/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/081222.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 Monday, December 22, 2008, Vol. 9, No. 253 Headlines A R M E N I A * Ba2 Bond Ratings Constrained by Low Level Economic Development A U S T R I A AVM KG: Claims Registration Period Ends January 29 BAUINGENIEUR SERVICES: Claims Registration Period Ends Jan. 29 COLOR-POINT LLC: Claims Registration Period Ends January 29 DARDI KG: Claims Registration Period Ends January 15 EIGBRECHT FOLIENTECHNIK: Claims Registration Period Ends Jan. 20 C Y P R U S DELANCE LTD: S&P Keeps 'BB-' Corp. Credit Rating; Outlook Negative F R A N C E ALCATEL-LUCENT: Sells Thales Stake to Dassault for EUR1.57 Bil. DELPHI CORP: To Sell Global Exhaust Business to Bienes for US$17MM IXIS CORPORATE: Moody's Downgrades Rating on Class S Notes to Ca NATIXIS SA: Cutting Staff by 40% Under CIB Restructuring Plan VERSAILLES CLO: Moody's Affirms 'Ba2' Rating on EUR14 Mil. Notes * FRANCE: To Slip Into Recession Next Year, Insee Says G E R M A N Y ANTIOCH COMPANY: Wants to Access US$4 Million BoA DIP Facility ARSNOVO INTERNATIONAL: Claims Registration Period Ends Jan. 16 BALU-HAUSTECHNIK GMBH: Claims Registration Period Ends Feb. 22 COM4TEAM GMBH: Claims Registration Period Ends February 20 CONTINENTAL AG: Moody's Downgrades Senior Unsec. Ratings to 'Ba1' DEHLER YACHTS: Goes Into Administration; 180 Jobs at Risk ESCADA AG: S&P Junks Long-Term Corp. Credit Rating; Outlook Neg. LINEATRE VERTRIEBS: Claims Registration Period Ends Feb. 20 TEXTILAGENTUR WICKING: Claims Registration Period Ends Jan. 19 VAC HOLDING: S&P Lowers Long-Term Corporate Credit Rating to 'B-' I C E L A N D GLITNIR BANKI: Rebranded Islandsbanki KAUPTHING BANK: Iceland Requests Data on Luxembourg Units LANDSBANKI ISLANDS: Former Luxembourg Unit Employees Stage Protest * ICELAND: IMF Sees Progress on Financial Sector Restructuring I R E L A N D ALEXANDRIA CAPITAL: Moody's Lowers Ratings on Two Classes to Low-B ELVA FUNDING: Moody's Downgrades Ratings on Six Note Classes ELVA FUNDING: S&P Downgrades Rating on EUR100 Mil. Notes to 'B-' HARRIER FINANCE: Moody's Downgrades Senior Debt and Note Ratings NEW BOND STREET: S&P Junks Credit Rating of Class A Notes RUBY FINANCE: Moody's Withdraws 'B3' Rating on EUR3 Mil. Notes STARTS PLC: Moody's Dowgrades Ratings on Two Note Classes I T A L Y BANCA DI CREDITO: S&P Downgrades Counterparty Ratings to 'BB/B' ITALFINANCE SECURITIZATION: Moody's Assigns 'Ba1' Rating on Notes K A Z A K H S T A N AKLIV LLP: Proof of Claim Deadline Slated for February 4 BURCH-ALMATY LLP: Creditors Must File Claims by February 4 IRS-RIG LLP: Claims Filing Period Ends February 4 JAN SHI: Creditors' Claims Due on February 4 KAZAKH OIL-PRODUCTS: Claims Registration Ends February 3 KUAT LLP: Proof of Claim Deadline Slated for February 4 NABI MULTI: Creditors Must File Claims by February 4 PRODOVOLSTVENNAYA COMPANIYA: Claims Filing Period Ends Feb. 3 RUSLAN LLP: Creditors' Claims Due on February 3 TUSMA I LLP: Claims Registration Ends February 4 K Y R G Y Z S T A N SERVICES AVIATION: Creditors Must File Claims by February 3 L A T V I A * LATVIA: Reaches Deal with IMF on EUR1.7 Bln Economic Program L U X E M B O U R G CARRERA CAPITAL: Moody's Downgrades Capital Note Rating to 'Ba1' N E T H E R L A N D S BALLY TECHNOLOGIES: Opens New European Headquarters in Amsterdam IFCO SYSTEMS: S&P Puts 'BB-' Corp. Credit Rating on WatchNeg. ROMPETROL GROUP: S&P Keeps 'B+' Cop. Credit Rating; Outlook Neg. R U S S I A ARTSTROY LLC: Creditor Must File Claims by January 12 BELOVSKIY MINING: Creditors Must File Claims by February 12 COAL ENERGY: Altay Bankruptcy Hearing Set February 16 GAZPROMBANK MORTGAGE: S&P Junks Ratings on Class B and C Notes ISTA-STROY LLC: Creditors Must File Claims by February 12 JFC GROUP: S&P Junks Corp. Credit Rating on Eroding Liquidity KOMI-TRANS-GAS CJSC: Perm Bankruptcy Hearing Set March 18 MOSCOW OBLAST: S&P Downgrades Issuer Credit Ratings to 'SD' MOSCOW REGIONAL: S&P Downgrades Issuer Credit Rating to 'SD' NATIONAL FACTORING: Moody's Reviews 'Ratings for Possible Cuts PULYUS LLC: Novosibirsk Bankruptcy Hearing Set December 22 RUS LLC: Creditors Must File Claims by January 12 SAMREK CJSC: Creditors Must File Claims by January 12 SCANDINAVIA INSURANCE: A.M. Best Affirms FSR at "B" & ICR at "bb+" TATSINSKIY CANNERY: Creditor Must File Claims by February 12 * RUSSIA: Sets Aside Addt'l RUR150 Bln to Prop Up Real Economy S E R B I A & M O N T E N E G R O * Moody's Changes Outlook on Montenegro's Ba2 Rating to Negative S P A I N BONOS DE TITULIZACION: Moody's Puts 'Ba3' Rating on Class C Notes IM SABADELL: Moody's Puts (P)Ba2 Rating on EUR121.8 Mln Notes S W E D E N FORD MOTOR: Will Extend Plant Shutdown to January 12 S W I T Z E R L A N D FERD. HOHNS: Creditors Must File Proofs of Claim by January 5 GEMAKO LLC: Deadline to File Proofs of Claim Set January 2 IMAGOS LLC: Creditors Have Until January 3 to File Claims MM FIORI: Proofs of Claim Filing Deadline is February 11 SATRAT LLC: Creditors' Proofs of Claim Due by February 7 WEBER SOLPROTECT: January 31 Set as Deadline to File Claims U K R A I N E DARINA LLC: Creditors Must File Claims by January 3 ENERGY OIL: Creditors Must File Claims by January 3 INSOL NIK: Creditors Must File Claims by January 3 INTRANS TECH: Creditors Must File Claims by January 3 KANKOR LLC: Creditors Must File Claims by January 3 KRAMATORSK BREWERY: Creditors Must File Claims by January 3 PRAKTIK-SERVICE LLC: Creditors Must File Claims by Jan. 3 TECHNOBUILDINGSERVICE LLC: Creditors Must File Claims by Jan. 3 UKRTECHNOSERVICE LLC: Creditors Must File Claims by January 3 U N I T E D K I N G D O M APOLLO LTD: Appoints Joint Liquidators from Smith & Williamson ARLO IV: Moody's Downgrades Ratings on Three Classes to Low-B BRITISH AIRWAYS: Merger Talks With Qantas Ends EDEUS EUROPE: Names Joint Administrators from KPMG FULHAM ROAD: S&P Withdraws Ratings on Six European CDO Tranches KAUPTHING SINGER: Tynwald Okays GBP11 Mln Payment Scheme to Savers LASER CUTTING: Taps Joint Administrators from PwC LEWIS & MAY: Appoints Joint Administrators from Baker Tilly MARBLE ARCH: S&P Downgrades Ratings on Class D Notes to 'BB' RALLY CDO: Moody's Downgrades Ratings on Four Classes of Notes TATA MOTORS: In Talks with UK Gov't Over Jaguar State Aid TATA STEEL: Corus UK Staff to Lose Anti-Social Shift Premiums WOOLWORTHS PLC: 807 Stores to Close by January 5 YHC DEVELOPMENTS: Names Joint Administrators from Ernst & Young X X X X X X X X * Car Czar May Force Bankruptcy Filing for GM & Chrysler * 80 Automotive Suppliers at Risk of Becoming Insolvent * BOND PRICING: For the Week Dec. 15 to Dec. 19, 2008 ********* ============= A R M E N I A ============= * Ba2 Bond Ratings Constrained by Low Level Economic Development -------------------------------------------------------------- Armenia's Ba2 government bond ratings and stable outlook are supported by its manageable debt levels, says Moody's Investors Service in its annual report on the country. The ratings are constrained by the low level of economic and institutional development of the country, along with its concentrated economic base and volatile neighborhood. "Armenia has not been directly affected by the global credit crunch although second-round effects are now being felt from the compression of world demand and the difficult conditions in Russia, its primary trading partner and the source of large diaspora remittances," said Moody's Associate Vice President Joan Feldbaum-Vidra, Moody's sovereign analyst for Armenia. She said growth is likely to decelerate sharply in the next few years even as the government moves forward with large public sector investment projects financed by multilateral funds. The spending on such projects should help sustain the growth momentum even as the fiscal deficits are set to shrink. "The country's low government debt and minimal refinancing risks are allowing its rating to maintain a stable outlook in the current environment," said Ms. Feldbaum-Vidra. "A weak revenue base is the main fiscal risk, although it is ameliorated by the very comfortable debt service profile, its good relations with its official creditors, and the liquidity provided by the expatriate Armenian community." Moody's reports that Armenia's economic prospects continue to be hampered by strained relations with Turkey and Azerbaijan, and that the border between Turkey and Armenia is closed, increasing the cost of both exports and imports. "Armenia's low institutional strength is another constraint on its ratings," said Feldbaum-Vidra. "The authorities are very keen to address this, recognizing that high levels of corruption and a suboptimal business climate need to be corrected in order to achieve long-term sustainable growth and to attract investment." Moody's first-ever ratings for Armenia were assigned in 2006 and include a Baa3 ceiling to foreign currency bonds and notes and a Ba3 ceiling for foreign currency bank deposits, all with stable outlooks. ============= A U S T R I A ============= AVM KG: Claims Registration Period Ends January 29 -------------------------------------------------- Creditors owed money by KG AVM (FN 291840b) have until Jan. 29, 2009, to file written proofs of claim to the court-appointed estate administrator: Dr. Karl F. Engelhart Esteplatz 4 1030 Wien Austria Tel: 712 33 30-0 Fax: DW 30 Creditors and other interested parties are encouraged to attend the creditors' meeting at 10:10 a.m. on Feb. 12, 2009, for the examination of claims at: Trade Court of Vienna Room 1707 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Nov. 18, 2008, (Bankr. Case No. 2 S 149/08m). BAUINGENIEUR SERVICES: Claims Registration Period Ends Jan. 29 -------------------------------------------------------------- Creditors owed money by LLC Bauingenieur Services (FN 259265y) have until Jan. 29, 2009, to file written proofs of claim to the court-appointed estate administrator: Kurt Bernegger Jaquingasse 21 1030 Wien Austria Tel: 01/799 15 80 Fax: 01/796 59 14 E-mail: kanzlei@bernegger-wt.com Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:30 a.m. on Feb. 12, 2009, for the examination of claims at: Trade Court of Vienna Room 1707 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Nov. 18, 2008, (Bankr. Case No. 2 S 148/08i). COLOR-POINT LLC: Claims Registration Period Ends January 29 ----------------------------------------------------------- Creditors owed money by LLC Color-Point (FN 247058x) have until Jan. 29, 2009, to file written proofs of claim to the court- appointed estate administrator: Dr. Annemarie Kosesnik-Wehrle Oelzeltgasse 4/6 1030 Wien Austria Tel: 713 61 92 Fax: DW 22 E-mail: kanzlei@kosesnik-langer.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:50 a.m. on Feb. 12, 2009, for the examination of claims at: Trade Court of Vienna Room 1707 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Nov. 18, 2008, (Bankr. Case No. 2 S 147/08t). DARDI KG: Claims Registration Period Ends January 15 ---------------------------------------------------- Creditors owed money by KG Dardi (FN 289494b) have until Jan. 15, 2009, to file written proofs of claim to the court- appointed estate administrator: Dr. Arno Maschke Mariahilfer Strasse 50 1070 Wien Austria Tel: 523 62 00 Fax: 526 72 74 E-mail: office@sup.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:45 a.m. on Jan. 29, 2009, for the examination of claims at: Trade Court of Vienna Room 1703 Vienna Austria Headquartered in Vienna, Austria, the Debtor declared bankruptcy on Nov. 18, 2008, (Bankr. Case No. 5 S 121/08s). EIGBRECHT FOLIENTECHNIK: Claims Registration Period Ends Jan. 20 ---------------------------------------------------------------- Creditors owed money by LLC Eigbrecht Folientechnik (FN 87164h) have until Jan. 20, 2009, to file written proofs of claim to the court-appointed estate administrator: Gerhard Nathschlager Eisenhandstrasse 15 4020 Linz Austria Tel: 77 55 44-16 Fax: 77 55 44-10 E-mail: insolvenz@bzp.at Creditors and other interested parties are encouraged to attend the creditors' meeting at 9:00 a.m. on Feb. 3, 2009, for the examination of claims at: Land Court of Linz Hall 522 Linz Austria Headquartered in Pucking, Austria, the Debtor declared bankruptcy on Nov. 14, 2008, (Bankr. Case No. 17 S 54/08b). =========== C Y P R U S =========== DELANCE LTD: S&P Keeps 'BB-' Corp. Credit Rating; Outlook Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it had revised its outlook on Cyprus-based Delance Ltd. to negative from stable. All ratings, including the 'BB-' corporate credit ratings on the company, and those on group financing vehicle Colgrade Ltd. were affirmed. Delance Ltd. is the holding company of Rolf Group, Russia's largest importer and retailer of foreign-branded cars. "The outlook revision follows a deterioration in the outlook for the Russian car market and a recent decision by the Russian government to increase import duties on new cars to 30% from 25%, which is expected to further reduce demand for most foreign branded cars. This in turn is expected to negatively impact Rolf Group's operating and financial performance, which will likely pressure the group's credit protection measures," said Standard & Poor's credit analyst Anna Stegert. The trading outlook for the Russian car market has become increasingly gloomy in recent months. GDP growth is expected to sharply decelerate and economic output in nominal U.S. dollar terms is likely to decline, which in turn negatively impacts the disposable incomes of Russian consumers. Additionally, the depreciation of the ruble puts upward pressure on the ruble- denominated cost of imported cars, which is generally borne by the customer. The increase of import duties is yet another factor that has dented the competitiveness of foreign manufacturers in relation to domestic producers. The ratings continue to depend on the assumption that Rolf Group will manage its liquidity successfully. Such success would entail, for example, the group maintaining its ability to roll over short-term bilateral bank lines and extending its exclusive distribution contract with Mitsubishi when it matures in 2009. =========== F R A N C E =========== ALCATEL-LUCENT: Sells Thales Stake to Dassault for EUR1.57 Bil. --------------------------------------------------------------- Alcatel-Lucent has signed a definitive agreement with Dassault Aviation regarding the acquisition by Dassault Aviation of Alcatel-Lucent's 41,262,481 shares in Thales. The transaction will be based on a price of EUR 38 per share, representing a total value of about EUR1.57 billion. The closing of the transaction, foreseen for spring 2009, is in particular subject to regulatory and administrative approvals, of which those relative to antitrust. About Dassault Aviation Headquartered in Paris, France, Dassault Aviation SA (EPA:AM) -- http://www.dassault-aviation.com/-- operates in the global aviation industry. The Company specializes in the design, manufacture and sale of combat aircraft and executive jets. Its portfolio of products includes Falcon aircraft for the civil aviation market, as well as Mirage 2000 and Rafale aircrafts for the military aviation sector. In addition, Dassault Aviation SA offers spare parts, tools and a range of services, such as technical support, maintenance and repair of airframe equipment and parts. Alongside the aircraft sector, the Company also focuses on space vehicles and pyrotechnical devices. Dassault Aviation SA has a number of subsidiaries, mainly located in the United States and France, including Dassault Falcon Jet, Dassault Falcon Service, Dassault Procurement Services and Sogitec Industries. About Alcatel-Lucent SA France-based Alcatel-Lucent SA (Euronext Paris and NYSE: ALU) -- http://www.alcatel-lucent.com/-- provides product offerings that enable service providers, enterprises and governments worldwide, to deliver voice, data and video communication services to end users. In the field of fixed, mobile and converged broadband networking, Internet protocol (IP) technologies, applications and services, the Company offers the end-to-end product offerings that enable communications services for residential, business customers and customers. It has operations in more than 130 countries. It has three segments: Carrier, Enterprise and Services. The Carrier segment is organized into seven business divisions: IP, fixed access, optics, multicore, applications, code division multiple access networks and mobile access. Its Enterprise business segment provides software, hardware and services that interconnect networks, people, processes and knowledge. Its Services business segment integrates clients' networks. In October 2008, the Company completed the acquisition of Motive, Inc. * * * As reported in the Troubled Company Reporter-Europe on Dec. 17, 2008, Standard & Poor's Ratings Services placed its 'BB-' long- term corporate credit rating on French telecom equipment and services supplier Alcatel Lucent on CreditWatch with negative implications. S&P also placed the 'BB-' long-term corporate credit rating on subsidiary Lucent Technologies Inc. and all issue ratings on both companies on CreditWatch with negative implications. At the same time, S&P affirmed the respective 'B' and 'B-1' short- term ratings on Alcatel Lucent and Lucent Technologies. The rating agency noted that on Sept. 30, 2008, Alcatel Lucent had on-balance-sheet gross debt of EUR5.8 billion, including the equity component of convertible bonds. "The CreditWatch placement follows Alcatel Lucent's strategy and outlook update [], including the company's forecasts of an 8% to 12% drop in its revenues in 2009, at constant currencies," said Standard & Poor's credit analyst Patrice Cochelin. DELPHI CORP: To Sell Global Exhaust Business to Bienes for US$17MM ------------------------------------------------------------------ Delphi Corporation said it received approval from the U.S. Bankruptcy Court for the Southern District of New York for the sale of assets related to the company's global exhaust business to Bienes Turgon for US$17 million, subject to adjustments. "Delphi's sale of its global exhaust business is a significant, meaningful step as the company progresses with ongoing corporate and divisional transformation plans," said Ron Pirtle, president, Delphi Powertrain Systems. "This move further refines our powertrain product portfolio to feature core, differentiated technologies in which Delphi possesses competitive advantages and for which customers are calling." Delphi selected Bienes Turgon as the lead bidder and received court approval to proceed with the sale process for the global exhaust business. Delphi will carefully manage the transition of the business, and the sale will be completed in coordination with Delphi's customers, suppliers, employees, unions and other stakeholders. The transaction, which is subject to certain closing conditions, including completion of consultation procedures with certain unions and works councils, and completion of the closing documents, is expected to close during the first half of 2009. Although the company is divesting its exhaust business, Delphi Powertrain continues to provide full engine management systems -- including air and fuel management, combustion and valvetrain technology -- through its gas EMS product business unit. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. IXIS CORPORATE: Moody's Downgrades Rating on Class S Notes to Ca ---------------------------------------------------------------- Moody's Investors Service has downgraded its rating of one class of notes issued by IXIS Corporate and Investment Bank. The transaction is an issuance under the debt issuance program of IXIS Corporate and Investment Bank. The Series 2495 notes are credit linked to the Class S floating rate notes issued by Tensyr Limited. The rating action follows the downgrade of the Class S Tensyr Limited notes to Ca from Aaa. Moody's initially analyzed this transaction using primarily the methodology and its supplements for repackaged securities as described in Moody's Special Reports: -- Repackaged Securities (October 2001) -- Moody's Refines It's Approach to Rating Structured Notes (July 1997) -- Weighing the Added Credit Risks of Credit-Linked Securities: Update on Moody's Rating Approach (January 1996) The rating action is: IXIS Corporate and Investment Bank: (1) Series 2495 EUR169,000,000 Total Return Notes due 2013 linked to an amount of US$218,900,000 of Class S Floating Rate Notes issued by Tensyr Limited -- Current Rating: Ca -- Prior Rating: Aaa -- Prior Rating Date: 1 February 2007 NATIXIS SA: Cutting Staff by 40% Under CIB Restructuring Plan ------------------------------------------------------------- Natixis SA's supervisory board on December 18 approved the plan presented by its executive management to thoroughly refocus the Corporate and Investment Banking (CIB) business on its historic clients, plain vanilla products and a client-oriented product offering, the company said in a statement. Natixis said it will support the restructuring plan underway since May 2008 by: -- resorbing assets with more risk; -- considerably reducing sources of loss as early as 2009; and -- stepping up cost-cutting actions. Natixis's two main shareholders, represented by Philippe Dupont and Bernard Comolet, confirmed their support of Natixis management, the company said. Refounding Natixis CIB Under the transformation plan for Natixis CIB, the company will: -- put a stop to credit and structured credit proprietary investment activities. These proprietary investment activities (EUR19 billion of risk weighted assets) will be stopped before we implement an already effective specific structure to optimize run-off management; -- halt more complex capital market activities, such as complex equity derivatives, complex fixed-income derivatives, fund derivatives. The equity unit will be downsized, risk will be removed, and it will operate at low cost. Simple derivatives in custody in France will be pooled with intermediation/brokerage activities; -- refocus on historic clients by promoting client operations (major corporates in France and selected corporates in Southern Europe, corporate mid caps in France, institutional investors in Europe and structured finance clients on the international level); -- tighten international presence: major reduction in Asia (most capital market activities stopped and simple client support service maintained) and in the United States (equity derivatives and vanilla corporate stopped), shut down of marginal offices (in South America),development projects abandoned (India and Korea); -- strengthen a risk discipline in all activities. Job Cuts Natixis disclosed that the transformed CIB will result in a 40% staff cut in the more complex capital market activities, i.e 15% fewer employees in CIB: total headcount will decrease from 5,700 employees in March 2008 to 4,860 at the end of 2009. It will also result in a 10% reduction of direct fixed expenses related to CIB. Natixis said it will provide employee representative bodies with the details of this new reorganization project in the upcoming weeks. Strategic Priorities for 2009 Natixis' priorities for 2009 consist in reducing sources of losses as soon as possible and a major decrease in the use of risk weighted assets. Through these measures, Natixis said the company will be in a position to adapt to the new economic environment resulting from the subprime crisis and the collapse of Lehman Brothers in September 2008 and to base its CIB on a strategic choice targetting stability and a reduced risk profile. Madoff Exposure Natixis said in a December 15 press statement that it might have indirectly fallen victim to the fraud for which Bernard Madoff, well known New York financier, was arrested on December 11 by the FBI. Natixis pointed out it has no proprietary investments in the hedge funds managed by Bernard Madoff Investment Securities LLC. On the other hand, the Bank disclosed it has carried out operations for its clients in several world renown funds where the securities were entrusted to first class custodians, most of which are subsidiaries of major international banks. These custodians in turn entrusted the custody of these securities to Bernard L. Madoff Investment Securities LLC, a registered broker under Securities & Exchange Commission regulation, listed on the NASDAQ. According to the company, all statements it held from 2003 to November 2008 show that these funds were almost all invested in US T-bills. Natixis said it is looking into the situation with its attorneys. The Bank reiterated it has no direct exposure and it estimates its maximum net indirect exposure to approximately EUR450 million. The effective impact of this exposure will depend both on the recovery level of the assets deposited on behalf of Natixis and the outcome of the courses of action the Bank can revert to including legal actions, the company said. About Natixis SA France-based Natixis SA (EPA:KN) -- http://www.natixis.com/-- formerly Natexis Banques Populaires, is involved in the banking sector and offers five main types of services: financing and investment banking, asset management, services, receivables management, private equity and private banking. Natixis also consolidates a proportion of the earnings of the retail banking activities of the Caisse d'Epargne Group and the Banque Populaire Group, its main shareholders. The Bank clientele comprises large corporations, medium-sized companies, institutions and the Banque Populaire retail-banking network. The Bank operates in 68 countries located in France, Europe, the Americas, Africa, Asia and Oceania. VERSAILLES CLO: Moody's Affirms 'Ba2' Rating on EUR14 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of the Notes issued by Versailles CLO M.E. I p.l.c.: * Aaa to the EUR7,500,000 Class S Senior Floating Rate Notes due 2023 * Aaa to the EUR102,750,000 Class A-1-D Senior Delayed Draw Floating Rate Notes due 2023 * Aaa to the EUR95,300,000 Class A-1-T Senior Secured Floating Rate Notes due 2023 * Aaa to the EUR33,000,000 Class A-2 Senior Variable Funding Floating Rate Notes due 2023 * Aa2 to the EUR22,500,000 Class B Senior Secured Floating Rate Notes due 2023 * A2 to the EUR18,000,000 Class C Deferrable Secured Floating Rate Notes due 2023 * Baa2 to the EUR12,200,000 Class D Deferrable Secured Floating Rate Notes due 2023 * Ba2 to the EUR14,000,000 Class E Deferrable Secured Floating Rate Notes due 2023 The ratings address the expected loss posed to investors by the legal final maturity. The affirmation of the ratings has been prompted by the execution of a Deed of Novation executed on December 15, 2008, whereby BNP Paribas, acting through its business unit The Leveraged Funds Group, replaces Calyon, acting through its business unit CLO Management Europe, under the Collateral Management Agreement, the Trust Deed , the Collateral Administration Agreement, the Liquidity Facility Agreement and the Agency Agreement of Versailles CLO M.E. I p.l.c. and whereby certain amendments are made to the Collateral Management Agreement. In November 2008, the senior noteholders of Versailles CLO M.E. I p.l.c. voted to appoint BNP Paribas as successor collateral manager. * FRANCE: To Slip Into Recession Next Year, Insee Says ------------------------------------------------------ France will slip into recession in 2009, BBC News reports citing Insee, the country's national statistics agency. BBC relates that according to the agency, the French economy has shrunk by 0.8% in the last three months of 2008 and will contract by another 0.4% in the first quarter of 2009. France, eurozone's second biggest economy, posted growth of 0.1% between July and September, BBC recounts. BBC notes that Insee also predicted that unemployment in France would rise to 8% by the middle of next year, up from 7.7% at the moment. ============= G E R M A N Y ============= ANTIOCH COMPANY: Wants to Access US$4 Million BoA DIP Facility -------------------------------------------------------------- The Antioch Company and its debtor-affiliates obtained permission from the United States Bankruptcy Court for the Southern District of Ohio to obtain US$4 million in postpetition financing from a group of financial institutions led by Bank of America N.A., as agent. The three DIP Lenders have committed to fund these amounts: Lender Commitment ------- ---------- Bank of America, N.A. US$1,428,571 Fifth Third Bank US$1,428,571 National City Bank US$1,142,857 The Debtors also seek the Court's consent to use cash collateral securing repayment of loan to their prepetition lenders. The DIP Loan will bear interest at Prime Rate plus 3%. In the event of default, the facility will incur interest at Prime Rate plus 5%. Interest will be computed on the basis of actual days elapsed and a 365-day year in all cases and will be payable monthly in arrears in cash. According to the Debtors, proceeds of the facility and cash collateral will be used to fund general corporate needs including working capital, and pay fees and expenses related to the financing and the Chapter 11 cases. The Debtors will grant the DIP Lenders first priority senior priming security interests and liens on all of their assets. The DIP Lenders claims' will have priority over and any and all administrative expenses. The DIP facility is subject to a US$250,000 carve-out for payment of fees and expenses incurred by professionals of the Debtors or any statutory committee. The DIP agent will be paid US$40,000 in closing fee in cash for the benefit of the lenders and a US$25,000 in arrangement fee on closing. The DIP facility contains customary and appropriate events of default. The hearing to consider approval of the DIP facility has been postponed to an unset date. It was originally set for Dec. 18, 2009. Michael J. Kaczka, Esq., at McDonald Hopkins LLC, relates the Debtors, the Official Committee of Unsecured Creditors and the Debtors' secured lenders have reached an agreement in principle resolving certain objections to the DIP request raised by the Committee. The Debtors, Mr. Kaczka notes, have submitted a proposed final order to the Court. A full-text copy of the Debtor-in-Possession Agreement is available for free at http://ResearchArchives.com/t/s?3675 A full-text copy of the Cash Collateral Budget is available for free at http://ResearchArchives.com/t/s?3676 About Antioch Co. The Antioch Co. -- http://www.antiochcompany.com/-- owns St. Cloud-based Creative Memories. The company was founded in 1926. It consists of operating and business units located in Ohio, Minnesota, Nevada, and Virginia. The direct-selling division encompasses the U.S. and Puerto Rico, Canada, Australia, New Zealand, Germany, Japan and the United Kingdom, with expansion planned in other European countries. The Antioch employs more than 1,090 people and manufactures, packages and markets more than 3,000 products to tens of thousands of independent sales consultants and retail dealers. As reported in the Troubled Company Reporter on Nov. 17, 2008, The Antioch reached an agreement with lenders to restructure its debt. To facilitate this agreement, Antioch and six of its subsidiaries filed voluntary petitions for Chapter 11 protection on Nov. 13, 2008 (Bankr. S.D. Ohio Lead Case No. 08-35741). McDonald Hopkins LLC represents the Debtors in their restructuring efforts. The United States Trustee for Region 9 appointed creditors to serve on an Official Committee of Unsecured Creditors. In their summary of schedules, the Debtors listed US$66,388,321 in total assets and US$141,142,236 in total liabilities. ARSNOVO INTERNATIONAL: Claims Registration Period Ends Jan. 16 -------------------------------------------------------------- Creditors of Arsnovo International GmbH have until Jan. 16, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 10:30 a.m. on Feb. 12, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Osnabrueck Branch N 301 Nebenstelle Kollegienwall 10 49074 Osnabrueck Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Frank Krueger Sutthauser Str. 394 49080 Osnabrueck Germany Tel: 0541-990330 Fax: 0541-9903310 The District Court opened bankruptcy proceedings against the company on Dec. 8, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Arsnovo International GmbH Attn: Ralph Mielenbrink, Manager Zum Rott 22 49078 Osnabrueck Germany BALU-HAUSTECHNIK GMBH: Claims Registration Period Ends Feb. 22 -------------------------------------------------------------- Creditors of BALU-Haustechnik GmbH have until Feb. 22, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 9:30 a.m. on March 19, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Neumuenster Meeting Hall B.031 Law Courts Boostedter Strasse 26 Neumuenster Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Helmut Gattermann Strassenbahnring 3 20251 Hamburg Germany The District Court opened bankruptcy proceedings against the company on Dec. 8, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: BALU-Haustechnik GmbH Attn: Heino Neubieser, Manager Bruegger Chaussee 5 24582 Wattenbek Germany COM4TEAM GMBH: Claims Registration Period Ends February 20 ---------------------------------------------------------- Creditors of COM4TEAM GmbH have until Feb. 20, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 10:15 a.m. on March 13, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Syke Hall 112 Hauptstr. 5A 28857 Syke Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Jan H. Wilhelm Am Markt 1 28195 Bremen Germany Tel: 0421/178765 Fax: 0421/1787665 The District Court opened bankruptcy proceedings against the company on Dec. 8, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: COM4TEAM GmbH Attn: Sascha Kleijn, Manager Ruschkamp 1 28844 Weyhe Germany CONTINENTAL AG: Moody's Downgrades Senior Unsec. Ratings to 'Ba1' ----------------------------------------------------------------- Moody's Investors Service has downgraded to Ba1 from Baa3 the senior unsecured long-term ratings and to Not Prime from Prime-3 the short-term ratings of Continental AG and its subsidiaries. At the same time Moody's assigned a Ba1 Corporate Family Rating. This concludes the review for downgrade initiated November 7, 2008. The outlook on the ratings is negative. Falk Frey, Senior Vice President and lead analyst at Moody's for Continental AG, commented: "The downgrade of Conti's ratings reflects another downward revision of the company's expectations operating performance in fiscal 2008 that will result in weaker credit metrics than anticipated and far below investment grade levels. Given the significant decrease in production volumes expected in 2009 the improvement in Conti's key financial metrics is likely to be slower than previously expected by Moody's and debt repayment will be far behind the pace built in the rating." Mr. Frey went on to say:" The negative outlook reflects the risks of further weakening in Conti's credit metrics in 2009, the need to successfully re-negotiate its financial covenants and the uncertainty over the strategy of its potential main shareholder, Schaeffler Group, assuming the transaction is approved by EU." Downgrades: Issuer: Continental AG -- Multiple Seniority Medium-Term Note Program, Downgraded to a range of Ba1 to NP from a range of Baa3 to P-3 Issuer: Continental Rubber of America Corporation -- Multiple Seniority Medium-Term Note Program, Downgraded to a range of Ba1 to NP from a range of Baa3 to P-3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 Assignments: Issuer: Continental AG -- Probability of Default Rating, Assigned Ba1 -- Corporate Family Rating, Assigned Ba1 -- Multiple Seniority Medium-Term Note Program, Assigned LGD3 Issuer: Continental Rubber of America Corporation -- Multiple Seniority Medium-Term Note Program, Assigned LGD3 -- Senior Unsecured Regular Bond/Debenture, Assigned LGD3 Outlook Actions: Issuer: Continental AG -- Outlook, Changed To Negative From Rating Under Review Issuer: Continental Rubber of America Corporation -- Outlook, Changed To Negative From Rating Under Review On December 10, Conti has again revised downwards its expectations for fiscal year 2008, now anticipating an EBIT margin (before the adjustment for amortization and depreciation of purchase price allocation, integration and restructuring costs) of 7.5%-8.0%. The former expectation was an EBIT margin of 8.5% revised from its original expectation of more than 9.3%. Moreover, the company has not ruled out to take a goodwill impairment of up to EUR1.0 billion for part of the VDO business acquired. Moody's acknowledges Conti's additional measures to preserve free cash flow for FY2009, including the consideration to refrain from dividend payments for fiscal 2008, a reduction in capital expenditures and R&D spending and the ongoing focus on working capital management. Moody's also notes that the company has a sound business model and solid competitive positions in its business segments. The ratings could come under further downward pressure should visibility of a further deterioration in key credit metrics in FY2009 arise, exemplified by (i) Debt/EBITDA materially exceeding 4.0x, (ii) RCF/Net Debt falling below 15% and (iii) failure to generate Free Cash Flow in an amount of around EUR500 million as well as (iv) a materially negative impact on profitability and cash flows resulting from a potential bankruptcy filing of one of the Detroit-3. Moody's views Conti's cash sources for the next 12 months to be sufficient to cover its cash needs. This view is based on the company's cash position of nearly EUR1.0 billion as of September 30, 2008, its sizable headroom under its EUR2.5 billion revolving credit facility maturing August 2012 and the cash flow generated from operations which should altogether be sufficient to meet the needs for cash arising from debt maturities, capital expenditures, working capital and day-to-day needs. Moody's notes however that Conti faces substantial refinancing risk from its EUR3.5 billion credit facility maturing by August 2010. Moody's last rating action on Conti was to place the Baa3 long- term and Prime-3 short-term ratings under review for a possible downgrade on November 7, 2008. Headquartered in Hanover, Germany, Continental AG - with targeted annual sales of more than EUR26.4 billion in 2008 - is one of the top automotive suppliers worldwide in the areas chassis and safety technology, interior and infotainment and powertrain as well as the world's fourth-largest manufacturer of passenger and commercial vehicle tires. In FY2007 Conti generated consolidated sales of EUR16.6 billion (including Siemens VDO starting December 1, 2007). DEHLER YACHTS: Goes Into Administration; 180 Jobs at Risk --------------------------------------------------------- Marian Martin at BYM News reports that German yacht builder Dehler has gone into administration, putting 180 jobs at risk. Axel Kampmann was appointed as provisional insolvency administrator of the company Thursday last week, the report discloses. According to the report, workers at Dehler instigated the opening of insolvency proceedings in the Arnsberg District Court. The report recounts that at the end of October, workers had been told by Dehler CEO Wilan van den Berg that a EUR4 million bank guarantee North Rhine Westphalia had ensured the company's future. However, it became clear Monday last week that the bank's requirements concerning a second managing director and other clauses had not been fulfilled and the money would not, therefore, be available, the report states. The workers, the report notes, blamed mismanagement for the company's collapse. They claimed that although production has been at low level for some months, there is no lack of orders simply a lack of capital to purchase materials to fulfill those orders, the report relates. ESCADA AG: S&P Junks Long-Term Corp. Credit Rating; Outlook Neg. ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it had lowered its long-term corporate credit rating on German high-end women's fashion designer and retailer ESCADA AG to 'CCC+' from 'B-' due to the company's ongoing operating underperformance. The outlook is negative. At the same time, the senior unsecured debt rating on ESCADA's EUR200 million note issue due in 2012 was also lowered to 'CCC+' from 'B-'. The recovery rating of '3' on the notes remains unchanged, indicating that lenders can expect meaningful (50%-70%) recovery in the event of a payment default. "The downgrade reflects ongoing low consumer confidence linked to the general economic slowdown, which is increasing the execution risk associated with management's turnaround program. This heightens S&P's concerns regarding ESCADA's ability to improve its operating profitability and maintain access to its EUR60 million bilateral credit facilities over the coming quarters," said Standard & Poor's credit analyst Diego Festa. In financial year ended October 2008, ESCADA's like-for-like sales fell by a low double-digit percentage on 2007 figures, leading EBITDA in the period to plummet by EUR49 million to EUR20 million, according to ESCADA's preliminary figures. Declining sales and profitability in the past four quarters are attributed to the very weak customer response to the company's Fall/Winter 2008 and Spring/Summer 2009 collections. The deterioration of macroeconomic conditions in key markets is also a compounding factor. Debt measures are correspondingly very weak, evidenced by a ratio of reported gross debt-to-EBITDA in excess of 10x on the basis of the preliminary results. Besides working capital needs, the operational recovery and brand repositioning of the company require further funds to invest in merchandising, marketing, shop refurbishment, and restructuring. This means that further support from the shareholders is essential to improve the company's liquidity position. There is a possibility that the continuing decline in ESCADA's operating profits will continue over the coming quarters, increasing near-term pressures on the company's liquidity position. S&P would lower the rating if ESCADA's efforts to achieve the planned turnaround fail to halt its falling profits, making available sources insufficient to meet the company's needs over the next few quarters. A positive rating action appears highly unlikely in the short term, given that ESCADA would need to demonstrate sustainable profitability improvement supported by adequate liquidity. LINEATRE VERTRIEBS: Claims Registration Period Ends Feb. 20 ----------------------------------------------------------- Creditors of LINEATRE Vertriebs GmbH & Co. Kg. have until Feb. 20, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 11.15 a.m. on Feb. 9, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Memmingen Meeting Hall 115 Ground Floor Buxacher Strasse 6 Memmingen Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Dieter Schmid (Kanzlei Pluta) Karlstrasse 33 89073 Ulm Germany Tel: 0731/968800 Fax: 0731/9688051 The District Court opened bankruptcy proceedings against the company on Dec. 10, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: LINEATRE Vertriebs GmbH & Co. Kg Attn: Schickel Peter and Dreyer-Schickel Gabriele, Managers Am Sandberg 15 86865 Markt Wald Germany TEXTILAGENTUR WICKING: Claims Registration Period Ends Jan. 19 -------------------------------------------------------------- Creditors of Textilagentur Wicking GmbH have until Jan. 19, 2009, to register their claims with court-appointed insolvency manager. Creditors and other interested parties are encouraged to attend the meeting at 9:00 a.m. on March 2, 2009, at which time the insolvency manager will present his first report. The meeting of creditors will be held at: The District Court of Aachen Room D 1.409 Adalbertsteinweg 92 52070 Aachen Germany Claims set out in the insolvency manager's report will be verified by the court during this meeting. Creditors may also constitute a creditors' committee or opt to appoint a new insolvency manager. The insolvency manager can be reached at: Dr. Ralf Sinz Heissbergstr. 