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/raid1/www/Hosts/bankrupt/TCREUR_Public/100218.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 Thursday, February 18, 2010, Vol. 11, No. 034 Headlines B E L G I U M KBC BANK: Moody's Lifts Rating on Preferred Securities to 'Ba3' B O S N I A & H E R Z E G O V I N A MLJEKARA AD: Insolvency Manager Invites Bid for Property G R E E C E * GREECE: Hid 2002 Currency Swap Arranged by Goldman Sachs I R E L A N D CLARIS LIMITED: Moody's Junks Rating on US$21.875 Mil. Notes INDEPENDENT NEWS: Extends Talks with Russian Buyer I T A L Y BANCAPULIA SPA: Moody's Upgrades Bank Strength Rating to 'D+' STEFANEL SPA: In Final Talks to Extend Debt Standstill Agreement K A Z A K H S T A N ALLIANCE BANK: Files for Chapter 15 Protection L A T V I A PAREX BANKA: Sells Bonds; Has Preliminary Depositor Deal PAREX BANKA: Repays EUR310 Million Syndicated Loan Tranche L U X E M B O U R G IIB LUXEMBOURG: Fitch Assigns 'B' Rating on US$200 Mil. Notes N E T H E R L A N D S INTERXION HOLDING: S&P Raises Corporate Credit Rating to 'B+' * NETHERLANDS: Agricultural Bankruptcies Up 56% to 133 in 2009 R U S S I A INTECO: Gets RUB8.4 Billion State Guarantee to Refinance Debt X5 RETAIL: S&P Changes Outlook to Stable; Affirms 'BB-' Ratings S P A I N AYT COLATERALES: Fitch Corrects Rating on Class D Notes to 'BB' EL BULLI: Likely to Close in 2012 Over Losses U N I T E D K I N G D O M CABLE & WIRELESS: S&P Cuts Ratings on GBP200 Mil. Bonds to 'B+' CHURCH STREET: Goes Into Administration Following Buyout CRYSTAL PALACE: Agilo May Have Breached Third-Party Rules EMI GROUP: Puts Abbey Road for Sale to Repay Debt ENTERPRISE INNS: Moody's Cuts Corporate Family Rating to 'B1' GALA CORAL: Has Tentative Agreement on GBP175MM Capital Infusion HOUSE OF FRASER: In Talks to Renegotiate Banking Covenants MANSARD MORTGAGES: S&P Affirms Rating on Class B2a Notes at 'B-' READER'S DIGEST: UK Unit Files for Administration ROYAL BANK: JP Morgan to Buy Part of RBS Sempra for US$1.7 Bil. STOCKPORT COUNTY: League Unable to Recommend Share Transfer TATA MOTORS: To Mothball TCP Site; Up to 3,000 Jobs at Risk X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* ============= B E L G I U M ============= KBC BANK: Moody's Lifts Rating on Preferred Securities to 'Ba3' --------------------------------------------------------------- Moody's Investors Service upgraded its ratings on certain KBC Bank NV's hybrid securities. Moody's upgraded KBC Bank NV's junior subordinated debt securities with cumulative deferral features to Ba1 from Ba3 and non-cumulative preferred securities to Ba3 from Caa1. The outlook for both hybrid instrument types is positive. This concludes the review for possible downgrade on the non- cumulative preferred securities that began on August 13, 2009. The rating outlook for KBC Bank NV and its subsidiaries remains negative and all other ratings on KBC Bank NV and its subsidiaries remain unchanged. Last Rating Action On August 13, 2009, Moody's downgraded the non-cumulative instruments to Caa1 and left the ratings on review for possible downgrade. It also downgraded the cumulative hybrid instruments to Ba3 with a negative outlook. These downgrades reflected the request by the European Commission to skip H2 2009 coupon payments as a result of KBC requiring state aid. The ongoing review for downgrade of the non-cumulative instruments incorporated the significantly greater expected loss that would result from non- cumulative coupon deferrals at least over the next 18 months. Rating Action in Detail The upgrade of KBC Bank NV's hybrid instruments reflects Moody's view that KBC Bank NV's publicly-stated intention to pay coupons and the agreement of the European Commission to do so lowers the expected loss on these instruments. However, it is Moody's opinion that, while the bank is implementing its restructuring plan and state aid has not been reimbursed, uncertainty on coupon payments is too high to warrant investment grade ratings for these instruments. The positive outlook reflects the fact that, once the uncertainties on the restructuring plan are lower (horizon of 1-2 years) and/or state aid has been fully reimbursed, Moody's will likely apply its revised Guidelines for Rating Bank Hybrids and Subordinated Debt published in November 2009, which should result in an upgrade to investment grade ratings. KBC Bank NV's directly-issued debt securities with cumulative deferral features were upgraded to Ba1 with a positive outlook from Ba3 with a negative outlook. KBC Bank's indirectly-issued non-cumulative trust preferred securities were upgraded to Ba3 with a positive outlook from Caa1 on review for possible downgrade. Rating History and Moody's Methodologies The last rating action on KBC Bank N.V. was on August 13, 2009, when Moody's downgraded the hybrid instruments issued directly and indirectly by KBC Bank N.V. following the group's announcement of a coupon deferral on its sterling perpetual issue. KBC Bank's directly-issued cumulative securities were downgraded to Ba3 with a negative outlook from Baa1 on review for possible downgrade. KBC Bank's indirectly-issued non-cumulative trust preferred securities were downgraded to Caa1 on review for possible downgrade from B1 on review with direction uncertain. Based in Brussels, KBC Group had total assets amounting to EUR344.4 billion at end-June 2009. KBC Group's consolidated total income for the first half of 2009 stood at EUR583 million, down from EUR4,360 million for the first half of 2008. In the same period, the net profit group share stood at minus EUR3,298 million (H1 2008: EUR1,047 million). At end-September 2009, KBC Bank's Tier 1 ratio stood at 10.6% under Basel II with 80% transitional floor. ======================================= B O S N I A & H E R Z E G O V I N A ======================================= MLJEKARA AD: Insolvency Manager Invites Bid for Property -------------------------------------------------------- ISI Intellinews reports that the insolvency manager of Mljekara AD called the interested parties to bid for the property of the troubled producer. According to the report, the floor price set for the property totals EUR7.6 million. Mljekara AD Banja Luka is a dairy company based in Banja Luka, Bosnia's Serb Republic. It processes milk and produces dairy products and substitutes as well as long-life products. =========== G R E E C E =========== * GREECE: Hid 2002 Currency Swap Arranged by Goldman Sachs ---------------------------------------------------------- Elisa Martinuzzi at Bloomberg News in Milan reports Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg, Ms. Martinuzzi says. According to Ms. Martinuzzi, Goldman helped Greece raise $1 billion of off- balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days. Failing to disclose the swap may have allowed Goldman, a co-lead manager on many of the sales, other underwriters and Greece to get a better price for the securities, said Bill Blain, co-head of fixed income at Matrix Corporate Capital LLP, a London-based broker and fund manager, Ms. Martinuzzi relates. Bloomberg says Michael DuVally, a spokesman at Goldman Sachs in New York, declined to comment. Ms. Martinuzzi relates Greek Finance Minister George Papaconstantinou said on February 15 that the swaps used by Greece to manage debt were "at the time legal." Greece doesn't use the swaps now, he said. Bloomberg reports that European Commission spokesman Amadeu Altafaj told reporters in Brussels on February 15 the swaps don't necessarily break EU rules. Data compiled by Bloomberg show Goldman Sachs earned about EUR735 million (US$1 billion) underwriting Greek government bonds since 2002. According to Bloomberg, Goldman Sachs underwrote 10 bond sales. Prospectuses for six of them, obtained by Bloomberg, contain no mention of the swaps. The other four couldn't be obtained. According to Bloomberg, Thomas Hazen, a law professor at the University of North Carolina at Chapel Hill, said Goldman could face legal liability "if it could be established that they were knowingly hiding risk, and therefore knew or had reason to know that the bond disclosure documents were misleading." However, Mr. Hazen said that would be "a tough hill to climb, in terms of burden of proof. There'd have to be some sort of smoking-gun memo." According to Bloomberg, Christoforos Sardelis, head of Greece's Public Debt Management Agency at the time, explained the transaction with Goldman consisted of a cross-currency