/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/081112.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, November 12, 2008, Vol. 9, No. 225 Headlines B U L G A R I A PETROL AD: Fitch Junks Issuer Default & Senior Unsecured Ratings F R A N C E CGG VERITAS: To Acquire Norwegian Seismic Company Wavefield COMPAGNIE GENERALE: S&P's BB Rating Unaffected by US$310MM Offer * France May Breach European Union's Deficit Limit in 2009 G E R M A N Y BEITH - BAU: Claims Registration Period Ends November 19 BOBOTEC GMBH: Claims Registration Period Ends November 19 DOLMEN VERLAG: Claims Registration Period Ends November 19 DRESDNER BANK: Incurs EUR2.4 Bil. Loss in 9-Mos Ended Sept. 2008 EUROHOME MORTGAGES: Moody's Junks EUR2.7MM Class X Notes' Rating EUROHOME MORTGAGES: Fitch Junks Ratings on Two Tranches GAWA GEBAUDETECHNIK: Claims Registration Period Ends Nov. 19 HEIDELBERGCEMENT AG: Credit Default Swaps Hit Record High PFRIEM BETEILIGUNGS: Claims Registration Period Ends Nov. 18 SCHMITZHAUS GMBH: Claims Registration Period Ends November 18 I R E L A N D CRH PLC: Expects Full Year Percentage Decline in Profit DECO 7: S&P Downgrades Rating on Class H Notes to 'B+' HALYARD CDO: Asset Liquidation Spurs S&P to Cut Ratings to 'D' PALMER SQUARE: Credit Deterioration Cues Moody's to Slash Ratings WATERFORD WEDGEWOOD: Moody's Junks Senior Subordinated Rating K A Z A K H S T A N TRISTAN OIL: Fitch Affirms IDR and Senior Unsecured Rating at B+ * Fitch Cuts Long-Term Foreign Currency Ratings on Four Companies * Fitch Downgrades LT Foreign Currency IDRs of Seven Kazakh Banks K Y R G Y Z S T A N INFO-LINE LLC: Creditors Must File Claims by November 28 MEDIA PRO: Creditors Must File Claims by November 28 L A T V I A PAREX BANK: Latvian Government Takes 51% Stake in Bank P O L A N D GDYNIA: EU Commission Agrees on Terms for Recovery of State Aid SZCZECIN: EU Commission Agrees on Terms for Recovery of State Aid R O M A N I A * Fitch Affirms 'D' Individual Ratings on Four Romanian Banks R U S S I A EUROPEAN TRUST: S&P Withdraws 'CCC+' Rating at Bank's Request KAZANORGSINTEZ OJSC: Fitch Junks IDR & Sr. Unsecured Debt Rating SUKHOI CIVIL: Fitch Holds Low-B Ratings; Outlook Negative WIMM-BILL-DANN: Moody's Revises Outlook on Ba3 Rating to Negative * NOVGOROD OBLAST: S&P Assigns 'B' Long-Term Issuer Rating S P A I N FONCAIXA FTPYME: Moody's Puts (P)C Rating on EUR76.4MM Notes SANTANDER HIPOTECARIO: S&P Affirms Junk Ratings on 3 Note Classes S W E D E N D. CARNEGIE: Swedish Government Takes Control U K R A I N E CAR TECHNICS: Creditors Must File Claims by November 22 FARCIDA LLC: Creditors Must File Claims by November 21 FERRUM-M LLC: Creditors Must File Claims by November 22 MAKAROV MOTORCAR: Creditors Must File Claims by Nov. 22 MALIN CELLULOSE-PAPER: Creditors Must File Claims by Nov. 22 SERVICE-CLASSIK LLC: Creditors Must File Claims by November 21 SPHERE-TRANS LLC: Creditors Must File Claims by November 22 TECHNO-PROM LLC: Creditors Must File Claims by November 21 TECHNOSTAR-XXI LLC: Creditors Must File Claims by November 22 TH TECHNOVSESVIT: Creditors Must File Claims by November 21 U N I T E D K I N G D O M AUTUMN GRANGE: Picks Joint Administrators from Grant Thornton BRITISH AIRWAYS: Reports GBP52 Mil. PBT in First Half 2008 DANWEL LTD: Names Tenon Recovery as Joint Administrators DELTA CDO: Credit Deterioration Cues Moody's Junk Ratings DSR PRINT: Appoints Joint Administrators from BDO Stoy HADDON HEALTHCARE: Taps Joint Administrators from Grant Thornton ILIAD INVESTMENT: Moody's Slices Ratings on Six Classes of Notes J & F WEDDINGS: Taps Joint Liquidators from Tenon Recovery LANDMARK MORTGAGE: S&P Puts Low-B Ratings on Classes C & D Notes MFI RETAIL: Decathlon May Acquire Stores Under Administration MONIER: Hires Goldman to Restructure Debt on Breach Concerns OCTAGON LIMITED: Moody's Cuts Rating on EUR6 Million Notes to C PARK ASSOCIATES: Taps Joint Administrators from Grant Thornton PARK GROUP: Appoints Joint Administrators from Grant Thornton RATHVILLY SCHOOL: Names Joint Administrators from Deloitte REC PLANTATION: Fitch Cuts Rating on Class E Notes to BB ROL REALISATIONS: Appoints Joint Administrators from PKF TAGGART HOMES: Names Joints Administrators from PwC TATA STEEL: Fitch Affirms UK Unit's 'BB' LT Foreign Currency IDR * Downturn Hampers Rescue of Ailing Businesses, PwC Survey Shows * EU Service Sector Set to Contract, KPMG Survey Says ********* =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D B U L G A R I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D PETROL AD: Fitch Junks Issuer Default & Senior Unsecured Ratings ---------------------------------------------------------------- Fitch Ratings downgraded Bulgaria-based fuel distributor Petrol AD's Issuer Default Rating and the senior unsecured rating for its EUR100 million notes due in 2011 to 'CCC' from 'B-'. Both ratings have been removed from Rating Watch Negative. Fitch has assigned a Negative Outlook to the Long-term IDR. The downgrades were prompted by a sizable share repurchase undertaken by Petrol AD in Q208, increased financial leverage and Fitch's concerns about corporate governance. Concern about diminished earnings, due to an asset disposal of an important part of the petrol station network, and large losses on derivatives transactions have also negatively affected Petrol AD's business and financial profile. The Recovery Rating on the notes is affirmed at 'RR4.' Petrol AD's financial profile, including its credit metrics, worsened substantially in Q208 due to a BGN90.7 million share repurchase, derivative losses of BGN71.5 million, working capital needs of BGN81.1 million and because of loans granted to related parties outside the Petrol AD group. Fitch estimates that Petrol AD's net leverage will increase markedly to 6.5-7.5x range at end- 2008 on the back of weaker EBITDA generation, which was driven by lost volume and earnings. It should be stressed that originally Petrol AD's management forecasted a net cash position at FYE08, which should have mitigated the deteriorated EBITDA during this transition period. Fitch is concerned about the company's corporate governance, especially as completion of the share-buyback was not in accordance with the planned use of proceeds from the sale of a cash-generating assets to Lukoil Bulgaria. Fitch regards the share-buyback as a quasi-dividend payment, which benefits shareholders to the detriment of bondholders. Additionally, Petrol AD granted a US$20 million loan to a related company outside the Petrol AD group. The issuer is still subject to numerous other sizable related-party transactions, including inter-company loans, debt guarantees. Petrol's management has stated to Fitch that Petrol AD's use of the disposal proceeds complies with provisions in the EUR100 million bond documentation. The Negative Outlook reflects the worsened business profile of Petrol AD following the sale of the cash-generating assets to Lukoil Bulgaria. Despite management plans to recover the lost volume and earnings in a short period of time, planned acquisitions in the Bulgarian market and investments in Petrol AD's network have been delayed. Fitch believes EBITDA recovery could be challenging because of the sluggish acquisition process and cash out-flow in Q208. Although the liquidity position of Petrol AD was negatively affected by the share repurchase, losses on derivatives transactions and working capital changes, Fitch assesses Petrol AD's cash position of BGN89.4 million at end-June 2008 as sufficient to repay short-term debt. This relates to the BGN15 million bonds maturing on November 20 2008. Petrol AD's management recently confirmed to Fitch that sufficient funds had been earmarked to redeem the bonds. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D F R A N C E =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D CGG VERITAS: To Acquire Norwegian Seismic Company Wavefield ----------------------------------------------------------- CGGVeritas will make a voluntary exchange tender offer for 100% of the shares of Wavefield Inseis ASA . Wavefield is a Norwegian pure-play seismic company which operates a fleet of 8 vessels and develops geophysical equipment based on fiber optic technology. In the third quarter 2008, Wavefield revenue was US$110 million, and operating income was US$37 million. * CGGVeritas will offer eligible Wavefield shareholders 1 newly issued CGGVeritas share for each 7 Wavefield shares * Aggregate equity value implied by the transaction is approximately US$310 million, an implied 31% premium for the Wavefield shareholders when compared to the closing price of November 7, 2008 * The transaction is immediately accretive to both EPS and cash flow per share * The net debt coverage ratios remain unchanged post transaction * The Board of Wavefield unanimously welcomes the CGGVeritas Offer The transaction strengthens CGGVeritas' high-end fleet capability with immediate access to five recently equipped high capacity 3D vessels. The additional complement of three mid 3D and 2D Wavefield vessels increases overall fleet management flexibility. Wavefield's Optoplan seabed fiber optic technology for reservoir monitoring expands the product offering of Sercel and accelerates market entry of next generation technologies. Wavefield backlog of US$485 million represents approximately one year of its revenue. Robert Brunck, Chairman and CEO of CGGVeritas commented: "I am very enthusiastic about the combination of Wavefield and CGGVeritas which will strengthen the technology position of both our Services and Equipment businesses in the high-end market. Based on its unique ability to lower the risks associated with finding and producing oil and gas, high-end seismic is more and more requested by our clients. With an expanded technology portfolio, a stronger industry position and the combined expertise, we will enhance our position as a preferred partner of our clients. The combination of the two companies increases our visibility further into 2009, enhances our ability to generate cash flow and provides value to our shareholders." Anders Farestveit, Chairman of Wavefield, stated "CGGVeritas is well placed to leverage Wavefield resources and expertise to further develop technology leadership across the full range of geophysical services and equipment. The Offer will create an even stronger global leader within the geophysical industry and provide operational and commercial synergies which will benefit both Wavefield and CGGVeritas shareholders. The global leadership position will also generate new and exciting opportunities for the employees, and allow for a further strengthening of the activity level in Norway." The exchange offer for the entirety of the share capital of Wavefield will commence as soon as regulatory and legal conditions permit, which is currently expected to be on or about November 24, 2008. Similarly, the offer will expire as soon as regulatory and legal conditions permit, which is currently expected to be on or about December 12, 2008. All newly issued CGGVeritas shares will be promptly listed on NYSE Euronext Paris and the New York Stock Exchange and will have equal rights in all respects as the existing CGGVeritas shares. This information is subject to the disclosure requirements set out in section 5-12 of the Norwegian Securities Trading Act. Headquartered in Paris, France Compagnie Generale de Geophysique- Veritas (NYSE: CGV) -- http://www.cggveritas.com/-- is a provider of geophysical services and manufacturer of geophysical equipment. The company has a total workforce of approximately 7,000 staff operating worldwide. * * * Compagnie Generale de Geophysique-Veritas continues to carry a Ba2 corporate family rating from Moody's Investors Service with stable outlook. COMPAGNIE GENERALE: S&P's BB Rating Unaffected by US$310MM Offer ---------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and outlook on France-based seismic oil services company Compagnie Generale de Geophysique - Veritas (CGG-Veritas; BB/Stable/--) remain unchanged following its share-based US$310 million offer for Norwegian seismic company Wavefield Inseis ASA (not rated). The friendly takeover offer will result in largely unchanged credit ratios because it will be funded through a share exchange. Wavefield Inseis had about US$0.15 billion in net debt and the combined group's net debt was about a pro forma US$1.7 billion at end-September. The combined group's 2008 reported EBITDA should be about US$1.7 billion (or US$1.1 billion on an adjusted basis when deducting capitalized multiclient expenses). S&P therefore expects adjusted debt to adjusted EBITDA to be at or below 2x, in line with S&P's expectations. S&P views the transaction positively because it will help consolidate the industry and expand CGG-Veritas' fleet to 27 vessels--17 of them high-end 3D--providing the company with flexibility to mothball lower-end 2D ships during downturns. * France May Breach European Union's Deficit Limit in 2009 ---------------------------------------------------------- Ben Hall at the Financial Times reports that France is likely to breach the European Union's deficit limit next year. France's budget deficit, according to the FT, would reach 3.1 per cent of gross domestic product, breaching the EU's normal deficit ceiling. The French government, the FT discloses, slashed its growth forecast for 2009 Thursday last week from 1-1.5 per cent to 0.2-0.5 per cent. The government, which has faced criticism in recent weeks for tabling a draft 2009 budget based on highly optimistic growth forecasts, foresees a Paris budget deficit of 1.2 per cent in 2012, rather than the 0.5 per cent in September. French finance minister Christine Lagarde, as cited by the FT said, the revised growth forecast was "lucid," adding that it was the "lowest ever put forward by a government in France." However, she noted the revised figures are still more optimistic than the forecast of the European Commission, which predicted zero growth for France next year and a deficit of 3.4 per cent, the FT states. The FT quotes Ms. Lagarde as saying the consequences of the financial crisis "are starting to be felt and will last for several quarters." She believes the credit crunch would leave "lasting effects". The FT adds a zero deficit by the end of his five-year mandate was one of President Nicolas Sarkozy's main campaign promises. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D G E R M A N Y =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D BEITH - BAU: Claims Registration Period Ends November 19 -------------------------------------------------------- Creditors of Beith - Bau GmbH have until Nov. 19, 2008, to register their claims with court-appointed insolvency manager Ralf Diehl. Creditors and other interested parties are encouraged to attend the meeting at 9:30 a.m. on Dec. 3, 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 Friedberg Hall 20a Homburger Road 18 61169 Friedberg (Hessen) 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: Ralf Diehl Marktlaubenstrasse 9 35390 Giessen Germany Tel: (0641) 93243-60 - 64 Fax: (0641) 93243-30 The District Court of Friedberg opened bankruptcy proceedings against Beith - Bau GmbH on Oct. 10, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Beith - Bau GmbH Attn: Joerg-Dieter Beith, Manager Feldpreul 23 61191 Rosbach Germany BOBOTEC GMBH: Claims Registration Period Ends November 19 --------------------------------------------------------- Creditors of bobotec GmbH Bautenschutz Abdichtungs- und Sanierungstechnik have until Nov. 19, 2008, to register their claims with court-appointed insolvency manager Eberhard Stock. Creditors and other interested parties are encouraged to attend the meeting at 9:05 a.m. on Nov. 28, 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 Krefeld Meeting Room H 131 First Floor Nordwall 131 47798 Krefeld 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: Eberhard Stock Wilhelmshofallee 75 47800 Krefeld Germany Tel: (02151) 5813-0 Fax: +4921515813134 The District Court of Krefeld opened bankruptcy proceedings against bobotec GmbH Bautenschutz Abdichtungs- und Sanierungstechnik on Sept. 3, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: bobotec GmbH Bautenschutz Abdichtungs- und Sanierungstechnik Attn: Horst Boleg, Manager Zur Hainbuche 14 47804 Krefeld Germany DOLMEN VERLAG: Claims Registration Period Ends November 19 ---------------------------------------------------------- Creditors of DOLMEN Verlag fuer Verbraucherinformation GmbH have until Nov. 19, 2008, to register their claims with court-appointed insolvency manager Jean-Olivier Boghossian. Creditors and other interested parties are encouraged to attend the meeting at 2:20 p.m. on Dec. 17, 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 Saarbruecken Area Hall 24 Branch Office Sulzbach Vopeliusstrasse 2 66280 Sulzbach 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: Jean-Olivier Boghossian Kapellenstrasse 18 66271 Kleinblittersdorf Germany Tel: 06805/ 9090 Fax: 06805/ 909 100 The District Court of Saarbruecken opened bankruptcy proceedings against DOLMEN Verlag fuer Verbraucherinformation GmbH on Oct. 