89 percent. "Our luxury certified pre-owned programs -- Cadillac, Saab and HUMMER Certified Pre-Owned Vehicles -- each posted strong sales increases last month, and GM Certified Used Vehicles is again setting the pace to lead the segment in sales this year," said LaNeve. "We're confident more shoppers will seek the quality and value that manufacturer certification offers." GM North America Reports July 2008 Production In July, GM North America produced 238,000 vehicles (116,000 cars and 122,000 trucks). This is down 16,000 vehicles or 6 percent compared with July 2007 when the region produced 254,000 vehicles (91,000 cars and 163,000 trucks). (Production totals include joint venture production of 14,200 vehicles in July 2008 and 13,000 vehicles in July 2007.) The GM North America third-quarter production forecast is unchanged from last month at 900,000 vehicles (456,000 cars and 444,000 trucks) which is down about 12 percent compared with a year ago, due to production adjustments in response to market changes that will reduce the number of trucks produced by about 209,000 and increase the number of cars by about 89,000. GM North America built 1.020 million vehicles (367,000 cars and 653,000 trucks) in the third-quarter of 2007. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. The company has regional headquarters in Switzerland. At March 31, 2008, GM's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. * * * As disclosed in the Troubled Company Reporter on Aug. 1, 2008, Standard & Poor's Ratings Services lowered the ratings on General Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from 'B'. The ratings on GM and Ford were removed from CreditWatch with negative implications, where they had been placed on June 20, 2008. Chrysler will remain on CreditWatch pending the renewal of certain bank lines at DaimlerChrysler Financial Services Americas LLC, which S&P expects to be completed in the next few days. If the bank lines are renewed as expected, S&P would affirm the ratings on Chrysler and DCFS and remove them from CreditWatch. As reported in the Troubled Company Reporter on July 17, 2008, Moody's Investors Service is reviewing the ratings of General Motors Corporation for possible downgrade. Ratings under review include its B3 Corporate Family Rating, B3 Probability of Default Rating, Ba3 rating for secured debt, and Caa1 rating for senior unsecured debt. GENERAL MOTORS: Says Delphi-Related Charges Reach US$11 Billion ------------------------------------------------------------- General Motors Corp. said charges related to Delphi Corp. has now reached approximately US$11,000,000,000. In a presentation furnished to securities analysts, GM said made a US$2,753,000,000 adjustment to its Delphi reserve, "primarily due to updated estimates related to Delphi's ongoing reorganization." The adjustment reflects higher expected obligations (e.g. net pension liabilities) and additional uncertainty around nature, value and timing of GM recoveries. GM's one-time losses due to Delphi have totaled US$3,484,000,000 for the 1st half of 2008. GM, which contributes to over 30% of Delphi's revenues, reported a net loss of US$15,471,000,000 or US$27.33 per share for the second quarter of 2008. The quarterly loss, according to Bloomberg News, is the third biggest in its 100-year history. "Second quarter charges of US$2.8 billion and year to date charges of US$3.5 billion were recorded for increased liabilities under our Delphi Benefit Guarantee Agreements, primarily due to expectations of increased obligations and updated estimates reflecting the nature, value and timing of our recoveries upon Delphi's emergence from bankruptcy," GM said in its news release. A former unit of GM, Delphi was set to emerge from bankruptcy in mid-April but obtained problems with its US$2,550,000,000 exit equity financing from Appaloosa Management, L.P. The plan of reorganization of Delphi, which has been confirmed by the U.S. Bankruptcy Court for the Southern District of New York, provides that GM will receive cash, notes and other securities in exchange for the consideration it provided to Delphi under their agreements. Appaloosa backed out from their investment agreement after Delphi sought US$2,825,000,000 of its US$6,100,000,000 exit debt financing from GM, its biggest customer. GM said that its second quarter results were primarily driven by several factors: -- significant losses in GM North America (GMNA) due to continuing U.S. industry volume declines and shifts in vehicle mix, the long strike at American Axle and large lease-related charges; -- a number of special charges associated with GM's ongoing restructuring actions; and -- continued losses at GMAC Financial Services (GMAC) and updated estimates regarding recoveries and expectations of assumed benefit obligations in the Delphi bankruptcy. Excluding expenses considered by GM to be one-time, including its adjustment to reserves for bankrupt Delphi Corp., the loss was US$6,300,000,000, or US$11.21 a share. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed USUS$11,446,000,000 in total assets and USUS$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide USUS$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. The company has regional headquarters in Switzerland. At March 31, 2008, GM's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. * * * As disclosed in the Troubled Company Reporter on Aug. 1, 2008, Standard & Poor's Ratings Services lowered the ratings on General Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from 'B'. The ratings on GM and Ford were removed from CreditWatch with negative implications, where they had been placed on June 20, 2008. Chrysler will remain on CreditWatch pending the renewal of certain bank lines at DaimlerChrysler Financial Services Americas LLC, which S&P expects to be completed in the next few days. If the bank lines are renewed as expected, S&P would affirm the ratings on Chrysler and DCFS and remove them from CreditWatch. As reported in the Troubled Company Reporter on July 17, 2008, Moody's Investors Service is reviewing the ratings of General Motors Corporation for possible downgrade. Ratings under review include its B3 Corporate Family Rating, B3 Probability of Default Rating, Ba3 rating for secured debt, and Caa1 rating for senior unsecured debt. GENERAL MOTORS: Can Participate in Delphi Suit vs. Appaloosa ------------------------------------------------------------ As widely reported, Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York declined to approve Appaloosa Management, L.P., et al.'s request for dismissal of Delphi Corp.'s US$2,550,000,000 lawsuit against them. Judge Drain also overruled the Plan Investors' objection to General Motors Corporation's participation as party-in-interest in the Adversary Proceedings. According to Bloomberg News, Judge Drain said Delphi will not settle the adversary cases without "obtaining input" ahead of time from GM. Delphi has accused Appaloosa and other investors of defrauding the Court by stating that they had every intention of performing under the Equity Purchase and Commitment Agreement. Appaloosa, however, argued that Delphi cannot seek specific performance because it is currently unable to perform under the conditions- precedent of the EPCA, including obtaining commitment to its US$6,100,000,000 debt financing and the completion of the rights offering. The Wall Street Journal reported that Judge Drain dismissed a portion of Delphi's complaint, but he rejected most of the defendants' arguments. Judge Drain also allowed Delphi to pursue its fraud claim against the Appaloosa-led group. The ruling allows Delphi to continue its bid to force the Plan Investors to make good on the equity investment, WSJ's David McLaughlin said. The Plan Investors had also pointed to provision in the EPCA which provide that the aggregate liability of the the Plan Investors for any reason, including, for any willful breach, prior to December 10, 2007, will not exceed US$100,000,000, and for any acts occurring thereafter, will not exceed US$250,000,000. Judge Drain, however, declined to cap damages at the EPCA at US$250,000,000. General Motors previously said that the terms and conditions of a new or modified plan, which it is negotiating with Delphi and the Official Committee of Unsecured Creditors, will depend in part on the amount of Delphi's recovery in the litigation. According to Bloomberg News, Judge Drain dismissed almost all claims Delphi made against Goldman Sachs Group Inc. and said any damages award against the parents of investors Harbinger Del- Auto Investment Co. Ltd. and Pardus DPH Holding LLC should be capped. Goldman Sachs & Co. previously stated that it had not obligation to close on the EPCA if other parties, including Appaloosa, failed to perform their obligations under the agreement. Bloomberg's Christopher Scinta added that the Court also turned aside Delphi's effort to subordinate in priority (or disallow) any claims the investors, other than Appaloosa, hold against Delphi. Judge Drain, according to the same report, also denied part of Delphi's fraud claim against Appaloosa, though he told Delphi attorneys they can revise their complaint by the end of the week to seek reinstatement of that claim. GM Allowed to Join As Party-In-Interest Like A-D Acquisition Holdings, LLC, and Appaloosa Management L.P. and other defendants to Delphi's US$2,550,000,000 complaint, UBS Securities LLC expressed opposition to General Motors' participation as party-in-interest. General Motors, in response, to the objections, clarified that it does not seek to intervene, but instead simply requests to be afforded admission to participate as a monitor in the Adversary Proceedings. Michael P. Kessler, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that the role sought by GM is subsumed within the greater rights that would be afforded to GM were it to exercise its right to intervene as a party to the Adversary Proceedings. In no way, then, does GM's proposal circumscribe any party's rights or deprive them of any protectable interests, he asserts. GM also emphasized that it does not seek to propose settlement of the dispute or take ownership of the Debtors' claims, nor is GM asserting rights that are derivative of another party's rights in the Chapter 11 cases, Mr. Kessler stressed. GM, Delphi and the Official Committee of Unsecured Creditors have agreed to terms of GM's participation in the Adversary Proceedings. Their stipulation, which has been approved by Judge Drain, provides that: (1) Weil, Gothshal and Manges, counsel of GM, will be served with all pleadings and other papers in accordance with Rule 5 of the Federal Rules of Civil Procedure and Rule 7005 of the Federal Rule of Bankruptcy Procedure; (2) GM, through its counsel, may participate in the Adversary Proceedings in a monitoring role, and will be permitted to: (i) appear before the Court on any matter, including at hearings and, as appropriate, chambers conferences; (ii) attend mediation sessions and other formal settlement negotiations, subject to any restrictions by the mediator; and (iii) participate in the discovery process, including attendance at depositions, access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits. (3) GM will sign and comply with the