/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100428.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, April 28, 2010, Vol. 11, No. 082 Headlines C Z E C H R E P U B L I C APETIT FOOD: Declared Bankrupt by Ostrava Regional Court ODEVNI PODNIK: Mulls Closure of Jesenik Plant E S T O N I A ESTONIAN AIR: Government May Increase Stake Via Rights Issue G E R M A N Y ARCANDOR AG: Karstadt Sale Deal Deadline May Be Extended COGNIS GMBH: Posts EUR47 Mil. Net Income in First Quarter 2010 COGNIS GMBH: S&P Affirms Corporate Credit Rating at 'B-' EUROHOME MORTGAGES: Fitch Junks Rating on Class B Notes From 'B' G R E E C E * GREECE: Needs to Secure Emergency Aid Package Soon I R E L A N D BANK OF IRELAND: To Raise EUR3.4 Bil. to Limit State Ownership BANK OF SCOTLAND: Moody's Confirms D- Bank Fin'l Strength Rating I T A L Y MISS SIXTY: To Close 10 of Remaining 20 Stores in the U.S. TAURUS CMBS: Fitch Junks Rating on Class F Notes From 'BB' L U X E M B O U R G CIRSA FUNDING: S&P Assigns 'B+' Rating on EUR400 Mil. Bonds N E T H E R L A N D S METINVEST BV: Fitch Assigns 'B-' Senior Unsecured Rating SENSATA TECHNOLOGIES: Posts US$27.6MM Net Income for March 31 Qtr P O L A N D TVN FINANCE: Moody's Assigns 'B1' Rating on EUR148 Mil. Notes R U S S I A OTP OJSC: Fitch Upgrades Individual Rating to 'D' From 'D/E' U K R A I N E CENTRAL EUROPEAN: S&P Raises Corporate Credit Rating to 'B' U N I T E D K I N G D O M BRITISH AIRWAYS: Four Executives Engaged in Price-Fixing HERTFORD INT'L: Share Suspension to Be Lifted on May 13 HULL CITY: In Negotiations with Creditors Over GBP35 Mil. Debt INTERNATIONAL PERSONAL: Fitch Assigns 'BB+' Rating on Senior Notes LLOYDS BANKING: Put Vue Entertainment Up for Sale ROYAL BANK: To Tighten Performance Targets on CEO Bonus Scheme UK COAL: Puts Agricultural Land Up for Sale as Debt Levels Soar UK SPV: Fitch Assigns 'B-' Rating on Limited Recourse Notes WEDGWOOD MUSEUM: In Administration; Fund-Raising Planned * UK: Firms In Major Financial Distress Up 14% in 1st Qtr. 2010 * UK: February-March Business Insolvency Rate Up 0.114% * UK: Small Businesses Hit by Late Payments, Research Says * UK: HSBC Seeks Support for Bank Levy Plan ********* =========================== C Z E C H R E P U B L I C =========================== APETIT FOOD: Declared Bankrupt by Ostrava Regional Court -------------------------------------------------------- CTK, citing the insolvency register at www.justice.cz, reports that the Regional Court in Ostrava has declared Apetit food a.s. bankrupt. According to the report, Apetit food has around CZK160 million of outstanding debt. The report notes the company, which has been insolvent since February, said it will propose a restructuring plan but failed to do so. Apetit food a.s. is a baguette maker based in Hnevotin, northern Moravia. ODEVNI PODNIK: Mulls Closure of Jesenik Plant --------------------------------------------- Odevni podnik Prostejov is considering closing its production plant in Jesenik, northern Moravia, to avoid bankruptcy, CTK reports, citing the company's insolvency administrator Jaroslav Svoboda. The plant employs 300 people, the report says. As reported by the Troubled Company Reporter-Europe on March 29, 2010, Odevni podnik, which has been insolvent since January, owes around CZK1.6 billion to its creditors. CTK, citing Odevni podnik's PR agent Karel Samec, disclosed the company's management said it had given up the right to draft a restructuring plan after failing to secure money for operation. Odevni podnik, a.s. is a textile company based in Prostejov, Czech Republic. ============= E S T O N I A ============= ESTONIAN AIR: Government May Increase Stake Via Rights Issue ------------------------------------------------------------ Ott Ummelas at Bloomberg News reports that Rasmus Ruuda, an Economy Ministry spokesman, said Estonia may take a controlling stake in AS Estonian Air through a rights issue that will dilute the ownership of SAS AB and investment bank AS Cresco. "According to present plans, there will be a rights issue that will increase the government's stake," Bloomberg quoted spokesman Mr. Ruuda as saying in an e-mailed response to Bloomberg questions Monday. "SAS should keep about a third" of Estonian Air. SAS holds 49% of Estonian Air, while Cresco has a 17% stake in the country's national airline, Bloomberg notes. Mr. Ruuda, as cited by Bloomberg, said the signing of a declaration of intent between the government, which holds 34% of Estonian Air, and SAS will "apparently" take place this week. Bloomberg recalls Estonian Air Chief Executive Officer Andrus Aljas said last year the airline, which operates six aircraft and has direct routes to 20 European cities, has lost money in the past three years and needs a "strong" strategic partner to survive. AS Estonian Air -- http://www.estonian-air.ee/-- serves destinations throughout Western and Eastern Europe. Including the planes flown by subsidiary Estonian Air Regional, the carrier operates a fleet of some 10 Boeing and Saab aircraft. The company offers scheduled passenger services to about 20 European destinations and charter passenger transportation to more than 50. It also offers cargo transport and handling services for third-party airlines. The Estonian government owns a third of the carrier. Scandinavian airline SAS owns about half of Estonian Air but announced plans in early 2009 that it plans to divest its 49% stake. ============= G E R M A N Y ============= ARCANDOR AG: Karstadt Sale Deal Deadline May Be Extended -------------------------------------------------------- Tom Mulier at Bloomberg News reports that Triton, the private equity firm that bid for Arcandor AG's Karstadt department-store unit last week, said the deadline to reach an agreement may be extended. According to Bloomberg, Thomas Schulz, a spokesman for the insolvency administrator of Arcandor, said the retailer aims to reach an agreement by April 30 and has received no other bids. Bloomberg relates John Mengers, a spokesman for Triton at CNC Communications & Network Consulting AG in Munich, said Triton plans to invest new capital in Karstadt and is seeking concessions. Mr. Mengers, as cited by Bloomberg, said Triton may study whether it could get state aid to make the purchase, adding that no decision has been made. Investment in Employee Training Triton Monday promised employees of Germany's Karstadt to further invest in their training and the company overall if its bid to acquire the insolvent retailer succeeds, William Launder and Natali Schwab at Dow Jones Newswires report, citing a letter to employees. Dow Jones relates Triton's written appeal to Karstadt staff follows press reports over the weekend indicating that Triton's bid could result in the elimination of about 4,000 jobs at Karstadt's locations. "Our plan would allot for extensive investment in employee training, individual segments and in particular the attractiveness of the stores," Triton partner Hans Maret wrote in the letter to employees, according to Dow Jones. Dow Jones notes Mr. Maret further warned, however, that restructuring was needed to eliminate "major weaknesses," including segment losses, inflexible compensation systems and high rents at Karstadt stores. Triton has approached Karstadt's staff as the company's creditors discuss a takeover offer presented by Triton Friday, Dow Jones recalls. About Arcandor AG Germany-based Arcandor AG (FRA:ARO) -- http://www.arcandor.com/-- formerly KarstadtQuelle AG, is a tourism and retail group. Its three core business areas are tourism, mail order services and department store retail. The Company's business areas are covered by its three operating segments: Thomas Cook, Primondo and Karstadt. Thomas Cook Group plc is a tour operator with operations in Europe and North America, set up as a result of a merger between MyTravel and Thomas Cook AG. It also operates the e-commerce platform, Thomas Cook, supporting travel services. Primondo has a portfolio of European universal and specialty mail order companies, including the core brand Quelle. Karstadt operates a range of department stores, such as cosmopolitan stores, including KaDeWe (Kaufhaus des Westens), Karstadt Oberpollinger and Alsterhaus; Karstadt brand department stores; Karstadt sports department stores, offering sports goods in a variety of retail outlets, and a portal, karstadt.de that offers online shopping, among others. As reported by the Troubled Company Reporter-Europe, a local court in Essen formally opened insolvency proceedings for Arcandor on September 1, 2009. The proceedings started for the Arcandor holding company and for 14 units, including the Karstadt department-store chain and Primondo mail-order division. Arcandor filed for bankruptcy protection after the German government turned down its request for loan guarantees. On June 8, 2009, the government rejected two applications for help by the company, which employs 43,000 people. The retailer sought loan guarantees of EUR650 million (US$904 million) from