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: DOLMEN Verlag fuer Verbraucherinformation GmbH Attn: Wolfram Schindler, Manager Untert=FCrkheimer Strasse 39-41 66117 Saarbruecken Germany DRESDNER BANK: Incurs EUR2.4 Bil. Loss in 9-Mos Ended Sept. 2008 ---------------------------------------------------------------- The tightening of the capital market crisis impacted Dresdner Bank AG's results in the first nine months of 2008, the bank said in a November 10 press statement. According to Dresdner Bank, its operating result fell to minus EUR1.7 billion as value adjustments from trading activities amounted to EUR2.1 billion and loan impairment losses were required in the amount of EUR226 million. After adjustment for the effects of the financial market crisis, Dresdner Bank said it generated a positive operating result from its ongoing business of around EUR600 million in the first three quarters of 2008. Dresdner Bank's net fee and commission income also fell by EUR463 million to EUR1.7 billion. The bank said the effects of the financial market crisis impacted net trading income in particular. In the first three quarters of 2008, the figure decreased by EUR1.9 billion year-on-year to minus EUR1.5 billion. The main reasons for the decline were value adjustments on collateralized debt obligations (CDOs) and US residential mortgage-backed securities (US RMBSs), as well as effects in connection with monoliners, the bank said. Overall, the bank's total operating income decreased to EUR2.2 billion. Costs, Risk and Capital Total operating expenses fell in the first nine months of 2008 by 4.0 per cent, to EUR3.6 billion both relating to total staff costs and to non-staff operating costs. Loan impairment losses rose by EUR261 million to EUR337 million. For the nine months ended September 2008, the bank reported a loss of EUR2.4 billion, compared to a profit of EUR858 million in the same period last year. For the first half-year ended June 2008, the bank reported a net loss of EUR1.03 billion from net income of EUR1.05 billion a year ago. For the first quarter ended March 2008, the bank reported a net loss of EUR469 million from a net income of EUR644 million in the comparable quarter in 2007. The positive effect on the current period's result from the reclassification of assets amounted to EUR415 million. Dresdner Bank's core capital ratio as at September 30, 2008, was 8.1 per cent compared to 9.3 per cent at the end of June 2008 and 9.1 per cent at year-end 2007. Its Private & Corporate Clients (PCC) division was impacted by clients' markedly cautious approach to securities transactions due to the uncertainty on the capital markets. This led to a decrease in operating income of roughly 7 per cent, to EUR2.5 billion. Costs were slightly lower, and the operating profit fell by 27 per cent to EUR458 million. However, PCC generated a return on risk- adjusted capital (RoRAC) of 21.9 per cent. The operating income of Dresdner Bank's Investment Banking division was negative at EUR275 million, due to the high level of value adjustments in the trading book. At lower costs and an increased loan impairment loss the operating loss totaled to EUR2.2 billion. A number of the investment bank's core business areas increased their income despite the financial market crisis: Global Loans & Transaction Services, which comprises Cash Management and International Products, among other things, recorded growth of EUR33 million to EUR424 million. Fixed Income, Currencies & Commodities expanded its income by a third, to EUR844 million. About Dresdner Bank AG Through its parent, insurance giant Allianz, Dresdner Bank AG's -- http://www.dresdner-bank.com/-- products and services are sold through some 12,000 insurance agency locations. Dresdner Bank also has some 60 offices in Europe, Asia, and the US. The company's operating divisions are Private & Corporate Clients (personal, private, business, and corporate banking; private wealth management) and Investment Banking (capital markets and global banking), which includes subsidiary Dresdner Kleinwort. Fellow Germany-based bank Commerzbank is buying Dresdner Bank for some US$14.3 billion. EUROHOME MORTGAGES: Moody's Junks EUR2.7MM Class X Notes' Rating ---------------------------------------------------------------- Moody's Investors Service has taken these rating actions on notes issued by Eurohome Mortgages 2007-1 plc: -- EUR262,500,000 Class A Mortgage Backed Floating Rate Notes due 2050, Current Rating: Aaa, on review for possible downgrade; -- EUR15,000,000 Class B Mortgage Backed Floating Rate Notes due 2050, Current Rating: Aa2, on review for possible downgrade; -- EUR12,000,000 Class C Mortgage Backed Floating Rate Notes due 2050, Current Rating: A1, on review for possible downgrade; -- EUR6,300,000 Class D Mortgage Backed Floating Rate Notes due 2050, Current Rating: Baa2, on review for possible downgrade; -- EUR4,200,000 Class E Mortgage Backed Floating Rate Notes due 2050, Current Rating: Ba2, on review for possible downgrade; and -- EUR2,700,000 Class X Mortgage Backed Floating Rate Notes due 2050, downgraded to Caa2 from Ba2, on review for possible downgrade. The ratings of the German Mortgage Early Repayment Certificates due 2050 and the Italian Mortgage Early Repayment Certificates due 2050 are not under review. -- Last rating action date: No rating action since closing in July 2007. This rating action has been prompted by the worse-than-expected collateral performance. Moody's expects to conclude the rating review once Moody's has received additional information and assessed in detail the effects of the performance on the outstanding ratings. The transaction includes mortgage loans originated by Deutsche Bank in Germany and Italy and was closed in July 2007. Both sub- pools have experienced delinquencies far higher than Moody's initially expected. As of November 2008, 8.4 per cent of the loans in the German pool were terminated while in total 17.2 per cent of the German sub-pool were delinquent. At the same time 9.2 per cent of the loans in the Italian pool were delinquent by the equivalent of more than 3 monthly installments, while in total 19 per cent of the sub-pool were delinquent. The provisioning mechanism for loans in the Italian sub-pool that are in arrears by 12 monthly installments, has led to reserve fund drawings on the interest payment dates in August 2008 and November 2008. By this mechanism, the equivalent of the loan amount of loans in arrears by 12 monthly installments is credited to the principal deficiency ledger and leads to trapping of available excess spread and, in case excess spread is insufficient, to drawings of the reserve fund. As a result of such drawings, only an amount equal to about 8 per cent of the initial balance of the reserve fund is still available as of November 2008. Interest and principal on the Class X Notes is paid by available revenue funds junior in the pre-enforcement revenue priority of payments. In Moody's opinion, it is likely - due to their ranking below the PDL of Class E Notes - that interest on the Class X Notes will not be paid on future interest payment dates in case of further poor pool performance. In such a scenario, available excess spread would first be used to clear any existing credit balance of Class E PDL. The transaction's liquidity facility cannot be drawn in order to make payments on Class X Notes. In addition, principal repayments of Class X Notes rank junior to the replenishment of the reserve fund, so that, in Moody's opinion, a significant improvement in the transaction's performance would be required before principal payments to Class X Notes will be made. Moody's ratings address the expected loss posed to investors by the legal final maturity of the notes. Moody's ratings address only the credit risks associated with the transaction. Other non- credit risks have not been addressed, but may have a significant effect on yield to investors. EUROHOME MORTGAGES: Fitch Junks Ratings on Two Tranches ------------------------------------------------------- Fitch Ratings has downgraded all six tranches of Eurohome Mortgages 2007-1, a pan-European RMBS transaction containing loans originated by Deutsche Bank AG and Deutsche Bank Mutui S.p.A. Four tranches remain on Rating Watch Negative. The downgrade follows Fitch's ongoing concerns about the performance of the deal and the recent reserve fund draw, which has led to the further decline in credit enhancement levels of all the classes. The rating actions are: -- Class A downgraded to 'AA' from 'AAA'; remains on RWN -- Class B downgraded to 'A' from 'AA'; remains on RWN -- Class C downgraded to 'BBB' from 'A'; remains on RWN -- Class D downgraded to 'B' from 'BBB'; remains on RWN -- Class E downgraded to 'CC' from 'BBB'; Distressed Recovery Rating of 'DR6' assigned; RWN removed -- Class X downgraded to 'CC' from 'BB+'; Distressed Recovery Rating of 'DR6' assigned; RWN removed -- German Mortgage Early Repayment Certificates affirmed at 'AAA'; Outlook Stable -- Italian Mortgage Early Repayment Certificates affirmed at 'AAA'; Outlook Stable According to the latest investor report for November 2008, the reserve fund draw for Q308 represented 67.02% of the target amount, leaving 0.09% credit enhancement support to the class E notes. This reserve fund draw was a result of defaulted loans being provisioned for in the Italian part of the pool. In Q308 EUR2.75 million (i.e. 1.54% of the Italian pool outstanding) was reported as defaulted, bringing the cumulative balance to 2.17% of the Italian pool at close. The investor report for November 2008 reported terminated loans at 8.39% of the current German portfolio outstanding. To date, neither of the two pools has reported any loss on individual loans. As the volume of loans with three or more missed payments continues to increase in both pools (currently at 9.22% for the Italian pool and 1.16% for the German portfolio), Fitch expects to see a high proportion of these loans defaulting in the forthcoming interest payment dates. The agency also believes that these loans are likely to cause the reserve fund to fully deplete on the next interest payment date in February 2009. In addition to this, Fitch expects to see the first losses allocated to the principal deficiency ledger of the class E notes. Although the defaulted loans have been written-off the long recovery time typically seen for Italian loans means that the agency does not expect to see the transaction benefit from recovery payments in the near future. As of November 2008, the two securitized pools contain loans with high weighted average loan-to-value ratios: 72.11% for the Italian portion and 100.78% for the German portion. Recoveries on defaulted loans are therefore expected to be limited, in particular due to the lengthy foreclosure procedures in the Italian portion of the pool and the high loan-to-value ratios in the German portion of the pool. At close the issuer entered into a EUR12-million liquidity facility agreement with Deutsche Bank AG (rated 'AA-' (AA minus)/'F1'/Outlook: Stable). According to this agreement, in case liquidity shortfalls arise, and the reserve fund is fully depleted, the issuer is entitled to make draws to cover senior expenses and interest payments on classes A to E, but only to a limited amount. As soon as the PDL balances of these notes reach a certain percentage of the outstanding balance of the notes, the liquidity facility may no longer be used to cover interest payments due on these notes and interest is deferred to a later date. Given the speed at which defaulted loans have been realized in this transaction, Fitch believes that these amounts may be reached in the course of 2009. The transaction remains on Rating Watch Negative due to the deteriorating performance of the two pools. Fitch expects to resolve the RWN following a further analysis of the transaction. Further rating actions will be taken as deemed necessary. GAWA GEBAUDETECHNIK: Claims Registration Period Ends Nov. 19 ------------------------------------------------------------ Creditors of Gawa Gebaudetechnik GmbH have until Nov. 19, 2008, to register their claims with court-appointed insolvency manager Rolf Otto Neukirchen. Creditors and other interested parties are encouraged to attend the meeting at 1:00 p.m. on Dec. 3, 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 Essen Meeting Hall 293 Second Floor Zweigertstr. 52 45130 Essen 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: Rolf Otto Neukirchen Zweigertstr. 28-30 45130 Essen Germany The District Court of Essen opened bankruptcy proceedings against Gawa Gebaudetechnik GmbH on Oct. 1, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Gawa Gebaudetechnik GmbH Reuenberg 50 45357 Essen Germany Attn: Juergen Rohr, Manager Blittersdorfweg 37 45307 Essen Germany HEIDELBERGCEMENT AG: Credit Default Swaps Hit Record High --------------------------------------------------------- Citing traders of credit-default swaps, Abigail Moses at Bloomberg News reports that the cost of protecting bonds sold by HeidelbergCement AG rose to a record on Friday, November 7. Bloomberg relates that according to CMA Datavision prices, credit- default swaps linked to HeidelbergCement rose 140 basis points to 1,300 at 9:30 a.m. in London Friday last week. A basis point on a credit-default swap contract protecting EUR10 million (US$12.8 million) of debt from default for five years is equivalent to EUR1,000 a year, Bloomberg notes. About HeidelbergCement Based in Heidelberg, Germany, HeidelbergCement AG -- http://www.heidelbergcement.com/-- is a global producer of cement, concrete and building materials. The company's core activities include the production and distribution of cement and aggregates, the two raw materials for concrete. It is also engaged in in the provision of such products as ready-mixed concrete, as well as concrete products and elements. In 2007, the company took over Hanson Group. * * * As reported in the Troubled Company Reporter-Europe on Oct. 28, 2008, Standard & Poor's Ratings Services lowered its long- and short-term corporate credit ratings to 'BB+/B' from 'BBB-/A-3' on Germany-based cement producer HeidelbergCement AG (HC). At the same time, S&P placed all the ratings on CreditWatch with negative implications. On Oct. 27, 2008, the TCR-Europe reported that Moody's Investors Service downgraded HeidelbergCement's (HC) long-term ratings to Ba1 and the short term rating from P-3 to NP. The outlook for the ratings is negative. In accordance with its established practices, Moody's concurrently assigned a Ba1 Corporate Family Rating to HC and expects to withdraw the long- term issuer rating shortly. The ratings of HC's EMTN program and outstanding and guaranteed bonds are lowered to Ba1. PFRIEM BETEILIGUNGS: Claims Registration Period Ends Nov. 18 ------------------------------------------------------------ Creditors of Pfriem Beteiligungs- und Verwaltungs GmbH have until Nov. 18, 2008, to register their claims with court-appointed insolvency manager Frank Hanselmann. Creditors and other interested parties are encouraged to attend the meeting at 10:10 a.m. on Nov. 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 Schweinfurt Meeting Hall 22 Eingang Friedenstr. 2 Schweinfurt 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: Frank Hanselmann Heinestrasse 7 b 97070 Wuerzburg Germany Tel: 0931/359800 Fax: 0931/3598050 The District Court of Schweinfurt opened bankruptcy proceedings against Pfriem Beteiligungs- und Verwaltungs GmbH on Oct. 13, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Pfriem Beteiligungs- und Verwaltungs GmbH Carl-Benz-Str. 13 97424 Schweinfurt Germany SCHMITZHAUS GMBH: Claims Registration Period Ends November 18 ------------------------------------------------------------- Creditors of Schmitzhaus GmbH have until Nov. 18, 2008, to register their claims with court-appointed insolvency manager Manfred Vellmer. Creditors and other interested parties are encouraged to attend the meeting at 9:15 a.m. on Dec. 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 Muenster Meeting Hall 119 B Gerichtsstr. 2-6 48149 Muenster 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: Manfred Vellmer Adalbertstr. 8 48565 Steinfurt Germany Tel: 02552/638710 Fax: +4925526387111 The District Court of Muenster opened bankruptcy proceedings against Schmitzhaus GmbH on Sept. 23, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Schmitzhaus GmbH Kleine Schweiz 28 a 48282 Emsdetten Germany Attn: Martin Theodor Schmitz, Manger Wegener Strasse 3 48282 Emsdetten Germany =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D I R E L A N D =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D CRH PLC: Expects Full Year Percentage Decline in Profit ------------------------------------------------------- CRH plc yesterday issued an interim management statement in accordance with the reporting requirements of the EU Transparency Directive. With the announcement on August 26, 2008 of CRH's first half results, the company indicated its expectation that the percentage decline in full year profit before tax would be broadly similar to the 10% decline reported for the first half. Since then, financial markets have been impacted by an unprecedented series of events which have contributed to an increasingly cautious business climate across the world. The company said this change in sentiment has been most marked in Europe, which had previously been only moderately affected by the fall-out from the sub-prime crisis in the United States, resulting in weaker than anticipated September/October trading in a number of European markets. In contrast overall trading in the company's American activities has, despite the increased financial market turmoil, evolved broadly along the lines anticipated in its August outlook, while the US$ has strengthened significantly. Against this backdrop the company now expects to report a full year percentage decline in profit before tax in the low to mid- teens. It expects a lesser reduction in earnings per share as a result of share buyback and the lower expected full year percentage tax charge which was noted in its August announcement. Europe Materials Construction growth in Poland and Ukraine, which more than compensated for declines in the Irish and Spanish markets in the first half of the year, has slowed over recent months due to a combination of economic and political factors, although profitability in the third quarter exceeded 2007. This, together with generally weaker trading patterns in other markets, is expected to result in only modest profit progress for the second half with full year operating profit now anticipated to show a high single digit percentage increase on the 2007 outturn of EUR586 million. Europe Products The slower trading patterns evident across the company's Europe Products operations in the latter part of the second quarter have intensified in recent months with negative economic newsflow. In addition, increasing stress in the UK housing market has necessitated further capacity cuts and cost restructuring in the company's UK clay business beyond what it previously anticipated. Against this backdrop, operating profit is now expected to be approximately 25% behind the 2007 outcome of EUR308 million. Europe Distribution Profitability in the company's DIY operations in the Benelux which had been adversely impacted by weakening consumer confidence in the first half of the year has proved more robust over recent months as a result of strong management action. However, trading across its merchanting operations which had a generally good first half has weakened with the economic climate. Full year operating profit is now projected to show a mid to high single digit percentage decline on the 2007 outcome of EUR212 million. Europe Overall Overall for Europe, with a slowing dynamic in central and eastern countries and lower 2008 growth expectations for most western European economies, the company now expects that operating profit will show a low-single-digit percentage decline compared with last year's EUR1.106 billion. Americas Materials Although the division experienced somewhat unsettled weather conditions in the very important September/October trading period, it continues to deliver a robust performance in offsetting the impact of higher input costs through targeted cost reduction measures and strong price increases, particularly for asphalt. As in the first half, these price increases are contributing to like- for-like volume declines against the backdrop of modestly higher highway budgets, and the company expects that the full year outturn is likely to show a mid-teen percentage decline on the 2007 operating profit outcome of US$781 million. Americas Products The negative economic environment of recent months is feeding through to some sectors of non-residential demand and impacting the company's APG and Precast operations to a somewhat greater extent than previously anticipated. While the company's Glass, MMI and South American operations have continued to perform well, it now expects a full year operating profit decline of the order of 20% on the 2007 outcome of US$466 million. Americas Distribution Trading performance in this business continues to exceed expectations with effective management of pricing, sales and overhead delivering strongly. Against this backdrop, and with contributions from AMS, which was acquired in November 2007, the company anticipates that full year operating profit will show an increase of approximately 30% compared with the US$96 million reported for 2007. Americas Overall Overall for the Americas the company expects a mid-teen percentage decline in full year US$ operating profit compared with last year's US$1.343 billion. However, with a more favorable projected full-year 2008 US$/euro exchange rate of 1.47*, previously 1.51 (2007: 1.3705), the company continues to expect a full year operating profit decline in euro