swap of about US$10 billion of debt issued by Greece in dollars and yen. That was swapped into euros using a historical exchange rate, a mechanism that implied a reduction in debt and generated about US$1 billion in an up-front payment from Goldman to Greece, Mr. Sardelis said. He declined to give specifics on how the swap affected the country's deficit or debt. ============= I R E L A N D ============= CLARIS LIMITED: Moody's Junks Rating on US$21.875 Mil. Notes ------------------------------------------------------------ Moody's Investors Service has downgraded the rating of three classes of Notes issued by Claris Limited (Sierra Valley 2007-1). The Notes affected by the rating action are: Issuer: Sierra Valley 2007-1 -- US$21.875M Claris Ltd Series 111/2007 Sierra Valley 2007-1, Downgraded to Caa2; previously on Nov 12, 2009 Downgraded to B3 -- US$48.125M Claris Ltd Series 112/2007 Sierra Valley 2007-1, Downgraded to B3; previously on Nov 12, 2009 Downgraded to Ba3 -- US$20M Claris Ltd Series 113/2007 Sierra Valley 2007-1, Downgraded to Ba2; previously on Nov 12, 2009 Downgraded to Baa2 Sierra Valley 2007-1 is a collateralized debt obligation backed by a portfolio of US and European commercial mortgage back securities. The rating downgrade actions reflect a general deterioration in the credit quality of the underlying portfolio. This credit deterioration can be observed through a decline in the average credit rating (as measured by an increase in the weighted average rating factor). The current portfolio WARF worsened from the previous rating action of 50 to 91, equivalent to a portfolio rating of A1 compared to Aa3 previously. Moody's notes that in the case of Sierra Valley 2007-1, approximately 22% of its assets have been the subject of rating downgrades since Moody's last review of the transaction in November 2009. A total of 8 reference assets have suffered downgrades ranging from 1-7 notches. The above tranches are all relatively thin, ranging from 1.25- 2.75% and the subordination for the above Series stood at 0%, 1.25% and 4%, respectively. The lowest rated assets in the portfolio are rated Ba1, which accounts for more than 5% of the pool. INDEPENDENT NEWS: Extends Talks with Russian Buyer -------------------------------------------------- BBC News reports that Independent News and Media has extended talks with Russian billionaire Alexander Lebedev over the ownership of its Independent and Independent on Sunday titles. BBC notes a deadline for talks was set for Monday, but the company has extended it to February 26 following delays. According to BBC, shareholders in INM are reported to be keen to get rid of the Independent titles, which are also loss-making and suffering steady decline in circulation. As reported by the Troubled Company Reporter-Europe on Feb. 15, 2010, talks have not progressed amid stumbling blocks understood to include the paper's printing contract with Trinity Mirror, which would cost over GBP15 million to break, pension deficit issues and redundancy costs. Debt-for-Equity Swap Citing the FT, the Troubled Company Reporter-Europe on Nov. 12, 2009, reported INM secured approval of a proposed debt-for-equity swap refinancing from bondholders. The FT disclosed the plan involves the exchange of EUR123 million (US$184 million, GBP110 million) of bonds for a 46% stake in the new company. According to the FT, under the plan approved by bondholders, existing IN&M shareholders would be diluted to around 52%. About Independent News & Media Headquartered in Dublin, Ireland, Independent News & Media PLC (ISE:IPD) -- http://www.inmplc.com/-- is engaged in printing and publishing of metropolitan, national, provincial and regional newspapers in Australia, India, Ireland, New Zealand, South Africa and the United Kingdom. It also has radio operations in Australia and New Zealand, and outdoor advertising operations in Australia, New Zealand, South-East Asia and across Africa. The Company also has online operations across each of its principal markets. The Company has three business segments: printing, publishing, online and distribution of newspapers and magazines and commercial printing; radio, and outdoor advertising. INM publishes over 200 newspaper and magazine titles, delivering a combined weekly circulation of over 32 million copies with a weekly audience of over 100 million consumers. In March 2008, it acquired The Sligo Champion. During the year ended December 31, 2007, the Company acquired the remaining 50% interest in Toowoomba Newspapers Pty Ltd. ========= I T A L Y ========= BANCAPULIA SPA: Moody's Upgrades Bank Strength Rating to 'D+' ------------------------------------------------------------- Moody's Investors Service upgraded the bank financial strength rating of BancApulia SpA to D+, mapping to a baseline credit assessment of Ba1, from D (BCA of Ba2). The rating agency also affirmed BancApulia's Baa2/Prime-2 deposit ratings. The outlook on all ratings is stable. This rating action follows the completion of the merger between BancApulia and Banca Meridiana (not rated by Moody's). Banca Meridiana was a wholly owned subsidiary of Veneto Banca Holding (Veneto Banca, not rated by Moody's). As a result of the transaction, BancApulia is now controlled by Veneto Banca. Moody's said that the upgrade of the BFSR -- which concludes the review for possible upgrade initiated on December 17, 2009 -- reflects mainly the improved liquidity and capitalization of the bank, following the merger. Moody's said that it views the transaction positively as BancApulia has become part of a stronger and larger banking group, and thus gains access to the latter's greater resources and potential economies of scale, which could in the medium term improve its challenged profitability and efficiency. In addition, the merger with Banca Meridiana strengthens BancApulia's position in its home region of Puglia, in the south of Italy. The stable outlook reflects Moody's expectation that these potential benefits are likely to materialize only in the medium term, while there are also numerous integration challenges related to their delivery. The affirmation of BancApulia's Baa2/Prime-2 deposit ratings with a stable outlook reflects Moody's expectation of a very high probability of support for the bank from its parent Veneto Banca, notably in terms of capital, liquidity and funding, as well as expected benefits deriving from the envisioned tight integration. BancApulia and Banca Meridiana announced their intention to merge in January 2009. Following regulatory and shareholder approvals, the two banks completed the transaction on January 25, 2010. As a result of the transaction, Veneto Banca has become the controlling shareholder of BancApulia and, given a recent capital increase of EUR93 million at Banca Meridiana prior to the merger, the merged bank will have a significantly stronger Tier 1 capital ratio of about 11%, compared to 6.84% for BancApulia at end-June 2009. The new BancApulia is set to become a fully integrated banking subsidiary, within the federal model of the Veneto Banca group, with certain functions being centralized at the Veneto Banca Holding level, and BancApulia focusing increasingly on commercial activities. Veneto Banca is a cooperative bank historically based in the region of Veneto in north-eastern Italy, with a client base mainly composed of small and medium-sized enterprises and retail clients. Total assets stood at EUR22 billion at end-June 2009. Banca Meridiana was a smaller retail and commercial bank, also based in BancApulia's home region of Puglia, with 51 branches and total assets of EUR1.6 billion at end-December 2008. It became part of the Veneto Banca group in 2002. This rating was upgraded: * BancApulia: BFSR upgraded to D+ mapping to a BCA of Ba1, from D, mapping to a BCA of Ba2. These ratings were affirmed with a stable outlook: * BancApulia: long-term deposit at Baa2 * BancApulia: short-term deposit at Prime-2 The previous rating action on BancApulia was on December 17, 2009, when its D BFSR was placed on review for possible upgrade. BancApulia SpA is headquartered in San Severo, Italy. At June 30, 2009, it had total assets of EUR4.5 billion. STEFANEL SPA: In Final Talks to Extend Debt Standstill Agreement ---------------------------------------------------------------- Gilles Castonguay at Dow Jones Newswires reports that Stefanel SpA said Tuesday it was in the final round of talks with its creditors to prolong for about