Germany's Economy Fund program. It also sought a further EUR437 million from a state-owned bank. COGNIS GMBH: Posts EUR47 Mil. Net Income in First Quarter 2010 -------------------------------------------------------------- Richard Weiss at Bloomberg News reports that Cognis GmbH posted a net income of EUR47 million (US$63 million) in the quarter ended March 31, after a loss of EUR33 million a year earlier. According to Bloomberg, the company's first-quarter sales rose 11% to EUR728 million. Cognis's adjusted earnings before interest, taxes, depreciation and amortization rose 80% to EUR131 million in the quarter, for adjusted Ebitda of EUR422 million for the past 12 months. BASF Bid As reported by the Troubled Company Reporter-Europe on April 12, 2010, the Financial Times said BASF is considering a bid for heavily-indebted Cognis. The FT disclosed two people close to the situation said BASF is in exploratory talks with Goldman Sachs and Permira, Cognis' owners. The people said it was still unclear whether this would lead to a bid for Cognis, which is valued at about EUR3 billion (US$4 billion) by its owners, according to the FT. IPO The company's owners are exploring a possible initial public offering, the FT said. The FT noted a large stumbling block for such a move is the company's debt load and its negative equity of EUR762 million. Despite reducing its leverage somewhat in recent years, Cognis still had a net debt load of EUR1.9 billion at the end of 2009, the FT stated. Headquartered in Monheim, Germany, Cognis GmbH -- http://www.cognis.com/-- is a specialty chemical company. The company operates through three business units: Care Chemicals, Nutrition and Health, and Functional Products. Among Cognis' products are environmentally friendly inks and coatings, synthetic lubricants, oilfield chemicals, fatty acids, and dietary supplements. Once a subsidiary of chemicals giant Henkel, Cognis is now owned by an investment group led by Permira and Goldman Sachs. COGNIS GMBH: S&P Affirms Corporate Credit Rating at 'B-' -------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed the 'B-' long-term corporate credit rating on Germany-based specialty chemicals producer Cognis GmbH and revised the outlook to positive from negative. "The rating action follows the improvement in Cognis' volumes since the second quarter of 2009, better-than-expected operating results for the year ended 2009, which continued through the first quarter of 2010, and signs that industry conditions are strengthening further in the near term," said Standard & Poor's credit analyst Paul Watters. Cognis' preliminary first-quarter 2010 results indicate that the pace of recovery at Cognis is increasing both regionally and at business unit level. Volume growth was up 14.2% year on year and recurring EBITDA increased substantially to EUR130.5 million. The company's funds from operations held up well in 2009 compared with 2008 and its free operating cash flow benefited substantially from a reduction in working capital. As a result Cognis' liquidity position improved and remains adequate. However, the ratings continue to be constrained by S&P's view of the company's high leverage derived from the dividend recapitalizations undertaken in previous years, under the private equity ownership. S&P views Cognis' business risk profile to be at the high end of the "fair" category, due to the sensitivity of demand over the economic cycle and to the volatility in raw material prices. This is partially offset by Cognis' world- leading position as a manufacturer of natural-based specialty chemicals, strong diversification, with above-average exposure to consumer-related sectors, and competitive advantage obtained by backward integration into nature-based raw materials. "The positive outlook on Cognis reflects the potential for a one- notch upgrade perhaps even within a few months if the company's operating and financial performance continues to improve and S&P expects this improvement to be sustainable," said Mr. Watters. The rating remains constrained by the company's high level of outstanding debt, such that adjusted debt/EBITDA was 7.6x at the end of 2009. However, if the company is able to maintain its operating margins and limit its working capital growth as demand recovers, that could support a further advance in FFO to net debt to more than 10%. This could justify a potential one-notch upgrade. Conversely, S&P could revise the outlook to stable if volume growth stalled, operating margins came under pressure, working capital increased above 20% of sales, or if S&P expects little improvement in the company's credit metrics and FOCF. Any combination of these factors would likely restrict the scope for further debt reduction. The ratings do not take into account any potential impact of a prospective IPO, if that were to materialize. EUROHOME MORTGAGES: Fitch Junks Rating on Class B Notes From 'B' ---------------------------------------------------------------- Fitch Ratings has downgraded Eurohome Mortgages 2007-1 plc, a pan- European RMBS transaction, and removed it from Rating Watch Negative. The downgrades of the class A and B notes reflect continued poor performance of the underlying assets. The rating actions are: -- Class A (ISIN XS0309227279) downgraded to 'BB' from 'BBB'; off RWN; assigned Negative Outlook and Loss Severity Rating 'LS-2' -- Class B (ISIN XS0309230497) downgraded to 'CCC' from 'B'; off RWN; assigned Recovery Rating 'RR6' -- Class C (ISIN XS0309232196) affirmed at 'CC'; Recovery Rating revised to 'RR6' from 'RR5' -- Class D (ISIN XS0309232600) affirmed at 'C'; Recovery Rating 'RR6' -- Class E (ISIN XS0309233244) affirmed at 'C'; Recovery Rating 'RR6' -- Class X (ISIN XS0309234309) affirmed at 'C'; Recovery Rating 'RR6' -- German Mortgage Early Repayment Certificates (GMERCs) (ISIN XS0309236007) affirmed at 'AAA'; Outlook Stable -- Italian Mortgage Early Repayment Certificates (IMERCs) (ISIN XS0309788031) affirmed at 'AAA'; Outlook Stable Following the review of the servicer - Deutsche Bank, Fitch noted that a number of key initiatives have been implemented within the bank's servicing platform and servicing strategies across both Germany and Italy in the last 12 months. These changes, such as hiring experienced staff, stronger focus on earlier borrower contact within the arrears cycle and offering payment dates to suit borrowers have served to improve servicing processes. Fitch believes these enhancements can contribute to mitigate further portfolio deterioration. The latest investor report for February 2010 shows an outstanding principal deficiency ledger balance on the class C notes in the amount of EUR336,719, bringing the total amount of un-provisioned defaulted loans to EUR10.8 million. This amount is almost exclusively made up from defaults of the Italian sub-portfolio. For the German sub pool, only losses are debited into the PDL, which have remained negligible compared to the outstanding balance of terminated loans in this part of the portfolio. Given the lengthy foreclosure process in Italy, no recoveries on the Italian defaulted loans are to be expected before 2011. As of end-December 2009, the servicer reported a decline in early arrears in both pools. Fitch believes that the efforts employed by DB are likely to have supported this decline. Although the improvement in arrears is seen as a positive for new arrears cases, Fitch believes that borrowers in the Italian portion of the pool, who are currently in higher arrears buckets, are still likely to roll through to default. This is likely to result in further pressure on excess spread levels. In addition, the Italian pool remains susceptible to increases in interest rates (German pool is fixed rate), which is why the agency believes that the transaction is likely to go through another cycle of performance deterioration when interest rates start to increase. As of Q409 the outstanding balance of terminated loans in the German portion of the pool was EUR13.7 million. Fitch has been informed by DB that to date six properties have been foreclosed, of which four had resulted in the full repayment of debt due, while two had seen losses amounting to EUR58,801. According to DB an additional 25 cases have seen collateral liquidation, and are still in the process of personal foreclosure. The downgrades of the class A and B notes reflect the underperformance of the underlying assets in terms of defaults as well as the agency's increased market value decline assumptions for Italy (the German market value assumptions were increased in 2009). Overall, the credit support available to these two tranches is insufficient to maintain the previous ratings. Fitch used its EMEA Residential Mortgage Loss criteria in the performance review of this transaction. =========== G R E E C E =========== * GREECE: Needs to Secure Emergency Aid Package Soon ---------------------------------------------------- Simon Kennedy and Flavia Krause-Jackson at Bloomberg News report that Greece