/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100930.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, September 30, 2010, Vol. 11, No. 193 Headlines D E N M A R K AMAGERBANKEN AS: Moody's Downgrades Bank Deposit Ratings to 'Ba2' G E R M A N Y BAYERISCHE LANDESBANKEN: Landesbanken Owners Discuss WestLB Tie-Up GECO 2002: Moody's Withdraws 'Ba2 (sf)' Rating on Class E Bond HYPO REAL: Closure Not "Cost Free" Option for Taxpayers WESTLB AG: Landesbanken Owners Discuss BayernLB Tie-Up I R E L A N D ARDAGH GLASS: Moody's Affirms Corporate Family Rating at 'B2' ARDAGH GLASS: S&P Changes Outlook to Stable; Affirms 'B+' Rating HARVEST CLO: Changes in Contracts Won't Affect Fitch's Ratings INTERMEDIATE FINANCE: Moody's Reviews Ratings on Seven Notes * IRELAND: Minister Rules Out Tapping European Bailout Package * IRELAND: Must Honor Obligations, Finance Minister Says I T A L Y BANCO POPOLARE: Moody's Cuts Bank Financial Strength Rating to D+ N E T H E R L A N D S IMPRESS HOLDINGS: S&P Affirms Corporate Credit Rating at 'B+' P O L A N D PBP ORBIS: Files for Bankruptcy After Shareholder Pulls Plug R U S S I A DEVELOPMENT CAPITAL: S&P Gives Positive Outlook; Keeps 'B-' Rating S L O V E N I A ABANKA VIPA: Moody's Lowers Financial Strength Rating to 'D+' NLB INTERFINANZ: Moody's Downgrades Issuer Rating to 'Ba1' NOVA KREDITNA: Moody's Lowers Financial Strength Rating to 'D' NOVA LJUBLJANSKA: Moody's Cuts Financial Strength Rating to 'D+' S P A I N MALLORCA: Dismisses Club President Josep Pons SANTANDER CONSUMER: Fitch Affirms Junks Ratings on Various Notes * SPAIN: Grappling With Real Estate Crisis; At Risk of Recession S W E D E N SAAB AUTOMOBILE: Has Engine Purchasing Deal With BMW U K R A I N E FERREXPO PLC: Moody's Assigns 'B2' Corporate Family Rating U N I T E D K I N G D O M AEGON NV: To Close Two More UK Businesses; 90 Jobs Affected ARCHIAL GROUP: PwC Administrators Sell Archial Architects B3 CABLE: Liquidators to Accept More Bidders for B3 Assets CONNAUGHT PLC: Call for Investigation Into Contracts Rejected DUNDEE FOOTBALL CLUB: May Need to Go Part-Time, Bannon Warns ELPHINSTONE ESTATES: Placed Into Administration KEYDATA INVESTMENT: 19,000 Lifemark Investors to Get Compensation NORPAK (EUROPE): Future Uncertain After Administration TRAVEL CLUB: Goes Into Administration * UK: Creditors Should Share Losses in Bank Crises, FSA Chair Says X X X X X X X X * EUROPE: Banking Regulators Interested in Bail-In Option * Upcoming Meetings, Conferences and Seminars ********* ============= D E N M A R K ============= AMAGERBANKEN AS: Moody's Downgrades Bank Deposit Ratings to 'Ba2' ----------------------------------------------------------------- Moody's Investors Service has downgraded the long- and short-term bank deposit ratings of Amagerbanken A/S to Ba2/Not Prime from Baa3/P-3, while its bank financial strength rating is upgraded to D- from E+, which now maps to a baseline credit assessment of Ba3. The outlook on all ratings is now stable. The rating action concludes the review for possible downgrade of the bank's deposit ratings, initiated on June 2, 2010. This rating action does not affect the backed Aaa rating assigned to individually government guaranteed debt issued by Amagerbanken. Ratings Rationale Moody's decision to change the BFSR to D- from E+ was prompted by the approximately DKK900 million of additional capital raised in an equity offering earlier this month, allowing the bank to be eligible to issue up to three-year government guaranteed debt under the Danish Banking Package II. Despite the bank being unable to issue debt on a standalone basis in the capital markets, issuing government guaranteed debt will enable the bank to refinance existing debt that matures in the short- and medium term, reducing the risk of imminent liquidity shortfalls. However, Moody's notes that Amagerbanken continues to be faced by challenges in its risk governance, profitability, asset quality and liquidity management. The bank's asset quality has deteriorated substantially, and the bank is now undertaking efforts to reduce major exposures and property loans. Since the start of the crisis Amagerbanken has recorded net losses totaling DKK1.3 billion, as a result of DKK3.1 billion of impairments (to a large extent on its real estate exposures), erasing the earnings generated by the bank during 2005-2007. For the first six months of 2010, Amagerbanken reported a pre-tax loss of DKK478 million, compared with a pre-tax loss of DKK415 million for the same period in 2009. The negative result was driven mainly by continued high levels of credit impairments (DKK622 million in H1 2010, compared with DKK732 million in H1 2009) and a lower net interest income (down 17% year-on-year), reflecting a 13% reduction in its loan book, as well as expenses related to the government hybrid capital injection received under Banking Package II. Commenting on Amagerbanken's deposit ratings, Moody's says that since the introduction of the Danish government's general guarantee mechanism in 2008 and following the downgrade of Amagerbanken's standalone BFSR to D-on February 26, 2009, and further down to E+ on September 8, 2009, the banks' deposit ratings at Baa3 have benefited from extraordinarily high uplift over the BCA, reflecting the strong systemic support provided to depositors and senior creditors and specifically the government's general guarantee. The rating action removes these elements of extraordinary support, reflecting the expiration of the general government guarantee for the deposit and senior unsecured debt of Danish banks as per the end of September 2010. However, Moody's added that the ratings continue to benefit from a lower level of systemic support from the Danish government. Moody's will continue to evaluate the merits of such support in light of the evolving legal environment with respect to Danish banking, including the legal amendments approved by the Danish Parliament on 1 June 2010. Moody's would view improvements in risk governance, as well as a stabilization of capital and improved asset quality and liquidity as positive factors that could put upward pressure on the bank's ratings. However, if further losses were significant enough to result in failure to meet the bank's individual solvency requirements, this would likely trigger renewed regulatory interventions. In that event, the BFSR would likely be downgraded to E. Moody's last rating action on Amagerbanken was implemented on September 16, 2010, when it assigned a backed rating of Aaa to the SEK2 billion senior notes issued by Amagerbanken A/S with a Danish government guarantee. Amagerbanken, headquartered in Copenhagen, Denmark, reported total assets of DKK30.3 billion (EUR4.1 billion) at the end of June 2010. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. ============= G E R M A N Y ============= BAYERISCHE LANDESBANKEN: Landesbanken Owners Discuss WestLB Tie-Up ------------------------------------------------------------------ James Wilson and Gerrit Wiesmann at The Financial Times report that owners of Germany's Landesbanken reached a broad agreement on the need to reform the banking sector, officials and bank representatives said after meeting to consider restructuring proposals. Talks about a merger between WestLB and Bayerische Landesbank, two banks that lost billions of euros in the global financial crisis, have injected fresh urgency into efforts to restructure Landesbanken -- a perennial source of instability in Germany's financial sector, the FT notes. According to the FT, a BayernLB-WestLB link was one of the "several concrete proposals" discussed on Tuesday at a meeting in Berlin, according to participants. Germany's finance ministry had ordered bank owners to discuss reform prospects, the FT states. The FT relates Georg Fahrenschon, the Bavarian finance minister, said a "first business analysis" of a tie-up between WestLB and BayernLB -- owned by Bavaria -- would be ready in November. Steffen Kampeter, deputy finance minister, said no possible models for consolidation had been ruled out, the FT notes. The FT says another firm plan discussed is a merger involving Duesseldorf's WestLB -- which was bailed out by the government last year -- and Helaba and Deka, two Frankfurt-based public sector institutions. WestLB is at the heart of consolidation plans because the European Commission has ordered that it change ownership by the end of next year, according to the FT. As reported by the Troubled Company Reporter-Europe on Sept. 22, 2010, Bloomberg News said Bayerische Landesbank and WestLB, two German state-owned lenders that needed government aid during the financial crisis, are examining a possible merger that would create the country's third-biggest bank. "The goal is to have a joint understanding by the end of the year on whether a merger makes economic sense," Munich-based BayernLB and Dusseldorf-based WestLB said in a joint e-mailed statement to Bloomberg on Monday. Bloomberg disclosed BayernLB, Germany's second-biggest state-owned lender after Stuttgart-based Landesbank Baden-Wuerttemberg, needed EUR10 billion in fresh capital and a EUR4.8 billion risk shield for its portfolio of asset-backed securities from the German state of Bavaria, which now owns 95.8% of the bank. About BayernLB Bayerische Landesbank a.k.a BayernLB -- http://www.bayernlb.de/-- acts as the principal bank to the state of Bavaria and as the central clearing house for the 75 Bavarian sparkassen (savings banks). Also serving corporations, national and local governments, financial institutions, and real estate firms, the bank offers a variety of services, including financing, security underwriting and trading, and risk management. It provides retail and private banking services for individuals through its Internet bank, Deutsche Kreditbank, and through banking subsidiaries in central and southeastern Europe. BayernLB's Landesbank Saar subsidiary (75% owned) provides financing to small and midsized businesses in the German state of Saarland and in France. * * * As reported by the Troubled Company Reporter-Europe on March 4, 2010, Moody's Investors Service downgraded the ratings of Bayerische Landesbank's profit participation certificates Series 11 to Ca from Caa1 and Series 12 to Caa1 from B2. In addition, the Tier 1 securities issued by BayernLB Capital Trust I were downgraded to Caa2 from Caa1. All ratings carry a stable outlook. The last rating action on BayernLB was on May 13, 2009, when Moody's downgraded the bank's BFSR to D- from C-, the long-term senior debt and deposit ratings to A1 from Aa2 and the subordinated liabilities to A2 from Aa3 while the Prime-1 short- term deposit rating was affirmed. GECO 2002: Moody's Withdraws 'Ba2 (sf)' Rating on Class E Bond -------------------------------------------------------------- Moody's Investors Service has withdrawn its rating on all rated notes issued by GECO 2002 Limited due to early redemption in full due to a call of the loss guarantee. The redeemed ratings are (amount reflects initial outstandings): -- EUR300M Cl. A-3 Bond, Withdrawn (sf); previously on Apr 4, 2003 Confirmed at Aaa (sf) -- EUR15.4M Cl. A-4 Bond, Withdrawn (sf); previously on Aug 1, 2006 Upgraded to Aaa (sf) -- EUR51.9M Class B Bond, Withdrawn (sf); previously on Feb 18, 2009 Confirmed at Aaa (sf) -- EUR51.8M Class C Bond, Withdrawn (sf); previously on Feb 18, 2009 Confirmed at Aa2 (sf) -- EUR47.8M Class D Bond, Withdrawn (sf); previously on Aug 1, 2006 Upgraded to Baa2 (sf) -- EUR23.1M Class E Bond, Withdrawn (sf); previously on Aug 1, 2006 Upgraded to Ba2 (sf) Classes A1+ (together with the Senior CDS) and A2 had previously been redeemed in full. The Junior CDS was privately rated by Moody's. In this synthetic transaction, Westfalische Hypothekenbank AG (Deutsche Pfandbriefbank AG) transferred the credit risk of initially 189 commercial mortgage loans secured by 229 commercial properties located throughout Germany. The senior portion and the most junior portion of the credit risk were transferred via two credit default swaps to third parties, while the mezzanine portion was transferred to the Issuer via a loss guarantee. The Issuer in-turn issued credit-linked notes to investors. HYPO REAL: Closure Not "Cost Free" Option for Taxpayers ------------------------------------------------------- James Wilson at The Financial Times reports that Joerg Asmussen, deputy finance minister, on Tuesday hit back at calls for a wind- down of all of Hypo Real Estate Holding and said keeping the core bank was "the better solution" for German taxpayers. According to the FT. Mr. Asmussen said closing down the troubled property lender would not be "cost free" for taxpayers. The bank, the biggest failure in Germany during the global financial crisis, received increased state support this month, raising the volume of taxpayer-backed guarantees to EUR142 billion (US$193 billion), the FT discloses. The FT relates HRE and the government say the increase will tide the bank through spinning off some EUR200 billion of unwanted assets into a "bad bank". Mr. Asmussen, as cited by the FT, said HRE's bad bank spin-off plan, which was temporarily approved by European competition authorities, was "very complex", involving securities and loans that had 3,600 counterparties in 60 jurisdictions, the FT notes. Public criticism of the problems at HRE has been driven by the rising amount of taxpayer exposure and by irritation at EUR25 million of bonus payments, the FT states. About Hypo Real Estate Germany-based Hypo Real Estate Holding AG (FRA:HRXG) -- http://www.hyporealestate.com/-- is a German holding company for the Hypo Real Estate Group. It is an international real estate financing company, combining commercial real estate financing products with investment banking. The Company divides its operations into three business units: Commercial Real Estate, which provides real estate financing on the international and German market; Public Sector & Infrastructure Finance, and Capital Markets & Asset Management. Hypo Real Estate Group operates through a number of subsidiaries, including, among others, Hypo Real Estate Bank International AG that focuses on Pfandbrief-based commercial real estate financing in all international markets, and offers large-volume investment banking and structured finance transactions; Hypo Real Estate Bank AG that focuses on the commercial real estate financing and refinancing business in Germany, and DEPFA Bank plc in Dublin, Ireland, which is a provider of public finance. * * * As reported by the Troubled Company Reporter-Europe, Bloomberg News said Chancellor Angela Merkel's government took over Hypo Real Estate in 2009 after the lender's Dublin-based Depfa Bank Plc unit couldn't raise financing when the bankruptcy of Lehman Brothers Holdings Inc. froze credit markets. Hypo Real was one of seven banks to fail stress tests on 91 of Europe's biggest lenders in July, according to Bloomberg. WESTLB AG: Landesbanken Owners Discuss BayernLB Tie-Up ------------------------------------------------------ James Wilson and Gerrit Wiesmann at The Financial Times report that owners of Germany's Landesbanken reached a broad agreement on the need to reform the banking sector, officials and bank representatives said after meeting to consider restructuring proposals. Talks about a merger between WestLB and Bayerische Landesbank, two banks that lost billions of euros in the global financial crisis, have injected fresh urgency into efforts to restructure Landesbanken -- a perennial source of instability in Germany's financial sector, the FT