two months a standstill agreement on its debt. According to Dow Jones, Stefanel said in a statement the agreement, which was to have expired Feb. 15, would be prolonged until April 30. The standstill agreement has enabled Stefanel to forgo interest payments on its debt, which at Sept. 30 stood at a net EUR64.2 million, Dow Jones says. The company's creditor banks include Banca Antonveneta, Intesa Sanpaolo SpA and UniCredit SpA, Dow Jones discloses. Dow Jones notes Stefanel also said it had presented to creditors an industrial and financial plan with the help of Bain & Company and Bird & Bird. Stefanel SpA -- http://www.stefanel.it/-- is an Italy-based company primarily engaged in the production and marketing of apparel. It operates in two main business areas: the clothing sector, through Stefanel, Interfashion and Hallhuber business units, and in the airport retailing sector, which includes clothing sold via the Nuance business unit. Stefanel offers casual-style clothing for men and women. The brand presents a strong focus on knitwear. Interfashion works with such designers as Marithe and Francois Girbaud. Hallhuber's products are suitable for a clientele aged between 20 and 30 years. As of December 31, 2008, the Company had around 330 stores all over the world, of which 244 of Stefanel brand. It also provides in-flight sales activities, Internet and mail-order purchase. It operates through its subsidiaries among which there are: Interfashion SpA, Lara Stefanel Sas, Stefanel GmbH, Stefanel International Holding NV, Stefanel Japan Inc. and Stefanel Hong Kong Ltd., among others. =================== K A Z A K H S T A N =================== ALLIANCE BANK: Files for Chapter 15 Protection ---------------------------------------------- JSC Alliance Bank filed for Chapter 15 bankruptcy (Bankr. S.D.N.Y. Case No. 10-10761) to protect itself from U.S. lawsuits and creditor claims while it reorganizes in Kazakhstan. JSC Alliance is the sixth-largest bank in Kazakhstan by net loans. The Chapter 15 petition says that assets and debts are in excess of US$1 billion. Law firm White & Case LLP, based in New York, is representing JSC Alliance in the Chapter 15 case. Maxat Rakhimzhanovich Kabashev, chairman of JSC's management board and authorized foreign representative of the bank, said JSC expanded rapidly in 2004 to 2007, primarily funded by bank borrowings and debt securities issued in the international capital markets. However, JSC experienced severe liquidity difficulties following the worldwide financial crisis. JSC went into default on lending agreements starting last March and negotiated a restructuring plan that was approved in December by creditors holding more than 94% of claims. Kazakh banks have struggled to sell property acquired after foreclosures on bad loans, Bloomberg News said, citing the National Bank of Kazakhstan's quarterly survey of banks released this month. On September 18, 2009, JSC obtained approval from the Financial Court in Kazakhstan of its application for restructuring under the Civil Procedural Code. The Kazakh Court ordered that the restructuring must be completed no later than March 15, 2010. On October 5, 2009, JSC and the steering committee of creditors signed a term sheet setting out key commercial terms of the restructuring. The restructuring has already been approved by creidtors holding 94% in amount of the claims against the Bank athat are being restructured. The Steering Committee members are Asian Development Bank, Calyon, Commerzbank Aktiengesellschaft, DEG- Deutsche Investitutions- und Entwicklungsgesellschaft mbIL HSBC Bank pic, ING Asia Private Bank Limited, JPMorgan Chase Bank, N.A., Sumitomo Mitsui Banking Corporation Europe Limited and Wachovia Bank N.A. Depending on the nature of their claims, creditors may choose or be eligible for one of several options to participate in the Restructuring: Option 1 -- available to holders of unsubordinated claims, involves the payment of 22.5% the face amount of such claims (payable in the relevant currency). Option 2 -- involves the issuance by the Bank of seven-year notes with a principal amount equal to 50% of the amount of a creditor's unsubordinated claims, and "Recovery Notes" in a principal amount representing approximately the remaining 50% of such claims. Recovery notes will be paid from recoveries on assets in the Bank's corporate and SME (Small and Medium-Sized Enterprise) portfolios, litigation recoveries and certain tax assets. JSC is seeking recognition from the U.S. Bankruptcy Court that the Kazakh Proceeding is the main proceeding pursuant to Sections 1515 and 1517 of the Bankruptcy Code. About JSC Alliance Bank JSC Alliance Bank is a bank with substantially all of its operations in the Republic of Kazakhstan. As of June 30, 2009, the Bank's net assets constituted 4.9% of the total assets of the banking system in Kazakhstan. It has 3,900 employees. The Bank's only assets in the U.S. are certain correspondent accounts with U.S. Banks. =========== L A T V I A =========== PAREX BANKA: Sells Bonds; Has Preliminary Depositor Deal -------------------------------------------------------- Aaron Eglitis at Bloomberg News reports that Parex Banka AS sold bonds and reached a preliminary agreement with some depositors to keep their money in the bank. According to Bloomberg, Parex said in an e-mailed statement Monday the bank sold bonds worth about EUR17.7 million (US$24.1 million) and came to an agreement in principal with depositors who faced restrictions on removing as much as EUR130 million of funds at the bank for two years. Bloomberg recalls restrictions on withdrawals were put on large deposits at Parex after it was seized by the Latvian government following a run on its deposits in 2008. The Financial and Capital Markets Commission and the government imposed transaction limits on Parex's clients of LVL35,000 (US$67,050) a month after the bailout to stem the outflow of funds. Bloomberg relates Robert Idelson, head of Parex's asset-management unit, in a telephone interview Monday the bank plans to sell another EUR50 million of bonds to depositors by the end of April. Mr. Idelson, as cited by Bloomberg, said should the next sale prove successful the bank "will have a pretty good chance to get the restrictions lifted before the end of the first half of the year". About Parex banka Founded in 1992, Parex banka -- http://www.parexgroup.com/-- currently employs some 1,900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank's shares, but 22.4% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans. * * * As reported by the Troubled Company Reporter-Europe on Dec. 23, 2009, Fitch Ratings affirmed Parex Banka's Long- and Short-term Issuer Default Ratings at 'RD'. The affirmation of Parex's IDRs at 'RD' reflects the extension of deposit restrictions imposed on the bank by the Latvian banking regulator till June 30, 2010. PAREX BANKA: Repays EUR310 Million Syndicated Loan Tranche ---------------------------------------------------------- Aaron Eglitis at Reuters reports that Parex Bank said on Friday it has repaid EUR310 million (US$424 million) to lenders of a syndicated credit. According to Reuters, Parex said the situation in the bank had become more stable and liquidity had improved and therefore it was able to repay EUR165 million, while the State Treasury provided the remaining EUR145 million as a term deposit. Since the government took over Parex in November 2008, the state has placed seven deposits in it worth a total LVL622 million (US$1.2 billion), Reuters notes. Parex also agreed to a deal to restructure its syndicated credit repayments to lenders, Reuters states. With the help of the state, Parex repaid EUR232.5 million in March 2009, Reuters recalls. The final EUR232.5 million of the syndicated loan becomes due May 2011, Reuters says. About Parex banka Founded in 1992, Parex banka -- http://www.parexgroup.com/-- currently employs some 1,900 people at branches all over Latvia and offers universal banking services throughout the Baltic region, the CIS and other European nations such as Germany, Switzerland and Sweden. Parex Group companies operate across the banking, finance, leasing, asset management and life insurance sectors. Currently, the Latvian Privatisation Agency is the majority shareholder of Parex banka, holding 73.4% of the Bank's shares, but 22.4% are controlled by the European Bank for Reconstruction and Development. Parex banka has signed up to the European Code of