/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100707.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, July 7, 2010, Vol. 11, No. 132 Headlines B E L G I U M TRUVO SUBSIDIARY: Moody's Cuts Probability of Default Rating to D C Y P R U S REMEDIAL CYPRUS: Has More Exclusivity, More Funding SL CAPITAL: S&P Raises Counterparty Credit Rating to 'B-' G E R M A N Y CONTINENTAL AG: Mulls US$626 Million High-Yield Bond Sale CONTINENTAL AG: Moody's Assigns 'B1' Rating on High Yield Bonds CONTINENTAL AG: S&P Assigns 'B' Rating on Senior Secured Notes PHOENIX PHARMAHANDEL: Moody's Assigns 'B1' Corporate Family Rating PHOENIX PHARMAHANDEL: S&P Assigns 'CCC' Corporate Credit Rating PRIMACOM GROUP: Completes First Phase of Restructuring G R E E C E MARFIN EGNATIA: Moody's Cuts Subordinated Debt Ratings to 'Ba1' WIND HELLAS: S&P Downgrades Corporate Credit Ratings to 'SD' I C E L A N D ICESAVE: Talks Over Settlement of GBP2.3 Billion Dispute Held I R E L A N D PAT KEOGH: BMW Car Garage Sold for EUR2.6 Million I T A L Y IT HOLDING: Deadline for Ferre Bids Extended Until August 2 * ITALY: At Risk of Default; Banks to Face Losses N E T H E R L A N D S VAN DER MOOLEN: Court Orders Investigation P O R T U G A L ATLANTES MORTGAGES: Fitch Lifts Rating on Class D Notes From BB R U S S I A GAZPROMBANK OAO: S&P Gives Positive Outlook; Affirms 'BB' Rating GE MONEY: Moody's Assigns 'Ba3' Long-Term Currency Deposit Ratings MDM BANK: Moody's Changes Outlook on 'D' Rating to Stable T U R K E Y AKBANK TAS: Moody's Assigns 'Ba1' Rating on Senior Unsec. Debt U K R A I N E * UKRAINE: Kiev to Restructure US$450 Million International Bonds U N I T E D K I N G D O M ARLO IV: Moody's Downgrades Rating on Series 2006 Notes to 'C' BNP PARIBAS: Moody's Withdraws 'Caa3' Rating on Swap Notes BRADFORD & BINGLEY: Former Shareholders May Get No Compensation EDINBURGH ACADEMY: Acquired by Invista From Administrators GALA CORAL: To Seek Consent From Lenders to Sell Junk Bonds GLOBUS MARITIME: May Seek Delisting of Shares From AIM LLOYDS BANKING: To Sell BoS Integrated Finance Investment Unit ODYSSEY PAVILION: Developer Files Suit v. Anglo Irish Bank PUNCH TAVERNS: Profits Hit by Concessions to Tenanted Estate ROYAL BANK: Markets Strategist & Markets Economist Quit Posts ST. MARGARET'S: EIS Union Examines Finances Following Closure VISTEON UK: Unite Mulls Legal Action Against Ford Over Pensions X X X X X X X X * EUROPE: Banks' Hidden Bad Loans May Threaten Stress Tests ********* ============= B E L G I U M ============= TRUVO SUBSIDIARY: Moody's Cuts Probability of Default Rating to D ----------------------------------------------------------------- Moody's Investors Service has downgraded Truvo Subsidiary Corp's Probability of Default Rating to D from Ca. The Corporate Family Rating remains unchanged at Ca and the ratings for the EUR395 million and US$200 million senior notes due 2014 also remain unchanged at C. The outlook on the ratings is stable. The PDR downgrade to D is prompted by Truvo's filing for an insolvency petition on 1 July 2010 in the United States Bankruptcy Court for the Southern District of New York. Moody's notes that only the U.S. holding companies of Truvo are included in the chapter 11 proceedings, while Truvo's operating companies domiciled outside of the U.S., including the operating companies in Belgium, Ireland, and Portugal will not partake in the filing. The filing for insolvency follows the failure of the company to make the 1 June 2010 interest payment due on the senior notes prior to the expiration of the 30-day grace period. Moody's notes that 75% of the senior secured lenders have agreed to the plan support agreement which describes the key terms of the proposed re-organization plan. Moody's would currently expect to reconsider Truvo's CFR once (i) the debt restructuring is complete; (ii) there is sufficient clarity on company's new capital structure; and (iii) there is information pertaining to company's new business plan. The instrument ratings of C (LGD6) on the senior notes due 2014 are in line with the proposed debt restructuring and reflect the very low recovery expected on the notes. Downgrades: Issuer: Truvo Subsidiary Corp * Probability of Default Rating, Downgraded to D from Ca. * Outlook is stable. The last rating action was implemented on 27 May 2010, when Moody's downgraded Truvo's CFR to Ca from Caa3; its PDR to Ca from Caa2; and the ratings on the EUR395 million and US$200 million senior notes due 2014 to C from Ca. Truvo's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as: (i) the business risk and competitive position of the company versus others within its industry; (ii) the capital structure and financial risk profile of the company; (iii) the projected performance of the company over the near to intermediate term; and (iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside Truvo's core industry and Truvo's ratings are believed to be comparable with those of other issuers with similar credit risk. Truvo Intermediate Corp., the parent of Truvo Subsidiary Corp., is, through its subsidiaries, the leading directory publisher in Belgium and Ireland. Through its joint venture with Portugal Telecom, the company is the leading directory publisher in Portugal and, through its minority interests, holds leading positions in the directory markets in South Africa and Puerto Rico. =========== C Y P R U S =========== REMEDIAL CYPRUS: Has More Exclusivity, More Funding --------------------------------------------------- Bill Rochelle at Bloomberg News reports that Remedial (Cyprus) Public Co. sought and obtained an extension until Sept. 15 of the exclusive right to propose a Chapter 11 plan. The judge also approved an increase in financing given by bondholders to US$6.5 million from US$5 million. Remedial previously received approval to sell two elevated support vessels to secured bondholders owed a net of $177 million. There were no bids submitted topping the offer from secured bondholders, owed US$230 million, to purchase the vessels in exchange for US$120 million in debt plus whatever is outstanding on the US$5 million post-bankruptcy loan. About Remedial (Cyprus) Based in Limassol, Cyprus, Remedial (Cyprus) Public Company owns and operates self-propelled jack up rigs called Elevating Support Vessels. The vessels facilitate offshore well intervention activities and work-over services. Remedial (Cyprus) Public Company Ltd. -- dba Brufani Shipmanagement Limited and Remedial Cyprus Limited -- filed for Chapter 11 bankruptcy protection on February 17, 2010 (Bankr. S.D.N.Y. Case No. 10-10782). Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., assists the Company in its restructuring effort. The Company estimated its assets and debts at US$100,000,001 to US$500,000,000. SL CAPITAL: S&P Raises Counterparty Credit Rating to 'B-' --------------------------------------------------------- Standard & Poor's Ratings Services said that it had raised its long-term counterparty credit rating on Cyprus-based S.L. Capital Services Ltd. to 'B-' from 'CCC+'. At the same time, S&P affirmed the 'C' short-term rating. The outlook is stable. "The upgrade reflects S&P's revision of the group status of S.L. Capital Services Ltd. to "core" from "nonstrategically important"," said Standard & Poor's credit analyst Sergey Voronenko. S&P believes that S.L. Capital has increasingly become important to the business profile and is highly integrated within the operations of its ultimate parent, Russian Aljba Alliance (B- /Stable/C). The long-term counterparty credit rating on S.L. Capital is one notch higher than its stand-alone credit profile, which S&P has raised to 'CCC+' from 'CCC'. The notching reflects S&P's expectation of the likelihood of an almost certain probability of extraordinary parental support. In S&P's view, S.L. Capital has increasingly become an important part of the Aljba group, given the company's high operational and business integration, the local operation's alignment with the group's strategy, and the company's increasingly important role in the group's financial results. S.L. Capital contributed almost one-half of the group's after-tax profit in 2009. The ratings also reflect S.L. Capital's very high dependence on Aljba for business, operational support, funding, and financial continuity. The ratings are constrained by S.L. Capital's very limited business and client base, and the inherently high volatility of its financial results due to market shifts. These factors are partly mitigated by parental financial and operating support, an adequate level of capitalization and liquid assets, and the company's relationship-driven niche customer and funding profile, which shelters the company from adverse market developments. The stable outlook on S.L. Capital mirrors that on Aljba and balances market volatility against continued group support. Moreover, S&P considers the current absolute amount of equity to be adequate to protect the company from potential market imbalances in the medium term. "Given the company's "core" status, strong link with, and high dependence on the parent, future changes to the ratings on S.L. Capital will largely follow changes in Aljba's credit standing and support for S.L. Capital," said Mr. Voronenko. "A downgrade of Aljba would likely result in a downgrade of S.L. Capital; likewise an upgrade of Aljba, a scenario that S&P currently consider unlikely in the near term, would likely result in an upgrade of S.L. Capital." If the company strengthened, specifically through a sustained good capital position, reduced volatility in earnings, and lower concentrations, S&P might raise its assessment of its stand-alone credit profile, but not to higher than one notch below the long- term credit rating on Aljba. S&P could lower the ratings on S.L. Capital if the Aljba group evolves in a way that weakens the company's "core" status within the group. ============= G E R M A N Y ============= CONTINENTAL AG: Mulls US$626 Million High-Yield Bond Sale --------------------------------------------------------- Sonja Cheung at Bloomberg News reports that Continental AG is raising at least EUR500 million (US$626 million) with a debut issue of high-yield bonds from the company. The new bonds are part of a refinancing that follows a EUR1.1- billion share sale and a EUR2.5-billion loan agreement, Bloomberg says, citing Antje Lewe, a spokeswoman for the company. According to Bloomberg, bankers involved in the sale said Citigroup Inc. and Royal Bank of Scotland Group Plc are managing the transaction, along with Commerzbank AG, Deutsche Bank AG, ING Groep NV, Landesbank Baden-Wuerttemberg and UniCredit SpA. Bloomberg notes the bankers said DZ Bank, Landesbank Hessen- Thueringen Girozentrale, Banca IMI SpA and WestLB AG have been hired as co-managers on the sale. About Continental AG Hanover, Germany-based Continental AG (OTC:CTTAY) -- http://www.conti-online.com/-- is an automotive industry supplier. The Company focuses its activities on the development, production and distribution of products that improve driving safety, driving dynamics and ride