notes. According to the FT, a BayernLB-WestLB link was one of the "several concrete proposals" discussed on Tuesday at a meeting in Berlin, according to participants. Germany's finance ministry had ordered bank owners to discuss reform prospects, the FT states. The FT relates Georg Fahrenschon, the Bavarian finance minister, said a "first business analysis" of a tie-up between WestLB and BayernLB -- owned by Bavaria -- would be ready in November. Steffen Kampeter, deputy finance minister, said no possible models for consolidation had been ruled out, the FT notes. The FT says another firm plan discussed is a merger involving Duesseldorf's WestLB -- which was bailed out by the government last year -- and Helaba and Deka, two Frankfurt-based public sector institutions. WestLB is at the heart of consolidation plans because the European Commission has ordered that it change ownership by the end of next year, according to the FT. As reported by the Troubled Company Reporter-Europe on Sept. 22, 2010, Bloomberg News said Bayerische Landesbank and WestLB, two German state-owned lenders that needed government aid during the financial crisis, are examining a possible merger that would create the country's third-biggest bank. "The goal is to have a joint understanding by the end of the year on whether a merger makes economic sense," Munich-based BayernLB and Dusseldorf-based WestLB said in a joint e-mailed statement to Bloomberg on Monday. Bloomberg disclosed as part of its restructuring, WestLB has to sell itself by the end of 2011 under conditions imposed by the EU Commission. The lender has received several bailouts, including EUR3 billion (US$3.9 billion) in capital from Germany's Soffin bank-rescue fund, Bloomberg noted. It set up a separate bad bank to rid itself of about a third of its assets, including toxic securities, according to Bloomberg. About WestLB Headquartered in Duesseldorf, Germany, WestLB AG (DAX:WESTLB) -- http://www.westlb.com/-- provides financial advisory, lending, structured finance, project finance, capital markets and private equity products, asset management, transaction services and real estate finance to institutions. In the United States, certain securities, trading, brokerage and advisory services are provided by WestLB AG's wholly owned subsidiary WestLB Securities Inc., a registered broker-dealer and member of the NASD and SIPC. WestLB's shareholders are the two savings banks associations in NRW (25.15% each), two regional associations (0.52% each), the state of NRW (17.47%) and NRW.BANK (31.18%), which is owned by NRW (64.7%) and two regional associations (35.3%). * * * As reported by the Troubled Company Reporter-Europe on May 6, 2010, Moody's Investors said WestLB AG's E+ bank financial strength rating (BFSR, which maps directly to a B2 baseline credit assessment, BCA), was affirmed and the outlook on this rating changed to stable from developing. Moody's affirmation of the E+ BFSR and the change of its outlook to stable reflects that, despite positive developments, the BFSR remains constrained by the bank's weak franchise, which includes several core segments that do not (or only insufficiently) contribute to group profits, thus resulting in the bank's continued dependence on volatile, wholesale-focused sources of income. Moody's does not rule out that the bank could be split up and unwound if efforts to divest the bank were to prove unsuccessful. ============= I R E L A N D ============= ARDAGH GLASS: Moody's Affirms Corporate Family Rating at 'B2' ------------------------------------------------------------- Moody's Investor's Service affirmed the Corporate Family Rating and Probability of Default Rating for Ardagh Glass Group plc at B2 and assigned provisional ratings to the financing of the announced acquisition of Impress Cooperative U.A. The outlook has been changed to positive from stable. The proposed Senior Secured Notes (EUR850 million and US$375 million, 7 years) have been assigned a provisional (P)Ba3 rating. The proposed Senior Unsecured Notes (EUR315 million and US$310 million, 10 years) have been assigned a provisional (P)B3 rating. The ratings of Ardagh's existing senior secured notes (EUR300 million due 2016) have been affirmed at Ba3, the senior unsecured notes (EUR310 million due 2017 and EUR180 million due 2020) have been affirmed at B3 and the rating for the PIK note (EUR126.5 million due 2015) has been affirmed at Caa1. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary 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. Ratings Rationale The affirmation of the B2 CFR reflects Ardagh's strong operating performance over the last quarters, which has been ahead of expectations and resulted in some headroom in the current rating category prior to the acquisition announcement. In addition, the affirmation reflects the positive impact of the acquisition on Ardagh's business profile, given Impress' complimentary product portfolio of metal cans, with a strong focus on the defensive food industry and a wide geographic spread with operations in Europe, North America and Australasia. Moreover, Moody's would expect customer concentration to reduce considerably following the acquisition, a concern currently incorporated into Ardagh's rating. At the same time, this acquisition will result in increased pro forma leverage ratios of approximately 5.5x debt/EBITDA as adjusted by Moody's on an LTM basis per June, which however remains in line with the requirements for the B2 rating category. Furthermore, Moody's notes the execution and integration risks inherent in such a transformational acquisition as well as certain aggressiveness in the financial policy as the purchase price consideration will be fully debt financed. The positive outlook is based on Moody's expectation that the enlarged group should be able to reduce leverage towards levels of 5x debt/EBITDA over the next 12-18 months on the back of ongoing cost savings initiatives, potential synergies and the application of positive free cash flows to net debt reduction. The positive outlook also incorporates Moody's expectation that the enlarged group will continue to tightly manage production volumes and prudently control volatile input costs without compromising current profitability levels as well as the preservation of an adequate liquidity profile including sufficient leeway under financial covenants. The ratings could be upgraded over the next 12-18 months should Ardagh manage to bring down leverage in terms of Debt/EBITDA towards 5 times and keep interest coverage in terms of (EBITDA-Capex)/Interest around 1.5x on the back of improvements in operating profitability and continued positive free cash flow generation. Moody's understands that Ardagh plans to acquire Impress for a total consideration of EUR1.7 billion including the repayment and assumption of existing debt at as well as fees and expenses which values the transaction at around 6x June LTM adjusted EBITDA. The transaction is still subject to regulatory approval, but is expected to close in late 2010. Ardgah plans to finance the acquisition with the issuance of (i) EUR850 million and US$375 million Senior Secured Notes and (ii) EUR315 million and US$310 million Senior Notes. The proceeds of EUR1.7 billion together with about EUR136 million of existing cash balances and initial drawings under a new EUR200 million revolving credit facility are planned to be used to finance (i) EUR380 million consideration for the equity of Impress Cooperative U.A, (ii) the repayment of EUR1.13 billion of existing Impress net debt, (iii) EUR214 million repayment of existing bank debt at Ardagh and (iv) to cover transactions fees and expenses. The provisional instrument ratings are based on indicative terms and conditions received so far according to which (i) the proposed Senior Secured Notes benefit from the same guarantors and security package as Ardagh's existing Senior Secured Notes (EUR 300mn, due 2016), and (ii) the proposed senior unsecured notes benefit from the same guarantee package as Ardagh's existing senior unsecured notes (EUR310 million, due 2017 and EUR180 million, due 2020). Ardagh's existing senior secured notes are supported by senior guarantees of subsidiaries representing at least 85% of consolidated assets and EBITDA and security interests which Moody's understand comprise the clear majority of the guarantors' assets. While Ardagh's senior unsecured debt is supported by guarantees from the same entities that guarantee the senior secured debt, it does not benefit from any tangible collateral. Following the closing of the acquisition, Moody's understand that material operating subsidiaries of the acquired business will become providers of upstream guarantees and collateral as are current material subsidiaries of Ardagh. Downgrades: Issuer: Ardagh Glass Finance plc -- Senior Subordinated Regular Bond/Debenture, Downgraded to LGD5, 77% from LGD5, 73% -- Senior Secured Regular Bond/Debenture, Downgraded to LGD2, 29% from LGD2, 23% -- Senior Unsecured Regular Bond/Debenture, Downgraded to LGD5, 77% from LGD5, 73% Issuer: Ardagh Glass Group PLC -- Senior Unsecured Regular Bond/Debenture, Downgraded to LGD6, 95% from LGD6, 93% Assignments: Issuer: Ardagh Packaging Finance plc * Senior Secured Regular Bond/Debenture, Assigned a range of 29 - LGD2 to (P)Ba3 * Senior Unsecured Regular Bond/Debenture, Assigned a range of 77 - LGD5 to (P)B3 Outlook Actions: Issuer: Ardagh Glass Group PLC -- Outlook, Changed To Positive From Stable Moody's last rating action on Ardagh was on January 13, 2010, when Moody's affirmed the B2 CFR with a stable outlook and assigned a B3 rating to the company's new EUR180 million Senior Notes due 2010. Ardagh Glass Group, registered in Ireland, is a leading supplier of glass containers by volume in Northern Europe, in particular in Germany, the UK, Scandinavia, Poland and the Benelux region. In the last twelve months ending June 2010, Ardagh generated sales of EUR1.25 billion. Incorporated in Deventer, The Netherlands, Impress is among the largest European metal packaging manufacturers, holding market leading positions in several metal packaging segments e.g. for seafood packaging globally and being the largest producer of paints, decorative tins and aerosols in Europe and ranking number two in Europe for heat-processed food packaging. Impress generated sales of EUR1.8 billion in the last twelve months ending June 2010. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. ARDAGH GLASS: S&P Changes Outlook to Stable; Affirms 'B+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it had revised its outlook on Ireland-based glass-container manufacturer Ardagh Glass Group PLC and its related entity Ardagh Glass Holdings Ltd. to stable from negative. At the same time, S&P affirmed the 'B+' long-term corporate credit ratings on both entities. At the same time, S&P has lowered the existing ?300 million senior secured issue rating from 'BB' to 'BB-', and revised the recovery rating from '1' to '2' on this instrument, indicating S&P's expectation of substantial (70%-90%) recovery for senior secured noteholders in the event of a payment default. However, S&P foresee the recovery at the low end of the 70%-90% range. S&P has also lowered the existing ?490 million senior unsecured issue rating from 'B' to 'B-', and revised the recovery rating from '5' to '6', indicating S&P's expectation of negligible (0%- 10%) recovery for unsecured noteholders in the event of a payment default. The issue rating on the existing payment-in-kind notes due 2015 is affirmed at 'B-' and the recovery rating remains at '6', indicating S&P's expectation of negligible (0%-10%) recovery for noteholders in the event of a payment default. S&P has assigned a 'BB-' issue rating a recovery rating of '2' to the proposed ?1.130 billion-equivalent senior secured notes, indicating its expectation of substantial (70%-90%) recovery-- albeit at the low end of the range--for unsecured noteholders in the event of a payment default. S&P has assigned a 'B-' issue rating and a recovery rating of '6' to the proposed ?550 million-equivalent senior unsecured notes indicating S&P's expectation of negligible (0%-10%) recovery for noteholders in the event of a payment default. "S&P's rating action follows Ardagh's announcement that it intends to acquire Impress Holdings B.V. (Impress), a Netherlands-based global provider of metal packaging," said Standard & Poor's credit analyst Izabela Listowska. The acquisition is conditional on EU and U.S. competition authority approvals. In S&P's opinion, the acquisition will enhance Ardagh's competitive position and diversity, with combined annual pro forma sales of about ?3 billion. S&P believes that the acquisition will improve Ardagh's business risk profile, which S&P currently view as "satisfactory". The stronger business risk profile, coupled with the company's "adequate" liquidity position, will be sufficient to mitigate the immediate increase in financial leverage, in S&P's opinion. In addition, S&P anticipates that credit measures following the transaction will remain in line with its guidelines for the ratings, albeit at the low end, before they gradually recover starting in 2011. This view is based on S&P's assumption of low-single-digit growth in revenues, fairly stable operating margins, the company's disciplined future capital- spending policy, and the absence of discretionary spending. The ratings remain constrained by S&P's view of the group's "highly leveraged" financial risk profile. The key risk factors include Ardagh's sensitivity to volatile input costs and relatively high capital intensity, in particular in the glass sector. The ratings are also constrained by the company's very aggressive financial policy, as demonstrated by its appetite for debt-funded acquisitions. These negative factors are partly offset by Ardagh's "satisfactory" business risk profile, which is supported by its leading market positions, long-standing relationships with customers, and end markets for about 75% of total revenues that are typically less sensitive to changing economic conditions. The ratings also reflect Ardagh's good profitability, underpinned by its enhanced cost base and ability to manage input cost changes, although S&P believes that its operating margins will be somewhat diluted by the lower-margin acquisition. The stable outlook assumes that the acquisition of Impress obtains the necessary approvals expected by the end of 2010, and reflects the anticipated improvement in Ardagh's business risk profile and its offsetting of the weaker financial risk profile resulting from the proposed transaction. S&P would view a ratio of adjusted funds from operations to debt of 10%-15% and adjusted debt to EBITDA of 5.0x-5.5x to be in line with a 'B+' rating for Ardagh, and S&P expects Ardagh to sustain this level in the near term. "The outlook reflects S&P's expectations of management's cautious approach to leverage, and that liquidity sources and headroom under financial covenants remain adequate," said Ms. Listowska. HARVEST CLO: Changes in Contracts Won't Affect Fitch's Ratings -------------------------------------------------------------- Fitch Ratings says that Harvest CLO V PLC's ratings will not be affected by the change in derivative contracts. The FX options and the GBP Libor cap agreements with Banque AIG and guaranteed by American International Group Inc. ('BBB'/Stable/'F1') have been terminated. Simultaneously, Harvest CLO V PLC has purchased from Barclays Bank PLC ('AA-'/Stable/'F1+') FX options and