Conduct on housing loans. * * * As reported by the Troubled Company Reporter-Europe on Dec. 23, 2009, Fitch Ratings affirmed Parex Banka's Long- and Short-term Issuer Default Ratings at 'RD'. The affirmation of Parex's IDRs at 'RD' reflects the extension of deposit restrictions imposed on the bank by the Latvian banking regulator till June 30, 2010. =================== L U X E M B O U R G =================== IIB LUXEMBOURG: Fitch Assigns 'B' Rating on US$200 Mil. Notes ------------------------------------------------------------- Fitch Ratings has assigned IIB Luxembourg S.A.'s US$200 million 11% issue of limited recourse notes, due in February 2013, a final Long-term rating of 'B' and a Recovery Rating of 'RR4'. The notes are to be used solely for financing a loan to Russia's International Industrial Bank, which is rated Long-term Issuer Default 'B', Short-term IDR 'B', Individual 'D', Support '5', Support Rating Floor 'No floor', and National Long-term 'BBB(rus)'. The Outlooks on both Long-term Issuer Default and National Long-term ratings are Stable. IIB Luxembourg will charge certain of its rights and interests under the loan agreement to BNY Corporate Trustee Services Limited, London Branch for the benefit of noteholders under the trust deed. The loan agreement contains a negative pledge clause, which allows for the creation of a lien (including securitization) on up to 10% of consolidated total assets of IIB and its subsidiaries. The loan agreement also limits mergers, disposals and other types of corporate reorganizations and stipulates that operations with affiliates should be conducted on market terms. Other covenants limit loans to related parties (net of impairment reserves) to 50% of IIB's IFRS equity (not including subordinated capital) and capital distributions (including payment of dividends, redemption or repurchase of share capital and prepayment of subordinated debt) to 50% of IFRS's net income. The covenants also oblige the bank to maintain a total Basel I capital adequacy ratio of no less than 20% (end-Q309: 29.77%) and to comply fully with mandatory ratios and other requirements of the Central Bank of Russia. According to the terms of the loan agreement, a cross default is triggered if overdue indebtedness of IIB or any of its material subsidiaries exceeds US$10 million. For additional information on the issue please refer to Fitch's announcement of February 5, 2010 available on ww.fitchratings.com. At end-2009, IIB was one of the top 30 Russian banks by total assets. IIB is controlled by Sergei Pugachev (with an 81% stake), who since 2001 has been a member of the upper house of the Russian parliament (the Federation Council). ===================== N E T H E R L A N D S ===================== INTERXION HOLDING: S&P Raises Corporate Credit Rating to 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised to 'B+' from 'B-' its long-term corporate credit rating on the Netherlands-based data center operator Interxion Holding N.V. The rating was removed from CreditWatch positive where it had been placed on Feb. 2, 2010. The outlook is stable. The issue ratings of 'BB-' and 'BB', respectively, on the company's notes and revolving credit facility are now final. The recovery ratings of '2' and '1', respectively, on the notes and revolver, continue to indicate S&P's expectations of "substantial" (70%-90%) and "very high" (90%-100%) recovery in the case of a payment default. "The upgrade reflects S&P's assessment that Interxion's liquidity has improved following the recent placement of EUR200 million of notes due 2017 and the signing of a EUR60 million revolver maturing in 2013," said Standard & Poor's credit analyst Patrice Cochelin. "The stable outlook reflects S&P's expectation that Interxion will continue to benefit from solid demand for its existing and new data centers, and will continue to deploy capital conservatively," said Mr. Cochelin. S&P does not expect gross adjusted debt to EBITDA to increase meaningfully above 4x and expect the company to maintain adequate liquidity. The corporate credit rating is constrained by S&P's expectation that significant capital investments will keep Interxion's free cash flow generation negative for some time. The rating is also constrained by the industry's largely fixed-cost base and its long planning and sales cycles, which S&P believes could significantly weaken earnings in the medium term. S&P also take into account Interxion's significant gross adjusted debt leverage and S&P's projections for moderate liquidity after early 2013. Interxion's status as a carrier-neutral data center provider--not tied to any particular telecom operator--with a presence in most European communication hubs is relatively rare and is a positive factor for the rating. The industry has adequate barriers to entry and currently has a favorable supply/demand balance--driven by a constrained offer, growth in Internet traffic and communications volumes in general, and the limited penetration, so far, of outsourced data centers in Europe. Interxion benefits from significant revenue recurrence as well as attractive margins and cash flow generated by facilities operating at optimal capacity. On Sept. 30, 2009, Interxion reported gross consolidated debt of about EUR156 million. S&P could consider lowering the rating if liquidity tightened significantly from its current level, if the profitability or cash generation of existing data centers deteriorated materially, or if leverage increased materially above S&P's current expectations, including an adjusted gross debt to EBITDA ratio meaningfully above 4x or funds from operations coverage of debt materially below 20%. Over time, significant progress toward positive consolidated free cash flow generation could support an upgrade, provided liquidity remains adequate. * NETHERLANDS: Agricultural Bankruptcies Up 56% to 133 in 2009 -------------------------------------------------------------- Rudy Ruitenberg at Bloomberg News reports that agricultural bankruptcies in The Netherlands in 2009 climbed to the highest level in three years as more growers of vegetables and flowers went bust. Bloomberg relates the government statistics office said in a report on its Web site Tuesday company failures in agriculture rose 56% to 133 last year from 85 in 2008. According to Bloomberg, Central Bureau voor de Statistiek said in the fourth quarter, 46 farm companies failed compared with 26 a year earlier. The bureau said agriculture accounted for less than 2% of overall Dutch bankruptcies, which surged 73% to 8,040, Bloomberg notes. The Netherlands is the fifth-largest farm producer in the European Union, Bloomberg discloses. =========== R U S S I A =========== INTECO: Gets RUB8.4 Billion State Guarantee to Refinance Debt ------------------------------------------------------------- Property Xpress reports that Inteco, owned by Elena Baturina, has received a state guarantee for RUB8.44 billion. According to the report, a member of the company said that with the help of the new state guarantees Inteco will refinance old loans to Sberbank and VTB. Inteco is a Russian construction company, 99% of which is owned by Yelena Baturina, Russia's richest woman and wife of Moscow city mayor, Yuriy Luzhkov. X5 RETAIL: S&P Changes Outlook to Stable; Affirms 'BB-' Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services said that it had revised its outlook on X5 Retail Group N.V., owner of Russia's largest grocery retail network, to stable from negative. At the same time, the 'BB-' long-term corporate credit and 'ruAA-' Russia national scale ratings on X5, its related entities, and their respective issue ratings were affirmed. "The outlook revision primarily reflects the improvement in X5's liquidity position, but also its resilient operating performance and more conservative financial policy," said Standard & Poor's credit analyst Anton Geyze. At the end of 2009, X5 obtained a five-year US$1.1 billion committed line from Sberbank and a number of smaller committed lines from foreign and state-owned banks. Additionally, in the 12 months to Sept. 30, 2009, X5 generated free operating cash flow (FOCF) of US$337 million, which allowed the company to accumulate meaningful cash balances. These sources secure the company's liquidity position over the next 12 months. S&P believes that debt metrics will improve further on the back of organic growth, supported by expanded selling space and flat nominal net debt, because S&P