confidentiality restrictions in the Stipulation and Agreed Protective Order Governing Production and Use of Confidential and Highly Confidential Information entered in the Adversary Proceedings; (4) GM will have access to all documents produced and written discovery requests and responses, and deposition transcripts and exhibits; (5) Weil Gotshal, on behalf of GM, will be authorized to evaluate the Adversary Proceedings. Neither Weil Gotshal nor GM will use materials provided pursuant to the Stipulation and Order for any other purpose; (6) The agreement is without prejudice to: (i) GM seeking further participation rights in the Adversary Proceedings; (ii) any party opposing the motion; (iii) any party seeking greater restrictions; and (iv) GM opposing restrictions; (7) The agreement is without prejudice to GM seeking to share discovery materials with GM personnel in connection with testimony by the personnel at depositions, hearings or trial, and if the parties cannot agree, the dispute may be presented to the Court; and (8) Delphi will not settle either of the Adversary Proceedings without obtaining input in advance from GM. Delphi lawyers will confer with GM's lawyers on a regular and timely basis concerning the Adversary Proceedings. The Stipulation will be effective for only so long as the Global Settlement Agreement and Master Restructuring Agreement entered into between General Motors and Delphi are not terminated. About Delphi Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed USUS$11,446,000,000 in total assets and USUS$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide USUS$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. The company has regional headquarters in Switzerland. At March 31, 2008, GM's balance sheet showed total assets of US$145,741,000,000 and total debts of US$186,784,000,000, resulting in a stockholders' deficit of US$41,043,000,000. Deficit, at Dec. 31, 2007, and March 31, 2007, was US$37,094,000,000 and US$4,558,000,000, respectively. * * * As disclosed in the Troubled Company Reporter on Aug. 1, 2008, Standard & Poor's Ratings Services lowered the ratings on General Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from 'B'. The ratings on GM and Ford were removed from CreditWatch with negative implications, where they had been placed on June 20, 2008. Chrysler will remain on CreditWatch pending the renewal of certain bank lines at DaimlerChrysler Financial Services Americas LLC, which S&P expects to be completed in the next few days. If the bank lines are renewed as expected, S&P would affirm the ratings on Chrysler and DCFS and remove them from CreditWatch. As reported in the Troubled Company Reporter on July 17, 2008, Moody's Investors Service is reviewing the ratings of General Motors Corporation for possible downgrade. Ratings under review include its B3 Corporate Family Rating, B3 Probability of Default Rating, Ba3 rating for secured debt, and Caa1 rating for senior unsecured debt. SEMGROUP LP: May Draw US$150 Million from BofA's DIP Financing -------------------------------------------------------------- SemGroup L.P. said that the U.S. Bankruptcy Court for the District of Delaware has approved a US$150 million interim debtor-in-possession financing, which will be provided by a group of banks led by Bank of America. The interim funding will be used to fund letters of credit to ensure the return of terms with certain product and service suppliers. The company is working with the lenders to finalize the revised order and expect to present the final order to the Court in an expedited fashion. A final hearing to consider the balance of the US$250 million DIP financing is scheduled for Aug. 18, 2008. "Obtaining this interim DIP financing is an important step forward in our Chapter 11 process," said Terry Ronan, SemGroup acting president and CEO. "The additional reassurance it provides to our creditors and employees will be essential in our ability to execute the plan we have created to maximize value for creditors." SemGroup believes the best alternative to maximize value for creditors is to undertake a sales process that will transition the company's businesses to well-established companies that can carry forward SemGroup's mission. "We have already received significant interest in our assets because of our talented and experienced employees, unique industry position, expansive customer base and premiere service capabilities," Mr. Ronan said. SemGroup and certain of its North American subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 22, 2008. Parties Balk at DIP Financing The Troubled Company Reporter-Europe said on Aug. 6, 2008, that a total of 18 parties-in-interest object to the request of SemGroup L.P. and its debtor-affiliates to obtain US$250,000,000 of senior secured superpriority postpetition financing from Bank of America. The parties-in-interest are: * Ad Hoc Committee of Unsecured Creditors w/ Senior Notes; * Alon USA, LP; * Cardinal Engineering, Inc.; * Central Crude Corporation and Redwing Gas Systems Inc.; * CHS, Inc.; * General Electric Capital Corporation; * JMA Energy Company, L.L.C.; * LCS Production Company, and the Texas operators; * Merrill Lynch Capital Corporation and ML Commodities, Inc.; * Murfin Drilling Company, Inc.; * New Dominion, L.L.C.; * Prima Exploration, Inc.; * RZB Finance LLC; * Samson Resources Company, and affiliates; * Sunoco, Inc.; * The SemCrude US Term Lender Group; * Veenker Resources, Inc.; and * Williams NGL Marketing, LLC, and affiliates. The Debtors filed with the Court a draft of the DIP Credit Agreement, a copy of which is available for free at: http://bankrupt.com/misc/semgroupfinaldippact.pdf About SemGroup L.P. SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq. at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc. The CCAA stay expires on Aug. 20, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed US$5,429,038,000 in total assets and US$5,033,214,000 in total debts. In their petition, they showed more than US$1,000,000,000 in estimated total assets and more than US$1,000,000,000 in total debts. =========== T U R K E Y =========== DOGAN YAYIN: Fitch Holds 'BB-' LT Local & Foreign Currency IDRs --------------------------------------------------------------- Fitch Ratings has affirmed Turkey-based Dogan Yayin Holding's Long-term local and foreign currency Issuer Default ratings at 'BB-'. Both ratings have Stable Outlooks. The ratings reflect DYH's leading position in the Turkish media & entertainment sector, with a 44.7% market share in total ad spend as of the first five months of 2008. It benefits from strong domestic ad spend growth (19% yoy growth in FY07) and healthy cash balances. DYH's creditworthiness is driven by its healthy cash balance and the credit quality of its main operating subsidiary, Hurriyet, while the high level of debt under its broadcasting subsidiary, Dogan TV, remains a concern. Fitch expects DYH to carry the proceeds from the sale of its 25% stake in Dogan TV on its stand-alone balance sheet and to continue to de-leverage in the medium-term. Fitch notes DYH has been highly acquisitive in the past 24 months, but does not factor into the ratings any major cash outflows associated with expansion in the medium-term. If DYH uses the Dogan TV stake sale cash for dividends or any further acquisitions, thus increasing its net debt position, it will have immediate negative implications for the ratings. The agency does not expect any cash outflows at the DYH level except for capital contributions to the existing businesses. The ratings also take into consideration DYH's dominant TV ad market share of 40% at FYE07. Its broadcasting EBITDA margins, excluding new ventures, were up at 18% at FYE07, from 9.9% in FY06. However, cash outflows for new investments, such as the introduction of new thematic channels, Kanal D Romania, and the new digital platform, D-SMART, continue to depress overall operating margins. Fitch does not see D-SMART as a profitable venture in the medium-term and is concerned that cash outflows related to D-Smart programming investments and capital expenditure will weigh on broadcasting operating margins and cash flow. Fitch would like to see more evidence that DYH can sustain its strong operational performance in the long-term. As at May 2008, DYH had US$307.3 million cash after the sale of the 25% stake in Dogan TV to Axel Springer. However, DYH's consolidated gross debt is still high at US$1.42 billion, based on management accounts, mainly due to the TME acquisition by Hurriyet in Q107 and Star TV acquisition in 2005 as well as investments in D-SMART and Kanal D Romania. DYH's net debt is US$743m; it has a consolidated cash balance of US$675 million, versus consolidated short-term obligations of US$281 million. As of May 2008, a total of US$656.7 million in debt (46% of total group debt) was reflected on the balance sheets of companies within the broadcasting segment. Dogan TV's net debt was US$530 million, with a consolidated cash balance of US$127.8 million. Fitch expects DYH to record a net consolidated debt/EBITDA ratio of 2-2.5x at FYE08, in line with its historical average. As a holding company, DYH depends on dividend flows, service income and capital gains. However, the ratings reflect only dividend flows from small operating companies such as Dogan Gazetecilik and Dogan Burda Rizzoli in the short-term. Hurriyet did not pay dividends in 2007 due to the TME transaction, and Fitch understands that it will resume dividend payout only in 2009-2010. Dogan TV is not expected by Fitch to make a contribution to dividend flows before 2010 as it will be paying down the debt stemming from the Star TV acquisition and new investments such as Kanal D Romania and D-SMART. Fitch understands management is willing to sell a minority stake in D- SMART to a strategic partner to reduce Dogan TV's leverage in the medium-term. DYH is owned by Dogan Sirketler Grubu A.S (63.02% equity and 63.02% voting interests), which is the holding company of Aydin Dogan, and his family. The Dogan Family and AD Foundation together own 3%. The rest of DYH shares are floated. HURRIYET: Fitch Holds 'BB' ID Rating with Stable Outlook -------------------------------------------------------- Fitch Ratings has affirmed Turkey-based newspaper group Hurriyet's Long-term foreign and local currency Issuer Default ratings at 'BB'. Both ratings have Stable Outlooks. The agency has also affirmed Hurriyet's National Long-term rating at 'AA(tur)' with Stable Outlook. The ratings reflect Hurriyet's strong leadership position, with a 38.9% share of newspaper advertising in 2007. They also reflect its capacity to generate strong free cash flow generation and de-leveraging following its TME acquisition in H107. Approximately 35% of the Hurriyet group's overall revenues and EBITDA are expected to be derived from outside Turkey in 2008. Under Fitch's "Parent and Subsidiary Rating Linkage" Criteria Report, the current ratings reflect the weak link between the two companies, due to dividend restrictions, DYH's only 60% stake in Hurriyet and its guarantee over Hurriyet's debt related to the TME acquisition. Any change in the rating of DYH or any acquisition by Hurriyet that increases leverage substantially will have negative implications for the