a GBP Libor cap. The terms of these new derivative contracts are almost identical to the terms of the derivative contracts that have been terminated. In Fitch's view, the minor differences between the agreements are not material enough to impact the ratings of the transaction. The notes are rated: -- EUR242.9m Class A-D (XS0293379342): 'AAA'; Outlook Negative; Loss Severity Rating (LS) 'LS-2' -- EUR152.5m Class A-R: 'AAA'; Outlook Negative; 'LS-2' -- EUR32.5m Class A2 (XS0293379771): 'AA'; Outlook Negative; 'LS-4' -- EUR42.5m Class B (XS0293380191): 'A'; Outlook Negative; 'LS- 4' -- EUR30m Class C1 (XS0293380274): 'BBB'; Outlook Negative; 'LS- 4' -- EUR10m Class C2 (XS0293951280): 'BBB'; Outlook Negative; 'LS- 4' -- EUR27.5m Class D (XS0293380431): 'BB'; Outlook Negative; 'LS- 5' -- EUR28.3m Class E1 (XS0293380514): 'B'; Outlook Negative; 'LS- 5' -- EUR5.6m Class E2 (XS0293952684): 'B'; Outlook Negative; 'LS- 5' -- EUR8m Class Q (XS0293380944): 'BB-'; Outlook Negative INTERMEDIATE FINANCE: Moody's Reviews Ratings on Seven Notes ------------------------------------------------------------ Moody's Investors Service has placed under review for possible downgrade the ratings of 7 classes of notes issued by Intermediate Finance II PLC: Issuer: Intermediate Finance II PLC -- EUR104M Class A-1 Senior Secured Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to A1 (sf) -- EUR195M Class A-2 Senior Secured Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to A3 (sf) -- EUR26M Class A-3 Senior Secured Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to Baa3 (sf) -- EUR63M Class B-1 Senior Secured Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to Ba2 (sf) -- EUR15M Class B-2 Senior Secured Fixed Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to Ba2 (sf) -- EUR78M Class C Secured Deferrable Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to B3 (sf) -- EUR39M Class D Secured Deferrable Floating Rate Notes due 2024, Placed Under Review for Possible Downgrade; previously on Oct 13, 2009 Downgraded to Caa1 (sf) Intermediate Finance II PLC is a multicurrency collateralized loan obligation backed by a portfolio of European mezzanine loans. The transaction is managed by Intermediate Capital Managers Limited. According to Moody's, the review for downgrade reflects further deterioration in the credit quality of the portfolio. This is observed through an increase in the portfolio weighted average rating factor 'WARF' (3005 in July 2010, compared to 2740 in August 2009), an increase in the proportion of securities rated Caa1 and below in the portfolio (15.39% in July 2010, compared to 10.2% in August 2009), a decrease in the Senior Par Value Test (149.51% in July 2010, compared to 152.48% in August 2009) and the failure of the Class D Par Value Test. These measure were taken from the trustee report dated July 30, 2010. However, Moody's notes that this deterioration may be partially mitigated following the reinvestment of approximately 92.5 million of cash (i.e. 19% of the current collateral balance) currently held in the structure. Depending on the impact that such reinvestment may have on the key metrics of the transaction (par, WARF, WAS and DS), the ratings of the notes may be affected by a 0 to 2 notch downgrade. Classes A and D are likely to be the most sensitive to such changes in metrics. Moody's will closely monitor the evolution of the transaction and, in particular, the impact on the WARF, par and DS upon full reinvestment of the principal proceeds. Under this methodology, Moody's used its Binomial Expansion Technique, whereby the pool is represented by independent identical assets, the number of which being determined by the diversity score of the portfolio. The default and recovery properties of the collateral pool are incorporated in a cash flow model where the default probabilities are subject to stresses as a function of the target rating of each CLO liability being reviewed. The default probability range is derived from the credit quality of the collateral pool, and Moody's expectation of the remaining life of the collateral pool. The average recovery rate to be realized on future defaults is based primarily on the seniority and jurisdiction of the assets in the collateral pool. The cash flow model used for this transaction, whose description can be found in the methodology listed above, is Moody's EMEA Cash-Flow model. Due to the impact of revised and updated key assumptions referenced in "Moody's Approach to Rating Collateralized Loan Obligations" and "Annual Sector Review (2009): Global CLOs", key model inputs used by Moody's in its analysis, such as par, weighted average rating factor, diversity score, and weighted average recovery rate, may be different from the trustee's reported numbers. Moody's also notes that a material proportion of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. As credit estimates do not carry credit indicators such as ratings reviews and outlooks, a stress of a quarter notch-equivalent assumed downgrade was applied to each of these estimates. In addition, large single exposure to obligors bearing a Credit Estimates have been considered for the analysis and applied a stress applicable to concentrated pools with non publicly rated issuers as per the report titled "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009. * IRELAND: Minister Rules Out Tapping European Bailout Package -------------------------------------------------------------- Patrick Donahue at Bloomberg News reports that Irish Foreign Minister Micheal Martin "absolutely" ruled out activating the European bailout package for Ireland, saying markets will calm after the government clarifies bank-bailout costs and the budget outlook. Bloomberg relates Mr. Martin said the government in Dublin will provide details of the bailout costs for Anglo Irish Bank Corp. by the end of the week and soothe bond investors after Standard & Poor's said more than EUR35 billion (US$47 billion) may be needed. According to Bloomberg, he said the budget is financed through the middle of next year and Ireland won't need money from the euro fund. Bloomberg says buyers of Irish debt reacted to concern about the bank bailout, pushing the extra yield investors demand to hold the country's 10-year debt over German bunds to a record on Tuesday, Sept. 28. Mr. Martin, as cited by Bloomberg, said he's confident that calm will return when the cost for recapitalizing the state- owned lender is released this week and the government publishes its fiscal outlook in mid-October. He also dismissed speculation about a default among holders of Anglo Irish's senior debt, which was cut on Monday to the lowest investment grade rating by Moody's Investors Service, Bloomberg notes. * IRELAND: Must Honor Obligations, Finance Minister Says -------------------------------------------------------- BBC News reports that Irish Finance Minister Brian Lenihan has said that the Republic of Ireland must "honor its obligations" to retain the confidence of the global money markets. Mr. Lenihan told BBC the Irish economy had now "stabilized". BBC notes he said keeping creditors to the country's ailing banks on side was essential to the recovery. The country's banking sector has continued to struggle following the financial crisis, BBC says. "Irish banks are very dependent on the international wholesale money markets," Mr. Lenihan told the BBC's business editor, Robert Peston. "Those who acted in good faith to Irish lending institutions have to be convinced that Ireland will honor its obligations and Irish banks will honor their obligations. . . . If those obligations are not honored, Ireland's funding position in the future will be perilous." Some EUR22 billon has already been spent on rescuing banks hit by the collapse of the Republic's property bubble, BBC discloses. ========= I T A L Y ========= BANCO POPOLARE: Moody's Cuts Bank Financial Strength Rating to D+ ----------------------------------------------------------------- Moody's Investor Services has changed the outlook to negative from stable on the A2 long-term deposit rating and on the Prime-1 short-term deposit rating of Banco Popolare Societa Cooperativa and has downgraded the bank financial strength rating to D+ from C- (which now translates to a Baa3 on the long-term rating scale). The outlook on the deposit ratings was changed to negative from stable. These ratings were downgraded: -- Bank financial strength rating to D+ from C- -- Tier III MTN to (P)Baa1 from A3 -- Junior subordinated debt to (P)Ba1 from Baa3 -- Preferred stock to Ba3 from Ba2 Ratings Rationale Moody's commented that the downgrade and the negative outlook on the deposit ratings of Banco Popolare reflect the significant challenges that it faces. Against an operating environment that has become less accommodating for most Italian banks, Banco Popolare needs to finalize the restructuring and integration of its acquisitions, while at the same time it needs to establish a profitable, well capitalized business model. The obstacles it faces towards this are significant: it has low capital levels, and its internal capital generation is constrained by its low profitability, whereas external capital raising in the market is difficult with the company's corporate structure. Disposal of non-core assets could strengthen capital levels, but further impact the bank's ability to generate sustainable profit and weaken its franchise. While the bank is continuing to take measures aimed at de-risking its operations and improving profitability, efficiency and capital, Moody's believes that the achievement of these goals however remains a significant challenge, and that further downward rating pressure cannot be excluded if no visible progress is made. Moody's commented that the rating action in particular takes into account (i) the agency's expectation that Banco Popolare's modest operating profitability -- as evidenced by the H1 2010 audited results -- is not likely to significantly improve before 2012 given the fragile economic recovery in Italy; (ii) a liquidity profile below that of its Italian peers, also due to the consolidation of its subsidiary, Banca Italease and (iii) the bank's weak capital adequacy and asset quality (Banco Popolare had a Tier 1 and Core Tier 1 ratio of 7.7% and 6.1% respectively, as of June 2010). Furthermore, Moody's notes lack of visibility over the bank's strategy beyond immediate restructuring, with the business plan postponed until the end of the first quarter of 2011. The key factor supporting the current rating remains the bank's sound franchise as the fourth largest Italian bank, with about 5% market share in retail banking activities. Banco Popolare's deposit ratings therefore incorporate four notches of systemic support. Any lack of improvement in the bank's financial profile, and a failure to reach a Core Tier 1 ratio above 7% in a short timeframe in particular, could prompt Banco Popolare's BFSR to become more weakly positioned in the D+ category, or even result in a further lowering of the BFSR itself. This could result in a downgrade of the deposit ratings, hence the negative outlook. Moody's expects to resolve the negative outlook around April 2011 upon analysis of the full-year 2010 performance and greater clarity of the bank's business plan and strategy. Banco Popolare's BFSR could be upgraded if significant improvements to its borrower concentration and financial profile are achieved, including (i) a Core Tier 1 ratio above 7.5%; (ii) a cost-to-income ratio below 65%; (iii) problem loans below 5% of loans; and (iv) top 20 borrowers below 750% of pre-provision income. Given the negative outlook and the challenges faced by this bank, these are however likely to be medium term objectives. The key factual elements underpinning the rating action are the bank's Tier 1, problem loans and net income as stated in its audited financial statements as at June 2010 and December 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. ===================== N E T H E R L A N D S ===================== IMPRESS HOLDINGS: S&P Affirms Corporate Credit Rating at 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed the 'B+' long-term corporate credit rating on Impress Holdings B.V., Netherlands-based global provider of metal packaging. The outlook is stable. At the same time S&P placed the 'B+' issue ratings on Impress's ?615 million and US$175 million secured bonds on CreditWatch with developing implications. S&P placed the 'B-' issue rating in Impress's ?250 million unsecured bonds on CreditWatch with positive implications. "The affirmation follows an announcement by Ardagh Glass Group PLC that it intends to acquire Impress," said Standard & Poor's credit analyst Izabela Listowska. The acquisition is conditional on EU and U.S. competition authority approvals. If the transaction closes as currently contemplated by the end of 2010, the combined entity would have a "satisfactory" business risk profile and "highly leveraged" financial risk profile, with pro forma anticipated adjusted debt to EBITDA of 5.0x-5.5x and adjusted funds from operations to debt of 10%-11%. S&P does not currently anticipate raising or lowering the corporate credit rating on Impress as a result of the transaction. The current ratings on Impress remain constrained by Impress' high debt leverage and its exposure to input cost changes. In addition, the company faces meaningful competition, in particular from smaller regional players, in fairly mature markets. These risks are mitigated by Impress' leading positions in its core markets, about two-thirds of which are fairly stable because the underlying business is food related. Furthermore, the company benefits from its good geographic and customer diversification, long-standing relationships with key customers, and good profitability. The CreditWatch placements reflect the uncertainties regarding the successful full refinancing of each instrument, as well as their future relative ranking in Ardagh's capital structure, should they not be entirely refinanced. While S&P understand that, following Ardagh's offer to buy Impress, Ardagh must offer to repurchase Impress's bonds, given the presence of a change-of-control clause in each of Impress's bond documentation, some of Impress' bondholders may refuse the offer. "While S&P might lower, raise, or affirm the issue rating on the senior secured notes, S&P considers that S&P would only raise or affirm the issue rating on the unsecured instrument; hence the difference in CreditWatch status of the secured and unsecured instruments," said Ms. Listowska. S&P would withdraw the issue and recovery ratings on any successfully refinanced instruments. The outlook is stable and also reflects S&P's assumption that the proposed acquisition by Ardagh will be closed by 2010. =========== P O L A N D =========== PBP ORBIS: Files for Bankruptcy After Shareholder Pulls Plug ------------------------------------------------------------ Martyna Olik at Warsaw Business Journal reports that PBP Orbis on Tuesday filed for bankruptcy. According to Warsaw Business Journal, PBP Orbis said that the immediate cause of its bankruptcy was the majority shareholder's decision not to provide funds for the company. Warsaw Business Journal relates private equity fund Enterprise Investors informed PBP Orbis of its decision to withhold its cash on Sept. 14. "Until the very end, the board of PBP Orbis tried to save the Company by implementing a restructuring plan and actively searching for a new investor," the company said in an official announcement