terms of approximately 20% (2007: EUR0.980 billion). Disposals/Associates The company continues to expect that full year profit on disposals of fixed assets will be at least similar to last year (EUR57 million). Its share of associates' profit after tax is also expected to be in line with 2007 (EUR64 million). Development On the development front a total of approximately EUR1 billion has been invested to date in acquisitions and investments. The completion of the EUR0.2 billion Yatai investment in China, announced in January, and the EUR0.4 billion Pavestone acquisition in the United States, announced in March, continues to be dependent on various regulatory approvals. With a challenging trading backdrop for many of the company's businesses, management's emphasis is firmly concentrated on operational delivery and as a result development activity continues to be limited to acquisition opportunities that offer compelling value and exceptional strategic fit. This emphasis is also reflected in capital expenditure which has and is being adjusted across the Group to reflect the reduced demand environment. Despite significant additional expenditure on completion of the new cement plants in Ireland and the United States, the company expects that 2008 capital expenditure will be held at the 2007 level of EUR1 billion. While it continues to support the essential needs of its businesses, 2009 capital expenditure at approximately EUR750 million based on current exchange rates is expected to be lower than depreciation. * Based on year to date US$/euro average of 1.50 and a projected rate of 1.28 for the remainder of 2008. The guidance provided in the company's Interim Statement of August 26 incorporated a projected 2008 rate of 1.51. Finance Net finance cost for 2008 based on current projected average exchange rates is expected to show a low to mid-teen percentage increase on 2007's EUR303 million. EBITDA/net interest cover for the year is expected to remain strong at approximately 7.5 times. To date in 2008 CRH has raised a total of EUR0.8 billion of long- term funding in international bond markets and has arranged EUR0.7 billion of bank funding, primarily through the establishment of new facilities. The Group is close to completing the renewal and extension of EUR1.5 billion of bank facilities with maturities in 2009. This renewal combined with the Group's traditional strong cash flow profile, enhanced by an intensified focus on cash generation, will leave CRH well positioned in terms of its debt facilities and maturity profile. Share Buyback In light of the stresses in financial markets, to maintain maximum financial flexibility the share repurchase program announced on January 3, 2008, which was limited to a maximum of 5% of the 547 million Ordinary shares in issue at December 2007, has been terminated. A total of 18.2 million shares were repurchased, equivalent to 3.3% of Ordinary Shares in issue at year end 2007, at an average price of EUR22.30 per share. Summary Since early 2007 the company said it has progressively implemented significant cost reduction measures across its businesses and this intense emphasis on operational efficiency and commercial delivery is continuing with further extensive measures being implemented. While the outlook for 2009 is challenging given the growing impact of ongoing turmoil in financial markets on the broader world economy, there are some positives with declining energy costs, world-wide interest rate reductions, a potential US infrastructure stimulus package and translation benefits of a stronger US$. Against this background, CRH's geographic, sectoral and product balance continues to underpin performance and cash flow. The company disclosed its attention and actions are resolutely focused on ensuring that its businesses are strongly positioned to cope with whatever circumstances may evolve and on further strengthening its existing financial flexibility. CRH will issue its full year 2008 trading update statement on Tuesday, January 6, 2009. Headquartered in Dublin, Ireland, CRH plc -- http://www.crh.ie/-- has operations in 34 countries, employing approximately 92,000 people at over 3,500 locations. Its operations focus on three closely related core businesses: Primary materials, Value-added building products, Specialist building materials distribution. CRH is listed on the Irish and London Stock Exchanges and through its ADRs on the New York Stock Exchange. DECO 7: S&P Downgrades Rating on Class H Notes to 'B+' ------------------------------------------------------ Standard & Poor's Ratings Services lowered to 'B+' from 'BB' and kept on CreditWatch negative its rating on the class H notes issued by Deco 7 =96 Pan Europe 2 PLC. S&P's ratings on the other classes of notes remain unaffected. On Aug. 8, S&P put the rating on class H notes on CreditWatch negative because of the acceleration of the Karstadt Kompakt loan on Aug. 1 and the insolvency of the main tenant, Hertie GmbH & Co KG. The Karstadt Kompakt loan is the largest remaining loan in the transaction, representing 34.8% of the total outstanding loan balance. Although the July payment default was subsequently cured in September, S&P understands that rent was not paid by the tenant for the past five months. However, sufficient funds were available to meet debt obligations in full on the October interest payment date, Oct. 20. In case of further lack of rental income, S&P expect liquidity to be available to meet timely note payments. S&P understands that the servicer is in the process of implementing an accelerated out-of-court asset sale program for the collateral (61 assets in total), with a view to repaying the Karstadt Kompakt loan by the end of August 2009. For S&P's current ratings S&P has considered the implications of the recent nonpayment, as well as the planned asset sale program. For example, S&P has examined a range of scenarios including stressed vacant possession value assumptions and the likelihood of the remaining assets being sold individually at market value. Having recently visited a number of the properties, S&P considers that a number of assets in the portfolio are located in favorable microlocations that could benefit from a restructuring and from letting to multiple retailers. However, S&P is concerned that any asset sale program in the current environment will be challenging given the difficult lending market and the low demand from third-party investors for retail assets in general and department stores in Germany in particular. In addition, the potential sale prices for retail assets that have an insolvent in-place principal tenant could be affected. In conclusion, because of a number of complex factors=97a loan structure that involves various jurisdictions, the insolvency of the parent company Dawnay Day Group and the principal tenant, and the challenges of a multi-jurisdictional and multi-layered workout process=97we have concluded that the probability of losses occurring on this loan has increased. S&P considers that the risks for this loan are no longer commensurate with the rating on the class H notes, and therefore S&P has lowered the rating. S&P will continue to closely monitor the workout process of this loan. HALYARD CDO: Asset Liquidation Spurs S&P to Cut Ratings to 'D' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'D' from 'CC' and then withdrew its ratings on the class A to E notes issued by Halyard CDO I PLC. The ratings defaults are in direct response to the liquidation of the underlying assets in the deal, which has led to all available proceeds being distributed to noteholders. The available funds were insufficient to redeem the class A to E notes in this transaction at par plus accrued interest. Ratings List Halyard CDO I PLC US$217.5 Million Senior Secured Floating-Rate Notes Ratings Lowered Rating ------ Class To From ----- -- ---- A D CC NR D B D CC NR D C D CC NR D D D CC NR D E D CC NR D NR =97 Not rated. PALMER SQUARE: Credit Deterioration Cues Moody's to Slash Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded its ratings of five classes of notes issued by Palmer Square plc and left two classes on review for further possible downgrade. Moody's have also assigned a rating of A3 on the Class A1-A Exchange Offer notes, and left this on review for downgrade as well. These rating actions are a response to credit deterioration in the underlying portfolio. The transaction is a cashflow CDO referencing, among other assets, Moody's subprime RMBS and ABS CDO. Currently 4.4% of portfolio by volume is rated Caa1 or below. Moody's said on Sept. 18, 2008 that it is revising its expected loss assumptions which are used for the surveillance of ratings of ABS CDOs holding subprime RMBS, specifically of the second half 2005 -- first half 2007 vintages. Moody's stated that for purposes of monitoring its ratings of ABS CDOs with exposure to second half 2005 -- first half 2007 subprime RMBS, it will rely on certain projections of the lifetime average cumulative losses for vintages of RMBS set forth in a recent Moody's report. Moody's explained that it will utilize the range of loss projections set forth in the report based on deal performance and quarterly vintage to modify its prior assumptions of the expected loss inputs when monitoring ABS CDO ratings. These rating actions are: Rating assignment Palmer Square plc: (1) US$878,150,000 Class A1-A Exchange Offer Floating Rate Notes due 2045 (currently US$869,323,193.43 outstanding due to amortization) -- Current Rating: A3, on review for downgrade Ratings downgrades Palmer Square plc: (1) US$667,500,000 Class A1-A Floating Rate Notes due 2045 (currently US$231,994,409.13 outstanding due to issuance of the Class A1-A Exchange Offer notes and amortization) -- Current Rating: A3, on review for downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: April 4, 2005 (2) US$45,000,000 Class A2-A Step-Up Floating Rate Notes due 2045 (currently US$75,000,000 outstanding due to further issuance) -- Current Rating: Caa3, on review for downgrade -- Prior Rating: Aaa, on review for downgrade -- Prior Rating Action Date: May 13, 2008 (3) US$6,750,000 Class B-1 Deferrable Floating Rate Notes due 2045 (currently US$11,250,000 outstanding due to further issuance) -- Current Rating: Ca -- Prior Rating: Baa1, on review for downgrade -- Prior Rating Action Date: May 13, 2008 (4) US$15,000,000 Class C-1 Deferrable Floating Rate Notes due 2045 (currently US$25,372,610 outstanding due to further issuance and deferred interest) -- Current Rating: C -- Prior Rating: Ba2, on review for downgrade -- Prior Rating Action Date: May 13, 2008 (5) US$7,500,000 Class D-1 Deferrable Floating Rate Notes due 2045 (currently US$12,741,600 outstanding due to further issuance and deferred interest) -- Current Rating: C -- Prior Rating: Caa1, on review for downgrade -- Prior Rating Action Date: May 13, 2008 WATERFORD WEDGEWOOD: Moody's Junks Senior Subordinated Rating ------------------------------------------------------------- Moody's Investors Service affirmed Waterford Wedgewood plc Corporate Family Rating of Caa1 and has downgraded the Probability of Default Rating to Caa2 from Caa1 and the senior subordinated rating on the EUR166 million notes due in 2010 to Caa3 from Caa2. The outlook on the rating is negative. "Moody's acknowledges the strong commitment towards the company by main shareholders via continuous capital injections and the ongoing restructuring efforts aimed at reducing the high costs burden and at sustaining the current debt structure. Nevertheless, the lowering of the PDR reflects the heightened execution risks associated with the restructuring program due to the current softness in consumer spending and the expectation that operating performances are likely to remain subdued increasing the probability of default in light of the approaching significant debt maturities in 2010", said Paolo Leschiutta, Vice President at Moody's and lead analyst for Wedgwood. "In addition, in Moody's view the implementation of the restructuring program depends upon events outside of the company's control, including the additional shares placing, planned by year end, and the potential disposal of Rosenthal, which successful conclusion are currently challenged by the difficult economic environment," continued Mr. Leschiutta. The affirmation of the CFR reflects Moody's expectation that potential recovery rate at family level in case of default might be above the standard 50%, in recognition also of the fact that brands value is not entirely reflected on the company's balance sheet. In this context Moody's notes that revenues have remained relatively resilient in recent years, indicating modest erosion in brand perception, while operating performances have been under significant pressure due to the unsustainable cost structure. Despite the continued support from shareholders, that recently materialized with an additional funds injection of EUR79.6 million completed in October 2008, the liquidity profile of the group remains inadequate, with limited availability under the revolving facility. Although Moody's recognizes that working capital cycle should be more favorable to the company in the coming months as the company starts to receive cash towards the end of the calendar year, Moody's remains concerned about the high cash burning rate of the company as fixed costs and interest burden continue to erode restored liquidity. The company has no short-term debt obligations, however debt maturities concentrated in 2010 will heighten refinancing risk in eighteen months' time. The negative outlook reflects Moody's view that the company will continue to face challenges in achieving the full benefits of the restructuring program and in strengthening profitability, which is required to reduce leverage from its current elevated levels. A stabilization of the company's rating outlook could be triggered by a return to profitability, resulting in positive cash flow from operations following a successful implementation of the restructuring program and a recovery in the ceramics markets. The CFR rating could be downgraded in the event of a significant delay in the restructuring program or if the liquidity profile deteriorates. The ratings could also be downgraded in the case of a deterioration in Moody's perception of potential recovery rate. Ratings affirmed: -- Waterford Wedgwood plc Corporate Family Rating of Caa1 Ratings downgraded: -- Waterford Wedgwood plc Probability of Default Rating lowered to Caa2 from Caa1; -- Senior subordinated rating on the EUR166 million notes due in 2010 to Caa3 (LGD4, 61%) from Caa2. The outlook is negative. Based in Waterford, Ireland, Waterford Wedgwood Plc is a global manufacturer and distributor of luxury crystal and chinaware products through the well-known brands of Waterford for its crystal division and Wedgwood, Royal Doulton and Rosenthal for its ceramics division. At FYE March 2008, the company had four production facilities around the world. One is based in Ireland, for crystal manufacturing. The other three are ceramics facilities, located in the UK (high automation products), Germany (Rosenthal collections) and Indonesia (labour intensive products). =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D K A Z A K H S T A N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D TRISTAN OIL: Fitch Affirms IDR and Senior Unsecured Rating at B+ ---------------------------------------------------------------- Fitch Ratings has affirmed Tristan Oil Ltd.'s Long-term foreign currency Issuer Default Rating and senior unsecured rating at 'B+' and its Recovery rating at 'RR4'. The Outlook for the Long-term rating remains Negative. The Negative Outlook reflects Fitch's concern that Tristan's intensive capex requirements coupled with its exposure to volatile oil and gas prices could put pressure on the company's credit metrics especially if it pursues a more aggressive financial policy. The improved leverage (net leverage of 1x in H108 versus 2.2x in 2007) makes the group more comfortably positioned among its Russian and international oil and gas peers with median net leverage of 0.6x. However, the de-leveraging that occurred in H108 was driven by production expansion and favorable oil and gas industry fundamentals. As oil and gas output is expected to remain relatively flat in 2009-2012, maintaining achieved leverage ratios and their improvement in the future is a function of EBITDA generation which in turn depends on oil and gas prices. Therefore, if the company chooses to implement a more aggressive financial policy it will adversely impact the group's credit metrics in light of weakening oil prices. The ratings reflect Tristan's position as one of the most profitable (FY07 EBITDAR margin of 71.6%) companies among its oil and gas peers. Nevertheless, Fitch notes that Tristan compares unfavorably with its counterparts based on coverage ratios. The ratings factor in Tristan's ability to achieve production targets as planned. Due to the completion of a second gas processing plant, the company's oil and gas production rose to 54,900 barrels of oil equivalent per day in H108 from 31,500 boepd in 2007. However, the ratings also take into account Tristan's limited scale of operations, relatively low reserves-to-production ratio, and lack of business diversification which makes the company vulnerable to oil price movements. In light of this, any cost overruns or severe delays in implementing its capex program might jeopardize its cash flow and overall credit metrics. In 2006, Tristan issued senior secured notes due in 2012 and provided a loan to two operating companies involved in oil and gas exploration and production in western Kazakhstan, Kazpolmunay LLP and Tolkynneftegaz LLP. All three entities, Tristan, KPM, and TNG, are 100%-owned (directly or indirectly) by Anatolie Stati, a Moldovan entrepreneur. Although Tristan categorises its notes as senior secured due to the pledge of 100% of the capital stock of Tristan, KPM and TNG, Fitch takes a conservative position regarding the reliability of this collateral in a distressed scenario and has therefore assigned them a senior unsecured rating. * Fitch Cuts Long-Term Foreign Currency Ratings on Four Companies ----------------------------------------------------------------- Fitch Ratings has downgraded the Long-term foreign currency ratings of three Kazakh energy companies and a railway group. The agency has simultaneously revised the foreign currency rating Outlooks on three separate energy groups and affirmed their ratings. All the rating actions follow a sovereign downgrade of Kazakhstan's Long-term foreign currency Issuer Default Rating to 'BBB-' (BBB minus) from 'BBB'. Kazakhstan's Long-term local currency IDR has meanwhile been downgraded to 'BBB' from 'BBB+'. The sovereign downgrade reflects concern that a weakening bank sector and the government's intention to draw-down an oil fund, to support the banking system and potentially the real economy, will jeopardize public finances. The Outlooks on Kazakhstan's Long-term IDRs remain Negative. Kazakh companies whose foreign currency ratings have been downgraded are: * Kazakhstan Temir Zholy -- Long-term foreign currency (FC) IDR: downgraded to 'BBB-' (BBB minus) from 'BBB'; Outlook remains Negative -- Senior unsecured rating: downgraded to 'BBB-' (BBB minus) from 'BBB' KTZ's ratings are aligned with the sovereign's, given the 100% state-owned railway company's strategic importance to Kazakhstan due to the country's vast terrain, land-locked position and underdeveloped