ratings. Hurriyet's credit metrics are in line with the current ratings and are expected to remain so. It recorded a net consolidated debt/EBITDA ratio of around 2x at end-May 2008, and there is no liquidity concern in the short-term. Management targets further de-leveraging to a net debt/EBITDA of 1.6x for FY08 and 1.3x at FY09. The Stable Outlook reflects Fitch's concerns over Hurriyet's and TME's weaker operating performances in 2006-2007 and higher debt metrics at the Hurriyet consolidated level after the TME acquisition, versus a net cash position historically. High newsprint prices of approximately US$769 per ton in 2007, promotional activities due to elevated competition, and a rise in the average number of pages, including inserts and supplements, have depressed EBITDA margins to 20.6% at FYE07 from 21.6% at FYE06. Fitch also notes the ongoing restructuring process at TME and higher marketing costs to fend off competition in Moscow impacted TME's operating performance negatively. Hurriyet's FYE07 free cash flow turned positive at TRY35.4 million (US$30.4 million), due to lower-than-expected capital expenditure of TRY64.5 million versus TRY121 million at FYE06 and no dividend payout in 2007 as a result of the TME acquisition. Hurriyet is not expected to pay any dividends in 2008 and 2009 as it concentrates on generating free cash flow and reducing leverage. Capital expenditure should be around US$30 million-40 million in FY08-FY09, which is close to the historical average and should ease the burden on cash flow. TME generates ample free cash flow on an annual basis, which will be used to meet its own debt obligations as well as pay dividends to its owner, Hurriyet. As at FYE07, gross debt - all bank debt - was TRY666.9 million, while cash totaled TRY140 million. The TME transaction in Q107 resulted in a US$336 million cash outflow from Hurriyet, financed by syndicated loans from ABN Amro Bank as the lead- manager, a bilateral loan by Garanti Bank and the company's internal sources. Fitch notes Hurriyet's consolidated leverage includes bank debt at the TME level, totaling US$144.8 million at end-May 2008. Fitch also notes the proceeds from TME's US$54.3 million sale of its Polish portal companies in June 2008 have been used to pay debt. This has reduced debt at the TME level to US$90.5 million. Thus, Hurriyet's total consolidated net debt has been reduced to an estimated amount of US$363 million at end-June 2008 according to management accounts, down from US$433.1 million as of end-May 2008. Hurriyet is Turkey's leading daily national newspaper, with strong positions in advertising and circulation revenues. Hurriyet is a subsidiary of DYH, which has 60% equity interest. The latter is controlled by Dogan Holding. TME is a leading provider of print and online classified advertising in Russia, the CIS, the Baltics and eastern Europe. TURKCELL ILETISIM: Earns US$426.4 Mln for 2nd Qtr Ended June 30 --------------------------------------------------------------- Turkcell Iletisim Hizmetleri A.S. posted US$426.4 million in net income on US$1.76 billion in net revenues in the second quarter ended June 30, 2008, compared with US$273.6 million in net income on US$1.50 billion in net revenues for the same period in 2007. Turkcell said the increase in net revenues was mainly due to: * a 4.7% increase in its subscriber base; * 6.5% appreciation of TRY against US$; * the price increase in 2007; and * the contribution of consolidated subsidiaries. On June 25, 2008, the company introduced an upward price adjustment of 3.66% on a blended basis in line with the trends in the general operating environment as well as customer behavior and trends in our competitive environment. However, the impact of this adjustment is not reflected in the second quarter results, yet. The year-on-year net income growth was mainly attributable to a US$139.9 million translation loss that Tukcell recorded in the second quarter 2007, while during the second quarter 2008, the company recorded only US$19.4 million translation loss. Net income margin increased to 24.3% in the second quarter of 2008 from 18.2% in the same period in 2007. Turkcell also reported US$913.2 million in net income on US$3.16 billion in net revenues in the first ended June 30, 2008, compared with US$545.8 million in net income on US$2.63 billion in net revenues for the same period in 2007. As of June 30, 2008, Turkcell had US$8.42 billion in total assets, US$2.32 billion in total liabilities and US$6.1 billion in total shareholders' equity. About Turkcell Based in Instanbul, Turkey, Turkcell Iletisim Hizmetleri A.S. --http://www.turkcell.com.tr/eng-- provides high-quality mobile voice and data services through its own GSM network. The company also operates in the Ukraine through its indirect subsidiary Astelit, in Azerbaijan, Kazakhstan, Georgia and Moldova through its associate Fintur, and in Northern Cyprus through its wholly owned subsidiary Kibris Telekom. * * * Turkcell Iletisim Hizmetleri continues to carry Ba2 foreign currency and domestic currency corporate family ratings with positive outlook from Moody's Investors Service. THe agency affirmed the ratings in February 2008. Turkcell also continues to carry BB foreign currency long-term corporate credit rating with positive outlook from Standard & Poor's Ratings Services. Turkcell continues to carry Fitch Ratings' BB foreign currency Issuer Default rating with stable outlook, and BB+ local currency Issuer Default rating with positive outlook. TURKCELL ILETISIM: Inks Deal to Buy 80% of Belarus Telecom ---------------------------------------------------------- Turkcell Iletisim Hizmetleri A.S. has signed a sale-and-purchase agreement to acquire a 80% stake in Belarusian Telecommunications Network (BeST). The completion of the transaction will be subject to the fulfillment of the conditions set forth in the SPA. The stake will be acquired from the State Committee on Property of the Republic of Belarus for US$500 million. The payment is expected to be realized in three tranches of which US$300 million is expected to be paid on the closing date, which is expected to be 30 days after the signature date and additional US$100 million tranches are expected to be paid on Dec. 31, 2009 and 2010 respectively. An additional payment of US$100 million shall be made when BeST records a full-year positive net income for the first time. Turkcell CEO Sureyya Ciliv noted, "The acquisition of BeST represents an opportunity for Turkcell to gain access to a market with a growth potential. Belarus is an attractive emerging market within Turkcell's growth geography with its young and well educated population and steadily growing economy. We are also happy to be starting our operations with an already established third operator in Belarus. We believe we can use our complimentary skills we gained in Ukraine and CIS very effectively in Belarus to differentiate BeST as soon as possible." About Turkcell Headquartered in Instanbul, Turkey, Turkcell Iletisim Hizmetleri A.S. -- http://www.turkcell.com.tr/eng-- provides high-quality mobile voice and data services through its own GSM network. The company also operates in the Ukraine through its indirect subsidiary Astelit, in Azerbaijan, Kazakhstan, Georgia and Moldova through its associate Fintur, and in Northern Cyprus through its wholly owned subsidiary Kibris Telekom. * * * Turkcell Iletisim Hizmetleri continues to carry Ba2 foreign currency and domestic currency corporate family ratings with positive outlook from Moody's Investors Service. The agency affirmed the ratings in February 2008. Turkcell also continues to carry BB foreign currency long-term corporate credit rating with positive outlook from Standard & Poor's Ratings Services. Turkcell continues to carry Fitch Ratings' BB foreign currency Issuer Default rating with stable outlook, and BB+ local currency Issuer Default rating with positive outlook. ============= U K R A I N E ============= ATOL-PLUS LLC: Creditors Must File Proofs of Claim by August 16 --------------------------------------------------------------- Creditors of Larisa Timofeeva have until Aug. 16, 2008, to submit proofs of claim to: Larisa Timofeeva Liquidator 54017 Nikolaev Ukraine P.O. Box 179 The Economic Court of Nikolaev commenced bankruptcy proceedings against the company after finding it insolvent on July 8, 2008. The case is docketed as 5/362/08. The Court is located at: The Economic Court of Nikolaev Admiralskaya Str. 22 54009 Nikolaev Ukraine The Debtor can be reached at: LLC Atol-Plus Spasskaya Str. 1 54001 Nikolaev Ukraine FUND OF ASSISTANCE: Creditors Must File Claims by August 20 ----------------------------------------------------------- Creditors of LLC Fund of Assistance to Youth (code EDRPOU 24415102) have until Aug. 20, 2008, to submit proofs of claim to: State Tax Inspection in Cherkassy, Liquidator Khreschatik Str. 235 18000 Cherkassy Ukraine The Economic Court of Cherkassy has commenced bankruptcy proceedings against the company after finding it insolvent. The Court is located at: The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Debtor can be reached at: LLC Fund of Assistance to Youth Gorky Str. 4 Cherkassy Ukraine KRUG-AUTO LLC: Creditors Must File Proofs of Claim by August 20 --------------------------------------------------------------- Creditors of LLC Krug-Auto (code EDRPOU 24419940) have until Aug. 20, 2008, to submit proofs of claim to: State Tax Inspection in Cherkassy, Liquidator Khreschatik Str. 235 18000 Cherkassy Ukraine The Economic Court of Cherkassy has commenced bankruptcy proceedings against the company after finding it insolvent. The Court is located at: The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Debtor can be reached at: LLC Krug-Auto L. Ukrainka Str. 6/2 Cherkassy Ukraine MOD OJSC: Creditors Must File Proofs of Claim by August 20 ---------------------------------------------------------- Creditors of OJSC Mod (code EDRPOU 31475325) have until Aug. 20, 2008, to submit proofs of claim to: The Economic Court of Lvov Lichakivska Str. 81 79010 Lvov Ukraine The Economic Court of Lvov commenced bankruptcy proceedings against the company after finding it insolvent on July 10, 2008. The case is docketed as 27/49. LAVANDA LLC: Creditors Must File Proofs of Claim by August 20 ------------------------------------------------------------- Creditors of LLC Lavanda (code EDRPOU 23984996) have until Aug. 20, 2008, to submit proofs of claim to: The Economic Court of Donetsk Artema Str. 157 83048 Donetsk Ukraine The Economic Court of Donetsk commenced bankruptcy proceedings against the company after finding it insolvent on June 4, 2008. The case is docketed as 5/30B. The Debtor can be reached at: LLC Lavanda Mayakovsky Str. 3/5 Yenakiyevo Donetsk Ukraine TCHIBES LLC: Creditors Must File Proofs of Claim by August 20 ------------------------------------------------------------- Creditors of LLC Tchibes (code EDRPOU 31947752) have until Aug. 20, 2008, to submit proofs of claim to: State Tax Inspection in Cherkassy, Liquidator Khreschatik Str. 235 18000 Cherkassy Ukraine The Economic Court of Cherkassy has commenced bankruptcy proceedings against the company after finding it insolvent. The Court is located at: The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Debtor can