expects discretionary cash flow to be neutral. S&P also expects any unforeseen transformational acquisitions to be funded largely through equity issuance. The ratings do not factor in any major acquisitions or changes to the shareholder remuneration policy. X5's significant unhedged exposure to foreign exchange borrowings remains an important restricting factor for its credit profile. The company generates almost all of its revenues in Russian rubles, while about 60% of its debt is in U.S. dollars. As the company does not fully hedge its foreign exchange risk exposure, X5 is dependent upon exchange rate fluctuations. The stable outlook reflects S&P's expectation of X5's continuing resilient operating performance and stable cash flow generation. "S&P expects the company to continue demonstrating a relatively prudent financial policy, which would include sound liquidity management and avoiding any opportunistic debt financed acquisitions," said Mr. Geyze. "Such acquisitions might put the company's liquidity at risk in the future, because potential acquisition targets in Russia often have mostly short-term debt maturity profiles." S&P could lower the ratings in case of a significant increase in X5's financial aggressiveness that would lead to deterioration of credit protection metrics. To maintain the current ratings, S&P expects the company's adjusted debt to EBITDA to be about 3.5x and adjusted funds from operations to be in the range of 15% to 20%. Ratings downside could also result in case of substantial ruble depreciation negatively affecting debt protection metrics and covenant headroom. Ratings upside would require further deleveraging and improvement in the capital structure in terms of duration and currencies. It would also require a longer track record of financial prudence, and a publicly formulated financial policy. Operational metrics should also remain supportive, meaning that the company should prove capable of adjusting its business to the weakening economic conditions and maintaining its market position. ========= S P A I N ========= AYT COLATERALES: Fitch Corrects Rating on Class D Notes to 'BB' --------------------------------------------------------------- Fitch Ratings has corrected a version released on February 15, 2010. The prior rating of the class D note was 'BB' and not 'BB-'. Fitch has downgraded AyT Colaterales Global Hipotecario, FTA Serie AyT Colaterales Global Hipotecario CCM I's (AyT Colaterales CCM I) class B, C and D notes. Fitch has simultaneously revised the Outlook of the class A notes to Negative from Stable, the remaining notes have Negative Outlooks. A full rating breakdown is provided at the end of this comment. (The Spanish RMBS transaction is comprised of loans originated and serviced by Caja de Ahorros de Castilla la Mancha.) Fitch has downgraded the junior notes of the transaction due to a deterioration in performance. AyT Colaterales CCM I reports on a semi-annual basis and as of the November 2009 interest payment date, the transaction showed a significant deterioration in the performance of the pool. Loans that are three months or greater in arrears increased to 5.11% of the current balance as of November 2009, compared with 1.20% in November 2008. Cumulative defaults are equal to 1.3% of the initial pool balance. No defaulted loans have been sold to date. The excess spread was not sufficient to fully provision for the defaulted loans and the reserve fund had to be drawn on the last three IPDs. The reserve fund currently stands at 72% of the required amount. Total defaults to date have been equal to EUR10.4 million, of which only EUR2.5 million was absorbed by excess spread. The Negative Outlook reflects the possible further deterioration of the pool and likely reserve fund draws which will reduce the credit enhancement available for all notes. The pool deterioration to date suggests arrears will continue to grow and further defaults are expected, in addition to uncertainty with regard to the level of potential recoveries based on Fitch's expectation that Spanish house prices will experience price declines of 25%-30% on a peak-to-trough basis. Fitch used its EMEA RMBS surveillance criteria, employing its credit cover multiple methodologies, to assess the level of credit support available to each class of notes with respect to the transactions. The rating actions are: -- Class A (ES 0312273248) affirmed at 'AAA'; Outlook revised to Negative from Stable; assigned Loss Severity (LS) rating of 'LS-1' -- Class B (ES 0312273255) downgraded to 'A-' from 'A'; Outlook Negative; assigned 'LS-3' -- Class C (ES 0312273263) downgraded to 'BB' from 'BBB-'; Outlook Negative; assigned 'LS-4' -- Class D (ES 0312273271) downgraded to 'B' from 'BB'; Outlook Negative; assigned 'LS-5' EL BULLI: Likely to Close in 2012 Over Losses --------------------------------------------- Caterersearch reports that Spain's El Bulli restaurant is likely close for good in 2012 because it is losing too much money. The report relates Ferran Adria, had planned to reopen after a temporary two-year closure but told the New York Times on Friday that El Bulli would now close permanently. According to the report, although the avant-garde restaurant has a waiting list of 3,000, it has operated at a loss since 2000 and has been losing around EUR500,000 a year. =========================== U N I T E D K I N G D O M =========================== CABLE & WIRELESS: S&P Cuts Ratings on GBP200 Mil. Bonds to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered to 'B+' from 'BB-' its issue ratings on the GBP200 million unsecured bonds due in 2012 issued by U.K.-based telecoms service provider Cable & Wireless PLC and the GBP200 million guaranteed notes due 2019 issued by Cable & Wireless International Finance B.V. due in 2019. These issue ratings remain on CreditWatch with negative implications where they were placed on Nov. 17, 2009. At the same time, S&P withdrew the recovery ratings on these issues. The long-term corporate credit rating of 'BB-' and the senior secured issue rating of 'BB-' on the new bond issued by C&W subsidiary Sable International Finance Ltd. are unchanged. These ratings remain on CreditWatch with positive implications where they were placed on Nov. 17, 2009, and Feb. 2, 2010, respectively, reflecting the likelihood of a one-notch upgrade on completion of C&W's proposed demerger. The 'B' short-term credit rating is unchanged. C&W intends to demerge its two main business lines, essentially resulting in the spin-off of its "Worldwide" activities from its international fixed-line and mobile operations, known as Cable & Wireless Communications PLC. C&W Communications will be the surviving entity that S&P will rate following the planned demerger. Each of the existing senior unsecured bonds will continue to be obligations of C&W or Cable & Wireless International Finance B.V. These entities will be part of the C&W Communications Group following the demerger. "The downgrade of the issue ratings on the two unsecured bonds reflects their deeper subordination following the issuance of a $500 million senior secured bond by Sable International Finance Ltd. as well as a likely reduced asset base following the planned demerger," said Standard & Poor's credit analyst Helen O'Toole. The withdrawal of S&P's recovery ratings on the two unsecured bonds reflects that C&W Communications' debtholders will be reliant on assets in the Caribbean, Panama, Macau, and elsewhere to service debt. Since S&P has limited knowledge of the insolvency regimes of the countries in which the assets are located, S&P will not apply its recovery rating methodology. The placement of the issue ratings on the unsecured bonds on CreditWatch with negative implications reflects the possibility that the ratings may be lowered further if the demerger does not go ahead. Based on current information, and assuming that the demerger goes ahead as per the plans that have already been communicated by the company, S&P expects there to be a two-notch differential between the corporate credit rating and the ratings on the unsecured debt instruments. The placement of the long-term corporate credit rating and the senior secured issue rating on CreditWatch with positive implications reflects S&P's view that, on completion of the demerger, C&W Communications is likely to benefit from a stronger business risk profile than C&W, probably leading to a corporate credit rating of 'BB'. "We will likely resolve the