comfort. It operates in six divisions. Chassis and Safety provides active and passive driving safety, safety and chassis sensor systems, as well as chassis components. Powertrain focuses on engine systems, hybrid electric drives, injection technology, and sensors and actuators, among others. Interior manufactures information management modules and wireless mobile devices. Passenger and Light Truck Tires provides tires for passenger cars, motorcycles and bicycles. Commercial Vehicle Tires offers tires for trucks, as well as industrial and off-the-road vehicles. ContiTech specializes in the rubber and plastics technology, offering parts, components and systems for the automotive industry and other sectors. In January 2009, Schaeffler KG acquired 49.9% interest in the Company. * * * As reported by the Troubled Company Reporter-Europe on Jan. 25, 2010, Standard & Poor's Ratings Services said that the 'B+' long- term corporate credit rating on Germany-based automotive supplier Continental AG remained on CreditWatch with negative implications, where it was originally placed on June 10, 2009. The 'B' short- term rating was affirmed. "S&P remain concerned about the potential negative influence on Continental's credit quality from its 42% owner, the Schaeffler group (not rated)," said Standard & Poor's credit analyst Werner Staeblein. "In S&P's view, the nature of the relationship between Schaeffler and Continental make S&P's parent- subsidiary criteria applicable, and the relationship between Continental and Schaeffler remains the key risk for the rating." While Continental's bank loan documentation provides some protection for Continental at this stage, S&P viewed this as likely temporary in nature. From the limited available public information about Schaeffler, S&P concluded that there is a high probability that Schaeffler's financial situation is weaker than that of Continental, implying an overall credit quality lower than that of Continental. CONTINENTAL AG: Moody's Assigns 'B1' Rating on High Yield Bonds --------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P) B1 rating to Continental's proposed secured high yield benchmark bond. The corporate family rating of Conti remains at B1 with a negative outlook. Proceeds of the proposed bond issuance are planned to be used to refinance part of the outstanding debt of EUR8.2 billion drawn under the company's syndicated credit facility due August 2012. Given the 5 and 7 year maturities of the proposed tranches a successful issue would somewhat lengthen the uneven debt structure of Conti as well as diversify the funding of the company which is currently solely reliant on bank financing, which would be a positive development for the credit overall as it would be an indicator that the company would have regained a broader access to financial markets though only chipping away at the large bulk refinancing due in 2012. Falk Frey, Senior Vice President and lead analyst at Moody's for Continental AG, commented: "A successful placement of Conti's benchmark secured bond issue would demonstrate the company's ability to diversify its funding sources away from a pure bank lending debt structure while at the same time starting to lengthen the uneven debt maturity profile in August 2012. Such a step in combination with Conti's stronger than expected recovery in operating performance anticipated for the current fiscal year could result in an outlook change to stable from negative shortly after a successful placement of the bond." On Friday, July 2nd Conti announced its preliminary revenues for the first half 2010 increased by 38% to approx. EUR12.5 billion and adjusted EBIT is expected to amount to at least EUR1.2 billion equal to an adjusted EBIT margin of approx. 10%. Based on these preliminary results for the first six months, Conti believes that an increase of approximately 15% in consolidated sales would be realistic for 2010 full year 2010. The adjusted EBIT margin is anticipated to be between 8.0% and 8.5% including a burden of EUR250 million from higher raw material costs in H2 2010. The company is expected to release its financial report for the first six months on July 29, 2010. In addition to the operating performance improvements above, Conti has initiated and finalized various initiatives over the last months, targeting an improved liquidity profile which also had a beneficial impact to the company's credit profile. Those initiatives include (i) an amendment to the existing EUR10.0 billion syndicated loan facility including the resetting of financial covenants (ii) the syndication of a new EUR2.5 billion Forward Start Facility as well as (iii) an equity capital increase for EUR1.1 billion and (iv) the issuance of a secured bond. Frey went on to say: "Despite the solid recovery in Conti's operating performance Moody's nonetheless see the corporate family rating effectively limited due to the uncertainty associated with the possible form and pace of a larger integration of Continental AG's into its major shareholder Schaeffler, which has reportedly a heavy debt load following its investment in Conti. At this time Moody's continue to see the position of Conti's lenders protected by a set of restrictive covenants in the company's credit facilities. However, these facilities expire as early as 2012. If and when a larger strategic reorganization or combination of all or parts of the enlarged Schaeffler/Continental group was to happen, the position of Conti's current lenders as well as the group total debt at that time might have to be reassessed." Conti's short term liquidity is good reflecting limited debt maturities for the next 12 months, a sizable cash position (more than EUR1.4 billion as of March 31, 2010) and notable headroom under its revolving credit facility as well as cash outflows for capital expenditure. The headroom under the company's covenant test is sufficient following the successful rights issue which is used to reduce indebtedness and the re-setting agreed with its lending banks in December 2009. The proposed secured senior notes will benefit from the same security package as the existing syndicated credit facility and rank effectively pari passu with this bank debt. Both will benefit from guarantees of subsidiaries of Continental AG representing more than 75% of consolidated revenues, assets and EBITDA. Moreover, both senior secured notes and the syndicated credit facility will be secured by shares of operating subsidiaries. Under Moody's Loss Given Default Methodology this results in the provisional (P)B1 rating for the proposed senior secured notes which is at the same level than the corporate family rating of Conti. The provisional ratings are based on the preliminary terms and conditions received so far and are subject to Moody's satisfactory review of the final documentation. Moody's last rating action on Conti was a downgrade to B1 (negative outlook) from Ba3 (negative outlook) on August 14, 2009. Headquartered in Hanover, Germany, Continental AG is one of the top automotive suppliers worldwide in the areas of brake systems, systems and components for powertrains and chassis, instrumentation, infotainment solutions, vehicle electronics, technical elastomers as well as the world's fourth-largest manufacturer of passenger and commercial vehicle tires. In 2009 Continental generated consolidated sales of EUR20.1 billion. CONTINENTAL AG: S&P Assigns 'B' Rating on Senior Secured Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' debt rating to the proposed senior secured notes to be issued by Germany-based auto supplier Continental AG's (B/Stable/B) financial subsidiary Conti-Gummi Finance B.V. (not rated). At the same time, S&P assigned a recovery rating of '3' to this debt, indicating S&P's expectation of meaningful (50%-70%) recovery in the event of a payment default. S&P expects the proposed notes to total at least EUR500 million. The rating on the proposed notes reflects S&P's view of their position in Continental's capital structure, as they rank pari passu with the group's existing EUR9.5 million syndicated bank facilities and a EUR2.5 billion forward-start facility. S&P believes that the proposed notes and these facilities benefit from the same security package, comprising extensive share pledges from material subsidiaries and security over cash pooling accounts, and also have security over intercompany loans. Furthermore, the bank debt also benefits from upstream guarantees from material subsidiaries. Under S&P's simulated default scenario, a hypothetical default would be triggered by refinancing risk on the syndicated bank debt maturing in August 2012. Therefore, S&P does not anticipate the bank lenders to be in a position effectively to gain a senior position prior to simulated default. Recovery Analysis The recovery rating on the proposed notes is '3' indicating S&P's expectation of meaningful (50%-70%) recovery for creditors in the event of a payment default. For the purposes of S&P's analysis S&P has valued the business on a going-concern basis because S&P believes that Continental's leading global market position, "satisfactory" business risk profile, and specific industry characteristics -- such as what S&P views as a well-diversified customer base and the cash-generative nature of the business -- would be recognized by potential buyers, even under distressed circumstances. Balance-sheet asset values underpin S&P's assessment of the group's enterprise value, and S&P estimates the distressed valuation at about EUR9.5 billion. S&P's recovery ratings and default scenario are based on the assumption that, following completion of the bond issue, the proceeds of the bond would be used, as announced by the group, to partially repay EUR2.45 billion outstanding under the group's term loan B facility due August 2010. S&P assumes that a deterioration in sales, along with lower capacity utilization, would squeeze the group's margins. In S&P's opinion, this would, in turn, lead to reduced EBITDA and then a payment default that S&P expects would occur by 2012. S&P believes that the hypothetical default would most likely be triggered by the group's inability to refinance its syndicated bank debt at maturity in August 2012. From S&P's stressed enterprise value of approximately EUR9.5 billion, S&P deducts priority claims comprising 50% of the current net pension deficit, European Investment Bank (AAA/Stable/A-1+) loans, and other senior liabilities of approximately EUR1.2 billion, such as a factoring line and the debt of operating subsidiaries, including committed, but undrawn, facilities. This leaves sufficient value to provide meaningful recovery prospects (50%-70%) for the proposed noteholders, leading us to assign a recovery rating of '3' to the notes. The recovery rating is based on the Continental group's current capital structure, and S&P considers that the proposed notes rank pari passu with the syndicated bank debt, which could change materially on the path to default. Any material change in the group's capital structure, such as a significant reduction of prior-ranking debt, could affect the outcome and recovery prospects. S&P's rating on the proposed notes is based on preliminary information and is subject to S&P's satisfactory review of the final documentation. In the event of any changes to the amount or terms of the bond, the recovery and issue ratings will be subject to further review. S&P expects to publish a detailed recovery report shortly. Ratings List New Rating Conti-Gummi Finance B.V. Senior secured notes (proposed)* B Recovery rating 3 * Guaranteed by Continental AG PHOENIX PHARMAHANDEL: Moody's Assigns 'B1' Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service has assigned B1 corporate family and probability of default ratings to PHOENIX Pharmahandel GmbH & Co. KG. Moody's has also assigned a (P)B1 rating to the proposed issue of EUR500 million Guaranteed Senior Unsecured Notes due in 2014 by PHOENIX PIB Finance B.V. The outlook on the ratings is stable. This is the first time that Moody's rates the company. Moody's issues provisional ratings in advance of the final sale of securities and these reflect Moody's credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive rating to the notes. A definitive rating may differ from a provisional rating. Moody's also notes that the B1 corporate family rating assumes a successful refinancing of PHOENIX, including the issuance of the EUR500 million notes. Furthermore, the refinancing includes inter alia the repayment of a loan made available to VEM Vermoegensverwaltungs GmbH, an affiliate of the company's shareholder, which will be repaid with funds from the disposal of ratiopharm, which is expected to close in August 2010 subject to regulatory approval. The B1 rating incorporates PHOENIX' position as a leading European pharmaceutical wholesaler. The company has a strong market position in key markets such as Germany, Italy and Scandinavia. Furthermore, PHOENIX has a strong retail base across a number of selected geographies with mature markets and high margins, e.g. Norway, UK and Switzerland. PHOENIX generates c. 70-80% of its revenues with prescription drugs, for which prices and margins are regulated providing a certain visibility with regard to profitability and cash flow generation. In recent years, the European pharmaceutical wholesale market showed solid growth rates of c. 3.5% p.a. on average, a trend that is likely to continue on the back of an increasing demand from an ageing and more health-conscious population and high growth rates seen in Eastern Europe. However, while Moody's acknowledges the benefits from operating in a regulated environment and the crucial rule pharmaceutical wholesalers and retailers play in the pharmaceutical supply chain, it also noted that PHOENIX' performance could be impacted by changes to existing health care regulations though the impact of such potential developments may be moderate and progressive. In the years 2008 and 2009 PHOENIX suffered from an instable financing base, which was primarily driven by the financial distress at the level of its owner, the Merckle family. Following refinancing measures, which include the setup of a new mid-term EUR2.6 billion bank financing, the issuance of the notes and a EUR500 million capital injection from its shareholder, as well as a repayment of a loan granted to VEM Vermoegensverwaltungs GmbH, an affiliate of the company's shareholder, and the disposal of certain non-core assets, PHOENIX is expected to still show a relatively high pro-forma leverage of c. 5.1x adjusted debt/EBITDA (based on EBITDA as expected for FY end 2010/11). Leverage is expected to gradually improve over time as parts of free cash flow will be used for debt repayments. Moody's notes that PHOENIX is subject to relatively significant seasonal swings in working capital leading to fluctuations in leverage metrics throughout the year, which are likely to reach lowest levels at financial year end. Given the history of the company, the rating also takes into account that the documentation of the loan agreement and the proposed notes limits payments to the company's direct or indirect shareholders. In recent years, PHOENIX has embarked on a few acquisitions to grow the company's presence in the wholesale and retail markets in several European countries. Moody's considers eventual future acquisitions to come through as opportunistic bolt-on acquisitions and remain rather limited in size. With the announced refinancing measures PHOENIX will have a good liquidity profile. PHOENIX will benefit from a EUR625 million Revolving Credit Facility, which would be undrawn at the time of the refinancing and provide an additional cushion to liquidity to cover inter alia seasonal swings in working capital. However, given that all debt instruments made available during the refinancing will mature in 2013 (bank debt) or 2014 (notes), PHOENIX is in Moody's view exposed to a certain degree of mid-term refinancing risk. The RCF will be subject to financial covenants under which PHOENIX should have satisfactory leeway, as well as to a Material Adverse Change Clause. Both, the notes and the bank debt benefit from upstream guarantees provided by the major operating subsidiaries, which however do not constitute guarantees upon first demand. The notes will rank equally to the obligations under the new bank credit facility with the same type of guarantee. However, they could be effectively subordinated if the lenders of the new bank facility would be in a position to draw under the guarantees prior to the holders of the notes. Moody's would expect that in such situation the guarantors would suspend payment and file for insolvency or pay pro rata to both sides, hence avoiding banks being in a better situation. In addition bank lenders benefit from share pledges over the major subsidiaries, the pledge of intercompany receivables, and the pledge over certain bank accounts. Although Moody's notes that this structure will put bank lenders slightly ahead of the holders of the notes, this does, at this time, not justify a full notch difference between the CFR and the rating of the notes. An upgrade to Ba3 could be considered if PHOENIX is able to reach a Debt/EBITDA of well below 5.0x and a CFO/Debt in the low teens on a sustained basis. At the same time, Moody's would expect the EBITDA Margin to be above 3.0%. Downward pressure could arise if leverage would move towards 6.0x Debt/EBITDA, CFO/Debt would sustainably be below 10% or in case of major debt financed acquisition or any major impact on the company's performance stemming from health care reforms. PHOENIX' ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of PHOENIX' core industry and PHOENIX' ratings are believed to be comparable to those of other issuers of similar credit risk. PHOENIX Pharmahandel GmbH & Co. KG is one of the leading European pharmaceutical wholesalers with activities in 23 countries and leading market positions in major markets such as Germany, Italy, Sweden, Finland and the UK. In the financial year ended January 2010 PHOENIX generated revenues of EUR21.3 billion and operating profit of EUR546 million. It is almost 100% owned by the Merckle family. PHOENIX PHARMAHANDEL: S&P Assigns 'CCC' Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'CCC' long-term corporate credit rating to Germany-based pharmaceuticals wholesaling company Phoenix Pharmahandel GmbH & Co. KG. S&P placed the rating on CreditWatch with developing implications. At the same time, S&P assigned an issue rating of 'CCC' to Phoenix's proposed EUR2.6 billion senior secured syndicated bank facilities (proposed facilities) due 2013, in line with the corporate credit rating on Phoenix. S&P placed the proposed facilities on CreditWatch with developing implications. S&P also assigned a recovery rating of '4' to the proposed facilities, indicating S&P's expectation of average (30%-50%) recovery prospects for senior lenders in the event of a payment default. In addition, S&P assigned an issue rating of 'CC' to Phoenix's proposed EUR500 million unsecured bonds (proposed bonds), two notches below Phoenix's corporate credit rating. S&P placed the proposed bonds on CreditWatch with developing implications. The recovery rating on the proposed bonds is '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. "The assigned long-term rating reflects Phoenix's currently high level of debt," said Standard & Poor's credit analyst Silvia Ortolan. "This is a consequence of the financial distress of an entity controlled by the Merckle family -- Phoenix's 98% majority owner -- in 2009, which resulted in Phoenix giving direct and indirect support of about EUR850 million to its parent. In financial 2009, Phoenix reportedly breached certain financial covenants in its bank loan facilities, which led to it entering into a standstill agreement with its banks. S&P understands that the standstill agreement provides protection from the early payback threat of existing debt until Jan. 31, 2011." The Merckle family-controlled entity has since substantially reduced its indebtedness by reducing its stake in HeidelbergCement AG (BB-/Stable/B). The Merckle family-controlled entities reached a further substantial milestone in March, with the announced sale of generic pharmaceuticals manufacturer ratiopharm GmbH for EUR3.7 billion on an enterprise value basis to Teva Pharmaceutical Industries Ltd. (A-/Stable/--). At the end of January 2010, Phoenix's financial debt was about EUR3.9 billion, or 7.4x Standard & Poor's-adjusted debt to EBITDA. S&P understand that the ratiopharm divestiture is a trigger for a EUR500 million equity injection into Phoenix. S&P further understand that Phoenix then plans to use those funds to refinance its bank debt and resolve the standstill agreement with its banks. S&P believes that this financial restructuring is likely to result in significant deleveraging. "The current rating does not take account of the potential restructuring and is therefore reflective of Phoenix's present levels of debt and weak liquidity," said Ms. Ortolan. The rating is additionally tempered by Phoenix's relatively low margins, and its lack of pricing power in its regulated pharmaceuticals market. S&P could raise Phoenix's credit rating to 'B+' if these refinancing-related events take place over the next few months: * Phoenix is successful in raising EUR500 million in the bond markets. * Phoenix receives the planned EUR500 million equity injection triggered by the ratiopharm divestiture. * Phoenix refinances its bank debt and resolves the standstill agreement with its banks. The CreditWatch developing placement reflects S&P's view of Phoenix's present standstill agreement with its banks and the pending closure of the ratiopharm divestiture. S&P expects to resolve the CreditWatch upon the successful execution of the refinancing and subsequent deleveraging of Phoenix, or otherwise within the next 90 days. S&P could upgrade the rating on Phoenix should the equity injection and bank loan refinancing lead to significant deleveraging of its balance sheet. Conversely, if Phoenix does not refinance as it envisages, this would likely be negative for the rating. S&P might revise its view on future rating progression if Phoenix's operating fundamentals did not appear to support a debt-to-EBITDA ratio of about 5.5x, which S&P considers commensurate with a 'B+' rating. PRIMACOM GROUP: Completes First Phase of Restructuring ------------------------------------------------------ Robert Briel at Broadband TV News reports that PrimaCom Group said it has successfully completed the first phase of restructuring of the company to secure its long-term future. The report relates that on Monday July 5, the shareholders' rights to the Primacom Management GmbH were transferred to Luxembourg- based Medfort S.ar.l. for an undisclosed sum. This company is a financial holding owned by private investors and independent of the creditors and the former majority shareholders, the report discloses. With this step, the first phase of the restructuring is over, the report notes. On June 16, 2010, the Troubled Company Reporter-Europe, citing CommsUpdate, reported that PrimaCom said it would file for insolvency protection after its shareholders failed to come to an agreement with creditors regarding repayment of a EUR29.2 million (US$35.7 million) loan. PrimaCom AG is a Germany-based holding company engaged in owning and operating cable television (TV) network in Germany. Its subscribers are offered digital television, pay-per-view, video- on-demand, telephone and high-speed Internet services to complement the Company's basic cable television offering. The Company's customers are connected to the 862 megahertz (MHz) networks and have access to more than 100 TV and radio programs. PrimaCom passes 1.4 million homes and serves approximately one million subscribers. The Company is 90.52% owned by Escaline Sarl, Luxembourg, through its indirect subsidiary Omega I Sarl. It operates mainly in six German states, including Berlin, Brandenburg, Sachsen, Sachsen-Anhalt, Thueringen, and Mecklenburg- Vorpommern. As of December 31, 2008, the Company had 28 wholly owned subsidiaries in Germany and Austria, as well as two majority owned subsidiaries in Germany, and one affiliate in Germany. =========== G R E E C E =========== MARFIN EGNATIA: Moody's Cuts Subordinated Debt Ratings to 'Ba1' --------------------------------------------------------------- Moody's Investors Service has downgraded the deposit and senior debt ratings of Marfin Egnatia Bank SA to Baa3/Prime-3 from Baa2/Prime-2 and subordinated debt ratings to Ba1 from Baa3. The deposit and debt ratings carry a positive outlook. The bank's stand-alone financial strength ratings are not affected by the rating action. The rating action by Moody's follows the downgrade of the ratings of Marfin Popular Bank -- MEB's Cyprus-based parent bank -- to Baa2/Prime-2/D+ with a negative outlook. The change in MEB's deposit and debt ratings reflects the weakened ability of the parent to provide support in case of need, as captured by the parent bank's lower standalone rating of D+, that Moody's uses as credit reference to impute parental support into MEB's ratings. The positive outlook on the ratings charts the path for convergence of these ratings with those of its parent when the legal absorption process is completed. Under this scenario -- which has already received shareholder approval, but is awaiting the District Court of Cyprus approval of the cross-border merger - - MEB's obligations would become obligations of MPB. Moody's last rating action for Marfin Egnatia Bank was implemented on 15 June 2010, when the long-term deposit and debt ratings were placed on review with direction uncertain, and the short-term ratings were placed on review for possible downgrade. Headquartered in Athens, Greece, Marfin Egnatia Bank SA reported total assets of EUR23.4 billion as of March 2010. WIND HELLAS: S&P Downgrades Corporate Credit Ratings to 'SD' ------------------------------------------------------------ Standard & Poor's Ratings Services said that it has lowered its long-term corporate credit ratings on Greek mobile telecommunications operator WIND Hellas Telecommunications S.A. and related entities to 'SD' from 'CC'. At the same time, S&P affirmed its 'CC' debt ratings on the EUR1.2 billion senior secured notes due 2012 issued by WIND Hellas' wholly owned financial subsidiary Hellas Telecommunications (Luxembourg) V S.C.A. The recovery rating on the notes is unchanged at '4', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. S&P also affirmed its 'C' debt ratings on the EUR355 million notes issued by Hellas Telecommunications (Luxembourg) III S.C.A. due 2013. The recovery rating on the notes is unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery for unsecured creditors in the event of a payment default. The downgrade to 'SD' (selective default) mainly reflects the group's agreement with some of its lenders to defer until Nov. 5, 2010, under the terms of the standstill agreement, a EUR17.5 million amortization payment under its RCF and payments due on July 15, 2010 relating to hedging contracts. The downgrade also reflects S&P's view that the group's capital structure has become unsustainable in the short to medium term, and consequently that WIND Hellas is highly likely to undergo a capital restructuring in the very short term, the second in about eight months. The standstill agreement with the group's RCF lenders and hedging banks became effective on July 1, 2010, and was approved by about 88% of RCF lenders and 100% of the hedging banks. The standstill agreement has also been submitted to senior secured noteholders, and requires that 75% of the latter, holding more than 75% in principal amount of notes, approve it by July 20, 2010. As of July 1, 2010, senior secured noteholders holding only about 48% of the principal amount of the notes have approved the agreement. Under the current senior secured notes' indentures, WIND Hellas has to pay interest on these notes on July 15, 2010. The EUR355 million unsecured notes have not been included in the standstill agreement. As part of the agreement, management has also announced that it will pursue strategic alternatives for its capital structure, and plans to receive final binding offers for the group's assets by Sept. 15, 2010, after which a preferred bidder would be chosen by Oct. 14, 2010. "S&P would lower its debt ratings on the senior secured notes to 'D' if the standstill agreement is approved by the required majority of senior secured noteholders, or if the group fails to pay interest on the notes on July 15, 2010," said Standard & Poor's credit analyst Melvyn Cooke. ============= I C E L A N D ============= ICESAVE: Talks Over Settlement of GBP2.3 Billion Dispute Held ------------------------------------------------------------- BBC News reports that Officials from Iceland, the Netherlands and the UK have held two days of talks in Iceland's capital Reykjavik over the settlement of a GBP2.3 billion banking dispute. The report recalls the money was lost in Iceland's banking crash in 2008, when British and Dutch depositors were affected after the Icesave bank collapsed. The latest talks, on hold due to elections in the UK and Netherlands, were the first since March, the report relates. It is hoped that further talks can be held at the end of the summer, the report notes. Iceland has said it will honor its commitments, but the nation's voters rejected an agreement at a referendum in March the report recounts. About Icesave Icesave was an online savings account brand owned and operated by Landsbanki from 2006-2008 that offered savings accounts. It operated in two countries -- the United Kingdom (since October 2006) and the Netherlands (since May 2008). ============= I R E L A N D ============= PAT KEOGH: BMW Car Garage Sold for EUR2.6 Million ------------------------------------------------- Nick Rabbitts of Limerick Leader reports that the Ballysimon Road car garage owned by Pat Keogh, whose company Pat Keogh Ltd. was placed in voluntary liquidation, was sold for EUR2.6 million. The report recalls BMW dealer Mr. Keogh closed his premises in the city in March 2009 after 44 years in business, with the loss of some 45 jobs, due to the difficult trading environment. According to the report, documents filed with the Companies Registration Office show that the BMW garage was sold to Kildare businessman Nicholas Conlan, who reopened the site last October, for EUR2,651,152. The documents show overall costs recovered from the liquidation of the firm amount to more than EUR3.4 million, the report discloses. But the monies paid out was only slightly less at EUR3.2 million, the report states. The report notes the receipts and payments account, lodged this week with the CRO, also show the liquidator, Michael O'Regan of PriceWaterhouse Coopers, was paid EUR30,000, with solicitors fees running to EUR20,244. Pat Keogh Ltd. was a Limerick-based car dealership. ========= I T A L Y ========= IT HOLDING: Deadline for Ferre Bids Extended Until August 2 ----------------------------------------------------------- Andrew Roberts at Bloomberg News reports that administrators for IT Holding SpA, the Italian fashion company being reorganized under government-backed bankruptcy protection, extended the deadline for binding offers for the Gianfranco Ferre label until Aug. 2. Bloomberg relates the administrators said Monday in a statement the previous deadline was July 6. Bloomberg recalls the administrators started the auction of the unit on June 16. As reported by the Troubled Company Reporter-Europe, IT Holding sought bankruptcy protection in February 2009 after failing to make payments to lenders and suppliers. About IT Holding SpA IT Holding SpA -- http://www.itholding.com/-- is a Milan, Italy- based company operating in the luxury goods market. The Company and its subsidiaries design, produce and distribute apparel, accessories, eyewear and perfumes. Its brand portfolio embraces: owned brands, Gianfranco Ferre, Malo, Exte, as well as licensed brands, Versace Jeans Couture, Versace Sport, Just Cavalli, C'N'C Costume National and Galliano. The Company's production facilities are located in Italy. IT Holding SpA has a worldwide distribution network, including 39 directly operated stores, 274 monobrand stores and over 6,000 department and specialty stores. In order to be present in the most significant markets, IT Holding SpA has dedicated market companies: ITTIERRE SpA, ITTIERRE France SA, ITTIERRE Moden GmbH, IT USA HOLDING Inc and IT Asia Pacific Limited, among others. * ITALY: At Risk of Default; Banks to Face Losses ------------------------------------------------- Andrew Davis at Bloomberg News reports that Capital Economics said Italy's debt, the highest in the euro region last year, remains a "potential time bomb" and the country is at risk of default unless it boosts productivity. "We think the size of the government's debts will eventually prompt the markets to turn their sights on Italy," Bloomberg quoted Capital Markets Managing Director Roger Bootle and chief European economist Jonathan Loynes as saying in a report Monday. "A default is a distinct possibility." According to Bloomberg, they said Italian banks would be hard hit by a default and foreign investors would face losses of EUR400 million (US$500 million) if Italy defaulted and forced bondholders to take a so-called haircut of 50% of their investments. Italy's debt is almost twice the European Union limit of 60% of GDP, Bloomberg notes. To reduce it to 100% of GDP in the next 15 years, the country would have to run a primary surplus -- the budget balance less interest payment -- of 5 percent of GDP, Bloomberg states. ===================== N E T H E R L A N D S ===================== VAN DER MOOLEN: Court Orders Investigation ------------------------------------------ Jurjen van de Pol at Bloomberg News reports that the Enterprise Chamber of the Amsterdam Appeals Court ordered an investigation into the management of Van der Moolen Holding NV. According to Bloomberg, the court said Monday in a faxed statement that the probe was requested by Dutch investor group VEB and insurer ASR Schadeverzekering NV. About Van der Moolen Headquartered in Amsterdam, Netherlands, Van der Moolen Holding N.V. -- http://www.vandermoolen.com/-- is an international securities trading and brokerage firm that specializes in providing low-cost liquidity in markets worldwide. Its business is to make money on financial markets, as a broker and proprietary trader in securities, futures, derivatives indexes and exchange traded funds. Van der Moolen, once the fourth-biggest market maker on the New York Stock Exchange, was declared bankrupt in September 2009 after posting three consecutive years of losses. =============== P O R T U G A L =============== ATLANTES MORTGAGES: Fitch Lifts Rating on Class D Notes From BB --------------------------------------------------------------- Fitch Ratings has upgraded three tranches of the Atlantes Mortgages Series and affirmed the four other note classes. The rating actions reflect Fitch's assessment of the current ratings against the agency's revised criteria assumptions for Portuguese RMBS transactions, and Fitch's expectations of the future performance of the underlying assets. The Atlantes Mortgages series consists of Portuguese RMBS transactions with mortgage loans originated by Banif Banco Internacional do Funchal ('BBB+'/Negative/'F2'). Although arrears have been above the average seen in other Fitch-rated Portuguese RMBS transactions and are currently on a clear upward trend, the expected loss as a result of poor performance is not expected to affect the notes' ratings. Fitch expects the prevailing macro economic environment in Portugal could cause delinquency levels to increase further and has revised the Outlook on the class C note of Atlantes 2 to Negative to reflect this concern. The rating actions are: Atlantes Mortgages No. 1 Plc: -- Class A (ISIN XS0161394324): affirmed at 'AAA'; Outlook Stable; Loss Severity rating of 'LS-1' -- Class B (ISIN XS0161394910): upgraded to 'AA' from 'A+'; Outlook Positive; Loss Severity rating of 'LS-1' -- Class C (ISIN XS0161395305): upgraded to 'A' from 'BBB'; Outlook Positive;; Loss Severity rating of 'LS-1' -- Class D (ISIN XS0161395560): upgraded to 'BBB' from 'BB'; Outlook Stable; Loss Severity rating of 'LS-2' Atlantes Mortgages No. 2: -- Class A (ISIN XS0348690651): affirmed at 'AAA'; Outlook Stable; Loss Severity rating of 'LS-1' -- Class B (ISIN XS0348690735): affirmed at 'A'; Outlook Stable; Loss Severity rating of 'LS-3' -- Class C (ISIN XS0348691972): affirmed at 'BBB'; Outlook revised to Negative from Stable; Loss Severity rating of 'LS- 3' Atlantes Mortgages 1 closed seven years ago and because its reserve fund does not amortize and the notes pay down sequentially, the level of credit enhancement has grown significantly. In addition, non-performing loans have been provisioned in a timely manner, resulting in over collateralization. Consequently, three tranches have been upgraded. The Positive Outlooks indicate that future CE growth is expected, and the Stable Outlook on the class D note reflects the possibility that the reserve fund may be utilized, but to a limited degree. Atlantes Mortgages 2 closed in 2008 and due to low prepayments rates the CE growth of this transaction has been limited. Nevertheless, current CE levels are enough to provide sufficient protection in comparison to the agency's higher losses expectations. On the other hand, only two years after closing, there are high levels of loans needing to being provisioned per quarter. This has caused the excess spread to be low, increasing the possibilities of a reserve fund draw. Although the delinquencies of both transactions stand well above of the average level seen in Fitch-rated Portuguese RMBS, the upward trend of arrears in Atlantes Mortgages 2 has been more severe. Atlantes Mortgage 2 had, at closing, a higher loan-to- value distribution than Atlantes 1, and Fitch believes this key factor explains the higher arrears of this transaction. The transactions, like most Portuguese RMBS, provision loans between 12 months and 36 months or more in arrears. Provisioning loans before losses occur efficiently traps excess spread, creating over-collateralization. Fitch expects recoveries on loans between three and five years after legal actions have been started. =========== R U S S I A =========== GAZPROMBANK OAO: S&P Gives Positive Outlook; Affirms 'BB' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it has revised the outlook to positive from stable on Russia-based Gazprombank. At the same time, S&P has affirmed the 'BB' long-term and 'B' short- term counterparty credit and 'ruAA' long-term Russia national scale ratings on GPB. "The rating action reflects S&P's opinion of the bank's strengthening risk management and control, reduced appetite for market risk and exposures, improved -- albeit still low -- capitalization, and better asset quality performance than the sector average," said Standard & Poor's credit analyst Ekaterina Trofimova. The ratings on GPB, Russia's third-largest bank, are still constrained by what S&P see as a challenging operating environment; GPB's material market risk exposures, which have led to highly volatile financials; relatively weak, albeit improving, capitalization and core profitability; and high credit risk costs, resulting from deteriorated asset quality. However, the ratings also continue to take into account GPB's status as a government-related entity, reflecting its high systemic importance to the Russian banking system. S&P believes that there is still a high probability that the bank would receive extraordinary support from the Russian Federation (foreign currency BBB/Stable/A-3; local currency BBB+/Stable/A-2; Russia national scale long-term 'ruAAA') as well as from the bank's main shareholder OAO Gazprom (BBB/Negative/A-3). The ratings also benefit from GPB's below-market-average liquidity risk and moderate short-term foreign debt repayments. S&P give the long-term ratings three notches of uplift above S&P's assessment of GPB's stand-alone credit profile, which mainly reflects GPB's status as a GRE, and its parental support. In S&P's view, Russia's gradually stabilizing operating environment, coupled with the bank's more cautious risk management and controls, and greatly downsized market risk exposures should help it improve its risk profile and financial performance. "The positive outlook reflects S&P's view that GPB's financial profile will continue to improve over the next 12 months, because of its risk management and control enhancements," said Ms. Trofimova. S&P believes that the bank's asset quality problems are stabilizing at the current fairly manageable levels and driving down credit costs. S&P believes that GPB will also manage to keep its loss-absorption capacity and liquidity at levels appropriate for the current ratings, despite the still-difficult operating environment. S&P would consider an upgrade if S&P sees continued improvement in asset quality that approaches pre-2008 levels. This is particularly with respect to the overall portfolio, including restructured loans, which S&P believes will lead to more robust profitability and capitalization. A reduction or loss of this positive momentum and of GPB's risk management focus would result in a revision of the outlook back to stable. Although this is not S&P's base case expectation, S&P would consider lowering the ratings if S&P were to see a substantial deterioration of the bank's asset quality or more aggressive market risk policy, which in turn would again erode capitalization. A lower probability of extraordinary state or parent support could also lead to a negative rating action. GE MONEY: Moody's Assigns 'Ba3' Long-Term Currency Deposit Ratings ------------------------------------------------------------------ Moody's Investors Service has assigned these global scale ratings to GE Money Bank CJSC: a Ba3 long-term and Not Prime short-term local and foreign currency deposit ratings, and an E+ bank financial strength rating. Concurrently, Moody's Interfax Rating Agency assigned a Aa3.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. GEMB's E+ BFSR, which translates into a Baseline Credit Assessment of B2, is constrained by the bank's moderate commercial franchise and its exposure to high credit risk in retail lending, which is typical for this market. The bank mostly relies on parental funding, which makes its funding base concentrated. The operating environment for banks in Russia remains volatile, which adds to uncertainties about GEMB's new funding plans (through wholesale borrowings and deposits) and weights on its loan quality. At the same time, the BFSR is supported by GEMB's good capitalization, adequate collections function, and a stable and experienced management team. The loan book is very granular, however focused on a handful of products. GEMB's global local currency deposit rating of Ba3 is based on the bank's BCA of B2 of two notches of support from parent U.S.-based GE Capital (Aa2/Stable). Moody's expect a moderate probability of support to GEMB from GE Capital in case of need, based on the former's full integration into the parent's operations, limited size, and reputation considerations. Moody's does not incorporate any probability of systemic support in GEMB's ratings, because the bank has limited systemic importance. GEMB's BFSR/BCA ratings have limited upside potential in the current volatile environment. In the longer run, positive rating actions would depend on the bank's success in building a more profitable and well diversified franchise, while keeping credit risks under control. Sound capitalization, continuous profitability, and a more diversified funding base are also necessary upgrade prerequisites. A downgrade of the bank's BFSR/BCA could follow a significant deterioration in the bank's capitalization, liquidity or asset quality. A significant loss of market share and material contraction in business volumes would also weaken the bank's franchise, possibly triggering negative rating actions. Deposit ratings could be upgraded if GE Capital's strategic commitment towards GEMB is significantly strengthened. Signs of weaker strategic commitment from GE Capital will lead to a decrease of parental support uplift. Parental support notches from GE Capital will be fully eliminated should the shareholder dispose of its controlling stake at GEMB. Headquartered in Moscow, GEMB is a consumer finance bank with assets of US$680 million as at 31 December 2009. The bank operated through 41 offices and around 100 kiosks in 10 Russian regions. GEMB is fully owned by GE Capital, the financial arm of General Electric Corporation. MDM BANK: Moody's Changes Outlook on 'D' Rating to Stable --------------------------------------------------------- Moody's Investors Service has changed to stable from negative the outlook on the D bank financial strength rating and the Ba2 long- term local and foreign currency deposit ratings of MDM Bank. The outlook was also changed to stable from negative on the bank's Ba2 senior unsecured and Ba3 subordinated debt ratings. The bank's Not-Prime short-term local and foreign currency deposit rating was affirmed. Concurrently, Moody's Interfax Rating Agency affirmed MDM's Aa2.ru national scale rating, as well as the Aa2.ru NSR of its senior unsecured domestic debt. National scale ratings carry no specific outlook. According to Moody's, the rating action reflects (i) MDM's strengthened liquidity profile, with its net loans-to-deposits ratio just slightly exceeding 100% at Q1 2010, and (ii) the bank's high capitalization level, with the Basel I Tier 1 ratio and total capital adequacy ratio standing at 18.8% and 21.1%, respectively, as at the same date. The weakening trend of MDM's asset quality still persists, with 90+ days overdue delinquent loans comprising 19.2% of the gross loan book at Q1 2010 and the renegotiated loans accounting for another 11.2% of the gross loans at the same date; however, the current level of loan loss reserves of 16.87% of the gross loan book appears to be sufficient to address the credit losses that have emerged so far, while the potential further credit losses are expected to be absorbed by MDM's revenue- generating capacity. Another rating driver supporting the rating action is the completion of all major phases of integration of 'pre-merger MDM Bank' with URSA Bank, whereby the resulting institution preserved and, in some areas, improved its corporate profile and financial fundamentals. MDM's market franchise and brand recognition, as well as its corporate governance and risk management practices generally benefited from the merger. "MDM's financial strength is underpinned by its recurring earnings generation, sound operational efficiency and ample liquidity cushion," said Ms. Olga Ulyanova, a Moody's Assistant Vice- President and the lead analyst for the bank. "At the same time, Moody's still expects to see some deterioration of MDM's asset quality indicators in 2010, which will continue to suppress the bank's profitability; therefore, the rating agency expects that the bank's bottom-line financial result will hover around break- even point this year," Ms. Ulyanova added. Moody's previous rating action on MDM was on 23 November 2009 when the rating agency assigned a Ba2 long-term local currency debt rating (with negative outlook) to the bank's local currency- denominated exchange-traded bond program. Concurrently, Moody's Interfax Rating Agency assigned a long-term NSR of Aa2.ru to this program. Headquartered in the city of Novosibirsk, the Russian Federation, MDM reported -- as at 31 December 2009 -- total assets of US$13.3 billion, total equity of US$2.0 billion and net IFRS loss of US$46 million. =========== T U R K E Y =========== AKBANK TAS: Moody's Assigns 'Ba1' Rating on Senior Unsec. Debt -------------------------------------------------------------- Moody's Investors Service has assigned a provisional foreign currency senior unsecured debt rating of (P)Ba1 to the proposed Eurobond issuance (the notes) by Akbank T.A.S. The outlook on the rating is stable. This is Akbank's first debt issuance and it is being offered under 144A -- DTC, Regulation S. The terms and conditions of the notes include (amongst other things) a negative pledge and a cross- default clause. The notes will be unconditional, unsubordinated and unsecured obligations and will rank pari passu with all Akbank's other senior unsecured obligations. The rating of the notes is in line with Akbank's senior unsecured foreign currency debt rating. Foreign currency debt ratings are subject to the foreign currency bond ceiling. As a result, even though Akbank's global local currency deposit rating of Baa1 is higher than the foreign currency bond ceiling for Turkey, the Akbank's foreign currency senior unsecured debt rating is constrained by and thus equal to this ceiling. Moody's notes that Akbank's foreign currency debt rating is higher than its Ba3 foreign currency deposit rating, since the foreign currency deposit rating is constrained by the lower Ba3 foreign currency country ceiling for deposits for Turkey. The higher foreign currency debt rating is primarily driven by the evaluation of the moratorium risk on foreign debt liabilities for the private sector. The lower foreign-currency deposits rating is constraint by the Turkish government bond rating of Ba2 and the evaluation of foreign currency deposit freeze risk at time of stress. An upgrade of the foreign currency bond ceiling would result in an upgrade of the rating of the notes since it is constrained by its applicable ceiling. A downgrade of the foreign currency bond ceiling or a downgrade of the Akbank's GLC deposit rating below that of the foreign currency bond ceiling for Turkey would result in a downgrade of the rating of the notes. The rating of the notes is provisional and represents Moody's preliminary opinion only. Upon a conclusive review of the documentation, Moody's will endeavor to assign a definitive rating to the notes. A definitive rating may differ from a provisional rating. A rating is not a recommendation to purchase, sell or invest in any securities. Moody's previous rating action on Akbank was on January 8, 2010, when it upgraded the bank's foreign currency deposit ratings to Ba3. Akbank is headquartered in Istanbul, Turkey, and at the end of December 2009 had total assets of US$67.8 billion. ============= U K R A I N E ============= * UKRAINE: Kiev to Restructure US$450 Million International Bonds ----------------------------------------------------------------- Kiev is seeking to restructure US$450 million of international bonds due in the next two years, Kateryna Choursina and Daryna Krasnolutska at Bloomberg News report, citing a person with knowledge of the matter in the Ukrainian capital city's administration. According to Bloomberg, the person said Kiev is likely to restructure its US$200 million of notes due 2011 and US$250 million of bonds due 2012, while continuing to meet interest payments. Bloomberg relates the city council planned make a full coupon payment yesterday ahead of schedule on the 2011 bond. The person, as cited by Bloomberg, said Kiev will decide on the restructuring before mid-September to allow time for the city council and the Finance Ministry to approve it. Ukraine's biggest city has suffered dwindling revenues since the global credit crisis undermined investment and left about 20 banks reliant on state aid, forcing the country to turn to the International Monetary Fund for support in 2008, Bloomberg discloses. Bloomberg recalls Standard & Poor's raised Ukraine's credit ratings on May 17 to B from B- following an agreement with Russia on lower prices for imported natural gas. Kiev city bonds are rated B- by Fitch, Bloomberg notes. =========================== U N I T E D K I N G D O M =========================== ARLO IV: Moody's Downgrades Rating on Series 2006 Notes to 'C' -------------------------------------------------------------- Moody's Investors Service took this rating action on notes issued by Arlo IV 2006 -- Lemar & Rosenheim I CDO, a synthetic CDO backed by a portfolio of structured finance securities and corporates. Issuer: ARLO IV 2006 - Lemar & Rosenheim I CDO -- EUR5M Series 2006 (Rosenheim I - Class B-3E) EUR5,000,000 Secured Limited Recourse Credit-Linked Notes due 2013 Notes, Downgraded to C and Withdrawn; previously on Feb. 20, 2009 Downgraded to Caa3 The above tranche was fully repurchased in November 2009 at a purchase price corresponding to recovery rate expected in C rated securities. Moody's views this as distressed exchange. The rating withdrawal follows the subsequent cancellation of the notes. BNP PARIBAS: Moody's Withdraws 'Caa3' Rating on Swap Notes ---------------------------------------------------------- Moody's Investors Service withdrew its credit rating on a credit default swap entered into by BNP Paribas, London Branch. The swap, BNP Paribas - Faraya 2004-5 Mezzanine Credit Default Swap, was terminated by the parties to the agreement. -- US$15M US$ 15,000,000 mezzanine credit default swap Notes, Withdrawn; previously on March 6, 2009 Downgraded to Caa3 BRADFORD & BINGLEY: Former Shareholders May Get No Compensation --------------------------------------------------------------- BBC News reports that independent valuer Peter Clokey has recommended that the Treasury offer no compensation to former shareholders of Bradford & Bingley. According to BBC, The B&B Shareholders Action Group plans to appeal against the decision by Mr. Clokey of PricewaterhouseCoopers. BBC says the decision would affect 935,000 investors. BBC recalls the bank was split into "good" and "bad" parts in the aftermath of the banking crisis, with the better half sold to Santander. The "bad" part of the bank stayed with the government, BBC notes. BBC recounts in the two days before administration, some GBP173 million was taken out of B&B. Mr. Clokey, as cited by BBC, said that, without nationalization, the bank would have fallen into administration, leaving nothing for shareholders. About Bradford & Bingley Headquartered in Bingley, United Kingdom, Bradford & Bingley plc provided specialist mortgages and savings products. It operated 197 branches and 141 agencies spread across the UK. Its market share of net new mortgage lending at the end of the 2007 was 7.7%. EDINBURGH ACADEMY: Acquired by Invista From Administrators ---------------------------------------------------------- PropertyEU reports that Invista Real Estate Opportunity Fund has acquired the Edinburgh Academy Boarding Houses in Edinburgh from administrators PWC. The investment volume for the acquisition of site was not disclosed, the report notes. According to the report, Scottish Land Holdings advised Invista in the deal. The former boarding houses of the well-known Scottish public school were purchased by Heritor's Residential Property at the height of the market in 2007, however, it has been lying vacant since the company went into administration the following year, the report notes. GALA CORAL: To Seek Consent From Lenders to Sell Junk Bonds ----------------------------------------------------------- Gala Coral Group Ltd. is seeking permission from lenders to sell as much as GBP600 million (US$907 million) of high-yield bonds, Kate Haywood and John Glover at Bloomberg News report, citing two people familiar with the situation. According to Bloomberg, the people said Gala would use the money to repay senior debt. Bloomberg notes the people said the company would have a year to complete the sale if consent is granted. Anousha Sakoui at The Financial Times reports Gala is paying its banks GBP3 million in fees in order to win more than two-thirds of their support for the bond sale, which would be rated below investment grade -- known as high yield or junk. Goldman Sachs is advising Gala on the consent process, the FT discloses. According to the FT, the bond would rank behind the banks in the order of priority of lenders. As reported by the Troubled Company Reporter-Europe on June 23, 2010, the FT said that Gala finalized a restructuring of its GBP2.5 billion (US$3.7 billion) debt. The FT disclosed as a result, Gala is freed from GBP588 million of mezzanine debt that is being written off in exchange for giving creditors control of the business. The FT said the new shareholder group will be led by Apollo Management, Cerberus, Park Square Capital and York Capital, which are providing GBP200 million to repay debt. 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. GLOBUS MARITIME: May Seek Delisting of Shares From AIM ------------------------------------------------------ Globus Maritime Ltd. said that its Board of Directors has noted that the Company's shares have been consistently trading at a substantial discount to its net asset value, which is a hindrance to the Company's plans for growth. Accordingly, with a view to maximizing Shareholder value, the Board has considered whether the Company should maintain its listing on AIM or seek a listing on another Stock Exchange. Although no final decision has been made in this regard, following discussions with the Company's advisers, the Board believes that it may be in the interests of the Company and its shareholders as a whole for it to seek a listing on a Stock Exchange in the United States in the near future. Were the Company to achieve such a listing, it would seek to delist its shares from AIM as soon as reasonably practicable so as to avoid the unnecessary expense of maintaining dual listings. The Board is therefore planning to seek shareholder approval at the AGM in respect of certain matters to facilitate such a listing in a timely manner should it choose to proceed with it. Further details are set out in the Circular. Posting of the Notice of AGM The Company has today posted a circular to its shareholders containing a notice of the Annual General Meeting of the Company together with a form of proxy and a CD-Rom containing the 2009 Annual Report and Accounts and new articles of incorporation and by-laws proposed to be adopted by the Company if the Board determines to seek a listing on a Stock Exchange in the United States. The AGM will be held on July 28, 2010 at 12:00 BST or 14:00 local Greek time at the offices of Globus Shipmanagement Corp., the Company's wholly-owned subsidiary, 3rd Floor, 128 Vouliagmenis Avenue, Glyfada, Athens 16674 Greece. The full notice of AGM contained in the circular, together with the 2009 Annual Report and Accounts, is available to be downloaded from the Company's website http://www.globusmaritime.gr. The resolutions to be proposed at the AGM include: -- Resolution 1: Approval of Annual Report and Accounts for the Period ended 31 December 2009 -- Resolutions 2, 3 and 4: Reappointment of Directors -- Resolutions 5 and 6: Reappointment and remuneration of Auditors -- Resolution 7: Removal of pre-emption rights -- Resolution 8: Reduction in the notice period for general meetings -- Resolutions 9, 10 and 11: Preparation for a possible listing on a Stock Exchange in the United States Resolutions 9, 10 and 11 seek approval for certain matters which the Company would be required to undertake, were it to seek a listing on a US Stock Exchange. In this regard, the Company announces that, with a view to maximizing shareholder value, it is exploring alternatives to its current Stock Exchange listing. Resolutions 1 to 6 (inclusive) comprise the ordinary business of the meeting and will be proposed as ordinary resolutions of the Company, and resolutions 7 to 11 (inclusive) are to be dealt with as special business and will be proposed as special resolutions of the Company. Appointment of Jeffrey Owen Parry as Non-Executive Director The Company appointed Jeffery Owen Parry as a non-executive director with immediate effect. Mr. Parry has 26 years' experience in the shipping sector. He is currently President of Mystic Marine Advisors LLC, a Connecticut- based advisory firm specializing in turnaround and emerging shipping companies. Formerly, he was CEO of NASDAQ-listed Aries Maritime Transport Limited (now NewLead Holdings Ltd.), where he led the turnaround and sale of the company. Mr. Parry has also served as the Managing Director of A.G. Pappadakis & Co. Ltd, an Athens-based shipowner, and Managing Director of Poten Capital Services LLC, a U.S. broker/dealer firm specializing in shipping, member of FINRA/SIPC. Mr. Parry holds a BA from Brown University and an MBA from Columbia University. He started his career as a stevedore on the New York waterfront. Mr. George Feidakis, Chairman of Globus, commented: "All of us welcome Jeff Parry to the Company's Board of Directors. We are confident that his expertise and counsel will be valuable assets as we continue to grow our Company." Jeff Parry fills the seat made vacant by the resignation of Mr. Arjun Batra who had been a director of Globus since May 2007. Mr. Feidakis commented: "Arjun Batra played an important role in the development and success of Globus and we thank him for his years of good service." Mr. Parry does not currently hold any shares in the Company. Save as disclosed herein there are no additional disclosures to be made in accordance with Rule 17 and paragraph (g) of Schedule 2 of the AIM rules for Jeffrey Parry. For further information: Globus Maritime Limited +30 210 960 8300 George Karageorgiou, CEO info@globusmaritime.gr Jefferies International Limited +44 (0) 20 7029 8000 Oliver Griffiths Anne Dovigen Capital Link - London +44 (0) 20 3206 1322/globus@capitallink.com Annie Evangeli Capital Link - New York +1 212 661 7566/globus@capitallink.com Ramnique Grewal About Globus Maritime Limited Globus is a global provider of seaborne transportation services for dry bulk cargoes, including among others iron ire, coal, grain, cement and fertilizers, along worldwide shipping routes. Globus owns and operates one Panamax, one Kamsarmax, and three Supramax vessels, with a weighted average age of 3.4 years as at June 30, 2010, and a total carrying capacity of 319,952 DWT. Globus is listed on the AIM market of the London Stock Exchange under ticker GLBS. Jefferies International Limited is acting as nominated adviser and broker to the Company. LLOYDS BANKING: To Sell BoS Integrated Finance Investment Unit -------------------------------------------------------------- Jon Menon and Andrew MacAskill at Bloomberg News report that Lloyds Banking Group Plc, the 41% British government-owned lender, is to sell its Bank of Scotland Integrated Finance investment unit to private equity firm Coller Capital for GBP332 million (US$504 million). According to Bloomberg, Lloyds said in a statement Monday that the bank will retain a stake of about 30% in a new joint venture called Cavendish Square Partners LP. Lloyds, as cited by Bloomberg said it values the total business at GBP480 million, a "small premium" to its book value. Lloyds is shedding assets after the bank was bailed out by the government and ordered to sell divisions by the European Union last year as a consequence of receiving more than GBP20 billion in state aid, Bloomberg notes. About Lloyds Banking Group PLC Lloyds Banking Group PLC, formerly Lloyds TSB Group plc, (LON:LLOY) -- http://www.lloydsbankinggroup.com/-- is a United Kingdom-based financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers. The Company operates in three divisions: UK Retail Banking, Insurance and Investments, and Wholesale and International Banking. Its main business activities are retail, commercial and corporate banking, general insurance, and life, pensions and investment provision. The Company also operates an international banking business with a global footprint in 40 countries. Services are offered through a number of brands, including Lloyds TSB, Halifax, Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham & Gloucester. On January 16, 2009, Lloyds Banking Group plc acquired HBOS plc. * * * As reported by the Troubled Company Reporter-Europe on March 17, 2010, Standard & Poor's Ratings Services said that it lowered its rating on a GBP56.472 million 6.475% preference share issue by Lloyds Banking Group (A/Stable/A-1) to 'C' from 'CC' following the first missed coupon payment. The counterparty credit ratings on Lloyds are unaffected by this action. The rating action is the first of S&P's forthcoming rating actions on over 40 hybrid instruments issued by Lloyds and related entities with discretionary coupon payments. Each security will be lowered to 'C' from 'CC' on the date of the first coupon payment to be missed. ODYSSEY PAVILION: Developer Files Suit v. Anglo Irish Bank ---------------------------------------------------------- Business World reports that Peter Curistan, who lost control of Belfast's best known entertainment complex, The Odyssey Pavilion, has launched legal action against Anglo Irish Bank over a GBP70 million (EUR85 million) debt. Mr. Curistan, the report says, is seeking damages over a collapsed sale of part of the entertainment complex in Belfast. The report notes a writ lodged at the High Court in Belfast alleges the bank has been negligent. According to the report, to address the debt, Anglo had been attempting to broker the sale of the Odyssey Pavilion's long-term lease for almost two years, but without success. The report recalls KPMG were appointed administrators in May and are searching for a buyer to take over the lease. The report relates an Odyssey spokesman said: "This is a matter between the former tenant of the Pavilion and Anglo Irish bank and does not involve the Odyssey Trust. Our interest as the guardians of the entire Odyssey complex is to ensure that the administrator is given the opportunity to conclude his work so that the Pavilion can receive new investment under new ownership as quickly as possible." The accountancy firm KPMG has been appointed to find a buyer for the Pavilion part of the Odyssey complex, the report discloses. Anglo moved to place the company into administration over the debts, but has been accused of acting in "bad faith" by Mr. Curistan, the report states. An offer for the Pavillion of GBP62 million, which is understood to have been made by property company PBN Developments several months ago, was turned down by Anglo Irish; but now fears are growing that the Odyssey Pavilion may now be worth as little as GBP50 million, which would leave the bank owners, the Irish taxpayers, to face the shortfall, the report notes. PUNCH TAVERNS: Profits Hit by Concessions to Tenanted Estate ------------------------------------------------------------ Adam Jones at The Financial Times reports that Punch Taverns said on Tuesday that the cost of supporting struggling publicans in its leased and tenanted business continued to run at just under GBP2 million a month. The FT relates the firm gave the update in a trading statement that showed a recent improvement in sales at its managed pubs arm but no easing of the decline in underlying profitability at its leased and tenanted outlets. According to the FT, as the UK's economic boom turned into recession, Punch had to give substantial financial concessions to the lessees and tenants running its weakest pubs, eroding group profits. The FT notes that in its leased and tenanted division, Punch said the like-for-like decline in earnings before interest, tax, depreciation and amortization (ebitda) for the 44 weeks to June 26 was similar to the 11% year-on-year drop it posted for the first half of its financial year. As reported by the Troubled Company Reporter-Europe on April 1, 2010, the FT said Punch Taverns, in common with many others in the UK's pub sector, has suffered a torrid few years as the smoking ban and then recession hurt sales and profits. The FT disclosed Punch's debt mountain, accumulated during several years of rapid expansion, means it has had less flexibility than its rivals to respond to the downturn. The company has sought to tackle its narrowing headroom on loan covenants by scrapping its dividend, raising GBP375 million through an emergency share issue, disposing of assets and using the money to buy back some of its debt at a discount, according to the FT. The FT noted that while net debt, which peaked at GBP4.9 billion in 2007, has fallen to GBP3.3 billion, this still represents about seven times group earnings before interest, tax, depreciation and amortization and six times the group's equity value. The FT said the company remains highly leveraged. Punch's balance sheet stress has been further compounded by continued weak trading at its core leased and tenanted business, according to the FT. Such has been the state of trading that Moody's, the ratings agency, warned in the autumn that Punch's credit position was likely to worsen as it would be difficult to pay back debt at the pace that earnings fell, the FT said. Punch Taverns plc -- http://www.punchtaverns.com/-- is a pub company in the United Kingdom, with over 8,400 pubs across its leased and managed portfolio. The Company is engaged in the trading activities in the operation of public houses either under the leased model or as directly managed by the Company. The leased model involves the granting of leases to tenants who operate the pub as their own business, paying rent to the Company, purchasing beer and other drinks from it and entering into profit sharing arrangements for income from leisure machines. Pubs that are directly managed involve the employment of a manager to operate each managed pub and the Group receives all revenues generated by the pub and is responsible for costs. During the fiscal year ended August 23, 2008, Punch Taverns plc acquired 20 pubs and 39 pubs were sold. ROYAL BANK: Markets Strategist & Markets Economist Quit Posts ------------------------------------------------------------- Jon Menon at Bloomberg News reports that Royal Bank of Scotland Group Plc said Chief Markets Strategist Bob Janjuah and Chief Markets Economist Kevin Gaynor have left the bank. RBS said Monday in a statement that the bank will continue to provide research with its team of strategists based in London, the Asia Pacific region and the U.S. According to Bloomberg, global economic research will be led by Chief European Economist Jacques Cailloux. About RBS The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/-- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed of its entire interest in Global Voice Group Ltd. * * * As reported by the Troubled Company Reporter-Europe on March 29, 2010, Standard & Poor's Ratings Services said that it lowered its ratings on "may pay" Tier 1 securities issued or guaranteed by The Royal Bank of Scotland Group PLC (A/Stable/A-1) to 'C' from 'CC'. At the same time, the rating on the RBSG-related security issued by Argon Capital PLC was similarly lowered to 'C' from 'CC'. The counterparty credit ratings and stand-alone credit profiles of RBSG and subsidiaries, and the ratings on other debt securities issued by these entities, are unaffected. ST. MARGARET'S: EIS Union Examines Finances Following Closure ------------------------------------------------------------- Gemma Fraser at Edinburgh Evening News reports that the EIS teaching union is investigating whether pension contributions, student loan repayments and registration fees deducted from the salaries of axed staff at St. Margaret's school actually went where they were meant to go. According to the report, the union has been called in to investigate whether the pension provider, the Student Loans Company and the General Teaching Council Scotland (GTCS) received the payments deducted from staff salaries between September last year until the school went into administration last month. The report notes it is understood staff became suspicious after receiving a letter from administrators KPMG which advised teachers who had opted to pay their annual registration fee to the GTCS from their salary that the deductions were "not forwarded to GTCS". The report says staff also became worried about their pension when the letter stated KPMG is "liaising with the pension provider to establish if there are any pension contribution arrears up to the date of insolvency". The report recalls the school closed its doors on June 29 after a fundraising campaign set up by parents in a bid to take ownership of the school failed. They ran out of time to raise the GBP2.5 million needed to pay off its existing creditors, the report recounts. As reported by the Troubled Company Reporter-Europe on June 14, 2010, Blair Nimmo of KPMG was appointed Provisional Liquidator of St Margaret's School (Edinburgh) Limited and of its 100% subsidiary St Hilary's House Limited on June 10, 2010. The Edinburgh-based School, which had charitable status and was incorporated in 1960, provided private education for girls at nursery, primary and secondary level (from 18 months to 18-years- old) and for boys at nursery and primary level (from 18 months to 10-years-old). St. Hilary's provided boarding facilities during term and operates as a hotel and youth hostel during the School holidays. The School had been affected by a sustained decline in pupil numbers over recent years and despite actions taken by the Board of Governors, the School could not continue to operate viably. At the time of the Provisional Liquidator's appointment the School and nursery comprised 397 pupils and 143 staff (69 teaching and 74 non-teaching). VISTEON UK: Unite Mulls Legal Action Against Ford Over Pensions --------------------------------------------------------------- BBC News reports that former Visteon UK workers should find out within days if their union will take legal action over their pension fund. BBC recalls the Swansea car parts factory went into administration last year, nine years after it was spun out of Ford, and many who transferred have seen their pensions hit. Unite's advisers are considering legal action against Ford, BBC says. The union will decide in the next few days whether to proceed, BBC states. BBC relates Ford has said it will resist any legal action. According to BBC, Ford has said it met every obligation to workers when contracts and conditions were taken on by Visteon. BBC notes in a statement the company insisted that it had "met or exceeded its obligations under the 2000 agreement when Visteon became fully independent". "Ford's obligations to its former employees were fully discharged and Ford believes there is no basis for resuming liability for benefits transferred to Visteon," the statement added, according to BBC. As reported in the Troubled Company Reporter, Visteon Corp. said Visteon UK, a company organized under the laws of England and Wales and an indirect, wholly-owned subsidiary of the company, filed on March 31, 2009, for administration under the United Kingdom Insolvency Act of 1986 with the High Court of Justice, Chancery division in London, England. The UK administration was initiated in response to continuing operating losses of the Visteon UK and mounting labor costs and their related demand on the company's cash flows. Visteon UK operated in Enfield, UK, Basildon, UK, and Belfast, UK and recorded sales of US$250 million for the year ended December 31, 2008. It had total assets of US$153 million as of December 31, 2008. =============== X X X X X X X X =============== * EUROPE: Banks' Hidden Bad Loans May Threaten Stress Tests ----------------------------------------------------------- Andrew MacAskill and Aaron Kirchfeld at Bloomberg News report that Europe's bank stress tests may not be as successful as the U.S. government's. According to Bloomberg, investors say they don't know if some banks are hiding bad loans, whether they have enough capital to withstand a debt default by a European state and whether governments can afford to rescue them. The European Union still hasn't disclosed the tests' criteria, including if they contain a sovereign default, Bloomberg notes. "There won't be a rebound in European banks unless we have stress tests," Bloomberg quoted Dirk Hoffmann-Becking, a senior research analyst at Sanford C. Bernstein in London who tracks European banks including Barclays Plc, Deutsche Bank AG and UBS AG, as saying. "But stress tests won't resolve the sovereign debt crisis." Bloomberg says Europe's 20 largest lenders are trading at about 10% less than the net value of their assets, while the 20 biggest U.S. banks trade at a 10% premium. Bloomberg notes unlike the U.S. government, EU governments haven't said if they'll provide cash to banks that fail the tests, and economists say countries including Spain and Portugal could struggle to fund any bailout. European lenders had US$2.29 trillion at risk in Greece, Italy, Portugal and Spain at the end of 2009, including loans to governments, Bloomberg says, citing the Bank for International Settlements. "You can't just have stress tests, you'd better prescribe some medicine as well, which is going be more capital-raising," said Hank Calenti, a credit analyst at Royal Bank of Canada in London, according to Bloomberg. "If some institutions need access to government recapitalization or other improvements, the market needs to know how that's going to happen." Bloomberg recalls concern about banks' potential losses on bonds sold by the governments of Greece, Italy, Portugal and Spain helped to increase borrowing costs for European banks this year. ********* 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 * * *