be reached at: LLC Tchibes Pervomayskaya Str. 68 Cherkassy Ukraine TECHNICS SERVICE: Creditors Must File Proofs of Claim by Aug. 16 ---------------------------------------------------------------- Creditors of LLC Technics Service (code EDRPOU 33350132) have until Aug. 16, 2008, to submit proofs of claim to: The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on July 16, 2008. The case is docketed as 24/189-b. The Debtor can be reached at: LLC Technics Service Bliukher Str. 11 04128 Kiev Ukraine TOUR-POLOZ: Creditors Must File Proofs of Claim by Aug. 20 ---------------------------------------------------------- Creditors of LLC Travel Agency Tour-Poloz (code EDRPOU 32881551) have until Aug. 20, 2008, to submit proofs of claim to: State Tax Inspection in Cherkassy, Liquidator Khreschatik Str. 235 18000 Cherkassy Ukraine The Court is located at: The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Economic Court of Cherkassy commenced bankruptcy proceedings against the company after finding it insolvent. The Debtor can be reached at: LLC Travel Agency Tour-Poloz Lenin Str. 31/1 Cherkassy Ukraine UTEK LLC: Creditors Must File Proofs of Claim by August 16 ---------------------------------------------------------- Creditors of LLC Utek (code EDRPOU 30859283) have until Aug. 16, 2008, to submit proofs of claim to: The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Economic Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on June 20, 2008. The case is docketed as 23/181-b. The Debtor can be reached at: LLC Utek Kikvidze Str. 13 01103 Kiev Ukraine UZ AND ME: Creditors Must File Proofs of Claim by August 20 ----------------------------------------------------------- Creditors of LLC Uz And Me (code EDRPOU 31947946) have until Aug. 20, 2008, to submit proofs of claim to: State Tax Inspection in Cherkassy, Liquidator Khreschatik Str. 235 18000 Cherkassy Ukraine The Economic Court of Cherkassy has commenced bankruptcy proceedings against the company after finding it insolvent. The Court is located at: The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Debtor can be reached at: LLC Uz And Me Tchaikovsky Str. 12 Cherkassy Ukraine =========================== U N I T E D K I N G D O M =========================== BANBURY PERSONNEL: Brings in Liquidators from Tenon Recovery ------------------------------------------------------------ S. J. Parker and T. J. Binyon of Tenon Recovery were appointed joint liquidators of Banbury Personnel Ltd. on July 28, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: Banbury Personnel Ltd. c/o Tenon Recovery Sherlock House 73 Baker Street London W1U 6RD England BORDERFOAM LTD: Joint Liquidators Take Over Operations ------------------------------------------------------ Kerry Bailey and Ian Gould of PKF (U.K.) LLP were appointed joint liquidators of Borderfoam Ltd. on July 22, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: Borderfoam Ltd. c/o PKF (U.K.) LLP New Guild House 45 Great Charles Street Queensway Birmingham B3 2LX England CSRL MECHANICAL: Taps Liquidators from Vantis --------------------------------------------- G. Mummery and P. Atkinson of Vantis Business Recovery Services were appointed joint liquidators of CSRL Mechanical Services Ltd. on July 25, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: CSRL Mechanical Services Ltd. c/o Vantis Business Recovery Services 43-45 Butts Green Road Hornchurch Essex RM11 2JX England DIAMOND LIFESTYLE: Ian S. Carr Leads Liquidation Procedure ---------------------------------------------------------- Ian S. Carr of Grant Thornton U.K. LLP was appointed liquidator of Diamond Lifestyle Ltd. on July 22, 2008, for the creditors' voluntary winding-up procedure. The company can be reached at: Diamond Lifestyle Ltd. Diamond House 7 Ramsay Court Hinchingbrooke Business Park Huntingdon Cambridgeshire PE29 6FY England FEDERAL MOGUL: T&N Asbestos Victims to Get GBP2 Mln in Payments --------------------------------------------------------------- About 50 families who were exposed to asbestos mined by Turner and Newall can recover almost GBP2,000,000, or about US$3,800,000 in compensation, Thompsons Solicitors said in a public statement. Thompson Solicitors represents the T&N asbestos victims. U.K.-based T&N formerly mined asbestos before filing administration proceedings under the United Kingdom Insolvency Act in 2001. T&N's mining operations resulted to workers being exposed to asbestos, which causes a kind of cancer in the lungs. Compensation claims filed by the asbestos victims were "stayed" or "frozen" as a result of T&N's administration proceedings. T&N was acquired by Federal-Mogul Corporation in 1999. Federal-Mogul and its U.S. affiliates also filed parallel bankruptcy proceedings in the United States in 2001 to separate their operating liabilities from their increasing asbestos liabilities. In September 2005, the administrators of the U.K. Debtors entered into an agreement outlining the terms of distributions to creditors of the U.K. Debtors. In October 2006, Federal- Mogul placed approximately US$750,000,000 for, among other things, asbestos claims against T&N. According to Thompsons Solicitors, more than 100 former T&N employees have died of mesothelioma or other diseases relating to asbestos since 2001. Ian McFall at Thompsons Solicitors said the firm is still working to ensure that other families who have been victims of T&N's asbestos mining operations will receive appropriate compensation. About Federal-Mogul Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 170; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 10, 2008, Moody's Investors Service confirmed the ratings of the reorganized Federal-Mogul Corporation -- Corporate Family Rating, Ba3; Probability of Default Rating, Ba3; and senior secured bank credit facilities, Ba2. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Nov. 28, 2007. As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. GEMINI PRODUCTIONS: Calls in Liquidators from Tenon Recovery ------------------------------------------------------------ David Thorniley and Andrew James Pear of Tenon Recovery were appointed joint liquidators of Gemini Productions Ltd. on July 22, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: Gemini Productions Ltd. Third Floor 25-31 Tavistock Place London WC1H 9SF England GENERAL TRADING: Administrators Sell Business as Going Concern -------------------------------------------------------------- The General Trading Company (Mayfair) Limited has been sold as a going concern. As reported in the Troubled Company Reporter-Europe, GTC was placed into administration on July 21, 2008. Philip Duffy, Jason Godefroy and Paul Clark, partners at MCR, were appointed as joint administrators. "We are pleased to announce the sale of GTC as a going concern, particularly as we remain in a difficult trading environment in the retail sector. Not only have we managed to preserve an historic reputation associated with the store, we've also been able to preserve the majority of jobs in the Company, with 19 staff retaining their positions," Mr. Clark, partner at MCR, commented. Founded by the Part family in 1920, the General Trading Company was one of London's first "boutique" home stores focusing on soft furnishings, interior decor, chinaware and glassware as well as clothing and accessories. It rapidly became highly fashionable as well as gaining Royal patronage. It was one of the first stores in the U.K. to develop the concept of the "Wedding List" now a traditional part of any marriage. ITV PLC: First Half 2008 EBITA Down 20% to GBP121 Million --------------------------------------------------------- ITV plc released interim financial results for the six months ended June 30, 2008. ITV's EBITA for the six months ended June 30, 2008 was GBP121 million, compared with EBITA of GBP151 million for the same period in 2007. ITV's group revenue for the six months ended June 30, 2008 was GBP1.03 billion, compared with group revenue of GBP1 billion for the same period last year. Operating Summary Revenue growth of 3% delivered by a strong operational performance in ITV's Broadcasting, Global Content and Online businesses. -- ITV Family net advertising revenue (NAR) was up 1% and viewing share up 2.5%. ITV Family share of commercial impacts was flat at 41.4% (2007: 41.4%) with ITV1 down 5.1% (2007: down 5.9%). -- Global Content revenues (including internal) were up 3% with external revenues up 30%. -- Online revenues were up 6% with ITV sites delivering 50 million online video views over the period and itv.com unique users averaging 6 million per month. The reduction in operating EBITA reflects, in particular, the first half weighting of ITV1 sports costs (up GBP29 million compared to 2007) primarily due to Euro 2008, as indicated in the Interim Management Statement in May. Over the full year, the ITV1 network program budget will be held at its 2007 level and this effect will reverse. Current Trading ITV estimates that total TV NAR for the eight months to August will be down 1% year-on-year, with ITV NAR flat. On current estimates, the television advertising market has weakened in September, where tough year-on-year comparisons apply, given the Rugby World Cup in 2007. ITV estimates that ITV NAR for September will be down 20% with the total market down 17%. While ITV has limited visibility on advertising revenues beyond September, ITV expects to outperform the total market over the full year. Goodwill Impairment As a result of reduced advertising market forecasts for 2008/09 and in accordance with IAS 36, an impairment loss against Broadcasting goodwill has been recognized. A non-cash impairment charge of GBP1,600 million is included in operating costs in the income statement. The goodwill arose from acquisitions in 2000 and 2004 leading to the creation of ITV plc. Dividend In view of the uncertain economic outlook and the Company's decision to maintain the investment in programming to deliver the Turnaround Strategy, the interim dividend has been set at 0.675 pence per share. The level of the final dividend will be considered in the light of second half trading and the economic outlook. The Company's policy remains to deliver dividend cover of 2 to 2� times over the medium term. Turnaround Strategy The Board has reassessed the Turnaround Strategy with management in the light of the weaker advertising and economic outlook. The Board remains confident that the Turnaround Strategy will deliver sustainable, long-term growth and is therefore maintaining its investment in programming. However, given the market uncertainty, ITV is revising its Global Content and Online targets: -- In Global Content, ITV is seeking to grow its annual revenues (including internal), through organic growth and acquisition, to a run-rate of GBP1 billion by the end of 2012. The previous target was to double revenues to GBP1.2 billion by 2012. -- In Online, ITV is seeking to grow its annual revenues to a run-rate of GBP150 million by the end of 2012. The change to the previous target of GBP150 million online revenues by 2010 also reflects regulatory delay to the planned Kangaroo service. The Company expects to meet the revised online target without relying on substantial acquisitions. ITV's Broadcasting target of an ITV Family share of commercial