that appeared on its Web site on Wednesday morning, according to Warsaw Business Journal. "As of Sept. 29, 2010, all operational activity of the Company will be suspended, while all tourist events scheduled from Sept. 29, 2010 onwards are canceled," the company wrote, Warsaw Business Journal notes. Orbis S.A., the firm's former owner, estimates that it might lose up to PLN13.64 million from the bankruptcy, Warsaw Business Journal discloses. Warsaw Business Journal notes the hotel operator issued a statement saying that although the company is not part of the Orbis capital group, there are loan agreements to the tune of PLN7.64 connecting both companies and an amount of up to PLN6 million for the tourist guarantee. PBP Orbis is a travel agency based in Poland. =========== R U S S I A =========== DEVELOPMENT CAPITAL: S&P Gives Positive Outlook; Keeps 'B-' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it had revised its outlook on Russia-based Development Capital Bank OJSC to positive from stable. At the same time the 'B-' long-term and 'C' short- term counterparty credit ratings were affirmed. The outlook is stable. The Russia national scale rating was raised to 'ruBBB+' from 'ruBBB'. "The outlook revision reflects S&P's view that the bank has shown positive dynamics in its financial profile, namely its stronger balance-sheet liquidity, stabilization of asset quality indicators, improved funding profile and maintenance of solid capitalization," said Standard & Poor's credit analyst Sergey Voronenko. The ratings continue to be constrained by inherent risks related to its undiversified business profile including a highly concentrated loan portfolio and deposit base. Owned by Russian businessman Rustem Teregulov, Development Capital Bank is a small bank specializing in corporate banking and financial services mostly for a limited number of high net-worth individuals. On Sept. 1, 2010, the bank had total assets of Russian ruble 9 billion (about US$300 million). The ratings reflect the bank's stand-alone credit profile, and do not include any extraordinary external support, either from the owner or the government. The bank's limited business base and customer franchise result in significant single-name concentrations in its lending and funding profiles. As of Sept. 1, 2010, the top 20 borrowers accounted for about 90% of gross loans. Although Development Capital Bank has a strategic target of developing a wider customer base and product range, S&P expects concentrations to remain high over the medium term. The loan portfolio is highly concentrated in the real estate and construction industries (about 70% of total loans as at Sept. 1, 2010). This is mitigated by the owner's good knowledge of these industries, his personal business connections, and regular revaluation of collateral. Impaired loans comprised about 8% of total loans as of Sept. 1, 2010 (where overdue loans did not exceed 1%), with an additional 8% restructured in 2009. Development Capital Bank's customer deposit base more than doubled in 2009, but mostly consists of current accounts, forcing the bank to invest these funds into liquid short-term instruments. On Sept. 1, 2010, about one-third of Development Capital Bank's assets consisted of cash, interbank deposits, and bonds eligible for use in repurchase agreement transactions. In S&P's view, the securities portfolio bears only moderate credit risk; corporate bonds accounted for 95% of the bank's total securities investments or 21% of its total assets as at Sept. 1, 2010, and were issued by leading Russian companies and banks. Core profitability remained relatively good in 2009 and in the first eight months 2010, reflected in a net interest margin of 11%, owing to very low interest expenses and a high share of capital in the bank's overall funding base. A good level of capitalization and liquid assets provide a protective buffer against a possible moderate market downturn and room for further business growth. The positive outlook reflects S&P's belief that Development Capital Bank will continue to enhance its financial and business profile through organic business growth, while preserving an adequate liquidity position, capitalization, and acceptable asset quality metrics, despite high borrower concentrations. =============== S L O V E N I A =============== ABANKA VIPA: Moody's Lowers Financial Strength Rating to 'D+' ------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of four Slovenian banks: Nova Ljubljanska Banka, NLB InterFinanz, Nova Kreditna Banka Maribor and Abanka Vipa. The rating actions are: -- NLB's deposit ratings have been downgraded by two notches to A3/Prime-2 and its bank financial strength rating to D+; all ratings carry a negative outlook -- The issuer rating of NLB InterFinanz was downgraded to two notches to Ba1 and then withdrawn (see below for more details on the withdrawal). -- NKBM's deposit ratings were downgraded by two notches Baa1/Prime-2 and its BFSR was downgraded to D; all ratings carry a negative outlook -- Abanka's long-term deposit rating has been downgraded by one notch to Baa1 and its D+ BFSR was affirmed; the short-term P- 2 rating remains unchanged; all ratings carry a negative outlook In the case of NLB, NLB InterFinanz and NKBM, the rating action concludes the review for downgrade of their ratings initiated on 3 June 2010. Ratings Rationale Moody's says that the rating downgrades are driven by continuing pressure on the banks' financial metrics, given the weak credit environment in Slovenia and in other regional markets in which they operate. "The anaemic economic recovery in Slovenia, which has followed the sharp recession in 2009, continues to generate corporate insolvencies and is likely to result in further asset quality deterioration and significant provisioning needs in the second half of 2010," explains George Chrysaphinis, a Vice- President and Senior Analyst in Moody's Financial Institutions Group. "Although capitalization levels are currently adequate, the banks' financial positions remains under pressure because of the risk of further increases in non-performing loans and banks' limited capacity to build capital reserves through profits," continues Mr. Chrysaphinis. The rating agency believes that these new ratings more accurately reflect this position. Moody's decision to maintain all of the negative outlooks on the banks' ratings reflects the possibility of further material deterioration in the banks' financial positions in the coming months. Ratings could be potentially downgraded further if there is significant additional asset quality deterioration, putting pressure on capital. Rating Actions In Detail Nova Ljubljanska Banka Moody's has downgraded NLB's long- and short-term deposit ratings to A3/Prime-2 and its BFSR to D+, mapping to a baseline credit assessment of Ba1. The outlook on all ratings is negative. The rating action is driven by the bank's currently modest capitalization position within the context of continued weakness in the Slovenian credit environment. In assessing the vulnerability of NLB's capital position, Moody's took into account the bank's elevated loan loss provisioning expenses during the first half of 2010 and also noted the continued flow of major corporate insolvencies in Slovenia during the year as evidence of ongoing weakness in the credit environment. In addition, Moody's has taken into consideration the bank's high corporate loan concentration and material presence in other regional markets in south eastern Europe, which further amplifies its exposure to credit risk. Moody's has also accounted for the likelihood that the bank will proceed with a substantial rights issue over the next few months, in line with plans announced by NLB's management and echoed by the Slovenian government -- NLB's largest shareholder -- in public statements. Moody's decision to downgrade NLB's BFSR to D+ reflects the sharper-than-expected deterioration in the bank's financial position in 2009 and the ongoing weakness in the credit environment. In Moody's opinion, these factors more than offset the positive impact of the planned capital injection. The two-notch downgrade of the bank's long-term deposit rating to A3 is driven by the downgrade of the BFSR to D+, equivalent to a BCA of Ba1. The A3 long-term deposit rating therefore continues to incorporate four notches of uplift due to the likelihood of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR190.0 million subordinated loan to Baa1 -- The EUR100.0 million perpetual subordinated floating-rate notes to Ba1 Nlb Interfinanz Moody's has downgraded NLB InterFinanz's issuer rating by two notches to Ba1. This action reflects (i) NLB's reduced capacity to provide parental support following the downgrade of its BFSR to D+, and (ii) pressure on the company's stand-alone financial strength as a result of weakening asset quality (though it remains profitable). The rating of NLB InterFinanz continues to incorporate some uplift due to parental support from NLB. Moody's Investors Service has withdrawn the credit rating of NLB InterFinanz for its own business reasons. Nova Kreditna Banka Maribor Moody's has downgraded NKBM's long- and short-term deposit ratings to Baa1/Prime-2 and the BFSR has been downgraded to D, mapping onto a baseline credit assessment of Ba2. All ratings carry a negative outlook. The rating action reflects the reassessment of the bank's financial strength as continued weakness in the Slovenian credit environment could yield further material deterioration in the bank's asset quality in 2010, following a difficult 2009, especially within the context of high corporate loan concentrations. The rating downgrade recognizes that, although current capitalization is adequate, deteriorating asset quality and declining provisioning coverage are more consistent with the new rating level. Moody's adds that, at the Baa1 level, NKBM's deposit ratings continue to benefit from four notches of uplift as a result of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR100.0 million 7.02% subordinated loan participation notes were downgraded to Ba2 -- The EUR50.0 million subordinated floating-rate Eurobonds were downgraded to Ba2 Abanka Vipa Moody's has downgraded Abanka's long-term deposit rating to Baa1. Although its D+ BFSR has been affirmed, its BCA now maps to the Ba1 level from Baa3 previously. The short-term P-2 rating remains unchanged. All ratings carry a negative outlook. The rating action is driven by the continued weakness in the Slovenian credit environment, which is likely to lead to a deterioration in the bank's financial position over the next few months. Moody's says that although Abanka's capitalization is currently sound and despite its asset quality comparing favorably with its peers, the bank remains vulnerable to the weak credit environment in Slovenia, as evidenced by the continued flow of corporate insolvencies and given the bank's high corporate loan concentrations. The maintenance of a negative outlook on Abanka's ratings reflects the fact that the bank's position within its rating category is vulnerable to worse-than-anticipated economic developments in Slovenia. This debt of Abanka was also downgraded and remains on negative outlook: -- EUR120.0 million preferred stock loan participation notes to Ba3 Previous Rating Actions and Methodologies Moody's previous rating action on Nova Ljubljanska Banka was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on NLB Interfinanz was implemented on 3 June 2010 when its issuer rating was put on review for possible downgrade. Moody's previous rating action on Nova Kreditna Banka Maribor was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on Abanka Vipa was implemented on 3 June 2010 when the bank's A3/Prime-2 deposit ratings and D+ BFSR of Abanka Vipa (Abanka) were affirmed. Headquartered in Ljubljana, Slovenia, Nova Ljubljanska Banka reported total consolidated assets of EUR19.58 billion as of 30 June 2010. Headquartered in Zurich, Switzerland, NLB Interfinanz reported total consolidated assets of CHF781.76 million (EUR525.6 million) as of 31 December 2009. Headquartered in Maribor, Slovenia, Nova Kreditna Banka Maribor reported total consolidated assets of EUR5.92 billion as of 30 June 2010. Headquartered in Ljubljana, Slovenia, Abanka Vipa reported total consolidated assets of EUR4.69 billion as of 30 June 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. NLB INTERFINANZ: Moody's Downgrades Issuer Rating to 'Ba1' ---------------------------------------------------------- Moody's Investors Service has downgraded the ratings of four Slovenian banks: Nova Ljubljanska Banka, NLB InterFinanz, Nova Kreditna Banka Maribor and Abanka Vipa. The rating actions are: -- NLB's deposit ratings have been downgraded by two notches to A3/Prime-2 and its bank financial strength rating to D+; all ratings carry a negative outlook -- The issuer rating of NLB InterFinanz was downgraded to two notches to Ba1 and then withdrawn (see below for more details on the withdrawal). -- NKBM's deposit ratings were downgraded by two notches Baa1/Prime-2 and its BFSR was downgraded to D; all ratings carry a negative outlook -- Abanka's long-term deposit rating has been downgraded by one notch to Baa1 and its D+ BFSR was affirmed; the short-term P- 2 rating remains unchanged; all ratings carry a negative outlook In the case of NLB, NLB InterFinanz and NKBM, the rating action concludes the review for downgrade of their ratings initiated on 3 June 2010. Ratings Rationale Moody's says that the rating downgrades are driven by continuing pressure on the banks' financial metrics, given the weak credit environment in Slovenia and in other regional markets in which they operate. "The anaemic economic recovery in Slovenia, which has followed the sharp recession in 2009, continues to generate corporate insolvencies and is likely to result in further asset quality deterioration and significant provisioning needs in the second half of 2010," explains George Chrysaphinis, a Vice- President and Senior Analyst in Moody's Financial Institutions Group. "Although capitalization levels are currently adequate, the banks' financial positions remains under pressure because of the risk of further increases in non-performing loans and banks' limited capacity to build capital reserves through profits," continues Mr. Chrysaphinis. The rating agency believes that these new ratings more accurately reflect this position. Moody's decision to maintain all of the negative outlooks on the banks' ratings reflects the possibility of further material deterioration in the banks' financial positions in the coming months. Ratings could be potentially downgraded further if there is significant additional asset quality deterioration, putting pressure on capital. Rating Actions In Detail Nova Ljubljanska Banka Moody's has downgraded NLB's long- and short-term deposit ratings to A3/Prime-2 and its BFSR to D+, mapping to a baseline credit assessment of Ba1. The outlook on all ratings is negative. The rating action is driven by the bank's currently modest capitalization position within the context of continued weakness in the Slovenian credit environment. In assessing the vulnerability of NLB's capital position, Moody's took into account the bank's elevated loan loss provisioning expenses during the first half of 2010 and also noted the continued flow of major corporate insolvencies in Slovenia during the year as evidence of ongoing weakness in the credit environment. In addition, Moody's has taken into consideration the bank's high corporate