CreditWatch status as and when the planned demerger becomes effective, which the company expects by end-March 2010," said Ms. O'Toole. "Based on S&P's current assessment, S&P expects to upgrade the corporate credit rating by one notch, to 'BB', on completion of the demerger." CHURCH STREET: Goes Into Administration Following Buyout -------------------------------------------------------- Adam Hooker at Print Week reports that East London printer Church Street Litho, which trades under the name of its predecessor Belgravia Colour Printers, has gone into administration. The report relates the failure comes just 18 months after the business and assets were bought out of administration by BCP director Martin Draycott. Andrew Andronikou and Peter Kubik, of insolvency practitioner Hacker Young, were appointed as administrators on January 25, the report recalls. The administrators have not returned requests for information and it is unclear what plans they have for the company, the report notes. CRYSTAL PALACE: Agilo May Have Breached Third-Party Rules --------------------------------------------------------- Owen Gibson and Dominic Fifield at The Guardian report that the Football League this week will seek clarification from Agilo, the hedge fund that pushed Crystal Palace into administration about the extent of their control over player contracts, amid concerns that they could breach rules over third-party ownership. According to the report, Agilo, the hedge fund that is owed GBP4.5 million by Crystal Palace, said that it appointed administrators in the final days of the January transfer window only as "a last resort" following a breakdown in relations with the club's former owner, Simon Jordan. The administrator Brendan Guilfoyle is expected to meet with the Football League in the coming days in the hope that it will release the balance of the money collected by the club in the transfer window from the sale of Victor Moses, the report says. The report notes even after money has been deducted for football creditors, Mr. Doyle has said that it will be sufficient to see the club through to the end of the season when added to the income from Palace's FA Cup run and a GBP1 million loan advanced by Agilo. Mr. Guilfoyle has agreed in principle with the PFA that players will defer payment of their bonuses and appearance money until the end of the season, the report recalls. Agilo accepted the players' contracts as security for a loan taken out by Mr. Jordan, which is believed to have around GB4.5 million outstanding, the report notes. As reported by the Troubled Company Reporter-Europe on Jan. 28, 2010, Crystal Palace went into administration after running into financial problems. According to The Times, the club has debts estimated at GBP30 million. London-based Crystal Palace Football Club -- http://www.cpfc.premiumtv.co.uk/-- plays in the English League. The team, also known as the "Eagles" represents a borough of London called Croydon. It was founded in 1905 by workers at the Crystal Palace, a wrought iron and glass building originally erected in the Hyde Park area of London to house the Great Exhibition of 1851 (the first in a series of World's Fair exhibitions). The Crystal Palace Football Club moved to its current stadium Selhurt Park in 1924. Chairman Simon Jordan took over the club in 2000, ending Crystal Palace's stint with bankruptcy. EMI GROUP: Puts Abbey Road for Sale to Repay Debt ------------------------------------------------- Andrew Edgecliffe-Johnson at The Financial Times reports that EMI Group has put Abbey Road, the London recording studios immortalized by the Beatles album of the same name, on the market as the music group looks to extricate itself from the debt burden of Terra Firma's 2007 leveraged buy-out. EMI would not comment but five people familiar with the situation told the FT it had been courting bidders for the property in St. John's Wood. A sale could raise tens of millions of pounds, the FT says. The FT notes it was not immediately clear whether EMI would sell the Abbey Road brand name along with the property, but one media lawyer said: "The brand is worth more than the building . . . anybody who wants the studios will want the brand." According to the FT, depending on the level of offers it attracts, a sale could bolster EMI's finances at a time when Terra Firma is seeking GBP120 million (EUR138 million) from investors by June to avoid breaching covenants on GBP3.3 billion of loans from Citigroup. However, it is unlikely that the proceeds would arrive in time or be large enough to help significantly with that deadline, the states. Going Concern Doubt As reported by the Troubled Company Reporter-Europe on Feb. 8, 2010, The Financial Times said KPMG, EMI Group's accountants, raised "significant doubt" about the company's ability to continue as a going concern. The FT disclosed Guy Hands, Terra Firma's founder and chairman, has written to investors in two of its private equity funds asking them to inject another GBP120 million, subject to EMI Music producing a new strategic plan. He must come up with the money by June 14 or risk losing the company to Citigroup, his bankers, the FT said. According to the FT, accounts for the year to March 2009, released on February 9, however, make clear that even if Terra Firma secures this equity, it will face another "significant shortfall" against a test on covenants in its loans by March 2011. Unless it can persuade Citi to restructure its GBP3.2 billion in loans by then, investors face further cash calls, the FT stated. The FT disclosed EMI's pre-tax losses for the year to March 2009 widened to GBP1.7 billion, against a GBP414 million loss for the previous period, which covered the first eight months and 21 days of Terra Firma's ownership. EMI -- http://www.emigroup.com/-- is the fourth largest record company in terms of market share (behind Universal Music Group, Sony Music Entertainment, and Warner Music Group). It houses recorded music segment EMI Music and EMI Music Publishing. EMI Music distributes CDs, videos, and other formats primarily through imprints and divisions such as Capitol Records and Virgin, and sports a roster of artists such as The Beastie Boys, Norah Jones, and Lenny Kravitz. EMI Music Publishing, the world's largest music publisher, handles the rights to more than a million songs. EMI Music operates through regional divisions (EMI Music North America, International, and UK & Ireland). Private equity firm Terra Firma owns EMI. ENTERPRISE INNS: Moody's Cuts Corporate Family Rating to 'B1' ------------------------------------------------------------- Moody's Investors Service downgraded Enterprise Inns plc Corporate Family Rating to B1 from Ba3, the Probability of Default Rating to B2 from B1 and the rating of GBP275 million senior secured floating-rate notes due 2031 to Ba2 from Ba1. At the same time the ratings were placed on review for further downgrade. The rating downgrade reflects Moody's expectation that Enterprise Inns' performance is unlikely to improve sufficiently over the next twelve to eighteen months to meet Moody's target credit metrics for stabilizing the rating at its former level. Moody's forecast indicates that the group's consolidated leverage, as measured by Moody's adjusted net debt to EBITDA, and EBITDA interest coverage will continue on a weakening rather than improving trend over this fiscal year and the next. ETI's active management of a predominantly good-quality portfolio of freehold public houses supports the rating. The large pub estate provides geographic diversification to its revenues, which are underpinned by long-term leases and low operational gearing. However, beer sales and rental income remain under pressure due to weak consumer spending. While the majority of ETI's pubs performed well, given the market circumstances, with net income received from over 80% of the estate let on substantive agreements down by less than 3% year-on-year, a minority of the properties faced considerable difficulties. The cost to ETI to either support or close these establishments drove down consolidated adjusted EBITDA by 13% during the 2008/09 fiscal year. The ratings also incorporate the measures taken by the company to preserve its overall credit profile: FY2008/09 free cash flow was increased by cutting the dividend and selling assets, the proceeds of which are being applied towards the reduction of debt; GBP103 million net cash was raised through the disposal of pubs, generating a small profit over book value. Moody's understands that the company is well on the way to realizing a similar amount in the first half of fiscal 2009/10. Moody's expects that the group will continue to comply with its various financial bond and bank covenants and maintain an adequate liquidity profile over the next twelve months; however the refinancing of the company's GBP1 billion syndicated bank facility looms in May 2011. In that connection, management has already started investigating refinancing alternatives. However, Moody's have seen elsewhere that banks are exacting tougher terms and conditions, including much lower loan-to-value covenants and this may affect the negotiations. The review for a further possible downgrade therefore relates largely to Enterprise Inns' heightened liquidity risk profile due to the execution risk related to its significant refinancing requirement in fifteen months. Furthermore, the company's present high level of indebtedness combined with the decline in pub market values during fiscal 2008/09 could potentially frustrate refinancing negotiations. Moody's review for possible further downgrade will focus on (i) the degree to which company's performance for the first half of 2009/10 meets budget expectations; (ii) the continuing success of its asset sales program to raise cash for the reduction of debt; (iii) the evolution of its liquidity and covenant headroom; and (iv) the company's progress towards the timely refinancing of its syndicated banking facilities. The last rating action was implemented on July 27, 2009, when Moody's changed the rating outlook to negative from stable. Enterprise Inns plc, headquartered in Solihull, is the second- largest pub operator in the UK. It has an estate of around 7,400 tenanted pubs country-wide, valued at GBP5.4 billion at September 30, 2009. GALA CORAL: Has Tentative Agreement on GBP175MM Capital Infusion ---------------------------------------------------------------- Anousha Sakoui at The Financial Times reports that key lenders to Gala Coral have tentatively agreed to a GBP175 million capital infusion for the gambling group as part of a debt restructuring. The FT relates a group of leading senior lenders, including Alcentra, Lloyds Banking Group and Royal Bank of Scotland, have been in talks with a group of investors who bought into the company's mezzanine debt in an attempt to take control over the business. The FT relates that under the terms being discussed, the mezzanine lenders, of which the biggest are Apollo Management, Cerberus and Goldman Sachs, would underwrite a GBP175 million injection that will help the company repay its senior debts. According to the FT, the plan would also see the company's mezzanine creditors take control by converting their GBP540 million claims into equity. The terms under which the new funds will be provided are yet to be agreed. In exchange for their support, Gala's banks are expected to not only have some of their debt repaid but also receive an increase in the interest paid on their loans, the FT notes. Gala Coral Group Ltd. -- http://www.galacoral.co.uk/-- is a gaming company in the UK, with operations encompassing bingo, casinos, and sports betting. It runs more than 150 bingo halls throughout the country, as well as some 30 casinos. The company is also a bookmarker with nearly 1,600 betting shops and online betting sites. Gala Coral Group was formed in 2005 when Gala Group acquired Coral Eurobet. The company is jointly owned by private equity firms Cinven Group, Candover Investments, and Permira. HOUSE OF FRASER: In Talks to Renegotiate Banking Covenants ---------------------------------------------------------- Esther Bintliff and Anousha Sakoui at The Financial Times report that House of Fraser is in talks with its lenders to renegotiate its banking covenants to fund expansion of its own-brand ranges. According to the FT, the retailer is not in danger of breaching covenants this year but the planned increase in own-brand sales means it needs higher levels of capital to buy stock next year, requiring it to reset its covenants. The FT says the company is looking to reset both its cash cover covenant and the ratio of net debt to earnings before interest, tax, depreciation and amortization. The retailer has about GBP180 million (US$284 million) of debt and has offered lenders an extra 1.25 percentage points of interest in the first year, which will be reduced to 1 percentage point thereafter, the FT discloses. The company has set lenders an "early bird" consent deadline for March 5, while the final deadline is March 12, the FT notes. According to the FT, more than 60% of the company's banks have pre-approved the change. House of Fraser needs the consent of two thirds of its lenders, the FT notes. House of Fraser -- http://www.houseoffraser.co.uk/-- is a department store chain. It sells women's, men's, and children's apparel and accessories; housewares; linens; cosmetics; perfume; jewelry; furniture; and electronics in 60-plus stores throughout the UK and Ireland. House of Fraser's stores operate under many banners, including House of Fraser, Frasers, Rackhams, and Jenners. Name brands offered include Alberta Ferretti, Armani, Diesel, French Connection, Jean Paul Gaultier, and Moschino, as well as in-house brands such as Linea Home. Founded in 1849 by Hugh Fraser, the department store chain is owned by a consortium of investors. MANSARD MORTGAGES: S&P Affirms Rating on Class B2a Notes at 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings on all classes of notes in Mansard Mortgages 2006-1 PLC's U.K. residential mortgage-backed securities transaction. As per the January 2010 investor report, the issuer has fully drawn the reserve fund and there is an uncleared class B2a principal deficiency ledger balance of GBP4.15 million (1.8% of the outstanding note balance), leaving the notes undercollateralized. The stock of repossessions has fallen to 3.7% in January 2010 from 7.1% in October 2009. In S&P's opinion, the stock is still high and the class B2a PDL may increase in the near term as properties are sold at a loss. However, collateral performance has improved in recent quarters as borrowers benefit from low interest rates (and therefore lower monthly payments). Total delinquencies have fallen to 35.1% in January 2010 from a peak of 47.4% in April 2009, and 180+ day delinquencies (excluding repossessions) have fallen to 16.9% in January 2010 from 19.1% in July 2009. S&P will continue to monitor the transaction, paying specific attention to the class B2a PDL, severe delinquencies, and the stock of repossessions. Mansard Mortgages 2006-1 is a U.K. nonconforming RMBS transaction that closed in October 2006. The collateral comprises first- ranking mortgages secured on freehold and leasehold residential properties in England, Wales, and Scotland. Ratings List Mansard Mortgages 2006-1 PLC GBP500 Million Mortgage-Backed Floating-Rate Notes Ratings Affirmed Class Rating ----- ------ A2a AAA M1a AA M2a BBB B1a BB B2a B- READER'S DIGEST: UK Unit Files for Administration ------------------------------------------------- The Reader's Digest Association, Inc. disclosed that the Reader's Digest Association, Ltd., a subsidiary of RDA, has filed an administration proceeding in the UK. The decision by the RDA UK board to place the UK company into an orderly insolvency process follows the recent decision by the UK Pensions Regulator that it would not support an agreement already reached between RDA UK, the trustees of its pension plan and the UK Pension Protection Fund (PPF) to settle a longstanding pension plan liability. The agreement, which contemplated a lump sum payment by parent company RDA plus an equity stake in RDA UK, was authorized by the US Bankruptcy Judge overseeing RDA's U.S. Chapter 11 proceedings, and would have relieved RDA UK of significant financial obligations associated with its underfunded UK pension plan. Absent an agreement, RDA UK is financially unable to meet those obligations and sustain its operations. Parent company RDA has completed a restructuring plan after having filed for pre-arranged Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York on August 24, 2009. The court confirmed RDA's plan on January 15, 2010, enabling the parent company to emerge from Chapter 11. On February 1, RDA announced it had elected to temporarily delay emergence from Chapter 11 for a few weeks to allow additional time for the UK