20-22 52066 Aachen Germany Tel: 02411605757 Fax: 02411605758 The District Court opened bankruptcy proceedings against the company on Dec. 8, 2008. Consequently, all pending proceedings against the company have been automatically stayed. The Debtor can be reached at: Textilagentur Wicking GmbH Attn: Roland Wicking, Manager Uhlenhorst 20 52223 Stolberg Germany VAC HOLDING: S&P Lowers Long-Term Corporate Credit Rating to 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term corporate credit rating on Germany-based magnetic materials manufacturer VAC Holding GmbH to 'B-' from 'B'. The 'B' short- term rating was affirmed. The ratings remain on CreditWatch with negative implications, where they were originally placed on Sept. 10, 2008. "The rating action is the result of VAC's weaker-than-expected operating and financial performance over the past two quarters, which has lead to a further tightening of headroom under its financial covenants," said Standard & Poor's credit analyst Anna Stegert. "The CreditWatch status reflects our heightened concerns over the company's ability to comply with financial covenants over the coming quarters given that its performance is likely to be affected by the significantly weaker economic environment, which is expected to persist well into 2009 and potentially beyond," Ms. Stegert stated. The company's performance in 2008 was weaker than expected due to a decline in demand from four of its nine end markets. S&P expects pressures on the company's profitability to increase over the coming quarters given that it will likely not be able to adjust its cost base to the quickly deteriorating demand. This is expected to constrain cash flow generation in the foreseeable future. For the last 12 months ended Sept. 30, 2008, adjusted FFO to debt decreased to about 6% from 7% at year-end 2007. As of Sept. 30, 2008, adjusted debt was about EUR347 million, including reported debt of EUR253 million and adjustments for off- balance-sheet obligations and debt-like liabilities of EUR115 net of available cash amounting to about EUR21 million. As a consequence, fully adjusted debt to EBITDA for the 12 months ended Sept. 30, 2008, was about 5.8x, at the same level than year-end 2007. "At the current rating level, S&P continue to assume that the company will be successful in renegotiating its covenants to restore adequate headroom sustainably above 15% before the end of the first quarter in 2009," said Ms. Stegert. "At the same time, the CreditWatch listing signals the significant risk related to the renegotiation in the currently difficult operating and credit market conditions that are expected to continue throughout 2009, and potentially beyond." S&P expects to resolve the CreditWatch on VAC in the first quarter of 2009. ============= I C E L A N D ============= GLITNIR BANKI: Rebranded Islandsbanki ------------------------------------- Iceland Review reports that it has been decided that as of February 20, 2009, Glitnir banki hf will be known as Islandsbanki, or the Bank of Iceland. Citing Frettabladid, the report relates that according to the bank's new director Birna Einarsdottir, the decision had been made because the brand Glitnir was not reliable anymore. The report notes the changes will take effect in the coming months and cost will be kept as low as possible. About Glitnir banki Headquartered in Reykjavik, Iceland, Glitnir banki hf -- http://www.glitnir.is/-- offers an array of financial services to corporation, financial institutions, investors and individuals. Glitnir banki filed a Chapter 15 petition on November 26, 2008 (Bankr. S.D. N.Y. Case No. 08-14757). The firm has retained Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, as counsel. In its Chapter 15 petition, the company estimated both its assets and debts to be than US$1 billion each. KAUPTHING BANK: Iceland Requests Data on Luxembourg Units --------------------------------------------------------- Bjorgvin G. Sigurdsson, Iceland's minister for business affairs, has demanded from Luc Frieden, his counterpart in Luxembourg, that local authorities grant access to data on the Luxembourg units of failed Icelandic banks to everyone involved in the investigation of the collapse, and the events leading up to the collapse of the Icelandic bank system, Iceland Review reported. The report recalled Sigurdsson told Morgunbladid that the Luxembourg unit of Kaupthing bank hf will not be sold until access to the information has been secured. "There are extensive interests at stake, also for Luxembourgish authorities, that Kaupthing [in Luxembourg] will not go bankrupt. Massive amounts are at stake, a great number of deposits and other claims that would fall on the Luxembourgish and Belgian state with very serious consequences for their bank systems," Mr. Sigurdsson was quoted by the report as saying. A spokesperson at the Luxembourgish Financial Supervisory Authority, however, told Morgunbladid that there is nothing preventing Icelandic and Luxembourgish authorities from cooperating as long as laws are complied with, the report recounted. The report noted that if Kaupthing in Luxembourg goes bankrupt, old Kaupthing will be held responsible for the unit. If that happens, the insolvency process of Kaupthing in Iceland would become more complicated, the report stated. According to the report, Iceland's Kaupthing requires ISK20 billion (US$170 million, EUR127 million) in equity to become operable again. About Kaupthing Bank Headquarted in Reykjavik, Iceland, Kaupthing Bank -- http://www.kaupthing.com-- is engaged in the provision of financial services, such as private banking, asset management, pension services, brokerage services, investment banking, as well as corporate and retail banking. The Bank's offer is targeted at companies, institutional investors and individuals. The Bank is operational in thirteen countries, including Luxembourg, Switzerland, the Nordic countries, the United Kingdom and the United States. The main subsidiaries include Kaupthing Singer & Friedlander and FIH Erhvervsbank. * * * As reported in the Troubled Company Reporter-Europe on October 13, 2008, Fitch Ratings downgraded Kaupthing Bank hf.'s Long-term Issuer Default rating to 'D' from 'CCC' and removed it from Rating Watch Evolving. This follows the announcement that Kaupthing is now subject to similar arrangements as its two Icelandic peers, Glitnir Banki and Landsbanki Islands, with the Icelandic authorities effectively seizing control of the bank. At the same time, Moody's Investors Service downgraded the bank financial strength rating (BFSR) of Kaupthing Bank hf to E from D+, its long-term deposit ratings to Caa1 from Baa3, the long-term senior debt ratings to Caa2 from Ba1. In addition, Moody's downgraded the bank's subordinated debt to C from Ba2 and its preferred stock to C from B1. The bank's short-term rating was downgraded to Not-Prime from P-3. Moody's is maintaining Kaupthing's long-term deposit ratings, the long-term senior debt ratings and its BFSR on review for further possible downgrade. LANDSBANKI ISLANDS: Former Luxembourg Unit Employees Stage Protest ------------------------------------------------------------------ Iceland Review reports that around 70 former employees of Landsbanki's Luxembourg unit and their families protested outside the bank Wednesday last week. According to the report, the employees demanded the term of notice they were promised and which they are entitled to according to law. Citing mbl.is, the report recounts that the employees were informed that they would receive their salaries from the bank's bankrupt estate. The employees, the report states, were asked to hand in the cell phones and cars that they required for their work and was part of their salaries Thursday last week. Landsbanki's remaining employees, however, were not permitted to participate in the protests, the report notes. The Luxembourgish association of bankers, Association Luxembourgeoise des Employes de Banque et Assurance (Aleba), is going to assist the former Landsbanki employees and are planning to sue the bank for unlawful layoffs, the report discloses. The report relates that according to Luxembourgish authorities, Landsbanki in Luxembourg had gone technically bankrupt on December 12. The bank had 160 employees, 35 of whom were Icelandic, the report discloses. The report adds Frettabladid said protests were also organized outside Landsbanki branches in Iceland, Frettabladid. As reported in the TCR-Europe on Dec. 17, 2008, the Commission de Surveillance du Secteur Financier in a press statement on Friday, December 12, 2008, said that in accordance with article 61-1 of the law of 5 April 1993 on the financial sector, as amended, the Tribunal d'arrondissement de Luxembourg [District Court], sitting in commercial matters, ordered the dissolution and the winding-up of Landsbanki Luxembourg S.A. This winding-up takes place following the suspension of payments for the bank declared on October 8, 2008. Landsbanki Luxembourg S.A. is a subsidiary of the Icelandic company Landsbanki Islands hf. The latter has been submitted to the Icelandic regime for the suspension of payments since December 5, 2008. Me Yvette Hamilius, Attorney-at-law, and Mr Franz Prost, accountant, external auditor and partner at Deloitte S.A. have been appointed as liquidators by this judgment. Mrs Karin Guillaume has been appointed as the official receiver. Finally, in accordance with Article 61(7) of said law, the judgment determines the manner in which the winding-up is to be carried out. About Landsbanki Headquartered in Reykjavik, Iceland, Landsbanki Islands hf. -- http://www.landsbanki.is/-- is a financial institution. The Bank filed for Chapter 15 protection on Dec. 9, 2008 (Bankr. S.D. N.Y. Case No.: 08-14921). Gary S. Lee, Esq., at Morrison & Foerster LLP, represents the Debtor. When it filed for protection from its creditors, it listed assets and debts of more than US$1 billion each. * ICELAND: IMF Sees Progress on Financial Sector Restructuring -------------------------------------------------------------- An International Monetary Fund (IMF) mission headed by Mr. Poul Thomsen on Thursday, December 18, 2008, concluded a four-day visit to Iceland to review recent financial, economic, and policy developments. The review was part of the IMF's Emergency Financing Mechanism procedures, which were used to expedite the approval of the Stand-By Arrangement with Iceland on November 19, 2008. During the visit, the mission had productive meetings with Iceland's authorities, as well as parliamentarians and various others representatives of the country's civil society. In Reykjavik, at the conclusion of the visit, Mr. Thomsen said: "Iceland's IMF-supported program is advancing well. The key near- term objective of stabilizing the krona is being met. A judicious monetary policy set the stage for an appreciation of the currency following the liberalization of controls on current account transactions and restoration of the interbank foreign exchange market. As conditions permit, the focus of monetary policy will soon turn to developing a comprehensive and well sequenced plan to lift capital controls and reduce interest rates. "We also welcome the progress on fiscal policy. The draft of the 2009 budget is in line with the program. The authorities have reiterated their commitment to medium-term fiscal consolidation, and are on track to lay out a strategy to this end in the very near future. "Finally, there has been progress on the restructuring of the financial sector, but the most crucial work now lies directly ahead. A framework has been put in place to engage creditors of the old banks, an asset recovery strategy has been put in place, and the groundwork has been laid for a valuation of new and old bank assets. Work on the valuation of assets will now need to commence to bring recapitalization of banks to a conclusion by the end the first quarter. "An IMF mission will visit again in early February to conduct the first formal review under the program." IMF-Supported Program As reported in the TCR-Europe on Nov. 20, 2008, the Executive Board of the International Monetary Fund approved a two-year SDR1.4 billion (about US$2.1 billion) Stand-By Arrangement for Iceland to support the country's program to restore confidence and stabilize the economy. The approval makes SDR560 million (about US$827 million) immediately available and the remainder in eight equal installments of SDR105 million (about US$155 million), subject to quarterly reviews. The Stand-By Arrangement entails exceptional access to IMF resources, amounting to 1,190 percent of Iceland's quota, and was approved under the Fund's fast-track Emergency Financing Mechanism procedures. There are three main objectives of the IMF-supported program: * to contain the negative impact of the crisis on the economy by restoring confidence and stabilizing the exchange rate in the near-term; * to promote a viable domestic banking sector and safeguard international financial relations by implementing a sound banking system strategy that is nondiscriminatory and collaborative; and * to safeguard medium-term fiscal viability by limiting the socialization of losses in the collapsed banks and implementing an ambitious multi-year fiscal consolidation program. Iceland's economic program envisages that the Fund's Stand-By Arrangement will fill about 42 percent of the country's 2008-2010 financing gap. The remainder will be met by official bilateral creditors. Recent Economic Developments Iceland's highly leveraged economy was unprepared to withstand the global financial turmoil. Over the past several years, a number of underlying imbalances built up, making the economy vulnerable to adverse external shocks. A long home-grown, foreign-funded boom led to overstretched private sector balance sheets, with high corporate and household leverage and a large share of foreign exchange-linked and inflation-indexed debt. The current account deficit surged to over 15 percent in each of the past three years, and inflation soared. The banking sector relied on the availability of ample foreign funding to rapidly expand abroad and accumulated assets amounted to almost 900 percent of GDP by end- 2007. At the same time, gross external indebtedness reached 550 percent of GDP, largely on account of the banks. Pressures in international markets and the loss of confidence in Iceland's financial system in October 2008 led to the collapse of its three largest banks, Glitnir, Landsbanki, and Kaupthing. As a result, key asset prices plummeted: the onshore foreign exchange market dried up, the krona depreciated by more than 70 percent in the off-shore market, and the equity market fell by 80 percent. Severe disruptions in the external payments system threatened to quickly spread to the real economy. In response, the government took a number of initial actions while developing the comprehensive program that is now supported by the Stand-By Arrangement. Program Summary Under the program, the Icelandic economy is expected to adjust sharply in the near term. Given the high leverage in the economy and significant dependence of the private sector on foreign currency and inflation-indexed debt, the economy is expected to enter into a serious recession in 2009-10. The anticipated large import compression will, however, lead to a rapid swing of the current account into surplus, providing significant support to the exchange rate going forward. Once confidence is restored and balance sheets readjusted, domestic demand�both investment and consumption�is projected to rebound strongly in 2011. Long-term growth prospects are favorable, in line with Iceland's very strong fundamentals, not least its highly educated labor force, favorable investment climate and rich natural resource endowment. To achieve this outcome, the program focuses on addressing the key challenges at hand: * Preventing further sharp krona depreciation by maintaining an appropriately tight monetary policy in the context of a flexible exchange rate policy. Restrictions on capital outflows will remain in the near term. * Developing a comprehensive and collaborative strategy for bank restructuring by (i) putting in place an efficient organizational structure to facilitate the restructuring process, (ii) proceeding promptly with the valuation of banks' assets, (iii) maximizing asset recovery in the old banks, (iv) ensuring the fair and equitable treatment of depositors and creditors of the intervened banks, and (v) strengthening supervisory practices and the insolvency framework. * Ensuring medium-term fiscal sustainability. While automatic fiscal stabilizers will be allowed to work in full during 2009, the program includes the development of a strong medium-term fiscal consolidation plan to be launched in 2010. This effort is needed to deal with the very substantial increase in public sector debt that is likely as a result of the budgetary cost of recapitalizing the banking system fulfilling the deposit insurance obligations to depositors in foreign branches of Icelandic banks. Iceland joined the IMF on December 27, 1945; its quota is SDR117.6 million (about US$173.6 million), and it has no outstanding use of IMF credits. ============= I R E L A N D ============= ALEXANDRIA CAPITAL: Moody's Lowers Ratings on Two Classes to Low-B ------------------------------------------------------------------ Moody's Investors Service downgraded and left under review for further possible downgrade its ratings of two classes of notes issued by Alexandria Capital plc under the Series 2004-17 (Karnak II). The transaction is a static synthetic CDO^2 referencing five bespoke corporate CDOs and European ABSs, mainly RMBS of 2001�2004 vintages. According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's reference portfolio, which includes but is not limited to exposure to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008; Washington Mutual Inc., which was seized by federal regulators on September 25, 2008 and subsequently virtually all of its assets were sold to JPMorgan Chase; Fannie Mae and Freddie Mac, which were placed into the conservatorship of the U.S. government on September 8, 2008; and Tribune Company, which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on December 8, 2008. Previously the transaction suffered defaults of Delphi Corporation and Quebecor World, Inc. The transaction also has a significant exposure to other corporate names, including General Motors Corporation which is currently rated C, which continue to deteriorate in the current economic environment. This will weigh on the ratings of the tranches in this transaction. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for corporate synthetic CDOs and ABS CDOs as described in Moody's Special Reports: -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) -- Understanding Collateral Risks of Funded Synthetics in CDOs (June 2006) -- Moody's Approach to Rating Multisector CDOs (September 2000) -- Moody's Approach To Rating Synthetic Resecuritizations (October 2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (June 2005) The rating actions are: Alexandria Capital plc -- Series 2004-17 -- Karnak II: (1) EUR20,000,000 "Karnak II" Class A Secured Floating Rate Notes due 20 December 2009, Series 2004-17A -- Current Rating: Ba1, on review for possible downgrade -- Prior Rating: A1 -- Prior Rating Date: 20 June 2008 (2) EUR20,000,000 "Karnak II" Class C Secured Floating Rate Notes due 20 December 2009, Series 2004-17C -- Current Rating: Ba3, on review for possible downgrade -- Prior Rating: Baa1 -- Prior Rating Date: 20 June 2008 ELVA FUNDING: Moody's Downgrades Ratings on Six Note Classes ------------------------------------------------------------ Moody's Investors Service has downgraded and left on review for further possible downgrade its ratings of fifteen classes of notes issued by Elva Funding PLC. The transaction is a static synthetic CDO referencing 10 mezzanine corporate credit default swaps and 40 European ABS assets (of which 11 are currently outstanding). According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's corporate portfolio in particular, which includes but is not limited to exposures to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008; Washington Mutual Inc., which was seized by federal regulators on September 25, 2008 and subsequently virtually all of its assets were sold to JPMorgan Chase and Fannie Mae which was placed into the conservatorship of the U.S. government on September 8, 2008. The transaction also has a significant exposure to other corporate names which continue to deteriorate in the current economic environment. This will weigh on the ratings of the tranches in this transaction. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for ABS CDOs and Corporate Synthetic CDOs as described in Moody's Special Reports: -- Moody's Approach to Rating Multisector CDOs (September 2000) -- Moody's Approach To Rating Synthetic Resecuritizations (October 2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (June 2005) -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Approach to Rating Digital Credit Default Swaps (July 2004) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) The rating actions are: Elva Funding PLC: (1) Series 2004-6 EUR5,000,000 Class A1 Secured Floating Rate Notes due 2013 -- Current Rating: Aa1, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Date: 23 July 2004 (2) Series 2004-6 US$5,000,000 Class A2 Secured Floating Rate Notes due 2013 -- Current Rating: Aa1, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Date: 23 July 2004 (3) Series 2004-6 EUR30,000,000 Class A3 Secured Fixed Rate Notes due 2013 -- Current Rating: Aa1, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Date: 23 July 2004 (4) Series 2004-6 EUR25,000,000 Class B1 Secured Floating Rate Notes due 2013 -- Current Rating: A2, on review for possible downgrade -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (5) Series 2004-6 US$5,000,000 Class B2 Secured Floating Rate Notes due 2013 -- Current Rating: A2, on review for possible downgrade -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (6) Series 2004-6 EUR5,000,000 Class B3 Secured Fixed Rate Notes due 2013 -- Current Rating: A2, on review for possible downgrade -- Prior Rating: Aaa, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (7) Series 2004-6 EUR37,500,000 Class C1 Secured Floating Rate Notes due 2013 -- Current Rating: Baa3, on review for possible downgrade -- Prior Rating: Aa1, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (8) Series 2004-6 US$5,000,000 Class C2 Secured Floating Rate Notes due 2013 -- Current Rating: Baa3, on review for possible downgrade -- Prior Rating: Aa1, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (9) Series 2004-6 EUR5,000,000 Class C3 Secured Fixed Rate Notes due 2013 -- Current Rating: Baa3, on review for possible downgrade -- Prior Rating: Aa1, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (10) Series 2004-6 EUR1,000,000 Class D1 (Sub-Class A) Secured Floating Rate Notes due 2013 -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating: Aa3, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (11) Series 2004-6 EUR6,500,000 Class D1 (Sub-Class B) Secured Floating Rate/Variable Coupon Notes due 2099 -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating: Aa3, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (12) Series 2004-6 US$2,500,000 Class D2 Secured Floating Rate Notes due 2013 -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating: Aa3, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (13) Series 2004-6 EUR2,500,000 Class D3 Secured Fixed Rate Notes due 2013 -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating: Aa2, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (14) Series 2004-6 US$2,500,000 Class E1 Secured Floating Rate Notes due 2013 -- Current Rating: Ba3, on review for possible downgrade -- Prior Rating: A1, on review for possible downgrade -- Prior Rating Date: 02 June 2008 (15) Series 2004-6 EUR2,500,000 Class E2 Secured Floating Rate Notes due 2013 -- Current Rating: Ba3, on review for possible downgrade -- Prior Rating: A1, on review for possible downgrade -- Prior Rating Date: 02 June 2008 ELVA FUNDING: S&P Downgrades Rating on EUR100 Mil. Notes to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'B-' from 'AA' its credit rating on the EUR100 million and JPY1.1 billion secured credit-linked floating-rate notes series 2007- 3 (Euclid CDO) class B2 notes issued by Elva Funding PLC. These step-up credit-linked notes have a loss threshold that increases at a predetermined point in the future. In this transaction, the subordination increases after seven years. S&P assess among other factors the likelihood of breaching the threshold at different points in time when assigning a rating. Following downgrades and credit events in the underlying reference portfolio, S&P's assessment of default risk is now consistent with a 'B-' rating. HARRIER FINANCE: Moody's Downgrades Senior Debt and Note Ratings ---------------------------------------------------------------- Moody's downgraded the senior debt and capital note ratings of structured investment vehicles Harrier Finance Funding and Kestrel Funding, both vehicles sponsored and backed by WestLB AG and managed by Brightwater Capital Management, a division of West LB Asset Management. Moody's actions are: Harrier Finance Funding Limited and Harrier Finance Funding (US) LLC (US$11.7 billion of debt securities affected) Euro and US Medium Term Note Programmes (US$10.7 billion) -- Current Rating: A2 and Prime-1 -- Prior Rating: Aa1, on review for downgrade and Prime-1 Capital Note Programme (US$988 million) -- Current Rating: C -- Prior Rating: Caa2, on review for downgrade Kestrel Funding PLC and Kestrel Funding (US) LLC (US$3.2 billion of debt securities affected) Euro and US Medium Term Note Programmes (US$2.9 billion) -- Current Rating: A2 and Prime-1 -- Prior Rating: Aa3, on review for downgrade and Prime-1 Capital Note Programme (US$315 million) -- Current Rating: C -- Prior Rating: Caa3, on review for downgrade Harrier Finance and Kestrel Funding are SIVs managed by Brightwater Capital Management, a fully owned subsidiary of WestLB AG (A2, Prime-1). Both vehicles were restructured in November 2007 when the sponsoring bank, WestLB AG, provided them with funding facilities that permit the redemption of senior debt as it falls due. The rating actions are prompted by the continued deterioration in market value of the asset portfolios of both vehicles. Harrier's portfolio market value declined to 72% of par as of 21 November 2008 from 81% on 12 September 2008 and 97% on 2 November 2007. Kestrel's portfolio market value also declined to 72% of par as of 21 November 2008 from 80.4% on 12 September 2008 and 95.8% on 2 November 2007. The senior debt ratings of each vehicle are jointly supported by a commitment from WestLB and the vehicle's asset portfolio. However, the significant declines in portfolio market value experienced by both vehicles represent an erosion of the support provided by the portfolio, leaving senior debt ratings fully dependent on the performance of WestLB in meeting its obligations under the funding facilities. As the capital notes of both vehicles do not benefit from sponsor support, Moody's view is that the declines in portfolio market value are likely to lead to losses to capital notes for both vehicles that are commensurate with a rating of C. Methodology For a description of Moody's approach to rating financial institutions, please see the rating methodology reports Bank Financial Strength Rating, Global Methodology, February 2007 and Incorporation of Joint Default Analysis into Moody's Bank Ratings, March 2007. To incorporate the joint support provided by WestLB's rating and each SIV's portfolio, please see the special report Moody's Approach to Jointly Supported Obligations, November 1997. In analyzing the SIVs on a standalone basis, Moody's constructed a cashflow model that incorporates various stressed pricing scenarios in the event of a liquidation of the asset portfolio. The model performs a monthly cashflow analysis of each vehicle across a distribution of possible pricing scenarios for non-cash assets. The assets are assumed to be homogenous and non-granular. Each vehicle's portfolio price is assumed to follow a normal distribution with mean set at the average price, and standard deviation determined as follows. Moody's first computes the decline from par of the market value of each asset portfolio. Moody's then set the standard deviation such that the probability of obtaining a further drop in price of the same magnitude as what has already been observed is equal to a five-year Aaa probability of default. Each portfolio's price is assumed to start at the average level, stressed to account for differences between sale and mark-to- market values. The model then assumes that prices deteriorate to the price obtained from the distribution over the first four months. Thereafter portfolio price returns linearly to par over twice the weighted average life of the portfolio. At each simulated point in the future, the model considers that maturing senior debt and any senior expenses are paid (1) from available cash, (2) by drawing on any available committed liquidity facilities, and (3) by liquidating assets. NEW BOND STREET: S&P Junks Credit Rating of Class A Notes --------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'CCC-' from 'A' and removed from CreditWatch negative its credit rating on the class A notes issued by New Bond Street CDO 2 PLC following downgrades and CreditWatch negative placements of assets in the underlying portfolio. The underlying portfolio comprises U.S. residential mortgage- backed securities and U.S. collateralized debt obligations of asset-backed securities. In S&P's opinion, the further deterioration in the credit quality of the underlying portfolio leads S&P to conclude that an increase in expected loss levels for all rating scenarios is likely, and those losses are not commensurate with S&P's previous ratings. The CDO is a hybrid, meaning that it has a cash CDO structure, but the portfolio contains both cash and synthetic CDO assets. The current collateral in the portfolio comprises largely CDOs of ABS and collateralized loan obligations. All assets in the portfolio are U.S. dollar-denominated. RUBY FINANCE: Moody's Withdraws 'B3' Rating on EUR3 Mil. Notes -------------------------------------------------------------- Moody's Investors Service has withdrawn its rating of one class of notes issued by Ruby Finance Plc. The transaction is a repack of a CLO equity piece. Under a swap guaranteed by Lehman Brothers Holdings Inc, on the maturity date the swap counterparty pays the difference between the principal amount and any amounts that may have been previously paid to noteholders from the CLO proceeds. The rating action follows the withdrawal of Lehman Brothers Holdings Inc's rating. Moody's initially analyzed this transaction using primarily the methodology and its supplements for repackaged securities as described in Moody's Special Reports: -- Repackaged Securities" (October 2001) -- Moody's Refines It's Approach to Rating Structured Notes (July 1997) The rating action is: Ruby Finance Plc: (1) Series No: 2007-7 EUR3,000,000 Dynamic Capital Protected Notes due 2023 -- Current Rating: WR -- Prior Rating: B3 under review for possible downgrade -- Prior Rating Date: 17 September 2008 STARTS PLC: Moody's Dowgrades Ratings on Two Note Classes ---------------------------------------------------------- Moody's Investors Service announced it downgraded and left under review for further possible downgrade its ratings of five classes of notes issued by Starts (Ireland) plc under Amber Structured Finance CDO. The transaction is a synthetic CDO^2 with fixed recovery rates referencing six managed bespoke corporate CDOs and ABSs, mainly European RMBS of 2003�2004 vintages. According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's reference portfolio, which includes but is not limited to exposure to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008; Washington Mutual Inc., which was seized by federal regulators on September 25, 2008 and subsequently virtually all of its assets were sold to JPMorgan Chase; Fannie Mae and Freddie Mac, which were placed into the conservatorship of the U.S. government on September 8, 2008; and two Icelandic banks, specifically Kaupthing Bank hf and Glitnir Banki hf. The transaction also has a significant exposure to other corporate names, including GMAC LLC which is currently rated C, which continue to deteriorate in the current economic environment. This will weigh on the ratings of the tranches in this transaction. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for corporate synthetic CDOs and ABS CDOs as described in Moody's Special Reports: -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Approach to Rating Digital Credit Default Swaps (July 2004) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) -- Understanding Collateral Risks of Funded Synthetics in CDOs (June 2006) -- Moody's Approach to Rating Multisector CDOs (September 2000) -- Moody's Approach To Rating Synthetic Resecuritizations (October 2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (June 2005) The rating actions are: Starts (Ireland) plc -- Amber Structured Finance CDO: (1) EUR19,000,000 Series 2004-1 Class A1-E1 Credit-Linked Notes due 2009 -- Current Rating: Baa2, on review for possible downgrade -- Prior Rating: Aa2 -- Prior Rating Date: 26 September 2008 (2) EUR48,500,000 Series 2004-2 Class A2-E1 Credit-Linked Notes due 2009 -- Current Rating: Ba1, on review for possible downgrade -- Prior Rating: Aa3 -- Prior Rating Date: 26 September 2008 (3) EUR15,000,000 Series 2004-3 Class B-E1 Credit-Linked Notes due 2009 -- Current Rating: Caa1, on review for possible downgrade -- Prior Rating: Baa2 -- Prior Rating Date: 26 September 2008 (4) EUR35,000,000 Series 2004-6 Class A2-E2 Credit-Linked Notes due 2009 -- Current Rating: Ba1, on review for possible downgrade -- Prior Rating: Aa3 -- Prior Rating Date: 26 September 2008 (5) Series 2005-1 US$25,000,000 Class A2-D2 Floating Rate Amber Credit-Linked Notes -- Current Rating: Ba2, on review for possible downgrade -- Prior Rating: A1 -- Prior Rating Date: 26 September 2008 ========= I T A L Y ========= BANCA DI CREDITO: S&P Downgrades Counterparty Ratings to 'BB/B' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it has lowered its long- and short-term counterparty credit ratings on Banca di Credito Cooperativo dell'Alta Padovana SCaRL to 'BB/B' from 'BBB- /A-3' and placed the ratings on CreditWatch with negative implications, primarily because of the bank's rapidly weakening financial profile. The long-term rating benefits from two notches of uplift above the bank's stand-alone creditworthiness, reflecting potential for extraordinary liquidity and capital support from the BCC system through its operating arm Iccrea Banca SpA (A/Stable/A-1). "The downgrade reflects the consistently rapid deterioration of Alta Padovana's loan portfolio and the potential for further deterioration of its credit risk profile, given high concentration on loans to construction and local real estate developers as well as weak risk management," said Standard & Poor's credit analyst Francesca Sacchi. In addition, the bank's bottom-line profitability is to remain under pressure from rising credit risk costs and declining revenues. S&P has furthermore taken into account the bank's material weakened liquidity position, given its need to refinance a significant amount of maturing debt in 2009. To resolve the CreditWatch placement, S&P will reassess the bank's ability to refinance its bond maturing in 2009, as well as the availability of the BCC system to provide liquidity support. S&P will also monitor inflows of problematic assets. S&P expects to review the bank within the next couple of months, and as a result, S&P could affirm the ratings or lower them by one or more notches. ITALFINANCE SECURITIZATION: Moody's Assigns 'Ba1' Rating on Notes ----------------------------------------------------------------- Moody's Investors Service has taken this rating action on notes issued by Italfinance Securitization Vehicle S.r.l. (amounts reflect initial note balance): - EUR959,000,000 Series 2005-1-A Asset Backed Floating Rate Notes due March 2023, Placed Under Review for Possible Downgrade; previously on 9 December 2005 Assigned Aaa; - EUR83,000,000 Series 2005-1-B Asset Backed Floating Rate Notes due March 2023, Placed Under Review for Possible Downgrade; previously on 9 December 2005 Assigned A2; - EUR56,000,000 Series 2005-1-C Asset Backed Floating Rate Notes due March 2023, Placed Under Review for Possible Downgrade; previously on 9 December 2005 Assigned Baa3; and - EUR18,500,000 Series 2005-1-D Asset Backed Floating Rate Notes due March 2023, Placed Under Review for Possible Downgrade; previously on 9 December 2005 Assigned Ba1; The rating action has been prompted by the worse-than-expected collateral performance. Moody's expects to conclude the rating review once Moody's have received additional information and assessed in detail the effects of the performance on the outstanding ratings. ITA 8 is the 12th transaction originated by Banca Italease S.p.A. (Ba1) (60.6% directly originated by Banca Italease S.p.A. and 39.4% originated by Mercantile leasing, 100% owned by Banca Italease S.p.A. The securitized portfolio includes receivables derived from auto, equipment and real estate lease contracts (excluding the relative residual value component of the contracts). The collateral portfolio has experienced so far defaults higher than Moody's initially expected. As of December 2008 reporting date, the transaction has reported a cumulative default rate of 2.8% of the total securitized pool (40% pool factor) whereas Moody's initial mean default assumption was in the range of 2.3% to 2.8% for the life of the transaction. In addition, the total delinquency level has increased from 8.08% to 10.21% over the last 2 periods. The reserve fund has not suffered any drawing since closing. 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. =================== K A Z A K H S T A N =================== AKLIV LLP: Proof of Claim Deadline Slated for February 4 -------------------------------------------------------- The Specialized Inter-Regional Economic Court of Aktube has declared LLP Akliv insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Aktube Altynsarin Str. 31 Aktobe Aktube Kazakhstan Tel: 8 (3132) 21-30-32 BURCH-ALMATY LLP: Creditors Must File Claims by February 4 ---------------------------------------------------------- The Specialized Inter-Regional Economic Court of Almaty has declared LLP Burch-Almaty insolvent on June 13, 2008. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Almaty Makataev Str. 196-36 Almaty Kazakhstan Tel: 8 (7272) 79-86-66 8 (7272) 79-86-76 8 701 795 30-25 IRS-RIG LLP: Claims Filing Period Ends February 4 ------------------------------------------------- The Specialized Inter-Regional Economic Court of Aktube has declared LLP IRS-RIG insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Aktube Altynsarin Str. 31 Aktobe Aktube Kazakhstan Tel: 8 (3132) 21-30-32 JAN SHI: Creditors' Claims Due on February 4 -------------------------------------------- The Specialized Inter-Regional Economic Court of Almaty has declared LLP Jan Shi Chui insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Almaty Makataev Str. 196-36 Almaty Kazakhstan Tel: 8 (7272) 79-86-66 8 (7272) 79-86-76 8 701 795 30-25 KAZAKH OIL-PRODUCTS: Claims Registration Ends February 3 -------------------------------------------------------- Jambyl Branch of LLP Kazakh Oil-Products has declared insolvency. Creditors have until Feb. 3, 2009, to submit proofs of claim to: LLP Kazakh Oil-Products Suleimenov Str. 96 Taraz Jambyl Kazakhstan KUAT LLP: Proof of Claim Deadline Slated for February 4 ------------------------------------------------------- The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP Kuat Company insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of South Kazakhstan Ilyaev Str. 24 Shymkent South Kazakhstan Kazakhstan NABI MULTI: Creditors Must File Claims by February 4 ---------------------------------------------------- The Specialized Inter-Regional Economic Court of Atyrau has declared LLP Nabi Multi Service insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of Atyrau 3rd. Floor Abai Str. 10a Atyrau Kazakhstan Tel: 8 (71222) 32-90-02 PRODOVOLSTVENNAYA COMPANIYA: Claims Filing Period Ends Feb. 3 ------------------------------------------------------------- The Specialized Inter-Regional Economic Court of North Kazakhstan has declared LLP Food Company Prodovolstvennaya Companiya insolvent on Nov. 6, 2008. Creditors have until Feb. 3, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of North Kazakhstan Krasnoznamenny Polk Str. 37 Petropavlovsk, 308 North Kazakhstan Kazakhstan RUSLAN LLP: Creditors' Claims Due on February 3 ----------------------------------------------- The Specialized Inter-Regional Economic Court of North Kazakhstan has declared LLP Corporation Ruslan insolvent. Creditors have until Feb. 3, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of North Kazakhstan Krasnoznamenny Polk Str. 37 Petropavlovsk, 308 North Kazakhstan Kazakhstan TUSMA I LLP: Claims Registration Ends February 4 ------------------------------------------------ The Specialized Inter-Regional Economic Court of South Kazakhstan has declared LLP Tusma I insolvent. Creditors have until Feb. 4, 2009, to submit proofs of claim to: The Specialized Inter-Regional Economic Court of South Kazakhstan Ilyaev Str. 24 Shymkent South Kazakhstan Kazakhstan =================== K Y R G Y Z S T A N =================== SERVICES AVIATION: Creditors Must File Claims by February 3 ---------------------------------------------------------- LLC Transport Services Aviation has declared insolvency. Creditors have until Feb. 3, 2009, to submit written proofs of claim to: LLC Transport Services Aviation Micro District 8, 33a-31 Bishkek Kyrgyzstan =========== L A T V I A =========== * LATVIA: Reaches Deal with IMF on EUR1.7 Bln Economic Program -------------------------------------------------------------- Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), in a press statement on Friday, December 19, 2008, said that an IMF staff mission and the Latvian authorities have reached agreement, subject to approval by IMF Management and the Executive Board, on an economic program supported by a 27- month Stand-By Arrangement for about EUR1.7 billion (US$2.4 billion). The agreement could go to the Executive Board for approval before the end of this year under the Fund's fast-track Emergency Financing Mechanism procedures, Mr. Strauss-Kahn noted. Mr. Strauss-Kahn stated that under the program the Latvian authorities are implementing a strong package of policy measures aimed at stabilizing the economy. In assembling the financial support for the authorities' program, the IMF coordinated closely with the European Union, the World Bank and several Nordic countries. He disclosed the EU will provide a loan of EUR3.1 billion (US$4.3 billion), the Nordic countries EUR1.8 billion (US$2.5 billion), the World Bank EUR400 million (US$557.6 million), the Czech Republic EUR200 million (US$278.8 million), and the European Bank for Reconstruction and Development, Estonia, and Poland EUR100 million each (US$139.4 million). The total financial package