impacts of at least 38.5% in 2012 is unchanged. In addition, ITV had previously set a group revenue target of 3-5% compound annual growth to 2010. With Broadcasting revenues accounting for 80% of overall revenues, group revenue growth will be largely dependent on television advertising market growth. Cost Savings The Company is today publishing a new target of achieving a GBP35 million run-rate of additional cost savings by the end of 2010. ITV is already on track to deliver GBP41 million in savings by the end of 2008 and GBP40 million of additional regional savings from the end of 2009. Debt and Liquidity The liquidity position of the Company remains strong and has been strengthened further since the end of the half year. In July, ITV raised GBP110 million from an issue of Eurosterling bonds with a maturity date of March 20, 2013. The company has also secured a further GBP200 million of 5 year committed bi- lateral financing. Net debt at June 30, 2008 stood at GBP663 million, down GBP5 million on Dec. 31, 2007. Michael Grade, Executive Chairman of ITV, said: "Almost a year into the Turnaround Strategy, we have made considerable operational progress. With more viewers watching more ITV programs, we are delivering greater value for advertisers. We have out-performed the market in terms of advertising revenues and viewing share. Our Global Content business is growing strongly and our presence online is strengthening, notwithstanding the delay in launching Kangaroo. "While our visibility on advertising revenues beyond September is limited, with a strong schedule in place for the rest of the year and planned for 2009, we are confident that we will continue to outperform. "However we cannot control the economic environment in which we operate. As a result of the recent slowdown in the television advertising market, the Board has taken some tough decisions which are reported here today. "We are implementing a new cost efficiency plan which will deliver GBP35 million in additional annual savings by the end of 2010. We are taking a GBP1,600 million impairment charge on Broadcasting goodwill and we are adjusting the turnaround targets for Global Content and Online. We continue to work with regulators, making the case for an urgent reduction in ITV's regulatory burden. "In the light of the uncertain economic outlook and the importance of maintaining programming investment, the Board has also reduced the level of the interim dividend to 0.675 pence per share. "The Board's confidence in the Turnaround Strategy is reflected in the decisions we have announced today. In particular, we are committed to maintaining investment, notwithstanding the cyclical downturn. By holding our focus on delivering the Turnaround Strategy, we are confident ITV will be strongly positioned to grow as the economy recovers. "ITV's long-term goal remains to create greater value for shareholders in the digital world from our position as the U.K.'s favorite source of free entertainment." About ITV plc Headquartered in London, ITV plc -- http://www.itvplc.com/-- is a U.K. media company, owning all of the regional Channel 3 licenses in England and Wales. The company wholly owns three leading free-to-air digital channels: ITV2, ITV3 and ITV4. It owns the market leading cinema screen advertising businesses in the U.K. and Republic of Ireland and has similar joint ventures in continental Europe and the United States. ITV PLC: S&P Cuts Long-Term Corp. Credit Rating to BB+ from BBB- ---------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its long-term corporate credit and senior unsecured debt ratings on U.K. private broadcaster ITV PLC to 'BB+' from 'BBB-'. At the same time, the short-term corporate credit rating was lowered to 'B' from 'A-3'. The outlook is stable. S&P has assigned its 'BB+' senior unsecured debt rating and a recovery rating of '4' to ITV's recent GBP110 million loating-rate notes due 2013. S&P also assigned a recovery rating of '4' to ITV's senior unsecured EUR500 million notes due 2011, GBP250 million notes due 2017, GBP250 million notes due 2009, and GBP325 million notes due 2015. The '4' recovery ratings indicate S&P's expectation of average (30%-50%) recovery for unsecured creditors in the event of a payment default. "The downgrade follows the release of half-year 2008 results indicating a further significant fall in EBITDA and a likely weakening of the group's business in the second half of 2008," said S&P's credit analyst Michael O'Brien. "This reflects a lack of visibility beyond September 2008 and a weaker short-term outlook, with an expected 3% drop for the TV advertising market overall." As a result, ITV has taken a noncash impairment charge to broadcasting goodwill to reflect lower future returns, before factoring in any regulatory changes that could provide increased flexibility to control costs. In addition, ITV revised parts of its turnaround strategy revenue expectations for its Global Content and Online divisions. Over the first half of 2008, ITV maintained its strong market performance in terms of viewing shares, but EBITDA including exceptional operating losses dropped 20.5%, through a combination of front-weighted program costs and a 1.2% drop in broadcast revenues. This, in addition to an increase in S&P's pension adjustment to ITV's debt, has resulted in a notable weakening of credit metrics. For the 12 months to June 30, 2008, adjusted debt to EBITDA was a weaker 3.5x and funds-from- operations to debt was 20.2%, compared with 2.9x and 27.3% for full-year 2007. ITV has announced a credit-supportive 50% cut in its interim dividend to be paid in January 2009, while giving no guidance as to subsequent dividends and maintaining its investment in programming to support future market performance. S&P expects that ITV will continue to pursue its turnaround strategy to ensure the successful execution of those elements of its business plans that are within the group's control. This relates particularly to the group's ability to control costs with a view to offsetting the challenges presented by regulatory constraints and tougher market conditions so that funds-from- operations to debt does not materially drop below 20%. Any material decrease in advertising revenues leading to a significant deterioration of the group's revenues and financial profile or any departure in financial policy, such as a more aggressive acquisition or shareholder-friendly strategy, could lead to lower ratings. Ratings upside is limited in the prevailing regulatory environment, but could be envisaged in the medium term if the group manages to stabilize or grow share of commercial impacts (SOCI) and advertising revenues in an environment of visible and sustainable market recovery in which regulatory burdens are eased, resulting in a significant and sustainable profitability and leverage improvement from current levels. NORTEL NETWORK: Posts US$251 Mln Net Loss for First Half 2008 -------------------------------------------------------------- Nortel Network Corp. posted US$251 million in net losses on US$5.38 billion in net revenues for the first half ended June 30, 2008, compared with US$140 million in net losses on US$5.05 billion in net revenues for same period in 2007. Nortel posted US$113 million in net losses on US$2.6 billion in net revenues for the second quarter ended June 30, 2008, compared with US$37 million in net losses on US$2.56 billion in net revenues for same period in 2007. As of June 30, 2008, Nortel Network had US$15.87 billion in total assets, US$13.37 billion in total liabilities, and US$2.5 billion in total shareholders' equity. "Nortel's financial performance in the first half of 2008 has been consistent and disciplined. We have achieved our objectives and are on track to meet our targets for the year," said Nortel president and CEO Mike Zafirovski. "In the second quarter, the company focused on the work at hand and improved productivity, stepped-up cost reduction activities and enhanced margin performance. We delivered gross margin of 43.1%, the seventh consecutive quarter of year-over-year improvement, and management operating margin of 4.3%, the eighth consecutive quarter of year-over-year improvement." "We continue to see strong customer momentum in key growth areas of our business. In recent months, we've signed a comprehensive global managed services telepresence agreement with Deloitte, have secured approximately 20 wins for our innovative 40G offering, and earlier this week signed on as the official network infrastructure partner for the London 2012 Olympic and Paralympic Games," said Zafirovski. "In the second half, faced with a challenging business environment, we will continue our focus on execution and on delivering accelerated growth in key segments in order to achieve our financial objectives for the year." About Nortel Networks Nortel Networks Corporation -- http://www.nortel.com-- (NYSE/TSX: NT) is a global supplier of networking solutions serving both service provider and enterprise customers. It supplies end-to-end networking products and solutions that help organizations enhance and simplify communications. Nortel operates in four segments: Carrier Networks, Enterprise Solutions, Metro Ethernet Networks and Global Services. Nortel Networks Limited is the company�s principal operating subsidiary. The company's executive offices are located in Toronto and has operations in the United Kingdom, China, Australia, Argentina and Brazil, among others. * * * In May 2008, Standard & Poor's Ratings Services revised its outlook on Toronto-based telecommunications equipment provider Nortel Networks Ltd. to positive from stable. At the same time, S&P affirmed the ratings, including the 'B-' long-term corporate credit rating, on the company. The ratings on NNL are based on the consolidation with parent Nortel Networks Corp. At the same time, S&P assigned a 'B-' bank loan rating to NNL's proposed US$500 million 10.75% senior unsecured notes due 2016. The notes are being issued as an add-on to the existing US$450 million 10.75% senior unsecured notes due 2016, issued July 2006. S&P also assigned a recovery rating of '4' to the notes, indicating the expectation for average (30%-50%) recovery in the event of payment default. Nortel will use the net proceeds from the new debt issuance, together with cash balances, to repay Nortel Network Corp.'s US$675 million 4.25% convertible notes maturing Sept. 1. At the same time, Moody's Investor Service said Nortel Network Corp.'s Senior Unsecured Convertible, Exchange Bond, Debenture ratings remains unchanged at B3 with LGD assessment changed to LGD4, 66% from LGD4, 67%. REFCO INC: Ex-CEO Phillip Bennett Settles with US SEC ----------------------------------------------------- Phillip R. Bennett, former CEO, chairman, and controlling shareholder of Refco Inc., has signed an agreement to settle a civil injunctive action filed by the U.S. Securities and Exchange Commission, Reuters reports citing court documents. As appeared in the TCR-Europe in February 2008, a complaint was filed in the United States District Court for the Southern District of New York on Feb. 19, 2008, alleging that Mr. Bennett orchestrated a scheme that periodically concealed hundreds of millions of dollars owed to Refco by a private entity that he