road infrastructure. * KazMunaiGaz National Company -- LT FC IDR: downgraded to 'BBB-' (BBB minus) from 'BBB'; Outlook remains Negative -- LT local currency (LC) IDR: affirmed at 'BBB'; Outlook remains Negative -- Short-term (ST) FC IDR: affirmed at 'F3' -- Senior unsecured rating: downgraded to 'BBB-' (BBB minus) from 'BBB' NC KMG's ratings are aligned with the sovereign's given that it was established as a wholly state-owned enterprise to represent the interests of the government in Kazakhstan's oil and gas industry. * Kazakhstan Electricity Grid Operating Company -- LT FC IDR: downgraded to 'BBB-' (BBB minus) from 'BBB'; Outlook remains Negative -- LT LC IDR: downgraded to 'BBB' from 'BBB+'; Outlook remains Negative -- ST FC IDR: affirmed at 'F3' KEGOC's ratings are aligned with the sovereign's given its 100% state ownership and strong state support resulting from the strategic nature of Kazakhstan's national transmission grid. * Mangistau Electricity Distribution Network Company -- LT FC IDR: downgraded to 'BB' from 'BB+'; Outlook revised to Negative from Stable. -- FC senior unsecured rating: downgraded to 'BB' from 'BB+' -- ST FC IDR: affirmed at 'B' -- LC senior unsecured rating: affirmed at 'BB+' -- National LT rating: upgraded to 'AA-(minus)(kaz)' from 'A+(kaz)', due to a recalibration of Fitch's National Kazakh scale; Outlook remains Stable MEDNC's ratings are linked to the sovereign's, but notched down to reflect that little indication has been given by MEDNC's ultimate parent, Samruk, that it will provide timely financial assistance in case of financial distress. The company has a near-monopoly position in electricity transmission and distribution in Mangistau, one of Kazakhstan's strategic oil and gas regions. Kazakh companies whose foreign currency rating Outlooks have been revised and ratings affirmed are: * JSC KazMunaiGas Exploration Production -- LT FC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Negative from Stable. This rating Outlook is constrained by Kazakhstan's sovereign rating Outlook. -- LT LC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Negative from Stable. -- ST FC IDR: affirmed at 'F3' * JSC KazTransOil (KTO) -- LT FC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Negative from Stable. This rating Outlook is constrained by Kazakhstan's sovereign rating Outlook. -- ST FC IDR: affirmed at 'F3' Fitch rates NC KMG's subsidiaries (including KMG EP and KTO) on a standalone basis, albeit with implicit state support via NC KMG being incorporated into the ratings, as well as their inter- dependencies. Fitch believes that the current strong financial profile of KMG EP and KTO will provide a cushion against the cyclical downturn in the global oil and gas markets and economic slowdown. The ratings of other NC KMG's subsidiaries -- KazTransGas and JSC Intergas Central Asia -- are unaffected. They are: * KazTransGas: -- LT FC IDR: 'BB'; Outlook Stable -- ST FC IDR: 'B' -- LT LC IDR: 'BB'; Outlook Stable * JSC Intergas Central Asia: -- LT FC IDR: 'BB+'; Outlook Stable -- ST FC IDR: 'B' -- LT LC IDR: 'BB+'; Outlook Stable -- Senior unsecured rating: 'BB+' * JSC National Atomic Company Kazatomprom -- LT FC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Negative from Stable. This rating Outlook is constrained by Kazakhstan's sovereign rating Outlook. -- ST FC IDR: affirmed at 'F3' Kazatomprom is Kazakhstan's national uranium operator. In Fitch's view, the company is well placed to withstand an economic slowdown given its solid financial profile which is underpinned by its position as one of the world's leading uranium producers. A resurgence of global nuclear activity should also help insulate Kazatomprom. * Fitch Downgrades LT Foreign Currency IDRs of Seven Kazakh Banks ----------------------------------------------------------------- Fitch Ratings downgraded by one notch the Long-term foreign currency Issuer Default Ratings of seven Kazakh financial institutions, namely BTA Bank, Kazkommertsbank, Halyk Bank, ATF Bank, Development Bank of Kazakhstan, Astana Finance and KazAgroFinance. The Outlook on these ratings remains Negative. This follows the downgrade of the sovereign ratings. At the same time, the agency has affirmed the ratings of three other Kazakh banks: Alliance Bank, Bank Centercredit and Temirbank. The Outlook on Alliance remains Negative and that on BCC remains Evolving. The Outlook on Temir is revised to Negative from Evolving. Fitch has also downgraded by one notch the Long-term IDRs of Moskommertsbank (the Russian subsidiary of KKB) and BTA Bank (Russia) (an affiliate of BTA), with their Outlooks remaining Negative. The ratings of two other BTA affiliates - Bank BTA- Kazan and BTA Bank (Georgia) - are affirmed, removed from Rating Watch and assigned Negative Outlooks. Finally, Fitch has downgraded by one notch the Individual ratings of BTA and KKB and states that there is now also downward pressure on Halyk's Individual rating. Banks' Individual ratings reflect their stand-alone financial strength without taking account of potential external support. The downgrades of the IDRs of six entities (BTA, KKB, Halyk, DBK, AF and KAF) reflect the reduced ability of the Kazakh authorities to provide support to these entities, following the sovereign downgrade. The Kazakh authorities' recently announced plans to inject capital into BTA, KKB, Halyk and Alliance confirm Fitch's long-held view of the very high propensity of the authorities to support banks which they judge to be systemically important. However, a two-notch differential between the ratings of the sovereign and BTA/KKB/Halyk has been retained in light of the large size of these banks, and in particular their foreign currency liabilities, relative to the size of the resources and foreign currency reserves of the sovereign, and other contingent claims on these resources. The affirmation of Alliance's ratings, and therefore the narrowing of the notching between Alliance and the sovereign, reflects the bank's inclusion in the authorities' capitalization plans and confirmation thereby of its treatment as a systematically important bank. However, Alliance's IDR remains one notch below those of BTA, KKB and Halyk in light of its considerably smaller and declining market shares, which could potentially make it somewhat less likely than the big three banks to receive support in the future. The downgrade of ATF reflects increased Kazakh transfer and convertibility risks, as captured in the downgrade of the Country Ceiling, which could limit ATF's ability to receive and utilize support from its parent, Italy's Unicredit S.p.A. ('A+'/Negative). The Negative Outlooks on ATF, BTA, KKB, Halyk, DBK, AF, KAF and Alliance reflect those on the sovereign. BCC's ratings, like those of Alliance, have been affirmed in light of the authorities' treatment of mid-sized banks as systemically important in its capitalisation plans. BCC's ratings do not yet receive any uplift as a result of potential support from Kookmin Bank ('A+'/Negative) in light of the minority shareholding of the latter and potential concerns about the ability of Korean banks to provide support for foreign affiliates. The Evolving Outlook on BCC's Long-term IDR reflects the potential for the rating to go down if the Kazakh sovereign is downgraded further and the potential for it to go up as Kookmin moves towards consolidating a majority stake in BCC. Rating actions: BTA Bank -- Long-term foreign currency IDR: downgraded to 'BB' from 'BB+'; Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BB' from 'BBB-' (BBB minus); Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- Short-term local currency IDR: downgraded to 'B' from 'F3' -- Support rating: affirmed at '3' -- Individual rating: downgraded to 'D' from 'C/D' -- Support Rating Floor: revised to 'BB' from 'BB+' -- Senior unsecured debt: downgraded to 'BB' from 'BB+' -- Tier 1 perpetual preferred securities: downgraded to 'B-' (B minus) from 'B+' Kazkommertsbank -- Long-term foreign currency IDR: downgraded to 'BB' from 'BB+'; Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BB' from 'BBB-' (BBB minus); Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- Short-term local currency IDR: downgraded to 'B' from 'F3' -- Support rating: affirmed at '3' -- Individual rating: downgraded to 'D' from 'C/D' -- Support Rating Floor: revised to 'BB' from 'BB+' -- Senior unsecured debt: downgraded to 'BB' from 'BB+' -- Subordinated debt: downgraded to 'BB-' (BB minus) from 'BB' -- Tier 1 perpetual subordinated notes: downgraded to 'B-' (B minus) from 'B+' Halyk Bank of Kazakhstan -- Long-term foreign currency IDR: downgraded to 'BB' from 'BB+'; Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BB' from 'BBB-' (BBB minus); Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- Short-term local currency IDR: downgraded to 'B' from 'F3' -- Support rating: affirmed at '3' -- Individual rating: affirmed at 'C/D' -- Support Rating Floor: revised to 'BB' from 'BB+' -- Senior unsecured debt: downgraded to 'BB' from 'BB+' Alliance Bank -- Long-term foreign currency IDR: affirmed at 'BB-' (BB minus); Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- Support rating: affirmed at '3' -- Individual rating: affirmed at 'D/E' -- Support Rating Floor: affirmed at 'BB-' (BB minus) -- Senior unsecured debt: affirmed at 'BB-' (BB minus) -- RUB-denominated senior unsecured debt: affirmed at 'A+(rus)' ATF Bank -- Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook remains Negative -- Short-term foreign currency IDR: downgraded to 'F3' from 'F2' -- Support rating: affirmed at '2' -- Individual rating: affirmed at 'D' -- Senior unsecured debt: downgraded to 'BBB' from 'BBB+' Bank Centercredit -- Long-term foreign currency IDR: affirmed at 'BB-' (BB minus); Outlook remains Evolving -- Short-term foreign currency IDR: affirmed at 'B' -- Support rating: affirmed at '3', -- Individual rating: affirmed at 'D' -- Support Rating Floor: affirmed at 'BB-' (BB minus) -- Senior unsecured debt: affirmed at 'BB-' (BB minus) Development Bank of Kazakhstan -- Long-term foreign currency IDR: downgraded to 'BBB-' (BBB minus) from 'BBB'; Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'F3' -- Short-term local currency IDR: downgraded to 'F3' from 'F2' -- Support rating: affirmed at '2', -- Support Rating Floor: downgraded to 'BBB-' (BBB minus) from 'BBB' -- Senior unsecured debt: downgraded to 'BBB-' (BBB minus) from 'BBB' Astana Finance -- Long-term foreign currency IDR: downgraded to 'BB' from 'BB+'; Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BB' from 'BB+'; Outlook changed to Negative from Stable -- Short-term foreign currency IDR: affirmed at 'B' -- National Long-term rating: affirmed at 'A+(kaz)'; Outlook remains Stable -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '3' -- Support Rating Floor: downgraded to 'BB' from 'BB+' -- Senior unsecured debt: downgraded to 'BB' from 'BB+' KazAgroFinance -- Long-term foreign currency IDR: downgraded to 'BB+' from 'BBB-' (BBB minus); Outlook remains Negative -- Long-term local currency IDR: downgraded to 'BBB-' (BBB minus) from 'BBB'; Outlook remains Negative -- Short-term foreign currency IDR: downgraded to 'B' from 'F3' -- National Long-term rating: affirmed at 'AA(kaz)'; Outlook remains Stable -- Support rating: downgraded to '3' from '2' -- Support Rating Floor: downgraded to 'BB+' from 'BBB-' (BBB minus) Temirbank -- Long-term foreign currency IDR: affirmed at 'BB-' (BB minus); Outlook changed to Negative from Evolving -- Short-term foreign currency IDR: affirmed at 'B' -- Support rating: affirmed at '3' -- Support Rating Floor: assigned at 'BB-' (BB minus) -- Individual rating: affirmed at: 'D/E' -- Senior unsecured debt: affirmed at 'BB-' (BB minus) Moskommertsbank -- Long-term foreign currency IDR: downgraded to 'B' from 'B+'; Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- National Long-term rating: downgraded to 'BBB-(minus)(rus)' from 'A- (minus)(rus)'; Outlook remains Negative -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '4' BTA Bank (Russia) -- Long-term foreign currency IDR: downgraded to 'B' from 'B+'; Outlook remains Negative -- Short-term foreign currency IDR: affirmed at 'B' -- National Long-term rating: downgraded to 'BBB-(minus)(rus)' from 'A-(minus)(rus)'; Outlook remains Negative -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '4' -- Senior unsecured debt: downgraded to 'B' from 'B+' Bank BTA-Kazan -- Long-term foreign currency IDR: affirmed at 'B'; Positive Watch removed, Negative Outlook assigned -- Short-term foreign currency IDR: affirmed at 'B' -- National Long-term rating: downgraded to 'BBB-(minus)(rus)' from 'BBB+(rus)'; Positive Watch removed, Negative Outlook assigned -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '4' BTA Bank (Georgia) -- Long-term foreign currency IDR: affirmed at 'B'; Evolving Watch removed, Negative Outlook assigned -- Short-term foreign currency IDR: affirmed at 'B' -- Individual rating: affirmed at 'D/E' -- Support rating: affirmed at '4' =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D K Y R G Y Z S T A N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D INFO-LINE LLC: Creditors Must File Claims by November 28 -------------------------------------------------------- LLC Info-Line has declared insolvency. Creditors have until Nov. 28, 2008, to submit written proofs of claims. Inquiries can be addressed to (0-550) 43-70-27. MEDIA PRO: Creditors Must File Claims by November 28 ---------------------------------------------------- LLC Media Pro has declared insolvency. Creditors have until Nov. 28, 2008, to submit written proofs of claims to: LLC Media Pro Kurmanjan datka Str. 232 Bishkek Kyrgyzstan Tel: (+996 312) 51-37-80 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D L A T V I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D PAREX BANK: Latvian Government Takes 51% Stake in Bank ------------------------------------------------------ Latvia's Parex Bank has sold 51% of its shares to the Baltic nation's government, with existing shareholders having the rights to buy out the stakes. Parex confirmed in a press statement that within the frameworks of the stabilization package, it received the state guarantees for its liabilities enabling the bank to preserve the liquidity at a sustainable level, and obviating possible doubts on its capabilities of raising funds in the international debt markets. "We fully recognize the correctness both of our and the State actions. The current cooperation model will help both our clients, shareholders and the management. Our clients, who have entrusted their funds to the Bank, will support the Government's actions, as Parex banka has been repeatedly demonstrating the timeliness of its actions for over the 20 years of its existence," the Chairman of Parex banka's Council Guntars Grinbergs said. According to the Wall Street Journal, around half of Parex's deposits, which totaled about US$3.5 billion at the end of September, are from non-residents. The Journal relates Parex officials already reported more than 5% decrease in the bank's deposits in October as Latvia's banking sector feels the effects of Russia's economic woes. Majority of the country's deposits are from Russian clients, the Journal says. The Journal discloses that in recent weeks, depositors have taken fright amid concern over Parex's ability to repay two syndicated loans from a group of European and Japanese banks. The Journal notes Parex has a EUR275 million (US$351 million) loan due in February and a EUR500 million loan due in June. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D P O L A N D =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D GDYNIA: EU Commission Agrees on Terms for Recovery of State Aid --------------------------------------------------------------- The European Commission has concluded, following four years of investigation, that state aid granted to Gdynia shipyard and Szczecin shipyard gives rise to disproportionate distortions of competition within the Single Market, in breach of EC Treaty state aid rules, and must be repaid. The Commission has simultaneously agreed to accept commitments from Poland for the implementation of the decisions in a way that will quickly create opportunities for viable and sustainable economic activities at the Gdynia and Szczecin sites and so maximize the number of sustainable jobs there. In particular, the Polish authorities have committed to sell the yards' assets through open, transparent, non- discriminatory and unconditional tenders and subsequently liquidate the Gdynia and Szczecin shipyard companies, claiming the state aid back through this process. As a result, companies acquiring the assets will not be liable to repay the illegal subsidies, even if they choose to continue shipbuilding. To help any workers that are made redundant, the Commission has offered assistance in devising flanking measures under existing EU programs (European Social Fund or European Globalisation Adjustment Fund). Commission President Jose Manuel Barroso said "We have worked long and hard to find a solution that is fair and sustainable. For the workers and businesses in Poland, but also for people working and doing business elsewhere. The solution that we have agreed with the Polish authorities offers the best possible prospects for future jobs and viable activities at these historic sites." Competition Commissioner Neelie Kroes commented: "I am confident that this solution will maximize opportunities for viable economic activity to continue at these historic sites, with good prospects for sustainable jobs there, while putting an end to the disproportionate distortion of competition caused by the huge subsidies received by these shipyards in recent years. This solution has been made possible by the very positive cooperation we have enjoyed with the Polish Government in recent weeks. I can well imagine that the buyers of certain assets would want to engage in shipbuilding at the sites, and that would not be a problem for the Commission because there would be no new subsidies and they would buy the assets at a market price. And if those acquiring the assets want to pursue other economic activities than shipbuilding, they must be allowed to. What matters most is the break with the past, viable economic activity at these sites and sustainable jobs." Since 2002, Gdynia Shipyard benefited from various aid measures (in particular capital injections, loans and tax write-offs) amounting to EUR700 million and from production guarantees of EUR916 million (both in nominal value). Szczecin Shipyard received aid of EUR1 billion as well as production guarantees of EUR697 million (again, in nominal value). The decisions require that Poland recovers from the yards all state aid unlawfully granted since May 2004. The two yards have been in difficulties since the 1990s. In April 2004, Poland notified restructuring aid for the two yards and the Commission opened formal investigations in June 2005. Poland submitted restructuring plans for both yards in September 2005 and September 2006, both with substantial delays. None of the plans would have ensured long-term viability to the yards and the restructuring would have been financed entirely by state aid. In December 2006, Poland decided to privatize the shipyards, a process, delayed several times, that eventually progressed in the course of the year and lead to potential investors submitting restructuring plans for the two yards on September 12, 2008. The plans represented an improvement in comparison to