amounts to EUR7.5 billion (US$10.5 billion), he added. Mr. Strauss-Kahn said: "The IMF-supported program aims to alleviate immediate liquidity pressures, restore long-term stability, and enhance competitiveness. It is centered on the authorities' objective of maintaining the current exchange rate peg, recognizing that this calls for extraordinarily strong domestic policies, with the support of a broad political and social consensus. "The program includes measures to stabilize the financial sector and restore depositor confidence. It will also require a substantial tightening of fiscal policy, including a headline fiscal deficit of less that 5 percent of GDP in 2009, compared to a deficit of 12 percent of GDP if no additional measures were taken, to reduce financing needs and support an improvement in competitiveness. Supporting structural reforms and wage reductions, led by the public sector, will further strengthen competitiveness and facilitate external adjustment. "Expenditure cuts are necessary but should be structured to support long-term growth and respect social objectives. The IMF supports the protection of social spending embedded in the program. "These strong policies justify the exceptional level of access to Fund resources�equivalent to around 1200 percent of Latvia's quota in the IMF�and deserve the support of the international community. "With Latvia's commitment to strengthened economic policies, we expect that banks and other financial institutions operating in the country will continue to provide adequate financing, and the key players have made commitments to this effect. "We will continue assisting the Latvian authorities in their courageous efforts to adjust in the midst of the global financial turmoil and we will work closely with them and other stakeholders as the program unfolds." =================== L U X E M B O U R G =================== CARRERA CAPITAL: Moody's Downgrades Capital Note Rating to 'Ba1' ---------------------------------------------------------------- Moody's downgraded the senior debt and capital note ratings of Carrera, a structured investment vehicle, and kept the rating of capital notes on review for downgrade. Carrera is sponsored and backed by HSH Nordbank AG. Details of Moody's actions are: Carrera Capital Finance Limited and Carrera Capital Finance LLC Euro and US Medium Term Note Programmes -- Current Rating: Aa3 and Prime-1 -- Prior Rating: Aaa, on review for downgrade and Prime-1 There are currently no debt securities outstanding under this program. Usage of the program is at the discretion of the issuer as market conditions permit. Capital Note Programme (US$359 million) -- Current Rating: Ba1, on review for downgrade -- Prior Rating: Baa2 Carrera Capital is a SIV managed by HSH Nordbank Securities S.A., a subsidiary of HSH Nordbank AG (Aa3, Prime-1). Carrera was restructured in November 2007 when the sponsoring bank, HSH Nordbank, provided committed liquidity facilities to support the vehicle's senior debt. Liquidity provided by HSH covers all senior debt and consists of these components: (1) a Note Purchase and Liquidity Facility, and (2) a Committed Repo Facility. The Repo Facility covers two thirds of senior debt, and has a cap on the margin payable to the facility provider. The Note Purchase and Liquidity Facility makes up the balance of senior debt and is dynamically sized in accordance with outstanding amounts of senior debt and the size of the Repo Facility. Both facilities expire on 13 November 2009 and can be canceled by Carrera as well as by HSH. Upon termination of the Repo Facility by HSH as the counterparty, the Note Purchase and Liquidity Facility amount will increase by a corresponding amount. If HSH as the lender under the Note Purchase and Liquidity Facility delivers a notice stating that the facility will not be renewed, Carrera will then draw down the existing facility in full and use the proceeds to repay senior debt as it falls due. The rating action on senior debt is prompted by the continued deterioration in Carrera's portfolio market value, which had declined to 77% of par as of 21 November 2008 from 87% on 12 September 2008 and 98% on 2 November 2007. The senior debt ratings are jointly supported by the obligations of HSH Nordbank under the liquidity facilities and the vehicle's asset portfolio. However, the significant decline in portfolio market value experienced by the vehicle represents an erosion of the support provided by the portfolio, leaving senior debt ratings fully dependent on the performance of HSH Nordbank in meeting its obligations under the liquidity facilities. The capital note ratings benefit from the issuer's strategy of holding assets to maturity since liquidation would otherwise crystallize losses for this class of investors. This buy-and-hold strategy, instituted by the issuer at launch in July 2006, has not been altered in any way in response to prevailing difficult market conditions. Were the issuer to continue with the strategy, the main risk to capital notes would, in Moody's view, be credit default and recovery rate risks. Carrera's asset portfolio has experienced one default and several downgrades; capital note ratings have therefore come under stress. The manager is exploring remedial steps to address this portfolio credit deterioration as well as any resulting losses given default. Moody's review will take into consideration any actions implemented by the manager. Methodology In analyzing the SIV on a standalone basis, Moody's constructed a cashflow model that incorporates various stressed pricing scenarios in the event of a liquidation of the asset portfolio. The model performs a monthly cashflow analysis of Carrera across a distribution of pricing scenarios for non-cash assets. The assets are assumed to be homogenous and non-granular. Carrera's portfolio price is assumed to follow a normal distribution with mean set at the average price, and standard deviation determined as follows. Moody's first compute the decline from par of the market value of the asset portfolio. Moody's then set the standard deviation such that the probability of obtaining a further drop in price of the same magnitude as what has already been observed is equal to a five-year Aaa probability of default. The portfolio's price is assumed to start at the average level, stressed to account for differences between sale and mark-to- market values. The model then assumes that prices deteriorate to the price obtained from the distribution over the first four months. Thereafter portfolio price returns linearly to par over twice the weighted average life of the portfolio. At each simulated point in the future, the model considers that maturing senior debt and any senior expenses are paid (1) from available cash, (2) by drawing on any available committed liquidity facilities, and (3) by liquidating assets. ====================== N E T H E R L A N D S ====================== BALLY TECHNOLOGIES: Opens New European Headquarters in Amsterdam ---------------------------------------------------------------- Bally Technologies, Inc. in a press statement on Monday, December 15, 2008, said that it will be opening a new European headquarters for its sales and service operations, to be located in Amsterdam, The Netherlands. The Company also announced a realignment and expansion of its European sales and service organization to meet the needs of its expanding presence in the European gaming market. The new Amsterdam headquarters will house the Company's main European logistics, warehousing, financial, sales, production/assembly, and customer-service operations. "Our new Amsterdam European headquarters will allow us to be more flexible, responsive, and proactive than ever before in serving our existing customers in western Europe and growing our customer base throughout the continent," said John Connelly, Bally's Vice President of International and Gaming Operations. "Our senior European sales management team, along with our outstanding technical support and gaming service personnel, will be even better equipped to provide our current and future customers with the kind of superior, best-in-class support they expect from Bally, a world leader in gaming products and systems technology." Bally will also open a new sales and service office in Ljubljana, Slovenia to support an expanding presence in eastern Europe. The Company will continue to maintain satellite sales and service operations centers in Germany, Spain, and the United Kingdom. In addition, in response to its rapidly expanding Systems business throughout Europe, Bally will also relocate its Systems Research and Development and service operations to much larger facilities in Nice, France. "Our new offices in Ljubljana will allow us to better serve such existing Bally Systems customers as the HIT Group, as well as provide the resources we need to further expand our market penetration into central and eastern Europe," explained Connelly. "This is in addition to our existing sales and service centers located in Spain, England, and Germany." Bally also appointed former Holland Casinos and Atronic gaming executive Marcel Heutmekers to the position of Director of Europe. About Bally Technologies Headquartered in Las Vegas, Nevada, Bally Technologies, Inc. (NYSE: BYI) -- http://www.BallyTech.com/-- designs, manufactures, operates, and distributes advanced gaming devices, systems, and technology solutions worldwide. Bally's product line includes reel-spinning slot machines, video slots, wide- area progressives and Class II lottery and central determination games and platforms. Bally Technologies also offers an array of casino management, slot accounting, bonus, cashless, and table management solutions. The company also owns and operates Rainbow Casino in Vicksburg, Mississippi. The company's South American operations are located in Argentina. The company also has operations in France, Germany, Macau, China, India, and the United Kingdom. * * * As reported in the TCR-Europe on Oct. 9, 2008, Fitch Ratings assigned a 'BB+' rating to Bally Technologies, Inc.'s new US$300 million credit facility. The credit facility rating is two notches above Bally's 'BB-' Issuer Default Rating due to Fitch's view of strong over-collateralization of that debt. The Rating Outlook is Positive. IFCO SYSTEMS: S&P Puts 'BB-' Corp. Credit Rating on WatchNeg. ------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its 'BB-' long-term corporate credit and debt ratings on IFCO Systems N.V., the Netherlands-based provider of reusable plastic containers and pallet management, on CreditWatch with negative implications. "The CreditWatch placement reflects our heightened concerns over the company's weakened liquidity since the beginning of the year, mainly because extraordinary cash drawings have diminished availability under the revolving credit facility," said Standard & Poor's credit analyst Izabela Listowska. Given softening market conditions, the company might find it difficult to expand its earnings and cash flows and restore its liquidity to levels adequate for the ratings. The ratings continue to be constrained by the group's aggressive financial profile; the high capital requirements to maintain and expand the asset pool of the relatively stable but seasonal RPC business; and the group's high exposure to the mature, cyclical, and low-margin pallet-management business in the U.S. The ratings are supported by IFCO's leading niche market positions as Europe's largest independent supplier of RPCs for the transport of fruit and vegetables, enhanced by the acquisition of STECO, and its position as the only recycled-pallet provider in the U.S. with a nationwide presence. "In resolving the CreditWatch, S&P will assess the company's prospects for strengthening its operating performance and liquidity," said Ms. Listowska. S&P could lower the ratings if it appears that IFCO's financial performance and liquidity position are unlikely to improve over the next few quarters. S&P expects to resolve the CreditWatch in the next 90 days. ROMPETROL GROUP: S&P Keeps 'B+' Cop. Credit Rating; Outlook Neg. ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it had revised its outlook on Netherlands-based oil refiner and marketer The Rompetrol Group N.V. to negative from stable. At the same time, the 'B+' long-term corporate credit rating was affirmed. The outlook revision reflects S&P's view that the flexibility and willingness of 75% shareholder, Kazakhstan-based JSC NC KazMunayGas (KMG, BBB-/Negative/--), to continue to support Rompetrol could decrease as a result of falling crude oil prices, reduced availability of credit, and Rompetrol's low profitability. It also reflects Rompetrol's vulnerable stand-alone credit quality (the rating effectively depends on parental support) and S&P's negative view of the refining market for 2009-2011. "The ratings on Rompetrol continue to be supported by its ownership by KMG. They include three notches of extraordinary shareholder support and reflect among other things support that KMG has already provided in the form of shareholder loans and crude oil shipments on extended payment terms," said Standard & Poor's credit analyst Per Karlsson. "Nevertheless, S&P believes that further support could prove difficult in view of weaker crude oil prices and tougher tax conditions in Kazakhstan, which are pressuring KMG's own cash flow generation and that of other, more strategically important subsidiaries that may need KMG's support," Mr. Karlsson added. Rompetrol's stand-alone credit quality (CCC+) is vulnerable. The company's cash flow generation is extremely weak. Rompetrol relies on short-term debt, implying very high liquidity risks. On Sept. 30, 2008, short-term debt was high at US$749 million (according to management). The group's liquidity position is particularly susceptible, especially in view of S&P's expectation that cash flow generation will weaken in 2009. In 2007, funds from operations amounted to only US$14 million, while capital spending was a high US$175 million. S&P expects some improvement in FFO in 2008 compared with 2007. However, S&P expects key credit ratios to remain very weak. S&P does not expect FFO to cover the company's ongoing capital expenditure program. The outlook is negative and reflects S&P's concern that in the harsher environment S&P foresees in 2009 and 2010, Rompetrol's cash flow generation will be substantially lower, while KMG's capacity to support its subsidiary may come under pressure. =========== R U S S I A =========== ARTSTROY LLC: Creditor Must File Claims by January 12 ----------------------------------------------------- Creditors of LLC Artstroy (Construction) have until Jan. 12, 2009, to submit proofs of claims to: Temporary Insolvency Manager: N. Surtayev Diksona Str.1/203 660020 Krasnoyarsk Russia The Arbitration Court of Krasnoyarsk will convene at 9:00 a.m. on Feb. 20, 2009, to hear bankruptcy supervision procedure. The case is docketed under Case No. ?33�13704/2008. The Debtor can be reached at: LLC Artstroy 78 Dobrovolcheskoy brigady Str. 4 660077 Krasnoayrsk Russia BELOVSKIY MINING: Creditors Must File Claims by February 12 ----------------------------------------------------------- Creditors of LLC Belovskiy Mining Equipment Plant have until Feb. 12, 2009, to submit proofs of claims to: R. Bikinin Insolvency Manager Aerodromnaya Str. 109 Belovo Kemerovskaya Russia The Arbitration Court of Kemerovskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?27�12088/2008,�4. The Debtor can be reached at: LLC Belovskiy Mining Equipment Plant Aerodromnaya Str. 109 Belovo Kemerovskaya Russia COAL ENERGY: Altay Bankruptcy Hearing Set February 16 ----------------------------------------------------- The Arbitration Court of Altay will convene on Feb. 16, 2009, to hear bankruptcy supervision procedure on LLC Coal Energy Company. The case is docketed under Case No. ??2 - 1069/2008. The Temporary Insolvency Manager is: A. Shchedurskiy Post User Box 934 656050 Barnaul Russia The Debtor can be reached at: LLC Coal Energy Company Kommunisticheskiy Prospect 53 Gorno-Altaysk Altay Russia GAZPROMBANK MORTGAGE: S&P Junks Ratings on Class B and C Notes -------------------------------------------------------------- Standard & Poor's Ratings Services removed from CreditWatch negative and lowered its credit ratings on the notes issued by Gazprombank Mortgage Funding 2 S.A. (GZP 2). The rating actions reflect the substantial interest rate and exchange rate risk the transaction is exposed to following Lehman Brothers Holdings' insolvency and, in S&P's view, the limited prospects of finding a replacement for the roles Lehman performed in the transaction. The exchange and interest rate risk had been covered through a cross-currency and interest rate swap provided by Lehman Brothers Special Financing, with a liquidity facility provided by Lehman Commercial Paper Inc., both guaranteed by Lehman. A notice to noteholders published on the Irish Stock Exchange on Dec. 8, 2008 contained an update on the attempts made to replace Lehman as counterparty in the transaction. In S&P's view, the notice drew either limited interest from other counterparties to assume the prior Lehman obligations under the swap, or required a price to undertake these roles that could not be supported by the structure. The collateral underlying the GZP 2 transaction is rouble- denominated and bears interest at a fixed rate. The class A2, B, and C notes are also rouble-denominated and pay a fixed interest rate in roubles. The class A1 notes are euro-denominated and pay a floating rate of interest. The transaction's exposure to exchange and interest rate volatility is significant: notwithstanding the de-leveraging that has occurred since closing, the class A1 notes currently account for more than 70% of the total liabilities of the issuer. On the last three interest payment dates since the Lehman default, rouble cash flows from the assets were exchanged for euros at the spot market rate to make the corresponding euro payments due under the class A1 notes. However, there is no formal mechanism in the transaction documentation to guarantee full payment of principal; therefore S&P would expect any devaluations of the rouble against the euro (relative to the fixed exchange rate embedded in the swap) would cause a principal loss for the transaction. On these latest three IPDs, devaluation of the rouble against the euro has already caused principal shortfalls, which S&P would expect to result in ultimate non-payment at maturity. S&P understands losses have been averted because the class Dz noteholders have agreed (on a one-off basis) to divert some of their junior remuneration to the principal priority of payments to compensate for principal shortfalls. S&P ran a series of cash flow model sensitivities to assess the rating impact of the unhedged transaction, assuming different combinations of interest rate and exchange rate stresses. S&P also assessed the incremental stress connected to the unavailability of the liquidity facility, which had been equivalent to 5% of the portfolio at any time. The analysis did not incorporate any review of the assumptions in the light of the recent downgrade of Russia, which had led to the ratings on the class A1 and A2 being lowered. This reflects S&P's assessment that this review of the assumptions would have had a marginal overall impact in the context. S&P's analysis led to its opinion that the outstanding classes of notes cannot be rated higher than 'B'. The rating action also factors in S&P's assessment of the likelihood of near term note default. Based on the current interest rate mismatch between assets, S&P is of the view that a modest depreciation of the rouble should not pose any near-term risk of default on the senior notes. Ratings List Gazprombank Mortgage Funding 2 S.A. EUR147 Million And RUB2,082.8 Million Mortgage-Backed Floating- And Fixed-Rate Notes (Gazprombank Mortgage Backed Securities Series 2007-1) Rating Lowered And Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- A1 B BBB/Watch Neg A2 B BBB/Watch Neg B CCC BBB-/Watch Neg C CCC BB-/Watch Neg ISTA-STROY LLC: Creditors Must File Claims by February 12 --------------------------------------------------------- Creditors of LLC Ista-Stroy (TIN 4341016696) have until Feb. 12, 2009, to submit proofs of claims to: V. Bushmanova Insolvency Manager Volodarskogo Str. 145 610002 Kirov Russia The Arbitration Court of Kirovskaya commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?28-5928/2008,-147/24. The Debtor can be reached at: LLC Ista-Stroy Lenina Str. 26b Kirovo-Chepetsk Russia JFC GROUP: S&P Junks Corp. Credit Rating on Eroding Liquidity ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has lowered its long-term corporate credit rating to 'CCC+ from 'B-' and Russia national scale rating to 'ruBB' from 'ruBBB-' on Russian fruit importer and distributor JFC Group Co. Ltd. The outlook is negative. "The downgrade reflects JFC's deteriorating liquidity position. The company faces a possible covenant breach on its three-year US$150 million syndicated loan, for which it does not have enough back-up liquidity sources to satisfy requests for repayment by creditors," said Standard & Poor's credit analyst Anton Geyze. JFC has already breached covenants on the syndicated loan, but managed to negotiate a waiver from syndicate arrangers. The company nevertheless had minimal headroom under one of its covenants for the 12 months ended Sept. 30, 2008. Additional waivers are likely to increase JFC's cost of funding and make interest payments increasingly difficult for the company. "The negative outlook reflects JFC's risks of noncompliance with covenants under its syndicated loan facility, which might trigger a default if the company obtains no waiver or if covenant breach is followed by a distressed exchange offer," said Mr. Geyze. S&P factors into the ratings JFC's immature