loan concentration and material presence in other regional markets in south eastern Europe, which further amplifies its exposure to credit risk. Moody's has also accounted for the likelihood that the bank will proceed with a substantial rights issue over the next few months, in line with plans announced by NLB's management and echoed by the Slovenian government -- NLB's largest shareholder -- in public statements. Moody's decision to downgrade NLB's BFSR to D+ reflects the sharper-than-expected deterioration in the bank's financial position in 2009 and the ongoing weakness in the credit environment. In Moody's opinion, these factors more than offset the positive impact of the planned capital injection. The two-notch downgrade of the bank's long-term deposit rating to A3 is driven by the downgrade of the BFSR to D+, equivalent to a BCA of Ba1. The A3 long-term deposit rating therefore continues to incorporate four notches of uplift due to the likelihood of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR190.0 million subordinated loan to Baa1 -- The EUR100.0 million perpetual subordinated floating-rate notes to Ba1 Nlb Interfinanz Moody's has downgraded NLB InterFinanz's issuer rating by two notches to Ba1. This action reflects (i) NLB's reduced capacity to provide parental support following the downgrade of its BFSR to D+, and (ii) pressure on the company's stand-alone financial strength as a result of weakening asset quality (though it remains profitable). The rating of NLB InterFinanz continues to incorporate some uplift due to parental support from NLB. Moody's Investors Service has withdrawn the credit rating of NLB InterFinanz for its own business reasons. Nova Kreditna Banka Maribor Moody's has downgraded NKBM's long- and short-term deposit ratings to Baa1/Prime-2 and the BFSR has been downgraded to D, mapping onto a baseline credit assessment of Ba2. All ratings carry a negative outlook. The rating action reflects the reassessment of the bank's financial strength as continued weakness in the Slovenian credit environment could yield further material deterioration in the bank's asset quality in 2010, following a difficult 2009, especially within the context of high corporate loan concentrations. The rating downgrade recognizes that, although current capitalization is adequate, deteriorating asset quality and declining provisioning coverage are more consistent with the new rating level. Moody's adds that, at the Baa1 level, NKBM's deposit ratings continue to benefit from four notches of uplift as a result of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR100.0 million 7.02% subordinated loan participation notes were downgraded to Ba2 -- The EUR50.0 million subordinated floating-rate Eurobonds were downgraded to Ba2 Abanka Vipa Moody's has downgraded Abanka's long-term deposit rating to Baa1. Although its D+ BFSR has been affirmed, its BCA now maps to the Ba1 level from Baa3 previously. The short-term P-2 rating remains unchanged. All ratings carry a negative outlook. The rating action is driven by the continued weakness in the Slovenian credit environment, which is likely to lead to a deterioration in the bank's financial position over the next few months. Moody's says that although Abanka's capitalization is currently sound and despite its asset quality comparing favorably with its peers, the bank remains vulnerable to the weak credit environment in Slovenia, as evidenced by the continued flow of corporate insolvencies and given the bank's high corporate loan concentrations. The maintenance of a negative outlook on Abanka's ratings reflects the fact that the bank's position within its rating category is vulnerable to worse-than-anticipated economic developments in Slovenia. This debt of Abanka was also downgraded and remains on negative outlook: -- EUR120.0 million preferred stock loan participation notes to Ba3 Previous Rating Actions and Methodologies Moody's previous rating action on Nova Ljubljanska Banka was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on NLB Interfinanz was implemented on 3 June 2010 when its issuer rating was put on review for possible downgrade. Moody's previous rating action on Nova Kreditna Banka Maribor was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on Abanka Vipa was implemented on 3 June 2010 when the bank's A3/Prime-2 deposit ratings and D+ BFSR of Abanka Vipa (Abanka) were affirmed. Headquartered in Ljubljana, Slovenia, Nova Ljubljanska Banka reported total consolidated assets of EUR19.58 billion as of 30 June 2010. Headquartered in Zurich, Switzerland, NLB Interfinanz reported total consolidated assets of CHF781.76 million (EUR525.6 million) as of 31 December 2009. Headquartered in Maribor, Slovenia, Nova Kreditna Banka Maribor reported total consolidated assets of EUR5.92 billion as of 30 June 2010. Headquartered in Ljubljana, Slovenia, Abanka Vipa reported total consolidated assets of EUR4.69 billion as of 30 June 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. NOVA KREDITNA: Moody's Lowers Financial Strength Rating to 'D' -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of four Slovenian banks: Nova Ljubljanska Banka, NLB InterFinanz, Nova Kreditna Banka Maribor and Abanka Vipa. The rating actions are: -- NLB's deposit ratings have been downgraded by two notches to A3/Prime-2 and its bank financial strength rating to D+; all ratings carry a negative outlook -- The issuer rating of NLB InterFinanz was downgraded to two notches to Ba1 and then withdrawn (see below for more details on the withdrawal). -- NKBM's deposit ratings were downgraded by two notches Baa1/Prime-2 and its BFSR was downgraded to D; all ratings carry a negative outlook -- Abanka's long-term deposit rating has been downgraded by one notch to Baa1 and its D+ BFSR was affirmed; the short-term P- 2 rating remains unchanged; all ratings carry a negative outlook In the case of NLB, NLB InterFinanz and NKBM, the rating action concludes the review for downgrade of their ratings initiated on 3 June 2010. Ratings Rationale Moody's says that the rating downgrades are driven by continuing pressure on the banks' financial metrics, given the weak credit environment in Slovenia and in other regional markets in which they operate. "The anaemic economic recovery in Slovenia, which has followed the sharp recession in 2009, continues to generate corporate insolvencies and is likely to result in further asset quality deterioration and significant provisioning needs in the second half of 2010," explains George Chrysaphinis, a Vice- President and Senior Analyst in Moody's Financial Institutions Group. "Although capitalization levels are currently adequate, the banks' financial positions remains under pressure because of the risk of further increases in non-performing loans and banks' limited capacity to build capital reserves through profits," continues Mr. Chrysaphinis. The rating agency believes that these new ratings more accurately reflect this position. Moody's decision to maintain all of the negative outlooks on the banks' ratings reflects the possibility of further material deterioration in the banks' financial positions in the coming months. Ratings could be potentially downgraded further if there is significant additional asset quality deterioration, putting pressure on capital. Rating Actions In Detail Nova Ljubljanska Banka Moody's has downgraded NLB's long- and short-term deposit ratings to A3/Prime-2 and its BFSR to D+, mapping to a baseline credit assessment of Ba1. The outlook on all ratings is negative. The rating action is driven by the bank's currently modest capitalization position within the context of continued weakness in the Slovenian credit environment. In assessing the vulnerability of NLB's capital position, Moody's took into account the bank's elevated loan loss provisioning expenses during the first half of 2010 and also noted the continued flow of major corporate insolvencies in Slovenia during the year as evidence of ongoing weakness in the credit environment. In addition, Moody's has taken into consideration the bank's high corporate loan concentration and material presence in other regional markets in south eastern Europe, which further amplifies its exposure to credit risk. Moody's has also accounted for the likelihood that the bank will proceed with a substantial rights issue over the next few months, in line with plans announced by NLB's management and echoed by the Slovenian government -- NLB's largest shareholder -- in public statements. Moody's decision to downgrade NLB's BFSR to D+ reflects the sharper-than-expected deterioration in the bank's financial position in 2009 and the ongoing weakness in the credit environment. In Moody's opinion, these factors more than offset the positive impact of the planned capital injection. The two-notch downgrade of the bank's long-term deposit rating to A3 is driven by the downgrade of the BFSR to D+, equivalent to a BCA of Ba1. The A3 long-term deposit rating therefore continues to incorporate four notches of uplift due to the likelihood of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR190.0 million subordinated loan to Baa1 -- The EUR100.0 million perpetual subordinated floating-rate notes to Ba1 Nlb Interfinanz Moody's has downgraded NLB InterFinanz's issuer rating by two notches to Ba1. This action reflects (i) NLB's reduced capacity to provide parental support following the downgrade of its BFSR to D+, and (ii) pressure on the company's stand-alone financial strength as a result of weakening asset quality (though it remains profitable). The rating of NLB InterFinanz continues to incorporate some uplift due to parental support from NLB. Moody's Investors Service has withdrawn the credit rating of NLB InterFinanz for its own business reasons. Nova Kreditna Banka Maribor Moody's has downgraded NKBM's long- and short-term deposit ratings to Baa1/Prime-2 and the BFSR has been downgraded to D, mapping onto a baseline credit assessment of Ba2. All ratings carry a negative outlook. The rating action reflects the reassessment of the bank's financial strength as continued weakness in the Slovenian credit environment could yield further material deterioration in the bank's asset quality in 2010, following a difficult 2009, especially within the context of high corporate loan concentrations. The rating downgrade recognizes that, although current capitalization is adequate, deteriorating asset quality and declining provisioning coverage are more consistent with the new rating level. Moody's adds that, at the Baa1 level, NKBM's deposit ratings continue to benefit from four notches of uplift as a result of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR100.0 million 7.02% subordinated loan participation notes were downgraded to Ba2 -- The EUR50.0 million subordinated floating-rate Eurobonds were downgraded to Ba2 Abanka Vipa Moody's has downgraded Abanka's long-term deposit rating to Baa1. Although its D+ BFSR has been affirmed, its BCA now maps to the Ba1 level from Baa3 previously. The short-term P-2 rating remains unchanged. All ratings carry a negative outlook. The rating action is driven by the continued weakness in the Slovenian credit environment, which is likely to lead to a deterioration in the bank's financial position over the next few months. Moody's says that although Abanka's capitalization is currently sound and despite its asset quality comparing favorably with its peers, the bank remains vulnerable to the weak credit environment in Slovenia, as evidenced by the continued flow of corporate insolvencies and given the bank's high corporate loan concentrations. The maintenance of a negative outlook on Abanka's ratings reflects the fact that the bank's position within its rating category is vulnerable to worse-than-anticipated economic developments in Slovenia. This debt of Abanka was also downgraded and remains on negative outlook: -- EUR120.0 million preferred stock loan participation notes to Ba3 Previous Rating Actions and Methodologies Moody's previous rating action on Nova Ljubljanska Banka was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on NLB Interfinanz was implemented on 3 June 2010 when its issuer rating was put on review for possible downgrade. Moody's previous rating action on Nova Kreditna Banka Maribor was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on Abanka Vipa was implemented on 3 June 2010 when the bank's A3/Prime-2 deposit ratings and D+ BFSR of Abanka Vipa (Abanka) were affirmed. Headquartered in Ljubljana, Slovenia, Nova Ljubljanska Banka reported total consolidated assets of EUR19.58 billion as of 30 June 2010. Headquartered in Zurich, Switzerland, NLB Interfinanz reported total consolidated assets of CHF781.76 million (EUR525.6 million) as of 31 December 2009. Headquartered in Maribor, Slovenia, Nova Kreditna Banka Maribor reported total consolidated assets of EUR5.92 billion as of 30 June 2010. Headquartered in Ljubljana, Slovenia, Abanka Vipa reported total consolidated assets of EUR4.69 billion as of 30 June 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. NOVA LJUBLJANSKA: Moody's Cuts Financial Strength Rating to 'D+' ---------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of four Slovenian banks: Nova Ljubljanska Banka, NLB InterFinanz, Nova Kreditna Banka Maribor and Abanka Vipa. The rating actions are: -- NLB's deposit ratings have been downgraded by two notches to A3/Prime-2 and its bank financial strength rating to D+; all ratings carry a negative outlook -- The issuer rating of NLB InterFinanz was downgraded to two notches to Ba1 and then withdrawn (see below for more details on the withdrawal). -- NKBM's deposit ratings were downgraded by two notches Baa1/Prime-2 and its BFSR was downgraded to D; all ratings carry a negative outlook -- Abanka's long-term deposit rating has been downgraded by one notch to Baa1 and its D+ BFSR was affirmed; the short-term P- 2 rating remains unchanged; all ratings carry a negative outlook In the case of NLB, NLB InterFinanz and NKBM, the rating action concludes the review for downgrade of their ratings initiated on 3 June 2010. Ratings Rationale Moody's says that the rating downgrades are driven by continuing pressure on the banks' financial metrics, given the weak credit environment in Slovenia and in other regional markets in which they operate. "The anaemic economic recovery in Slovenia, which has followed the sharp recession in 2009, continues to generate corporate insolvencies and is likely to result in further asset quality deterioration and significant provisioning needs in the second half of 2010," explains George Chrysaphinis, a Vice- President and Senior Analyst in Moody's Financial Institutions Group. "Although capitalization levels are currently adequate, the banks' financial positions remains under pressure because of the risk of further increases in non-performing loans and banks' limited capacity to build capital reserves through profits," continues Mr. Chrysaphinis. The rating agency believes that these new ratings more accurately reflect this position. Moody's decision to maintain all of the negative outlooks on the banks' ratings reflects the possibility of further material deterioration in the banks' financial positions in the coming months. Ratings could be potentially downgraded further if there is significant additional asset quality deterioration, putting pressure on capital. Rating Actions In Detail Nova Ljubljanska Banka Moody's has downgraded NLB's long- and short-term deposit ratings to A3/Prime-2 and its BFSR to D+, mapping to