previous versions. However, despite further large amounts of state aid and substantial job losses foreseen in these plans, the yards would still not have been commercially viable. The Commission therefore concluded that the subsidies received by the Gdynia and Szczecin shipyards did not comply with the guidelines on rescue and restructuring aid but rather constituted illegal operating aid. The Commission decision requires repayment of the illegal aid. Asset Sale In order to reduce the potential negative social and regional effects of these decisions, the Commission agreed with Poland on specific modalities of implementation, along the model developed in the recent Olympic Airways decision. Poland has submitted that it needs to take legislative action to implement the sale of assets. Poland committed that the recovery will be implemented by way of a sale of assets or small bundles of assets in an open, transparent, non-discriminatory and unconditional tender. The proceeds from the sale of the assets will be used to repay creditors, including the recovery claim of the state related to the unlawful aid. The existing companies owning the yards, with the remaining assets and liabilities, will be liquidated. The assets have to be sold at market price to the highest bidder. The tender must be non-discriminatory, ensuring access to all profiles of potential buyers, irrespective of the purpose of their investment. No conditions can be attached to the tender (for example, a requirement that a bidder purchases all the assets of a given yard). The sole award criterion for the selection of the winning bid will be revenue maximization for the benefit of the yard's creditors. An automatic transfer of employees to the new economic activity cannot be imposed. Any write-off or repayment of public or private liabilities, financed by the State, would amount to additional state aid and could not be accepted. All creditors and clients must be treated in the same way as they would be in the framework of insolvency procedures. The sale must be conducted by an independent sales administrator under the close supervision of the creditors ensuring that it is conducted on market terms. In addition, Poland and the Commission will appoint jointly a monitoring trustee with the specific task to verify that the sale and the recovery of the aid take place in full compliance with the decisions. Poland committed to complete the sale by the end of May 2009. Poland was assured in a letter from Commissioner Kroes that, provided that these conditions are respected, this sale would not be considered to involve new aid to buyer(s) of the yards' assets and the assets could be transferred to the buyer(s) free of any liability concerning the reimbursement of unlawful state aid. The buyers of the assets could therefore restart economic operations without the burden of the past and in the absence of any limitation concerning their future activity. About Stocznia Gdynia Located in Port of Gdynia, Poland, Stocznia Gdynia S.A. -- http://www.stocznia.gdynia.pl/-- engages in the construction of ships, partly equipped hulls, ship's sections, superstructures, and steel constructions. The company also engages in the production and distribution of technical gases, hot water, and steam, as well as research and development works in technical studies. SZCZECIN: EU Commission Agrees on Terms for Recovery of State Aid ----------------------------------------------------------------- The European Commission has concluded, following four years of investigation, that state aid granted to Gdynia shipyard and Szczecin shipyard gives rise to disproportionate distortions of competition within the Single Market, in breach of EC Treaty state aid rules, and must be repaid. The Commission has simultaneously agreed to accept commitments from Poland for the implementation of the decisions in a way that will quickly create opportunities for viable and sustainable economic activities at the Gdynia and Szczecin sites and so maximize the number of sustainable jobs there. In particular, the Polish authorities have committed to sell the yards' assets through open, transparent, non- discriminatory and unconditional tenders and subsequently liquidate the Gdynia and Szczecin shipyard companies, claiming the state aid back through this process. As a result, companies acquiring the assets will not be liable to repay the illegal subsidies, even if they choose to continue shipbuilding. To help any workers that are made redundant, the Commission has offered assistance in devising flanking measures under existing EU programs (European Social Fund or European Globalisation Adjustment Fund). Commission President Jose Manuel Barroso said "We have worked long and hard to find a solution that is fair and sustainable. For the workers and businesses in Poland, but also for people working and doing business elsewhere. The solution that we have agreed with the Polish authorities offers the best possible prospects for future jobs and viable activities at these historic sites." Competition Commissioner Neelie Kroes commented: "I am confident that this solution will maximize opportunities for viable economic activity to continue at these historic sites, with good prospects for sustainable jobs there, while putting an end to the disproportionate distortion of competition caused by the huge subsidies received by these shipyards in recent years. This solution has been made possible by the very positive cooperation we have enjoyed with the Polish Government in recent weeks. I can well imagine that the buyers of certain assets would want to engage in shipbuilding at the sites, and that would not be a problem for the Commission because there would be no new subsidies and they would buy the assets at a market price. And if those acquiring the assets want to pursue other economic activities than shipbuilding, they must be allowed to. What matters most is the break with the past, viable economic activity at these sites and sustainable jobs." Since 2002, Gdynia Shipyard benefited from various aid measures (in particular capital injections, loans and tax write-offs) amounting to EUR700 million and from production guarantees of EUR916 million (both in nominal value). Szczecin Shipyard received aid of EUR1 billion as well as production guarantees of EUR697 million (again, in nominal value). The decisions require that Poland recovers from the yards all state aid unlawfully granted since May 2004. The two yards have been in difficulties since the 1990s. In April 2004, Poland notified restructuring aid for the two yards and the Commission opened formal investigations in June 2005. Poland submitted restructuring plans for both yards in September 2005 and September 2006, both with substantial delays. None of the plans would have ensured long-term viability to the yards and the restructuring would have been financed entirely by state aid. In December 2006, Poland decided to privatize the shipyards, a process, delayed several times, that eventually progressed in the course of the year and lead to potential investors submitting restructuring plans for the two yards on September 12, 2008. The plans represented an improvement in comparison to previous versions. However, despite further large amounts of state aid and substantial job losses foreseen in these plans, the yards would still not have been commercially viable. The Commission therefore concluded that the subsidies received by the Gdynia and Szczecin shipyards did not comply with the guidelines on rescue and restructuring aid but rather constituted illegal operating aid. The Commission decision requires repayment of the illegal aid. Asset Sale In order to reduce the potential negative social and regional effects of these decisions, the Commission agreed with Poland on specific modalities of implementation, along the model developed in the recent Olympic Airways decision. Poland has submitted that it needs to take legislative action to implement the sale of assets. Poland committed that the recovery will be implemented by way of a sale of assets or small bundles of assets in an open, transparent, non-discriminatory and unconditional tender. The proceeds from the sale of the assets will be used to repay creditors, including the recovery claim of the state related to the unlawful aid. The existing companies owning the yards, with the remaining assets and liabilities, will be liquidated. The assets have to be sold at market price to the highest bidder. The tender must be non-discriminatory, ensuring access to all profiles of potential buyers, irrespective of the purpose of their investment. No conditions can be attached to the tender (for example, a requirement that a bidder purchases all the assets of a given yard). The sole award criterion for the selection of the winning bid will be revenue maximization for the benefit of the yard's creditors. An automatic transfer of employees to the new economic activity cannot be imposed. Any write-off or repayment of public or private liabilities, financed by the State, would amount to additional state aid and could not be accepted. All creditors and clients must be treated in the same way as they would be in the framework of insolvency procedures. The sale must be conducted by an independent sales administrator under the close supervision of the creditors ensuring that it is conducted on market terms. In addition, Poland and the Commission will appoint jointly a monitoring trustee with the specific task to verify that the sale and the recovery of the aid take place in full compliance with the decisions. Poland committed to complete the sale by the end of May 2009. Poland was assured in a letter from Commissioner Kroes that, provided that these conditions are respected, this sale would not be considered to involve new aid to buyer(s) of the yards' assets and the assets could be transferred to the buyer(s) free of any liability concerning the reimbursement of unlawful state aid. The buyers of the assets could therefore restart economic operations without the burden of the past and in the absence of any limitation concerning their future activity. About Stocznia Szczecinska Headquartered in Szczecin, Poland, Stocznia Szczecinska Nowa Sp. z o.o. -- http://www.ssn.pl/-- specialized in the construction of container, chemicals transport, multi-purpose and Con-Ro ships. The company has been in insolvency after experiencing substantial reduction of new ship orders, sharp price decline, and several years of high exchange rate between the Polish zloty and U.S. dollar. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D R O M A N I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D * Fitch Affirms 'D' Individual Ratings on Four Romanian Banks ------------------------------------------------------------- Fitch Ratings has downgraded five Romanian banks and affirmed one other, following Fitch's sovereign rating action taken on Romania. Romania's Long-term foreign currency Issuer Default Rating was downgraded to 'BB+' from 'BBB', LT local currency IDR to 'BBB-' (BBB minus) from 'BBB+', and to Short-term FC IDR 'B' from 'F3'. Its Country Ceiling is downgraded to 'BBB' from 'A-. The Outlook remains Negative. The LT IDRs and Support ratings of the five downgraded Romanian banks are driven by institutional support from their respective foreign parents and are constrained by Romania's 'BBB' Country Ceiling. The Country Ceiling limits the extent to which potential support from the banks' foreign parents can be factored into their IDRs and Support ratings. Banca Comerciala Romana S.A.: -- LT FC IDR: downgraded to 'BBB' from 'A-' (A minus); Outlook remains Negative -- LT LC IDR: downgraded to 'BBB' from 'A-' (A minus); Outlook remains Negative -- ST FC IDR: downgraded to 'F3' from 'F2' -- Individual rating: affirmed at 'C/D' -- Support rating: downgraded to '2' from '1' BRD - Groupe Societe Generale S.A.: -- LT FC IDR: downgraded to 'BBB' from 'A-' (A minus); Outlook remains Negative -- ST FC IDR: downgraded to 'F3' from 'F2' -- Support rating: downgraded to '2' from '1' Bancpost S.A.: -- LT FC IDR: downgraded to 'BBB' from 'A-' (A minus); Outlook remains Negative -- ST FC IDR: downgraded to 'F3' from 'F2' -- Individual rating: affirmed at 'D' -- Support rating: downgraded to '2' from '1' Uni Credit Tiriac Bank S.A.: -- LT FC IDR: downgraded to 'BBB' from 'A-' (A minus); Outlook remains Negative -- ST FC IDR: downgraded to 'F3' from 'F2' -- Support rating: downgraded to '2' from '1' -- Individual rating: affirmed at 'D' Banca Romaneasca S.A.: -- LT FC IDR: downgraded to 'BBB' from 'BBB+'; Outlook changed to Negative from Stable -- ST FC IDR: downgraded to 'F3' from 'F2' -- Support rating: affirmed at '2' -- Individual rating: affirmed at 'D' The rating action on domestically owned private Romanian bank, Banca Transilvania S.A., whose LT IDR is driven by its intrinsic strength and hence not constrained by Romania's 'BBB' Country Ceiling, is affirmed. The Outlook is changed to Stable from Positive since an improvement in operating environment is no longer expected as reflected in the Negative Outlook on the sovereign's LT IDRs. Banca Transilvania S.A.: -- LT FC IDR: affirmed as 'BB-' (BB minus); Outlook changed to Stable from Positive -- ST FC IDR: affirmed at 'B' -- Support rating: affirmed at '3' -- Support Rating Floor: affirmed at 'BB-' (BB minus) -- Individual rating: affirmed at 'D' =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D R U S S I A =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D EUROPEAN TRUST: S&P Withdraws 'CCC+' Rating at Bank's Request ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' long-term and 'C' short-term counterparty credit ratings and its 'ruBB' Russia national scale rating on Russia-based European Trust Bank. The ratings were subsequently withdrawn at the bank's request. "As a result of the withdrawal, ETB will no longer be subject to Standard & Poor's review," said Standard & Poor's credit analyst Maria Malyukova. At the moment of rating withdrawal the bank had no rated senior unsecured debt outstanding. KAZANORGSINTEZ OJSC: Fitch Junks IDR & Sr. Unsecured Debt Rating ---------------------------------------------------------------- Fitch Ratings has downgraded Tatarstan-based chemical producer OJSC Kazanorgsintez's Long-term Issuer Default Rating to 'CCC' from 'B-', following the agency's review of the company's interim results. Fitch also downgraded the senior unsecured debt rating of Kazanorgsintez SA's US$200 million loan participating notes to 'CCC-' from 'B-' and assigned a Recovery Rating of 'RR5' to reflect below-average recovery prospects in the event of a default. The ST IDR is downgraded to 'C' from 'B' and removed from Rating Watch Negative. The LT IDR and the senior unsecured rating remain on RWN. The rating action reflects Fitch's concerns over the material deterioration in KOS's credit profile in H108 with no uplift expected in H208 as demand and prices soften in the polyethylene market. Fitch forecasts that the combination of lower earnings and higher debt in FY08 will translate into a gross debt/EBITDA ratio above the 6x covenant on the company's US$200 million five- year loan participation notes. The agency notes that while the leverage covenants on some of the company's bilateral bank facilities have been met to date, they could come under pressure should KOS's debt metrics deteriorate further. Additionally, KOS's weakening cash flow generation and stretched liquidity will increase its reliance on refinancing to meet debt maturities of US$330 million in FY09 (estimated US$149 million in Q109). The recent turmoil in the Russian financial markets, together with the company's deteriorating financial profile, creates, in Fitch's view, material refinancing risk. KOS reported record low profitability in H108, with EBITDA down 42% yoy at RUB1.6 billion (US$59 million) and EBITDA margin down to 13.1% from 26.7% in H107. This was driven by high feedstock prices, general cost inflation and incremental costs associated with the newly installed capacity. Together with the lower operating earnings, a sharp rise in cash interest payments resulted in a negative RUB494 million (US$18 million) cash flow from operations. This compares with a positive RUB1.1 billion in H107 in H107. Funds from operations/net cash interest deteriorated to 1.7x in H108 from 4.8x in H107 (3x in FY07) and EBITDA/gross interest coverage dropped to 3.1x from 25.1x in H107 (14.1x in FY07). Fitch estimates that Gross debt/EBITDA was 7.2x for the LTM to June 2008, up from 4.5x at FYE 12/07. The agency expects the weak performance to continue in H208, due to soft market conditions. KOS's main challenges in the short term will be to secure funding or extensions on maturing debt obligations and obtain a new waiver from noteholders and, potentially, bilateral lenders on the expected covenant breach. A negative rating action could result from KOS's inability to resolve those issues. Conversely, should KOS succeed in addressing those challenges, the ratings could be affirmed. Fitch stresses, however, that KOS's operating performance in FY09 is likely to fall short of the levels anticipated when the company launched its four-year debt-funded capacity expansion program (completed in September 2008). The program is the primary factor behind KOS's heavy debt burden and Fitch believes that KOS's ability to optimally run its newly expanded ethylene capacity and to achieve the intended vertical integration is hampered by its tolling agreement with Gazprom- affiliated Sibur ('BB'/RWN). Under the agreement, KOS is required to process 50% of the ethane it receives from the Gazprom-owned Orenburg helium plant for Sibur. The Orenburg plant accounts for approximately 80% of KOS's ethane supplies (including tolling volumes) and in early 2007, a unilateral attempt by KOS to reduce tolling volumes resulted in the suspension of supplies from the Orenburg plant with a visible impact on profitability. This underlines KOS's vulnerability to supply concentration risk. Sibur has reportedly been in talks with KOS shareholders since mid-2007 to acquire a stake in the company and Fitch understands the terms of the tolling agreement have not been revised since. Fitch is also concerned about the company's ability to derive incremental earnings from the capacity ramp-up when demand for plastics is likely to be affected by the global economic downturn. Fitch has revised its global economic outlook, with Russia's growth for 2009 now estimated at 4%, down from previous forecasts of 7%-8%. KOS's sales from export markets - which account for 25% of revenues - are likely to be impacted by the combined effect of the global economic slowdown and new HDPE capacity coming onstream in the Middle East and western Europe in 2009. While details remain unclear on a potential acquisition by Sibur, Fitch notes that such a transaction could result in a positive rating action, assuming that KOS's existing debt obligations are taken over by the acquiring entity. SUKHOI CIVIL: Fitch Holds Low-B Ratings; Outlook Negative --------------------------------------------------------- Fitch Ratings revised the foreign and local currency Outlooks on four Russian companies and affirmed the ratings of five companies. The rating actions are following the change of Russia's foreign and local currency Outlooks to Negative from Stable which was prompted by a combination of economic and policy challenges, as well as the expected deterioration in the sovereign's balance sheet, albeit from an