controlled. The complaint also alleged that Mr. Bennett directed practices that artificially inflated Refco's financial results. The complaint sought a permanent injunction enjoining Mr. Bennett from violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Exchange Act Rules 10b-5, 13b2-1, and 15d 14, and from aiding and abetting violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Exchange Act Rules 15d-2 and 15d- 13. The complaint also sought payment by Mr. Bennett of unjust enrichment that he received as a result of his actions, with prejudgment interest thereon, and imposition of civil money penalties against him pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. According to Reuters, Mr. Bennett did not admit or deny the allegations in the complaint. He also waived the right to appeal the final judgment, which prohibits him from acting as a officer or director of a public company. The settlement, however, did not mention or specify any financial agreements, Reuters adds. Fraud Case In July 2008, the Hon. Naomi R. Buchwald of the U.S. District Court for the Southern District of New York in Manhattan sentenced Mr. Bennett of 16-year prison term after he pleaded guilty of defrauding Refco investors out of US$2.4 billion. Mr. Bennett said he will appeal the prison term. Mr. Bennett was accused of hiding Refco's true financial position from investors by moving more than US$1,000,000,000 in debt off the company's books to Refco Group Holdings Inc, a privately held entity owned by Mr. Bennett. Mr. Bennett admitted that he conspired with other unnamed Refco executives to conceal the size of Refco's liabilities, and said he deceived his auditors, investors and lenders. Mr. Bennett remains at his home in Somerset County, New Jersey under electronic monitoring. Mr. Bennett has been out on a US$50,000,000 bail after his arrest in 2005, and is expected to report to prison on Sept. 4, 2008. About Refco Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. S & E CLEANING: Taps Liquidators from Tenon Recovery ---------------------------------------------------- S. J. Parker and T. J. Binyon of Tenon Recovery were appointed joint liquidators of S & E Cleaning Ltd. on July 18, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: S & E Cleaning Ltd. c/o Tenon Recovery Sherlock House 73 Baker Street London W1U 6RD England SITE SPACE: Claims Filing Period Ends October 31 ------------------------------------------------ Creditors of Site Space Ltd. (formerly Sitespace Ltd.) have until Oct. 31, 2008, to send their full names, address and descriptions, full particulars of their debts or claims, and the names and addresses of their Solicitors (if any), to: David Elliott Liquidator Moore Stephens LLP Victory House Admiralty Place Chatham Maritime Kent ME4 4QU England David Elliott of Moore Stephens LLP was appointed liquidator of the company on July 29, 2008, for the creditors' voluntary winding-up procedure. SYNCORA: Moody's Puts B2 IFSR Under Review for Possible Upgrade --------------------------------------------------------------- Moody's Investors Service has placed the B2 insurance financial strength ratings of Syncora Guarantee Inc., Syncora Guarantee (U.K.) Ltd. and Syncora Guarantee Re Ltd. on review for possible upgrade. In the same rating action, Moody's confirmed the ratings of Syncora Holdings Ltd. with a negative outlook. Moody's also placed the ratings of Twin Reefs Pass-Through Trust on review with direction uncertain. This rating action was prompted by SCA's announcement that it has closed on the previously announced agreement with XL Capital Ltd. providing for the termination, elimination or commutation of certain reinsurance, guarantees and other agreements with XL and its affiliates in return for a payment by XL of US$1.775 billion in cash and 8 million shares of XL Class A ordinary shares. SCA also announced it has closed on the previously announced agreement with Merrill Lynch & Co., Inc. for the termination of eight credit default swaps on ABS CDOs written by SG in return for a US500 million cash payment to Merrill Lynch. Prior to this rating action, the ratings of SG and SG Re were under review with direction uncertain and the debt ratings of SCA and Twin Reefs were under review for possible downgrade. Moody's ratings on securities that are guaranteed or "wrapped" by a financial guarantor are generally maintained at a level equal to the higher of a) the rating of the guarantor (if rated at the investment grade level), or b) the published underlying rating. In accordance with current rating agency policy, following Moody's June 20, 2008 rating action on XL Capital Assurance (now Syncora Gurantee) and XL Financial Assurance, which lowered their ratings to below the investment grade level, Moody's withdrew ratings on SG and SG Re-wrapped securities for which there was no published underlying rating. Should the guarantors' ratings subsequently move back into the investment grade range or should the agency subsequently publish the associated underlying rating, Moody's would reinstate previously withdrawn ratings on those wrapped instruments. According to Moody's, the review for possible upgrade on the insurance financial strength ratings of SG and SG Re reflects the significant improvement to SCA's capital adequacy position and upward pressure on the ratings following the successful completion of the aforementioned transactions with XL and Merrill Lynch. However, Moody's stated that the insurance financial strength ratings are likely to remain non-investment grade at the conclusion of our rating review given the continued uncertainty with respect to SCA's remaining mortgage-related exposures and currently impaired franchise. The confirmation of SCA's shelf and preference share ratings (with a negative outlook) reflects the positive overall capital adequacy implications associated with the Master Agreement and Merrill Agreement and resulting upward pressure on the insurance financial strength ratings. However, in Moody's opinion, the credit profile of the holding company has not benefited to the same degree. The change in the direction of the rating review on Twin Reefs, to review with direction uncertain, from review for possible downgrade, reflects the potential for upward rating pressure based on the improvement in the credit profile of the trust's underlying securities (SG Re Series B preference shares), as well as the possibility that dividends on these underlying securities could be omitted at some future date, which could result in a downgrade from the current Caa2 rating. The rating agency stated that SCA has announced that it expects to record significant reserve charges on its mortgage-related exposures during 2Q2008, including both second-lien RMBS and ABS CDOs. This reserving activity will result in both SG and SG Re reporting negative statutory capital at quarter-end. However, the transactions contemplated by the Master Agreement and the Merrill Agreement will result in the companies having positive statutory capital and result in a significant improvement in their capital adequacy positions, in Moody's opinion. In addition, SCA has announced it has commuted its outbound reinsurance with RAM Reinsurance Company Ltd and a portion of inbound reinsurance with Financial Security Assurance Inc. (the remainder of which will be moved from SG Re to SG). SCA has also earmarked US$820 million for the purpose of commuting, terminating, amending or restructuring existing agreements with certain CDS bank counterparties who have signed the Master Agreement. Moody's stated that the ratings review will focus on: 1) the risk-adjusted capital adequacy positions of SG and SG Re; 2) further clarity with respect to future preferred share dividend policy and capacity; and 3) an assessment of SCA's franchise value and future business prospects. With respect to SCA's commutation agreement with Merrill, Moody's stated that the negotiated settlement has some elements that are typically associated with a distressed exchange, though such a determination is ultimately a matter of judgment, and depends on the specific circumstances of the guarantor as well as the amount of the settlement compared to the economic value of the hedge. Based on Moody's evaluation of these exposures, the settlement amount represents a significant discount to the capital charges applied in our model. List of Rating Actions The following ratings have been placed on review for possible upgrade: -- Syncora Guarantee Inc. -- insurance financial strength at B2; -- Syncora Guarantee (U.K.) Ltd. -- insurance financial strength at B2; and -- Syncora Guarantee Re Ltd -- insurance financial strength at B2. The following ratings have been confirmed with a negative outlook: -- Syncora Holdings Ltd. -- provisional rating on senior debt at (P)Caa3, provisional rating on subordinated debt at (P)Ca and preference shares at Ca. The following rating has been placed on review with direction uncertain: -- Twin Reefs Pass-Through Trust -- contingent capital securities at Caa2. Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd.) is a Bermuda-domiciled holding company whose primary operating subsidiaries, Syncora Gurantee Inc. (formerly XL Capital Assurance Inc.) and Syncora Guarantee Re Ltd. (formerly XL Financial Assurance Ltd.), provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. SYNCORA HOLDINGS: Closes XL Capital & Merrill Lynch Transactions ---------------------------------------------------------------- Syncora Holdings Ltd. disclosed the closure of the formerly reported transactions with XL Capital Ltd. pursuant to the Master Commutation, Release and Restructuring Agreement of July 28, 2008, and the related transactions intended to close concurrently with the XL transaction. The company also reported that the transaction with Merrill Lynch & Co., Inc. pursuant to the agreement with Merrill Lynch dated July 28, 2008, also closed. In addition, the waivers and related transactions under the company's Credit Agreement Amendment with its lenders, described in the company's press release of July 28, 2008, went into effect as of Aug. 5. In conjunction with the closing of the transaction with XL Capital and as contemplated by the Master Transaction Agreement, the following members of Syncora Holdings' Board of Directors have resigned: Fred Corrado, Paul E. Hellmers, Gardner L. Grant, Jr., and Jonathan F. Bank. Second Quarter Results Announcement and Investor Conference Call Separately, the company announced that it will release its second quarter 2008 results after the close of regular stock market hours on Aug. 11, 2008. Paul S. Giordano, President and Chief Executive Officer, Syncora Holdings; Edward B. Hubbard, Executive Vice President, Syncora Holdings and President of Syncora Guarantee Inc.; and Elizabeth A. Keys, Senior Vice President and Chief Financial Officer, Syncora Holdings, will host an earnings conference call to discuss Syncora Holdings' second quarter 2008 results on Aug. 12, 2008, at 8:30 am Eastern Daylight Time (EDT). About Syncora Holdings Syncora Holdings Ltd., formerly Security Capital Assurance Ltd., is a Bermuda-domiciled holding company whose primary operating subsidiaries, XL Capital Assurance Inc. and XL Financial Assurance Ltd, provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. SCA