corporate governance and risk management, and limited transparency and visibility. The ratings also factor in no further exercise of opportunistic financial policy. The current ratings reflect the existing scope of consolidation and the corporate structure, and do not incorporate any changes in scope of consolidation. S&P could revise the outlook to stable if JFC increases headroom under its covenants and makes it adequate. S&P will also monitor whether the group will be able to increase its liquidity cushion in the form of undrawn amounts under its committed lines. Covenant breach could lead to a negative rating action as well as evaporation of support from banks that currently allow JFC to roll over its significant short-term debt. KOMI-TRANS-GAS CJSC: Perm Bankruptcy Hearing Set March 18 --------------------------------------------------------- The Arbitration Court of Perm will convene on Mar. 18, 2009, to hear bankruptcy supervision procedure on CJSC Komi-Trans-Gas. The case is docketed under Case No. ?50�14115/2008,-B6. The Temporary Insolvency Manager is: Yu. Svetlakov Bereznikovaskaya Str. 75a/12 618400 Berezniki Russia The Debtor can be reached at: CJSC Komi-Trans-Gas Geroyev Khasana Str. 7a Perm Russia MOSCOW OBLAST: S&P Downgrades Issuer Credit Ratings to 'SD' ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term issuer credit ratings on Moscow Oblast to 'SD' from 'B-', indicating a selective default. Also S&P lowered the Russia national scale rating to 'SD' from 'ruBBB-'. At the same time, Moscow Oblast's senior unsecured debt ratings on bonds on which RUR82.6 billion is outstanding were affirmed at 'B-/ruBBB-'. They remain on CreditWatch, but the implications were revised to developing from negative. According to Standard & Poor's definition, a selective default is representative of an issuer defaulting selectively--that is, defaulting on one issue or class of issues, but honoring others in a timely fashion. S&P's default definitions include payment defaults on both rated and unrated financial obligations. S&P has lowered the issuer credit rating on the oblast to 'SD' as, on Dec. 15, 2008, it failed to honor its RUR5.2 billion put option on the bond placed by Moscow Regional Mortgage Agency (MRMA, not rated), which it 100% owns. The default was triggered by a court decision to freeze all payments on the bond as part of an investigation procedure against a third party, the bond arranger. Consequently, the court has frozen all transactions with the bond, including its repayment. "We view this case as exceptional," said Standard & Poor's credit analyst Valerie Montmaur. "Although the oblast has always declared its willingness to service its put option, the amount of which is included in the oblast budget for 2008, and had accumulated cash reserves that exceeded the amount due before the due date, the legal impediment restricts its ability to honor its obligations." Should the ban on transactions with MRMA's bonds be lifted and the oblast honor its obligations as planned, S&P would review the SD status. Notwithstanding, Moscow Oblast has confirmed that it continues to service its six rated bonds. S&P therefore considers this default as selective and have affirmed the ratings on the senior unsecured debt at 'B-'. These debt ratings remain on CreditWatch, reflecting the uncertainty about the oblast's ability to successfully refinance and redeem the debt obligations of its companies due in the near term. However, S&P's revision of the CreditWatch implications to developing from negative reflects that, so far, the oblast has serviced all its debts in a timely manner, including direct and guaranteed debt that has fallen due in recent days, owing to the successful placement of RUR20 of a planned RUR33 billion bond issue in December 2008, as well as additional credit line arrangements with Russian banks. The developing implications indicate that the ratings could be raised, affirmed, or lowered. "We plan to resolve the CreditWatch within next few weeks after S&P has reviewed the outcome of the oblast's total tax-supported debt refinancing scheme, which S&P expects it to complete by the end of 2008, and once S&P gains more visibility on the oblast's debt burden and financial performance in the medium term," said Ms. Montmaur. If the oblast takes on material additional short-term debt to provide additional support to its companies, this could lead to a further deterioration in its creditworthiness and to consequent downgrades of its senior unsecured debt ratings to the 'CCC' or even 'CC' category. Conversely, S&P could affirm or raise the oblast's senior unsecured debt ratings if it succeeds in refinancing its tax- supported debt in 2008 as planned, extending the debt maturities and easing the debt burden in the medium term. The oblast's capacity to curb its operating expenditure growth in 2009-2010 and ensure strong budgetary performance in times of persistent refinancing risks, would also be a key consideration for a positive rating actions. MOSCOW REGIONAL: S&P Downgrades Issuer Credit Rating to 'SD' ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its long-term issuer credit rating on Russia-based Moscow Regional Investment Trust Co. to 'SD' from 'CC', indicating a selective default. S&P also lowered its Russia national scale rating on MRITC to 'SD' from 'ruCC'. At the same time, MRITC's senior unsecured debt rating on two bonds on which Russian ruble (RUR)5.2 billion is still outstanding was affirmed at 'CC/ruCC' and remains on CreditWatch with negative implications, where it was originally placed on Sept. 26, 2008. According to Standard & Poor's definition, a selective default is representative of an issuer defaulting selectively--that is, defaulting on one issue or class of issues, but honoring others in a timely fashion. S&P's default definitions include payment defaults on both rated and unrated financial obligations. "We have lowered the issuer credit rating on MRITC to 'SD' because the company missed payment on two unrated banks loans totaling RUR4 billion, which fell due on Dec. 15, 2008," said Standard & Poor's credit analyst Valerie Montmaur. "MRITC has confirmed, however, that the payments on the two rated senior unsecured bonds remain current, which is why S&P consider this default as selective." MRITC is owned by Moscow Oblast (B-/Watch Neg/--; Russia national scale rating ruBBB-/Watch Neg/--). It receives extraordinary support from the oblast because it arranges financing for the construction of public infrastructure and manages other public assets. The oblast has provided guarantees on most of MRITC's direct debt obligations and is committed to honor them as guarantor. However, under Russian legislation, regions and municipalities may grant only subordinate guarantees, which Standard & Poor's views as untimely and conditional. As a result, the ratings on MRITC's debt obligations reflect the creditworthiness of the company, and not that of the guarantor. The defaulted loan is one of MRITC's obligations guaranteed by the oblast. The creditor had planned to roll over the loans, but finally decided to call upon them on the due date. Because this decision was taken unexpectedly, MRITC didn't have enough cash on its accounts to honor these obligations. S&P expects Moscow Oblast to eventually assume its responsibility as a guarantor and repay these loans, either directly through its budget or via the company. "If the oblast repays these loans on behalf of MRITC as planned, or MRITC is able to renegotiate its loans, thereby restoring its ability to service all its direct debt obligations on a timely basis, S&P may revise the ratings on MRITC," said Ms. Montmaur. S&P understand that one loan of RUR1 billion has already been repaid and that an extension of the remaining RUR3 billion loan may be provided shortly. NATIONAL FACTORING: Moody's Reviews 'Ratings for Possible Cuts -------------------------------------------------------------- Moody's Investors Service has placed the B2 long term local and foreign currency ratings of National Factoring Company CJSC and its E+ bank financial strength rating on review for possible downgrade. At the same time, Moody's Interfax Rating Agency, which is majority-owned by Moody's, has downgraded NFC's long-term National Scale Rating to Baa1.ru from A3.ru and placed it on review for possible downgrade. Moody's rating actions reflect the increased uncertainties with regard to the company's ability to finance its operations given its high reliance on wholesale market funding and the continuing deterioration in market conditions. By end-May 2009, NFC is due to repay approximately RUR1.7 billion, or around 35% of its current liabilities, in funding from third parties, not counting its Central Bank of Russia short term facility of around RUB1.3 billion (or around 25% of NFC's liabilities) under the central bank's limit. Moody's recognizes that NFC has access to funding from its sister institution Uralsibbank but cautions that this is not sizable enough to support the current volumes of its operations and that a high reliance on a single party, although related, still carries a degree of uncertainty over the sustainability of the funding base. As a result, Moody's believes that NFC's franchise and bottom-line profitability are likely to suffer. Moody's also notes that the bank is likely to experience a substantial deterioration in asset quality as the majority of its portfolio is represented by small and medium-sized companies, some of which operate in the sectors, which are currently among those most vulnerable to the continuing deterioration in macroeconomic conditions. Moody's expects to conclude the review in the coming months after more clarity is obtained on the ability of the bank to refinance its obligations, trend in asset quality deterioration and their influence on performance as well as liquidity profile. Moody's last rating action on NFC was on December 7, 2007, when the ratings were assigned at B2/Not-Prime/E+/A3.ru with stable outlooks. Based in Moscow, NFC is one of the largest companies in the Russian factoring sector. It reported total consolidated assets of US$406 million and total equity of US$91 million under IFRS as of June 30, 2008. PULYUS LLC: Novosibirsk Bankruptcy Hearing Set December 22 ---------------------------------------------------------- The Arbitration Court of Novosibirsk will convene on Dec. 22, 2008, to hear bankruptcy proceedings on LLC Pulyus. The case is docketed under Case No. ?45�21739/02-SB/4724. The Insolvency Manager is: A. Zaykov Post User Box 11 Vokzalnaya Magistral 16 630099 Novosibirsk Russia The Debtor can be reached at: LLC Pulyus Gorbanya Str. 33 Novosibirsk Russia RUS LLC: Creditors Must File Claims by January 12 ------------------------------------------------- Creditors of LLC Rus Garment Factory (TIN 2635076239) have until Jan. 12, 2009, to submit proofs of claims to: A. Khalizov Insolvency Manager Apt. 252 Pirogova Str. 15 355040 Stavropol Russia The Arbitration Court of Stavropol commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?63�12393/08-S5�28. The Debtor can be reached at: LLC Rus Kulakova Prospect 8 355035 Stavropol Russia SAMREK CJSC: Creditors Must File Claims by January 12 ----------------------------------------------------- Creditors of CJSC Samrek (Construction) have until Jan. 12, 2009, to submit proofs of claims to: G. Kayumova Insolvency Manager Post User Box 5100 614030 Perm Russia The Arbitration Court of Perm commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed under Case No. ?50�5028/2008,-B-5. The Debtor can be reached at: CJSC Samrek Tselinnaya Str. 23 614056 Perm Russia SCANDINAVIA INSURANCE: A.M. Best Affirms FSR at "B" & ICR at "bb+" ------------------------------------------------------------------ A.M. Best Co. has affirmed the financial strength rating of B (Fair) and the issuer credit rating of "bb+" of Scandinavia Insurance Company Limited Liability Company (SIC) (Russia). The outlook for both ratings is stable. The ratings of SIC reflect its supportive level of risk-adjusted capitalization and moderate operating performance. Offsetting factors are SIC's volatile underwriting performance and declining business profile. In A.M. Best's opinion, SIC's risk-adjusted capitalization is supportive of the current rating, with its capital position benefiting from a reduction in premium and reserve risk, following a continued decline in gross premiums written from RUR487 million in 2005 (US$17 million) to RUR185 million (US$8 million) expected in 2008. The deterioration in SIC's profile is the result of the company restructuring its portfolio, eliminating unprofitable business and thereby concentrating on its key marine business, where it has its main expertise. A.M. Best expects SIC to grow up to 20% in each of the next two years from a low premium base, developing and servicing its clients in the local St. Petersburg market. The company's operating performance has been moderate with pre tax profits of RUR58 million (US$2 million) expected in 2008, mainly arising from investment income. Underwriting performance has been volatile, largely arising from fluctuations in the company's reserves following its changing profile and expense allocation within group companies. A.M. Best anticipates the combined ratio to remain below 95% over the next two years, with its loss ratio expected to improve to 64% in 2008. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. TATSINSKIY CANNERY: Creditor Must File Claims by February 12 ------------------------------------------------------------ Creditors of OJSC Tatsinskiy Cannery (TIN 6134000074) have until Feb. 12, 2009, to submit proofs of claims to: A. Semenyakov Insolvency Manager Post User Box 3199 344092 Rostov-on-Don Russia The Arbitration Court of Rostovskaya will convene on Jan. 23, 2009, to hear bankruptcy proceedings. The case is docketed under Case No. ?53�9744/08-S1�8. The Debtor can be reached at: OJSC Tatsinskiy Cannery Lenina Str. 81 Tatsinskaya 347060 Rostovskaya Russia * RUSSIA: Sets Aside Addt'l RUR150 Bln to Prop Up Real Economy -------------------------------------------------------------- The Russia government plans to spend an extra RUR150 billion (US$5.4 billion) to prop up the real sector of the economy amid the global financial crisis, RIA Novosti reports citing Finance Minister Alexei Kudrin. The report relates Mr. Kudrin said in a government meeting that together with the earlier approved RUR175 billion (US$6.3 billion) rescue package, support for the real economy will total RUR325 billion (US$11.7 billion) Mr. Kudrin, however, stressed the Russia's economy had not yet slipped into recession, the report notes. He said that the Russian government had forecast GDP growth of up to 3% in 2009, the report adds. ===================================== S E R B I A & M O N T E N E G R O ===================================== * Moody's Changes Outlook on Montenegro's Ba2 Rating to Negative ---------------------------------------------------------------- Moody's Investors Service has changed the outlook on the Government of Montenegro's Ba2 foreign currency bond rating to negative from stable. "The Montenegrin economy is being assailed by a triple shock," says Kenneth Orchard, Vice-President/Senior Analyst in Moody's Sovereign Risk Group. "The global credit crunch has reduced liquidity in the banking system, the collapse of aluminum prices is threatening the viability of the country's largest exporter, and the termination of the international property boom will lead to a sharp deceleration in foreign direct investment." Moody's believes the combination of adverse shocks is likely to have a severe impact on the country's economy, and will weaken the government's financial strength to an extent that will be difficult to reverse over the medium term. Moody's recognizes that a currency crisis per se is impossible, as Montenegro uses the euro as its official currency. Nevertheless, a credit crisis cannot be completely ruled out because using a currency for which there is no lender of last resort places the full burden of economic and financial stability upon the government, specifically upon fiscal policy. "Unlike in most other countries, the Montenegrin central bank is unable to provide liquidity support to the banking system in times of stress because it cannot create euros," explains Mr. Orchard. "In this context, the government of Montenegro recently agreed to make a loan to the country's second-largest bank, which was facing serious liquidity problems." According to Moody's, the 50% decline in international aluminum prices over the past five months could also lead directly to additional stress on the government's balance sheet. A single aluminum smelter and associated bauxite mine are responsible for approximately 15% of Montenegro's GDP and 50% of the country's merchandise exports. "Moody's notes that Montenegro's high electricity costs are resulting in the smelter and mine being commercially unviable at current market prices for aluminum," says Mr. Orchard. "Given the importance of the smelter to the local economy, the government may be forced to re-nationalize the company if the current owners decide to close down production. Such intervention would inevitably lead to higher public sector debt and a deterioration of the budget balance." Moody's also recognizes that property-related foreign direct investment -- a major driver of economic growth and source of external financing for the large current account deficit over the past few years -- is set to fall with the end of the international property boom. Lower FDI inflows and external bank financing will likely force a difficult downward adjustment in domestic demand. Moody's believes that the triple shock will cause a severe economic slowdown, increasing pressure on the government's budget and liquidity. Montenegro's government debt burden is currently about average compared to other countries in the region, and its debt is mostly owed to residents and official creditors at low interest rates. However, a higher debt burden would weaken the government's balance sheet in relative terms, which could move the credit metrics outside its peer group and potentially lead to a one-notch downgrade. On the other hand, Moody's could return the outlook to stable if the economy and government finances prove to be more resilient to the recession than expected, and the government engineers a private sector solution for the banking system and aluminum industry such that the government's balance sheet is left relatively unscathed. In a related action, the outlook on the Ba3 foreign currency bank deposit ceiling was also changed from stable to negative. The last rating action on Montenegro was implemented on 12 March 2008, when Moody's assigned first-time ratings to Montenegro of a Baa1 country ceiling for long-term foreign currency debt and a Ba2 issuer rating for the foreign currency debt obligations of the government. ========= S P A I N ========= BONOS DE TITULIZACION: Moody's Puts 'Ba3' Rating on Class C Notes ----------------------------------------------------------------- Moody's Investors Service has assigned definitive credit ratings to three classes of "Bonos de Titulizacion de Activos" issued by VALENCIA HIPOTECARIO 5 Fondo de Titulizacion de Activos, a Spanish Asset Securitisation Fund that has been created by Europea de Titulizacion, S.G.F.T, S.A.: -- Aaa to the EUR468 million Series A notes -- Aa1 to the EUR5 million Series B notes -- Ba3 to the EUR27 million Series C notes Moody's ratings address the expected loss posed to investors by the legal final maturity. 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 A, B and C. The ratings do not address full redemption of the notes on the expected maturity date. 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. The ratings of the Notes are based upon the analysis of the characteristics of the mortgage pool backing the Notes, the protection the Notes receive from credit enhancement against defaults and arrears in the mortgage pool, the legal and structural integrity of the issue and the credit quality of the parties involved in the transaction. Moody's initially analyzed and monitors this transaction using the rating methodology for EMEA RMBS transactions . The key parameters used by Moody's to calibrate the loss distribution curve are a Milan Aaa CE range of 8.50 - 8.70% and an Expected Loss range of 2.65 - 2.85%. Moody's based its rating on (1) an evaluation of the underlying portfolio of mortgage loans securing the structure, and on (2) the transaction's structural protections which include the subordinate position of the Series B and C Subordinate notes with respect to the Series A notes, the strength of the cash flows, which include the reserve fund and any excess spread available to cover losses. The Spanish Government announced on November 4th 2008 a package of aid to assist unemployed, self employed and pensioneer borrowers through a form of mortgage subsidy aid. It is unclear how this package will be implemented, and also if it is implemented, how the transaction will be affected, although both liquidity and credit implications are possible on this portfolio. However, any implications on the ratings will ultimately depend on the actual financial aid conditions which will be approved. IM SABADELL: Moody's Puts (P)Ba2 Rating on EUR121.8 Mln Notes ------------------------------------------------------------- Moody's Investors Service has assigned these provisional ratings to the debt to be issued by IM Sabadell Empresas 3, FTA: - (P)Aaa to the EUR1,409.4 million Series A notes; - (P)A3 to the EUR208.8 million Series B notes; and - (P)Ba2 to the EUR121.8 million Series C notes. IM Sabadell Empresas 3, FTA is a securitization fund created with the aim of purchasing a pool of loans granted by Banco de Sabadell, S.A. (Aa3/P-1/B-) to Spanish enterprises and self- employed individuals, out of the scope of any public guarantee program. According to Moody's, this deal benefits from strong features, including: (i) a strong swap agreement guaranteeing an excess spread of 0.25%; (ii) an excess spread-trapping mechanism through a 12-month "artificial write-off"; (iii) a reserve fund that will be fully funded upfront to cover a potential shortfall in interest and principal; (iv) a trigger whereby if Banco de Sabadell's rating falls below Baa3, a back-up servicer is appointed; and (v) eligibility criteria that will limit the amount of loans in arrears (up to 30 days) at closing date and will prevent the securitization of loans corresponding to the restructuring or refinancing of debts. However, Moody's notes that the deal also has weaknesses, including: (i) high borrower concentration, with the top borrower representing 9.35% of the issuance amount; (ii) lack of pool information to assess the pool concentration by group of borrowers and the occupancy type of mortgaged properties; (iii) regional concentration in Catalonia (40%); (iv) the deferral of interest payments on each of Series B and C, which increases the expected loss on these subordinated series; and (v) the pro-rata amortization of the B and C Series of notes, which leads to reduced credit enhancement of the senior series in absolute terms. These features were reflected in Moody's credit enhancement calculation. As of November 2008, the provisional pool of underlying assets comprised a portfolio of 4,665 loans granted to 4,327 borrowers, all of which are Spanish corporates or self-employed individuals. The loans were originated between 1998 and September 2008, and have a weighted-average seasoning of 2.0 years and a weighted- average remaining term of 9.2 years. The weighted-average interest rate is 5.7%, with the majority of the loans linked to floating reference rates. 