a baseline credit assessment of Ba1. The outlook on all ratings is negative. The rating action is driven by the bank's currently modest capitalization position within the context of continued weakness in the Slovenian credit environment. In assessing the vulnerability of NLB's capital position, Moody's took into account the bank's elevated loan loss provisioning expenses during the first half of 2010 and also noted the continued flow of major corporate insolvencies in Slovenia during the year as evidence of ongoing weakness in the credit environment. In addition, Moody's has taken into consideration the bank's high corporate loan concentration and material presence in other regional markets in south eastern Europe, which further amplifies its exposure to credit risk. Moody's has also accounted for the likelihood that the bank will proceed with a substantial rights issue over the next few months, in line with plans announced by NLB's management and echoed by the Slovenian government -- NLB's largest shareholder -- in public statements. Moody's decision to downgrade NLB's BFSR to D+ reflects the sharper-than-expected deterioration in the bank's financial position in 2009 and the ongoing weakness in the credit environment. In Moody's opinion, these factors more than offset the positive impact of the planned capital injection. The two-notch downgrade of the bank's long-term deposit rating to A3 is driven by the downgrade of the BFSR to D+, equivalent to a BCA of Ba1. The A3 long-term deposit rating therefore continues to incorporate four notches of uplift due to the likelihood of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR190.0 million subordinated loan to Baa1 -- The EUR100.0 million perpetual subordinated floating-rate notes to Ba1 Nlb Interfinanz Moody's has downgraded NLB InterFinanz's issuer rating by two notches to Ba1. This action reflects (i) NLB's reduced capacity to provide parental support following the downgrade of its BFSR to D+, and (ii) pressure on the company's stand-alone financial strength as a result of weakening asset quality (though it remains profitable). The rating of NLB InterFinanz continues to incorporate some uplift due to parental support from NLB. Moody's Investors Service has withdrawn the credit rating of NLB InterFinanz for its own business reasons. Nova Kreditna Banka Maribor Moody's has downgraded NKBM's long- and short-term deposit ratings to Baa1/Prime-2 and the BFSR has been downgraded to D, mapping onto a baseline credit assessment of Ba2. All ratings carry a negative outlook. The rating action reflects the reassessment of the bank's financial strength as continued weakness in the Slovenian credit environment could yield further material deterioration in the bank's asset quality in 2010, following a difficult 2009, especially within the context of high corporate loan concentrations. The rating downgrade recognizes that, although current capitalization is adequate, deteriorating asset quality and declining provisioning coverage are more consistent with the new rating level. Moody's adds that, at the Baa1 level, NKBM's deposit ratings continue to benefit from four notches of uplift as a result of systemic support. The negative outlook on the ratings reflects the downside risk to current assumptions about the severity and duration of asset quality weakening at the bank. This debt was also downgraded: -- The EUR100.0 million 7.02% subordinated loan participation notes were downgraded to Ba2 -- The EUR50.0 million subordinated floating-rate Eurobonds were downgraded to Ba2 Abanka Vipa Moody's has downgraded Abanka's long-term deposit rating to Baa1. Although its D+ BFSR has been affirmed, its BCA now maps to the Ba1 level from Baa3 previously. The short-term P-2 rating remains unchanged. All ratings carry a negative outlook. The rating action is driven by the continued weakness in the Slovenian credit environment, which is likely to lead to a deterioration in the bank's financial position over the next few months. Moody's says that although Abanka's capitalization is currently sound and despite its asset quality comparing favorably with its peers, the bank remains vulnerable to the weak credit environment in Slovenia, as evidenced by the continued flow of corporate insolvencies and given the bank's high corporate loan concentrations. The maintenance of a negative outlook on Abanka's ratings reflects the fact that the bank's position within its rating category is vulnerable to worse-than-anticipated economic developments in Slovenia. This debt of Abanka was also downgraded and remains on negative outlook: -- EUR120.0 million preferred stock loan participation notes to Ba3 Previous Rating Actions and Methodologies Moody's previous rating action on Nova Ljubljanska Banka was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on NLB Interfinanz was implemented on 3 June 2010 when its issuer rating was put on review for possible downgrade. Moody's previous rating action on Nova Kreditna Banka Maribor was implemented on 3 June 2010 when the bank's ratings were put on review for possible downgrade. Moody's previous rating action on Abanka Vipa was implemented on 3 June 2010 when the bank's A3/Prime-2 deposit ratings and D+ BFSR of Abanka Vipa (Abanka) were affirmed. Headquartered in Ljubljana, Slovenia, Nova Ljubljanska Banka reported total consolidated assets of EUR19.58 billion as of 30 June 2010. Headquartered in Zurich, Switzerland, NLB Interfinanz reported total consolidated assets of CHF781.76 million (EUR525.6 million) as of 31 December 2009. Headquartered in Maribor, Slovenia, Nova Kreditna Banka Maribor reported total consolidated assets of EUR5.92 billion as of 30 June 2010. Headquartered in Ljubljana, Slovenia, Abanka Vipa reported total consolidated assets of EUR4.69 billion as of 30 June 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. ========= S P A I N ========= MALLORCA: Dismisses Club President Josep Pons --------------------------------------------- Troubled Primera Division side Mallorca has dismissed club president Josep Pons after the former Spanish ambassador was accused on sexual harassment charges, Peace FM Online reports. According to the report, Mr. Pons was appointed club president at the end of last season, when Lorenzo Serra Ferrer took over ownership of the entity as they plunged into administration. The report relates that the case against Mr. Pons derives from his period working in the Spanish embassy in Austria, and an employee has failed an official complaint. The report notes that the board of directors convened to establish the most suitable course of action and selected to dismiss the diplomat and promote Vice President Jaume Cladera into his position. The report relates that Efe reported that Mr. Pons protested his innocence and refuted claims that there had been any allegations made against him. Despite Mr. Pons' protestations, the club has decided to remove him until the case can be investigated in full, the report adds. SANTANDER CONSUMER: Fitch Affirms Junks Ratings on Various Notes ---------------------------------------------------------------- Fitch Ratings has affirmed Santander Consumer Spain Auto 06, FTA ratings and revised the Outlooks on the class A, B and C notes to Stable from Negative. Also following Fitch's recent review of the transactions' performance, the agency has downgraded the mezzanine and junior classes of Santander Consumer Spain Auto 07-1, FTA and Santander Consumer Spain 08-1, FTA. A full rating breakdown is provided below: Santander Consumer Spain Auto 06, FTA: -- EUR288,6m class A (ISIN ES0338057005): affirmed at 'AA+sf'; Outlook revised to Stable from Negative; Loss Severity (LS) Rating 'LS-1' -- EUR22.3m class B (ISIN ES0338057013): affirmed at 'Asf'; Outlook revised to Stable from Negative; Loss Severity (LS) Rating 'LS-3' -- EUR22.3m class C (ISIN ES0338057021): affirmed at 'BBBsf'; Outlook revised to Stable from Negative; Loss Severity (LS) Rating 'LS-3' -- EUR22.9m class D (ISIN ES0338057039): affirmed at 'CCCsf'; Recovery Rating 'RR4' -- EUR10.2m class E (ISIN ES0338057047): affirmed at 'CCsf'; Recovery Rating 'RR5' Santander Consumer Spain Auto 07-1, FTA: -- EUR849,0m class A (ISIN ES0337709002): affirmed at 'AAsf'; Outlook revised to Stable from Negative; Loss Severity (LS) Rating 'LS-1' -- EUR78m class B (ISIN ES0337709010): affirmed at 'BBBsf'; Outlook Negative; LS Rating revised to 'LS-3' from 'LS-4' -- EUR20m class C (ISIN ES0337709028): downgraded to 'Bsf' from 'B+sf'; Outlook Negative; LS Rating 'LS-5' -- EUR40m class D (ISIN ES0337709036): affirmed at 'CCsf'; Recovery Rating revised to 'RR5' from 'RR3'. Santander Consumer Spain 08-1, FTA: -- EUR251,1m class A (ISIN ES0378638003): affirmed at 'AA-sf'; Outlook Negative; LS Rating 'LS-2' -- EUR35m class B (ISIN ES0378638011): downgraded to 'BBsf' from 'BBBsf'; Outlook Negative; LS Rating revised to 'LS-3' from 'LS-4' -- EUR10m class C (ISIN ES0378638029): downgraded to 'CCCsf' from 'BBsf'; assigned Recovery Rating 'RR2' -- EUR12m class D (ISIN ES0378638037): downgraded to 'CCsf' from 'CCCsf'; Recovery Rating revised to 'RR3' from 'RR2'. -- EUR10m class E (ISIN ES0378638045): downgraded to 'Csf' from 'CCsf'; Recovery Rating revised to 'RR5' from 'RR3'. Fitch has revised the Outlooks of class A, B and C notes of Santander Consumer Spain Auto 06 to Stable from Negative and affirmed all the ratings on this deal due to an improvement in the performance of the underlying pool and adequate credit support. Fitch believes the transaction will continue to benefit from deleveraging, resulting in further increases in the available credit enhancement. Following a period of climbing arrears from January 2008 to January 2009, early and middle stage delinquencies began to stabilize a year ago. Since then, arrears have decreased in the latest payment dates. As of July 2010, 90 days-past-due delinquencies stood at 4.2%, versus 5.4% in January 2010. As a result, excess spread trends are increasingly positive, and Fitch expects the reserve fund to continue to increase given the decreasing delinquency pipeline. For Santander Consumer Spain Auto 07-1, FTA and Santander Consumer Spain Auto, 08-1, delinquencies are stabilizing, albeit at elevated levels. For the 07-1 deal, 90dpd delinquencies were 6.9% as of June 2010, up from 6.7% in March 2010, whereas 90dpd delinquencies for the 08-1 deal were 10.5% as of the latest payment date compared to 11.4% as of January 2010. Fitch expects defaults to increase as late stage arrears progress to the default threshold. The 07-1 and 08-1 transactions have a relatively late- stage default definition of 18 months-past-due (mpd), compared to 12mpd for Santander Consumer Spain Auto 06. Fitch notes that excess spread has dropped for the 07-1 and 08-1 transactions as a result of the significant rise in defaulted loans. Fitch expects excess spread to remain negative for the next several quarters. As a result, Fitch expects increased pressure on the reserve fund following the elevated default volumes (1.5% for 07-1 and 2.3% for 08-1 as of the latest payment date). For Santander Consumer Spain 08-1, the agency expects the reserve fund to be completely drawn and a principal deficiency ledger to start building up in the short term. Fitch's affirmation of the ratings of the senior classes of Santander Consumer Spain Auto 07-1 and 08-1 reflects the positive effect of the transaction amortization on the available credit enhancement. For the same deals, Fitch's downgrades of the ratings of the mezzanine and junior classes reflect increasing exposure to future performance deterioration as reserve funds decline. Based on the current pool performance, Fitch has revised its assumptions on the expected defaults and recovery rate for the remaining pool. Other factors, such as the pool de-leveraging, prepayment and weighted average residual life, have also been factored into the final rating analysis. * SPAIN: Grappling With Real Estate Crisis; At Risk of Recession ---------------------------------------------------------------- InsolvencyJournal.ie, citing Nick Hood from Begbies Global Network, reports that Spain is grappling with the worst real estate crisis in the world. According to InsolvencyJournal.ie, there are now some 1.5 million unfinished, unsold or unwanted residential units across the country, a housing mountain of epic proportions, estimated by some to represent 30 years' demand at present sales levels. InsolvencyJournal.ie relates earlier this year the Bank of Spain suggested that EUR165 billion in loans, equal to just under 40% of all bank exposure to construction and real estate, may turn out to be irrecoverable threatening the financial sector with a repeat off Japan's zombie bank syndrome of the 1990s when banks hoarded capital to cover losses. InsolvencyJournal.ie says Spain remains at real risk of sliding back into recession amid speculation that yet further deficit reduction measures will be forced on the government, triggering a downward spiral with serious implications for the Eurozone. =========== S W E D E N =========== SAAB AUTOMOBILE: Has Engine Purchasing Deal With BMW ---------------------------------------------------- Saab Automobile and Bayerische Motoren Werke AG have agreed on a deal that allows the Swedish carmaker to use engines made by BMW, Ola Kinnander and Chris Reiter at Bloomberg News report, citing a person with direct knowledge of the matter. Bloomberg relates the person said Saab will initially purchase BMW engines for the 9-3 model that is scheduled for release in late 2012. Spyker Cars, Saab's new owner, "confirms that talks are ongoing and will give further details once a final agreement has been reached," the Zeewolde, Netherlands-based company said in a statement, according to Bloomberg. Bloomberg notes the person said the automakers are also in talks about Saab buying diesel engines from Munich-based BMW, as well as using BMW's Mini Countryman platform for its smaller 9-2 model. As reported by the Troubled Company Reporter-Europe on Sept. 24, 2010, Bloomberg News said that Volvo Cars and Saab Automobile, struggling to revive slumping U.S. sales, need to find distinctive design and the right price tags to compete as luxury brands against BMW and Daimler AG. Bloomberg said moving into the luxury segment in the U.S. is essential to restoring profitability at Saab and Volvo after years of losses under General Motors Co. and Ford Motor Co. Bloomberg disclosed Saab's U.S. sales, which peaked at 48,000 cars in 2003, dropped to 8,500 in 2009, while Volvo's U.S. deliveries declined 16% to 61,435 during the year. The fight back will be toughest for Saab, which was on the brink of collapse before Spyker stepped in, according to Bloomberg. With an annual production of up to 126,000 cars, Saab's current models include the 9-3 (available as a convertible or sport sedan), the luxury 9-5 sedan (also available in a sport wagon), and the seven-passenger 9-7X SUV. As it prepared to separate from General Motors, Saab filed for bankruptcy protection in February 2009. A year later, in February 2010, GM sold Saab to Dutch sports car maker Spyker Cars for about US$400 million in cash and stock. ============= U K R A I N E ============= FERREXPO PLC: Moody's Assigns 'B2' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service has assigned Corporate Family and Probability of Default Ratings of B2 to Ferrexpo Plc, a Ukrainian iron ore pellet producer. The outlook is stable. This is the first time that Moody's has rated Ferrexpo Plc. Ratings Rationale The B2 corporate family rating recognizes the company's (i) access to sizeable iron ore reserves and unexploited iron ore resources adjacent to its existing exploited iron ore deposits (almost 7 billion tons of measured and indicated resources including 1.5 billion tons of proven and probable reserves), (ii) geographical location with good access to the European markets and to the seaborne market thanks to its proximity to the Black Sea, (iii) long history of iron ore mining and iron ore pellet production at its main operating subsidiary Ferrexpo Poltava GOK Corporation, (iv) relatively strong market position in iron ore pellets as the sixth largest pellet producer worldwide, (v) sound balance sheet structure and debt metrics to date despite having experienced volatility in iron ore and pellets prices over the last eighteen to twenty four months, and (vi) the group's continued focus on reducing operating cash costs which are currently at the bottom end of the second quartile of the pellet production industry cost curve. On a more negative tone, the rating is constrained by (i) the exposure of the group to a single commodity which has proven volatile over the recent past, (ii) Ferrexpo's concentration in iron ore resources in one single location which increases the production outage risk notwithstanding that the production track record of the group has been good so far, (iii) the relatively low grade of the group's mining deposits compared to some competitors, (iv) the average cash cost structure of the group with a position at the low end of the second quartile of the iron ore pellet production industry cost curve, (v) the group's strong customer concentration with material revenues generated under long term contracts with Voest Alpine (unrated) and US Steel (Ba2, Negative Outlook) notwithstanding that Ferrexpo has had long standing relationships with these customers and no significant volume off- take disruptions despite turbulent times in the steel industry, and (vi) the group's concentrated ownership structure with 51% of the shares of the company being controlled by an individual. The B2 Corporate Family Rating also reflects the country ceiling of the Republic of Ukraine (B1, Negative Outlook) which owns the iron ore reserves and resources notwithstanding that Ferrexpo exports all its products outside of Ukraine and is largely funded through non domestic banks. The liquidity position of Ferrexpo is adequate. At June 30, 2010, the group had US$60 million of cash on balance sheet. The liquidity needs of the group over the next twelve months mainly consist of capex, working capital requirements and dividends and are expected to be funded from operating cash flows and cash on balance sheet. Moody's expects Ferrexpo to apply discretion in the development of its unexploited mining resources in order to maintain an adequate liquidity profile in the future. The agency positively notes the refinancing of the group's US$230 million pre-export finance facility with a US$350 million pre-export finance facility, which will push back first monthly amortization to 2012 from 2011. The stable outlook assigned to the ratings reflects Moody's expectation that Ferrexpo will maintain a prudent balance sheet strategy going forward and will continue to benefit from supportive demand fundamentals for its iron ore pellets. The stable outlook also reflects the agency's expectation that Ferrexpo will continue to focus on the optimization of its cost structure and will apply discretion in the development of its commercially unexploited iron reserves. Finally the stable outlook reflects Moody's expectation that Ferrexpo will maintain an adequate liquidity profile through the cycle. Ferrexpo Plc, headquartered in Switzerland and incorporated in the UK, is an iron ore pellet producer with all its mining and processing assets located in Ukraine. Ferrexpo has the fourth largest iron ore reserves worldwide behind Vale, Rio Tinto and BHP Billiton with access to approximately 1.5 billion tonnes of JORC proved and probable reserves included in approximately 6.9 billion of resources at an average ore grade of 30% Fe. Ferrexpo is the 6th largest pellet producer behind Cliffs, Vale, Samarco Metinvest and LKAB. In 2009, the group generated sales of US$649 million and an EBITDA of US$138 million. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating. The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. =========================== U N I T E D K I N G D O M =========================== AEGON NV: To Close Two More UK Businesses; 90 Jobs Affected ----------------------------------------------------------- Terry Murden at The Scotsman reports that Aegon on Tuesday said it will close two more businesses in Britain, resulting in a further 90 job losses. According to The Scotsman, its third-party pension administration and its employee benefits software businesses, both based in England, are not considered core to the company's plans. The Scotsman relates the announcements came in an update on measures first announced in June aimed at taking GBP80 million a year in costs out of the UK business. Aegon has already taken a number of measures to restructure its UK operations, including the closure of its group risk business, its withdrawal from the bulk annuities market and the reorganization of the company's UK sales division which led to 106 job losses, The Scotsman notes. The Scotsman says it wants to focus on life insurance, pensions and asset management in order to improve earnings growth, cash flow generation and return on capital. The third-party pensions administration business is part of Aegon's trustee solutions business unit, and currently employs 82 staff in Daresbury, Cheshire, The Scotsman discloses. It will be wound down while the remainder of the business, which provides support for clients moving from defined benefit to defined contribution schemes, based in Edinburgh, will be retained, The Scotsman notes. The employee benefit software business, Aegon Benefit Solutions, currently employs seven staff in London, The Scotsman discloses. The business will also move into wind-down, The Scotsman notes. The Scotsman relates Otto Thoresen, chief executive of Aegon UK, said the group had withdrawn from the third-party pensions administration business as it could not achieve desired volumes. Bailout As reported by the Troubled Company Reporter-Europe on Aug. 19, 2010, The Financial Times said that Aegon agreed to a series of commercial controls, including a pledge not to offer the three most competitive interest rates, in return for final approval from Brussels of the EUR3-billion bailout it received from the Dutch government during the financial crisis. The FT disclosed the group already repaid EUR1 billion and will repay a further EUR500 million to the state this month. It would pay back the balance of EUR1.5 billion by June 2011, the FT said. About AEGON As an international life insurance, pension and investment company based in The Hague, AEGON has businesses in more than 20 markets in the Americas, Europe and Asia. AEGON companies employ roughly 29,000 people and have more than 40 million customers across the globe. * * * As reported by the Troubled Company Reporter-Europe on July 28, 2010, Fitch maintained the Rating Watch Negative on AEGON's perpetual capital securities to reflect the risk of coupon deferral under the concept of "burden sharing" for state-aided financial institutions such as AEGON. Eleven AEGON N.V. perpetual capital securities have been rated 'BB': US$500m 6.5%, callable 12/2010 (NL0000062420); US$250m floating rate, callable 12/2010 (NL0000062438); NLG450m 7.125%, callable 03/2011 (NL0000120889); EUR200m 6%, callable 07/2011 (NL0000168466); US$550m 6.875%, callable 09/2011 (NL0000686368); US$1,050m 7.25%, callable 12/2012 (NL0006056814); EUR950m floating rate, callable 07/2014 (NL0000116150); US$500m floating rate, callable 07/2014 (NL0000116168); NLG250m 4.156%, callable 06/2015 (NL0000120004); US$1,000m 6.375%, callable 06/2015 (NL0000021541); and NLG300m 5.185%, callable 10/2018 (NL0000121416). ARCHIAL GROUP: PwC Administrators Sell Archial Architects --------------------------------------------------------- Rachael Singh at Accountancy Age reports that PwC administrators have sold Archial Architects and its subsidiary to Ingenium Archial. According to the report, the sale will provide continuity for the staff, suppliers, and customers of the architectural business. As reported in the Troubled Company Reporter-Latin America on September 24, 2010, bdonline.co.uk said that Archial Group PLC f.k.a SMC was unable to agree on repayment terms over unpaid tax owed to HM Revenue & Customs and appointed joint administrators David Chubb and Graham Frost of PricewaterhouseCoopers, who are now seeking a rapid sale of the business. The report related Mr. Chubb said: ". . . due to difficulties in meeting the group's financial obligations, the directors have concluded that various companies in the Group, including Archial Architects Limited and Alsop Sparch Limited, should be placed into administration to protect the business and assets." Archial Group PLC is a London-based practice that employs 400 staff worldwide including around 200 architects. B3 CABLE: Liquidators to Accept More Bidders for B3 Assets ---------------------------------------------------------- RTE News reports that Landsbanki has instructed Alan Flanagan, who has been dealing with the receivership and liquidation of B3 Cable Solutions (Ireland) Ltd., to accept further offers from anyone interested in re-establishing cabling manufacturing at the plant. In a statement released to RTE News, Mr. Flanagan said his work was continuing as normal. But he said he was available for the next eight weeks to any party that wished to make an offer for any remaining assets with a view to re-starting business at the site, according to RTE News. RTE News relates that expressions of interest had been closed within weeks of the plant's being closed with just hours of notice to staff. But it is understood that the majority of the assets at the plant, which was involved in the manufacture of cabling, have been sold. A local councilor and MEP Marian Harkin met representatives of Landsbanki in London on Tuesday and agreed that the liquidator would be open to expressions of interest in the plant for the next two months, RTE News adds. As reported in the Troubled Company Reporter-Europe on July 15, 2010, The Irish Times said workers at B3 Cable Solutions were summoned to a meeting in Longford and were told the plant was to shut as no new owner could be found. Receiver and manager of B3 Cable Solutions Alan Flanagan of Deloitte said an exhaustive search had failed to find a buyer for the facility. The closure will result in the loss of 104 jobs. B3 Cable Solutions said: "Since appointment on June 30, 2010, Alan Flanagan of Deloitte, the receiver of B3 Cable Solutions (Ireland) Ltd., has been engaged in an extensive process to sell the business and assets of the company as a going concern. Unfortunately, this has not proved possible, and reluctantly Mr. Flanagan is now forced to close the B3 plant at Aghafad, Longford, and dispose of the assets on a piecemeal basis." B3 Cable Solutions manufactured copper-based cable for Eircom and other customers. CONNAUGHT PLC: Call for Investigation Into Contracts Rejected ------------------------------------------------------------- Dan Grimmer at Evening News24 reports that calls for an independent investigation into the process which led to Connaught PLC being awarded contracts with Norwich City Council were rejected by Labour-controlled City Hall on September 28, 2010. The report relates that the Liberal Democrats wanted the probe after the company that was awarded the GBP17.5 million contract to fix council homes went into administration -- leading to the loss of more than 300 jobs in Norwich. Evening News24 notes, at the first public council meeting since the Connaught collapse, Labor leaders defended the process by which the contract was awarded and said instead of a probe, time would be better spent picking up the pieces to ensure services continued and jobs were safeguarded. The report relates Judith Lubbock, Lib Dem councilor for Eaton, had said, in calling for the inquiry: "The collapse of Connaught has caused huge concern and hardship for those 320 staff that have lost their jobs. The collapse has also caused many questions to be asked about the procurement process itself. In order that there is public confidence in the council's ability to let future contracts the Lib Dems are asking that there be a full independent inquiry into the procurement process which led to the Connaught housing repair and maintenance contract." However, Evening News24 notes, Alan Waters, executive member for corporate resources and governance, said: "I think time would be better spent moving forward rather than trying to rewrite history and what the city will want is the repairs and maintenance service running smoothly and job opportunities for former Connaught workers as soon as possible." The report relates Mr. Waters pointed out that Mrs. Lubbock was involved in the cross party procurement process -- the details of which were outlined in a 15 page document handed out at last night's meeting. Mrs. Lubbock, Evening News24 relates, said she was "very disappointed" at Labor's attitude towards an independent probe. Evening News24 discloses that while the calls for a public inquiry were dismissed, the council did agree a Conservative motion, amended by the Greens, for the issue to be looked at through its scrutiny committee. The report relates that the Greens also asked a string of questions through which it emerged that the council has had to spend GBP1.2 million in letting a string of emergency contracts ahead of getting in place a new contractor in the longer term. The report relates that they also queried why the Connaught workforce did not have the right kit in place when the contract started, which Mr. Waters said was partially due to the uncertainty created when Morrison sought an injunction to stop it being awarded - and was not connected to the collapse of Connaught earlier this month. Evening News24 says that Morrison, which previously ran the CityCare contract had obtained an injunction with the High Court to prevent the award of the contract -- with a judge said that there was a "serious issue as to the pricing of the Connaught bid and as to the investigations that the council took to assure itself that it was a properly sustainable bid." However, the report relates, it never came to a trial as the council and Morrison reached a settlement, which is believed to have included a financial package. Evening News24 notes that more than 300 Connaught employees working on the social housing maintenance and repairs contract were made redundant earlier this month after the collapse of Connaught Partnerships. The report relates that administrator KPMG said it could not find a buyer to take over the work, although most of the other similar contracts with councils around the country were snapped up. The council now faces re-letting contracts on an interim basis -- for six to 12 months, while also trying to find a longer term solution, which could involve re-tendering the contracts -- a process which could be lengthy and costly to City Hall, Evening News24 adds. About Connaught plc Connaught plc -- http://www.connaught.plc.uk/-- is a United Kingdom-based company engaged in the provision of integrated asset services to the public and private sectors. The Company operates in two business segments: social housing and compliance. Social Housing segment provide social housing landlords throughout the United Kingdom with a range of planned and response maintenance services, as well as compliance and estate management. The Compliance segment provides safety, health and risk management solutions. It has information, advisory, training and servicing capabilities to provide integrated compliance solution throughout the United Kingdom. On July 22, 2009, the Company completed the acquisition of UK Fire (International) Limited and Igrox Limited. On September 15, 2008, the Company completed the acquisition of Lowe Group Holdings Ltd. On November 26, 2008, the Company completed the acquisition of certain assets of Predator Pest Control Plc. DUNDEE FOOTBALL CLUB: May Need to Go Part-Time, Bannon Warns ------------------------------------------------------------ Dundee United legend Eamonn Bannon has told city rivals Dundee Football Club that they may need to go part-time in a bid to get out of the financial mire, Scottish Daily Record reports. As reported in the Troubled Company Reporter-Latin America on September 29, 2010, Mail Online said that Dundee Football Club could be plunged into administration for the second time in just seven years after it emerged they owe the taxman GBP250,000. According to the report, the club has fallen behind in payments over the last 19 months and has been hit by a demand for the balance to be cleared immediately. The report related Director Calum Melville has revealed the club could call in the administrators within weeks. According to Scottish Daily Record, Mr. Bannon has urged the club to start from scratch again by rearing their own young players. The report relates Mr. Bannon said that the only other way is to find another investor like Callum Melville who tried and failed to get the club into the SPL and is on the brink of walking away. "[Mr.] Melville came in and ploughed in his own money on the premise they'd get into the SPL. When that didn't happen the alarm bells started ringing. If they want to survive they have to get back to what they can afford. Get back to the bare bones and start from scratch, even if it's only as a part-time club." Bannon is certain Dundee wouldn't be in their current mess if the city had just one club. "I don't think a city like Dundee needs two clubs. In a perfect world you'd just have Dundee FC in a nice big stadium, like Aberdeen," Scottish Daily Record quoted Mr. Bannon as saying. ELPHINSTONE ESTATES: Placed Into Administration ----------------------------------------------- Elphinstone Estates and a number of its subsidiaries were put into administration after Lloyds Banking Group pulled its funding, estimated to be worth GBP175 million in a combination of debt and equity, The Scotsman reports. The report relates that the company, owned and run by Ken Ross, is the third developer to admit defeat after failing to agree terms with its lender, Lloyds. According to The Scotsman, Mr. Ross said that Lloyds had pulled its support despite being close to finding another funder. "A re-financing package had been developed with another funder," the report quoted Mr. Ross as saying. "And we were trying to reach an agreement with Lloyds Banking Group that would have enabled the business to move on. Regrettably LBG was unable to provide continuing support," he added. The Scotsman discloses that senior Scottish property figures turned on Lloyds Banking Group, saying it was "in danger of destroying the industry" following the firm's collapse. The report relates David Hunter, a former property fund manager and head of Hunter Advisers, said the bank was "in danger of destroying the Scottish property industry" by taking a short-term approach to its lending woes. Mr. Hunter, the report says, called on the Scottish government to intervene to ensure there are sufficient property developers and land consents to continue building. The Scotsman discloses that Dan Macdonald, chief executive of property firm Macdonald Estates, said the bank's decision was "nonsensical" and added to the call for government intervention. However, The Scotsman notes that an unnamed spokesman for Lloyds insisted that putting its customers into administration was "always a last resort". Elphinstone Estates is a Scottish property developer. KEYDATA INVESTMENT: 19,000 Lifemark Investors to Get Compensation ----------------------------------------------------------------- The Daily Telegraph reports that around 19,000 consumers who lost money in Lifemark bonds bought through collapsed investment firm Keydata Investment Services Ltd. are set to receive compensation. According to The Daily Telegraph, the Financial Services Compensation Scheme said that following an investigation it had decided that marketing material used by Keydata to promote the Lifemark bonds did not comply with Financial Services Authority rules. As a result, the company has a legal liability to people who lost money because of the problems at Lifemark, The Daily Telegraph discloses. Luxembourg-based Lifemark is in provisional administration, but the administrator is considering proposals to restructure the group, The Daily Telegraph says. The Daily Telegraph notes the FSCS said there was still uncertainty about the restructuring and what the implications would be for investors. As a result it is not known how much individual Lifemark bonds are worth, and how much each investor has lost, The Daily Telegraph states. Lifemark is not covered by the FSCS because it is based in Luxembourg, but the FSCS will be paying out compensation to eligible British investors who bought bonds through Keydata if it finds the group has a liability to them, according to The Daily Telegraph. The FSCS's announcement affects people with Lifemark Defined Income Plans issues one to eight, Income Plans issues one to 14, Secure Income Bonds issue four, and Secure Income Plans one to 14, The Daily Telegraph discloses. As reported by the Troubled Company Reporter-Europe, Messrs. Schwarzmann and Batten of PricewaterhouseCoopers LLP were appointed joint administrators of Keydata on June 8, 2009. The appointment was made based on an application to court by the FSA on insolvency grounds. The FSCS hopes to provide a further update on the calculation and payment of compensation by the end of October, The Daily Telegraph notes. The Daily Telegraph says people who have an eligible claim will receive 100% of the first GBP30,000 they lost, and 90% of the next GBP20,000, giving a maximum of GBP48,000. Keydata Investment Services Ltd. designs, distributes and administers structured investment products. Keydata operates from three locations, being London, Glasgow and Reading and administers its own products as well as portfolios for third parties. NORPAK (EUROPE): Future Uncertain After Administration ------------------------------------------------------ Adam Hooker at printweek.com reports that uncertainty surrounds the future of Norpak (Europe), which went into administration last month. According to the report, Richard Simms and Steven Ford at F A Simms & Partners were appointed to the company on August 10, 2010; however the administrator has not commented on the situation. The report relates that no one from Norpak was available for comment and the company's number is no longer being answered. The report says that it was announced in January that Norpak had joined forces with newspaper mailroom equipment distributor WRH Marketing. Lee Whatmough, head of WRH Marketing, told PrintWeek that there had been no contact between the companies for some time. "Information in the market place is sparse. We haven't been contacted about the situation by Norpak and I wouldn't be able to add too much because I don't know what is going on. Obviously any arrangement between the two companies is no longer active," he added. Norpak (Europe) manufactures polywrapping. TRAVEL CLUB: Goes Into Administration ------------------------------------- Travel Club of Upminster and its subsidiary Austria Travel have gone into administration following a failed attempt by owner Tony Freudmann to rescue the businesses, travelmole.com reports. According to the report, Mr. Freudmann and administrators Shipleys held last-ditch talks with a possible buyer, but shortly after the meeting Shipleys issued a statement both businesses had gone into administration. The report relates that Shipleys said they were unable to meet payments to key overseas accommodation providers. The report says that a notice of intent to appoint administrators was filed in court for Travel Club on September 14 and for Austria Travel on September 24. The report relates that specialist travel accountants Ellman Wall were earlier instructed to value the businesses and seek expressions of interest from within the industry, but no buyer came forward. About Travel Club of Upminster Headquartered in Birmingham, Travel Club of Upminster and its subsidiary Austria Travel provided accommodation-only primarily in Majorca, Portugal and, in the case of Austria Travel, in Austria. * UK: Creditors Should Share Losses in Bank Crises, FSA Chair Says ------------------------------------------------------------------ Ben Moshinsky at Bloomberg News reports that Financial Services Authority Chairman Adair Turner said creditors should be forced to take losses in bank crises. Bloomberg relates Mr. Turner said in a speech in Brussels on Tuesday lawmakers should create "mechanisms to impose losses on senior debt and subordinated debt holders" to pay for a bailout in the event of a bank crisis. =============== X X X X X X X X =============== * EUROPE: Banking Regulators Interested in Bail-In Option --------------------------------------------------------- Scheherazade Daneshkhu and Brooke Masters at The Financial Times report that global regulators meeting in Paris on Monday to discuss "too big to fail" banks said "good progress" had been made but that global measures to deal with the problem were likely to take years to implement. The FT relates Svein Andresen, secretary-general of the Financial Stability Board -- the Swiss-based body charged with tackling the issue by the leaders of the Group of 20 large and emerging nations -- said the measures "will unfold over a number of years". According to the FT, Mario Draghi, chairman of the FSB, said there was unanimous agreement that big banks needed a higher capacity to absorb losses than the minimum capital standards set two weeks ago by global banking regulators meeting in Basel. The FT says regulators, however, appeared no closer to agreeing on the composition of the "loss-absorption measures". The FT notes Mr. Draghi reiterated that these could include a combination of a capital surcharge for large institutions; "contingent capital" that converts from debt to equity at times of stress and "bailin debt", under which bank creditors lose part of their investment in a failing bank. European regulators are interested in bail-ins, while the US has already passed a law forcing banks to draw up resolution plans, known as living wills, the FT states. Mr. Draghi, as cited by the FT, said that the FSB would launch studies of contingent capital and bail-in debt to assess their capacity to absorb losses. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Sept. 23-25, 2010 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 1, 2010 AMERICAN BANKRUPTCY INSTITUTE ABI/UMKC Midwestern Bankruptcy Institute Kansas City Marriott Downtown, Kansas City, Kan. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 1, 2010 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Oct. 11, 2010 AMERICAN BANKRUPTCY INSTITUTE Chicago Consumer Bankruptcy Conference Standard Club, Chicago, Ill. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 15, 2010 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Hilton New Orleans Riverside, New Orleans, La. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 28, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Level Professional Development Program Weil, Gotshal & Manges LLP, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 29, 2010 (tentative) AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium The Savoy, London, England Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. __, 2010 AMERICAN BANKRUPTCY INSTITUTE Delaware Views from the Bench and Bankruptcy Bar Hotel du Pont, Wilmington, Del. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 11, 2010 AMERICAN BANKRUPTCY INSTITUTE Detroit Consumer Bankruptcy Conference Hyatt Regency Dearborn, Dearborn, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 29, 2010 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP, INC. 17th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York City Contact: 1-903-595-3800; http://www.renaissanceamerican.com/ Dec. 9-11, 2010 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, a JW Marriott Resort & Spa, Scottsdale, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ January 26-28, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Distressed Investing Conference Aria Las Vegas Contact: http://www.turnaround.org/ Jan. 27-28, 2011 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colo. Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 3-5, 2011 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casuarina Resort & Spa, Grand Cayman Island Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 24-25, 2011 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 4, 2011 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Hyatt Regency Century Plaza, Los Angeles, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 7-9, 2011 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition Duberstein U.S. Courthouse, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - Florida Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10-12, 2011 AMERICAN BANKRUPTCY INSTITUTE SUCL/ Alexander L. Paskay Seminar on Bankruptcy Law and Practice Marriott Tampa Waterside, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 17-19, 2011 AMERICAN BANKRUPTCY INSTITUTE Byrne Judicial Clerkship Institute Pepperdine University School of Law, Malibu, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ April 27-29, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott, Chicago, IL Contact: http://www.turnaround.org/ May 5, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - New York City Association of the Bar of the City of New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ May 6, 2011 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Hilton New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ June 6, 2011 AMERICAN BANKRUPTCY INSTITUTE Canadian-American Cross-Border Insolvency Symposium Fairmont Royal York, Toronto, Ont. Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Mich. Contact: http://www.abiworld.org/ July 21-24, 2011 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 27-30, 2011 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Sanctuary at Kiawah Island, Kiawah Island, S.C. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 4-6, 2011 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 14, 2011 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Tampa Convention Center, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. __, 2011 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Dublin, Ireland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 19-22, 2012 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. 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 * * *