has announced that it will formally change its corporate name to Syncora Holdings Ltd. on Aug. 4, 2008. XLCA and XLFA will be renamed Syncora Guarantee Inc. and Syncora Guarantee Re Ltd, respectively. * * * As reported in the Troubled Company Reporter-Latin America on Aug. 1, 2008, Moody's Investors Service placed these ratings Security Capital Assurance Ltd. under review for possible downgrade: (P)Caa3 provisional rating on senior debt, (P)Ca provisional rating on subordinated debt, and Ca rating on preference shares. In August 2008, Fitch Ratings downgraded these ratings on Security Capital Assurance Ltd. and its financial guaranty insurance subsidiaries and placed all ratings on Rating Watch Evolving: -- Long Term Issuer Rating to 'CCC-' from 'B-'; -- US$250 million Fixed/Floating Series A Perpetual Non-cumulative Preference Shares to 'CCC-' from 'CCC'. TCR-Latin America reported on July 31, 2008, that Standard & Poor's Ratings Services said its 'C' long-term credit rating on Security Capital Assurance Ltd. remains on CreditWatch with negative implications. STORE TO DOOR: Appoints Liquidators from Vantis ----------------------------------------------- G. Mummery and D. C. Wilson of Vantis Business Recovery Services were appointed joint liquidators of Store To Door Group Ltd. on July 25, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached at: Store To Door Group Ltd. c/o Vantis Business Recovery Services 43-45 Butts Green Road Hornchurch Essex RM11 2JX England * IMF Cuts the United Kingdom's 2008 Growth Forecast to 1.4% ------------------------------------------------------------ The Executive Board of the International Monetary Fund concluded on July 30, 2008, the Article IV consultation with the United Kingdom. Background Economic growth was above trend in 2006 and 2007. In terms of expenditure, the expansion was largely driven by private consumption, on the heels of strong employment, steady real wage and living standards growth, and a surge in immigration. Compressed global credit market spreads, loosening credit conditions and a resulting expansion of household debt, alongside the decade-long housing boom provided additional fuel. Concurrently, investment was boosted by a low cost of capital and high corporate profitability. And notwithstanding favorable export market growth, the current account deficit reached 4 1/4 percent by 2007, a 3 percentage point worsening since 2003. The real effective exchange rate also appreciated by about 10 percent from 2006 through mid-2007. With slack diminishing, inflation began to rise, prompting the initiation of a tightening cycle by the Bank of England. Still, rising commodity and services prices led CPI inflation to rise above 3 percent in March 2007, requiring the first explanatory open letter from the governor to the chancellor since the inauguration of the regime a decade earlier. During this period, the fiscal deficit remained high, with a structural tightening in 2005 reversed in 2006. In the second half of 2007, the U.K. faced two new international shocks�the disruption to global financial markets and the sharp acceleration of the upward trend in world food and fuel prices. The combined effects of these shocks raised uncertainty, increased inflation risks on both sides, and compounded the ongoing correction in the domestic housing market. A run on Northern Rock, a medium-sized mortgage lender, raised the specter of financial stability weakness feeding through to the real sector. Reflecting the disinflationary impact of expected output weakness, the monetary tightening cycle ended and the Bank of England lowered the bank rate by a cumulative 75 basis points (to 5 percent) in three steps from December 2007. The 2008 budget set a neutral fiscal stance, allowing full operation of automatic stabilizers. Since August 2007, the real effective exchange rate has depreciated by more than 10 percent, in line with monetary loosening, but also reflecting a reassessment of U.K. risk. And aided by lower outflows from foreign owned banks, the current account deficit fell toward the end of 2007. So far in 2008, evidence points to a sharp slowing in activity alongside high inflation. Second quarter growth was weak, forward looking indicators are gloomy, sterling money market spreads remain elevated, unemployment has edged up, and house prices are falling rapidly. Accordingly, real GDP growth is projected to be 1.4 percent in 2008, falling to 1.1 percent in 2009. Inflation rose to 3.8 percent in June, on account of food and fuel price developments. And while there is scant evidence of second-round effects, as wages remain subdued, indicators of long-run inflation expectations have risen further. Executive Board Assessment Executive Directors agreed with the thrust of the staff appraisal. They observed that, following a decade of sustained strong economic performance, including stable economic growth and low inflation, the U.K. economy is now facing several concomitant shocks. The strong policy frameworks and structural reforms that have underpinned this remarkable performance will be tested by lower growth, higher inflation from food and fuel price increases, ongoing strains in financial markets, rapid housing price reversals, and medium-term external imbalances. The financial sector strains have also triggered a broad-based effort to reform the financial stability framework. In this difficult context, Directors noted that the authorities' inflation target of 2 percent will be exceeded for an extended period. In addition, the public net debt ceiling of 40 percent of GDP is likely to be breached. Rising long-term inflation expectations have added to the importance for fiscal and monetary policies to play their part in safeguarding the credibility of the nominal framework. Directors welcomed the commitment made in the 2008 budget to tighten fiscal policy in the coming two years. Directors saw no room for slippages in the current fiscal year. A number of Directors recommended a stronger-than-planned fiscal stance for 2009 and beyond to support medium-term fiscal sustainability and help build headroom for full operation of automatic stabilizers. A stronger fiscal stance would also help address external imbalances. Some Directors favored a somewhat more gradual adjustment as planned given short-term output concerns. Directors generally considered that any revision to the fiscal framework should enhance its credibility. They recommended that the net public debt ceiling of 40 percent of GDP be retained. Should it be breached, they called for concrete and frontloaded plans to bring debt back below the ceiling. Some Directors argued that the elevation of the status of nominal expenditure ceilings within the current fiscal framework would enhance its credibility. Some Directors suggested that any revision of the fiscal rules should strengthen consistency with the Stability and Growth Pact. Directors agreed that monetary policy has been appropriately focused on stemming second-round effects from the food and fuel terms of trade shocks. Given the outlook for inflation and the stance of fiscal policy, Directors saw little scope for monetary easing at present. Directors considered that the current inflation-targeting framework contains sufficient flexibility in the target horizon and definition to accommodate the ongoing terms of trade shocks. Directors noted that sterling has moved towards its equilibrium value, but remains on the strong side. This could adversely affect export growth, and underscores the case for improving the mix of policies to rebalance demand toward the external sector. Some Directors also stressed the need to enhance productivity. Directors welcomed the ongoing efforts to stabilize financial markets, including the introduction of the Special Liquidity Scheme. They noted that further capital-raising and information disclosure initiatives by financial institutions would boost confidence in the financial system. With regard to the financial stability framework, Directors praised the thoroughness of efforts to diagnose and resolve the problems illuminated by recent market tension. They welcomed the close tripartite cooperation among the Bank of England, the Financial Services Authority, and the Treasury, and the openness of the consultation process. This process has correctly highlighted the need for a special bank resolution regime, a statutory role of the Bank of England in the financial stability framework, and strengthened operations of the Financial Services Authority. In addition, Directors agreed that success of the special resolution regime will require full clarity and accountability within the tripartite structure. * S&P Says EEMEA Utilities to Face Economic Challenges Ahead ------------------------------------------------------------ In a published report titled, "After Strong Performance, Will EEMEA Utilities Withstand The Coming Challenges?", Standard & Poor's Ratings Services said that the overall rating performance of utilities in Eastern Europe, Middle East, and Africa (EEMEA) has been positive since October 2007. The outlook for ratings performance over the next one-two years is, however, clearly less favorable. "We have upgraded four issuers on the back of mergers and acquisitions, parental support, and strong performance in 2007 -- and there have been no downgrades," said S&P's credit analyst Eugene Korovin. Three of the four upgrades were from speculative grade to investment grade, so that now 14 out of the 23 utilities in S&P's rated EEMEA portfolio have investment grade ratings of 'BBB-' or above. Since October 2007, there have been several downward outlook revisions and CreditWatch placements with negative implications, which tilt the balance of rating outlooks to negative. This reflects the significant challenges faced by a number of companies in S&P's portfolio, which may put pressure on the ratings in the short to medium term. Key challenges ahead include worsening macroeconomic environments and increasing input cost inflation due to significant increases in the cost of oil and gas, which in a number of cases has not been passed through in end-user tariffs. Government-led sector restructuring, which may be credit- dilutive, increasing investments, and more difficult access to liquidity resulting from ongoing credit crunch, will also test many of the companies' mettle. Although compared with other economic sectors, utilities are relatively well positioned to withstand macroeconomic challenges, sector-specific risks such as restructuring, increasing investments to ensure secure energy supplies, and mounting fuel costs that cannot be passed through in tariffs in a timely manner may put some pressure on the sector's credit quality. * Consumer Spending Downturn to Hit UK Retail & Leisure Sectors --------------------------------------------------------------- Consumers are feeling increasingly worse off on a month-by-month basis as their disposable income dwindles, according to new research by PricewaterhouseCoopers LLP. Consumers are clearly getting more nervous, with consumer spending growth predicted to slow to just 0.5% in 2009. Nearly 60% of consumers surveyed by PricewaterhouseCoopers last month think their household will be worse off in the next 12 