49.5% of the outstanding of the portfolio is secured by a first-lien mortgage guarantee over different types of properties (25% residential properties and 9% land), with a weighted-average loan to value equal to 52%. Geographically the pool is concentrated in Catalonia (40%), a natural consequence of the location of the originator. The pool is around 39% concentrated in the "buildings and real estate" sector according to Moody's industry classification. Moody's has based the provisional ratings primarily on these factors: (i) an evaluation of the underlying portfolio of loans; (ii) historical performance and other statistical information; (iii) the swap agreement hedging the interest rate risk; (iv) the credit enhancement provided through the GIC accounts, the excess spread, the reserve fund and the subordination of the notes; and (v) the legal and structural integrity of the transaction. 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. The provisional ratings address the expected loss posed to investors by the legal final maturity (October 2044). In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal at par with respect to the notes on or before the final legal maturity date. 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. =========== S W E D E N =========== FORD MOTOR: Will Extend Plant Shutdown to January 12 ---------------------------------------------------- Ford Motor Co. decided to extend the shutdown of some of 10 of its assembly plants for an extra week in January, citing slow sales, The Associated Press reports. The AP relates that Ford Motor spokesperson Angie Kozleski said that the normal two-week holiday shutdown will be extended to Jan. 12, 2009, at all operating assembly plants except the plant in Claycomo and the Dearborn truck plant, which will both resume operations on Jan. 5, 2009. The two plants, says The AP, make the F-150 pickup truck. Claycomo also makes the Ford Escape and Mercury Mariner, the report states. According to The AP, Ford Motor will also extend the shutdown at some engine, transmission and parts stamping plants, or shut portions of them. Ford Not in Loan Pact Talks With Credit Unions Sharon Terlep at The Wall Street Journal reports that while General Motors Corp. and Chrysler LLC have entered into loan agreements with credit unions, Ford Motor isn't in talks on a similar deal, as it believes its finance arm, Ford Financial, can meet buyers' needs. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Moody's Investors Service lowered the debt ratings of Ford Motor Company, Corporate Family and Probability of Default Ratings to Caa1 from B3. The company's Speculative Grade Liquidity rating remains at SGL-3 and the rating outlook is negative. In a related action Moody's also lowered the long-term rating of Ford Motor Credit Company to B3 from B2. The outlook for Ford Credit is negative. As reported in the Troubled Company Reporter on Oct. 10, 2008, Fitch Ratings downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company by one notch to 'CCC' from 'B-'. ===================== S W I T Z E R L A N D ===================== FERD. HOHNS: Creditors Must File Proofs of Claim by January 5 ------------------------------------------------------------- Creditors owed money by JSC Ferd. Hohns are requested to file their proofs of claim by Jan. 5, 2009, to: Schlosshaldenstrasse 8 9300 Wittenbach Switzerland The company is currently undergoing liquidation in Wittenbach. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 10, 2008. GEMAKO LLC: Deadline to File Proofs of Claim Set January 2 ---------------------------------------------------------- Creditors owed money by LLC Gemako are requested to file their proofs of claim by Jan. 2, 2009, to: Hans Borner Liquidator Eugen-Huber-Strasse 163 8048 Zurich Switzerland The company is currently undergoing liquidation in Stans. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Oct. 21, 2008. IMAGOS LLC: Creditors Have Until January 3 to File Claims --------------------------------------------------------- Creditors owed money by LLC Imagos are requested to file their proofs of claim by Jan. 3, 2009, to: Claudia Lasser Liquidator Schaffhauserstrasse 2 8400 Winterthur Switzerland The company is currently undergoing liquidation in Winterthur. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Aug. 12, 2008. MM FIORI: Proofs of Claim Filing Deadline is February 11 -------------------------------------------------------- Creditors owed money by LLC MM Fiori are requested to file their proofs of claim by Feb. 11, 2009, to: Trust and Consulting Company Basso & Partner Mail Box 14 6440 Brunnen Switzerland The company is currently undergoing liquidation in Aesch. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 30, 2008. SATRAT LLC: Creditors' Proofs of Claim Due by February 7 -------------------------------------------------------- Creditors owed money by LLC SatRAT are requested to file their proofs of claim by Feb. 7, 2009, to: Kirchbergstrasse 98 3400 Burgdorf Switzerland The company is currently undergoing liquidation in Burgdorf. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Sept. 11, 2008. WEBER SOLPROTECT: January 31 Set as Deadline to File Claims ----------------------------------------------------------- Creditors owed money by LLC Weber Solprotect are requested to file their proofs of claim by Jan. 31, 2009, to: Ralph Weber Liquidator Bergstrasse 54 8303 Bassersdorf Switzerland The company is currently undergoing liquidation in Waltenschwil. The decision about liquidation was accepted at an extraordinary shareholders' meeting held on Oct. 1, 2008. ============= U K R A I N E ============= DARINA LLC: Creditors Must File Claims by January 3 --------------------------------------------------- Creditors of LLC Trading House Darina (EDRPOU 32504120) have until Jan. 3, 2009, to submit proofs of claim to: Mr. Vladimir Novoseltsev Liquidator / Insolvency Manager Dobrovolskiy Str. 38/2 Cherkassy Ukraine Tel: 8(096)666-63-60 The Arbitration Court of Cherkassy commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 4, 2008. The Economic Court of Cherkassy Shevchenko Avenue 307 18005 Cherkassy Ukraine The Debtor can be reached at: LLC Trading House Darina Shevchenko boulevard, 197 18000 Cherkassy Ukraine ENERGY OIL: Creditors Must File Claims by January 3 --------------------------------------------------- Creditors of LLC Energy Oil (EDRPOU 32830376) have until Jan. 3, 2009, to submit proofs of claim to: Mr. Viacheslav Letskan Liquidator Apt. 42 Dovzhenko Str. 16V 03057 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Oct. 2, 2008. The case is docketed as 43/540. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Energy Oil Melnikov Str. 2/10 Kiev Ukraine INSOL NIK: Creditors Must File Claims by January 3 -------------------------------------------------- Creditors of LLC Insol Nik (EDRPOU 34565960) have until Jan. 3, 2009, to submit proofs of claim to: Mr. O. Tomashevsky Liquidator / Insolvency Manager Office 72 Rabochaya Str. 7 Nikolaev Ukraine Tel: 8(0512)44-72-27 The Arbitration Court of Nikolaev commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 18, 2008. The case is docketed as 5/510/08. The Economic Court of Nikolaev Admiralskaya Str. 22a 65009 Nikolaev Ukraine The Debtor can be reached at: LLC Insol Nik Lenin avenue, 107/1 Nikolaev Ukraine INTRANS TECH: Creditors Must File Claims by January 3 ----------------------------------------------------- Creditors of LLC Intrans Tech (EDRPOU 35722434) have until Jan. 3, 2009, to submit proofs of claim to: Mr. O. Tomashevsky Liquidator / Insolvency Manager Office 72 Rabochaya Str. 7 Nikolaev Ukraine Tel: 8(0512)44-72-27 The Arbitration Court of Nikolaev commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 18, 2008. The case is docketed as 5/504/08. The Economic Court of Nikolaev Admiralskaya Str. 22a 65009 Nikolaev Ukraine The Debtor can be reached at: LLC Intrans Tech Sadovaya Str. 6-D Nikolaev Ukraine KANKOR LLC: Creditors Must File Claims by January 3 --------------------------------------------------- Creditors of LLC Kankor (EDRPOU 30826237) have until Jan. 3, 2009, to submit proofs of claim to: Mr. O. Tomashevsky Liquidator / Insolvency Manager Office 72 Rabochaya Str. 7 Nikolaev Ukraine Tel: 8(0512)44-72-27 The Arbitration Court of Nikolaev commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 18, 2008. The case is docketed as 5/511/08. The Economic Court of Nikolaev Admiralskaya Str. 22a 65009 Nikolaev Ukraine The Debtor can be reached at: LLC Kankor Heroes of Stalingrad avenue, 113-A Nikolaev Ukraine KRAMATORSK BREWERY: Creditors Must File Claims by January 3 ----------------------------------------------------------- Creditors of CJSC Kramatorsk Brewery (EDRPOU 0539653) have until Jan. 3, 2009, to submit proofs of claim to: The Economic Court of Donetsk Artema Str. 157 83048 Donetsk Ukraine The Arbitration Court of Donetsk commenced bankruptcy proceedings against the company after finding it insolvent. The case is docketed as 42/210B. The Debtor can be reached at: CJSC Kramatorsk Brewery Mayakovsky Str. 3 Kramatorsk Donetsk Ukraine PRAKTIK-SERVICE LLC: Creditors Must File Claims by Jan. 3 --------------------------------------------------------- Creditors of LLC Praktik-Service (EDRPOU 33997742) have until Jan. 3, 2009, to submit proofs of claim to: Private Enterprise Legal Bureau Kharchenko Liquidator: Melnikov Str. 12 04050 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 25, 2008. The case is docketed as 44/366-b. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Praktik-Service P. Lumumba Str. 15 01042 Kiev Ukraine TECHNOBUILDINGSERVICE LLC: Creditors Must File Claims by Jan. 3 --------------------------------------------------------------- Creditors of declared LLC Building House Technobuildingservice (EDRPOU 34881328) have until Jan. 3, 2009, to submit proofs of claim to: LLC Meta Agro Liquidator Apt. 31 Kikvidze Str. 12a 01103 Kiev Ukraine The Arbitration Court of Kiev commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 25, 2008. The case is docketed as 44/416-b. The Economic Court of Kiev B. Hmelnitskij Boulevard 44-B 01030 Kiev Ukraine The Debtor can be reached at: LLC Building House Technobuildingservice Office 197 Yanvarskogo Vosstaniya Str. 3-b 01010 Kiev Ukraine UKRTECHNOSERVICE LLC: Creditors Must File Claims by January 3 ------------------------------------------------------------- Creditors of Llc Firm Ukrtechnoservice (EDRPOU 23920648)have until Jan. 3, 2009, to submit proofs of claim to: Mr. V. Vakulenko Liquidator Apt. 5-A Shakespeare Str. 12-A 61045 Kharkov Ukraine Tel: 773-01-30 The Arbitration Court of Kharkov commenced bankruptcy proceedings against the company after finding it insolvent on Nov. 19, 2008. The case is docketed as B-50/100-08. The Economic Court of Kharkov Derzhprom 8th Entrance Svoboda Square 5 61022 Kharkov Ukraine The Debtor can be reached at: LLC Firm Ukrtechnoservice Kovtun Str. 1 Kharkov Ukraine =========================== U N I T E D K I N G D O M =========================== APOLLO LTD: Appoints Joint Liquidators from Smith & Williamson -------------------------------------------------------------- Neil Francis Hickling of Smith & Williamson Limited was appointed liquidator of Apollo (Birmingham) Ltd. on Dec. 3, 2008, for the creditors' voluntary winding-up proceeding. The company can be reached through Smith & Williamson Ltd. at: No. 1 St. Swithin Street Worcester WR1 2PY England ARLO IV: Moody's Downgrades Ratings on Three Classes to Low-B ------------------------------------------------------------- Moody's Investors Service announced it has downgraded and left on review for further possible downgrade its ratings of four classes of notes issued by ARLO IV Limited (Lemar and Rosenheim I CDO). This transaction is a managed synthetic CDO credit-linked to a portfolio that comprises 10% of corporate entities and 90% of ABS securities, of which almost half have already amortized. The corporate portion being subject to substitutions by the Replacement Selector and the ABS portion is static and has fixed recovery rates of 95%. Moreover, the current lowest subordination in this transaction is 0.41%. According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's reference portfolio, which includes but is not limited to exposure to Fannie Mae and Freddie Mac, which were placed into the conservatorship of the U.S. government on September 8, 2008; and two Icelandic banks, specifically Kaupthing Bank hf and Glitnir Banki hf. The transaction also has a significant exposure to other corporate names which continue to deteriorate in the current economic environment. This will weigh on the ratings of the tranches in this transaction. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for corporate synthetic CDOs and ABS CDOs as described in Moody's Special Reports: -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) -- Moody's Approach to Rating Multisector CDOs (September 2000) -- Moody's Approach To Rating Synthetic Resecuritizations (October 2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (June 2005) The rating actions are: Arlo IV Limited - Lemar and Rosenheim I CDO: (1) Series 2006-1 (Lemar I -- Class B-2E) EUR10,000,000 Secured Limited Recourse Credit-Linked Notes due 2013 -- Current Rating: Ba3, on review for possible downgrade -- Prior Rating: Aa2 -- Prior Rating Date: 17 April 2008 (2) Series 2006-1 (Lemar I -- Class B-3E) EUR10,000,000 Secured Limited Recourse Credit-Linked Notes due 2013 -- Current Rating: B1, on review for possible downgrade -- Prior Rating: A1 -- Prior Rating Date: 17 April 2008 (3) Series 2006-1 (Rosenheim I -- Class B-3E) EUR5,000,000 Secured Limited Recourse Credit-Linked Notes due 2013 -- Current Rating: B1, on review for possible downgrade -- Prior Rating: A1 -- Prior Rating Date: 17 April 2008 (4) Series 2006-1 (Lemar I -- Class C-2E) EUR10,000,000 Secured Limited Recourse Credit-Linked Notes due 2013 -- Current Rating: Caa1, on review for possible downgrade -- Prior Rating: A3 -- Prior Rating Date: 17 April 2008 BRITISH AIRWAYS: Merger Talks With Qantas Ends ---------------------------------------------- British Airways Plc's merger talks with Australia's Qantas Airways Ltd have ended. Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time, the U.K.-based airline said in a statement. Both airlines will however continue to work together on their joint business between the UK and Australia and as part of the oneworld alliance. Bloomberg News relates the merger talks were called off after the carriers failed to agree on who would control the new company. The negotiations were halted after British Airways Chief Executive Officer Willie Walsh and his Qantas counterpart Alan Joyce couldn't reach agreement on the ownership split, Tony Cane, a spokesman for British Airways, was cited by Bloomberg News as saying. Disclosure of the negotiations "had created unrealistic expectations about a ratio that could never have been delivered given the two relative values of the airlines," Mr. Cane told Bloomberg News. British Airways confirmed on December 2, 2008 that it is exploring a potential merger with Qantas Airways via a dual-listed company structure. As published in the Troubled Company Reporter-Europe on Dec. 9, 2008, Bloomberg News reported Qantas Chief Executive Officer Alan Joyce said "significant matters" need to be resolved before a merger with British Airways can be achieved. These include "an appropriate merger ratio," issues connected with British Airways' pension fund and the global economic outlook, Mr. Joyce said, as cited by Bloomberg News. According to Bloomberg News, analysts at Citigroup Inc. said in a Nov. 21 report concern about pension fund liabilities has also delayed progress on British Airways' proposed tie-up with Spain's Iberia Lineas Aereas de Espana SA. As reported in the Troubled Company Reporter-Europe on Nov. 19, 2008, Iberia planned of an all-share merger with British Airways and has told investors it may take a bigger share of the combined group. However, Iberia chairman Fernando Conte noted there are still some difficulties with the deal including British Airways's pension deficit. British Airways will continue talks over a merger with Iberia, Mr. Cane told Bloomberg News on December 18. 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. * * * As reported in the TCR-Europe on Nov. 18, 2008, Moody's Investors Service placed all ratings of British Airways plc (Baa3 Corporate Family Rating - CFR); Ba1 senior unsecured and the Ba2 rating of the perpetual guaranteed preferred securities on review for possible downgrade. EDEUS EUROPE: Names Joint Administrators from KPMG -------------------------------------------------- Allan Watson Graham and Christine Mary Laverty of KPMG LLP were appointed joint administrators of Edeus Europe Ltd. on Dec. 8, 2008. The company can be reached through KPMG LLP at: 2 Cornwall Street Birmingham B3 2DL England FULHAM ROAD: S&P Withdraws Ratings on Six European CDO Tranches --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its credit ratings on six European synthetic collateralized debt obligation tranches issued by Fulham Road Finance Ltd. S&P withdrew the ratings on the class A to F notes following notification on Dec. 10, 2008 of a noteholders' resolution passed on June 13, 2005 to approve the substitution of Standard & Poor's as the rating agency in respect of the notes. Ratings List Ratings Withdrawn Fulham Road Finance Ltd. EUR255 million floating-rate credit-linked notes Rating ------ Class To From ----- -- ---- A NR AAA B NR AA+ C NR AA- D NR A- E NR BBB F NR BB+ KAUPTHING SINGER: Tynwald Okays GBP11 Mln Payment Scheme to Savers ------------------------------------------------------------------ iomtoday.co.im reports that Tynwald last week approved in principle a scheme to provide a payment of GBP1,000 payment to depositors of Kaupthing Singer and Friedlander (Isle of Man). Tynwald, iomtoday.co.im relates, voted for the scheme in principle 20 votes to one in the House of Keys and by six votes to 0 in the Legislative Council. Peter Karran (Lib Vannin, Onchan), however, voted against the scheme, iomtoday.co.im discloses. Mr. Karran, as cited by iomtoday.co.im, said he was "very concerned" that a "dangerous principle" had been set that could "come back to visit us in the long term". According to iomtoday.co.im, the GBP11 million cost of the scheme would be funded out of reserves but the GBP1,000 would be taken off any further settlement reached for each depositor. iomtoday.co.im notes payments are expected to be made in the latter part of January. Manx Radio recounts Treasury Minister Allan Bell stressed the payment wouldn't trigger the Depositors' Compensation Scheme and wouldn't be duplicated in any future payments. About Kaupthing Singer & Friedlander (Isle of Man) Ltd. Kaupthing Singer & Friedlander (Isle of Man) Ltd. -- http://www.kaupthingsingers.co.im/-- is the UK subsidiary of Iceland-based Kaupthing Bank hf. On Oct. 9, 2008, the Isle of Man Court made a provisional liquidation order in relation to Kaupthing Singer & Friedlander (Isle of Man). Subsequently, Michael Simpson of PricewaterhouseCoopers was appointed as provisional liquidator of the bank. On Oct. 8, 2008, The Isle of Man Financial Supervision Commission suspended the banking license of Kaupthing Singer & Friedlander (Isle of Man). LASER CUTTING: Taps Joint Administrators from PwC ------------------------------------------------- Lyn L. Vardy and Stephen A Ellis of PricewaterhouseCoopers LLP, were appointed joint administrators of The Laser Cutting Company Ltd. on Dec. 9, 2008. The company can be reached at: The Laser Cutting Company Ltd. 58-64 Catley Road Darnall Sheffield S9 5JF England LEWIS & MAY: Appoints Joint Administrators from Baker Tilly ----------------------------------------------------------- Alan Lovett and Andrew Sheridan of Baker Tilly Restructuring and Recovery LLP were appointed joint administrators of Lewis & May Properties Ltd. on Dec. 8, 2008. The company