moved toward getting an emergency aid package before debt payments come due in mid-May as Finance Minister George Papaconstantinou warned investors they will "lose their shirts" if they bet the cash-strapped nation will default. Bloomberg relates Mr. Papaconstantinou said in Washington Sunday money will be available "rather soon" and his country wouldn't restructure its debt. According to Bloomberg, with EUR8.5 billion (US$11.3 billion) of Greece's bonds maturing May 19, any delay in assistance may trigger another sell-off in its assets and hurt global markets. Paul Carrel at Reuters reports that German Finance Minister Wolfgang Schaeuble said on Monday it may be possible for Germany to finalize a law granting Greece financial aid on May 7. Bloomberg notes Mr. Papaconstantinou said bridge loans may be possible if countries can't secure an accord in time. "The whole thing is moving terribly close to the wire," Erik Nielsen, chief European economist at Goldman Sachs Group Inc., said in a report to clients yesterday from Washington. Mr. Nielsen, as cited by Bloomberg, said a deal is needed by around May 6 so aid can be delivered before debt payments come due. Bloomberg notes that while Mr. Nielsen said he sees an "overwhelming probability" that the government may cut or delay payments to bond investors, Mr. Papaconstantinou said a restructuring is "off the table." ============= I R E L A N D ============= BANK OF IRELAND: To Raise EUR3.4 Bil. to Limit State Ownership -------------------------------------------------------------- Robert Lindsay at Times Online reports that Bank of Ireland plans to raise EUR3.4 billion in an attempt to limit the scale of state ownership. The report relates the bank on Sunday said that it would raise up to EUR1.9 billion (GBP1.6 billion) in a rights issue and another EUR500 million in a placing with institutional investors. According to the report, the bank intends to raise the remaining EUR1 billion by converting part of the Irish government's preference shares into ordinary stock. The report notes bank said that the moves would cap the government's shareholding, which stands at 34%, at no more than 36%. It will offer potential investors a chance to swap debt for equity, the report says. Headquartered in Dublin, Bank of Ireland -- http://www.bankofireland.com/-- provides a range of banking and other financial services. These include checking and deposit services, overdrafts, term loans, mortgages, business and corporate lending, international asset financing, leasing, installment credit, debt factoring, foreign exchange facilities, interest and exchange rate hedging instruments, executor, trustee, life assurance and pension and investment fund management, fund administration and custodial services and financial advisory services, including mergers and acquisitions and underwriting. The Company organizes its businesses into Retail Republic of Ireland, Bank of Ireland Life, Capital Markets, UK Financial Services and Group Centre. It has operations throughout Ireland, the United Kingdom, Europe and the United States. * * * As reported by the Troubled Company Reporter-Europe on April 7, 2010, Fitch Ratings affirmed the rating on Bank of Ireland's Tier 1 notes at 'CCC' (ISINs: XS0268599999, US055967AA11 and USG12255AA64). At the same time, Moody's Investors Service placed Bank of Ireland's D bank financial strength rating (BFSR -- mapping to a baseline credit assessment of Ba2) on review for possible upgrade, previously they had a developing outlook. BANK OF SCOTLAND: Moody's Confirms D- Bank Fin'l Strength Rating ---------------------------------------------------------------- Moody's Investors Service has confirmed the bank deposit ratings of Bank of Scotland (Ireland) at Baa1/Prime-2 and the bank financial strength rating at D- (mapping to a baseline credit assessment of Ba3). The outlook on the BFSR and the long-term ratings is negative. These rating actions conclude the outstanding review for possible downgrade of the bank's ratings initiated on November 3, 2009. The ratings had been placed on review for possible downgrade in November 2009 following the announcement that its ultimate parent, Lloyds Banking Group, was not going to participate in the UK government's Asset Protection Scheme, and therefore the mirror of this scheme that was to have been put in place for the benefit of BOSI was no longer going to be established. Ross Abercromby, Vice President/Senior Analyst and the lead analyst for the bank at Moody's said "The confirmation of the Baa1/P-2 bank deposit and senior debt ratings reflects Moody's view that the high level of support demonstrated to date by the bank's ultimate parent, Lloyds Banking Group, will continue. This high level of support has already been evidenced by the substantial additional capital that has been injected into BOSI in 2008 and 2009, the provision of substantial funding lines and the existence of a guarantee for certain assets at BOSI, provided by Bank of Scotland (rated Aa3/P-1/D+)." Mr. Abercromby added that "The negative outlook on all the ratings indicates the uncertainty about the performance of the restructured bank within the Irish operating environment which is likely to remain very challenging for some time." In addition the confirmation of the ratings incorporates the restructuring of BOSI that will lead to the bank focusing on the SME/corporate business in Ireland where it has a market share of around 8%. The retail and intermediary businesses are to be closed, and the commercial real estate portfolio will be run-off over the medium to long-term. This restructuring clarifies the position of BOSI within Lloyds, although in Moody's opinion the strategic importance of BOSI to the wider Lloyds group will reduce given its smaller size. The D- BFSR reflects the weak underlying performance of the entity, which has large concentrations in commercial property in Ireland, a capital and funding position that is dependent on its parent and the challenges the bank faces to run-off of the significant exposure to the domestic commercial real estate market and to close the retail and intermediary businesses. The last rating action was on November 3, 2009, when the Baa1/P- 2/D- ratings were placed on review for possible downgrade. These ratings were confirmed: Bank of Scotland (Ireland): * Bank financial strength rating at D- * Long-term bank deposit rating at Baa1 * Short-term bank deposit rating at Prime-2 Headquartered in Dublin, Ireland, BOSI reported consolidated assets of EUR31.8 billion at year-end 2009. ========= I T A L Y ========= MISS SIXTY: To Close 10 of Remaining 20 Stores in the U.S. ---------------------------------------------------------- Sharon Edelson at WWD reports that Chieti, Italy-based company Miss Sixty is closing 10 of its remaining 20 stores in the U.S. According to WWD, the company suffered a series of financial setbacks during the height of the recession, entering administration, a British bankruptcy process, in the U.K. WWD recalls Miss Sixty in 2008 lost EUR19.5 million, or US$28.6 million, compared with a profit of EUR9.6 million, or US$13.1 million, in 2007. Miss Sixty SpA founder, chairman and creative director Wichy Hassan, said the company's U.S. stores were simply not working, in part due to mismanagement, according to WWD. TAURUS CMBS: Fitch Junks Rating on Class F Notes From 'BB' ---------------------------------------------------------- Fitch Ratings has downgraded Taurus CMBS No.2 S.r.l.'s class E and F notes whilst affirming the class A, B, C, D and G commercial mortgage-backed floating rate notes and class X detachable coupon. The class E notes have a Negative Outlook and the class F notes have been assigned a Recovery Rating of 'RR1'. -- EUR17.7m class A (IT0003957005) affirmed at 'AAA'; Outlook Stable -- Class X DC affirmed at 'AAA'; Outlook Stable -- EUR26.0m class B (IT0003957013) affirmed at 'AAA'; Outlook Stable -- EUR14.2m class C (IT0003957021) affirmed at 'AA'; Outlook Stable -- EUR16.6m class D (IT0003957039) affirmed at 'A'; Outlook Stable -- EUR14.2m class E (IT0003957047) downgraded to 'BB' from 'BBB'; Outlook Negative -- EUR9.5m class F (IT0003957054) downgraded to 'CCC' from 'BB'; assigned 'RR1' -- EUR14.1m class G (IT0003957062) affirmed at 'BB'; Outlook Stable The rating actions are driven by the interest shortfall suffered by the class F notes in the April 2010 Interest Payment Date and the consequences that further loan prepayment may have on the class E and F bonds. While the class G is not receiving any interest as a result of the cumulative effect of loan prepayments, pursuant to the 'available funds cap' provision, interest is no longer falling due on the class, which accounts for its affirmation. The issuer has one asset remaining, a one-third syndicated EUR112.5 million portion of the Berenice loan, secured on an Italian portfolio of mainly office buildings. This syndicated amount includes some EUR10.7 million of undrawn commitment, which is warehoused by the issuer in an account offering a sub-Euribor rate of interest. The Berenice borrower intends gradually to dispose of the portfolio in line with its business plan. Originally, the collateral comprised 54 commercial properties, with concentrations in the Milan and Rome regions, and since closing in December 2005 twelve properties have been sold, with EUR153.3 million prepaid under the entire loan. This has resulted in only modest de-leveraging of the loan, since a 10% release premium was scheduled to become active after December 2008. However, a revaluation of the portfolio in December 2009 has seen a decrease in value of 1% since September 2009. Out of four loans that were originally securitized in the transaction, three have repaid, with much of the principal collected being applied sequentially. Consequently, note de- leveraging has supported the ratings of the class A through C notes. However, this has led to an increase in the weighted average (WA) margin of the notes, which caused an interest shortfall to arise on the class G notes from the October 2007 IPD. The AFC limits interest due to this class to what is available in the event of loan prepayments. However, no such provision applies to any other classes of notes, which means that for other classes, the risk of an irrecoverable shortfall may bring about negative rating action. On the April 2010 IPD, the servicer reported a shortfall of EUR7,140 on the class F interest, which was caused by an increase in the issuer's cost of funding related to a EUR1 million prepayment being applied sequentially as well as a one-off increase in senior issuer fees. Fitch notes that the loan margin is due to step-up from July 2012, which could reverse the shortfall and reduce the risk of future ones arising. However, if, as expected, the borrower continues to sell properties prior to loan maturity, the risk and magnitude of interest shortfalls on the class F will grow. In an extreme prepayment scenario, even the class E notes could be affected. Should this arise, shortfalls would likely prove irrecoverable unless short term interest rates rise. The relative negative carry on the undrawn commitment would also rise upon partial loan repayments. The risk of an irrecoverable shortfall of interest explains the negative rating action taken on the class F notes. The unusual outcome whereby the class G note is rated more highly than the prior-ranking class F note is due to the AFC on the former, as well as the good performance of the single underlying loan. =================== L U X E M B O U R G =================== CIRSA FUNDING: S&P Assigns 'B+' Rating on EUR400 Mil. Bonds ----------------------------------------------------------- Standard & Poor's Ratings Services said that it has assigned its 'B+' long-term issue rating to the proposed up to EUR400 million unsecured bonds maturing in 2018 to be issued by Cirsa Funding Luxembourg S.A., a newly formed, fully owned finance subsidiary of Spain-based Cirsa Gaming Corp. S.A. (B+/Stable/--). At the same time, Standard & Poor's has assigned a recovery rating of '4' to this debt, reflecting its expectations of average (30%-50%) recovery for creditors in the event of a payment default. The issue rating is the same as the corporate credit rating on Cirsa. S&P understands that the proposed bond issue will only proceed if Cirsa manages to raise enough funds to reimburse its existing EUR270 million 2014 bonds and pay the related premium fees, as well as cover transaction costs associated with the new issuance-- in total, about EUR300 million. S&P would withdraw the rating on the proposed new debt in the event of noncompletion of the issue. The issue ratings on the existing EUR500 million senior unsecured bonds -- comprising EUR230 million bonds due 2012 issued by Cirsa Capital Luxembourg S.A. and EUR270 million bonds due 2014 issued by Cirsa Finance Luxembourg S.A. -- are unchanged at 'B+', in line with the corporate credit rating on Cirsa. The recovery rating on these issues remains at '4' -- the same as that on the proposed bonds -- indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. With what remains of the new-issuance proceeds after the aforementioned disbursements, Cirsa plans to repay its existing short-term bank debt of about EUR50 million, leaving about EUR60 million of additional cash on balance sheet. S&P understands that the proposed 2018 bonds will be unsecured and will benefit from operating-company guarantees representing about 45% of Cirsa's 2009 consolidated EBITDA. S&P also understands that the guarantees are the same as those for the 2012 bonds. S&P notes that the existing 2014 bonds benefit from additional operating-company guarantees from the Argentinean business, which represented about 15% of Cirsa's 2009 EBITDA. Successful issuance of the proposed bonds would, in S&P's opinion, simplify Cirsa's capital structure, in particular because both outstanding bond issues would benefit from identical guarantee packages. However, S&P continues to believe that the location of a significant share of Cirsa's assets in Latin America gives rise to additional valuation and insolvency regime uncertainties. The new EUR30 million revolving credit facility, which is contingent upon the successful completion of the proposed bond issuance, will, according to S&P's understanding, be taken on by the parent company. The maturity is in April 2012, but can be extended to May 2015 under certain conditions -- in particular if, prior to April 2012, the 2012 bonds are successfully refinanced with a maturity at the earliest in August 2015. S&P understands that the RCF will be undrawn at the close of the bond issuance. S&P also understands that the RCF will be secured by pledges from Cirsa Italia and Cirsa's Bingo operating companies. In addition, according to the draft documentation, the RCF should benefit from operating-company guarantees similar to those of the 2012 and 2018 bond issues, as well as from Cirsa Italia and Cirsa's Bingo operating companies. Based on the terms of the intercreditor agreement to be signed by the 2018 bondholders and the RCF lenders, the RCF will rank ahead of the 2018 bonds on enforcement. S&P notes that the existing 2012 bondholders are not party to the new intercreditor agreement, although S&P believes that this would not affect the relative ranking between the 2012 and 2018 bonds since S&P considers both instruments to rank pari passu with each other. The proposed bonds have incurrence-based covenants, in particular a 2.5x fixed-charge coverage ratio limit for additional debt incurrence (the same as in the documentation for the 2012 bonds). However, these covenants will not prevent Cirsa from raising, in particular, up to EUR100 million of additional credit facilities, up to EUR25 million of additional capital leases, up to EUR50 million of indebtedness in permitted joint ventures, or a general envelope of up to EUR75 million. Recovery Analysis Given Cirsa's leading market positions, S&P has valued it as a going concern. S&P deem this valuation method as more appropriate than a liquidation valuation given the business' high regulatory barriers to entry and its cash-generative characteristics. S&P has simulated a default in 2012, at which point S&P forecasts that EBITDA will have declined by 43% since year-end 2009, to about EUR120 million. S&P has valued the business using a combination of discounted cash flow and market multiple approaches in order to incorporate S&P's view of both Cirsa's distressed performance in S&P's simulated default scenario and sector dynamics. Consequently, S&P estimates Cirsa's enterprise value at the simulated point of default to be about EUR660 million, which corresponds to a blended enterprise- value-to-EBITDA multiple of 5.5x. "S&P note that Cirsa's material exposure to Latin American countries -- about 55% of its 2009 consolidated EBITDA -- could make S&P's valuation estimate volatile and complicate enforcement proceedings over the related assets," said Ms. Devevey. S&P estimates recovery prospects for the pari passu bondholders in the 30%-50% range (hence S&P's recovery rating of '4'), after considering other pari passu obligations (in particular, the bilateral bank lines sitting at the level of various bonds' guarantors) and deducting priority liabilities of about EUR315 million (comprising enforcement costs and priority debt -- in particular, the bilateral bank lines sitting at the operating companies that are not guarantors, as well as the super senior RCF). Ratings List Ratings Unaffected Cirsa Gaming Corp. S.A. Corporate credit rating B+/Stable/-- Cirsa Finance Luxembourg S.A./Cirsa Capital Luxembourg S.A. Senior unsecured* B+ Recovery rating 4 Ratings Assigned Cirsa Funding Luxembourg S.A. Senior unsecured* B+ Recovery rating 4 * Guaranteed by Cirsa Gaming Corp. S.A. ===================== N E T H E R L A N D S ===================== METINVEST BV: Fitch Assigns 'B-' Senior Unsecured Rating -------------------------------------------------------- Fitch Ratings has assigned METINVEST B.V.'s proposed issue of Notes an expected senior unsecured rating of 'B-'. (The rating is constrained by Ukraine's sovereign ratings: 'B-'/Stable/'B'). The upcoming issue has also been assigned an expected Recovery Rating of 'RR4'. The final rating is contingent on receipt of final documentation conforming materially to information already received and confirmation regarding the amount and tenor of the notes. Fitch rates Metinvest's Long-term foreign currency Issuer Default Rating at 'B-', its Long-term local currency IDR at 'B', and National Long-term rating at 'AA+(ukr)'. All three ratings have Stable Outlooks. Metinvest's Short-term foreign currency IDR is 'B', its Short-term local currency IDR is 'B' and the National Short-term rating is 'F1+(ukr)'. The Long-term foreign currency IDR remains constrained by Ukraine's sovereign ratings. The Recovery Rating for the senior unsecured debt is 'RR4'. Metinvest is planning to use proceeds from the notes to finance its capital expenditure program and for general corporate purposes. The notes trust deed and other related documents are governed by English law. The notes are fully, unconditionally and irrevocably guaranteed on a joint and several basis by major operating assets of Metinvest. The expected tenor for the bond is five years. The terms contained in the notes' prospectus state that the notes rank at least equally with all senior, unsubordinated, unconditional and unsecured indebtedness of Metinvest, and includes a negative pledge (albeit with a comprehensive list of permitted liens), restrictions on mergers and disposals and a certain limitation on dividend payments and transactions with affiliates. The notes prospectus also includes a consolidated leverage (debt/EBITDA) ratio covenant of 3x. In FY09, Metinvest reported consolidated revenue of US$6,026 million, 55% below that of FY08, due to the global recession and the downturn in the steel industry. The company also reported an EBITDAR margin of 23% (FY08: 35%). In accordance with Fitch's internally produced, conservative rating case forecasts, the agency estimates Metinvest's 2010 revenue will be 8%-10% above that of 2009, and anticipates an EBITDAR margin of 23%-27%. As of FY09, Metinvest had total debt of US$2.4 billion, including US$1.2 billion of short-term debt, a gross debt/EBITDAR ratio of 1.63x, and a net debt/EBITDAR ratio of 0.74x. The agency estimates gross debt/EBITDAR in 2010 at between 1.2x-1.5x, and the EBITDAR/gross interest expenses ratio at 9x-12x. SENSATA TECHNOLOGIES: Posts US$27.6MM Net Income for March 31 Qtr ----------------------------------------------------------------- Sensata Technologies B.V. filed with the Securities and Exchange Commission its quarterly report on Form 10-Q for the quarterly period ended March 31, 2010. The Company swung to net income of US$27,678,000 for the three months ended March 31, 2010, from a net loss of US$10,185,000 for the year ago quarter. The Company reported net revenue of US$377,137,000 for the past quarter from US$239,016,000 for the year ago quarter. As of March 31, 2010, the Company had total assets of US$3,206,356,000 against total liabilities of US$2,665,974,000, resulting in stockholders' equity of US$540,382,000. As of December 31, 2009, the Company had total assets of US$3,163,127,000 against total liabilities of US$2,776,380,000, resulting in shareholder's equity of US$386,747,000. A full-text copy of the Company's quarterly report is available at no charge at http://ResearchArchives.com/t/s?60c5 About Sensata Almelo, Netherlands-based Sensata Technologies B.V. -- http://www.sensata.com/-- supplies sensing, electrical protection, control and power management solutions. Majority- owned by affiliates of Bain Capital Partners, LLC, a leading global private investment firm, and its co-investors, Sensata employs approximately 9,500 people in nine countries. Sensata's products improve safety, efficiency and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, air-conditioning, data, telecommunications, recreational vehicle and marine applications. As reported by the TCR on December 7, 2009, Moody's Investors Service has upgraded Sensata Technologies B.V.'s Corporate Family and Probability of Default ratings to Caa1 from Caa2, as well as the company's senior secured credit facility to B2, senior unsecured notes to Caa2, and senior subordinated notes to Caa3. In a related rating action, Moody's affirmed the Company's Speculative Grade Liquidity rating at SGL-3. The outlook is positive. The TCR on Nov. 4, 2009, said that Standard & Poor's affirmed the ratings on Attleboro, Massachusetts-based Sensata Technologies, Inc., including the 'CCC+' corporate credit rating. At the same time, S&P revised the outlook on the company to stable from negative. =========== P O L A N D =========== TVN FINANCE: Moody's Assigns 'B1' Rating on EUR148 Mil. Notes ------------------------------------------------------------- Moody's Investors Service has assigned B1 rating to the senior notes worth approximately EUR148 million and due 2017 that were issued by TVN Finance Corporation II A.B. to the parent company of TVN S.A., ITI Group, back in March 2010. The notes are guaranteed on a senior unsecured basis by TVN S.A., and some of its subsidiaries, and have the same terms and conditions as, and rank pari passu with, the EUR405 million notes issued in November 2009. The proceeds of the debt issue that has been rated have been used to acquire the remaining 49% stake in the "n" DTH platform in March 2010. The issuance is in line with Moody's earlier expectations as outlined in Moody's Press Release published on November 9, 2009. The last rating action on TVN was implemented on November 9, 2009, when Moody's downgraded the CFR to B1 from Ba3, affirmed the Probability of Default Rating of Ba3, assigned B1 rating to the EUR405 million notes due 2017 and changed the outlook on the ratings to stable from negative. Headquartered in Warsaw, TVN is one of the leading television broadcasters in Poland. It also owns and operates Poland's leading internet portal, Onet.pl, and Pay-TV DTH operator "n". As of December 2009, the company reported net revenues of approximately PLN2.1 billion and EBITDA of PLN795 million. =========== R U S S I A =========== OTP OJSC: Fitch Upgrades Individual Rating to 'D' From 'D/E' ------------------------------------------------------------ Fitch Ratings has affirmed the Support rating of OTP bank Plc at '2' and the Long-term Issuer Default Rating of Russia-based OJSC OTP Bank's at 'BB' with a Negative Outlook. Fitch has simultaneously upgraded OTPR's Individual Rating to 'D' from 'D/E'. As Fitch does not conduct a full credit review of OTPH, the agency has only assigned a Support Rating. A full rating breakdown of OTPR is provided at the end of this comment. OTPH's Support Rating reflects Fitch's view on its systemic importance to the domestic banking system and the high probability of support that would likely be forthcoming from the Republic of Hungary ('BBB'/Negative/'F3') if needed. OTPR's IDRs continue to be based on the likely still high propensity of OTPH providing support to its subsidiary in case of need. OTPH's operating environment in its domestic and major international markets in which the group is active continue to face challenges as reflected in the higher loan impairment charges. However, compared with Q408, the market conditions have become somewhat more stable. Fitch notes that OTPH remained profitable throughout the crisis and that its Tier1 capital ratio at 13.8% at end-2009 is adequate. Fitch is informed that the bank had liquidity reserves of EUR6 billion at end-2009 of which EUR1.2bn will be required to cover for debt maturing during 2010, excluding mortgage bonds. Fitch understands that OTPH remains a committed strategic investor to the region. OTPR's Long-term IDRs could be downgraded if Hungary's sovereign creditworthiness (foreign currency Long-term IDR 'BBB'/Negative/F3) and operating environment continue to deteriorate, which could further weaken OTPH's standalone credit profile and the ability of the sovereign to support the group, in case of need. The upgrade of OTPR's Individual Rating to 'D' reflects the improvement in the Russian operating environment, the stabilization of loan impairment levels, greater diversification of funding and a reduction in risk in the bank's securities book. Non-performing loans (NPLs, overdue by more than 90 days) at end- 2009 were a high 13.2% (end-2008: 10.4%), with 5.3% of the gross portfolio written off during the year; however, Fitch does not expect asset quality metrics to show any further significant deterioration in 2010 given the recovery of the Russian economy, a tightening of underwriting criteria and expected loan growth. Retail NPLs stood at 16.8% at end-2009, which in part reflects the higher-risk, higher-return nature of the bank's portfolio, while corporate NPLs were a low 3%. Some diversification of the funding base has been achieved through a 41% increase in domestic deposits in 2009; however, parent bank funding remained a significant 34% of liabilities at end-2009. The liquidity position is currently comfortable, supported by credit lines available from the parent bank and the Central Bank of Russia, as well as the short-term and amortizing nature of the retail loan book. The risk profile of the securities' portfolio at the OTPR level has also decreased following the sale of certain Kazakh bank bonds. The Individual Rating also takes into account the bank's only moderate capitalization with a regulatory ratio at 13.2% at end- Q110, which nevertheless could potentially allow the bank to increase its impairment reserves up to 17.3% of the gross portfolio compared with the actual level of 11.6% at end-Q110. Core profitability weakened due to higher credit and funding costs in 2009, but remained solid and should rebound in 2010 on the back of lower impairment charges, notwithstanding possible further margin pressure. In addition, the capital gain on the bank's securities' portfolio positively affected internal capital generation in 2009. The rating actions on OTPR are: -- Long-term foreign currency IDR: affirmed at 'BB'; Outlook Negative -- Long-term local currency IDR: assigned at 'BB'; Outlook Negative -- Short-term foreign currency IDR: affirmed at 'B' -- Support Rating: affirmed at '3' -- Individual Rating: upgraded to 'D' from 'D/E' -- National Long-term rating: affirmed at 'AA-(rus)'; Outlook Negative With total consolidated assets of US$3 billion, OBR was the 37th- largest Russian bank at end- 2009. OTPH currently holds a 95.8% stake. OTPH was the largest bank in Hungary by total assets with a 26.3% share of system assets and 29.3% of retail deposits, based on end-2009 data. In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs. ============= U K R A I N E ============= CENTRAL EUROPEAN: S&P Raises Corporate Credit Rating to 'B' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised its long-term corporate credit rating on Bermuda-based emerging markets TV broadcaster Central European Media Enterprises Ltd. to 'B' from 'B-'. The outlook is stable. S&P also raised to 'B' from 'B-' the long-term debt ratings on CME's US$475 million senior secured convertible notes due 2013, ?440 million notes due 2016, and ?150 million notes due 2014. "The upgrade mainly reflects S&P's view that CME's liquidity and business risk profile have materially improved following the recent completion of the Ukrainian disposal and Bulgarian acquisition," said Standard & Poor's credit analyst Melvyn Cooke. In particular, S&P believes that liquidity, which was its main concern at the previous rating level, is now adequate under its scenario of relatively flat advertising markets in 2010 in the countries where CME operates. S&P also understands the group's financial policy to be less aggressive going forward, especially regarding M&A transactions, and view this shift as a rating support. The stable outlook primarily reflects S&P's opinion that CME's liquidity -- mainly supported by large cash balances -- stands to remain adequate over the next few quarters, despite expected significant negative free cash flow in 2010. The outlook incorporates S&P's expectation that CME's negative free cash flow is likely to decrease progressively in the next few quarters, thanks to a slowly improving advertising market, its exit from the heavily loss-making Ukraine operations, and from the integration of the newly acquired free cash flow generating bTV businesses. "S&P therefore anticipate, under its scenario of slow recovery in CME's advertising markets in 2010 and 2011, that the group may generate -- or approach -- positive free cash flow in 2011," said Mr. Cooke. S&P also expect CME to continue sustaining or improving its audience and its advertising market shares in the foreseeable future. The outlook does not factor in any material debt-funded acquisition. Downward rating pressure could stem from significant operating underperformance and/or materially larger-than-expected deterioration in CME's liquidity over the next few quarters, including higher-than-expected negative free cash flows in 2010 and 2011. A return to a more aggressive financial policy, such as a significant debt-funded acquisition resulting in reduced liquidity and significantly higher-than-expected leverage, would also weigh on the ratings. A positive rating action could stem from a material improvement in advertising spending in the company's key markets that would translate into strong EBITDA margin growth, significantly improved prospects for free cash flow generation, and faster-than-expected deleveraging. =========================== U N I T E D K I N G D O M =========================== BRITISH AIRWAYS: Four Executives Engaged in Price-Fixing -------------------------------------------------------- Jane Croft at The Financial Times reports that the Southwark Crown Court was told on Monday that four British Airways executives "colludes" with Virgin Atlantic Airways as part of a price-fixing conspiracy that led to millions of air passengers being overcharged for transatlantic flights. According to the FT, the court was told that the four executives agreed with each other and with three Virgin executives to make and implement agreements between July 2004 and April 2006 that led to price fixing. The BA executives on trial include Martin George, BA's former commercial director; Iain Burns, BA's former head of communications; and Alan Burnett, the airline's former head of UK and Ireland sales, the FT discloses. The fourth man -- Andrew Crawley, BA's sales and marketing director -- still works for the carrier and was promoted to the company's management board in 2008, the FT says. All men have pleaded not guilty, the FT notes. The FT relates Richard Latham QC, prosecuting for the Office of Fair Trading, claimed that the four men "side-stepped" the proper process and that there was "an escalation of what we allege is illegal cartel activity" and that the "unlawful agreement between the two airlines developed over time and the agreement became stronger with every increase" in the surcharge. According to the FT, Mr. Latham told the court that Steve Ridgway, chief executive of Virgin Atlantic, as well as Willy Boulter, commercial director, and Paul Moore, director of corporate affairs, had admitted to cartel offenses and had been granted immunity from prosecution in what Mr. Latham called a "necessary evil". The FT recounts the court was told during 2005 and the second half of 2004, BA raised GBP64 million from the passenger fuel surcharge which was introduced to cushion the impact of rising oil prices. About British Airways Headquartered in Harmondsworth, England, British Airways Plc, along with its subsidiaries, (LON:BAY) -- http://www.ba.com/-- is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The Company's principal place of business is Heathrow. It also operates a worldwide air cargo business, in conjunction with its scheduled passenger services. The Company operates international scheduled airline route networks together with its codeshare and franchise partners, and flies to more than 300 destinations worldwide. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company carried more than 33 million passengers. It carried 777,000 tons of cargo to destinations in Europe, the Americas and throughout the world. In July 2008, the Company's subsidiary, BA European Limited (trading as OpenSkies), acquired the French airline, L'Avion. * * * As reported in the Troubled Company Reporter-Europe on Nov. 12, 2009, Moody's Investors Service placed the Ba3 Corporate Family and Probability of Default Ratings of British Airways plc and the senior unsecured and subordinate ratings of B1 and B2 under review for possible downgrade. Moody's said the rating action reflects the continued weakening in profitability in the first half of FY2010 (to September 2009), with an operating loss of GBP111 million reported versus a profit of GBP140 million a year earlier (post restructuring charges), and Moody's view that losses in FY2010 will likely be higher than in FY2009. This comes in spite of lower operating costs, notably for fuel, as demand in the industry remains very depressed, while the company has successfully reduced its employee and selling costs. Reported net debt remained constant during the period, partly benefiting from a positive exchange rate impact, although Moody's debt metrics also incorporate the full value of the convertible notes issued in August 2009. HERTFORD INT'L: Share Suspension to Be Lifted on May 13 ------------------------------------------------------- ShareCast reports that Hertford International is set to return from suspension next month after proposing to enter into a Company Voluntary Arrangement. The company has also decided to change its name to Otium Ventures and adopt an investing policy, the report notes. The report recalls trading in Hertford shares was suspended at 4 pence each on November 5 after it admitted there was an ongoing deferred consideration dispute between itself and Provident Financial over the company's purchase of Cheque Exchange. According to the report, shares are expected to return from suspension on May 13 following the approval and acceptance of the CVA proposal. Hertford International Group Plc -- http://hertfordinternationalgroup.com/-- is a United Kingdom- based company. The Company owns 100% interest of its trading subsidiary, CrewCard Networks Limited, whose principal activity is developing technology and systems for the distribution, and usage of prepaid debit cards. The Company's subsidiary CrewCall Network Limited develops new offerings for the calling telephony market. On January 30, 2009, the Company purchased 100% interest in Cheque Exchange Limited., which provides cheque cashing and money transfer facilities through a network of over 750 agents nationwide. HULL CITY: In Negotiations with Creditors Over GBP35 Mil. Debt -------------------------------------------------------------- Rachael Singh at Accountancy Age reports that Hull City FC is looking to renegotiate its GBP35 million of debts over fears that the club could face insolvency. The club, which is audited by Deloitte, is apparently negotiating loans with creditors and hopes to make an announcement this week about its financial restructuring, the Accountancy Age says, citing The Guardian. Following the last audit, Deloitte warned the club it could face a struggle to continue as a going concern, Accountancy Age notes. David Anderson at Mirror Football reports that Hull City owner Russell Bartlett is determined to avoid going into administration and insists the club can "trade through" their financial crisis. According to Mirror Football, Mr. Bartlett believes he can restructure Hull's GBP35 million debt and slash the club's GBP39 million wage bill. "We face a tough period to trade through the transitional period and readjust the business to life in the Championship, but I am confident we can do that," Mirror Football quoted Mr. Bartlett as saying. "We are presently preparing plans to trade through and within that process to significantly lower the wage bill and potentially to restructure other liabilities." Hull City Association Football Club is an English football club based in Kingston upon Hull, East Riding of Yorkshire, founded in 1904. INTERNATIONAL PERSONAL: Fitch Assigns 'BB+' Rating on Senior Notes ------------------------------------------------------------------ Fitch Ratings has assigned International Personal Finance Plc's euro-denominated senior unsecured notes due May 2015 an expected Long-term rating of 'BB+'. The notes will be issued under IPF's euro medium-term note program. IPF is rated Long-term Issuer Default Rating 'BB+' with a Stable Outlook and Short-term IDR 'B'. The final rating is contingent on the receipt of final documents conforming to information already received. The company is listed in London and focuses on emerging market home-collected small unsecured loans. LLOYDS BANKING: Put Vue Entertainment Up for Sale ------------------------------------------------- Helen Power at Times Online reports that Lloyds Banking Group is putting the cinema chain Vue Entertainment up for sale. According to Times Online, the sale is at an early stage, but at least half the cinema chain is expected to be auctioned to another investor this year. Vue has about 20% of the UK's cinema market and about 33 million people a year visit its 65 cinemas, Times Online discloses. The vendors hope that the sale of the stake could raise as much as GBP400 million, Times Online says. The business is part of the HBOS Integrated Finance private equity portfolio, which Lloyds inherited when it took over the ailing bank in 2008, Times Online notes. About Lloyds Banking Group PLC Lloyds Banking Group PLC, formerly Lloyds TSB Group plc, (LON:LLOY) -- http://www.lloydsbankinggroup.com/-- is a United Kingdom-based financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in three divisions: UK Retail Banking, Insurance and Investments, and Wholesale and International Banking. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision. The Company also operates an international banking business with a global footprint in 40 countries. Services are offered through a number of brands, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham & Gloucester. On January 16, 2009, Lloyds Banking Group plc acquired HBOS plc. * * * As reported by the Troubled Company Reporter-Europe on March 17, 2010, Standard & Poor's Ratings Services said that it lowered its rating on a GBP56.472 million 6.475% preference share issue by Lloyds Banking Group (A/Stable/A-1) to 'C' from 'CC' following the first missed coupon payment. The counterparty credit ratings on Lloyds are unaffected by this action. The rating action is the first of S&P's forthcoming rating actions on over 40 hybrid instruments issued by Lloyds and related entities with discretionary coupon payments. Each security will be lowered to 'C' from 'CC' on the date of the first coupon payment to be missed. ROYAL BANK: To Tighten Performance Targets on CEO Bonus Scheme -------------------------------------------------------------- Miles Costello at Times Online reports that Royal Bank of Scotland will tighten performance targets on a multimillion-pound bonus scheme for its chief executive. According to Times Online, Sir Philip Hampton will admit to shareholders at the bank's annual meeting this week that the previous level at which the scheme would pay out -- the share price reaching 50p -- was too low. The RBS chairman will pledge to set new, stricter criteria for Stephen Hester's bonus, in acknowledgement of the recent recovery in the bank's share price, Times Online says. The pay plan, already outlined in the annual report, had threatened to spark a protest among leading institutional shareholders, who are keen to ensure that executive bonus deals carry rigorous performance targets, Times Online relates. Mr. Hester's scheme is a rolling three-year incentive plan that began this year and will run until the end of 2012, Times Online discloses. The share price target for the previous scheme was also 50p, Times Online states. Mr. Hampton will say that RBS will agree a deal for Mr. Hester only after holding talks with leading shareholders, according to Times Online. He will also seek the approval of UK Financial Investments, which manages the Government's stakes in nationalized and partially state-owned lenders, Times Online notes. 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 March 29, 2010, Standard & Poor's Ratings Services said that it lowered its ratings on "may pay" Tier 1 securities issued or guaranteed by The Royal Bank of Scotland Group PLC (A/Stable/A-1) to 'C' from 'CC'. At the same time, the rating on the RBSG-related security issued by Argon Capital PLC was similarly lowered to 'C' from 'CC'. The counterparty credit ratings and stand-alone credit profiles of RBSG and subsidiaries, and the ratings on other debt securities issued by these entities, are unaffected. UK COAL: Puts Agricultural Land Up for Sale as Debt Levels Soar --------------------------------------------------------------- William MacNamara at The Financial Times reports that UK Coal said it was taking on more debt and selling one-third of its 28,000- acre portfolio of agricultural land after making a larger than expected pre-tax loss of GBP129 million last year. According to the FT, the company has taken on GBP30 million in new loan facilities and extended the terms of its existing loans. Net debt of GBP182 million gave the group a gearing level of 119% at the year end, compared with 46% in 2008, the FT discloses. "We consider our debt levels too high," the FT quoted UK Coal Chairman David Jones, as saying in a statement, "and therefore intend to take advantage of the current strong market values for agricultural land to pursue the disposal of a significant proportion of our agricultural estate and to explore joint- venturing the development of a larger part of our brownfield land portfolio." The FT notes the company said that 28,000 acres of its 43,500-acre total portfolio was agricultural land, and that selling about one- third of this was expected to raise some GBP35 million. Cashflow Crisis Robert Lea at Times Online reports that UK Coal on Monday said production problems had prompted a cashflow crisis, an eightfold increase in losses and the abortion of a potential GBP350 million merger with the mining group Hargreaves Services. Times Online relates pre-tax losses sank to GBP129 million in 2009, from GBP15 million the previous year, and revenues dived from GBP392 million to GBP316 million. This was a result of lower production levels, which in turn left the group locked into less profitable legacy supply contracts with big coal-fired power stations in the Midlands and South Yorkshire, Times Online discloses. "UK Coal is deeply in the mire and appears to be running out of options," Times Online quoted Roger Bade, an analyst at Libertas Capital, as saying. Times Online says the uncertainty at UK Coal has prompted Hargreaves Services to step back from talks, admitting that it had not been able to do due diligence. It is understood that Hargreaves Services might be interested in UK Coal's smaller open- cast operations but not the troubled deep mines, Times Online states. According to Times Online, cash was flowing out of the company at a rate of GBP17 million a month in the first quarter of this year. UK Coal plc -- http://www.ukcoal.com/-- is a United Kingdom-based company engaged in surface and underground coal mining, property regeneration and management, and power generation. The Company operates four deep mines, located in Central and Northern England. Its deep mines business consists of Daw Mill (Warwickshire), Kellingley (Yorkshire) and Thoresby and Welbeck (Nottinghamshire). The Company had five active surface mines. Total surface mining reserves and resources are estimated at approximately 55 million tons. The Company owns approximately 45,000 acres (18,200 hectares) of predominantly agricultural land. During the year ended December 31, 2008, it acquired 50% of UK Strategic Partnership Limited as a joint venture company with Strategic Sites Limited for the development of certain investment properties. In January 2009, it sold 50% share in Coal4Energy Limited to Hargreaves Services PLC. UK SPV: Fitch Assigns 'B-' Rating on Limited Recourse Notes ----------------------------------------------------------- Fitch Ratings has assigned UK SPV Credit Finance plc's upcoming issue of US$-denominated limited recourse notes an expected Long- term rating of 'B-' and a Recovery Rating of 'RR4'. The notes are expected to have a maturity of five years. The final ratings are contingent on the receipt of final documentation conforming materially to information already received. The notes are to be used solely for financing a loan to Ukraine- based PJSC CB PRIVATBANK (PrivatBank). Fitch rates PrivatBank Long-term Issuer Default 'B-', Short-term IDR 'B', Individual 'D/E', Support '5' and Support Rating Floor 'No Floor'. The Outlook on the Long-term IDR is Stable. UK SPV Credit Finance plc, a UK-based company, will only pay noteholders amounts (principal and interest) received from PrivatBank under the loan agreement. The claims under the loan agreement will rank at least equally with the claims of other senior unsecured creditors of PrivatBank, save those preferred by relevant laws. Under Ukrainian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-2009, retail depositors accounted for a high 50% of PrivatBank's non-equity funding, according to the bank's audited consolidated IFRS accounts, which could significantly limit recoveries for PrivatBank's other senior creditors in a default scenario. While, in Fitch's view, this risk is not at present sufficient to warrant a Recovery Rating of below 'RR4' for the notes, any significant further increase in the proportion of retail funding in PrivatBank's liabilities could lead to a revision of the Recovery Rating and downgrade of the Long-term rating of the notes. Nevertheless, Fitch notes that the successful completion of the current transaction would result, at least temporarily, in a reduction in the proportion of retail funding. The loan agreement contains a set of covenants, including those which limit disposals, mergers and other types of corporate reorganizations by PrivatBank and its material subsidiaries and stipulate that operations with affiliates should be conducted on an arm's-length basis. A 'negative pledge' clause allows for a creation of a lien (including securitization) on up to 35% of PrivatBank's total assets. PrivatBank and any of its banking subsidiaries also commit to comply with any capital adequacy ratio requirements set by the relevant banking authority (minimum capital adequacy ratio is 10% for Ukraine). According to the terms of the loan agreement, a cross default is triggered if the overdue indebtedness of PrivatBank or any of its subsidiaries exceeds US$20 million. PrivatBank shall redeem the notes if the bank's majority shareholders (Igor Kolomojsky and Gennady Bogolubov) cease to own together, directly or indirectly, more than 50% of the voting stock of PrivatBank and if such an event results in a downgrade of PrivatBank's ratings. WEDGWOOD MUSEUM: In Administration; Fund-Raising Planned -------------------------------------------------------- Emma Strawford at Staffs LIVE reports that the Wedgwood Museum in Stoke-on-Trent has gone into administration. The report relates the administrators were called in on April 23, following the news of a GBP134 million pension fund deficit from the collapse of the Wedgwood company. According to the report, insolvency practitioner Begbies Traynor is planning a fund-raising campaign to pay off the museum's creditors and avoid having to sell off any of the items in its collection. No staff redundancies are expected for the time being, the report notes. * UK: Firms In Major Financial Distress Up 14% in 1st Qtr. 2010 --------------------------------------------------------------- Scott Hamilton at Bloomberg News, citing a survey by Begbies Traynor Group Plc, reports that the number of U.K. companies in major financial distress rose 14% in the first quarter of the year as more creditors took legal action to recover debts. Bloomberg relates Begbies Traynor said in a report released Monday that some 161,601 companies have "significant" or "critical" financial difficulties in the first three months of the year compared with 141,527 in the previous quarter. According to Bloomberg, the Manchester, England-based insolvency specialist said in the report the companies owe about GBP55 billion (US$85 billion) to creditors and suppliers. Bloomberg notes Begbies Traynor said part of the increase is due to more creditors taking court action to get money repaid and help bolster their own finances as they seek to take advantage of the economic recovery. The insolvency specialist, as cited by Bloomberg, said an expected rise in U.K. interest rates over the next year may push more businesses into difficulties. * UK: February-March Business Insolvency Rate Up 0.114% ------------------------------------------------------- Jonathan Moules at The Financial Times, citing figures released last week by business information provider Experian, reports that the proportion of businesses going insolvent increased from 0.096% to 0.114% between February and March. The FT says last month's rise in insolvencies was driven by failures among businesses employing 26 to 50 people, of whom 0.34% were reported to be insolvent. According to the FT, among medium-sized companies -- those employing between 101 and 500 people -- the insolvency rate fell from 0.17 to 0.16% in March, while the lowest insolvency rate, of 0.07%, is held by companies employing just one or two people. * UK: Small Businesses Hit by Late Payments, Research Says ---------------------------------------------------------- Small businesses are being forced to write-off debt at a faster rate because they are struggling to reduce a near GBP63 billion mountain of unpaid bills, Roland Gribben at The Daily Telegraph reported. Nearly three out of four small-and-medium-sized enterprises (SMEs) have been hit by late payments over the last year but less than half have taken steps to reduce the pressure, the report said, citing research, by NatWest and its Royal Bank of Scotland parent, among 500 companies. Invoices for GBP15.7 billion are more than 120 days in arrears, the report disclosed. NatWest and RBS estimate less than half SMEs have taken action with 11% hiring an in-house credit controller, 9% using invoice discounting and 8% factoring to ease cash flow pressures, the report noted. * UK: HSBC Seeks Support for Bank Levy Plan ------------------------------------------- Patrick Jenkins and Sharlene Goff at The Financial Times report that HSBC is seeking support for a plan to direct any industry- wide bank levy into government-sponsored venture capital agencies. The FT relates the bank has toured Europe seeking support for its ideas that include varying the capital buffers that banks are required to hold, depending on economic conditions. According to the FT, the bank believes banks should hold higher capital cushions in good times to absorb losses when conditions decline. The HSBC plan would inject equity into capital-starved small and medium businesses, the FT says. That would remove a big obstacle to lending -- banks only lend to businesses that can prove they have sufficient equity in place, the FT states. Critics say venture capital financing is not the business of government, the FT notes. ********* 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 U. Pascual, Marites O. Claro, Rousel Elaine T. 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 * * *