exceptionally strong initial position. Russian companies whose Issuer Default Rating Outlooks have been revised and whose ratings have been affirmed are: JSC Russian Railways -- Long-term (LT) foreign currency (FC) IDR: affirmed at 'BBB+'; Outlook revised to Negative from Stable -- LT local currency (LC) IDR: affirmed at 'BBB+'; Outlook revised to Negative from Stable -- Short-term (ST) FC IDR: affirmed at 'F2' -- Short-term (ST) LC IDR: affirmed at 'F2' -- National LT rating: affirmed at 'AAA(rus)';.Outlook remains Stable. -- National senior unsecured rating: affirmed at 'AAA(rus)' RZD's ratings are aligned with the sovereign's because the company is 100% state-owned and because of its strategic importance. Sukhoi Civil Aircraft JSC -- LT FC IDR: affirmed at 'BB+'; Outlook revised to Negative from Stable -- LT LC IDR: affirmed at 'BB+'; Outlook revised to Negative from Stable -- ST FC IDR: affirmed at 'B' -- ST LC IDR: affirmed at 'B' -- Senior unsecured rating: affirmed at 'BB+' -- National LT rating: affirmed at 'AA(rus)'; Outlook remains Stable -- National ST rating: affirmed at 'F1+(rus)' SCAC's ratings are linked to the sovereign's because it is majority state-owned and because of its strategic importance. Federal Hydrogeneration Company HydroOGK -- LT FC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Negative from Stable -- National LT rating: affirmed at 'AA+(rus)'; Outlook remains Stable RusHydro's ratings are linked to those of Russia due to state ownership, the strategic importance of the company to the state, and a degree of reliance by the company on investment funding from the state. OJSC OC Rosneft -- LT FC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Stable from Positive -- LT LC IDR: affirmed at 'BBB-' (BBB minus); Outlook revised to Stable from Positive -- Rosneft Capital S.A.'s Debt Issuance Programme: affirmed at 'BBB-' (BBB minus) Rosneft's ratings benefit from the state's majority ownership as well as implied and historically demonstrated indirect support, which is particularly relevant for the company given its rapid and acquisition-driven growth. Russian companies whose ratings are affirmed with Stable Outlook are: OAO Gazprom -- LT FC IDR: affirmed at 'BBB'; Outlook remains Stable -- LT LC IDR: affirmed at 'BBB'; Outlook remains Stable -- Senior unsecured rating: affirmed at 'BBB' -- Gaz Capital S.A.'s debt issuance program: affirmed at 'BBB' Gazprom's ratings are based on its standalone profile, although its state ownership and the influence of the state on Gazprom's business environment and financial profile are factored into the ratings. WIMM-BILL-DANN: Moody's Revises Outlook on Ba3 Rating to Negative ----------------------------------------------------------------- Moody's Investors Service has changed the outlook on the Ba3 corporate family rating of Wimm-Bill-Dann OJSC to negative. The change in the outlook reflects short-term maturities continuously accounting for a material part (currently about 35%) of the company's debt against a background of tight market conditions to access liquidity and challenging economic conditions. The liquidity management policy of the company is based principally on the company's strong cash flow generation capacity with no significant additional committed back-up credit facilities signed well in advance dates of refinancing issues. Though Moody's believes that the company has a number of options to deal with the potential call of cash in the next few months, such a liquidity profile is putting potential pressure on the company's Ba3 going forward. The agency also takes comfort that Wimm-Bill-Dann has a strong historical operating performance in a non-cyclical sector and moderate leverage, which provide a solid base for continuous access to funding. Moody's notes that the company may be required in March 2009 by bondholders to buy back its Rbl5 billion bond under the put option incorporated into the bond. To meet this potential obligation Wimm-Bill-Dann has already put aside approximately Rbl3.2 billion cash and plans to earn the other needed part of the required sum in the upcoming few months before March 2009. The company is also adjusting its capex plans and intends to continue its tight cost management policy to achieve this goal. The agency understands that at the same time the company is in discussion with banks on credit lines to additionally support its refinancing profile and more broadly to get access to funding for further development of its business. Moody's expects that the company will generate the sources necessary to meet the upcoming obligation if it were to materialize but at the same time notes that the external funds the company may attract would likely be of short-term nature, hence not fully comforting the refinancing profile going forward. The company's ability to develop in accordance with its own projections, in particular increase its EBITDA in 2009 by about 20-22%, keep its leverage approximately at 2.0x, and have short- term refinancing needs addressed in advance, would contribute to the stabilizing outlook of the rating. The rating could be downgraded if the company's cash flow generation ability deteriorated and its leverage were approaching 2.5x with the company's short-term debt increasing and the liquidity position being deteriorated. Wimm-Bill-Dann is one of Russia's largest manufacturers of dairy products and beverages, as well as baby foods, with more than 19,000 employees and 37 production facilities located predominantly in Russia, as well as Uzbekistan, Kyrgyzstan, Ukraine and Georgia. Of the company's 2007 sales of $2.4 billion, dairy products account for approximately 76%. The company's founding shareholders have a 45% stake. Groupe Danone, together with its subsidiaries, holds a 18.4% stake, which enables it to nominate a member to WBD's board of directors. * NOVGOROD OBLAST: S&P Assigns 'B' Long-Term Issuer Rating ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term issuer and 'ruA' Russia national scale ratings to Novgorod Oblast, one of 83 regions in the Russian Federation (foreign currency BBB+/Negative/A-2; local currency A-/Negative/A-2; Russia national scale 'ruAAA'). "The ratings reflect the oblast's concentrated economic base and lower wealth levels than the Russian average, weak budgetary performance on average, and an expected substantial increase in tax-supported debt," said Standard & Poor's credit analyst Felix Ejgel. Novgorod Oblast's low direct debt service and the commitment of oblast's new management to fostering long-term economic development and timely debt repayment support the ratings. The oblast's wealth levels are lower than the national average. Moderate annual economic growth of about 5% in 2003-2007 could slow to 2.0%-2.5% in 2009-2010 due to the ongoing credit crisis. The oblast's largest enterprise, JSC Acron is responsible for 20% of the oblast's industrial output. As a result of the concentration of its economic base, the oblast's budgetary performance remains unstable. Due to one-time payments from Acron, the operating balance should improve to 7% before it declines to a mere 1% on average in 2009-2010. The oblast's new management team is timely servicing debt obligations in full. Direct debt should remain at about a modest 16% of operating revenues in 2008-2009, while debt service will account for 3% of total revenues. Tax-supported debt is set to increase substantially, however, to about 50% of total revenues in 2009 after the oblast issues new guarantees to the private sector. The oblast had accumulated Russian ruble 2.1 billion ($77.7 million) of cash on accounts as of Sept. 30, 2008. "The stable outlook reflects S&P's expectation that the efforts taken by the oblast government to attract private and federal budget investment in local infrastructure will lead to moderate economic growth in 2010 and help the region stabilize its budgetary performance at modest levels. The outlook also factors in S&P's assumption that the oblast guarantees are to be granted only to long-term amortizing loans. "We could revise the outlook on Novgorod Oblast to positive should the nonchemical sectors of the local economy grow faster than projected, thanks to solid private and public investments stimulating revenue growth, which would allow for higher infrastructure-related spending and only modest recourse to debt," said Mr. Ejgel =3D=3D=3D=3D=3D=3D=3D=3D=3D S P A I N =3D=3D=3D=3D=3D=3D=3D=3D=3D FONCAIXA FTPYME: Moody's Puts (P)C Rating on EUR76.4MM Notes ------------------------------------------------------------ Moody's Investors Service assigned these provisional ratings to the debt to be issued by FONCAIXA FTPYME 2, Fondo de Titulizacion de Activos: -- (P)Aaa to the EUR533.7 million Series AS notes -- (P)Aaa to the EUR456.3 million Series AG notes -- (P)A3 to the EUR27.5 million Series B notes -- (P)Baa3 to the EUR82.5 million Series C notes -- (P)C to the EUR76.4 million Series D notes FONCAIXA FTPYME 2, Fondo de Titulizacion de Activos, a securitization of small- and medium-sized enterprise loans under the FTPYME program carried out by La Caixa, comes after the concession by the Spanish Ministry of Economy of a new guarantee budget for the current year. According to Moody's, this deal benefits from several credit strengths including: (1) a well diversified portfolio in terms of industry concentration, with a Real Estate exposure below 18% (and no loans to real estate developers); (2) a strong swap agreement guaranteeing an excess spread of 0.50%; (3) a 6.95% reserve fund to cover potential shortfalls in interest or principal; (4) a 12-month artificial write-off mechanism; and (5) the guarantee of the Kingdom of Spain (Aaa/P-1), as concerns the Series AG notes. However, Moody's notes that the deal also features credit weaknesses, notably: (1) around 41% of the borrowers are micro-SMEs (turnover below EUR1 million) and around 26% are self-employed; (2) pro-rata amortization of the notes; and (3) the negative impact of the interest deferral trigger on the subordinated series. These increased risks were reflected in the credit enhancement calculation. The provisional pool of underlying assets was, as of October 2008, composed of a portfolio of 30,456 loans and 27,535 borrowers, granted to Spanish enterprises and self-employed individuals. The loans have been originated between 1990 and 2008, with a weighted average seasoning of 2.89 years and a weighted average remaining life of 9.47 years. Around 62% of the outstanding of the portfolio is secured by mortgage guarantee over different types of properties (58.9% of the portfolio being first-lien with a weighted average LTV of 46.7%). Geographically, the pool is concentrated in Madrid (24.3%), Andalusia (12.8%) and Valencia (12.1%). At closing, there will be no loans in arrears. Moody's based the ratings primarily on: (i) an evaluation of the underlying portfolio of loans; (ii) historical performance information and other statistical information; (iii) the swap agreement hedging the interest rate risk; (iv) the credit enhancement provided through the GIC account, the excess spread, the cash reserve and the subordination of the notes; and (v) the legal and structural integrity of the transaction. Moody's initially analyzed and will monitor this transaction using the rating methodology for EMEA SMEs loan-backed transactions as described in the Rating Methodology report "Moody's Approach to Rating Granular SME Transactions in Europe, Middle East and Africa" June 2007. The ratings address the expected loss posed to investors by the legal final maturity of the notes. In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal at par on or before the rated final legal maturity date on Series AS, AG, B and C, and for ultimate payment of interest and principal at par on or before the rated final legal maturity date on Series D. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. Moody's issues provisional ratings in advance of the final sale of securities, and these ratings only reflect Moody's preliminary credit opinions regarding the transaction. Upon a conclusive review of the final pool of assets and the final documentation, Moody's will endeavor to assign a definitive rating to the notes. A definitive rating, if any, may differ from a provisional rating. Date of previous rating action: no previous rating action since initial rating assignment. SANTANDER HIPOTECARIO: S&P Affirms Junk Ratings on 3 Note Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services placed on CreditWatch negative its credit ratings on the class C to E notes issued by Fondo de Titulizacion de Activos Santander Hipotecario 2 (Santander Hipotecario 2), and the class B to E notes issued by Fondo de Titulizacion de Activos Santander Hipotecario 3 (Santander Hipotecario 3) and Fondo de Titulizacion de Activos Santander Hipotecario 4 (Santander Hipotecario 4). All other notes issued by Santander Hipotecario 2, Santander Hipotecario 3 and Santander Hipotecario 4, as well as those issued by Fondo de Titulizacion de Activos Santander Hipotecario 1 (Santander 1) have been affirmed. All the Santander Hipotecario transactions are backed by portfolios of residential mortgage-backed loans secured over residential properties in Spain. The collateral backing these transactions is characterized by a higher loan-to-value ratios and lower-than-average seasoning in the Spanish market. These CreditWatch placements follow deterioration in the performance of the underlying pools. A high concentration of defaults and low levels of available excess spread have resulted in the depletion of the reserve funds for Santander Hipotecario 3 and Santander Hipotecario 4. Santander Hipotecario 2 has also drawn under its reserve fund, although its fund remains at over 80% of its minimum required level. All these transactions feature a structural mechanism that traps excess spread to provision for the full balance of defaulted loans. A loan is considered as defaulted either when it is in arrears for more than 18 months, or if the servicer deems it as defaulted. Most defaults which have recently materialized have been classified by the servicer as early defaults. S&P will now request from the servicer full information on the current portfolios backing these deals, and will consider the quality and quantity of that information when S&P review these CreditWatch placements. Rating List Ratings Placed on CreditWatch Negative Fondo de Titulizacion de Activos Santander Hipotecario 2 EUR1.955 Billion Mortgage-Backed Floating-Rate Notes And An Overissuance Of EUR17.6 Million Floating-Rate Notes Class Rating ----- ------ To From -- ---- C A-/Watch Neg A- D BBB/Watch Neg BBB E BB/Watch Neg BB Fondo de Titulizacion de Activos Santander Hipotecario 3 EUR2.8 Billion Mortgage-Backed Floating-Rate And An Overissuance Of EUR22.4 Million Floating-Rate Notes Class Rating ----- ------ To From -- ---- B AA/Watch Neg AA C A/Watch Neg A D BBB/Watch Neg BBB E BB/Watch Neg BB Fondo de Titulizacion de Activos Santander Hipotecario 4 EUR1.23 Billion Mortgage-Backed Floating-Rate Notes And An Overissuance Of EUR14.8 Million Floating-Rate Notes Class Rating ----- ------ To From -- ---- B AA/Watch Neg AA C A/Watch Neg A D BBB/Watch Neg BBB E BB/Watch Neg BB Ratings Affirmed Fondo de Titulizacion de Activos Santander Hipotecario 1 EUR1.875 Billion Mortgage-Backed Floating-Rate Notes Class Rating ----- ------ A AAA B AA C A+ D BBB+ Fondo de Titulizacion de Activos Santander Hipotecario 2 EUR1.955 Billion Mortgage-Backed Floating-Rate Notes And An Overissuance Of EUR17.6 Million Floating-Rate Notes Class Rating ----- ------ A AAA B AA- F CCC- Fondo de Titulizacion de Activos Santander Hipotecario 3 EUR2.8 Billion Mortgage-Backed Floating-Rate And An Overissuance Of EUR22.4 Million Floating-Rate Notes Class Rating ----- ------ A AAA F CCC- Fondo de Titulizacion de Activos Santander Hipotecario 4 EUR1.23 Billion Mortgage-Backed Floating-Rate Notes And An Overissuance Of EUR14.8 Million Floating-Rate Notes Class Rating ----- ------ A AAA F CCC- =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D S W E D E N =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D D. CARNEGIE: Swedish Government Takes Control --------------------------------------------- Niklas Magnusson at Bloomberg News reports that the Swedish government has taken over D. Carnegie & Co. AB, putting the investments of shareholders at risk. Carnegie, the report discloses, will be sold off in parts. According to the report, Sweden's national debt office assumed control of Carnegie Investment Bank AB and Max Matthiessen Holding AB, the two units that make up Carnegie. The divisions, the report notes, had been used for a SEK5 billion (US$640 million) loan made by Swedish government to shore up Carnegie's funding last month. The debt office, on Monday, ousted the entire board of the bank, which was fined a year ago by Sweden's Financial Services Authority for lack of adequate internal control of its trading operations, the report relates. The Swedish financial regulator also revoked Carnegie's license to operate. The bank would regain the license when taken over by the national debt office, the report adds. "If the debt office had not taken ownership, the bank's business operations would have had to be wound up," the report quotes the financial regulator as saying. "This would have led to a rapid fall in the value of the collateral." The financial regulator accused Carnegie of taking "exceptional risks" with loans, the report recounts. Carnegie, which has lost 87 percent of its value in the past year, was suspended from trading on the Stockholm stock exchange, the report states. On September 30, shareholders of the bank included Franklin- Templeton Funds, ABG Sundal Collier ASA, Swedbank Robur funds and the first and second Swedish state pension funds, the report reveals. Headquartered in Stockholm, Sweden, D. Carnegie & Co. AB -- http://www.carnegie.se/-- is an independent Nordic investment bank engaged in securities broking, investment banking, asset management, and private banking, as well as in pension advice. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D U K R A I N E =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D CAR TECHNICS: Creditors Must File Claims by November 22 ------------------------------------------------------- Creditors of LLC Car Technics (code EDRPOU 31437242) have until Nov. 22, 2008, to submit proofs of claim to: Mr. R. Breus L Liquidator Ap. 70 Novoprudnaya Str. 4 61018 Kharkov Ukraine The Arbitration Court of Kharkov commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 6, 2008. The case is docketed as B-48/130-08. The Economic Court of Kharkov Derzhprom 8th Entrance Svoboda Square 5 61022 Kharkov Ukraine The Debtor can be reached at: LLC Car Technics August 23rd Str. 51 61103 Kharkov Ukraine FARCIDA LLC: Creditors Must File Claims by November 21 ------------------------------------------------------ Creditors of LLC Farcida (code EDRPOU 33523406) have until Nov. 21, 2008, to submit proofs of claim to: Mr. Usachov Oleg Liquidator Sachko Str. 26/27 Dnieprodzerzhynsk Dnipropetrovsk Ukraine The Arbitration Court of Dnipropetrovsk commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 13, 2008. The case is docketed as B 29/212-08. The Economic Court of Dnipropetrovsk Kujbishev Str. 1a 49600 Dnipropetrovsk Ukraine The Debtor can be reached at: LLC Farcida Dimitrov Str. 4-a, Ap. 43 Dnieprodzerzhynsk 51900 Dnipropetrovsk Ukraine FERRUM-M LLC: Creditors Must File Claims by November 22 ------------------------------------------------------- Creditors of LLC FERRUM-M (code EDRPOU 33302546) have until Nov. 22, 2008, to submit proofs of claim to: Mr. B. Krupka Liquidator Ap. 193 Independency Square, 2 Brovary 07400 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 16, 2008. The case is docketed as 24/395-b. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Ferrum-M Academic Bogomolets Str. 6 01024 Kiev Ukraine MAKAROV MOTORCAR: Creditors Must File Claims by Nov. 22 ------------------------------------------------------- Creditors of JSC Makarov Motorcar Enterprise 13240 (code EDRPOU 05538810) have until Nov. 22, 2008, to submit proofs of claim to: LLC Alarit Ukraine Liquidator / Insolvency Manager K. Liebkneht Str. 27 Skvira Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 8, 2008. The case is docketed as B 11/282-08. The Economic Court of Kiev Komintern Str. 16 01032 Kiev Ukraine The Debtor can be reached at: OJSC Makarov Motorcar Enterprise 13240 Lenin Str. 42 Makarov 08132 Kiev Ukraine MALIN CELLULOSE-PAPER: Creditors Must File Claims by Nov. 22 ------------------------------------------------------------ Creditors of LLC Malin Cellulose-Paper Experimental Factory (code EDRPOU 30939578) have until Nov. 22, 2008, to submit proofs of claim to: Mr. A. Boreyko Liquidator / Insolvency Manager Ap. 304 Putiatinsky Square, 2 10002 Zhytomir Ukraine The Arbitration Court of Zhytomir commenced bankruptcy proceedings against the company after finding it insolvent on Sept. 25, 2008. The Economic Court of Zhytomir Putiatinskiy Square 3/65 10014 Zhytomir Ukraine The Debtor can be reached at: LLC Malin Cellulose-Paper Experimental Factory Nemanikhin Str. 2 Malin 11602 Zhytomir Ukraine SERVICE-CLASSIK LLC: Creditors Must File Claims by November 21 -------------------------------------------------------------- Creditors of LLC Company Service-Classik (code EDRPOU 35017600) have until Nov. 21, 2008, to submit proofs of claim to: Mr. Zlenko Vitaly Liquidator/Insolvency Manager Balochnaya Str. 3 Makieyevka 86100 Donetsk Ukraine The Arbitration Court of Donetsk commenced bankruptcy proceedings against the company after finding it insolvent on Sept. 29, 2008. The case is docketed as 5/116b. The Economic Court of Donetsk Artema Str. 157 83048 Donetsk Ukraine The Debtor can be reached at: LLC Company Service-Classik Poleglykh Komunarov Str. 76 83087 Donetsk Ukraine SPHERE-TRANS LLC: Creditors Must File Claims by November 22 ----------------------------------------------------------- Creditors of LLC Sphere-Trans (code EDRPOU 34614635) have until Nov. 22, 2008, to submit proofs of claim to: Mr. B. Krupka Liquidator Ap. 193 Independency Square, 2 Brovary 07400 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 16, 2008. The case is docketed as 24/393-b. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Sphere-Trans P. Lumumba Str. 15-A 01042 Kiev Ukraine TECHNO-PROM LLC: Creditors Must File Claims by November 21 ---------------------------------------------------------- Creditors of LLC Company Techno-Prom (code EDRPOU 35017573) have until Nov. 21, 2008, to submit proofs of claim to: Mr. Zlenko Vitaly Liquidator/Insolvency Manager Balochnaya Str. 3 Makieyevka 86100 Donetsk Ukraine The Arbitration Court of Donetsk commenced bankruptcy proceedings against the company after finding it insolvent on Sept. 29, 2008. The case is docketed as 5/114b. The Economic Court of Donetsk Artema Str. 157 83048 Donetsk Ukraine The Debtor can be reached at: LLC Company Techno-Prom Kiev Avenue, 36D 83054 Donetsk Ukraine TECHNOSTAR-XXI LLC: Creditors Must File Claims by November 22 ------------------------------------------------------------- Creditors of LLC Technostar-XXI (code EDRPOU 34809498) have until Nov. 22, 2008, to submit proofs of claim to: Mr. B. Krupka Liquidator Ap. 193 Independency Square, 2 Brovary 07400 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 16, 2008. The case is docketed as 24/396-b. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Technostar-XXI Kikvidze Str. 11 01103 Kiev Ukraine TH TECHNOVSESVIT: Creditors Must File Claims by November 21 ----------------------------------------------------------- Creditors of LLC TH Technovsesvit (code EDRPOU 35636204) have until Nov. 21, 2008, to submit proofs of claim to: Mr. Zlenko Vitaly Liquidator / Insolvency Manager Balochnaya Str. 3 Makieyevka 86100 Donetsk Ukraine The Arbitration Court of Donetsk commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 3, 2008. The case is docketed as 5/115b. The Economic Court of Donetsk Artema Str. 157 83048 Donetsk Ukraine The Debtor can be reached at: LLC TH Technovsesvit Kuprin Str. 117 83122 Donetsk Ukraine =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D U N I T E D K I N G D O M =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D AUTUMN GRANGE: Picks Joint Administrators from Grant Thornton ------------------------------------------------------------- Keith Hinds and Robert Harry Pick of Grant Thornton UK LLP were appointed joint administrators of Autumn Grange Ltd. on Oct. 27, 2008. The company can be reached through Grant Thornton UK LLP at: No. 1 Whitehall Riverside Leeds LS1 4BN England BRITISH AIRWAYS: Reports GBP52 Mil. PBT in First Half 2008 ---------------------------------------------------------- British Airways plc presented its interim management report for the six months ended September 30, 2008. Period highlights: -- Operating profit of GBP140 million (2007: GBP567 million - restated) -- Profit before tax of GBP52 million (2007: GBP616 million - restated) -- Revenue GBP4,754 million (2007: GBP4,470 million - restated) -- Full year fuel costs still expected to be about GBP3 billion Commenting on the results, British Airways' chief executive Willie Walsh, said: "This is a good performance given the incredibly difficult trading conditions. The six month period will be remembered as one of the bleakest on record. The period was hit by a crisis in the banking sector, record fuel prices and several airlines going out of business. "Against this very tough economic backdrop we have delivered profits of GBP140 million resulting from a 6.4 per cent revenue increase. "Costs are up GBP711 million and remain a key challenge. Fuel costs for the period were up GBP511 million at GBP1,494 million. Our annual fuel bill is still expected to be up some 50 per cent at about GBP3 billion. Employee costs, including a GBP40 million severance provision, were up 8.6 per cent." Financial Review British Airways's total revenue in the period was up 6.4 per cent. Passenger revenue was up 6.5 per cent on capacity up 1.3 per cent. Yields were up 10.5 per cent as a result of both price increases and the impact of a stronger US dollar. Traffic volumes have reduced on last year and seat factor was down 3.8 points to 74.6 per cent. Trading conditions continue to be challenging, with longhaul premium traffic in particular having weakened after the summer. Cargo business continued to perform well with volumes measured in cargo tonne kilometres (CTKs) up 2 per cent on last year. Revenue rose 25.2 per cent to GBP363 million, underpinned by fuel surcharge recoveries and strong volumes. Overall, yields improved by 22.7 per cent. Total Group operating costs were up 18.2 per cent, due primarily to the dramatic increase in fuel costs, with unit costs up 19.2 per cent. Fuel costs were up 52 per cent on last year, despite a fuel hedging profit of GBP329 million during the period. The market price of fuel was up 73 per cent over the same period last year. Other costs were also up GBP200 million, with currency effects contributing almost half of the increase. Cash level at the end of September unchanged from March at GBP1.8 billion. Net debt was GBP1.4 billion, in line with this time last year. Committed facilities of GBP2.0 billion have been secured for aircraft purchases out to December 2012. BA also has a general purpose committed facilities of GBP0.6 billion. The Group performed an interim valuation update for the UK defined benefit pension schemes on an IAS 19 basis, as at September 30, 2008, which showed a net increase of GBP201 million to the pension deficit. This resulted in no change to the amounts recorded in the Group's financial statements, due to its application of the corridor. As previously announced, during the six month period BA has taken a charge of GBP79 million for the abolition of industrial building allowances, which contributed to the post-tax loss of GBP42 million. Excluding the one-off cost, the tax rate for the period would have been 29 per cent. BA's directors recommend that no dividend be paid for the period ended September 30, 2008. About British Airways Headquartered in Harmondsworth, England, British Airways Plc -- http://www.ba.com/-- operates of international and domestic scheduled and charter air services for the carriage of passengers, freight and mail, and provides of ancillary services. The British Airways group consists of British Airways plc and a number of subsidiary companies including in particular British Airways Holidays Ltd. and British Airways Travel Shops Ltd. BA has offices in India and Guatemala. * * * British Airways Plc continues to carry a "Ba1" senior unsecured debt rating from Moody's with a stable outlook. DANWEL LTD: Names Tenon Recovery as Joint Administrators -------------------------------------------------------- Ian William Kings and Steven Philip Ross of Tenon Recovery were appointed joint administrators of Danwel Ltd. on Oct. 27, 2008. The company can be reached through Tenon Recovery at: Tenon House Ferryboat Lane Sunderland Tyne & Wear SR5 3JN England DELTA CDO: Credit Deterioration Cues Moody's Junk Ratings --------------------------------------------------------- Moody's Investors Service downgraded its ratings of three classes of notes issued by Delta CDO plc - Series 2005-2. Two of these classes of notes remain under review for possible downgrade. These rating actions are a response to credit deterioration in the underlying portfolio. The transaction is a synthetic CDO referencing, among other assets, a large proportion of Moody's prime and subprime RMBS. Approximately 4% of the portfolio is currently rated Caa1 or below. Moody's announced on Sept. 18, 2008 that it is revising its expected loss assumptions which are used for the surveillance of ratings of ABS CDOs holding subprime RMBS, specifically of the second half 2005 -- first half 2007 vintages. Moody's stated that for purposes of monitoring its ratings of ABS CDOs with exposure to second half 2005 -- first half 2007 subprime RMBS, it will rely on certain projections of the lifetime average cumulative losses for vintages of RMBS set forth in a recent Moody's Special Report. Moody's explained that it will utilize the range of loss projections set forth in the report based on deal performance and quarterly vintage to modify its prior assumptions of the expected loss inputs when monitoring ABS CDO ratings. The rating actions are: Delta CDO plc - Series 2005-2: (1) Series 2005-2 USD60,000,000 B-1 Floating Rate Credit Linked Secured Notes due 2045 -- Current Rating: Caa2, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: Aug. 18, 2005 (2) Series 2005-2 USD28,000,000 C-1 Floating Rate Credit Linked Secured Notes due 2045 -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating: Aa2 -- Prior Rating Action Date: Aug. 18, 2005 (3) Series 2005-2 USD4,500,000 E-1 Floating Rate Credit Linked Secured Notes due 2045 -- Current Rating: Ca -- Prior Rating: Baa2 -- Prior Rating Action Date: Aug. 18, 2005 DSR PRINT: Appoints Joint Administrators from BDO Stoy ------------------------------------------------------ Geoffrey Stuart Kinlan and William John Turner of BDO Stoy Hayward LLP were appointed joint administrators of DSR Print Management Ltd. on Oct. 27, 2008. The company can be reached through BDO Stoy Hayward LLP at: Prospect Place 85 Great North Road, Hatfield Hertfordshire AL9 5BS England HADDON HEALTHCARE: Taps Joint Administrators from Grant Thornton ---------------------------------------------------------------- Keith Hinds and Robert Harry Pick of Grant Thornton UK LLP, were appointed joint administrators of Haddon Healthcare Ltd. on Oct. 27, 2008. The company can be reached through Grant Thornton UK LLP at: No. 1 Whitehall Riverside Leeds LS1 4BN England ILIAD INVESTMENT: Moody's Slices Ratings on Six Classes of Notes ---------------------------------------------------------------- Moody's Investors Service downgraded its ratings of six classes of notes issued by Iliad Investment PLC -- Series 9 and Series 14. These rating actions are a response to credit deterioration in the underlying portfolio. These transactions are synthetic CDO squared. Each of the CDOs are similar in structure and comprise of between 80% - 85% ABS assets, with the remainder as corporate exposure. A large proportion of the ABS assets are subprime RMBS bonds of the 2006 and 2007 vintages. Currently, around 8% and 10% of portfolio by volume is rated Caa1 or below and the current subordination below the lowest tranche is 4.54% and 2.73%, for Iliad Series 9 and Iliad Series 14 respectively. Moody's announced on Sept. 18, 2008 that it is revising its expected loss assumptions which are used for the surveillance of ratings of ABS CDOs holding subprime RMBS, specifically of the second half 2005 -- first half 2007 vintages. Moody's stated that for purposes of monitoring its ratings of ABS CDOs with exposure to second half 2005 -- first half 2007 subprime RMBS, it will rely on certain projections of the lifetime average cumulative losses for vintages of RMBS set forth in a recent Moody's Special Report. Moody's explained that it will utilize the range of loss projections set forth in the report based on deal performance and quarterly vintage to modify its prior assumptions of the expected loss inputs when monitoring ABS CDO ratings. The rating actions are: Iliad Investment P.L.C. Series 9: (1) The EUR25,000,000 Series 9 Class A1 5.10 per cent Notes due 2013 -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: May 28, 2003 (2) The EUR10,000,000 Series 9 Class A2 Secured Floating Rate Notes due 2013 -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: May 28, 2003 (3) The CHF12,500,000 Series 9 Class A3 Secured Floating Rate Notes due 2013 -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: May 28, 2003 Iliad Investment P.L.C. Series 14: (1) The EUR40,000,000 Series 14 Class A Secured Floating Rate Notes due 2010 -- Current Rating: Caa1, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Action Date: Aug. 12, 2003 (2) The EUR30,000,000 Series 14 Class B Secured Floating Rate Notes due 2010 -- Current Rating: Caa2, on review for possible downgrade -- Prior Rating: Aa2 -- Prior Rating Action Date: Aug. 12, 2003 (3) The EUR 30,000,000 Series 14 Class C Secured Floating Rate Notes due 2010 -- Current Rating: Caa3, on review for possible downgrade -- Prior Rating: A2 -- Prior Rating Action Date: Aug. 12, 2003 J & F WEDDINGS: Taps Joint Liquidators from Tenon Recovery ---------------------------------------------------------- Matthew Colin Bowker and Jonathan Paul Philmore of Tenon Recovery were appointed joint liquidators of J & F Weddings Ltd. on Oct. 21, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached through Tenon Recovery at: Lowgate House Lowgate Hull HU1 1EL England The company operates as a clothing retailer. LANDMARK MORTGAGE: S&P Puts Low-B Ratings on Classes C & D Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on the class C and D notes issued by Landmark Mortgage Securities No. 2 PLC after a deterioration in the performance of the underlying collateral. S&P also affirmed the class A and B notes. This rating action follow a full credit and cash flow analysis of the most recent loan-level information as of the September 2008 interest payment date. This information shows that while credit enhancement levels available to the notes have increased, the performance of the underlying collateral has deteriorated. As of the September IPD, cumulative losses remain relatively low at 0.26%. However, there has been a notable increase in the number of properties repossessed recently. In the September quarterly reporting period, 2.63% of the pool went into repossession, with total repossessions now standing at 3.86%. As of the previous IPD (June 2008), 1.76% of properties were in repossession. As these properties are sold S&P expect to see a significant increase in losses. Currently, repossessions have a weighted- average loss severity of 22.3%. Furthermore, with 90+ day arrears standing at 12.8% of the current pool balance (excluding repossessions), this indicates the strong potential for increased repossession rates in the near future. As U.K. house prices continue to decline, the current loan-to- value ratios of the pool will increase and S&P expects higher average losses for loans on properties that have been repossessed and loans that ultimately default. Under the current market conditions, S&P also expects an increase in the time from repossession to sale, leading to increased arrears levels before sale. The notes, issued in 2007, are backed by a portfolio of first- ranking residential mortgages secured over properties in the U.K. The mortgage loans were originated by Unity Homeloans Ltd., Infinity Mortgages Ltd., and Amber Homeloans Ltd. and subsequently bought by Investec Bank (UK) Ltd. Ratings List Landmark Mortgage Securities No. 2 PLC EUR51.500 Million And GBP322.645 Million Mortgage-Backed Floating-Rate Notes Ratings Lowered And Removed From CreditWatch Negative Class Rating ----- ------ To From -- ---- C BB+ BBB/Watch Neg D B+ BB/Watch Neg Ratings Affirmed Class Rating ----- ----- Aa AAA Ac AAA Ba A Bc A MFI RETAIL: Decathlon May Acquire Stores Under Administration ------------------------------------------------------------- France-based sport retailer Decathlon is considering to acquire stores put into administration by MFI Retail Ltd last month, Retail Week reports. "We're looking at the list of disposals. If the location is good and the size is right, we will think about it," Stephan Vyret, Decathlon's development director, was quoted by Retail Week as saying. MFI, Retail Week relates, placed 95 of its weaker-performing stores -=96 about half of its portfolio -=96 into the hands of administrators Kroll last month. The report notes many are likely to close completely. According to the report, Decathlon is eyeing the MFI stores as potential sites for its expansion program. The French sport retailer, the report reveals, seeks to expand its UK portfolio to about 40 within five years. Decathlon is expected to make a decision in the coming months, the report discloses. The Range, a home and leisure garden retailer is also understood to be interested in the MFI stores in administration, the report adds. MONIER: Hires Goldman to Restructure Debt on Breach Concerns ------------------------------------------------------------ Helen Power at The Times reports that Monier Group has hired Goldman Sachs to restructure an estimated EUR2 billion (GBP1.6 billion) of debt amid fears that the company might breach its banking covenants next month. Citing insiders, the report discloses Monier is at risk of breaching its December 31 covenant. The company, the report relates, drew down EUR125 million from its credit facilities last month to give it an additional cash cushion. However, it has not provided lenders with detailed guidance about its end-of-year figures, heightening concerns about a possible covenant breach, the report adds. According to