can be reached at: Lewis & May Properties Ltd. Holme Cottage Church Lane Ruscombe Reading Berkshire RG10 9UA England MARBLE ARCH: S&P Downgrades Ratings on Class D Notes to 'BB' ------------------------------------------------------------ Following a review of Lehman Brothers' participation in Marble Arch Residential Securitisation No.4 PLC (MARS 4), Standard & Poor's Ratings Services has lowered and removed from CreditWatch negative its rating on the class D notes. S&P has also removed from CreditWatch negative and affirmed the ratings on the class A, B, and E notes. The class C notes remain on CreditWatch negative. MARS 4 had draws on its reserve funds in March, June, and September 2008, largely due to the step-up of the A3c detachable rate coupon and increased losses. In July 2008, S&P lowered the rating on the E1c notes to 'B' from BB/Watch Neg. Lehman Brothers Holdings Inc. is the Bank of England base rate swap guarantor and the fixed/floating swap guarantor in this transaction. S&P placed all the notes issued by MARS 4 on CreditWatch negative on Sept. 17 following rating actions on Lehman Brothers. The BBR and fixed/floating swaps both materially affected the deal, most noticeably when LIBOR is stressed upward from its current level. While the class A, B, and E notes have sufficient credit enhancement to withstand the absence of the swaps at their respective rating levels, the class D notes are significantly impaired. Therefore, S&P has lowered the rating on the class the D notes to 'BB' from BBB/Watch Neg. S&P believes the rating on the class C notes could also be lowered. However, the effect of the swaps is not as pronounced for this class and any rating action will depend on whether or not the swaps are replaced and the terms of any possible replacement. The class C notes remain on CreditWatch negative until these issues are resolved. Ratings List Marble Arch Residential Securitisation No. 4 PLC EUR100.55 Million, GBP518.2 Million, and US$479 Million Mortgage-Backed Floating-Rate Notes With An Overissuance Of GBP14.28 Million Mortgage-Backed Floating-Rate Notes And GBP0.42 Million Mortgage-Backed Deferrable-Interest Notes Ratings Lowered And Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- D1a BB BBB/Watch Neg D1c BB BBB/Watch Neg Ratings Removed From CreditWatch Negative And Affirmed Rating ------ Class To From ----- -- ---- A2b AAA AAA/Watch Neg A2c AAA AAA/Watch Neg A3c AAA AAA/Watch Neg A3cDacs AAA AAA/Watch Neg B1a AA AA/Watch Neg B1b AA AA/Watch Neg B1c AA AA/Watch Neg E1c B B/Watch Neg Ratings Remaining On CreditWatch Negative Rating ------ Class To From ----- -- ---- C1a A/Watch Neg A/Watch Neg C1c A/Watch Neg A/Watch Neg RALLY CDO: Moody's Downgrades Ratings on Four Classes of Notes -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for further possible downgrade its ratings of four classes of notes issued by Rally CDO Limited. The transaction is a synthetic CDO^2 referencing, US ABS (90% of the reference portfolio) including RMBS and four corporate CDOs (10% of the reference portfolio). The rating actions are a response to credit deterioration in the underlying corporate portfolio and, to a lesser extent, to downgrades in the ABS portfolio. The reference portfolio includes but is not limited to exposure to Lehman Brothers Holdings Inc., which filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 15, 2008; Washington Mutual Inc., which was seized by federal regulators on September 25, 2008 and subsequently virtually all of its assets were sold to JPMorgan Chase; Fannie Mae and Freddie Mac, which were placed into the conservatorship of the U.S. government on September 8, 2008; Tribune Company, which announced on December 8, 2008 that it is voluntarily restructuring its debt obligations under the protection of Chapter 11 of the US Bankruptcy Code; General Motors Corporation whose senior unsecured rating was downgraded to C by Moody's on December 3, 2008 following the submission of a restructuring plan to the Senate Banking Committee and House of Representatives Financial Services Committee on December 2, 2008; and GMAC LLC whose senior unsecured rating was downgraded to C by Moody's on November 20, 2008 following GMAC's launch of debt exchange offerings. The transaction also has significant exposure to other corporate names which continue to deteriorate in the current economic environment. This will weigh on the ratings of the tranches in this transaction. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology and its supplements for corporate synthetic CDOs as described in Moody's Special Reports: -- Moody's Approach To Rating Synthetic CDOs (July 2003) -- Moody's Revisits Its Assumptions Regarding Corporate Default (and Asset) Correlations for CDOs (November 2004) -- Moody's Approach To Rating Synthetic Resecuritizations (October 2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (June 2005) The rating actions are: Issuer: Rally CDO Limited (1) US$42,000,000 Class A Floating Rate Notes due 2010 -- Current Rating: Aa1, on review for possible downgrade -- Prior Rating: Aaa -- Prior Rating Date: 28 February 2005 (2) US$18,000,000 Class B Floating Rate Notes due 2010 -- Current Rating: A3, on review for possible downgrade -- Prior Rating: Aa2 -- Prior Rating Date: 11 June 2008 (3) US$12,000,000 Class C Floating Rate Notes due 2010 -- Current Rating: Ba1, on review for possible downgrade -- Prior Rating: A3 -- Prior Rating Date: 11 June 2008 (4) US$6,000,000 Class D Floating Rate Notes due 2010 -- Current Rating: B2, on review for possible downgrade -- Prior Rating: Ba1 -- Prior Rating Date: 11 June 2008 TATA MOTORS: In Talks with UK Gov't Over Jaguar State Aid --------------------------------------------------------- BBC News reports that Business Secretary Lord Mandelson confirmed that the UK government has held talks with Jaguar Land Rover over the possibility of state aid for the carmaker. He, however, noted no decision had yet been made, and there was not "an open chequebook", the report relates. "We are analyzing very carefully what is going on in the [car] sector, and we will make good judgments in good time if it is appropriate for the government to take any action or if it is possible for us to do so," Lord Mandelson was quoted by the report as saying. "I have had discussions with the owners and management of Jaguar Land Rover in particular, because they argue that they are under particular strain." He stressed Tata, owner of Jaguar Land Rover, had first and primary responsibility for the carmaker's financial requirements, the report recounts. Tata Motors Ltd, which bought Jaguar Land Rover from Ford Motor Co in June for GBP1.7 billion, declined to comment on talks with the government, the report adds. On Dec. 3, 2008, the TCR-Europe reported that according to BreakingNews.ie Jaguar Land Rover will slash half of its workforce by the end of the year amid severe global car market conditions. BreakingNews.ie disclosed the company will lay off around 850 IT and engineering staff at plants in Castle Bromwich, Solihull, Whitley, and Gaydon, all in the West Midlands of England. The company, BreakingNews.ie revealed, employs about 16,000 staff at plants in the West Midlands and at Halewood, Merseyside. As reported in the TCR-Europe on Nov. 11, 2008, in the first nine months of the year combined sales by the two brands fell by 4.7 per cent to 214,480 vehicles. Jaguar sales grew by 12.9 per cent but Land Rover lost 9.7 per cent, the report stated. About Tata Motors India's largest automobile company, Tata Motors Limited -- http://www.tatamotors.com/-- is mainly engaged in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the company. The company's operating segments consists of Automotive and Others. In addition to its automotive products, it offers construction equipment, engineering solutions and software operations. TML is listed on the Bombay Stock Exchange, the National Stock Exchange of India and New York Stock Exchange. It was ultimately 33.4% owned by the Tata Group as of December 2007. Tata Motors has operations in Russia and the United Kingdom. * * * As reported in the Troubled Company Reporter-Asia Pacific on July 9, 2008, Standard & Poor's Ratings Services kept its 'BB' corporate credit rating on India's Tata Motors Ltd. On CreditWatch with negative implications, pending finalization of the long-term financing plans for funding the company's purchase of Jaguar and Land Rover from Ford Motor Co. (B/Watch Neg/--). At the same time, Standard & Poor's ratings on all Tata Motors' rated debt remain on CreditWatch with negative implications. The rating on Tata Motors was lowered on April 4, 2008, to 'BB', from 'BB+', after the announcement of the agreement with Ford Motor Co. for the purchase of Jaguar and Land Rover. Tata Motors paid about US$2.3 billion in cash for Jaguar and Land Rover (comprising brands, plants, and intellectual property rights). Ford contributed US$600 million to the Jaguar-Land Rover (JLR) pension plans. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 2, 2008, Moody's Investors Service downgraded the corporate family rating of Tata Motors Ltd to B1 from Ba2. The outlook remains negative. "The rating change reflects the slowdown in demand seen in both Tata Motors Ltd's domestic and overseas markets. This translates into pressure on profitability, and happens at a time when the company has increased its leverage. Tata Motors Ltd's financial flexibility is therefore significantly weakened," Elizabeth Allen, a Moody's Vice President/Senior Credit Officer said. TATA STEEL: Corus UK Staff to Lose Anti-Social Shift Premiums ------------------------------------------------------------- BBC News reports that staff at the Scunthorpe and Teeside plants of Corus, part of Tata Steel, agreed to a reduction in shift premiums. According to the report, 1,400 staff at the two plants will lose some of the premiums paid for anti-social shifts such as working overnight after Corus decided to cut production due to falling steel sales. The staff will see their pay cut by as much 11.5% as a result of the reduction in shift premiums, the report states. Last week, unions at Corus rejected a UK-wide 10% cut in wages, the report recounts. Citing a Corus spokesman, the report discloses the company will be introducing new shift patterns for about a fifth of the workforce at Scunthorpe from the middle of January. "Some Scunthorpe employees who receive a shift premium for working anti-social hours will receive less of a shift premium from January," the spokesman was quoted by the report as saying. He, however, noted the pay cut is a temporary measure, the report relates. About Tata Steel Limited Headquartered in Mumbai, India, Tata Steel Limited -- http://www.tatasteel.com/-- is a diversified steel producer. It has operations in 24 countries and commercial presence in over 50 countries. Its operations predominantly relate to manufacture of steel and ferro alloys and minerals business. Other business segments comprises of tubes and bearings. Tata Metaliks Limited, which is engaged in the business of manufacturing and selling pig iron, became a subsidiary of the Company with effect from Feb. 1, 2008. * * * Tata Steel Limited continues to carry a "BB" Standard & Poor's rating on its of US$750 million and US$500 million senior unsecured bank loans. As reported in the Troubled Company Reporter-Asia Pacific on October 24, 2008, Moody's Investors Service changed Tata Steel Ltd's outlook on its Ba1 corporate family rating to negative from stable. This reflects the change in outlook for Tata Steel UK's rating (formerly Corus) from stable to negative and the close linkages between the credit profiles of the two entities. "The change in outlook reflects the more challenging operating conditions now facing Tata Steel UK as a result of the likely deterioration in demand in Europe and the UK in the next 18 months, with declining steel prices and reduced production volumes," said Ivan Palacios, a Moody's AVP Analyst and lead analyst for Tata Steel. WOOLWORTHS PLC: 807 Stores to Close by January 5 ------------------------------------------------ The joint administrators to Woolworths Plc has confirmed that the 807 Woolworths stores will close by January 5, 2009, unless a buyer for the business can be found. Negotiations for the sale of the Woolworths retail business as a going concern continue, but have not yet resulted in a buyer being found. The stores will be closed in tranches of 200, with the first tranche set to close to the public on December 27, and thereafter on December 30, January 2 with the final stores closing to the public on January 5, 2009. Woolworths currently employs 22,000 permanent members of staff and 5,000 temporary and seasonal staff. The staff will be retained for a period following the store closures. The distribution centers supporting the stores employ about 500 staff and are likely to close before the end of December. The Administrators are working closely with the Redundancy Payments Office and Job Centre Plus to provide support for all staff, which will include a fast track process for paying redundancy entitlements. The administrators revealed that over 300 of the stores are under offer from a range of third parties, and that there is considerable interest in the other 500 stores. The administrators have also received interest in and offers for the Woolworths brand name, and the Ladybird and Chad Valley brands. The closing down sale will see new discounts introduced on over 40 million items with discounts of 20-60% across items in all stores. 50 million new stock items including DVDs, CDs and toys will be received into stores this week and further discounts will be applied in due course. Neville Kahn, joint administrator comments: "While negotiations for the sale of Woolworths' retail arm remain ongoing, and we continue to speak to new interested parties, regrettably we have had to begin a store closure program. We are extremely grateful to the staff and management for their support throughout this difficult time. "We are confident that we will sell the leases of the 300 stores currently under offer and are hopeful that our ongoing discussions with other parties will also prove successful." Woolworths was placed into administration on November 27, 2008. About Deloitte Deloitte -- http://www.deloitte.com/-- provides audit, consulting, financial advisory, risk management and tax services to selected clients. Deloitte & Touche LLP is the United Kingdom member firm of DTT. About Woolworths Group plc Headquartered in London, England, Woolworths Group plc (LON:WLW) -- http://www.woolworthsgroupplc.com/-- is a general merchandise retailer, and entertainment wholesaler and publisher. The Company's business is divided into Retail, and Entertainment Wholesale and Publishing segments. Woolworths, Streets Online Limited, WMS Card Services Limited and Flogistics Limited are included within the Retail segment, with Entertainment UK Limited, Disc Distribution Limited and 2entertain Limited being the constituents of Entertainment Wholesale and Publishing segment. The stores comprise Woolworths outlets located in small towns and city suburbs, targeted at meeting basic everyday shopping requirements, as well as larger stores located on shopping streets in regional shopping centers. The product offer covers toys, children's clothing, events, confectionery, home and entertainment, and larger stores include a range of home and children's clothing. YHC DEVELOPMENTS: Names Joint Administrators from Ernst & Young ---------------------------------------------------------------- Robert Hunter Kelly and Charles Graham John King of Ernst & Young LLP were appointed joint administrators of YHC Developments Ltd. on Dec. 4, 2008. The company can be reached through Ernst & Young LLP at: 1 Bridgewater Place Water Lane Leeds LS11 5QR England =============== X X X X X X X X =============== * Car Czar May Force Bankruptcy Filing for GM & Chrysler -------------------------------------------------------- Citing Senator Carl Levin, John Hughes at Bloomberg reports that the U.S. Treasury may adopt a plan that would let a car czar or the Treasury secretary force General Motors Corp. and Chrysler LLC into bankruptcy if the two companies fail to prove that they can survive without government financial assistance. Bloomberg relates that the Treasury plan would resemble a measure that the Congress passed last week that was rejected by the Senate. According to the report, Sen. Levin said that GM and Chrysler would be required to submit viability plans by March 31, 2009, or lose any government support. The report quoted Senator Levin as saying, "The power rests in the hands of either the czar or the Secretary of the Treasury to force bankruptcy by March 31." Sen. Levin, states Bloomberg, said that Treasury Secretary Henry Paulson and his successor would "in effect" be the car czar because the Treasury Department would supervise the financial assistance program. The administration was moving with "deliberative speed" in considering possible financing for U.S. automakers, the report says, citing Mr. Paulson. According to Bloomberg, White House spokesperson Tony Fratto said, "There will be conditions to any taxpayer financing. There will be rigorous oversight to make sure that these companies are doing what they promised to do, and we want to make sure that everyone is making the concessions that they're going to have to commit to make." GM-Chrysler Merger Talks Resume General Motors Corp. has resumed talks with Chrysler LLC on a possible merger, after Cerberus Capital Management LP said that it is willing to sell part of its stake in Chrysler, The Wall Street Journal reports, citing people familiar with the matter. According to WSJ, Cerberus Capital restarted the talks as cash in GM and Chrysler become scarce. Sources said that GM and Chrysler ended the negotiations in early November, Naoko Fujimura and Dave McCombs at Bloomberg News relate. Shawn Langlois at MarketWatch reports that GM spokesperson Tony Cervone denied the merger negotiations, saying, "We are not in merger talks with Chrysler. We stated in November that any talks related to a potential merger were tabled so we could focus on our liquidity situation. That remains the case." MarketWatch states that Chrysler spokesperson Shawn Morgan also dismissed the reports as rumor. * 80 Automotive Suppliers at Risk of Becoming Insolvent ------------------------------------------------------ Maria Sheahan at Reuters reports that German weekly Automobilwoche, citing consultancy Roland Berger's industry expert Marcus Berret, said some 80 automotive suppliers around the world are at risk of becoming insolvent in the near future. Reuters relates that according to the magazine, German supplier ZF Friedrichshafen's chief executive Hans-Georg Haerter said in particular companies that were bought by private equity firms could face trouble ahead. "It will be very sobering for many suppliers when the bills for October, November and especially December are paid in coming weeks," Mr. Haerter was quoted by Reuters as saying. * BOND PRICING: For the Week Dec. 15 to Dec. 19, 2008 ----------------------------------------------------- Issuer Coupon Maturity Currency Price ------ ------ -------- -------- ----- BELGIUM ------- Barry Calle SVCS 6.000 07/13/17 EUR 73.68 CYPRUS ------ Abh Financial Lt 8.200 06/25/12 USD 62.33 Alfa MTN Invest 9.250 06/24/13 USD 64.88 FRANCE ------ Alcatel S.A. 4.750 01/01/11 EUR 13.07 6.380 04/07/14 EUR 70.08 Altran Technologies S.A. 3.750 01/01/09 EUR 12.87 Axa SA 8.600 12/15/30 USD 64.03 Calyon 6.000 06/18/47 EUR 43.25 Credit Agricole 3.750 10/20/20 EUR 71.76 4.050 12/22/20 EUR 73.94 Soc Air France 2.750 04/01/20 EUR 18.20 Wavecom S.A. 1.750 01/01/14 EUR 24.31 GERMANY ------- Bayer AG 5.000 07/29/2105 EUR 74.15 HUNGARY ------- Agrokor 7.000 11/23/11 EUR 70.42 IRELAND ------- Allied Irish Bks 5.250 03/10/25 GBP 71.14 5.630 11/29/30 GBP 68.53 Alfa Bank 8.625 12/09/15 USD 40.92 8.635 02/22/17 USD 37.56 Ardagh Glass 7.130 06/15/17 EUR 64.25 Banesto Finance Plc 6.120 11/07/37 EUR 6.12 LUXEMBOURG ---------- Acergy SA 2.250 10/11/13 USD 57.03 AK Bars Bank 8.250 06/28/10 USD 97.75 9.250 06/20/11 USD 97.63 Alrosa Finance 8.880 11/17/14 USD 57.82 Bank of Moscow 7.340 05/13/13 USD 61.98 7.500 11/25/15 USD 39.95 6.810 05/10/17 USD 36.30 Beverage Pack 8.000 12/15/16 EUR 54.21 9.500 06/15/17 EUR 38.21 NETHERLANDS ----------- ABN Amro Bank N.V. 6.250 06/29/35 EUR 50.79 Aegon N.V. 6.130 12/15/31 GBP 70.29 Air Berlin Finance B.V. 1.500 04/11/27 EUR 20.51 Alfa Bk Ukraine 9.750 12/22/09 USD 100.14 ALB Finance B.V. 8.750 04/20/11 USD 47.54 7.880 02/01/12 EUR 36.39 ASM International N.V. 4.250 12/06/11 USD 63.79 4.250 12/06/11 USD 59.00 ASML Holding N.V. 5.750 06/13/17 EUR 59.51 Astana Finance 7.880 06/08/10 EUR 98.61 9.000 11/16/11 USD 95.19 ATF Capital BV 9.250 02/21/14 USD 57.78 BK Ned Gemeenten 0.500 06/27/18 CAD 67.57 Centercrdt Intl 8.000 02/02/11 USD 54.87 8.630 01/30/14 USD 38.41 8.630 01/30/14 USD 38.76 Hit Finance B.V. 4.880 10/27/21 EUR 71.08 RUSSIA ------ Sistema Capital 8.880 01/28/11 USD 71.11 SPAIN ----- Abertis Infra 4.375 03/30/20 EUR 74.88 Auvisa 4.790 12/15/27 EUR 65.09 UNITED KINGDOM -------------- Alfa-Bank CJSC 12.000 08/11/11 USD 62.46 Amlin Plc 6.500 12/19/26 GBP 65.89 Anglian Water Finance Plc 2.400 04/20/35 GBP 46.43 Aspire Defence 4.670 03/31/40 GBP 61.56 4.670 03/31/40 GBP 1.24 Aviva Plc 5.250 10/02/23 EUR 75.32 6.880 05/22/38 EUR 63.87 6.880 05/20/58 GBP 78.68 Barclays Bank Plc 11.650 05/20/10 USD 60.50 5.600 02/22/21 USD 74.48 Beazley Group 7.250 10/17/26 GBP 65.35 BL Super Finance 4.480 10/04/25 GBP 75.03 British Airways Plc 8.750 08/23/16 GBP 81.08 British Land Co 5.010 09/24/35 GBP 74.38 Broadgate Finance Plc 4.850 04/05/31 GBP 81.84 5.100 04/05/33 GBP 65.01 CGNU Plc 6.130 11/16/26 GBP 69.91 ********* 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 * * *