pension issue to be addressed. In light of the recent action taken by RDA UK to file for administration, parent RDA expects to emerge from Chapter 11 promptly. RDA does not expect the UK administration to have a material impact on its financial performance as the UK business has been operating with negative free cash flow, and without the contemplated restructuring the corporation did not see a clear pathway to profitability in the UK over the next several years. The UK pension issue is specific to the UK entity and does not involve any other RDA company. RDA intends to work with the administrators to ensure an orderly process, and RDA does not expect an adverse impact on non-UK operations globally including suppliers and customers. RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it reaches a customer base of 130 million in 78 countries. It publishes 92 magazines, including 50 editions of Reader's Digest, the world's largest- selling circulation magazine, operates 78 branded websites and sells 40 million books, music and video products across the world each year. ROYAL BANK: JP Morgan to Buy Part of RBS Sempra for US$1.7 Bil. --------------------------------------------------------------- Javier Blas at The Financial Times reports that JPMorgan on Tuesday agreed to buy a large chunk of RBS Sempra Commodities for US$1.7 billion in cash. According to the FT, the bank said it would purchase RBS Sempra's global oil unit, its profitable metal trading business and operations in coal, freight and power and gas in Europe and Asia. RBS Sempra Commodities will retain its US natural gas and power operations, the FT says. The sale of the business -- a joint venture between Royal Bank of Scotland, the rescued UK bank, and US utility group Sempra Energy -- was triggered by a European Commission state-aid ruling late last year ordering RBS to divest its stake, the FT notes. Lazard advised RBS on the sale and Sempra Energy has retained JPMorgan to review alternatives for the North American power and gas unit, the FT discloses. The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed its entire interest in Global Voice Group Ltd. * * * As reported by the Troubled Company Reporter-Europe on Dec. 22, 2009, Fitch Ratings upgraded The Royal Bank of Scotland Group's (RBS Group) and The Royal Bank of Scotland's Individual Ratings to 'D/E' from 'E' and removed the Rating Watch Positive. The upgrade of the Individual Ratings reflects improvements in the group's capital combined with some progress in restructuring the balance sheet. STOCKPORT COUNTY: League Unable to Recommend Share Transfer ----------------------------------------------------------- Stockport County Association Football Club Limited entered into administration on April 30, 2009, with the appointment of John Titley and Paul Reeves, Directors at Leonard Curtis, as Joint Administrators. In an update, the administrators said, "We are disappointed to report that we have received confirmation via our solicitors that the Football League is presently unable to recommend the transfer of the SCFC share to the prospective purchaser, The Melrose Consortium. We understand that certain items of required information are still outstanding. We remain hopeful that The Melrose Consortium can still progress their interest and we will continue to provide information and support to them. "However, we will also continue to actively seek interest from other parties and would emphasize that any such parties should notify us of their interest as quickly as possible in order to ensure the Club's future. "The administrators would like to thank the players, staff, supporters and sponsors for their patience and efforts in these difficult times for the Club. "The administrators have made every effort to secure a sale but the current economic climate combined with the requirements of the Football League membership criteria have made this process extremely difficult. However, the administrators would like to assure everyone associated with the Club that everything is being done to try and attract new investors for the Club and would like to use this opportunity to encourage offers for the Club." TATA MOTORS: To Mothball TCP Site; Up to 3,000 Jobs at Risk ----------------------------------------------------------- Chris Tighe at The Financial Times reports that Corus is to begin to mothball its Teesside Cast Products site this Friday, threatening to end more than 150 years of iron and steelmaking on Teesside and resulting in up to 3,000 job losses. Corus, the FT discloses, has blamed TCP's problems on the sudden termination last year by an international consortium of a deal by which it was to buy 78% of the steel output from the site, which has a 3m tonnes a year capacity. That withdrawal, half way through a 10-year contract, undermined an agreement by two of the consortium members -- Marcegaglia of Italy and Dongkuk of South Korea -- to buy the plant for US$480 million, the FT recounts. The FT relates Community, the steel union, attacked Corus, owned by Tata Steel of India, for acting too quickly, saying on Tuesday that it had undermined future growth. The market for steel slab, TCP's product, is "improving week by week". "The decision to mothball Teesside Cast Products is premature and jeopardizes the foundation of British manufacturing," the FT quoted Michael J. Leahy, general secretary, as saying. The union had expected a meeting with Corus and Gordon Brown, the prime minister, before any mothballing, the FT notes. According to the FT, about 1,600 jobs at TCP are under threat, as well as up to 1,000 contractors' posts. Separately, the FT's Mr. Tighe reports Unite, the trades union, attacked mothballing as a "disgraceful charade" and a "smoke screen" to give the impression Corus wanted to sell TCP once it had interested buyers. "Serious offers have been made to Corus that would allow production to remain at the plant -- but the management has dismissed them all out of hand," the FT quoted Terry Pye, Unite's national office for the steel industry. The FT relates Ray Mallon, Middlesbrough's elected mayor, claimed a credible consortium interested in buying the plant had received no response from Corus to a request to "look at the books" and to allow due diligence. Mr. Mallon on Wednesday urged Lord Mandelson to support the consortium's negotiations by paying to keep the current workforce in place for up to 90 days, and postpone mothballing, while the deal is explored, the FT recounts. Lord Mandelson, business secretary, will meet Corus management at Teesside today, Feb. 18, the FT discloses. The Department of Business has said it cannot, by European state subsidy rules, offer a steel industry wage subsidy, the FT notes. According to the FT, Kirby Adams, chief executive of Corus, said the company had "toured tirelessly around the globe" to seek a strategic partner but had been unable to find one. Mr. Adams, as cited by the FT, said Corus, which gave TCP several temporary reprieves after announcing its proposed mothballing last May, had spent US$220 million trying to find a buyer. 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. On April 2, 2007, Tata Steel UK Limited (TSUK), a subsidiary of Tulip UK Holding No.1, which in turn is a subsidiary of Tata Steel completed the acquisition of Corus Group plc. Tata Metaliks Limited, which is engaged in the business of manufacturing and selling pig iron, became a subsidiary of the Company with effect from February 1, 2008. In September 2008, the Company acquired a 7.3% interest in Riversdale Mining Ltd. * * * As reported in the Troubled Company Reporter-Asia on June 10, 2009, Moody's Investors Service downgraded the corporate family rating of Tata Steel Ltd to Ba3 from Ba2. Moody's said the rating outlook is stable. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Feb. 21-23, 2010 INSOL International Annual Regional Conference Madinat Jumeirah, Dubai, UAE Contact: 44-0-20-7929-6679 or http://www.insol.org/ April 20-22, 2010 TURNAROUND MANAGEMENT ASSOCIATION Sheraton New York Hotel and Towers, New York, NY Contact: http://www.turnaround.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ October 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ ********* 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. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda-Fernandez, Joy A. Agravante and Peter A. Chapman, Editors. Copyright 2010. 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 * * *