months. This is a clear deterioration since the PricewaterhouseCoopers April survey when 37% of consumers surveyed thought they would have less disposable income (money remaining after household bills and credit card payments) in the next year. As a recession becomes more likely, many observers are looking back to the early 1990s to help predict what might happen. However is that a good benchmark? Since the downturn of the 1990s certain categories of consumer spending have shifted from being "discretionary" to "essential", such as eating out, holidays and mobile phones� i.e. would today's consumers stop spending in these areas if their income was squeezed? At the same time some elements of consumer spend may have become more discretionary in nature, for example clothes shopping (because of "fast fashion") and grocery shopping (e.g. premium ranges in supermarkets). These shifts, combined with structural changes in the market mean that things could be quite different this time round. Olivia Gillan, retail partner in the strategy group, PricewaterhouseCoopers LLP, commented: "The performance of certain retailers and categories during the 1990s recession gives an indication of the winners and losers of the current downturn. However a lot has changed over the last 15 years. New 'value' players have emerged, additional space has been added, and consumers have been spending more on discretionary items �- treating themselves to luxury ready meals, or snapping up a cheap catwalk copy top only to throw it away after a couple of uses. As a result, some sectors will be hit differently this time around." Consumer Sentiment is Worsening The downturn is hitting those who are less well-off harder. The most pessimistic groups in the survey were lower income groups and older consumers �- they have less spare cash and are being hit particularly hard by food price and utility bill increases. Nearly seven in ten DE respondents think their household will be worse off -- of which three in ten think they will be much worse off and seven in ten consumers over 65 think they will be worse off in the next 12 months. However younger age groups seem to think that their household income is more resilient, with 26% of 18-24 year olds thinking that they will be better off �- maybe they are just too young to remember the last recession? As consumer spending tightens, the proportion spent on discretionary categories within the leisure and retail sectors is likely to decline. PwC is already seeing consumer belt- tightening, evidenced by the recent flurry of profit warnings, worse than expected trading statements and a 28% rise in retail administrations. Its survey shows that consumers are already starting to change their behavior. 35% of consumers have been shopping less often in the last six months: * 28% have delayed buying furniture; * 25% have bought more from friends, or items that are second-hand e.g. from Ebay; * 16% have bought fewer designer products. This Time Versus Last Time In the early 1990s, the sectors impacted the most, seeing the deepest and longest declines, were big ticket items where purchases can be delayed (e.g. cars and appliances) and discretionary sectors where consumers can reduce consumption or switch to cheaper alternatives (e.g. restaurants and air travel). Similar overall dynamics are expected in any potential downturn now, with big ticket and discretionary sectors expected to be the most impacted. According to the PwC survey, consumers claim that if forced to cut spending, they would particularly cut back on eating out, holidays, electrical goods and clothing over the coming year: * 43% would cut back on eating out and takeaways; * 30% would cut back on short breaks as well as their main holiday; * 37% say they would cut back on electrical goods, and 28% say furniture; * 33% say they would cut back on clothes, shoes and accessories and 36% say designer labels. Grocery The impact of the early 1990s recession on the grocery sector was very limited. However, since then grocery purchasing has arguably become more discretionary as people have treated themselves by trading up to supermarkets' "finest" or "best" ranges. As a result, this time round, the sector could be hit harder if consumers rein in their spend by cutting out unnecessary luxuries and trading down to cheaper value lines and promoted items in store. This is reflected in the PwC survey: * 58% said they would buy fewer items; * 57% said they would buy more on sale; * 51% said they would buy cheaper alternatives. The other big difference is that the likes of Aldi, Lidl and Netto now make up nearly 6% of the grocery market -� they simply weren't around in the early 1990s. This could hit the major supermarkets if consumers start doing more of their shopping in these outlets �- the survey suggests 34% of consumers would plan to switch to a cheaper supermarket. Clothing The last recession had a relatively limited impact on consumers' spend on clothing. But clothing spend is arguably more discretionary now and the sector could therefore be hit worse than in the early 1990s. Price deflation, together with the craze for fast/disposable fashion started by the likes of Zara and Topshop, and buoyed by magazines like Grazia, has driven growth in volumes as consumers have stocked up on cheap catwalk copies to be worn a few times and then thrown away. They have been buying new clothes, not because they needed them, but just because they could. If times get really tough, consumers could cut back on these very discretionary purchases and this is reflected in the PwC survey: * 49% said they would buy fewer items * 35% said they would buy more clothes in the sale and * 31% said they would buy clothes less often Since the early 1990s, significant space for clothing retail has been added as supermarkets and department stores have extended their clothing ranges, fashion specialists have rolled out more stores and new chains have emerged. Particularly significant has been the development and growth of value retailers like Primark, Peacocks and TK Maxx -- there were no value retailers in the top ten womenswear retailers in 1990 but there are five now. As a result, this means that life for mid-market clothing retailers is likely to be tougher this time round. Unsurprisingly, the survey reflects that: 29% of respondents said they would buy from cheaper places if they had to cut their spend. Olivia Gillan, retail partner in the strategy group, PricewaterhouseCoopers LLP, concluded: "Many retailers and leisure operators succeeded in growing through the early 1990s. Then, as now, key to success is a differentiated proposition, a focus on offering consumers value for money, and continued management focus. The downturn should not be an excuse for retailers to stop investing for the future; it can be an opportunity to restructure or pause for breath. It's about the survival of the fittest." PricewaterhouseCoopers LLP -- http://www.pwcglobal.com/-- provides auditing services, accounting advice, tax compliance and consulting, financial consulting and advisory services to clients in a variety of industries. * UK Pension Funds Has GBP41BB Net Deficit in Mid-July, LCP Says ---------------------------------------------------------------- Lane Clark & Peacock LLP estimates that under the accounting standard IAS19 the aggregate FTSE 100 U.K. pension deficits and surpluses stood at an overall deficit of GBP41 billion as at mid-July 2008, in stark contrast to an aggregate GBP12 billion surplus in July 2007. The aggregate position oscillated wildly throughout the year, reaching a high point of a GBP19 billion surplus at the end of November 2007, before falling back to a GBP41 billion deficit in mid-July 2008. Extreme volatility, therefore, is a key issue for both the company and pension fund balance sheets. During 2008, the financial conditions driving surpluses and deficits have been brutal. Over the period from Jan. 1, 2008, LCP estimates that the overall funding position of FTSE 100 companies under IAS19 has suffered from the effects of first, equity market falls wiping off around GBP33 billion from scheme assets and second, new and severe market fears over rising inflation adding around GBP50 billion to scheme liabilities � a combined and unprecedented "double whammy" of GBP83 billion. At the same time, companies have benefited from one significant consequence of the credit crunch, namely the sharp rise in yields on corporate bonds (IAS19 requires companies to discount future pension liabilities using such yields). LCP estimates that the rise in bond yields since Jan. 1, 2008 will have reduced IAS19 liabilities by around GBP40 billion � enough to offset almost half of the huge losses arising from equity market falls and rising inflation. Bond yields peaked in late March, enabling companies with March reporting dates to report smaller pension liabilities than if they had used current bond yields. 14 of 23 companies reporting in late March disclosed surpluses, totaling GBP5.9 billion. In the light of the subsequent fall in bond yields, equity market falls and increasing fears over inflation, LCP estimates that those 14 companies have suffered aggregate pension losses of almost GBP13 billion since March, with estimated deficits now totaling around GBP7 billion. Company contributions were again significant during the year (reported as GBP13.1 billion for 2007, down slightly from last year�s record of GBP13.4 billion). However, they had relatively little impact on overall deficits given the sheer scale of movements in equity and corporate bond markets, and the impact of inflation expectations. Lane Clark & Peacock LLP -- http://www.lcp.uk.com/-- is a partnership of consulting actuaries, established in 1947. The firm has 85 partners and principals and a team of more than 450 employees in 8 offices across Europe (London, Winchester, Jersey, Brussels, Zurich, Basel, Utrecht and Dublin). It specializes in providing their clients with practical, bespoke and robust solutions, covering corporate pensions, strategic investment advice, general insurance and specialist financial services including risk appraisal, business modeling and valuations. * BOOK REVIEW: American Express ------------------------------- Title: American Express: The People Who Built the Great Financial Empire Author: Peter Z. Grossman Publisher: Beard Books Hardcover: 420 pages List Price: US$34.95 Own your personal copy at http://amazon.com/exec/obidos/ASIN/1587982838/internetbankrupt American Express: The People Who Built the Great Financial Empire by Peter Z. Grossman is the inside story of how a major corporation prevailed to reach worldwide success. This fascinating book reveals the inside story of one of the best-known and most influential corporations in the world. It is not just the history of a company, but of a business. The American Express Company is a consummate example of corporate success and endurance. The book will prove informative for all interested in the world of business, and it will reinforce the notion that fact can be more engrossing than fiction. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Zora Jayda Zerrudo Sala, Pius Xerxes Tovilla, Joy Agravante, Julybien Atadero, Marie Therese Profetana and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *