/raid1/www/Hosts/bankrupt/TCREUR_Public/100514.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, May 14, 2010, Vol. 11, No. 094
Headlines
F R A N C E
CEGEDIM SA: S&P Assigns 'BB+' Rating on EUR300 Mil. Bonds
G E R M A N Y
ARCANDOR AG: Karstadt Unit Sale At Risk, Administrator Says
IKB DEUTSCHE: Deutsche Bank Not to Blame for 2007 Funding Crisis
LANDESBANK BERLIN: Fitch Raises Individual Rating to 'C/D'
* GERMANY: Corporate Insolvencies Up 6.9% In February 2010
G R E E C E
* Moody's Downgrades Ratings on 36 Classes From 23 Greek SF Deals
I C E L A N D
GLITNIR BANK: Files US$2BB Suit v. Ex-Principal Shareholder
I R E L A N D
CORIOLANUS LIMITED: Moody's Withdraws 'Caa3' Rating on Series 59
DUBLIN OAK: Moody's Withdraws Junk Ratings on 2 Classes of Notes
EUROCASTLE CDO: S&P Affirms Rating on Class E Notes at 'BB'
IRISH NATIONWIDE: Explores Options; May Wind Down Operations
QUINN INSURANCE: Anglo Irish to Push Through With Rescue Plan
SEA CDO: Moody's Junks Rating on EUR7 Million Notes From 'B1'
I T A L Y
FIAT SPA: Plans to Refinance EUR5 Bil. in Loans Amid Spin-Off
K A Z A K H S T A N
EURASIAN NATURAL: Moody's Assigns 'Ba2' Corporate Family Rating
* Fitch Affirms 'BB+' Rating on Kazakhstan Region of Mangistau
R U S S I A
ALROSA CO: S&P Assigns 'B+' Issue Rating on Proposed Bonds
RASPADSKAYA OAO: Moody's Reviews 'B1' Corporate Family Rating
RASPADSKAYA OJSC: Fitch Puts 'B+' Rating on Negative Watch
TINKOFF.CREDIT: Moody's Assigns 'E+' Financial Strength Rating
S W E D E N
SAS AB: Moody's Confirms Corporate Family Rating at 'Caa1'
S W I T Z E R L A N D
* SWITZERLAND: Makes Bank Break-up Proposal to Protect Economy
U K R A I N E
ZEMELNYI BANK: Central Bank Appoints Temporary Management
U N I T E D K I N G D O M
CATTLES PLC: Losses Incurred in 2007 & 2008 Worse Than Expected
GALA CORAL: Shareholders to Get GBP10MM In Debt-For-Equity Swap
G&H WEB OFFSET: In Administration; MCR Seeks Buyer for Business
JOHN DICKIE: Forced Into Receivership by Bank of Scotland
IRISH NATIONWIDE: Explores Options; May Wind Down Operations
RD PRECISION: Bought Out of Administration; Up to 100 Jobs Saved
X X X X X X X X
* EUROPE: Fitch Reviews Indicators of Leveraged Borrower Ratings
* BOOK REVIEW: The Executive Guide to Corporate Bankruptcy
*********
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F R A N C E
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CEGEDIM SA: S&P Assigns 'BB+' Rating on EUR300 Mil. Bonds
---------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'BB+' preliminary long-term debt rating to the proposed up to
EUR300 million unsecured bonds maturing in 2017 to be issued by
Cegedim S.A. (BB+/Stable/--), a France-based health care
technology and services provider. At the same time, Standard &
Poor's has assigned a preliminary 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.
Final ratings will depend upon receipt and satisfactory review of
all final transaction documentation, including legal opinions.
Accordingly, the preliminary ratings should not be construed as
evidence of final ratings. If Standard & Poor's does not receive
final documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, Standard & Poor's
reserves the right to withdraw or revise its ratings.
S&P understands that Cegedim plans to use the issuance proceeds to
permanently prepay a portion of its existing amortizing term loan
A (TL A) maturing in 2013, leaving about EUR114 million of this
loan outstanding.
S&P understands that the proposed 2017 bonds will be unsecured and
will not benefit from any operating-company guarantees. S&P notes
that Cegedim's existing credit facilities -- the outstanding
EUR114 million TL A and a EUR165 million revolving credit facility
maturing in 2012 -- are secured by share pledges and guaranteed by
certain of Cegedim's operating companies; S&P understands,
according to the RCF and TL A documentation, that these
subsidiaries must represent at least 70% of Cegedim's consolidated
EBITDA.
If Cegedim were unsuccessful in placing the proposed bonds, S&P's
maintenance of the current corporate credit rating would likely
depend on Cegedim proactively managing its liquidity position, in
view of the fairly large TL A amortizations in the next few years
and the RCF's maturity in 2012.
Recovery Analysis
The preliminary recovery and issue ratings on the proposed 2017
bonds reflect the bonds' unsecured nature, the existence of
priority debt -- albeit a moderate amount -- ranking ahead of the
proposed bonds in a post-default waterfall scenario, and Cegedim's
exposure to the French insolvency regime post-default, which S&P
views as rather unfavorable for creditors. At the same time, the
ratings are supported by S&P's valuation of Cegedim as a going
concern, which, according to S&P's estimates, translates into a
stressed enterprise value of about EUR410 million at S&P's
simulated point of default in 2013.
S&P has treated the unsecured bonds as ranking behind the senior
secured credit facilities and ranking pari passu with the
EUR45 million shareholder loan in the post-default waterfall.
Unsecured bondholders do not benefit from any guarantee or share
pledges, while the lenders of the RCF and the TL A benefit from
share pledges and guarantees from certain of Cegedim's
subsidiaries. Cegedim's shareholder loan, due 2014, is
subordinated to the senior secured facilities, as per the terms of
the intercreditor agreement between the respective lenders. Since
the 2017 bondholders are not, and will not become, party to this
intercreditor agreement, S&P understands that the shareholder loan
is not specifically subordinated to the proposed bonds and S&P has
therefore assumed the pari passu ranking of the two debt
instruments. However, given the shareholder loan's earlier
maturity compared with that of the bonds, S&P believes that there
is a risk that the lenders of the shareholder loan could negotiate
priority ranking over the unsecured bondholders, which could, in
S&P's opinion, impair recovery prospects for the bondholders.
S&P has simulated a default in 2013, triggered by Cegedim's loss
of several key customers on the back of mergers and acquisitions
activity among the pharma companies and Cegedim's subsequent
incapacity to repay its scheduled TL A amortization. At the
simulated point of default, S&P forecasts that EBITDA will have
declined by almost 60% since year-end 2009, to about
EUR70 million. S&P has also assumed that the RCF, due in 2012,
will be rolled over by one year to 2013, under similar terms.
S&P has valued the business as a going concern using a combination
of discounted cash flow and market multiple approaches. S&P's
going-concern valuation is supported by Cegedim's leading market
positions and unique business model, which results in a business
risk profile that S&P views as "satisfactory." S&P estimates
Cegedim's enterprise value at the simulated point of default to be
about EUR410 million, which corresponds to a blended enterprise-
value-to-EBITDA multiple of about 6x.
After deducting about EUR30 million of enforcement costs, S&P
arrives at a net enterprise value of about EUR380 million. S&P
then deducts priority liabilities of about EUR15 million
(consisting of the securitization of Cegedim Finance Lease) and
priority debt of about EUR215 million (consisting of a fully drawn
EUR165 million RCF and an outstanding TL A of about EUR45 million
-- according to S&P's simulated default assumptions -- as well as
the related prepetition interest); this leaves about
EUR150 million of residual value for creditors. S&P has therefore
calculated recovery prospects for bondholders and pari passu
shareholder loan lenders (who have a total claim of about
EUR355 million, including prepetition interest) in the 30%-50%
range, hence S&P's preliminary recovery rating of '4' on the
bonds.
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G E R M A N Y
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ARCANDOR AG: Karstadt Unit Sale At Risk, Administrator Says
-----------------------------------------------------------
Karstadt, the department-store unit of insolvent German retailer
Arcandor AG that is in talks with potential buyers, may fail to
convince some German cities to abandon tax claims, endangering the
sale, Holger Elfes at Bloomberg News reports, citing the
insolvency administrator's spokesman Thomas Schulz.
Bloomberg relates Mr. Schulz said three of a total 94 cities have
rejected the administrator's request to waive the claims on taxes
they are owed by Karstadt. The cities are Duisburg, Bielefeld and
Erding, Bloomberg discloses. According to Bloomberg, the
spokesman said under insolvency rules, 98% of the cities in which
Karstadt have stores have to accept the request to make the sale
possible.
Bloomberg notes Mr. Schulz said 12 other cities, including
Cologne, Munich and Hanover, have indicated they plan to reject
the request, while about 70 cities have said they plan to
approve it.
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.
IKB DEUTSCHE: Deutsche Bank Not to Blame for 2007 Funding Crisis
----------------------------------------------------------------
Karin Matussek at Bloomberg News reports that Deutsche Bank AG
Chief Executive Officer Josef Ackermann told the Dusseldorf
Regional Court that the lender wasn't responsible for the 2007
funding crisis that forced IKB Deutsche Industriebank AG to seek a
bailout.
According to Bloomberg, Mr. Ackermann testified that IKB's capital
base was in peril before Deutsche Bank cut IKB's credit line.
Bloomberg relates Mr. Ackermann testified Wednesday at former IKB
Chief Executive Officer Stefan Ortseifen's trial on charges he
misled investors. Mr. Ortseifen, Bloomberg discloses, is charged
with misleading investors by downplaying the effect of the looming
crisis in a press release on July 20, 2007.
"We didn't cause the reputational damage that put IKB in the
crisis," Bloomberg quoted Mr. Ackermann as saying Wednesday. "We
only cut the credit line when it became obvious that IKB was
already in a crisis."
Bloomberg recalls at the opening of the case in March, Mr.
Ortseifen had blamed Deutsche Bank for causing IKB's near-collapse
in 2007. The former executive told the court Deutsche Bank halted
all transactions with IKB on July 27 of that year, hurting IKB's
reputation and triggering the crisis, Bloomberg recounts.
About IKB Deutsche Industriebank
IKB Deutsche Industriebank AG -- http://www.ikb.de/-- is a
Germany-based banking company, which specializes in the field of
long-term financing. It offers a range of financial products and
services directed at medium-sized domestic as well as
international companies and project partners. The Company's
focuses on the two segments Corporate Customers, including
domestic corporate financing, especially lending, but also product
leasing and private equity; and Real Estate Customers, which
provides customized financing solutions as well as related
services for industrial real estate. As of March 31, 2009, it
operated through direct and indirect subsidiaries, including the
wholly owned IKB Capital Corporation and IKB Equity Finance GmbH,
among others; its two majority owned subsidiaries; as well as two
affiliated companies. The Company's subsidiaries are located in
Germany, the United States, the Netherlands, Luxembourg, Austria,
the Czech Republic, France, Hungary, Poland, Russia, Slovakia and
Romania.
* * *
As reported by the Troubled Company Reporter-Europe on Sept. 21,
2009, Moody's Investors Service confirmed the Baa3 long-term debt
and deposit ratings, Ba2 subordinated debt ratings and Prime-3
short-term rating of IKB Deutsche Industriebank, reflecting
Moody's assessment of a very high probability of ongoing external
support. The outlook on the senior and junior debt ratings
remains negative. IKB's E bank financial strength rating, mapping
to a stand-alone baseline credit assessment of Caa1, was affirmed,
with a stable outlook. Moody's downgraded the upper Tier 2 junior
subordinated instruments issued by IKB and its vehicle ProPart
Funding Ltd to C from Ca, the lowest level on Moody's rating
scale, and the Tier 1 instruments issued by IKB Funding Trust I &
II and Capital Raising GmbH to Ca from Caa3. Moody's said the
outlook on the instruments is stable.
LANDESBANK BERLIN: Fitch Raises Individual Rating to 'C/D'
----------------------------------------------------------
Fitch Ratings has affirmed Landesbank Berlin AG's Long-term Issuer
Default Rating at 'AA-' with a Stable Outlook, Short-term IDR at
'F1+', Support Rating at '1' and Support Rating Floor at 'AA-'.
Fitch has additionally affirmed Berlin-Hannoversche Hypothekenbank
AG's Long-term IDR at 'A+' with a Stable Outlook, Short-term IDR
at 'F1', and Support Rating at '1'. (Berlin Hyp is a subsidiary
of LBB.) The agency has simultaneously upgraded both banks'
Individual Ratings to 'C/D' from 'D'. LBB's guaranteed
obligations are affirmed at 'AAA', based on the grandfathering of
the guarantee provided by its owners.
The affirmation of the banks' IDRs reflects the unchanged
strategic importance of Landesbank Berlin for its owners, the
German savings banks, which dominate German retail banking. The
IDRs reflect the extremely high probability of support being
forthcoming, if required, from the Federal Republic of Germany
('AAA'/Stable Outlook/'F1+'). Such support would likely be
directed either to Landesbank Berlin, or would be received
indirectly through the saving banks given their public-sector
ownership and importance to Germany's financial system and
economy. In this context, Berlin Hyp's Long-term IDR and Support
Rating continue to reflect Fitch's opinion that this support would
filter through the bank's direct majority owner. Landesbank
Berlin has published a declaration of backing for Berlin Hyp's
liabilities, limited to its 91.58% share in the bank. Fitch
considers that this support would be unrestricted if it was ever
required, especially given the high integration of Berlin Hyp with
Landesbank Berlin. Any change in the ownership structures of
Landesbank Berlin or Berlin Hyp, or in Fitch's opinion of support
from the Federal Government, would be most likely to trigger
negative rating action.
The upgrades of Landesbank Berlin's and Berlin Hyp's Individual
Ratings take into account a more resilient performance throughout
the financial market crisis during the past year than Fitch had
initially anticipated. The upgrades also reflect Fitch's
expectation that continued pressure on the banks' commercial real
estate loan quality will remain manageable and that the group will
be able to continue its track record of reducing its still
substantial legacy problem loan book. In this context, Berlin
Hyp's non-performing loans are largely covered by collateral,
which, however, depends on valuation and makes the bank sensitive
to market value declines and, to a minor extent, loan loss
reserves.
Fitch expects that Landesbank Berlin's performance will remain
challenged by its considerable exposure to commercial real estate
throughout 2010 and 2011 and to event risk in its large investment
portfolios. The expected losses should nonetheless be absorbed by
the bank's modest but improving profitability. The bank remains
especially vulnerable to event risk because capitalization is only
adequate and profitability is low, which is taken into account by
the Individual Rating of 'C/D' which indicates a sub-investment
grade on an unsupported basis.
Berlin Hyp's Individual Rating similarly reflects the bank's focus
on and exposure to commercial real estate markets and its
concentration risks, as well as a reliance on wholesale funding
and exposure to credit spread risks. Downward rating pressure on
the Individual Rating would result from a slump in its asset
quality through single large scale credit events. While Fitch
currently considers Berlin Hyp's risk-adjusted capitalization as
adequate, the bank's high leverage reflects its still high --
although declining -- volume of public sector loans, which are
focused mainly on domestic borrowers.
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.
* GERMANY: Corporate Insolvencies Up 6.9% In February 2010
----------------------------------------------------------
Roman Kessler at Dow Jones Newswires, citing the Federal
Statistics Office, Destatis, reports that corporate insolvencies
in Germany rose 6.9% from the year earlier in February, after a
4.2% rise in January.
According to Dow Jones, German insolvency courts reported 2,558
company insolvencies for February, compared with 2,547 a month
earlier.
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G R E E C E
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* Moody's Downgrades Ratings on 36 Classes From 23 Greek SF Deals
-----------------------------------------------------------------
Moody's Investors Service downgraded 36 classes of notes in 23
Greek structured finance transactions and placed one class of
notes in one CDO transaction on review for possible downgrade.
The rating actions were prompted by Moody's expectations of
significant pool performance deterioration due to the stressed
economic environment in Greece as well as increased operational
risk due to the weakened financial strength of Greek banks as
reflected in the downgrades of several Greek banks on 30 April
2010. The action takes into account the benefit of the package
announced by the European policymakers, together with the measures
announced by the ECB which have removed the risk of sponsors
facing an immediate liquidity crisis.
Five ABS transactions, on review for downgrade, were not affected
by the rating actions as their bank originators have committed to
provide additional structural support for their transactions.
Moody's is analyzing these restructuring proposals and will revert
with its conclusions to the market as soon as possible. All the
notes affected by the rating actions remain on review for further
possible downgrade. During this review Moody's will assess the
rating impact of the available credit enhancement given the
portfolio expected loss assumptions, as well as the linkage to the
counterparties performing key roles in the transactions.
RMBS: Moody's downgraded and kept on review for possible downgrade
all of the notes in 11 transactions, representing approximately
EUR10.7 billion. The senior notes have been downgraded by a
maximum of three notches and mezzanine and junior notes by one
notch.
ABS: Moody's downgraded all of the notes in 9 transactions and
maintained all ratings on review for possible downgrade,
representing approximately EUR7.2 billion. Senior notes have been
downgraded by a maximum of three notches and junior notes by one
notch.
CLOs: Moody's downgraded all of the notes in three transactions
and maintained all ratings on review for possible downgrade,
representing approximately EUR3.9 billion. A single note in
another CDO transaction has been placed on review for possible
downgrade.
Moody's previously took negative rating actions on some of these
affected transactions (see press release dated April 27, 2010,
entitled "Moody's takes actions on Greek structured finance
transactions following Greece downgrade"). Moody's analysis of
Greek structured finance transactions is based on an assessment of
the available credit enhancement -- given the expectations around
the asset pool performance considering a variety of loss scenarios
- as well as their exposure to the banks providing operational
services, swaps and liquidity.
Credit Impact of Asset Pool Performance
The credit enhancement available to the senior notes in the
transactions must be sufficient to withstand extreme scenarios of
collateral losses, including those related to potential government
debt problems. Due to the implementation of Greece's austerity
package and the resulting impact on the Greek economy and
collateral performance, Moody's revised the probability of the
extreme loss scenarios and has therefore taken action in all
senior notes in the affected transactions. To determine the
amount of loss under such an event, Moody's considered a few
extreme loss scenarios, such as the crisis in Argentina in 2000,
which combined a systemic banking crisis together with a sovereign
debt crisis. For example, this would potentially results in
required credit enhancement ranges of 25 to 45 percent for
residential mortgage, 40 to 60 percent for consumer loan and 45 to
65 percent for small and mid-size enterprises (SME)
securitizations. In its previous analysis, Moody's viewed the
probability of this economic worst-case scenario of collateral
losses as equivalent to the probability of default for an A2 rated
security, that is positioned one notch above the current Greek
government rating . Given the austerity measures imposed by the
Greek fiscal plan Moody's has now revised the probability of an
extreme loss scenario in the underlying collateral to be
equivalent to the probability of default of a Baa2 rated security.
In addition, Moody's also downgraded mezzanine and junior notes as
a result of revised loss assumptions under the expected case
scenario. Moody's notes the Eurozone support measures together
with the austerity program will cause the transfer of wealth and
income from the household and private sectors to the government
sector via the assessment and collection of taxes and is likely to
reduce the ability of the underlying borrowers to meet their debt
obligations.
Operational Risk and Liquidity
Additionally, Moody's considered the operational risk in the
transactions taking into account Moody's criteria for servicing
and cash management (see "Global Structured Finance Operational
Risk Request for Comment" published 6 May 2010). Thus, the rating
actions reflects the weakened financial strength of the Greek
banks, which act in various roles in the transactions, including
servicer, cash managers and swap counterparties. In particular,
Moody's notes that the transactions could be exposed to
operational risk if there was a servicer default as a servicing
transfer would be extremely difficult in the context of the
current crisis. However Moody's notes that the package announced
by the European policymakers, together with the measures announced
by the ECB to provide liquidity support to the banking system have
largely reduced the funding pressures faced by the sponsors.
The ratings of all notes remain on review for further possible
downgrade. During the review, Moody's will focus on the exposure
of each transaction to the various counterparties performing key
roles and on the efficiency of the structural features in place.
In particular, following the recent downgrades of Greek banks,
several rating triggers have been breached requiring the affected
counterparties to put in place certain remedies, such as
counterparty replacements, cash collateralization of exposures and
the appointment of back-up servicers. The implementation of these
remedial actions will be assessed in order to determine the degree
of linkage between the ratings of the transactions and the
relevant Greek bank ratings.
List of Rating Actions
RMBS
Issuer: Estia Mortgage Finance II PLC
-- EUR1137.5M A Notes, Downgraded to A3 and Remains On Review
for Possible Downgrade; previously on Apr 27, 2010 Downgraded
to A1 and Placed Under Review for Possible Downgrade
Issuer: Grifonas Finance No. 1 Plc
-- EUR897.7M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010 Aa3
Placed Under Review for Possible Downgrade
-- EUR23.8M B Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR28.5M C Certificate, Downgraded to Baa3 and Placed Under
Review for Possible Downgrade; previously on Aug 30, 2006
Definitive Rating Assigned Baa2
Issuer: KATOIKIA I MORTGAGE FINANCE PLC
-- EUR886.6M A Notes, Downgraded to A3 and Remains On Review for
Possible Downgrade; previously on Apr 27, 2010 Downgraded to
A1 and Placed Under Review for Possible Downgrade
Issuer: KION Mortgage Finance No. 2 Plc
-- EUR522.405M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A1 and Placed Under Review for Possible
Downgrade
Issuer: KION Mortgage Finance Plc
-- EUR553.8M A Certificate, Downgraded to A2 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to Aa3 and Placed Under Review for Possible
Downgrade
-- EUR28.2M B Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR18M C Certificate, Downgraded to Ba1 and Placed Under
Review for Possible Downgrade; previously on Dec 7, 2006
Definitive Rating Assigned Baa3
Issuer: Themeleion II Mortgage Finance Plc
-- EUR690M A Certificate, Downgraded to A2 and Remains On Review
for Possible Downgrade; previously on Apr 27, 2010 Downgraded
to Aa3 and Placed Under Review for Possible Downgrade
-- EUR37.5M B Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR22.5M C Certificate, Downgraded to Baa3 and Placed Under
Review for Possible Downgrade; previously on Jun 21, 2005
Definitive Rating Assigned Baa2
Issuer: Themeleion III Mortgage Finance Plc S.r.I.
-- EUR900M A Certificate, Downgraded to A3 and Remains On Review
for Possible Downgrade; previously on Apr 27, 2010 Downgraded
to A1 and Placed Under Review for Possible Downgrade
-- EUR40M M Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR20M B Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR40M C Certificate, Downgraded to Baa3 and Placed Under
Review for Possible Downgrade; previously on Jun 26, 2006
Definitive Rating Assigned Baa2
Issuer: Themeleion IV Mortgage Finance Plc
-- EUR1352.9M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A1 and Placed Under Review for Possible
Downgrade
-- EUR155.5M B Certificate, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A3 and Placed Under Review for Possible
Downgrade
-- EUR46.6M C Certificate, Downgraded to Ba1 and Placed Under
Review for Possible Downgrade; previously on Jun 21, 2007
Definitive Rating Assigned Baa3
Issuer: Themeleion Mortgage Finance PLC
-- EUR693.5M A Notes, Downgraded to A1 and Remains On Review for
Possible Downgrade; previously on Apr 27, 2010 Aa2 Placed
Under Review for Possible Downgrade
-- EUR32M B Notes, Downgraded to Baa1 and Remains On Review for
Possible Downgrade; previously on Apr 27, 2010 Downgraded to
A3 and Placed Under Review for Possible Downgrade
-- EUR24.5M C Notes, Downgraded to Baa3 and Placed Under Review
for Possible Downgrade; previously on Jun 14, 2004 Definitive
Rating Assigned Baa2
Issuer: Themeleion V Mortgage Finance Plc
-- EUR957.8M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A1 and Placed Under Review for Possible
Downgrade
Issuer: Themeleion VI Mortgage Finance Plc
-- EUR1560.9M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A1 and Placed Under Review for Possible
Downgrade
ABS
Issuer: Anaptyxi SME I
-- EUR1750M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A1 and Placed Under Review for Possible
Downgrade
Issuer: Anaptyxi SME II 2009-1 PLC
-- EUR1815M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010 A1
Placed Under Review for Possible Downgrade
Issuer: Andromeda Leasing I PLC
-- EUR504M A Certificate, Downgraded to A2 and Remains On Review
for Possible Downgrade; previously on Apr 27, 2010 Downgraded
to Aa3 and Placed Under Review for Possible Downgrade
Issuer: Gaia Lease Plc
-- EUR272.6M A Notes, Downgraded to A1 and Remains On Review for
Possible Downgrade; previously on Apr 27, 2010 Aa1 Placed
Under Review for Possible Downgrade
Issuer: IRIDA PLC
-- EUR261.1M A Certificate, Downgraded to A1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to Aa3 and Placed Under Review for Possible
Downgrade
Issuer: Misthosis Funding Plc
-- EUR363.9M A Certificate, Downgraded to A2 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010 Aa2
Placed Under Review for Possible Downgrade
Issuer: PRAXIS I FINANCE PLC
-- EUR493M A Certificate, Downgraded to A3 and Remains On Review
for Possible Downgrade; previously on Apr 27, 2010 Aa3 Placed
Under Review for Possible Downgrade
Issuer: Praxis II Finance Plc
-- EUR379.2M A Certificate, Downgraded to A2 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to Aa3 and Placed Under Review for Possible
Downgrade
Issuer: Synergatis Plc
-- EUR1414.5M A Certificate, Downgraded to A3 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010 Aa3
Placed Under Review for Possible Downgrade
CDO
Issuer: Axia II Finance PLC
-- EUR459M Class A Asset Backed Floating Rate Notes due 2031
Notes, Downgraded to A1 and Remains On Review for Possible
Downgrade; previously on Apr 27, 2010 Aa1 Placed Under Review
for Possible Downgrade
Issuer: EPIHIRO PLC (Athena Project)
-- EUR1623M Euro 1,623,000,000 Class A Asset Backed Floating
Rate Notes due January 2035 Notes, Downgraded to A1 and
Remains On Review for Possible Downgrade; previously on Apr
27, 2010 Aa1 Placed Under Review for Possible Downgrade
Issuer: Eterika Plc
-- EUR975M Class A Notes, Downgraded to Baa1 and Remains On
Review for Possible Downgrade; previously on Apr 27, 2010
Downgraded to A2 and Placed Under Review for Possible
Downgrade
Issuer: TALANTO PLC
-- EUR811.65M EUR 811,650,000 Class A Asset Backed Note due 2031
Notes, A1 Placed Under Review for Possible Downgrade;
previously on Feb 20, 2009 Assigned A1
Moody's will continue to monitor the transactions.
=============
I C E L A N D
=============
GLITNIR BANK: Files US$2BB Suit v. Ex-Principal Shareholder
-----------------------------------------------------------
Glitnir Bank has commenced legal action in the Supreme Court of
the State of New York against Jon Asgeir Johannesson, formerly its
principal shareholder, Larus Welding, previously Glitnir's Chief
Executive, Thorsteinn Jonsson, its former Chairman, and other
former directors, shareholders and third parties associated with
Mr. Johannesson, for fraudulently and unlawfully draining more
than US$2 billion out of the Bank.
Glitnir is also taking action against its former auditors
PricewaterhouseCoopers, for facilitating and helping to conceal
the fraudulent transactions engineered by Mr. Johannesson and
his associates, which ultimately led to the Bank's collapse in
October 2008.
Glitnir has also secured a freezing order from the High Court in
London against Mr. Johannesson's worldwide assets, including two
apartments in Manhattan's exclusive Gramercy Park neighborhood,
for which he paid approximately US$25 million.
Mr. Johannesson -- beneficial owner of the now-defunct Baugur
investment group -- is understood to be domiciled in the United
Kingdom, and still holds a number of high-profile directorships
there, including Iceland Foods and House of Fraser, two of the
UK's best-known retailers.
The lawsuit, filed in New York on May 11, shows:
* How a cabal of businessmen led by Mr. Johannesson conspired
to systematically loot Glitnir Bank to prop up their own failing
companies
* How Mr. Johannesson and his co-conspirators seized control
of Glitnir, removing or sidelining experienced Bank employees --
and abused this control to place the Bank in extreme financial
peril
* How Mr. Johannesson, Mr. Welding and the other Defendants
facilitated and concealed their diversions from the Bank by
overriding Glitnir's financial risk controls, violating Iceland's
banking laws, and orchestrating a blizzard of convoluted stock
"parking" transactions
* How the individual Defendants, with the complicity of
Glitnir's auditor PwC, raised US$1 billion from investors in New
York without revealing the truth about the Bank's financial
exposures to Mr. Johannesson and his co-conspirators
* How the Defendants' transactions cost Glitnir more than US$2
billion and contributed significantly to the Bank's collapse
A full copy of the New York court action will be available at
http://www.glitnirbank.com/
The litigation is being piloted by Glitnir's Winding-Up Board,
which was appointed by the Icelandic Court to supervise the
liquidation of the Bank. It follows a thorough forensic review of
Glitnir's management and transactions in the years leading up to
the Bank's collapse.
On behalf of Glitnir's creditors, the Winding-Up Board is
determined to pursue recovery of assets looted from Glitnir by
Mr. Johannesson and the other Defendants, and believes that the
New York court is the most suitable forum for doing so. Central
to the case is the US$1 billion bond issue sold in September 2007
to New York investors who were misled as to Glitnir's financial
exposures. Around 90% of Glitnir Bank's estimated 9,000 creditors
are thought to be based outside Iceland.
"There is evidence supporting the allegation that Glitnir Bank was
robbed from the inside," said Steinunn Guobjartsdottir, chair of
the Glitnir Winding-Up Board. "[Tue]day's legal action is a
positive step aimed at making accountable the small number of
people whose intent or negligence contributed significantly to
Glitnir's demise."
Glitnir has already filed separate litigation against some of the
individual Defendants in Iceland. It has also made a relevant
submission to Iceland's Special Prosecutor and Icelandic
authorities. The Icelandic Government has also been notified
about [Tue]day's litigation.
Last month, a report from Iceland's Special Investigation
Commission ruled that Iceland's financial collapse was partly
caused by the disproportionate exercise influenced over the
country's banks by a small group of businessmen, including Mr.
Johannesson.
Glitnir Bank's Winding-Up Board's legal representation is Steptoe
& Johnson, LLP (New York) and Slaughter and May (London).
About Glitnir Banki
Headquartered in Reykjavik, Iceland, Glitnir banki hf --
http://www.glitnir.is/-- offers an array of financial services to
corporation, financial institutions, investors and individuals.
Iceland's government took control of Glitnir, along with two other
financial institutions -- Landsbanki Islands hf and Kaupthing Bank
hf -- after it failed to obtain short-term funding. The District
Court of Reykjavik granted a Moratorium order on Glitnir on
Nov. 24 2008. Glitnir said the Moratorium is not a bankruptcy
proceeding and does not affect its banking licenses or its ability
to operate as a bank. The Moratorium is a specialized proceeding
under Icelandic law designed to provide it with appropriate global
protection from legal action taken by its creditors, Glitnir
pointed out.
Steinunn Gudbjarsdottir, as the duly authorized foreign
representative for Glitnir banki hf, sought creditor protection
for the bank under Chapter 15 of the U.S. Bankruptcy Code on
November 26, 2008 (Bankr. S.D.N.Y. Case No. 08-14757). According
to Bloomberg, Glitnir's assets in the United States comprised of
bank accounts and loan provided to U.S. companies. The company,
Bloomberg citing papers filed with the Court, issued 22 short- and
long- term notes for about US$7 billion in the country.
Judge Stuart M. Bernstein presides over the case. Gary S. Lee,
Esq., at Morrison & Foerster LLP in New York, serves as counsel to
the foreign representative. The Chapter 15 petition estimated
both assets and debts to be more than US$1 billion.
On January 6, 2009, Judge Bernstein issued an order recognizing
the bank's restructuring proceedings in Iceland.
=============
I R E L A N D
=============
CORIOLANUS LIMITED: Moody's Withdraws 'Caa3' Rating on Series 59
----------------------------------------------------------------
Moody's withdrew its rating of these Series 59 notes issued by
Coriolanus Limited (Moorgate CLO 3). The notes were repurchased
and cancelled in full in July 2009.
Issuer: Coriolanus Limited - Series 59 (Moorgate 3)
Series 59 US$3,000,000 Portfolio Credit Linked Floating Rate
Secured Notes due 2022, Withdrawn; previously on April 8, 2009
Downgraded to Caa3
DUBLIN OAK: Moody's Withdraws Junk Ratings on 2 Classes of Notes
----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of notes
issued by Dublin Oak Limited for the lack of information on a
material portion of the portfolio.
Issuer: Dublin Oak Ltd.
-- US$207,000,000 Class A Credit-Linked Notes due 2086-1,
Withdrawn; previously on Dec 1, 2009 Downgraded to Caa2
-- US$90,000,000 Class B Credit-Linked Notes due 2086,
Withdrawn; previously on March 11, 2009 Downgraded to Ca
-- US$2,700,000,000 Super Senior Swap, Withdrawn; previously on
Dec 1, 2009 Downgraded to A2
EUROCASTLE CDO: S&P Affirms Rating on Class E Notes at 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Eurocastle CDO III PLC's class A-2 and B notes. At the same time,
S&P affirmed its ratings on the class A-1, C, D, and E notes.
The rating actions follow S&P's assessment of a deterioration in
the credit quality of the underlying portfolio. According to
S&P's analysis, the percentage of assets rated below investment-
grade (below 'BBB-') is currently about 53%. Of those, S&P
considers about 5.6% as rated 'CCC+' and below. This includes
adjustments S&P has made to the ratings on those assets that are
currently on CreditWatch negative.
According to S&P's analysis, about 7.5% of the portfolio is
currently on CreditWatch negative. On April 6, 2009, S&P
published revised assumptions governing structured finance assets
with ratings on CreditWatch held within collateralized debt
obligation transactions. Under these revised assumptions, S&P
adjust ratings on CreditWatch downward by at least three notches.
In addition, about 0.3% of the portfolio is rated 'D' and as such
S&P considered assets rated 'D' as defaulted in S&P's analysis.
However, S&P note that according to the trustee report, asset
defaults amount to about EUR41 million or 5.5% of the portfolio.
This difference is due to the wider definition of "defaulted
assets" in the transaction documents. In its analysis, S&P
considered that a portion of these assets are currently deferring
their interest payments.
In S&P's view, this deterioration in the portfolio's credit
quality has led to an increase in scenario default rates.
According to the latest available trustee report of March 2010,
the class A/B and class C/D overcollateralization ratio tests have
declined further since S&P's last review in August 2009 and are
currently failing their respective trigger levels. From the
information the trustee provided to us, S&P note that this breach
is largely due to adjustments to the balance of assets rated
'CCC+' and below, which according to the transaction's documents
need to be applied when calculating these tests.
The breach of the overcollateralization ratio tests has led to a
reduction in the principal amount outstanding of the class A-1
notes. This is because available interest and principal proceeds,
after payment of interest on the class B notes, are used to repay
the notes in order of seniority, starting with class A-1. The
class C, D, and E notes are deferring their interest payments.
S&P also note that according to the transaction documents, there
are two overcollateralization ratio tests which, if failed,
trigger an event of default under the notes. These are the
"inadequate par coverage test" and the "class A collateral test".
According to the information S&P received from the trustee, the
inadequate par coverage test (as of March 10, 2010) passed with a
ratio of 132.5% (the trigger is 100%) and the class A collateral
test currently passes with a ratio of 111.3% (the trigger is
103%). According to the note conditions, a portfolio liquidation
following an event of default can, among other conditions, only
occur subject to the consent of 66 2/3% by principal amount
outstanding of each of the class A, B, C, and D notes. In S&P's
view, it is therefore unlikely that portfolio liquidation would
occur if an event of default is triggered.
S&P has observed a recent increase in the credit enhancement
available for all rated notes. In S&P's view, this is due to the
purchase of assets at a discount to par and the reduction in the
principal amount outstanding of the class A-1 notes. However,
S&P's cash flow analysis indicates that for the class A-2 and B
notes, these factors are not sufficient to compensate for the
increase in the SDR.
As a result, the existing ratings on the class A-2 and B notes are
in S&P's opinion no longer commensurate with the available credit
enhancement, and S&P has therefore lowered the ratings on these
notes.
Eurocastle III is a managed European cash flow CDO involving
primarily commercial mortgage-backed securities (about 42%
according to S&P's analysis), residential mortgage-backed
securities (about 33% according to S&P's analysis), CDOs backed by
loans to small midsize enterprises (about 8% according to S&P's
analysis), and commercial asset-backed securities. The
transaction closed in April 2005.
Ratings List
Eurocastle CDO III PLC
EUR749.925 Million Senior and Mezzanine Deferrable-Interest
Floating-Rate Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
A-2 AA+ AAA
B A- AA
Ratings Affirmed
Class Rating
----- ------
A-1 AAA
C BBB+
D BBB-
E BB
IRISH NATIONWIDE: Explores Options; May Wind Down Operations
------------------------------------------------------------
BreakingNews.ie reports that Daniel Kitchen, the chairman of Irish
Nationwide Building Society, has said a number of options are
being considered for the society's future, including wind-down of
operations.
BreakingNews.ie relates Mr. Kitchen said at the society's AGM that
it was inevitable to assume the society faces further losses as
its commercial loans are transferred to NAMA, with the bonds
received by NAMA to be used either to repay existing borrowings or
to bolster the society's liquidity.
According to BreakingNews.ie, Mr. Kitchen said that its future
lies in returning to its roots as a savings and loan organization.
INBS is to prepare a reconstruction plan by late June 2010 for
submission to Brussels, BreakingNews.ie notes.
As reported by the Troubled Company Reporter-Europe on April 21,
2010, the Financial Times said Irish Nationwide posted a 2009 loss
of EUR2.5 billion (US$3.4 billion) following charges for impaired
property loans of EUR2.8 billion. The FT disclosed under the
Irish government's banks rescue plan, Irish Nationwide is set to
transfer EUR8.3 billion, or almost 80%, of its total book to NAM,
the so-called bad bank. On the first tranche of EUR670 million
loans going to Nama, the agency is paying EUR280 million, or a 58%
discount to book value, the FT said. This compares with the
industry average discount of 47% on the first EUR16 billion
tranche from all five institutions, according to the FT.
Irish Nationwide Building Society, headquartered in Dublin,
Ireland, had total assets of EUR14.4 billion at year-end 2008.
* * *
As reported by the Troubled Company Reporter-Europe on April 7,
2010, Fitch Ratings downgraded the Individual rating of Irish
Nationwide Building Society to 'F' from 'E'. The rating has been
downgraded to 'F' to reflect that, in Fitch's opinion, it would
have defaulted if it had not received external support.
QUINN INSURANCE: Anglo Irish to Push Through With Rescue Plan
-------------------------------------------------------------
BreakingNews.ie reports that Anglo Irish Bank is pressing ahead
with its proposed rescue plan for Quinn Insurance. According to
BreakingNews.ie, the bank hopes to join forces with a foreign
trade buyer to run the insurer and temporarily share ownership.
BreakingNews.ie says it's likely the plan will face significant
regulatory hurdles and remains subject to further change.
As reported by the Troubled Company Reporter-Europe on April 19,
2010, The Financial Times said Quinn Insurance was put into
administration on April 15 after Sean Quinn abandoned attempts to
keep control of the family-owned company. The FT disclosed the
administrators were instructed by the High Court to run the
company as a going concern "with a view to placing it on a sound
commercial footing".
Quinn Insurance is owned by Sean Quinn, Ireland's richest man, and
his family. The company has just more than 20% of the motor and
health insurance market in Ireland. It has more than one million
customers in the country. Employing almost 2,800 people in
Britain and Ireland, it was founded in 1996 and entered the UK
market in 2004, according to The Times.
SEA CDO: Moody's Junks Rating on EUR7 Million Notes From 'B1'
-------------------------------------------------------------
Moody's Investors Service has taken these rating actions on notes
issued by of SEA CDO Limited 2004-3, a collateralized debt
obligation transaction referencing a static portfolio of corporate
entities.
Issuer: SEA CDO Limited 2004-3 (Grande II)
* EUR7M Secured Floating Rate "Grande II" Notes due 2014,
Downgraded to Caa2; previously on Feb 23, 2009 Downgraded to B1
Moody's explained that the rating action taken is the result of
the deterioration of the credit quality of the reference
portfolio. The 10 year weighted average rating factor of the
portfolio, adjusted with forward looking measures, has
deteriorated from 688 since the last rating action in February
2009, to 904, equivalent to an average rating of the current
portfolio of Baa3. The reference portfolio includes an exposure
to Takefuji corporation, and Ambac Financial Group which have
experienced substantial credit migration in the past few months,
and are now rated respectively Caa2 on review for downgrade and C.
Since inception of the transaction, the subordination of the rated
tranche has been reduced due to credit events on Lehman Brothers
Inc., CIT Group Inc., Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association and Idearc Inc, General
Motors Corporation and Lear Corporation. These credit events lead
to a decrease of approximately 1.6% of the subordination of the
series. The Banking, Telecommunications, and Retail industry
sectors are the most represented, weighting 9.87%, 8.05% and 7.79%
respectively, of the portfolio initial notional.
=========
I T A L Y
=========
FIAT SPA: Plans to Refinance EUR5 Bil. in Loans Amid Spin-Off
-------------------------------------------------------------
Fiat SpA is seeking to refinance as much as EUR5 billion (US$6.3
billion) in bank loans as it separates the truck and tractor
operations from carmaking, Sara Gay Forden and Elisa Martinuzzi at
Bloomberg News report, citing three people familiar with the
matter.
According to Bloomberg, two of the people said part of the credit
may be used to replace about EUR2 billion in intercompany loans
with CNH Global NV and to fund Fiat's five-year business plan.
Bloomberg notes one person said Chief Executive Officer Sergio
Marchionne intends to ask Fiat's board to approve the refinancing
plan as early as July.
Fiat's bank debt totaled EUR8.7 billion at the end of March,
excluding intercompany lending, Bloomberg discloses.
"The new financial structure they put in place means everything,
including the intercompany loans and liquidity, which is very
important right now," Bloomberg quoted Falk Frey, an analyst at
Moody's Investors Service, as saying in Frankfurt. "The less
debt, the better the credit rating could be."
Moody's rates Fiat's debt Ba1, the highest non-investment grade.
Amsterdam-based CNH's debt is rated two steps lower at Ba3.
About Fiat SpA
Headquartered in Turin, Italy, Fiat SpA (BIT:F) --
http://www.fiatgroup.com/-- is principally engaged in the design,
manufacture and sale of automobiles, trucks, wheel loaders,
excavators, telehandlers, tractors and combine harvesters.
Through its subsidiaries, Fiat operates mainly in five business
areas: Automobiles, including sectors led by Maserati SpA, Ferrari
SpA and Fiat Group Automobiles SpA, which design, produce and sell
cars under the Fiat, Alfa Romeo, Lancia, Fiat Professional,
Abarth, Ferrari and Maserati brands; Agricultural and Construction
Equipment, which is led by Case New Holland Global NV; Trucks and
Commercial Vehicles, which is led by Iveco SpA; Components and
Production Systems, which includes the sectors led by Magneti
Marelli Holding SpA, Teksid SpA, Comau SpA and Fiat Powertrain
Technologies SpA, and Other Businesses, which includes the sectors
led by Fiat Services SpA, a publishing house Editrice La Stampa
SpA and an advertising agency Publikompass SpA. With operations
in over 190 countries, the Group has 203 plants, 118 research
centers, 633 companies and more than 198,000 employees.
* * *
As reported by the Troubled Company Reporter-Europe on April 27,
2010, Standard & Poor's Ratings Services said that it placed its
'BB+' long-term corporate credit rating on Italian industrial
group Fiat SpA on CreditWatch with negative implications. At the
same time, the 'B' short-term credit rating on Fiat was affirmed.
In addition, S&P placed the 'BB+' long-term rating on Fiat's
subsidiary CNH Global N.V. on CreditWatch with developing
implications.
"The CreditWatch placement reflects S&P's view that Fiat's credit
quality could weaken due to increased business risk as a
consequence of the proposed demerger of CNH, Iveco SpA (not
rated), and the industrial and marine divisions of Fiat Powertrain
Technologies into the newly created entity Fiat Industrial SpA,"
said Standard & Poor's credit analyst Barbara Castellano.
===================
K A Z A K H S T A N
===================
EURASIAN NATURAL: Moody's Assigns 'Ba2' Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service has assigned a Corporate Family Rating
of Ba2 to Eurasian Natural Resources Corporation PLC, a vertically
integrated Kazakh mining company. The outlook is stable. This is
the first time that Moody's has rated ENRC Plc.
The Ba2 issuer rating for ENRC recognizes the company's (i) good
access to high grade and long reserve life mining assets in
Kazakhstan with more than 35 years of reserves at current
production levels, which offer ENRC a privileged access to the
Chinese and more generally to the Asian and Eurasian markets,
(ii) favorable cost structure thanks to the group's high quality
mining assets as well as the group's high level of vertical
integration (self sufficiency in metals, downstream integration in
smelting and refining as well as the access to captive power and
transportation assets), (iii) conservative balance sheet structure
that benefited from the retention of the group's solid cash flow
generation during the cyclical upturn experienced by the sector
mining sector up to mid 2008 and of the IPO proceeds of December
2007, (iv) strategy to diversify the group's product portfolio in
natural resources to reduce the group's exposure to certain
customers, metals and regions and (v) experienced management.
The rating is constrained by (i) ENRC's exposure to volatile
metals markets and its revenue and earnings concentration on
ferrochrome and iron ore, (ii) the group's strong customer
concentration with MMK and UC Rusal accounting for 15% and 8% of
fiscal year 2009 group revenues, (iii) the company's limited
geographical diversification in terms of location of assets, which
implies some degree of political risk and foreign exchange
exposure, but also in terms of location of end customers although
Moody's notes that the company's acquisitions in Africa have
improved the group's geographical profile and metals diversity,
(iv) the capital intensiveness of the business which will require
large capital expenditures to maintain current production levels
in the short to medium term, and (v) the fairly high event risk
linked to the successful execution of the group's corporate
strategy.
The liquidity profile of the group is adequate. ENRC had
US$830 million of cash and cash equivalents on balance sheet at
fiscal year-end 2009. The liquidity needs of ENRC over the next
twelve months mainly consisting of the payment for the
acquisitions announced since the beginning of fiscal year 2010,
material capex (partly discretionary) and modest working capital
requirements are expected to be covered from operating cash flows,
cash on balance sheet as well as drawings under a new
US$400 million credit facility from the Development Bank of
Kazakhstan.
The stable outlook reflects Moody's expectation that ENRC will
maintain a prudent balance sheet strategy going forward and will
continue to benefit from supportive demand fundamentals for its
products. The stable outlook also reflects the agency's
expectation that ENRC will pursue its diversification strategy to
improve the business profile and earnings resilience of the group
over time at a prudent pace. The agency will closely monitor the
execution of the strategy, which bears some execution risk.
Eurasian Natural Resources Corporation Plc, headquartered in
London, is a vertically-integrated Kazakh mining company primarily
focused on the production of ferrochrome and iron ore (49% and 29%
of group revenues respectively). ENRC is the world's largest
ferrochrome producer (by chrome content) and one of the world's
significant exporters of iron ore by volume. ENRC is also the
world's 9th largest supplier of traded alumina by volume (15% of
group revenues). Beside these core mining activities ENRC also
owns and operates energy (Kazakhstan largest electricity provider)
and logistics assets, which are partly used for captive purposes
(ENRC is self sufficient in electricity and logistics in
Kazakhstan). ENRC generated revenues of US$3,831 million and
reported an underlying EBITDA of US$1,462 million for the fiscal
year ended 31st December 2009.
* Fitch Affirms 'BB+' Rating on Kazakhstan Region of Mangistau
--------------------------------------------------------------
Fitch Ratings has affirmed the Kazakhstan Region of Mangistau's
Long-term foreign and local currency ratings at 'BB+' and the
Short-term foreign currency rating at 'B'. The National Long-term
rating is affirmed at 'AA-(kaz)'. The Outlooks for all three
Long-term ratings are Stable.
The affirmation of the region's ratings reflects its wealth within
the national context, sound budgetary performance, moderate
rigidity and almost debt-free status as well as its highly
concentrated economy. However, the ratings also factor in the
strong reliance of the regional budget on central government
decisions and the impact of the national economic downturn.
The region's economy is strong, but highly concentrated in the oil
and gas sector. Mangistau's per capita gross regional product was
2.3x above the national average in 2008. Rich natural resources
drive the region's industrial development, but cause a high tax
concentration. However, the region's tax proceeds are based on
salary funds and are not linked directly to the profitability of
local businesses, which makes tax revenue less vulnerable to a
fall in oil prices.
The region continued to demonstrate a sound budgetary performance
in 2009 despite the national economic slowdown. The growth of
operating expenditure outpaced operating revenue, which caused a
minor deterioration of operating performance in 2009. However, it
remained comfortable with an operating balance at 28.5% of
operating revenue. Fitch notes that the introduction of a new
approach to the intergovernmental transfers' calculation is
expected in 2010, which causes some uncertainty with respect to
the future operating performance.
The region is almost risk free and the debt burden totalled
KZT650m at end-2009, which is below 2% of current revenue.
Regional financing options have been limited since 2005, and the
only form of debt available to Kazakh regions is central
government loans. Mangistau obtained five earmarked interest-free
loans from the central government, totalling KZT1.4 billion, in
2005-2009. The region is planning to borrow KZT599 million in
2010-2012, while total repayment accounts for KZT750 million over
that period. This will lead to the reduction of Mangistau's
direct risk to KZT499 million by end 2012.
As of early 2010, the region's contingent liabilities were
negligible. However, the region is conducting negotiations with
the European Bank for Reconstruction and Development on a water
supply development project for the City of Actau Heating, Water
Supply and Sewerage Public Company. If the US$8m loan is raised,
it would increase the region's contingent liabilities to about 3%
of operating revenue in 2010. Given the expected long-term nature
of the loan, it is not expected to add significant pressure to the
region's budget.
Mangistau is located in south-west Kazakhstan on the Caspian Sea
coast. It accounts for 2.7% of the national population and
contributed 6.8% of national GDP in 2008.
===========
R U S S I A
===========
ALROSA CO: S&P Assigns 'B+' Issue Rating on Proposed Bonds
----------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned an
issue rating of 'B+' to the proposed Russian ruble
(RUB) 26 billion bond to be issued by Russian diamond miner
ALROSA Co. Ltd. (B+/Positive/B). At the same time, S&P assigned a
recovery rating of '4' to the proposed bond, indicating S&P's
expectation of average (30%-50%) recovery in the event of a
payment default. The issue and recovery ratings on Alrosa's other
debt facilities remain unchanged.
S&P anticipates that the proceeds of the new issue will be used to
refinance debt maturities due in 2010. This is in line with S&P's
existing assumptions regarding the near-term development of
Alrosa's capital structure.
Recovery Analysis
S&P's recovery analysis is based on a stand-alone assessment of
the value of Alrosa's business, but largely reflects S&P's view
that the government of the Russian Federation (foreign currency
BBB/Stable/A-3; local currency BBB+/Stable/A-2; Russia national
scale 'ruAAA') would not be willing to cede entire control of the
company's core production assets. In S&P's opinion, this could
limit the value available to the bondholders, resulting in an
exceptionally low valuation multiple at default.
The recovery rating is based on a stressed enterprise valuation of
about $1.8 billion, which S&P believes could be constrained by the
possibility of government intervention in any sale process.
Additional factors affecting recovery prospects include the
unsecured nature of the debt and the risks inherent in Russian
insolvency laws.
Ratings List
ALROSA Co. Ltd.
New Rating
RUB26 bil. bond B+
Recovery Rating 4
RASPADSKAYA OAO: Moody's Reviews 'B1' Corporate Family Rating
-------------------------------------------------------------
Moody's Investors Service has placed OAO Raspadskaya's B1
corporate family rating and B1 rating for Loan Participation Notes
due in 2012 issued by Raspadskaya Securities and totaling
US$300 million on review for possible downgrade. At the same time
Moody's Interfax Rating Agency, which is majority owned by
Moody's, placed Raspadskaya's A1.ru national scale rating on
review for possible downgrade.
The action reflects the uncertainties surrounding the impact of
the recent accident at OAO Raspadakaya mine in Kemerovo region on
the company's operating performance going forward. As the
company's production has a significant concentration on that mine
which accounts for the majority of its coal output, Raspadkaya's
cash flow generation could be affected in case it would be faced
with an extended interruption in operations at this location.
However Moody's notes that the company continues to have a strong
financial profile supported by conservative credit metrics and
good liquidity position which gives some degree of protection to
negative developments.
Moody's review will mainly focus on:
(i) the potential length and extent of interruption of
production at the Raspaskaya mine and the possible
mitigants that other producing assets of the company or
existing inventories could bring to revenue flow,
(ii) the ensuing revenue loss and financial consequences if
such suspension of mine operations was to last for an
extended period,
(iii) the importance of investments and expenses that may be
required to re-launch the mine's operation,
(iv) the potential company's liability arising from this
event.
The last rating action was on February 13, 2009, when Moody's
Investors Services downgraded the Ba3 corporate family rating and
Aa3.ru national scale rating of OAO Raspadskaya to B1 and A1.ru
respectively. At the same time, Moodys, downgraded the rating for
Loan Participation Notes due in 2012 and totaling US$300 million
from Ba3 to B1. The outlook on all ratings remained stable.
Raspadskaya is the largest Russian coking coal producer and is
among the top 10 coking coal producers globally with a coal
production volume of 9.41 mln t in 2008 and 10.56 mln t in 2009
and sales of 7,03 mln t of coal concentrate in 2008 and 7,72 mln t
of coal concentrate in 2009.
The company's production assets consist of three underground
mines, one open-pit, a coal preparation plant, and one more mine
is currently under construction, as well as a coal transportation
network and a number of integrated infrastructure companies. All
the assets are located in Kuzbass Basin (Kemerovo region, Russia).
The company is controlled by management and Evraz Group (rated B1,
stable outlook) through equal stakes in Corber Enterprises Ltd.
which holds an 80% stake in Raspadskaya. In 2009 the company
reported revenue of US$497 million (59% decrease Y-o-Y) and
US$255 million of EBITDA (71% crease Y-o-Y) based on audited
consolidated financial statements.
RASPADSKAYA OJSC: Fitch Puts 'B+' Rating on Negative Watch
----------------------------------------------------------
Fitch Ratings has placed OJSC Raspadskaya's Long-term foreign
currency Issuer Default Rating of 'B+', National Long-term rating
of 'A(rus)' and senior unsecured rating of 'B+' on Rating Watch
Negative. It has affirmed the Short-term IDR at 'B'. The
Recovery Rating on the senior unsecured debt is 'RR4'.
The rating action reflects uncertainty over the possible impact of
the two explosions at the Raspadskaya mine, on 8 and 9 May 2010,
on the company's credit profile. The mine, which accounts for 65%
of the company's total sales volumes, had its shafts and ground
facilities significantly damaged by the explosions.
Fitch notes that Raspadskaya's credit profile could be negatively
affected if the mine remains closed for a long period and if the
company significantly increases borrowings to finance post-
explosion operations. Raspadskaya's management has not yet issued
any official statements with regards to the time and funds it will
take to rebuild the mine.
The RWN will be resolved once Fitch has received estimates of the
scale of the damage and funds required to restore the mine's
operations.
TINKOFF.CREDIT: Moody's Assigns 'E+' Financial Strength Rating
--------------------------------------------------------------
Moody's Investors Service has assigned these global scale ratings
to Tinkoff.Credit Systems: an E+ bank financial strength rating,
and B3 long-term and Not Prime short-term local and foreign
currency deposit ratings. Concurrently, Moody's Interfax Rating
Agency assigned a Baa2.ru long-term National Scale Rating to the
bank. Moscow-based Moody's Interfax is majority owned by Moody's,
a leading global rating agency. The outlook on the long-term
global scale ratings is stable, while the NSR carries no specific
outlook.
According to Moody's, TCS's E+ BFSR, which translates into a
Baseline Credit Assessment of B3, is underpinned by: (i) low
operating costs due to a business model which is based on direct
marketing and internet-based services; (ii) a wide net interest
margin; and (iii) adequate capital cushion, with 17.0% Basel I
Tier 1 capital ratio reported as at YE2009.
However, Moody's notes that TCS's ratings are constrained by:
(i) high refinancing risks arising from the bank's high reliance
on a limited number of wholesale debt facilities; (ii) its short
track record; (iii) the monoline nature of its operations; and
(iv) the vulnerability of the bank's net interest margin to
possible changes in the consumer finance regulatory framework.
According to Moody's, any possible upgrade of TCS's ratings will
be contingent on the bank's ability to diversify its funding which
is already being witnessed by the rating agency given the rapid
growth of retail deposits.
Conversely, the rating agency observes that TCS's ratings might be
adversely affected if: (i) the bank's liquidity profile
deteriorates, or (ii) volume of loans shrinks materially, leading
to erosion of the bank's efficiency and profitability.
Moody's notes that TCS's local and foreign currency deposit
ratings do not factor in any probability of systemic support in
the event of a stress situation, given the bank's very low market
share and relatively low importance to the Russian banking system.
Although support from the bank's shareholders cannot be ruled out,
its extent and timeliness are uncertain.
Headquartered in Moscow, TCS reported IFRS total assets of
US$212 million and shareholders' equity of US$35 million as at
December 31, 2009. The bank's net income in 2009 totalled
US$18.2 million.
===========
S W E D E N
===========
SAS AB: Moody's Confirms Corporate Family Rating at 'Caa1'
----------------------------------------------------------
Moody's Investors Service confirmed SAS AB's Corporate Family
Rating at Caa1. The Probability of Default Rating was raised to
Caa1 from Caa2 and both the senior unsecured and subordinate
ratings were confirmed at Caa1 and Caa3, respectively. The
outlook is stable. This concludes the review for possible
downgrade that was initiated on February 11, 2010.
This rating action reflects predominantly Moody's view that the
capital structure has been strengthened following the successful
completion the SEK5 billion rights issue, for which SEK4.7 billion
in proceeds were obtained net of transaction costs, which is
expected to increase the company's pro forma level of financial
preparedness (cash plus undrawn facilities as a percentage of
revenues) to c.31% from about 16% reported as of March 2010.
As a precondition for the rights issue, the company has also
completed these measures: i) the refinancing of its c.SEK2 billion
bonds maturing in 2010, notably via the issuance of two new bonds
in the aggregate of SEK2.2 billion (namely SEK 580 million under
the MTN program due 2016 and SEK1.6 billion convertible notes due
2015); ii) the extension of four of its revolving credit
facilities by one year to 2013, for which Moody's understands that
the covenants have been made more flexible; and lastly iii) the
company has reached an agreement with flight decks and cabin
unions for an additional SEK500 million in savings that will
impact results as of April 2010. Moody's believe that these
measures, combined with other actions under the 'Core SAS'
program, will significantly reduce Moody's earlier liquidity
concerns and gradually improve profitability at the airline. The
company is further planning to issue SEK1 billion in notes due
2012 to enhance liquidity.
Our stable outlook factors in a number of other factors, such as
the company's ongoing Core SAS initiatives. Its total cost
savings amount to SEK7.8 billion, of which 63% was reported to
have been completed as of March 2010, with the remaining annual
earnings effect estimated to amount to SEK4.8 billion in the 2010-
2012 period. Structural changes also include capacity and
employee reductions, as well as administrative and operational
savings. While Moody's expect 2010 will be not be as weak as
2009, Moody's still expect the environment to remain difficult for
the European airline industry, as noted in IATA's latest
forecasts. In this regard, Moody's expect that SAS will continue
to use cash in the current fiscal year but to a lesser degree,
such that the level of financial preparedness is likely to weaken
during the year, but Moody's expect liquidity to remain sufficient
beyond a 12-month horizon.
The stable outlook therefore factors in Moody's expectation of a
gradual improvement in metrics and a stabilization in net cash
flows over the medium term. The stable outlook does not factor in
any potentially significant adverse impact from litigation
concerning price fixing that could be announced in the near term.
For upward pressure on the rating, Moody's would expect gross
leverage (as adjusted by Moody's) to fall below 8x, while
maintaining an adequate liquidity profile and adherence to any
financial covenants. Conversely, the ratings could come under
negative pressure if profitability were not to improve in the
current year or if liquidity were once again to come under
pressure.
Moody's last rating action on SAS AB was on February 11, 2010,
when Moody's placed all SAS ratings under review for possible
downgrade and lowered the PDR from Caa1 to Caa2.
Headquartered in Stockholm, Sweden, SAS is one of the largest
passenger airlines in Europe with c. 25 million passengers flown
and total revenues of SEK45 billion in 2009.
=====================
S W I T Z E R L A N D
=====================
* SWITZERLAND: Makes Bank Break-up Proposal to Protect Economy
--------------------------------------------------------------
Reuters reports that the Swiss government on Wednesday made a
proposal to parliament for legislation to prevent large banks from
dragging down the entire economy if they were to become insolvent.
"The risks of systemically important banks should be restricted,
as more stringent capital, liquidity and risk diversification
requirements will be set out in the Banking Act," Reuters quoted
the government as saying in a statement.
"The proposal on these legislative measures should be put out for
consultation in the form of a conference in October 2010, and be
adopted by the Federal Council by the end of 2010," the government
said, according to Reuters. "In the event of swift consideration
by parliament, the legislative amendments could come into force
on January 1, 2012."
=============
U K R A I N E
=============
ZEMELNYI BANK: Central Bank Appoints Temporary Management
---------------------------------------------------------
Kateryna Choursina at Bloomberg News reports that Ukraine's
central bank appointed temporary management at PAT Zemelnyi Bank
for six months to stabilize the lender.
According to Bloomberg, Natsionalnyi Bank Ukrainy appointed Nina
Hryshyna, the deputy head of its directorate in Kharkiv region,
eastern Ukraine, to manage Zemelnyi.
PAT Zemelnyi Bank is based in Kharkiv.
===========================
U N I T E D K I N G D O M
===========================
CATTLES PLC: Losses Incurred in 2007 & 2008 Worse Than Expected
---------------------------------------------------------------
Adam Jones and Sharlene Goff at The Financial Times report that
Cattles plc has unveiled worse-than-expected losses for the years
prior to its financial crisis. The FT relates Cattles on
Wednesday said the losses made in 2007 and 2008 were much worse
than it envisaged six months ago.
The FT recalls Cattles delayed the publication of its performance
figures for 2008 in February last year so it could perform a
thorough review of its impairments. At that time it warned it had
probably overestimated the value of its loan portfolio, the FT
recounts.
According to the FT, the group on Wednesday released the audited
results for 2008.
The pre-tax loss was GBP745.2 million, reflecting a loan loss
charge of GBP794.3 million, the FT discloses. The deficit was
significantly worse than the GBP555.3 million unaudited loss
Cattles had announced in November, the FT notes. This figure was
released before Grant Thornton started work as its new auditor,
replacing PwC, the FT notes.
The lender also announced a further restatement to its 2007
figures, the FT says. These revealed a pre-tax loss of œ96.5m
during the period instead of the GBP22.7 million unaudited profit
it had been expecting, the FT states.
The FT notes trading in the group's shares and bonds was suspended
in April and the shares are now deemed to have little or no value.
Its shares will be suspended until at least the publication of
last year's results, after which it will make a decision whether
to relist or delist the shares, the FT says.
The business is now under new management and has ceased lending in
its main subsidiary, Welcome Finance, though it is still
collecting payments from this business, the FT discloses.
Miles Costello and Robert Lindsay at The Times report that Cattles
accused its former directors of deliberately providing misleading
information about its finances.
The Times relates Margaret Young, who was installed last year as
executive chairman, said Wednesday that certain of the former
directors had provided "incomplete and misleading information"
that had helped to "mask the true state of Welcome's loan book and
in particular the correct level of arrears within the book".
According to The Times, Ms. Young said, "Certain executives had
provided a range of presentations, documents and verbal
reassurances to the non-executive directors that everything was
entirely as it should have been and that there was no reason for
concern."
The Financial Services Authority is likely to act when Cattles'
2009 accounts are released, the Times notes. Ms. Young warned
investors to expect more losses when they are published soon, The
Times states.
Cattles plc -- http://www.cattles.co.uk/-- is a financial
services company specializing in providing consumer credit to non-
standard customers in United Kingdom. The Company also provides
debt recovery services to external clients and its consumer credit
business, and working capital finance for small- and medium-sized
businesses. It also has a car retail operation, which is an
introducer of hire purchase customers to its consumer credit
business. Its business divisions include Welcome Financial
Services, The Lewis Group and Cattles Invoice Finance. Welcome
Financial Services consists of three businesses: Welcome Finance,
Shopacheck and Welcome Car Finance. Shopacheck provides short-
term home collected loans to some 260,000 customers through 52
branches. The Lewis Group provides debt recovery and
investigation services, serving both external clients and Welcome
Financial Services. In September 2007, it announced the
acquisition of a debt portfolio of United Kingdom credit card,
loan and overdraft receivables.
* * *
As reported by the Troubled Company Reporter-Europe on April 8,
2010, Fitch Ratings upgraded Cattles Plc's Long-term Issuer
Default rating to 'C' from 'Restricted Default' and Short-term IDR
to 'C' from 'RD'. The company's senior unsecured bonds' Long-term
rating has been affirmed at 'C' and the Recovery Rating is 'RR5'.
Fitch said the upgrade reflects the standstill agreement in place
between Cattles and its creditors, which became effective on
December 17, 2009. Conditions that are indicative of a Long-term
IDR of 'C' include an issuer that has entered into a standstill
agreement following a payment default. Fitch downgraded Cattles'
Long-term IDR to 'RD' on July 8, 2009, following confirmation that
the company would not pay the coupon on its GBP400 million 7.125%
bonds, due 2017, that fell due on July 6, 2009.
There continues to be uncertainty over the level of recoveries
available to bondholders, according to Fitch.
GALA CORAL: Shareholders to Get GBP10MM In Debt-For-Equity Swap
---------------------------------------------------------------
Anousha Sakoui and Martin Arnold at The Financial Times report
that shareholders in Gala Coral will receive just GBP10 million
(US$15 million) to walk away from the debt-laden betting and bingo
company into which they pumped GBP1.2 billion of equity.
The FT notes Gala will become the biggest European company to be
taken over by holders of mezzanine debt -- borrowing that ranks
below senior bank loans.
According to the FT, the three main owners -- Permira, Candover
and Cinven -- are expected to divide the pay-off equally with
other shareholders. The damage is likely to be felt most by
Permira, which lost its entire GBP370 million investment in Gala,
a victim of the smoking ban and betting regulation changes, the FT
states.
The FT says mezzanine creditors, including Apollo Management,
Cerberus and Park Square Capital, will write off their GBP550
million of debt claims and provide GBP200 million in new funds,
which will cut the debt to GBP1.75 billion. In exchange they will
receive all of Gala's equity, the FT discloses.
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.
G&H WEB OFFSET: In Administration; MCR Seeks Buyer for Business
---------------------------------------------------------------
Adam Hooker at Print Week reports that G&H Web Offset has been put
into administration. The report relates Stephen Clancy and David
Whitehouse, of MCR, were appointed joint administrators of the
company on Tuesday. The Liverpool plant has ceased trading, the
report notes.
G&H bosses claimed they had no choice but to call in
administrators because they did not have time to reduce the
workforce and said they were about to lose GBP150,000 a month, the
report states.
MCR is now seeking a buyer for the business, with a deadline for
offers set for Friday, the report discloses. It will address
staff and Unite at a meeting next Tuesday to discuss future plans,
the report says.
According to the report, MCR sent out a "business for sale" notice
Tuesday, stating that G&H Web Offset had a turnover of GBP10.2
million in 2008 and GBP7.7 million in 2009.
G&H Web Offset is a printing company based in Liverpool. It is a
subsidiary of G&H Group.
JOHN DICKIE: Forced Into Receivership by Bank of Scotland
---------------------------------------------------------
Tim Sharp at Herald Scotland reports that John Dickie Group has
been forced into receivership by the Bank of Scotland, putting
some 35 direct and indirect jobs at risk.
According to the report, the group was told at the beginning of
the month that the bank was not prepared to continue its support,
and the directors were asked to call in administrators. They
resisted and the bank on Tuesday called in receivers, the report
relates.
"It seems that self interest and the 'too large to fail' principle
is dictating who the bank is prepared to continue to support, as
Dickie's sensible land-buying policy and modest borrowings do not
now appear to merit the bank's support," the report quoted a
company spokesman as saying. "After 130 years of house building
in the West of Scotland the company was not offered any conduit by
the bank to enter a debate nor given recourse to appeal the bank's
decision."
It is understood that Dickie's borrowing facility was GBP15
million, and its debt GBP13 million, the report notes.
John Dickie Group's annual accounts published at the end of 2009
recorded a GBP7.1 million loss for the year to June 30, 2008, the
report discloses.
Based in Renfrewshire, John Dickie Group is one of Scotland's
oldest housebuilders.
IRISH NATIONWIDE: Explores Options; May Wind Down Operations
------------------------------------------------------------
BreakingNews.ie reports that Daniel Kitchen, the chairman of Irish
Nationwide Building Society, has said a number of options are
being considered for the society's future, including wind-down of
operations.
BreakingNews.ie relates Mr. Kitchen said at the society's AGM that
it was inevitable to assume the society faces further losses as
its commercial loans are transferred to NAMA, with the bonds
received by NAMA to be used either to repay existing borrowings or
to bolster the society's liquidity.
According to BreakingNews.ie, Mr. Kitchen said that its future
lies in returning to its roots as a savings and loan organization.
INBS is to prepare a reconstruction plan by late June 2010 for
submission to Brussels, BreakingNews.ie notes.
As reported by the Troubled Company Reporter-Europe on April 21,
2010, the Financial Times said Irish Nationwide posted a 2009 loss
of EUR2.5 billion (US$3.4 billion) following charges for impaired
property loans of EUR2.8 billion. The FT disclosed under the
Irish government's banks rescue plan, Irish Nationwide is set to
transfer EUR8.3 billion, or almost 80%, of its total book to NAM,
the so-called bad bank. On the first tranche of EUR670 million
loans going to Nama, the agency is paying EUR280 million, or a 58%
discount to book value, the FT said. This compares with the
industry average discount of 47% on the first EUR16 billion
tranche from all five institutions, according to the FT.
Irish Nationwide Building Society, headquartered in Dublin,
Ireland, had total assets of EUR14.4 billion at year-end 2008.
* * *
As reported by the Troubled Company Reporter-Europe on April 7,
2010, Fitch Ratings downgraded the Individual rating of Irish
Nationwide Building Society to 'F' from 'E'. The rating has been
downgraded to 'F' to reflect that, in Fitch's opinion, it would
have defaulted if it had not received external support.
RD PRECISION: Bought Out of Administration; Up to 100 Jobs Saved
----------------------------------------------------------------
BBC News reports that Derbyshire-based group Gardner UK has bought
RD Precision and its Polish subsidiary out of administration in a
deal said to be worth GBP1.14 million.
According to the report, the deal secured up to 100 jobs at the
company. The report relates Matt Dunham, of administrators Grant
Thornton, said, "This was the most attractive deal for the
creditors."
Queensferry-based RD Precision makes parts for aircraft wings, and
customers include Airbus.
===============
X X X X X X X X
===============
* EUROPE: Fitch Reviews Indicators of Leveraged Borrower Ratings
----------------------------------------------------------------
Fitch Ratings says in a new special report on European leveraged
borrowers that are shadow-rated 'B-*' or higher and/or rated at
'CCC*' or lower, that historical financial metrics are not always
the best indicator for judging an issuer's rating. The agency
believes that an assessment of future financial performance can
provide a better indication of an issuer's rating with respect to
"performing" and "distressed" borrowers.
"In reviewing the key differentiating factors between 'B-' and
'CCC' ratings at the low point of the economic cycle, Fitch found
that historical financial metrics are not always the best
indicator of an issuer's rating, but rather Fitch's expectation of
the company's future financial profile," says Matthias Volkmer, a
Director in Fitch's Leveraged Finance group. "As such forecasts
enable Fitch to differentiate between issuers that are
underperforming, but expected to recover, and those which face
more significant challenges to their ultimate survival."
This type of forecasting is consistent with Fitch's general
"through-the-cycle" approach to corporate ratings and the agency's
financial forecasts are key to differentiating between 'B-' and
'CCC'-rated European leveraged borrowers.
The formal Fitch definition of a 'B' range highly speculative
rating is that "material default risk exists, but a limited margin
of safety remains", whereas the 'CCC' definition states that
"default is a real possibility". The importance of qualitative
analysis comes to the fore in differentiating between borrowers
which have sufficient liquidity and flexibility and a sound enough
business model to survive a relevant stress event and those
borrowers which are underperforming. Underperforming borrowers
include those who do not have sufficient liquidity, or who would
have unsustainable capital structures when faced with challenges
to their business model or execution risk of their turnaround
plans. These borrowers are more likely to have been rated at a
distressed level ('CCC') because default is a real possibility.
The assignment of ratings at the 'B-*' and 'CCC*' level is
particularly relevant and sensitive for European CLO Asset
Managers, because European CLOs typically have portfolio limits
that prevent or restrict CLO managers' exposure to 'CCC'-rated
credits. Fitch-rated European CLOs that exceed their 'CCC' rating
buckets are subject to additional covenant tests on over-
collateralisation. A direct consequence of breaching an OC test
is that subordinated collateral management fees, which form a
vital source of CLO managers' fee revenues, are suspended and
accrue "in kind", whilst portfolio coupons are instead distributed
to repay more senior CLO tranches.
As a result of the high leverage taken on by borrowers at the peak
of the market in 2006-7, combined with the more recent economic
and financial crisis, Fitch's European portfolio of shadow-rated
leveraged borrowers has experienced a dramatic rating migration
from a predominantly 'B+*'/'B*' rated universe in 2002 to a
profile dominated by 'B-*' borrowers with 59% of all ratings at
'B-*' or below at the end of April 2010. Furthermore, 18% of
Fitch's shadow ratings as of April 2010 were so called "non-
performing" or "distressed" 'CCC*' and below rated borrowers,
compared to only 5% at the end of 2002, meaning that by October
2009, 89% of Fitch-rated European CLOs had exceeded their 'CCC'
rating buckets.
Fitch's shadow ratings of approximately 280-300 European leveraged
borrowers form the basis of the statistics and analysis in the
report.
* BOOK REVIEW: The Executive Guide to Corporate Bankruptcy
----------------------------------------------------------
Authors: Thomas J. Salerno; Craig D. Hansen; Jordan A. Kroop
Publisher: Beard Books
Hardcover: 728 pages
List Price: US$174.95
The newly revised edition of The Executive Guide To Corporate
Bankruptcy is perfectly timed. As the global economy continues to
deteriorate, more and more companies are sinking into insolvency
with executives at their helm who need a crash course in
bankruptcy realities. This excellent book will quickly get both
the seasoned executive and the uninitiated lawyer up to speed on
the bankruptcy process.
Salerno, Kroop and Hansen understand that the reorganization
process can be intimidating, puzzling, and generally unpleasant.
They penetrate the opaque gloom that some lawyers tend to
perpetuate. Each chapter of this book addresses a different
aspect of the reorganization process, beginning with an overview
of the origins and purpose of US bankruptcy laws and ending with a
debunking of common myths about reorganization. In between, they
discuss each chapter of the bankruptcy code; discussing the gamut
from liquidations through Chapter 11 sales and full-blown
reorganizations. The authors' ability to distill the bankruptcy
code's complex language into comprehensible and manageable blocks
of information makes the book extremely readable.
The Executive Guide is full of pragmatic advice. After laying out
the essential elements and key players in the restructuring
process, the authors get down to the nitty gritty of navigating a
distressed company through reorganization. They realistically
assess the challenges that an executive should expect to face in
Chapter 11. They discuss how to assuage and balance the concerns
of employees and key vendors, address the inevitable creditor
dissatisfaction with executive compensation, deal with members of
their professional team and work effectively as an executive whose
actions will be constantly scrutinized and second-guessed. The
authors also provide the cautionary note that "executives
preparing to embark on a reorganization are usually too
preoccupied with business emergencies to think about the personal
toll that the process will exact."
One common flaw in books that try to be accessible while dealing
with technical topics is that they fall short in providing the
reader with a substantive understanding of the subject matter.
The Executive Guide to Corporate Bankruptcy avoids this pitfall.
The book's fourth and fifth chapters provide in-depth analysis of
the strategic decisions and steps that should be taken during the
restructuring process. The authors explain the importance that
venue can have a case, the intricacies of first day motions and
how to prepare for confirmation. There is a detailed discussion
of the sale of assets during the course of a Chapter 11
restructuring and the importance of making sure that major
constituencies are a part of the decision-making process. They
also walk the reader through the specifics of a plan of a
reorganization, explaining the dynamics of the negotiation
process, especially how to understand and appreciate the needs of
your constituents and how to get a plan confirmed.
The icing on the cake for this book is the excellent appendix.
The final section of the book includes a user-friendly glossary of
commonly used bankruptcy terms and a reorganization timeline. It
also includes sample documents such as debtor-in-possession (DIP)
financing agreements, operating reports, first day motions and
orders, management severance agreements, and more. The summary of
management incentive stock plans implemented in recent
restructuring transactions is particularly informative.
This is a terrific book. While geared to the non-lawyer
executive, it will also be a useful resource for any lawyer who
wants to gain practical familiarity with the bankruptcy process.
This should be a best seller in today's environment, though it may
need to be delivered to most executives in a brown paper wrapper.
*********
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. Joy A. Agravante, Valerie U. Pascual, Marites O.
Claro, Rousel Elaine T. Fernandez, Frauline S. Abangan 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 * * *