the report, PAI, which bought Monier for EUR2.4 billion in March last year, could be forced to inject more equity into the business to appease lenders. Goldman, which was drafted in by PAI, is understood to be looking at a range of options including covenant waiver negotiations, a PAI-backed debt buyback and or a refinancing, although this will be very difficult in the current debt markets, the report states. PAI, the report recounts, unveiled plans this year to cut Monier's debt by buying back about 20 per cent of it. The Goldman team is led by Andrew Wilkinson, the bank's global head of restructuring, the report reveals. Monier Group -- http://www.monier.co.uk/-- supplies pitched- roofing products, roofing components and chimney systems. It has more than 200 production sites and activities in 46 countries, including the United Kingdom, Germany, Poland, among others. In 2006, Monier employed more than 12,000 people, generating sales of over EUR1.6 billion. OCTAGON LIMITED: Moody's Cuts Rating on EUR6 Million Notes to C --------------------------------------------------------------- Moody's Investors Service downgraded its rating of notes issued by Octagon Limited under Series 2006-1. This rating action follows the downgrade of the rating of the US$7,500,000 Class D-1 Floating Rate Notes due 2045 issued by Palmer Square plc. The repack notes issued by Octagon Limited are credit linked to the Palmer Square Class D-1 notes which are now rated C. The underlying assets of the Palmer Square transaction are predominantly 2004 -- 2007 vintage Moody's subprime and Moody's ABS CDOs. Issuer: Octagon Limited (1) EUR6,000,000 Secured Deferrable Floating Rate Notes due April 2045, Credit Linked to the Palmer Square plc US$7,500,000 Class D-1 Floating Rate Notes due 2045 -- Current Rating: C -- Prior Rating: Caa1, on review for downgrade -- Prior Rating Action Date: May 13, 2008 PARK ASSOCIATES: Taps Joint Administrators from Grant Thornton -------------------------------------------------------------- Keith Hinds and Robert Harry Pick of Grant Thornton UK LLP were appointed joint administrators of Park Associates (Park Homes) Ltd. on Oct. 27, 2008. The company can be reached through Grant Thornton UK LLP at: No. 1 Whitehall Riverside Leeds LS1 4BN England PARK GROUP: Appoints Joint Administrators from Grant Thornton ------------------------------------------------------------- Keith Hinds and Robert Harry Pick of Grant Thornton UK LLP were appointed joint administrators of The Park Group (Park Estates) Ltd. on Oct. 27, 2008. The company can be reached through Grant Thornton UK LLP at: No. 1 Whitehall Riverside Leeds LS1 4BN England RATHVILLY SCHOOL: Names Joint Administrators from Deloitte ---------------------------------------------------------- Stephen Anthony John Ramsbottom and Dominic Lee Zoong Wong of Deloitte & Touche LLP were appointed joint administrators of Rathvilly Private School Ltd. on Oct. 29, 2008. The company can be reached through Deloitte & Touche LLP at: Blenheim House Fitzalan Court Newport Road Cardiff CF24 0TS Wales REC PLANTATION: Fitch Cuts Rating on Class E Notes to BB -------------------------------------------------------- Fitch Ratings downgraded REC Plantation Place Limited's junior notes due 2016 and removed them from Rating Watch Negative. The notes are assigned a Negative Outlook. The senior notes are affirmed, with Outlook on the Class B notes changed to Negative from Stable. -- GBP290.43 million Class A affirmed at 'AAA'; Stable Outlook -- GBP39.75 million Class B affirmed at 'AA'; Outlook revised to Negative from Stable -- GBP44.72 million Class C downgraded to 'A-' (A minus) from 'A'; off RWN; Negative Outlook assigned -- GBP39.75 million Class D downgraded to 'BBB-' (BBB minus) from 'BBB'; off RWN; Negative Outlook assigned -- GBP14.91 million Class E downgraded to 'BB' from 'BBB'; off RWN; Negative Outlook assigned The underlying single loan remains in default as both the A-note and whole loan-to-value ratios continue to be in breach of their respective covenants of 77.7% and 82.1%. The loan's collateral, a Grade A office property located in the City of London, showed a further 7% decline in value in the latest quarterly valuation, increasing the LTV to 93.9% on the A-note and 99.5% on the whole loan. These ratios take into consideration a GBP16.8m one-off cash deposit from the borrower, held in escrow by the issuer. The borrower has submitted a proposal to redeem part of the Class A notes and has suggested the removal of the LTV covenant. The noteholders have yet to comment on this proposal. Alternatives to a restructuring include enforcement of the loan. Fitch has been informed by the servicer that the noteholders are not currently able to force an acceleration of the loan and that enforcement rights over the loan reside with the issuer. Plantation Place remains fully let to 13 tenants, most of which are either rated or considered to be investment-grade quality. Of the rental income, 72% is derived from leases expiring in 2027 or thereafter. The interest coverage ratio remains stable at 1.24x on the A-note and 1.15x on the whole loan, above the covenants of 1.15x and 1.1x, respectively. Despite the ongoing default, both the A- and B-notes continue to amortize. The loan remains in primary servicing. Fitch will continue to monitor the ongoing developments surrounding the LTV covenant breach and possible cures, and comment further once new information is available. An updated performance report is available on Fitch's subscription website. ROL REALISATIONS: Appoints Joint Administrators from PKF -------------------------------------------------------- Matthew Gibson and Jonathan Newell of PKF (UK) LLP were designated Joint Administrators of Rol Realisations Ltd. on Oct. 3, 2008. The company can be reached through PKF (UK) LLP at: Sovereign House Queen Street Manchester M2 5HR England The company rents, supplies and installs various equipments. TAGGART HOMES: Names Joints Administrators from PwC --------------------------------------------------- Garth Andrew Calow and Robert Birchall of PricewaterhouseCoopers LLP were named joint administrators of Taggart Homes Carlisle Ltd. on Oct. 23, 2008. The company's address is: Taggart Homes Carlisle Ltd. 12 Quays Reach Carolina Way Salford Quays Manchester M50 2ZY England TATA STEEL: Fitch Affirms UK Unit's 'BB' LT Foreign Currency IDR ---------------------------------------------------------------- Fitch Ratings revised Tata Steel Limited and Tata Steel U.K. Ltd's Outlook to Negative from Stable. At the same time, the agency has affirmed TSL's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' (BBB minus), National Long-term Issuer Rating at 'AAA(ind)', and TSUK's Long-term foreign currency IDR at 'BB'. The Negative Outlook reflects Fitch's concerns on the ability of parent Tata Sons Limited to support TSL given the sharp drop in the market value of the former's investment holding in public listed companies (primarily Tata Consultancy Services Limited), as well as concerns on margin pressures at TSUK driven by the economic slowdown in Europe, which has resulted in a sharp drop in steel prices. The agency continues to take a consolidated view on TSL in line with its Parent and Subsidiary Rating Linkage methodology -- with TSUK's rating benefiting from potential parental support despite TSUK acquisition debt remaining non- recourse to TSL. When the ratings were assigned, Fitch had provided a one notch uplift to TSL's Long-term foreign currency IDR and National Issuer Rating, reflecting the support expected to be available from Tata Sons Limited. While Tata Sons Limited's credit profile continues to remain strong and its willingness to provide support to TSL remains unchanged due to TSL's flagship status, the ability to provide this support, in Fitch's opinion, has weakened substantially. Fitch believes that a sustained deterioration in Tata Sons Limited's ability to provide support, driven by market value of its investments in public listed companies as outlined above, remaining consistently below US$12 billion during the next nine months, would act as a negative trigger for the ratings. Fitch notes that continued lower steel prices across Europe (including UK) could potentially impact TSUK's standalone profitability and while the Indian operations would continue to generate strong cash flows, the credit metrics for TSUK and TSL could potentially deteriorate, leading to breach of the consolidated net financial leverage trigger of 3.5x, resulting in a negative rating action. The agency however notes that TSL has plans to raise substantial equity for meeting its investment requirements and derisk the TSUK operations through captive raw material linkages which could potentially provide downside cushion. While the capex/investment plans of USD10,957m for the next three years are higher than earlier estimates, Fitch also notes that greenfield projects in India continue to remain exposed to regulatory risks leading to uncertainty on timing and are somewhat discretionary in nature. Derisking of the balance sheet through these initiatives coupled with a sustained improvement in Tata Sons Limited's ability to support TSL could potentially lead to the Outlook reverting to Stable from Negative. The ratings continue to reflect the strength of TSL's low cost operations in India with captive sources of iron-ore and coal, the high-end nature of TSUK's domestic operations allowing it to pass raw material price increases to end consumers and an improving but still moderate financial profile. The consolidated performance in FY08 benefited from a strong performance from its India and UK operations (contributing 46% and 51% to overall EBITDA), resulting in EBITDAR margins of 13.8% and a net debt/EBITDA of 2.7x. The profitability of TSUK's operations has benefited from the continued improvement process which resulted in substantial cost savings of USD600m in FY08 and is also expected to contribute substantially in FY09 and FY10. Fitch has also taken cognizance of TSL's recent equity infusion of GBP250m into TSUK to mitigate risks of a potential breach of covenant under its Secured Facility Agreement, driven by higher working capital requirements on account of the sharp increase in iron-ore and coal prices. TSL is the flagship of the Tata Group and the sixth-largest steel producer in the world. TSL's revenue composition remains tilted towards Europe which contributed 69% of revenues in FY08 with India contributing 15%, Asia contributing12% and 5% from other markets. Fitch also affirmed the ratings on TSL and TSUK's debt instruments: TSL: -- Long Term Debt aggregating INR58.5bn: National Long-term Rating at 'AAA (ind)'; -- Non-Convertible Debenture Issue of INR20bn: National Long- term Rating at 'AAA (ind)'; -- Fund Based Cash Credit Limits of INR10.6bn and Non-Fund Based Limits of INR23.40bn: National Long- term Rating at 'AAA (ind)'; -- Fund Based Limits of INR7.25bn and Non-Fund Based Limits of INR7.6bn: National Short-term Rating at 'F1+(ind)'; and -- Commercial Paper/Short Term Debt of INR9.75bn: National Rating of 'F1+(ind)'. TSUK and its subsidiaries: -- Senior Secured Bank Loan Facilities aggregating GBP 3.67bn: Long-term rating at 'BB+'. At the same time, Fitch assigned a National Rating of 'AAA(ind)' to TSL's proposed INR15bn non-convertible debenture program. * Downturn Hampers Rescue of Ailing Businesses, PwC Survey Shows ---------------------------------------------------------------- The downturn has made it more difficult to rescue ailing businesses according to 75% of respondents of a survey by PricewaterhouseCoopers LLP of its Turnaround Director (TD) Panel. The survey further indicates that businesses do not seem to have learned lessons from the last downturn. Almost 60% of TDs believe that companies are failing to both recognize when they are struggling and to bring in help early enough, according to the first in a series of quarterly surveys carried out by PwC. TDs have in fact revealed that they are being brought in at the same point in a company's cycle as in previous downturns. The findings, which were sought as part of PwC's Managing in a Downturn campaign, reflect the views of more than 100 members of the PwC Turnaround Director Panel that consists of senior executives, many with specialist expertise in corporate rescue, who can be introduced to a troubled business and take on an executive role in its turnaround. Richard Boys-Stones, partner, Business Recovery Services at PricewaterhouseCoopers LLP, says: "These Turnaround Directors are really at the sharp end of the current downturn. They can see trends and issues emerging before they trickle down into mainstream thinking. The increased complexity of capital and stakeholder structures established in recent years means that this downturn presents challenges not previously seen, currently making it more difficult to turn a business around according to three quarters of TDs that participated in the survey." More than 83% of respondents anticipate a deterioration of the economic situation over the next year, and the results show that TDs do not believe we have seen the full effects of the downturn, particularly on headline consumer spending and SMEs. Over half of the Panel says the turnaround process is already taking longer than six months ago, with the drying up of credit and greater scrutiny from financial institutions being highlighted by most of those surveyed. Richard Boys-Stones, partner, Business Recovery Services at PricewaterhouseCoopers LLP, concluded: "Clear visibility and control over cash coupled with a practical realistic assessment of different outcomes is essential. If one message can be taken away from this first survey, it is that managers need to be increasingly decisive and act now to ensure the survival of their business. "PwC has developed a simple framework of '10 Fundamental Priorities' that we believe businesses need to focus on if they are to survive the downturn and leave themselves well positioned for when the market improves. A combination of PwC's wide capability and additional turnaround executive experience is supporting an increasing number of businesses." About PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP -- http://www.pwc.co.uk/-- provides industry-focused assurance, tax and advisory services. It has more than 16,000 partners and staff in offices around the UK. * EU Service Sector Set to Contract, KPMG Survey Says ----------------------------------------------------- The mood among EU service providers has darkened in the autumn as the wider financial market turmoil intensifies and signs of a worldwide downturn have grown. The key development from the latest KPMG Business Outlook Survey, which surveys around 2,800 service sector firms across the EU, is that the twelve-month outlook for business activity has turned negative. Following expectations of weaker growth over the previous two surveys, activity is now expected to contract on both the volume and revenue measures. Moreover, every non-price measure has fallen into negative territory, including new business, employment, profits, capital expenditure and outsourcing. While the latest survey findings firmly point to the onset of recession in the EU over the next twelve months, inflation expectations have also retreated. Total input costs for service providers are still expected to rise overall, but at the weakest rate in the survey history*. This follows record high expectations back in the spring when oil prices were still climbing. With reduced upward pressure on input costs and declining demand conditions, service providers' expectations for charge inflation also sank to a new low. Outlook findings: Confidence in the EU service sector economy regarding the outlook for business activity over the next twelve months sank dramatically in October to a record survey low. The net balance of the expected volume of business activity has fallen three times in a row since April 2007 and now stands at -2.9 in the latest period. This signals that for the first time in the survey history more service sector companies expect activity to decline than those anticipating growth. Similarly, business revenues are forecast to decline over the next twelve months, with the net balance plummeting from +23.8 to -7.2. Overall pessimism regarding the twelve-month outlook for business activity (both in terms of volumes and revenues) was displayed in France, Spain and Ireland in October. France registered the lowest figure of -15.9, closely followed by Italy (-13.7). In Italy and the UK very modest positive expectations were expressed for business activity, while German service providers were, on average, neutral about the future outlook. The latest survey findings highlighted expectations of falling profits across the EU service sector economy over the next twelve months. The net balance fell sharply from +7.6 to -21.1, the lowest figure to date. Moreover, all six countries are pessimistic regarding profit expectations, with the worst degree of sentiment registered in Spain (-32.2). With activity and revenues expected to decline and profits under threat, service providers in the EU are set to cut workforces over the next twelve months. The net balance fell into negative territory for the first time in October, to -14.4, from +12.2 in April. Pessimism is slightly less marked in the UK than the Eurozone, where Ireland and Spain forecast especially steep job losses (-26.5 and -26.2 respectively). Service sector companies are also expecting to cut back on capital investment as activity declines and the wider availability of credit remains under threat as a result of the worst financial crisis for eighty years. A weaker climate of demand over the next twelve months is widely expected to bring with it reduced inflationary pressures. The net balance of firms' total input costs dropped sharply to a new low of +24.3, far surpassing the previous low of +43.0 recorded in April 2006. Outsourcing costs are expected to increase at the weakest pace, followed by other non-staff costs. The net balance for staff costs was relatively high at +35.4, though this was still a notable fall from April's figure of +56.5 and is the lowest to date. Service providers expect to raise selling prices at a much weaker rate as a result, with the net balance falling to a new low of +8.3. Charges are expected to fall in Ireland (-6.8) and across Post & Telecommunications and Financial Intermediation sectors at the EU level. Commenting on the latest survey findings, Andrew Smith, Chief Economist, KPMG, said: "The extreme downturn in service sector confidence =96- output, profits and employment are now all expected to fall in the coming year =96- spells recession for the wider economy as well. The only saving grace is the collapse in inflation expectations, leaving the door open for deeper interest rate cuts in coming months." About KPMG LLP (UK) KPMG LLP (UK) -- http://kpmg.co.uk/-- provides professional services including audit, tax, financial and risk advisory. KPMG in the UK has over 10,000 partners and staff working in 22 offices and is part of a strong global network of members firms. As part of KPMG Europe it has merged with its German and Swiss firms, making it the largest integrated accounting firm in Europe. ********* 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. Pius Xerxes V. Tovilla, Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda, Joy A. Agravante, Marie Therese V. 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 * * *